Saturday, June 02, 2012

Buyer At 2nd Mortgagee-Forced F'closure Sale Unwittingly 'Inherits' Bad Payment History On Existing 1st Loan; Needs Media To Fix Resulting Credit Woes

From the San Jose (California) Mercury News Action Line:
  • I have worked on this to no avail for almost a year, and it is absolutely driving me mad. In January of 2011, I acquired a property on the steps of the courthouse by foreclosure.

  • The lender, Luther Burbank Savings, said in order to assume the loan I had to apply for it and qualify to assume. This I did, paying more than $3,000 in charges for the assumption. I had been making timely payments on this loan for almost a year.

  • Then the nightmare started. As soon as I assumed the loan with the same loan number as the previous owners, their bad credit appeared on my credit report. The credit reporting companies show me owning the property from 2003 when I only acquired it in 2011.

  • Since then, my life has been a nightmare, trying to repair this. Luther Burbank, to give them their due, has tried to have the previous bad credit erased from my credit report -- to no avail. The credit reporting companies don't respond to letters or to any other form of communication.

  • Luther Burbank has contacted the credit reporting companies and there is now a note in my file that says this loan number is paid as agreed, but they will not remove the years of derogatory information connected with the loan number.

  • You can never talk to a live person, their websites don't take complaints, and they don't reply to letters. Where can I go from here? (Kate Talbot)
  • I contacted the three major reporting agencies for you, Kate. Experian spokesman Gerry Tschopp reported back: "We reviewed Ms. Talbot's credit history and found that the foreclosure information had been deleted as requested by Luther Burbank Savings. There was no indication of foreclosure in her credit report, and the account shows current with no negative payment history."

  • TransUnion spokesman Clifton M. O'Neal reported that your record has been corrected.

  • Equifax spokesman Timothy Klein said that he is looking into this for you.

Now-Foreclosed Homeowner: Bank Unloaded Defectively-Constructed House On Us & Financed It With Crappy Loan!

In Joplin, Missouri, KOAM-TV Channel 7 reports:
  • A Joplin woman fights foreclosure on her father's home and says the bank that sold it to her misrepresented it during the sale. It's complicated but Emily Arnold and her father, Robert Ross, are struggling to stay in the place they call home.

  • Mid-Missouri Bank refused to respond to our request for interviews about the loan but has foreclosed on the home. The house on 43 Highway North of Stones Corner looks good on the outside but a closer look reveals construction problems.

  • Arnold and Ross say they thought they were buying the house from Mid Missouri Bank, but instead the home was titled to a construction company, a company who's owner, Danny Tandy, is now in jail. Arnold and Ross say the bank should have backed the home warranty because they insisted Tandy do the home construction and customization.

  • Arnold says a cheap composite was installed instead of tile and is now cracked. Plumbing and groundwater issues have led to moisture, mold and now rot problems that add up to $73,000 in needed repairs.
  • Arnold hired an attorney who says bank officials set her dad up with a yearly renewed loan destined to fail instead of a veteran's loan for which he would qualify. And they contend the bank had an improper relationship with the contractor, Danny Tandy.

Kid Cancer Patient Returns Home From Hospital Trip To Find Cops Giving Him, Tenant-Family The Boot; Victims Screwed By Rent-Skimming Landlord

In Orange County, California, CBS Los Angeles reports:
  • An Orange County family was kicked out of their home Thursday morning despite paying the rent on time, and, now, eight people, including a child with cancer, are homeless. “My brothers and sisters thought because they brought lots of cops that we were criminals or something,” said 10-year-old Jesus Ramirez, who is battling Lymphoma. He’s undergone six surgeries to treat cancer.

  • He and his mother were returning from Children’s Hospital to the home their family rents in Orange only to find sheriff’s deputies serving them an eviction notice. The family had just minutes to grab what they could before the locks were changed behind them.
  • The family was unaware that the bank had foreclosed on the home in December 2011. They had been diligently paying their $2,200 a month rent on time to the owners.

  • The owner never did discuss that with them or give them any notice. They received no notice. And, unfortunately, they received their first notice of the situation last Friday or Thursday. They received a five-day vacate in the name of the owners and occupants — so it didn’t even name them,” said Celia Garcia, a family friend.
For story update, see
Family Of 8 Allowed Back Home Temporarily After Being Evicted.

Bay State AG: Boiler-Replacing Landlord Pinched For Improperly Removing Asbestos-Containing Pipe Insulation, Then Threatening Tenant To Stay Mum

From the Office of the Massachusetts Attorney General:
  • A property owner from Weston and a Plainville-based heating contractor have been arraigned in connection with the alleged improper removal of asbestos in a single-family rental property in Medway, Attorney General Martha Coakley announced [].

  • David Einis, age 58, and Nicholas Pasquantonio, age 41, were each arraigned on two counts of violating the Massachusetts Clean Air Act for failure to file a notice of asbestos removal with the Massachusetts Department of Environmental Protection (MassDEP) and failure to prevent asbestos emissions.

  • Nicholas Pasquantonio was also arraigned on charges of witness intimidation. Einis and Pasquantonio were arraigned [] in Norfolk Superior Court where each pleaded not guilty and were released on personal recognizance. Pasquantonio was released with the condition that he not have contact with the victim of the alleged witness intimidation.

  • Authorities allege the asbestos containing insulation was from heating pipes in an occupied Medway rental property owned by Einis, which was released when the boiler was being replaced by Pasquantonio.

  • According to authorities, in December 2010, Einis hired Pasquantonio of Johnny’s Oil Service, Inc., who is not a licensed asbestos contractor, to replace the boiler in the Medway property occupied by a family with several children.

