Saturday, September 08, 2012

MTA Stiffs Tenant On $65K Promise After She Was Booted From Rent Controlled Apartment Resulting From 2nd Ave. Subway Construction-Related Condemnation

In New York City, the New York Post reports:
  • She famously wiped out her husband’s “ring around the collar” — but now, she says, she’s getting taken to the cleaners by the MTA [Metropolitan Transit Authority]. Sally Ardrey — the actress who appeared in the 1970s Wisk commercial featuring that catch phrase — was booted from her rent-controlled apartment during Second Avenue Subway construction and is now battling the agency for financial assistance because it wants her to take an apartment she can’t afford.

    Ardrey, who is 74 and has four grandchildren, says she can’t make ends meet on her fixed income and has hired a lawyer to take on the MTA. “I’m frightened of what’s going to happen,” said Ardrey, whose commercial featured a suitcase flying open and taunting her bout collar stains on her husband’s shirts — ads she denounced years later as sexist.

    I can’t tell you how jittery and sad it makes me feel. This is a terrible thing,” she said. Ardrey says the MTA ran her through the wringer, at first negotiating with her and her lawyer before suddenly backing out. “I don’t feel it’s fair . . . I just don’t understand,” Ardrey said. “Why string us along?

    In 2009, she was forced to leave her $1,726-per-month, rent-controlled apartment at 257 E. 73rd St. — where she’d lived for more than two decades — because the building was condemned due to the subway line.

    The MTA helped Ardrey got a new place to live — an offer made to the 57 others dislocated by the project — eventually finding a $2,195-per-month pad that was not rent stabilized. “The MTA told Sally that if she moved into the comparable apartment, it would give her a [one-time] rental assistance payment of $65,553.01,” said her lawyer, Joshua Colangelo-Bryan.

    But Ardrey, whose income is less than $40,000 per year, crunched the rent numbers and realized the MTA was trying to whitewash a bad situation. The new apartment rate amounted to a $5,600 rent increase per year, and she would be exposed to big increases.

    To avoid breaking the bank, Ardrey in 2009 instead moved into an apartment on East 91st Street that cost $1,600 per month and was not rent stabilized — and asked the MTA to honor its $65,500 rent-assistance offer.

    But “the MTA told Sally that because the rent in this new apartment was, at that time, less than the rent in her [old] apartment, it would not give her any rental assistance payments,” said Colangelo-Bryan.

    Over time, the new, nonstabilized, apartment would become more expensive, and, in fact, it already has,” Colangelo-Bryan, said, adding that Ardrey’s rent has now increased to $1,756.

    Ardrey and her lawyer negotiated with the MTA — which was initially receptive — until it abruptly pulled out of the talks. “We eventually traded settlement proposals that actually would have had Sally getting the full $65,553.01,” and they were near a deal, Colangelo-Bryan said.

    But, suddenly, “there is no offer on the table and no willingness to negotiate.” “Ultimately, the MTA has punished Sally for being frugal,” the lawyer said.

    MTA spokesman Aaron Donovan said, “We are sympathetic to Ms. Ardrey’s situation, and we are considering a settlement of her appeal.”

City Slams Brakes On NYC Bus Driver, Wife Accused Of Clipping Government Out Of $94K In Housing Subsidies, Other Public Assistance

In Staten Island, New York, the New York Post reports:
  • Authorities have charged a Staten Island bus driver and his wife with cheating the government out of $94,000 in housing subsidies and other benefits. City Department of Investigation Commissioner Rose Gil Hearn announced the arrests of David Vale and Maria Almanzar yesterday.

    A criminal complaint accuses the couple of collecting $60,000 in housing subsidies by falsely claiming she was living alone in a home they shared on Staten Island. It says Vale was making about $104,000 a year as a bus driver at the time.

    Authorities also charged Almanzar with fraudulently obtaining another $34,000 in food stamp and Medicaid benefits. The husband and wife each face up to 10 years in prison if convicted.

Senior Homeowners The Target Of Phone Campaign By Outfit Seeking Personal Info By Implying They May Be Eligible For Property Tax Refunds

From the Clark County, Washington Assessor's Office:
  • The Clark County Assessor’s Office is warning county residents of a telephone marketing campaign that seeks personal information from older residents, implying they could receive property tax refunds or relief.

    Seniors in several Washington counties have received calls from telephone solicitors who are marketing reverse home mortgages. The callers identify themselves as agents of “Seniors First.”

    The callers ask residents for personal information such as income, age and employment status. Callers say they are trying to help residents determine whether they qualify for the state’s property tax relief programs or assistance to veterans. The solicitors imply they are calling on behalf of the state Department of Revenue.

    Confused taxpayers in Clark, Lewis and Thurston counties have contacted the state regarding the calls. The Department of Revenue has alerted counties statewide to the telephone campaign.
For the Clark County Assessor press release, see Confusing, inaccurate phone calls target older property owners (State, county officials warn of reverse mortgage sales pitch).

Rich Divorcée Hit With $4.7M 'Hotel Bill' & Faces Add'l $3M Tack On For Seller's Legal Fees For Backing Out Of Deal To Buy $18.75M Residential Suite

In New York City, the New York Post reports:
  • That’s one heck of a hotel bill. A well-heeled divorcée who lost $4.7 million when she backed out of buying a swank Upper East Side co-op now faces more than $3 million in legal bills from the developer.

    Defense lawyers say they spent more than 5,000 hours battling Roberta Campbell after she filed suit in 2009 to recoup her deposit on a residential suite in The recently renovated Mark hotel on East 77th Street.

    In particular, this lawsuit was difficult and hard-fought, with plaintiff’s counsel raising numerous issues in an effort to excuse plaintiff’s failure to close her purchase,” according to papers filed in Manhattan federal court.

    And while admitting that their fees “are large in comparison with the down payments at issue,” the hotel’s lawyers insist that the amounts — including $1,025 an hour for lawyer Michael Korotkin — “are reasonable under all of the facts and circumstances.”