  • Pasquantonio allegedly did not seal off the basement while he worked to replace the boiler. After being notified by the Medway Board of Health a few days later, MassDEP inspected the site and allegedly found the improper removal and release of asbestos.
  • Authorities also allege that when Pasquantonio became aware he might be charged criminally, he went to the property where the illegal asbestos removal had occurred and threatened one of the tenants not to testify against him.

Bay State AG Bags Landlord For Alleged Clean Air Act Violations; Improper Asbestos Removal, Failure To Warn Tenants Exposed Them To Associated Dangers

From the Office of the Massachusetts Attorney General:
  • A North Grafton property owner has been indicted in connection with paying two of her tenants to improperly remove asbestos from her Springfield rental property, Attorney General Martha Coakley announced []. The property owner allegedly failed to warn the tenants of the dangers associated with asbestos and did not ensure that they had proper protective equipment or training of removal procedures.

  • Susan B. Nissenbaum, age 59, was indicted by a Hampden County Grand Jury on three counts of violating the Massachusetts Clean Air Act for failure to file a notice of asbestos removal with the Massachusetts Department of Environmental Protection (MassDEP), improper asbestos removal, and improper asbestos storage.
  • According to authorities, in April 2010, Nissenbaum paid two of her tenants to remove asbestos siding from the single-family rental property in Springfield that they were living in and store it on the property.

  • Authorities allege that although Nissenbaum knew that the siding contained asbestos, she did not inform her tenants how asbestos needed to be handled and failed to ensure that they had the proper training or equipment to do so.

  • Nissenbaum allegedly failed to ensure that the tenants follow proper procedures to prevent asbestos fibers from being released into the air. Further investigation revealed that Nissenbaum had the asbestos containing materials stored improperly at the property in torn bags.

  • As a result, authorities allege that the tenants, their children, and others were exposed to asbestos. Nissenbaum also allegedly failed to notify MassDEP before commencing work on the project.
  • Members of the public who have information regarding a potential environmental crime are encouraged to contact the MassDEP Environmental Strike Force Hotline at 1-888-VIOLATE (846-5283) or the Attorney General’s Office at 617-727-2200.
For the Massachusetts AG press release, see Property Owner Indicted for Allegedly Ordering Unsafe and Illegal Removal of Asbestos From Springfield Rental Property (Property owner paid tenants to remove asbestos without providing proper equipment, warning of dangers, or removal training).

Famed Prize Fighter Boxes It Out With Brother In Land Dispute; Says Sibling-Felon Had No Authority To Sign Away Deed To Local Gym To Satisfy Tax Lien

In Phoenix, Arizona, The Arizona Republic reports:
  • A land dispute has thrust one of Phoenix's most notorious boxing heroes into a legal battle with a non-profit organization affiliated with Sheriff Joe Arpaio.

  • The dispute between former world champion boxer Michael Carbajal and the Sheriff's Youth Assistance Foundation has brought new focus to a feud that has torn at Michael and his former trainer and brother, Danny, who was released from state prison in July following a 41/2-year sentence for theft and fraud.

  • Danny signed a document in December giving the Sheriff's Youth Assistance Foundation title to a pair of lots near the corner of 10th and Fillmore streets near downtown Phoenix. The Youth Assistance Foundation is a long-standing non-profit that receives proceeds from the sale of Arpaio's pink underwear, among other endeavors, and is run by a board without members of the sheriff's staff.
  • But an attorney for Michael said in court documents that the land was not available, and in any event, was not Danny's to sign over to anyone. The land is owned by Carbajal's Ninth Street Gym Inc., according to the Maricopa County Assessor, and the most recent deed dates from 1992 when a Phoenix couple conveyed the property to the gym.

  • Each brother is affiliated with a company of the same name: Danny's Ninth Street Gym was administratively dissolved in 2001 by the Arizona Corporation Commission for not filing annual reports, and the Internal Revenue Service revoked its status as a tax-exempt organization in 2010.

  • Michael's Ninth Street Gym was established in 2007 and is listed as a non-profit with the Arizona Corporation Commission, though the federal government has no record of Michael's tax-exempt status.

  • The property has had tax liens filed against it every year since 2006. [Sheriff's Youth Assistance Foundation director Tom] Harper purchased a 2007 tax lien on the property earlier this year to prevent the property from going into foreclosure.

  • Harper claims that Danny, as an affiliate of the original Ninth Street Gym, was authorized to discharge the land as a way to liquidate the remaining assets of his former non-profit, which are statutorily required to go to the state, a church or another charitable organization, such as the Sheriff's Youth Assistance Foundation.

  • David Derickson, an attorney for Michael, said the land became Michael's in 2007 when he established his own version of the Ninth Street Gym, and that the opportunity to challenge Michael's claim to the land expired three years later, in 2010.

  • "It's just ridiculous. Danny's a criminal, he's on probation right now, he signed this thing over to the SYAF without any legitimate authority," Derickson said. "The law in Arizona and elsewhere is fairly clear, even if there's a question about whether Michael had an entitlement to the property. He held it for more than three years in an open and notorious way. He had the corporation incorporated in his name. He ran it and has, therefore, ownership of it."
For more, see Famed boxer Michael Carbajal, Arpaio group in land-rights feud (Carbajal's brother had signed lots over to sheriff's non-profit).