    Campbell, the ex-wife of Intuit software chair Bill Campbell, walked away from her planned $18.75 million purchase after inspecting the pad and noting a laundry list of problems, including no heat or hot water, unstained floors and missing hanger rods in the closets.

    But a judge ruled that Roberta wasn’t entitled to break the deal, saying Con Ed was ready to turn on the gas and that most of her complaints were easily fixed “punch list” items.

    Judge William Pauley III also noted that Roberta wasn’t exactly hurting, having moved into 15 Central Park West, “one of the most desirable addresses in Manhattan.” Campbell reportedly paid $17.5 million in cash for that apartment, which has four bedrooms and views to both the east and west.

    Her lawyer declined to comment.

Attorney Gets Bar Boot For Ripping Off $80K In Client Funds From Family Trust

From the California Bar Journal (August 2012):
  • Luann Marie Kelley [#131841], 61, of San Diego was disbarred June 16, 2012, and was ordered to make restitution and comply with rule 9.20 of the California Rules of Court.

    Kelley stipulated that she failed to account for client funds and misappropriated thousands of dollars from a family trust. Kelley represented the trustee, who transferred $80,000 of trust assets to Kelley, who in turn deposited the money in her client trust account. The balance the account dropped to $3,950.75 and later to zero.

    Although Kelley believes she is entitled to $27,123 of the $80,000 for attorney fees and costs, she did not obtain a required order concerning fees and costs from the probate court. The court ordered her to refund $80,000 to the trust, along with an additional $115,752.98 in damages, by May 13, 2010. Kelley contends the issue of her claim to attorney fees and costs remains open with the probate court.

    In mitigation, she had no prior discipline record, provided evidence of her good character, suffered from depression and cooperated with the bar’s investigation.

Friday, September 07, 2012

NYT On Banksters' Big Win In Nationwide Foreclosure Fraud Settlement

From an op-ed piece in The New York Times:
  • It has been six months since the big banks settled with state and federal officials over evidence of widespread foreclosure fraud, promising to provide $25 billion in mortgage relief in exchange for not being sued over past foreclosure abuses.

    At the time, it looked like a sweet deal for the banks. The fines were paltry compared with the damage done to homeowners and the economy. And much of the relief the banks were obliged to provide could be met by continuing more or less with business as usual.

    It still looks like a sweet deal.

    The Office of Mortgage Settlement Oversight, the monitor of the settlement, released a preliminary report last week showing that 138,000 homeowners had received some form of relief from March 1 through June 30. That is roughly the number that would have been expected under various aid programs in effect before the settlement.

    Worse, with some three million borrowers now in or near foreclosure, according to Moody’s Analytics, it is nowhere near the level of relief needed to fix the housing market.

NYC Home Lender To Cough Up $3.55M To Settle Fair Housing Allegations That It Clipped Blacks, Latinos For Higher Loan Prices Than Non-Hispanic Whites

From the U.S. Department of Justice (Washington, D.C.):
  • GFI Mortgage Bankers Inc., a large independent home mortgage firm that concentrates on the New York, New Jersey, and Florida markets, will pay $3.555 million to resolve a lending discrimination lawsuit filed by the Department of Justice and the U.S. Attorney’s Office for the Southern District of New York.

    The lawsuit alleges that GFI engaged in a pattern or practice of discrimination by pricing residential mortgage loans for qualified African-American and Hispanic borrowers higher than for similarly-qualified non-Hispanic white borrowers between 2005 and 2009.

    The settlement provides $3.5 million in compensation to approximately 600 African-American and Hispanic GFI borrowers identified by the United States as paying more for a loan based on their race or national origin, and it requires GFI to pay the maximum $55,000 civil penalty allowed by the Fair Housing Act.

    The settlement also requires GFI to develop and implement new policies that limit the pricing discretion of its loan officers, require documentation of loan pricing decisions, and monitor loan prices for race and national origin disparities not justified by objective borrower credit characteristics or loan features.
  • The settlement came after the United States had filed its opposition to GFI’s motion to dismiss the case and the court had stated it was “skeptical” of GFI’s argument that federal law allows lenders to price loans in a way that produces such disparate impacts on minority borrowers.

    The settlement, which was entered by the court, was filed in federal court in Manhattan, where GFI is headquartered.

Lawsuit: Latino Influx Into Eastern Long Island Town Making Locals Antsy; Officials Allegedly Target Landlords Renting To Hispanics w/ Code Violations

In East Hampton, New York, the New York Post reports:
  • They forced him to clean dirty toilets while everyone else lazed on four-hour lunches. They left him notes such as “Now just why in the hell do I have to press ‘1’ for English?” with a picture of John Wayne. Then they denied him leave to care for his dying mother-in-law.

    It’s hell being Hispanic in the Hamptons.

    Chilean immigrant Jorge Kusanovic, 67, has lived among the rich of East Hampton for 36 years. But now he’s suing the town for $3 million for back pay he says he is owed — as well as his dignity.

    The park worker filed a suit this month that alleges a decade of toil, where white supervisors threatened to fire him at every turn. “Because I’m Spanish, I have to pay a price the rest of my life to live here,” Kusanovic said. “You start to think this is normal.”

    Tension over Hispanic residents in the Town of East Hampton, population 21,457, is nothing new. But the conflict has gotten hotter this summer, as residents have complained about new immigrants, and Kusanovic has bared his case in court.

    This spring, residents packed town board meetings during public sessions, demanding officials enforce East Hampton’s housing code to stop people from living in town illegally. Some residents, particularly in the hamlet of Springs, say large immigrant families are packed into single-family homes.

    They brought photos of their neighbors’ homes to town board hearings — saying their multiple satellite dishes and car-covered lawns were ruining property values.

    Deputy town supervisor Theresa Quigley blasted the complainers for targeting “Latino” families. During one meeting, she was overheard calling the complainers “Nazis.” “I’m telling you, this is disgusting,” she said. “I don’t want to be in this town.”