Friday, June 01, 2012

Sovereign Citizen Charged w/ Burglary, Vandalism, Using Sham Legal Process In Attempt To Scare Cops In Alleged Vacant F'closed Mansion-Snatching Case

In Pickens County, South Carolina, the Anderson Independent Mail reports:
  • Garnett Radcliff Campbell Jr. is accused of drilling through one of about a dozen locks at a $2.6 million foreclosed home in Sunset in order to claim it as his own. Campbell installed a new lock and put a notice on the door which claimed that theMoorish American Society of Philadelphiahad seized the property in accordance with international law.

  • The home he allegedly attempted to seize is a five bedroom, six-and-a-half bath, 10,000-square foot waterfront retreat on 3.5 acres in the Cliffs Keowee Vineyards community.

  • According to the printed notice posted on the door, any law enforcement officers who came onto the property — on White Violet Way — would be trespassing and subject to being sued, according to a statement from the Pickens County Sheriff’s Office.

  • Deputies were not persuaded by the paperwork. [...] Campbell has been arrested on charges of burglary, vandalism and attempting to intimidate law enforcement by using a sham legal process.
  • The home listing is held by Scott Garland, a Realtor and appraiser with Community First Real Estate. Regions Bank and the real estate firm were advised by the FBI in advance that the secluded home could be targeted by the sovereign citizen group.

  • Garland said he initially was skeptical that anyone could penetrate the security at the Cliffs community or would be so brazen to target the upscale home. He checked the home following the warnings and didn’t notice anything. A week later while making his regular rounds, Garland saw the notice on the door. “I was shocked at first they made it in, had posted their signs and moved in their items,” he said.
  • FBI agents have spoken with Pickens County deputies on several occasions, warning them of the dangers that sovereign citizens could pose, [Assistant Sheriff Tim] Morgan said. “The sovereign citizen movement, in all its various forms, poses a clear threat to the safety of our community because it’s an attempt to disengage from the rules which govern everyone,” Pickens County Sheriff David Stone said in a statement. “A person who fervently believes that he is not subject to the law, and can essentially dictate his own law, is potentially very dangerous.”

  • The Moorish National Republic is a sovereign citizen group, according to web sites. Several of its offshoots, including the group Campbell claimed to belong to, have been categorized as domestic terrorism groups by the FBI, according to a statement from the Pickens County Sheriff’s Office. [...] He prefers to go by the name “Noble Yeshuah B. al Nina El,” according to the Sheriff’s Office.

Black Family Moves After Home-Torching; Feds Pinch White Supremacist On Charges Of Arson, Using Fire In Race-Based Interference With Housing Rights

From the Office of the U.S. Attorney (Chicago, Illinois):
  • Accused of targeting an African-American family because of their race, a Joliet man was arrested [] by FBI agents on federal arson and civil rights charges for allegedly setting fire to their home on his street. No one was injured in the early morning blaze in June 2007, although the home was occupied by eight children and an adult at the time of the fire.

  • The defendant, Brian James Moudry, was charged with one count each of arson, using fire to interfere with housing rights on the basis of race, and using fire to commit another felony in a three-count indictment that was returned by a federal grand jury last Thursday and unsealed [] following his arrest.
  • According to the indictment, Moudry set fire to a house located in the 300 block of South Reed Street, on June 17, 2007. The fire was reported at approximately 4:10 a.m. The indictment alleges that Moudry set the fire to “injure, intimidate, and interfere with, and attempt to injure, intimidate and interfere with, Victim A and her family, all of whom were African-American, because of their race” and because they were renting and occupying the dwelling. The family moved after the fire.

  • The arson charge carries a mandatory minimum of 5 years and a maximum of 20 years in prison; arson to interfere with housing rights carries a maximum penalty of 10 years in prison; and arson while committing another felony carries a mandatory prison term of 10 years, which must be served consecutively to any other sentence, and each count carries a maximum fine of $250,000.

Bay State AG: Landlord Evicted Renters Shortly After They Gave Birth, Made Threats Implicating Tenants' Immigration Status, Loss Of Housing Vouchers

From the Office of the Massachusetts Attorney General:
  • A Boston area landlord has been ordered to cease violating state housing laws after allegedly threatening tenants who complained about unsanitary and unsafe conditions, Attorney General Martha Coakley announced []. Keith L. Miller of Newton allegedly threatened one tenant over their immigration status and others after they complained about property conditions.

  • The preliminary injunction was issued [...] by Suffolk Superior Court in a pending housing discrimination case against Miller who owns 24 units in Chelsea, Newton, Boston and Arlington. The court order requires Miller to remove lead paint hazards from his units, to refrain from discriminating against tenants who have young children and to stop retaliating against his tenants for complaining about unsafe conditions.

  • We want to ensure that tenants have access to safe housing and are not threatened or evicted when they complain about living conditions,” AG Coakley said. “This case is of particular importance because the safety of young children is at risk and the landlord has been uncooperative. We allege that this landlord engaged in a pervasive pattern of retaliatory and coercive conduct directed at tenants who raised concerns about unsafe conditions.”

  • The AG’s Office filed a lawsuit against Miller in February 2011 alleging numerous violations relating to three former tenants. According to the lawsuit, two tenants were evicted shortly after giving birth because their apartments were not deleaded and the third was evicted after requesting a lead paint inspection by the Department of Public Health (“DPH”), which ultimately found violations in the unit. State law requires landlords to abate lead paint hazards in apartments where children under the age of six reside.

  • Since it was first filed, the AG’s case has expanded significantly based on information obtained through further investigation. According to the amended complaint filed last month, Miller evicted or threatened to evict tenants with young children, rented apartments containing lead paint to tenants with young children, failed to remove lead hazards in those apartments, failed to provide proper notice of lead hazards to his tenants and made misrepresentations regarding the presence of lead paint in his apartments. In one instance, Miller allegedly attempted to force a tenant to pay for the lead paint abatement required by DPH.