    Census data shows that the number of Hispanic residents in East Hampton has skyrocketed 94%, with 5,660 in 2010, compared to 2,914 a decade earlier.

    Lawrence Kelly, an attorney for Kusanovic, says the feuding has gotten so bad that the town is targeting landlords who rent to Latinos — issuing building violations just to coerce them into changing tenants.

    It’s pitted neighbor against neighbor, with longtime resident Tina Piette calling some people’s efforts to spy on newcomers “disgusting.” “People move to East Hampton or retire there and don’t expect to see Ecuadorians next door, or someone who speaks Spanish and is a permanent resident,” she said.

    Still, Kusanovic says such unwelcome treatment of Latinos in the Hamptons is the norm. He purchased his home in Montauk during a housing lottery in the ’70s. At the time, more than a dozen minority families signed up for two homes, but Kusanovic was told he’d win because he has light skin, light eyes and a European-sounding last name.

    Those attributes never proved helpful again, as residents made clear he would never be one of them.
For more, see Hamptons race rift (Hispanic influx, lawsuit roil the East End).

Thursday, September 06, 2012

"Legal, Non-Conforming Use" Zoning Status Throws Monkey Wrench Into Couple's Effort To Sell Home

In Deltona, Florida, The Daytona Beach News Journal reports:
  • The moving boxes speak to Lynne and Earl Hoisington's intentions.

    But two closings this week -- the one where they planned to buy a new house in DeLand and the one where they would turn in the keys to their three-bedroom, two-bath Deltona home -- are off.

    The Hoisingtons and the real-estate agents involved in their deal say a city ordinance, an eagle-eyed appraiser and the square-footage of the Deltona house are to blame. They suggest the city's rules, if not changed, could slow the sale of homes in a city that continues to be in the throes of the foreclosure crisis.
  • [A]n appraiser reviewing their Giovanni Street home found its dimensions, 1,068 square feet, fell short of the Deltona requirement for single-family homes in its residential zoning. He checked a box marked "legal nonconforming (grandfathered use)."

    The nonconforming tag means if the home were to be destroyed by fire or a natural disaster, it would have to be rebuilt at the current standard, 1,200 square feet, or more. That clause meant the buyer could not obtain financing, according to Matt Gurnow, a loan originator with Watson Mortgage Corp., DeLand.

    Gurnow wrote Deltona Mayor John Masiarczyk last week explaining that the loan for a nonconforming house is "not sellable on the secondary market and therefore not a loan we can close and fund. ... Our investors (JP Morgan Chase, Wells Fargo, Bank of America, B&T) will not purchase a loan on a home that is nonconforming, knowing that if their collateral for the loan is destroyed, it cannot be rebuilt as it sits."

California Attorney Agrees To Disbarment After Ripping Off $66K+ In Fees From Three Clients For Promised Mortgage-Related Litigation Never Pursued

From the California Bar Journal (August 2012):
  • Thomas Craig Nelson [#82506], 58, of San Diego was disbarred June 16, 2012, and was ordered to make restitution and comply with rule 9.20 of the California Rules of Court.
    Nelson stipulated to nine counts of misconduct in three matters.

    He represented two couples who had disputes with their mortgage lenders, agreed to file chapter 13 bankruptcy petitions to stop pending trustee sales of their homes and then to initiate litigation against the mortgage lenders.

    One couple paid Nelson $20,700 in advance fees and the other gave him $25,500. Although he filed bankruptcy petitions for both couples, they were dismissed and Nelson never initiated litigation. He stipulated that in both matters he failed to perform legal services competently, account for client funds or refund unearned fees.

    He represented another couple, who paid an advance fee of $20,000, to pursue a loan modification and to sue their lender if unsuccessful. Nelson did little to secure a loan modification, never filed a lawsuit and eventually filed a chapter 13 bankruptcy petition that was dismissed. The clients hired a new lawyer after their lender sued them. Nelson admitted he provided no legal services of value to the couple, nor did he account for or refund their advance fee.

    Nelson was suspended and placed on probation in 2011 for failing to perform legal services competently, refund unearned fees or cooperate with the bar’s investigation, and he committed acts of moral turpitude. He also was disciplined in 2002 for failing to maintain entrusted funds in a trust account and misappropriating $38,000 in client funds, an act of moral turpitude.

    In mitigation, he stipulated to disbarment.

State Bar Pulls Attorney's License, Orders Restitution After Admitting To Ripping Off $50K+ From Three Clients Seeking Loan Modification Help

From the California Bar Journal (August 2012):
  • Moses Sheldon Hall [#153759], 56, of Fullerton was disbarred June 21, 2012, and was ordered to make restitution and comply with rule 9.20 of the California Rules of Court. Hall stipulated to nine counts of misconduct in three loan modification matters.

    In each case, he advised his clients to stop making mortgage payments and they lost their homes to foreclosure. All the clients were current on their mortgage payments when they hired Hall.

    He instructed one client, who paid him a flat fee of $3,495, to stop making payments on her mortgages because lenders were only approving loan modifications on mortgages of delinquent borrowers. Instead, he told her to send monthly payments that he calculated at $779.42 — based on a presumed loan modification — and he would hold the money in his client trust account. The client followed his advice and her home was sold at foreclosure. Hall did not refund any of the $11,507.46 he was supposed to hold in trust.

    He calculated monthly payments of $1,987.93 for another client, who also sent the money to him instead of her lender. Her home also was sold in foreclosure and Hall misappropriated the $15,903.44 the client gave him. That client also paid Hall a $3,000 fee.

    A couple who paid $1,500 of a flat fee gave Hall monthly payments he calculated at $2,023.82; their house was sold at foreclosure. He misappropriated the $22,262.02 the couple gave him to hold in trust.

    Hall stipulated in each matter that he failed to perform legal services competently or maintain client funds in trust and he misappropriated client funds, committing acts of moral turpitude. Hall was publicly reproved in 1993.

Wednesday, September 05, 2012

Vegas Man Cops Plea To Peddling Bogus Loan Modification Ripoff; Suspect Targeted Underwater Homeowners With Phony Principal Reduction Offers

From the U. S. Department of Justice (Washington, D.C.):
  • A Las Vegas man pleaded guilty [] to operating a foreclosure rescue scam that defrauded distressed homeowners who were struggling to pay their mortgages, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.

    Alex P. Soria, 65, pleaded guilty [...] to one count of wire fraud and one count of theft of government funds in connection with a scheme to defraud homeowners who were behind on their mortgages.

    According to court documents, Soria identified homeowners whose mortgage debt exceeded the value of their homes and charged them a fee purportedly to reduce the principal balance of their mortgages using money from the Department of the Treasury’s Troubled Asset Relief Program (TARP).

    Soria admitted in court that he lied to homeowners about his affiliation with several mortgage lenders and that he provided victims with fraudulent letters stating they had been approved for loans.

    Soria also admitted he falsely told victims that his loan program had been successful in the past and charged homeowners for loan modifications he knew he could not deliver. Court documents show that Soria concealed from homeowners the fact that the state of Nevada had issued a cease and desist order which legally prohibited him from working in the mortgage industry.

    Soria collected more than $100,000 in fees from distressed homeowners, many of whom lost their homes to foreclosure after Soria failed to deliver the loan modifications he promised.

Scammer Who Ran Loan Modification Ripoff Dodges Hard Prison Time, Gets 180 Days In County Jail, Probation On Five Misdemeanor Charges

From the Office of the Los Angeles, California City Attorney:
  • City Attorney Carmen A. Trutanich [] announced his office secured a criminal conviction and restitution for victims of a Los Angeles man operating a loan modification scam.

    Defendant Carlo Hamrahi bilked each of his victims out of thousands of dollars by claiming he could reduce their mortgage interest rates through federal government programs RESPA (Real Estate Settlement Procedures Act) and TILA (Truth in Lending Act). [...] Defendant Hamrahi, 40, entered a no contest plea to five misdemeanor counts of grand theft and identity theft.

  • Los Angeles Superior Court Judge Yolanda Orozco sentenced Defendant Hamrahi to 180 days in jail and five years probation. In addition, the defendant was also ordered to pay $18,500 in restitution to the five victims named in the case and is prohibited from engaging in the business of real estate loans, modifications, servicing and all other financial transactions relating to real estate during the period of probation.
  • Dating back to 2010, Defendant Hamrahi, through his Los Angeles business, engaged in a scheme of soliciting money, primarily from members of the Armenian-American community residing in the San Fernando Valley, for the purposes of assistance with loan modification and debt relief.

    Each of the victims paid thousands of dollars in fees and advance payments to Defendant Hamrahi who failed to perform any of the promised and paid-for services.

Ex-R/E Agent Cops Plea For Role In Bogus Mortgage Elimination Scam Based On Discredited 'Sovereign Citizen' Claims; Ripoff Fleeced $2.5M From Victims

From the Office of the U.S. Attorney (Los Angeles, California):
  • A South El Monte man has agreed to plead guilty to a federal mail fraud charge in a scheme that falsely promised to eliminate mortgage debts for approximately 200 distressed homeowners who each paid a $15,000 fee. Instead of working on behalf of the homeowners, the man simply sent worthlessSovereign Citizenpaperwork to lenders – paperwork that did nothing to affect the mortgage of a single homeowner.

    In a plea agreement filed [] in United States District Court in Los Angeles, Ernesto Diaz, 57, who formerly worked as a realtor, agreed to plead guilty to one count of mail fraud. As part of the agreement, Diaz has agreed to cooperate in an ongoing investigation into against his company, Crown Point Education Inc., which had offices in Montebello and El Monte.

    Diaz joined the Crown Point scheme in March 2010 after the company had been in business for approximately one year. Diaz spoke at seminars to recruit distressed homeowners and to train salespersons in the Crown Point program.

    In his plea agreement, Diaz admitted that he and others promised distressed homeowners at these seminars that, in exchange for fees that were generally $15,000 per property, Crown Point would eliminate the homeowners’ mortgages within six to eight months through a secret process that involved sending packets of documents to lenders.

    Even though he told victims that he could eliminate their mortgage woes, Diaz admitted in his plea agreement that the process had never been successful. Diaz failed to tell distressed homeowners that earlier Crown Point clients – including Diaz’s own brother – had lost their houses to foreclosure and been evicted from their houses.

    In the plea agreement, Diaz admitted that another person affiliated with Crown Point filed bankruptcy documents in the names of Crown Point clients to delay foreclosure and eviction. Diaz acknowledged that Crown Point filed many bankruptcy documents without the knowledge of the company’s clients and that signatures of debtors and notaries were forged on many documents filed with the Bankruptcy Court.

    In his plea agreement, Diaz admits that approximately 200 homeowner-victims paid Crown Point nearly $2.5 million for help they did not receive. The claims made to distressed homeowners were based on discreditedSovereign Citizenclaims that mortgages are invalid because the banks did not actually lend the money used to fund mortgages and the notes were securitized.

Tuesday, September 04, 2012

Washington Appeals Court: Homeowner's Failure To Stop Foreclosure Sale Not Neccssarily Waiver Of Right To Pursue State Consumer Protection Act Claims

In Seattle, Washington, Seattle Weekly reports:
  • As we all know, the real estate industry has been rife with shady loans over the past decade. If you were a borrower, and you lost your house to foreclosure, too bad. The way courts have often ruled, there's been little you could do about it. [Recently], however, the state Court of Appeals ruling set a new precedent.