  • It is also alleged that Miller refused to repair unsafe and unsanitary conditions, that he used threats, intimidation, and coercion to interfere with the rights of his tenants, and that he retaliated against tenants when they reported suspected violations of the law to city and state officials. Among other things, after several tenants requested health code inspections, Miller allegedly made inquiries and threatening comments about one tenant’s immigration status and threatened other tenants with the loss of their housing vouchers.
For the Massachusetts AG press release, see Landlord Ordered to Remove Lead Paint and End Discriminatory, Threatening Conduct (AG’s Office Obtains Court Order Against Landlord Alleged To Have Threatened Tenant About Immigration Status, Evicted Others That Complained About Sanitary Conditions).

Thursday, May 31, 2012

Alleged "Ghetto Loans" Peddler, City Of Memphis, Shelby County Settle 'Reverse Redlining' Race-Based Discrimination Suit

In Memphis, Tennessee, The Memphis Daily News reports:
  • Wells Fargo & Co. has agreed to settle a federal discrimination lawsuit the Memphis and Shelby County governments filed against the bank by setting a five-year mortgage lending goal of $425 million here, including $125 million in home purchase lending to low- and moderate-income borrowers.

  • The city and county governments filed suit in Memphis Federal Court in December 2009 against Wells Fargo Bank, Wells Fargo Financial Tennessee Inc. and Wells Fargo Financial Tennessee 1 LLC, alleging the company discriminated against its African-American mortgage holders with refinancing that put the homes of those mortgage holders at risk.

  • Former Wells Fargo workers from Memphis were among those alleging the company specifically targeted black customers for the refinancing.(1)
Go here for earlier posts on this and related stories involving accusations against Wells Fargo targeting minority borrowers with crappy loans.

(1) See The Daily Record: Ex-workers allege race-based loan approach at Wells Fargo, which, in reporting on a similar lawsuit brought by the City of Baltimore, describes testimony from two former high-ranking Wells Fargo employees stating that Wells Fargo intentionally made bad loans to African-Americans.

The employees, who worked out of Virginia and Maryland but knowledgeable about the company's national lending practices, according to the complaints, said Wells Fargo marketed subprime loans to predominantly African-American ZIP codes and churches, used software to "translate" marketing materials into African-American vernacular, joked that borrowers who were deceptively steered from prime into subprime loans were "riding the stagecoach to Hell," and that company officials referred to the loans in minority communities as "ghetto loans" and to the borrowers as "mud people," according to The Daily Record story.

Ex-Real Estate Agent Bagged In Alleged $200K+ Ripoff Of Clients' Downpayment Deposits Never Placed In Escrow; DA: Suspect "A Common & Notorious Thief"

In Peabody, Massachusetts, The Salem News reports:
  • A former real estate broker from Peabody pleaded not guilty yesterday to charges that she stole more than $200,000 from a dozen clients hoping to purchase homes through "short sales," prosecutors announced.

  • Farkhanda "Kandy" Tarar Shah, 61, was indicted by a Middlesex County grand jury on charges of felony larceny, embezzlement, and being a common and notorious thief, the Middlesex district attorney said in a press release.
  • [District Attorney Gerry] Leone said Shah was both a licensed mortgage broker and real estate agent who ran a business called K-Realty in Somerville. Over a two-year period between 2007 and 2009, Shah repeatedly used deposits left by clients for her own business and personal expenses, Leone said. Such deposits are legally supposed to be kept in an escrow account.

  • Shah's clients hired her to help them purchase properties that were "underwater" and facing foreclosure through so-called short sales. Because such transactions can be fraught with delays or other obstacles and require approval of the mortgage holder, many of the deals fell through.

  • However, when clients wanted to get their deposit money back from Shah, they learned that she was unable to pay them — because, prosecutors say, she had already spent their money rather than putting it into escrow accounts.

Ongoing Litigation Targeting Real Estate Agents Highlights Home Seller Disclosure Issues When Premises Is Near Environmentally Toxic Site

In Gainesville, Florida, The Independent Florida Alligator reports:
  • Two ongoing court cases involving Gainesville residents highlight potential issues about how much information realtors should tell buyers about the Cabot/Koppers Superfund site.
  • The Cabot/Koppers Superfund site is an environmentally toxic site in Northeast Gainesville. Two companies, Cabot Inc. and Koppers Inc., used improper methods to dispose of hazardous chemicals. Now, the soil and water at and around the site are contaminated.
  • [Clara] Melgarejo’s lawsuit states she did not know her home, at 444 NW 30th Ave., was less than 100 feet from the western boundary of the Cabot/Koppers Superfund site when she signed in 2004. She learned about the site in 2009 when the Florida Department of Health sent letters to neighbors to tell them about the site and the health hazards associated with the contaminants.

  • The lawsuit states the realtors knew about the Superfund site but did not disclose that information to the buyer. While Melgarejo was looking at the house, the sellers gave her a property disclosure form that identified toxic substances in or around the property. Asbestos siding was the only item noted.

  • Melgarejo is suing to get out of her contract and to get compensated for damage. Bosshardt Realty Services and the noted realtors responded in court documents, saying they deny all allegations. Documents state the damage noted by Melgarejo was caused by third parties over which the defendants “have no responsibility, duty, domain or control.”

  • In the second case, [Clara Bea] Horton asked the court to set aside the sale of her house because the nearby Superfund site made it essentially worthless.

  • The dispute is based on the fact that … the property is within the area of contamination from the Koppers Superfund site. Accordingly, the property is at best valueless and may represent a virtually unlimited CERCLA liability,” court documents state.

Wednesday, May 30, 2012

Feds Tag Banksters With Suits Over Crappy Mortgage Securities They Allegedly Unloaded Onto Pair Of Now-Defunct Financial Institutions

Reuters reports:
  • The U.S. government has filed three lawsuits against a group of large banks over losses on soured mortgage debt purchased by two small Illinois banks that failed in 2009. Acting as receiver for Citizens National Bank and Strategic Capital Bank, the Federal Deposit Insurance Corp sued a number of banks including Bank of America Corp , Citigroup Inc , Deutsche Bank AG and JPMorgan Chase & Co.

  • Seeking a combined $92 million, the lawsuits accuse the banks of misrepresenting the risks of residential mortgages they packaged into securities, causing losses for investors once the poor quality and defective underwriting became evident. [...] Two FDIC lawsuits were filed in Manhattan federal court and seek a combined $77 million, while a third filed in Los Angeles federal court seeks $15 million.

Deutsche, Affiliate Admit To Peddling Crappy FHA Mtgs; Head NYC Fed On Banksters' Practices: "Seemed To Treat Red Flags As If They Were Green Lights!"

From the Office of the U.S. Attorney (Manhattan):
  • Preet Bharara, the United States Attorney for the Southern District of New York, [and others] announced [] that the United States has settled a civil fraud lawsuit against DEUTSCHE BANK AG, DB STRUCTURED PRODUCTS, INC., DEUTSCHE BANK SECURITIES, INC. (collectively “DEUTSCHE BANK” or the “DEUTSCHE BANK defendants”) and MORTGAGEIT, INC. (“MORTGAGEIT”).

  • The Government’s lawsuit, filed May 3, 2011, sought damages and civil penalties under the False Claims Act for repeated false certifications to HUD in connection with the residential mortgage origination practices of MORTGAGEIT, a wholly-owned subsidiary of DEUTSCHE BANK AG since 2007.

  • The suit alleges approximately a decade of misconduct in connection with MORTGAGEIT’s participation in the Federal Housing Administration’s (“FHA’s”) Direct Endorsement Lender Program (“DEL program”), which delegates authority to participating private lenders to endorse mortgages for FHA insurance.

  • Among other things, the suit accused the defendants of having submitted false certifications to HUD, including false certifications that MORTGAGEIT was originating mortgages in compliance with HUD rules when in fact it was not.

  • In the settlement [...], MORTGAGEIT and DEUTSCHE BANK admitted, acknowledged, and accepted responsibility for certain conduct alleged in the Complaint, including that, contrary to the representations in MORTGAGEIT’s annual certifications, MORTGAGEIT did not conform to all applicable HUD-FHA regulations.
For the lawsuit, see U.S. v. Deutsche Bank, et ano.
In a statement in connection with this litigation, the U.S. Attorney made these observations on the bankster's lending practices that precipitated this lawsuit:
  • The complaint describes, in detail, lenders taking abusive advantage of a vital Government mortgage insurance program, issuing billions in loans to countless aspiring homeowners. But while the homes the defendants issued loans for may have been built on solid ground, the defendants’ lending practices were built on quicksand.

  • Borrower after borrower defaulted – often within just months of closing – because those loans were doomed to fail. Why? Because, as alleged, the defendants simply ignored every type of red flag and breached every duty of due diligence before endorsing mortgages for federal insurance.

  • In fact, they seemed to treat red flags as if they were green lights. Ultimately, prudence was trumped by profit, and good faith took a back seat to good fees.

Lack Of Notice, Dispute Over Homestead Eligibility Left Couple Facing Possible F'closure By Tax Certificate-Holding Neighbor & Subject Of Local Gossip

In Washington, D.C., The Washington Post reports:
  • Theresa Bollech found out by chance that a neighbor had purchased a tax-sale certificate on her family’s home in the Chevy Chase neighborhood in the District and was quietly planning to foreclose in a matter of weeks.

  • The Bollechs weren’t deadbeats. But they were at odds with the D.C. Office of Tax and Revenue over their homestead exemption.

  • They say they never received notification last year that the city had placed a lien on their property and sold it to the neighbor in July at a tax-sale auction. In that, their experience was typical of a system in which the District sells tax-sale certificates — liens — on properties owing as little as $500 in back taxes or utility bills to speculators and financial institutions that are not required to notify property owners until they begin foreclosure proceedings, according to attorneys working with a consortium called the Alliance to Help Homeowners Maintain Equity.
  • But all parties agree on one critical aspect of the system — the notice property owners receive immediately after the tax-sale auction: none. The city passes that responsibility to purchasers, who are required to notify property owners only when they file to foreclose, a motion that can’t be legally pursued until six months after a sale.
  • Theresa Bollech said she and her husband didn’t know that the city had sold a tax certificate on their home in the 5700 block of 27th Street NW last July to a neighbor because they never received notice before or after the sale.

  • What’s more, she said, no one from the District said a word to them about the sale during a hearing in September with the director of the OTR’s homestead unit over the root cause of their delinquency — the disputed homestead exemption, which significantly reduces assessments for residents who claim a D.C. property as their primary home. (The unit ultimately ruled in the Bollechs’ favor.)

  • They wouldn’t learn that a neighbor had purchased a tax certificate on their home for months. But it became the subject of gossip in their neighborhood, and a neighbor tipped them off just weeks before the neighbor who purchased the certificate could have initiated foreclosure proceedings.