    The case concerns a Pierce County woman named Tamara Frizzell, who owned her house free and clear, according to her attorney Dan Young. In 2008, needing some money to pay bills, she contacted a couple who advertised their lending business in a local paper. Frizzell initially wanted $20,000, but Barbara and Gregory Murray talked her into a $100,000 loan instead, the court ruling relates.

    The deal made no sense. Frizzell, who inherited her house from her husband, had essentially no income, according to Young. Yet, the agreement called for her to make $1,000-a month payments, which would only cover interest on the loan. At the end of the three years, she was to pay back the entire $100,000.

    Why would she agree to a deal like that? Young has argued in legal papers that Frizzell isn't fully competent. She has a learning disability and possibly "incipient dementia," according to a psychologist giving his opinion to the court. A friend of Frizzell said that offering a loan to her "was like giving the money to a small child who had no conception of how to spend the money, what would be required to pay it back, and what would happen if it were not paid back."

    Indeed, Frizzell subsequently squandered $60,000 of the loan on eTrade-purchased stocks that tanked. Since she had virtually no income, she only made a few of the $1,000 payments. The Murrays moved to foreclose.

    Frizzell's sister found Young, who took the case on pro bono and filed a court motion for an injunction. The court agreed, but only on condition that Frizzell come up with a $15,000 payment and $10,000 bond by the very next morning. Of course, Frizzell had no way to do so, and the house went up for sale. Barbara Murray bought it and evicted Frizell.

    Frizzell, with Young's help, filed suit in Pierce County Superior Court, charging deceptive practices that constitute a violation of the [Washington State] Consumer Protection Act(1).

    Young's theory is that the Murrays were out to acquire Frizzell's house all along, and for less than half of what it was worth. The couple's attorney, Darren Krattli, denies the claim, but declines to comment further.

    A Superior Court judge dismissed Frizzell's claims, saying she had waived her right to redress by failing to stop the foreclosure sale. And if her lawsuit's only goal was to invalidate the sale, she might well have. State law discourages such after-the-fact lawsuits, because they could destabilize foreclosure sales; people couldn't be sure that the home they bought at an auction was really theirs.

    But the appeals court noted that Frizell's claims were broader. She sought damages under the Consumer Protection Act. And Frizzell hadn't compromised that by failing to keep her home off the market. Her case will now proceed in Superior Court.

    She certainly could use any money she gets from the case. Young says his client was rendered homeless by the foreclosure. The last he knew, she was living in an inoperable van she had found on Craigslist and parked at somebody's house.
Source: Even After Foreclosure Sale, Borrowers Can Sue Over Allegedly Deceptive Loans, Court Rules.

For the court ruling, see Frizzell v. Murray, No. 42265-4-II (Wn. App. Div. 2, August 28, 2012).

(1) The Consumer Protection Act is Washington State's version of the state laws that prohibit unfair and deceptive acts and practices in trade and commerce (generically referred to as state UDAP statutes). For more on UDAP statutes across the U.S., see Consumer Protection In The States: A 50-State Report on Unfair and Deceptive Acts and Practices Statutes.

Washington High Court: Irregularities In Following Statute Invalidates Foreclosure Sale; Experienced 3rd Party Winning Bidder At Auction Not A BFP

A May, 2012 ruling by the Washington State Supreme Court affirmed an intermediate appeals court ruling finding that:
  1. A trustee's sale under a non-judicial foreclosure proceeding taking place beyond the 120 days permitted by state law (RCW 61.24.040(6)) warrants invalidating the sale,

  2. Under the circumstances of this case, the homeowner/borrower did not waive the right to bring a postsale challenge for failing to utilize the presale remedies under RCW 61.24.130, and

  3. Without actually distinguishing/determining whether the sale was absolutely void, or merely voidable (it appears that the state Supreme Court was never asked to decide whether the sale was absolutely void, or merely voidable; the high court apparently just implicitly assumed that the foreclosure sale was voidable - calling it "invalid"),(1) the third party buyer at the foreclosure sale was not a bona fide purchaser ("BFP") and accordingly, was not entitled to receive title to the property on account of his winning bid.
Specifically, with regard to the status of the third party winning bidder at the foreclosure sale as a bona fide purchaser, the court made the following analysis:
  • ¶ 23 Despite the trustee's failure to strictly comply with the statutory requirements and in addition to the waiver argument, Dickinson contends he is a BFP and should receive title. While the trial court concluded that Dickinson was a BFP, the Court of Appeals disagreed. We agree with the Court of Appeals.

    ¶ 24
    Under RCW 61.24.040(7), the deed's "recital shall be prima facie evidence of [statutory] compliance and conclusive evidence thereof in favor of bona fide purchasers."[9] Whether Dickinson was a BFP is factual and legal inquiry.

    A BFP is one who purchases property without actual or constructive knowledge of another's claim of right to, or equity in, the property, and who pays valuable consideration

    But if the purchaser has knowledge or information
    that would cause an ordinarily prudent person to inquire further, and if such inquiry, reasonably diligently pursued, would lead to discovery of title defects or of equitable rights of others regarding the property, then the purchaser has constructive knowledge of everything the inquiry would have revealed.

    Thus, in considering whether a person is a BFP, we ask (1)
    whether the surrounding events created a duty of inquiry, and if so, (2) whether the purchaser satisfied that duty. In this determination, we consider the purchaser's knowledge and experience with real estate. Miebach v. Colasurdo, 102 Wash.2d 170, 175-76, 685 P.2d 1074 (1984).

    ¶ 25
    The facts pertaining to Dickinson's status are undisputed. We give, as did the Court of Appeals, substantial weight to Dickinson's real estate experience. Dickinson has extensive experience with nonjudicial foreclosure sales, purchasing 9 of his 13 properties at such sales. He familiarized himself with foreclosure law and knew enough about the process to obtain the notice of trustee's sale from a title company.

    ¶ 26 Dickinson had within his knowledge sufficient facts to put an experienced real estate purchaser, such as himself, on inquiry notice. He had a copy of the notice of trustee's sale, which listed the amount in arrears as only $1,228.03, suggesting Tecca had substantial equity in the property. CP at 530.