  • There’s no way to describe what it feels like to think you’re going to lose your home,” said Bollech, sitting at the dining room table that now doubles as a repository for hundreds of tax documents. “How could they do this to us? How could they not say something?”

Tuesday, May 29, 2012

Bid & Cure Statements Filed During Foreclosure Process With Four County Public Trustees The Focus Of Colorado AG Mortgage Fraud Probers' 'Paper Chase'

In Denver, Colorado, The Denver Post reports:
  • Mortgage fraud investigators with the Colorado Attorney General's office have gathered documents filed with at least four county public trustees' offices by some of the state's largest foreclosure law firms, according to several people familiar with the request.

  • Trustees in four counties confirmed they each provided hundreds of pages of documents — mostly bid and cure statements associated with foreclosures spanning a five-year period — in response to a request by the attorney general's consumer protection division.

  • Deputy Attorney General Jan Zavislan, who heads that office's consumer protection division, declined to comment about the scope or nature of the request, or even to say it was an inquiry or formal investigation. "That's a very big no comment," Zavislan said Friday.
  • Trustees in Boulder, Jefferson, Arapahoe and El Paso counties confirm they provided sets of 100 documents for each of seven law firms — Vaden, Dale & Decker, Castle Stawiarski, Hopp, Aronowitz & Mecklenburg , Medved and Janeway — covering the period of 2008 to the present, according to a copy of an email sent to the Boulder County public trustee and obtained by The Denver Post under the state's open records law.
  • The request was focused on bid and cure statements attorneys file in a foreclosure case. Each statement includes charges the law firm says must be paid — by the homeowner in the case of a cure or, in the case of a bid, by the winner of a public auction when a property is sold.

  • The bid sheet is a bank's offer for the auction of a foreclosed property, a requirement by law. If there are no other bidders, the bank retains the property and reduces by their bid amount what a homeowner owes them. Sometimes lenders will bid the exact amount owed.

  • Cures are filed with trustees when homeowners indicate they would like to stop the foreclosure process by paying what they owe. The cure bill will include charges such as outstanding amounts on a mortgage, accrued interest and a variety of other fees such as attorneys costs and property inspections.

NJ AG Squeezes Five Guilty Pleas From Scam Group For Roles In Use Of Dead Man's ID To Buy, Finance Home Purchase

From the Office of the New Jersey Attorney General:
  • Attorney General Jeffrey S. Chiesa announced that five people have pleaded guilty for their roles in a scheme, led by a Hudson County woman, to defraud a mortgage lender of $431,200 by filing a false loan application and purchasing a home in Newark in the name of a man who was deceased. The final defendant, a Morris County lawyer, pleaded guilty [].

  • The leader of the scheme, Genilza R. Nunes, 38, of Kearny (aka Leticia Wilchez, Geny Silva, Gena Nunez and Genilza Borges), pleaded guilty on May 8 to second-degree money laundering before Superior Court Judge Salem Vincent Ahto in Morris County. Under the plea agreement, the state will recommend that she be sentenced to 10 years in state prison, including two years of parole ineligibility, and be ordered to pay a $150,000 fine.

  • [P]aul DiGiacomo, 46, of Madison, a lawyer who laundered stolen funds through his trust account, pleaded guilty to second-degree money laundering before Superior Court Judge Thomas V. Manahan in Morris County. Under his plea agreement, the state will recommend that he be sentenced to eight years in state prison and be ordered to pay a $150,000 fine.
For the rest of the NJ AG press release, see Five Plead Guilty in Scheme to Defraud Lender of $431,200; False Mortgage Loan Application Results in Loan Issued to Dead Man (Leader of scheme faces up to 10 years in state prison).

Theft By Deception Among Charges For Newark Man Accused Of Using Stolen ID To Sell His Own Home To Unwitting Victim, Then Purchase & Move Into Another

From the Office of the New Jersey Attorney General:
  • Attorney General Jeffrey S. Chiesa announced that a Newark man was indicted [] for allegedly stealing approximately $1.2 million from two mortgage lenders by using a stolen identity and false information to obtain two home loans, which he used to sell his home in Newark and acquire a luxury home in Georgia.

  • Davionne Anderson, 41, of Newark, and his unregistered real estate investment company, AAA Investment Group, were each charged in a five-count state grand jury indictment with two counts of second-degree theft by deception, two counts of second-degree identity theft and one count of third-degree money laundering. The charges stem from an investigation by the Division of Criminal Justice Financial & Computer Crimes Bureau.

  • In April and May of 2007, Anderson and AAA allegedly used a woman’s stolen identity and false information to obtain a total of $1,205,250 in loans, which Anderson used to buy two homes in the woman’s name: a home that he himself owned in Newark, and a home in Georgia that was owned by an innocent seller who was unaware of the fraud. [...] After completing the phony sale of his own home and acquiring the Georgia home in the name of the unsuspecting buyer, Anderson moved into the Georgia home with his wife

  • Using a single stolen identity and two fraudulent loan applications, this defendant from Newark allegedly stole over a million dollars from lenders and attempted to settle into a luxury home in Georgia that we allege he never intended to pay for,” said Attorney General Chiesa.

Monday, May 28, 2012

NH Homeowner Suit To Enjoin F'closing Lenders From Forcing Sale Gets Green-Light Where Mortgage Assignor Ceased Holding Loans Years Before Assignment

From a recent ruling from the U.S. District Court in New Hampshire:
  • At first blush, this case appears to present a question that has demanded the attention of state and federal courts throughout the country over the past several years: whether mortgagors have standing to challenge the validity of putative assignments of their mortgages to claimed assignees attempting to enforce those mortgages.

  • Two of the defendants argue that mortgagors have no such standing, and have moved to dismiss the complaint for that reason. Upon closer scrutiny, however, the complaint does not squarely challenge the validity of an assignment, and thus does not implicate that question.

  • Plaintiffs Michael and Kathleen Drouin filed this action in state court seeking to enjoin American Home Mortgage Servicing, Inc., Wells Fargo Bank, N.A., and Option One Mortgage Corporation from foreclosing on the property securing their mortgage loan.

  • The Drouins allege that American Home Mortgage and Wells Fargo (collectively, "Wells Fargo"), claiming to possess an assignment of their mortgage from Sand Canyon Corporation, the successor-in-interest to Option One (the original mortgagee), have demanded payment on the mortgage and threatened to foreclose if such payment is not made.

  • But Sand Canyon cannot have assigned the mortgage to Wells Fargo, the Drouins allege, because it ceased holding any mortgages—including theirs—years before the alleged assignment.

  • Wells Fargo removed the case to this court, which has diversity jurisdiction over this matter under 28 U.S.C. § 1332. It then moved to dismiss, see Fed. R. Civ. P. 12(b)(6), asserting that the Drouins have no standing to challenge the assignment's validity and that they may not maintain a cause of action seeking to enjoin the foreclosure sale. Both parties declined the court's offer to hold oral argument on Wells Fargo's motion.

  • The motion is denied. Whatever the merits of Wells Fargo's argument as to the standing of a mortgagor to challenge the validity of an assignment, the gravamen of the Drouins' complaint is not that the assignment from Sand Canyon to Wells was invalid (though there are overtones of that as well).

  • Rather, the Drouins' principal grievance is that, even if the assignment was technically "valid," it cannot have served to assign their mortgage to Wells Fargo because Sand Canyon did not hold the mortgage, and could not assign what it did not have.

  • Because the Drouins satisfy the requirements of standing as to that claim, and because New Hampshire law clearly establishes the right of mortgagors to file an action seeking to enjoin a foreclosure sale, the case may proceed.
For the factual background, and the court's analysis of the law it applied to these facts, see Drouin v. American Home Mortgage Servicing, Inc., Civil No. 11-cv-596-JL (D.N.H. May 18, 2012).
Thanks to Mike Dillon of Stellionata Consulting, LLC for the heads-up on this litigation.

Lower Court Ruling Leading To Low-Income Homeowners Being 'Priced Out' Of Court Faces Appellate Challenge From Consumer Advocates

From a post in Public Citizen's Consumer Law & Policy Blog:
  • After Pittsburgh-area homeowner Mary Glover was subjected to a series of overcharges on her mortgage and misallocation of her payments by Goldman Sachs and Wells Fargo, she filed a putative class action under state contract law, the FDCPA, and state consumer protection laws.

  • When the financial institutions stonewalled during discovery, the magistrate judge -- instead of simply adjudicating Ms. Glover's motions to compel -- told the parties they ought to work out their disputes and if they couldn't, he'd appoint a special master.

  • They couldn't, and he made good on his threat, ordering that the master's fees be split equally between the large institutional defendants and Ms. Glover, whose only income is less than $10,000 in Social Security disability benefits.

  • [P]ublic Citizen filed a mandamus petition in the Third Circuit to overturn the appointment of the special master. The issues we raise are whether a special master's costs can be allocated in such a way as to price a low-income litigant out of court, and whether a special master could be appointed in the first place for the purpose of coercing parties into settling their discovery disputes. (Obviously we believe the answer to both questions is "no.")

  • Our petition, filed in cooperation with Michael P. Malakoff who brought the case originally, is here.

Federal Appeals Court: OK Under State Law To Double-Cross Minnesota Homeowners With False Promises Of Foreclosure Forbearance

From a recent post in Public Citizen's Consumer Law & Policy Blog:
  • What Happens When A Lender Promises Not to Foreclose But Forecloses Anyway?

  • According to Brisbin v. Aurora Loan Services, No. 11-1218 (8th Cir. May 21, 2012), decided Monday by the Eighth Circuit, under Minnesota law, the homeowner is out of luck because a homeowner can only sue on promises made in written agreements.

  • This is true even under a promissory estoppel theory -- that is, even if, as alleged in Brisbin, the homeowner relied to her deteriment on the promise to forbear

  • As the homeowner's lawyer put it in an article on the case, the Eighth Circuit's decision "solidifies the ability of the mortgage company in this case to explicitly lie to the customers it's serving and not be held accountable when an individual is relying on representations being made."

  • I wonder whether this would be the law in any, many, or most other states.
See also, The National Law Journal: Oral promise to delay foreclosure means nothing, Eight Circuit rules (Minnesota's credit agreement law bars courts from enforcing a lender's oral promise to delay a foreclosure sale, the U.S. Court of Appeals for the Eighth Circuit has ruled) (free registration required).
Thanks to Deontos for the heads-up on the story.

Sunday, May 27, 2012

C. Florida Cops Pinch Suspect Allegedly Posing As Real Estate Agent Holding Open Houses At Vacant, F'closed Homes, Duping Would-Be Buyers Out Of Cash

In Central Florida, the Tampa Bay Times reports:
  • A Polk County man has been accused of collecting down payments of homes that were not for sale — and state authorities believe some of his victims are in the Tampa Bay area. Paul Vencatasawmy, 41, has been arrested on fraud charges in connection with a couple of transactions, the Florida Department of Law Enforcement says.

  • So far, they've identified victim losses that add up to $380,000 but believe there's more.