    Dickinson contacted Tecca, who refused to sell him the property and insisted the sale would not happen. Dickinson kept track of the numerous continuances and was surprised that the property was finally up for sale, five months after the date listed in the notice. The number of continuances, however, chilled the bidding process, contributing to the grossly inadequate purchase price.

    Although four or five bidders showed up to the original sale, only Dickinson and another bidder showed up at the actual sale. Dickinson was prepared to bid up to $450,000 for the property, showing he knew the property was worth at least that much. The substantial equity coupled with the minor default amount, Tecca's intention to keep the property, and the numerous continuances created a duty of inquiry, which Dickinson failed to satisfy.

    Given that he had already contacted Tecca once, Dickinson could have contacted Tecca again to determine whether default had been cured. Had Dickinson made a reasonably diligent inquiry, he could have discovered that the numerous continuances were tied to payments under the Forbearance Agreement.

    Because real estate investment was his livelihood, Dickinson should have taken more care with this purchase in order to claim BFP protection
    . We agree with the Court of Appeals and hold that Dickinson was not a BFP.
For the ruling, see Albice v. Premier Mortg. Servs., 174 Wn.2d 560, 276 P. 3d 1277 (Wn. May 24, 2012).

(1) Note that if the court had been asked to determine whether the sale was absolutely void, or merely voidable, and had it concluded that it was the former, it would have been unneccessary to determine a winning bidder's BFP status - one who would otherwise qualify as a BFP will never prevail if the foreclosure sale is found to be absolutely void.

DC High Court: Foreclosure Trustee 'Could' Be Liable For Damages For Failure To Call Off Sale When Homeowner Has Prospective Buyer For Property

From a Client Alert from the law firm Seyfarth Shaw:
  • On May 24, 2012, the District of Columbia Court of Appeals reviewing the Onyeoziri v. Spivok case determined that trustees under a deed of trust may be liable for interference with business relations if the trustees prevent the debtor from curing the default in a foreclosure proceeding.

    In this case, days before the scheduled foreclosure under a deed of trust, the debtor presented a copy of a contract of sale of the secured property to the trustees together with a letter prequalifying the buyer for a loan in an amount sufficient to pay off the secured indebtedness.

    The Court of Appeals determined that the evidence, taken in the light most favorable to the debtor, supported a finding that by following through with the foreclosure sale after the trustees were made aware of the debtor’s contract to sell the property, the trustees intentionally interfered with the contract for sale in a manner that, a jury could find, was unnecessary to protect the security interest.

    Specifically it was the trustees’ “unreasonable refusal” to permit the debtor to go forward with his contract for the sale of the property, and the trustees’ insistence on proceeding with the foreclosure sale that “interfered with [debtor’s] business relations with the prospective purchaser.”

    Although the Court acknowledged the right of a secured party to protect its interest in its collateral, it decided that the trustees clearly knew that they were impeding the debtor’s ability to perform the contract to sell the property, which would have covered the indebtedness and negated the necessity of the foreclosure sale.

Monday, September 03, 2012

So. Cal. Coupled Booked On $2.3M Bail After Pinch For Allegedly Hijacking Homes By Forging, Filing False Deeds; I.D./Grand Theft Charges Also Pending

From the Office of the San Bernardino County, California District Attorney:
  • A Fontana couple has been arrested and charged with 20 felony counts in connection with a real estate fraud scheme. Nick C. Lee, 42, and his wife, Chang-Li Wang, 45, both of Fontana, are charged with multiple counts of Forgery, Procuring and Offering False or Forged Instrument, Identity Theft, and Grand Theft of Personal Property.

    After receiving a fraud referral from the Los Angeles County Sheriff's Department, investigators from the San Bernardino County District Attorney's Office determined that in 2007, the suspects fraudulently filed false Deeds of Trust and Grant Deeds for properties in the cities of Fontana and Baldwin Park.

    Lee, a licensed real estate agent, and his wife Wang, are also suspected of assuming the identities of unsuspecting victims and using their credit profiles to obtain the residences and multiple credit cards. "They would use the fraudulent credit cards to initially pay mortgage payments prior to renting the homes out," said Senior Investigator Jamie Samaniego.

    Both Lee and Wang were arrested without incident on August 22, 2012, at their Fontana residence and booked at the West Valley Detention Center on $2.3 million each.
For the San Bernardino County DA press release, see Husband and Wife Charged with Real Estate Fraud and Identity Theft.

Joint So. Cal. Local/Federal Probe Ends With Bagging Of Suspect Alleged To Have Forged, Filed False Docs To Hijack Title To Recently-Foreclosed Homes

From the Office of the San Bernardino County, California District Attorney:
  • A 56-year-old man has been arrested and charged for defrauding banks and financial businesses by illegally filing fraudulent Grant Deeds on properties throughout San Bernardino County.

    David Alan Boucher is charged with 63 felony counts of Filing False Documents, Forgery and Identity Theft. If convicted as charged, he faces a maximum sentence of 16 years and 4 months in state prison.

    On the morning of July 28, 2012, Boucher was arrested at his Upland residence without incident by investigators from the San Bernardino County District Attorney’s Office Real Estate Fraud Unit. Other agencies involved in the arrest include the FBI, Riverside County District Attorney’s Office, and the Los Angeles Sheriff’s Department.

    Boucher locates properties that have been sold at foreclosure auction and currently belong to a lending institution. He then fraudulently signs Grant Deeds as the “Authorized Representative” of the bank, which has acquired the foreclosure home.

    After having the documents notarized, Boucher or one of his representative then records the Grant Deeds at the San Bernardino County Recorder’s Office. In some instances, after the fraudulent transfer of title, hard money loans are obtained on the properties. Boucher has fraudulently transferred approximately 20 properties in San Bernardino County, representing a property value of approximately $4.5 million dollars.

    District Attorney Investigators believe there may be additional victims. Members of the media are asked to share the following information: If you suspect that you been victimized by David Alan Boucher, or any of his associates, please contact the District Attorney’s Real Estate Fraud Unit at (909) 891-3519.

Sovereign Citizen Pair Among 4 Targeted By Indianapolis-Area Prosecutor In 3 Separate Cases Involving Alleged Vacant Home Title/Possession Hijackings

In Marion County, Indiana, WRTV-TV Channel 6 reports:
  • Four people have been charged in a real estate fraud scheme involving bad checks and renting out homes already in foreclosure. The Marion County Prosecutor's Office filed charges [] in connection with three separate cases in which suspects are accused of taking possession of homes that they did not own, and then renting them out for profit, Call 6 Investigator Rafael Sanchez reported.

    Shela Amos and Beverly Cannedy, who both worked with the Tertius Malachi & James Youth Foundation, claimed to own six homes and collected $19,000 from victims they purported to sell or rent the homes, according to the probable cause affidavit.

    Both Amos and Cannedy identified themselves as so-called sovereign citizens, a growing group of people who consider themselves exempt from obeying state and federal laws.

    Amos and Cannedy are each charged with two counts of corrupt business influence, two counts of burglary, six counts of forgery and six counts of theft.

    "The individuals who were duped into buying properties, not only are they out the money that they have provided to these defendants, but in the cases where these individuals believed they were buying a home, they actually moved in to the properties, put some work and improvements into the homes and obviously had that emotional investment as well," Marion County Prosecutor Terry Curry said. "So clearly, they're victimized."

    The second case Willie Hawkins, the former head of the Budget Property Group, who took possession of homes in foreclosure without the owners' consent, according to the affidavit.

    Hawkins rented out the homes and told his victims that he would negotiate with the banks to help them purchase the homes, although he never contacted the banks, investigators said. Seven people paid Hawkins nearly $40,000 as part of the scheme involving seven properties, according to the affidavit.

    Hawkins is charged with corrupt business influence, two counts of burglary, 10 counts of theft and three counts of evasion of tax.

    The third case involves Wendell Brown, also known as Menes Ankh-El, who produced fake deeds and claimed ownership of homes that were vacant, including one he was found living in, investigators said. Brown is charged with five counts of forgery, one count of theft and five counts of intimidation.

    "We also have reason to believe that other individuals have been victimized by these schemes, and we encourage citizens who believe they have been victims of fraud to come forward and report it to law enforcement or the Marion County Prosecutor's Office, so we can help prevent future crimes like these from occurring," Curry said.
Source: 4 Accused Of Illegally Renting Out Foreclosed Homes (Families Paid Thousands To Rent Bank-Owned Homes).

Vegas Scammer Pleads Guilty To Screwing Distressed Homeowners Out Of Upfront Fees In Exchange For Phony Loan Mod, Refinance Promises

In Las Vegas, Nevada, the Las Vegas Review Journal reports:
  • A Las Vegas man accused of defrauding distressed homeowners trying to refinance or adjust their home mortgages pleaded guilty [] in federal court.

    Alex Soria, 65, pleaded guilty to wire fraud in the mortgage scheme, which occurred between May 2008 and January 2010. He also pleaded guilty to theft of government funds in a separate scheme to illegally collect $208,106 in disability benefits from the U.S. Social Security Administration between 1990 and 2010.
  • Soria, who had worked in the mortgage lending business since about 1970, was indicted in April 2011. The indictment charged Soria with falsely telling homeowners that he was a loan officer with Amwest Capital and that he could help them get relief with their mortgages through two federal programs.

    He acknowledged in his plea agreement that he provided homeowners with phony letters sayng they were pre-qualified for a new loan and concealed from his clients that he was not licensed to act as a mortgage agent.

    When he applied for federal disability benefits in 1990, Soria indicated that cataracts and a kidney condition kept him from working. He acknowledged in his agreement that he continued to collect the benefits long after he returned to work in the mortgage business.

    Soria also is facing state charges in a mortgage and foreclosure scam.

Sunday, September 02, 2012

Outcome In Recent Florida Appeals Court Case Underscores Importance Of Obtaining Title Insurance When Buying (Or Lending Against) Real Estate

A recent news release from the law firm Trenam Kemker comments on a recent ruling by a Florida appeals court (Mayfield v. First City Bank of Florida, Case No. 1D11-3681 (Fla. 1st DCA, August 2, 2012)) that essentially said that a deed recorded for only 73 minutes before being 'erased' by the office of the local county recording office was enough to impart constructive notice to the public as to the ownership and lien status of a particular piece of real estate, notwithstanding the fact that anyone checking the public record after the erasure would never know of the documents' existence.

The news release makes the following three points that underscore the importance of a buyer obtaining a title insurance policy when buying real estate, thereby placing a title insurance company on the hook for a possible loss on account of a local county recorder's office screw-up:
  1. The Mayfields’ loss is exactly the kind of result that title insurance is designed to cover. Along with the risks of forgery, fraud, and other problems not disclosed by the public records, the title insurance company assumes the risk that a recording clerk will make a mistake in recording your documents, leaving the priority of your transaction unprotected. Don’t forego title insurance because you think you have a simple or routine transaction — such was the Mayfields’ transaction.

  2. Make sure that your title insurance commitment is marked or endorsed at closing to insure that your ownership is insured through the date and time of the closing. Thankfully, Florida has a statute that effectively requires the title insurance company to provide coverage as of this date if it is disbursing funds in connection with closing a transaction, but most real estate lawyers require the update notation or endorsement anyway.

  3. As a double check on the title insurance company, learn to use the online Official Records of the local clerk of circuit court, which, within a few days of closing in most counties, will enable you to see your recorded documents online in the county Official Records over the internet. In view of the Mayfield case, it may be a good idea to check the records again a few days or weeks later, to be sure that the recording hasn’t been cancelled. No kidding.

Texas-Based 'Burger & Fries Peddler' Files FDCPA Suit; Says Collector's Phone Calls Seeking To Squeeze Debt-Delinquent Employee Disrupted Operations

The Houston Chronicle reports:
  • Everyone hates harassing calls from unrelenting debt collectors, even the folks at Whataburger Restaurants. Exasperated officials at the San Antonio-based burger chain have gone to court in an attempt to stop persistent collections calls made to its corporate headquarters to get an unidentified employee to pay up on a debt allegedly owed.

    Whataburger last week sued NCO Financial Systems, saying the collection efforts of one of the nation's largest debt collectors "amount to a campaign of harassment against Whataburger that is unreasonable ... and reckless."

    H. Anthony Hervol, a San Antonio lawyer who defends individuals in debt-collection disputes, called Whataburger's action "very unusual."

    "I guess the word I would use is refreshing," Hervol said when asked for a reaction. "It's good to see that an employer would step in, rather than blame the employee - which is what debt collectors want them to do."

    In an email, Whataburger General Counsel Mike Gibbs would neither comment on the lawsuit nor share any information on the case or the unidentified employee. There were no details in the lawsuit about the type of debt or the amount allegedly owed.

    Privately held Whataburger employs 400 people at its headquarters. Overall, it employs more than 22,000. Calls to NCO in Horsham, Pa., were not returned.

    In the lawsuit, Whataburger claims the calls from NCO have kept coming despite a July 16 cease-and-desist letter to the company. More than 50 calls from NCO have been made to the restaurant company's toll-free number since June, the suit says.

    NCO's "disruptive conduct causes phone lines to ring, keeping the phone lines as well as Whataburger employees occupied and prohibiting (them) from performing their respective duties," the suit claims.

    It's common for collection companies to call debtors at their workplace, Hervol said.

    "One of the problems with debtor collectors is that they know if they try to collect at your place of employment, that you're going to worry about your job and somehow that's going to help them collect the debt," he said.

    Whataburger seeks unspecified actual damages - toll charges for long-distance calls to its headquarters - and punitive damages from NCO.

    Whataburger alleges NCO made at least 27 calls after the chain issued its cease-and-desist letter, violating the federal Fair Debt Collection Practices Act. For that, Whataburger says in the suit, the debt collector is liable for damages of up to $1,000 for each violation.

    NCO also is accused by Whataburger of violating the Texas Debt Collection Act, which carries a minimum $100 penalty for each violation. The suit was filed Aug. 16 in Bexar County District Court.

    NCO also has landed in authorities' cross hairs. Earlier this year, it agreed to change its collection practices as part of a settlement with 19 state attorneys general. It agreed to set aside $950,000, or $50,000 for each state, in restitution for eligible consumers.

    Texas was not part of that settlement. But in 2008, NCO resolved an enforcement action brought by the state over charges it "unlawfully made harassing and threatening phone calls to purported debtors," according to the attorney general's office.

    NCO, which has operations in San Antonio, is part of Expert Global Solutions, a publicly traded company that generated about $1.5 billion in revenue in 2011.

TX High Court Again Nixes Pipeline Outfit's Claim Of Eminent Domain Right To Take Farmer's Land; Checking Box On Gov't Form Not Enough To Invoke Power

The Southeast Texas Record reports:
  • [Texas] rice farmers and landowners breathed a collective sigh of relief [...], after the Texas Supreme Court denied a pipeline company’s second motion on rehearing in a case over its common carrier status.

    In 2009, Denbury Green Pipeline-Texas, claiming it was armed with the power of eminent domain, obtained a permanent injunction in Jefferson County District Court that stopped Texas Rice Land Partners from delaying construction of a pipeline running through private famers’ lands.

    Texas Rice Land Partners appealed the ruling, arguing that Denbury has its own interest at heart and not the public’s, court records show.

    Nonetheless, the Ninth Court of Appeals found that Denbury meets all the requirements of a common carrier, granting the company the right to take private lands for public use at below market prices.

    The case was appealed to the Texas Supreme Court and on Aug. 26, 2011, justices removed Denbury’s common carrier status and remanded the case, court records show.

    On Aug. 17, nearly a year later, the Supreme Court denied Denbury’s second motion on rehearing.

    The Court holds that to be a ‘common carrier’ carbon dioxide pipeline, and endowed by the Natural Resources Code with the power to exercise eminent domain for public use, it must do more than check a box on a government form,” wrote Justice Dale Wainwright in his concurring opinion.

    The right of private property is a fundamental right expressly protected in the constitution. The Court also holds that for a carbon dioxide pipeline owner to be a common carrier engaged in transporting the resource to or for the public, the pipeline’s only users must be more than a ‘corporate parent or affiliate.’

    Justice Wainwright was joined by Justice Phil Johnson.

    Denbury filed the second motion for rehearing solely on the issue of the breadth of the court’s use of the term “affiliate” under sections 111.002(6) and 111.019 of the Texas Natural Resources Code, the opinion states.

    Case background

    As the Record reported in June 2008, shortly after being informed that the police would be called if the pipeline company’s surveyors came anywhere near a rice paddy, Denbury Green filed its petition for an injunction against TRLP and Mike Latta in Jefferson County.

    That same day, Judge Donald Floyd, Jefferson County 172nd Judicial District, approved the TRO.

    On Jan. 5, 2009, Judge Floyd approved Denbury Green’s motion for summary judgment, granting the company full access to the farmer’s lands.

    Shortly afterwards, TRLP and Latta appealed, arguing that “the trial court erred … since TRLP showed proof that Denbury Green’s pipeline is a private carrier,” court papers say.

    Denbury Green has planned a 314 mile, 24-inch pipeline starting near the Texas-Louisiana border and ending at the Hastings Field located in Brazoria and Galveston counties. The pipeline will transport carbon dioxide (CO2), which will be injected into oil reservoirs to recover additional crude oil.