  • Vencatasawmy posed as a real estate agent selling properties. Though he had some affiliations with legitimate companies, the FDLE said he struck out on his own to do these fraudulent transactions.
  • Florida Department of Law Enforcement agents claimed Vencatasawmy held open houses at homes that were in foreclosure or vacant.

Suspected Connecticut Foreclosure Assistance Scammer Feels The Heat, May Be Readying To Bolt Town; Victims: Target About To Take 'Extended Vacation'

In Wethersfield, Connecticut, NBC Connecticut reports:
  • A local attorney told the Troubleshooters more people have come forward to blame a Wethersfield business for their foreclosures. Attorney Manny Suarez now represents six clients with complaints about Deowraj "Deo" Buddhu.

  • Court documents describe Buddhu as running a scheme that promises customers who often don't speak English well access to a supposed stash of federal money that can help pay off their debt. Court records say Buddhu collects thousands of dollars from his customers and tells them to stop paying their mortgages.

  • The result, according to court papers, is that customers like Heddy Arcos-Torres of Hartford never see a dime and they wind up in foreclosure. [...] Suarez said the government money fund is fictitious and that Arcos-Torres is one of 200 alleged victims. A judge has since vacated the foreclosure judgment against Arcos-Torres, which means she and her husband will be able to modify their loan and stay in their house.

  • The Connecticut Office of Chief Disciplinary Council investigates the unauthorized practice of law. The office said it has received complaints about Buddhu. Buddhu spent time in jail for forgery and in 2008 both he and his daughter, Sunita, were permanently barred from preparing tax returns for others.
  • The Wethersfield Police Department cannot confirm or deny it is investigating Buddhu.

  • According to customers, Buddhu is now telling people he's about to take an extended vacation. Buddhu did not respond to our repeated requests for comment, only to say on the phone "if you want to believe what they are saying" before our call was disconnected.
For the story, see More Foreclosure Victims Come Forward (More people are coming forward after the Troubleshooters first reported on a Wethersfield business).

Ten Screwed Over Homeowners Sue Motown-Area R/E Operator Suspected Of Using Land Contract Deals To Rip Off Cash Peddling Homes In Foreclosure

In Detroit, Michigan, WXYZ-TV Channel 7 reports:
  • Leonard Bale, the West Bloomfield real estate investor exposed by 7 Action News for selling houses he knew were in some phase of foreclosure, has been sued in Wayne County Circuit Court. In a Dearborn law office, attorney Mike Jaafar announced his clients’ allegations that he said could support criminal fraud charges.

  • Ten people who say they suffered from Bale’s business practices - some who were left homeless - claim fraud, conspiracy and other misconduct when they made land contract purchases from Bale and his Wolverine Investment company.
  • His customers say Bale takes down-payment cash from families like the McGee’s, then, breaking promises along the way, they allege he lies about his true ownership in the house, up the point of bank notices asking Bale to respond to foreclosure proceedings.

  • He knew at the time he was selling these properties that he was inducing them by giving false information,” says attorney Jaafar.

Complaints Flood Florida Bar As Pervasive Cavalier Attitude Of Wayward Attorneys Unsettles Some

The South Florida Business Journal reports:
  • It’s been a tough stretch for the reputation of Florida’s 93,000 attorneys. The blemished names include convicted Ponzi schemer Scott Rothstein and alleged foreclosure king David J. Stern. In all, almost 200 attorneys currently face complaints of violations regarding loan modification services.

  • The situation has been called overwhelming. Last year alone, the Florida Bar processed some 8,000 grievance cases. Almost 100 attorneys were disbarred.

  • Malfeasance and misconduct is nothing new, at least to Andrew Hall, founding partner with Hall, Lamb and Hall, P.A. in Miami. What’s unsettling is the magnitude and a pervasive cavalier attitude, said the attorney, [...]
For more, see Florida Bar tackles attorney discipline (requires subscription).

Attorney To Get License Pulled After $95K Client Ripoff; Cash Intended To Pay Off Civil Settlement

The State Bar of California recently announced:
  • The State Bar of California has accepted a stipulated disbarment from Newport Beach attorney Kendall R. Paulson, who misappropriated $95,000 that was supposed to be used to settle his client’s lawsuit.
  • According to the disbarment stipulation approved by the State Bar Court Wednesday, Paulson, 51, represented Carl Lovegren in a civil suit filed against him in Orange County Superior Court in September 2006. The following year, the parties entered into a settlement agreement whereby Lovegren agreed to pay the plaintiffs $95,000. The agreement stated that should Lovegren fail to pay an agreed-upon amount by Feb. 9, 2008, he would be responsible for twice the balance, plus interest.
  • On Dec. 10, 2008, Lovegren gave Paulson $40,000 to pay part of the settlement agreement, money that Paulson deposited into his client trust account but later spent. Paulson misappropriated an additional $55,000 in settlement money from another check Lovegren gave him in June 2009.
  • According to the stipulation, Paulson misled both Lovegren, who thought he had been paying off the settlement, and the court, by telling a judge that his client was trying to raise money to pay the judgment but needed more time.
  • Paulson (bar number 120688), who had no prior history of discipline, will be placed on involuntary inactive status May 18 until the California Supreme Court acts on the disbarment recommendation. He has agreed to pay restitution, plus interest.(1)
(1) Homeowners ripped off by the dishonest conduct of a California attorney (including a failure to refund unearned legal fees) who want to recover their money can apply for possible restitution from the Client Security Fund of the State Bar of California (see also Can the Client Security Fund Help You?).
For earlier posts referencing California's Client Security Fund in the context of loan modification ripoffs, see:
For similar "attorney ripoff reimbursement funds" that sometimes help cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see: