Saturday, November 10, 2012

Wells' Whistleblower Claims Foreclosure Retaliation After Providing Negative Testimony Against Outfit In Suit; Says Feds Used Her Affidavit To Score Big, Then Left Her Out To Dry

In Baltimore, Maryland, Baltimore City Paper reports:
  • A former Wells Fargo loan officer whose affidavit about company practices played a key roll in multiple lawsuits against the bank says her former employer is retaliating by illegally trying to take her Eastern Shore house in foreclosure.

    Elizabeth Jacobson has written to Federal Housing Finance Agency and other regulators, claiming that Wells Fargo, which services the loan on the $529,000 house she bought in 2007, returned all seven of the payments she made under a government-sponsored loan workout. She was scheduled to face a foreclosure hearing on Nov. 5.

    I was denied [a loan modification] five days after the president of Wells Fargo testified before Congress that he had read my affidavit,” Jacobson says. “I contend they singled me out by returning the payments.”
  • Jacobson’s affidavit—made part of Baltimore City’s landmark suit against Wells Fargo—said the company paid her and others bonuses for targeting high-interest loans to African-Americans and Hispanics. Wells Fargo settled the case last summer for an estimated $175 million (“Bank Payback,” Mobtown Beat, July 18). The company admitted no wrongdoing. It has always said that Jacobson’s charges were false.

    When she worked for Wells, Jacobson said she earned six figures routinely, clearing $700,000 in 2004. After she left the company and blew the whistle, her financial status changed. Today she and a partner operate a foreclosure consultancy company from the Eastern Shore.

    We’re admitted as bank foreclosure examiners and loan securitization auditors,” Jacobson says by phone from the passenger seat of her partner’s car. “In six or seven circuit courts in Maryland we’re admitted as experts.”
  • Armed with knowledge of sloppy foreclosure practices, Jacobson says she plans to fight her former employer on every front. “I want the foreclosure to be dismissed, then I want to go after Wells Fargo under the civil rights laws,” she says. “The DOJ [Department of Justice] used my affidavit to settle that big lawsuit . . . [then] they left me out to dry.”
For more, see Whistleblower Blowback (Wells Fargo employee who exposed questionable practices faces foreclosure).

Fracking: Study Suggests Home Values For Property Using Local Groundwater For Drinking Are Taking Hit In Areas Near Shale Gas Wells

In Washington County, Pennsylvania, McClatchy Tribune  reports:
  • Property owners near shale gas wells are liable to suffer a major loss in value because of worries over water contamination, according to economists from Duke University and the nonprofit research organization Resources for the Future.

    Their study found Pennsylvania homeowners who use local groundwater for drinking lost up to 24 percent of their property value if they are within a mile and a quarter of a shale gas well.

    But the news was far better for neighbors who get their water piped in. They saw values rise by nearly 11 percent, likely because of lease money from gas drillers and no worries about polluted water, the researchers found.

    The study is among the first attempts to measure the impact on property owners of the shale gas boom sweeping the nation. It comes as the need for new regulations is being hotly debated and shale gas critics allege people are getting sick from hydraulic fracturing, or fracking, the process in which high-pressure water and chemicals are injected underground to free up the natural gas in shale rock.

    There has been no scientific consensus determining that fracking pollutes groundwater. But the fear is enough to drive down property values, suggests the study, which was recently released by the nonpartisan National Bureau of Economic Research after being completed this summer. The researchers said the 24 percent drop in home values was driven by public perception instead of any actual data showing contamination.

    "The perception of how much risk there is of groundwater contamination from fracking is tremendous," said Lucija Muehlenbachs of the nonpartisan Resources for the Future, who conducted the study with colleague Elisheba Spiller and Chris Timmins, an economics professor at Duke University.

    The researchers looked at property values of all homes in Washington County, Pa., near Pittsburgh. It's an area at the heart of the shale gas revolution. They found just over 200 homes within a mile and a quarter of a shale gas well.

    About half the homes were on piped water. Researchers saw an increase in value in those homes. The other half relied on water wells that drew from local groundwater, and they had a significant loss in value. The researchers suggested that loss could lead to an increase in the likelihood of foreclosure in areas experiencing the rapid growth of hydraulic fracturing.

Out-Of-State Landlord Facing Foreclosure Tagged With Arrest Warrant Over Building Health/Safety Issues; Court-Ordered Receivership, Demolition Possible As Renters Wallow In Mire, Legal Limbo

In Lynn, Massachusetts, The Daily Item reports:
  • A New York woman faces arrest for failing to appear in District Court to address what a city attorney described as "significant fire concerns" and other problems in the Marianna Street apartment building she owns.

    The building's fire protection system "remains inoperable" and raw sewage in 122-126 Marianna St. is "endangering tenants," according to a city inspection report filed in court.

    "The biggest concern is significant fire concerns; they need to be attended to immediately," said city attorney Vincent Phelan.

    Phelan said Helen Doss, the Utica, N.Y. woman listed in court records as the building's owner, was served with an order last month to address problems in the building outlined in an Oct. 18 city complaint. District Court Judge Stacy Fortes issued a warrant for Doss' arrest last Thursday after she failed to attend a court hearing on a city failing to abate a private health nuisance complaint.

    "She's ignored orders from the Health Department," Phelan said. Attempts to locate and contact Doss on Monday were unsuccessful, but Phelan said Doss received a copy of the city cleanup order in person last month from city inspector Andrew Young.

    City Inspectional Services Department records detail an Oct. 17 complaint about no heat, mice, roaches and "many code issues" in 122-126 Marianna. Inspectors confirmed the complaints that day and a week later when Young outlined 14 violations in a letter listing Doss as the building's trustee.

    In addition to raw sewage, the letter noted missing smoke and carbon monoxide detectors, hanging and exposed wires, "excessive rodent feces in basement" and no current certificates of inspection for building apartments.

    Code violations carry a $1,000 fine and possible imprisonment, according to Young's letter.

    Phelan and Ward 3 City Councilor Darren Cyr said 122-126 Marianna faces foreclosure, and said the building and its owners are well known to the city.

    "Every few months I've got to call the Health Department because the neighbors call me. It's a blight on the neighborhood," Cyr said.

    He said the city has "several options" for dealing with the building and its problems. The building will be razed if the council passes a demolition order, and the city will take it over and collect rent from the tenants if officials seek court approval to take the property by receivership.

S. California Trio Bagged, Face 22 Felony Charges In Home Improvement Ripoff; Allegedly 'Rented' Legit Licenses From Contractors To Dupe Victims Into Scam That Performed Incomplete, Substandard Work

From the Office of the Ventura County, California District Attorney:
  • District Attorney Gregory D. Totten announced [] the completion of an 18-month investigation and filing of a felony complaint against Los Angeles residents Avi Hviv Gozlan (DOB 10/3/64), Ely Kavon (DOB 8/1/82) and Debra Lyn Mabrie (DOB 3/22/57). All three individuals are charged with 22 felonies, including grand theft, money laundering, elder abuse, conspiracy to contract without a license, and the aggravated white collar crime enhancement.

    The charges arise out of a fraudulent remodeling and home improvement scheme operating across Southern California under the names Amco, Inc., Liberty Construction, Universal Remodeling, VIP Home Design, Inc. and Vista Home Improvement, Inc.

    The defendants misled consumers into believing these companies were properly licensed with the Contractors State License Board by renting legitimate licenses from other contractors for a monthly fee. Gozlan's prior contractor's license was revoked by the Contractors State License Board in 2000. In reality, licensed contractors were not overseeing or participating in these contracting businesses.

    Through VIP Home Design, Inc. and the other companies identified above, Gozlan, Kavon and Mabrie are accused of selling home improvement services to consumers. They utilized a sophisticated network of telemarketers who were each required to make hundreds of telephone calls each day seeking out customers. Investigators have interviewed five victims to date who reside in Ventura County, three of whom are elders. Their losses exceed $145,000.

    Salespeople and telemarketers from these businesses proposed home improvement work that they never intended to complete, or offered services they ultimately failed to provide. Much of the work performed was substandard or resulted in overbilling for tasks that were never done.

Scammer Gets Three Years For Role In Conspiracy That Ripped Off Snoozing City Housing Authority Of $1.4M

From the Office of the U.S. Attorney (Baltimore, Maryland):
  • U.S. District Judge William D. Quarles, Jr. sentenced Tyeast Brown, a/k/a Peaches, age 41, of Washington, D.C., [] to three years in prison followed by four years of supervised release for conspiring to commit bank fraud in connection with a scheme to steal over $1.399 million from a Housing Authority of Baltimore City (HABC) bank account in just a few months. Judge Quarles also entered an order requiring Brown to forfeit and pay restitution of at least $1,399,700.

    The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Stephen E. Vogt of the Federal Bureau of Investigation.

    According to her guilty plea, Brown conspired with others in a scheme to steal money from the HABC. With Brown’s knowledge, in May of 2010, co-defendant William Darden used co-defendant Keith Daughtry’s identity to obtain a fraudulent driver’s license in Daughtry’s name, but bearing Darden’s photograph. The fraudulent driver’s license was made so that if law enforcement were to locate Daughtry through the fraudulent license’s use, Daughtry could claim that his identity had been stolen.

    On May 25, 2010, Darden used the fraudulent driver’s license to open a bank account for an entity called Keith Daughtry Contracting LLC. Shortly thereafter, substantial amounts of funds illegally diverted by Brown’s conspirators from a HABC bank account were electronically transferred into the Daughtry LLC bank account, even though Daughtry LLC had never provided any services to the HABC requiring compensation.

    Investigators have determined that the conspirators were responsible for transferring at least $1,399,700 stolen from HABC’s account into Daughtry LLC’s account between July and September 2010.
  • Brown recruited a number of individuals, mostly young women, who during the summer of 2010 opened debit cards in their own names. Several hundreds of thousands of dollars in stolen HABC funds were transferred from the Daughtry LLC account onto these debit cards. Brown then directed her recruits to withdraw most of these funds off the debit cards through cash withdrawals, and demanded that the recruits provide her with this cash, though she permitted them to keep amounts for themselves.

    Brown, in turn, divided the cash with her conspirators. Brown periodically checked the account balances on the debit cards in her recruits’ names.. Brown admits that she is responsible for over $1 million in losses as a result of her participation in the conspiracy.

    Keith Eugene Daughtry, age 50, and William Darden, age 45, both of Washington, D.C., pleaded guilty to their role in the scheme. Daughtry was sentenced to 41 months in prison and ordered to forfeit and pay restitution of $1,399,700. Darden is awaiting sentencing.

Friday, November 09, 2012

California Jury Belts Loan Modification Scammer With 14 Felony Convictions That Include Grand Theft, Filing Forged Instrument, Foreclosure Consulting Fraud, Money Laundering

In Ventura, California, the Ventura County Star reports:
  • A jury [] found a 66-year-old woman guilty of felonies stemming from a loan modification scheme in which Ventura County homeowners were tricked out of thousands of dollars, according to prosecutors.

    Laura Cecilia Carlson, of Hacienda Heights, faces more than 11 years behind bars. Bailiffs took her into custody after the verdicts were read. In an interview, prosecutor Dominic Kardum said Carlson was convicted of 14 felonies that included foreclosure consulting fraud, grand theft, filing a forged instrument and money laundering.

    Carlson showed no emotion as she stood by her lawyer while the verdicts were read. Carlson, who is a licensed real estate agent, and others were arrested in January 2011.

    Carlson ran the business as Global Team Consulting. She trained employees and collected thousands of dollars in upfront fees from clients after promising to reduce the principal and monthly mortgage payments. Prosecutors say the clients got no services and lost thousands of dollars and their homes.

    Kardum said co-defendant Victoria Santos, of Oxnard, advertised on Spanish-language radio stations to target predominantly Spanish-speaking immigrants.

    There were eight victims, and most lost their homes to foreclosures as a result of the scheme, he said.

    "One victim in particular worked in the strawberry fields in Oxnard, picked strawberries and saved for years and years," Kardum said. "She saved thousands of dollars, bought a home and was actually current in her mortgage payment when she met these defendants, the criminals."

    Victims were told to stop making mortgage payments and pay the fraudulent company. These payments went into Carlson's bank account, from which she withdrew hundreds of thousands of dollars, Kardum said.
  • Three co-defendants have been convicted of felonies, Kardum said. They are Santos; Juan Alvarado Cervantes, of Los Angeles; and Felipe Carlos Segovia Castro, of Los Angeles. Margie Joanna Vargas, of Orange, pleaded guilty to a misdemeanor.

Nevada Litigation Continues To Escalate In Controversy Around Aggressive HOA Tactics When Filing Liens For Unpaid Assessments & Allegedly Inflated 'Collection Costs' On Foreclosed Homes

In Las Vegas, Nevada, Vegas Inc. reports:
  • The Nevada Supreme Court may soon be asked to weigh in again on the issue of past-due homeowner association assessments and fees levied against buyers of foreclosed homes.

    Attorneys for the Southern Highlands Community Association, in a bid to short-circuit an existing class-action lawsuit over those fees, last week told Clark County District Court Judge Susan Scann that they will appeal one of her rulings in the suit.

    The ruling at issue was favorable to investors in foreclosed homes and homebuyers suing the HOA over the fees.

    The investors, represented by Las Vegas attorneys James Adams and Puoy Premsrirut, in recent years have sued hundreds of Nevada HOAs and their collection agencies in state and federal court and before the state Real Estate Division.

    The investors’ attorneys claim HOAs and their collection agencies regularly file inflated liens against foreclosed homes to recover not just excessive past-due monthly HOA assessments that accumulate while the homes sit vacant, but unauthorized collection costs for those assessments as well.

    The liens must be paid off for the investors and other buyers to obtain titles to the homes.

    The investors claim state law and sometimes HOA governing documents limit the liens to an amount equaling six or nine months of assessments depending on the circumstances.

    In one recent suit, for instance, the investors said a party purchased a home in Spring Mountain Ranch and was required to pay off an HOA lien against the home of $5,895. They said state law limited the HOA’s lien authority in that instance to $357, with the remainder representing an "unlawful lien amount."

    The investors say this pattern of alleged overcharging has been repeated thousands of times at scores of HOAs, potentially subjecting the HOAs to significant damages.
For more, see HOA fee issue likely headed back to Nevada Supreme Court.

In a related story, see B of A sues 28 Nevada HOAs, collection agencies in lien dispute:
  • Bank of America is suing 28 Nevada homeowner associations and their collection agencies in the continuing dispute over charges that HOAs have been hitting homeowners and buyers of foreclosed homes with inflated bills for past-due assessments and collection costs.

HOAs Feel Budget Squeeze As Foot-Dragging Foreclosing Banksters Play 'Waiting Game' When Recording Deeds On Repossessed Homes

In Charlotte, North Carolina, WSOC-TV Channel 9 reports:
  • Since the recession hit, thousands of area homes have fallen into foreclosure and disrepair. Yards have been left overgrown; houses have been left abandoned. But there's another unexpected kind of fallout that's causing big problems for homeowners associations across the Charlotte area.

    It's pervasive,” said Tim Sellers, a real estate attorney. “It's happening with such frequency that it’s becoming a common practice.”

    Sellers, who represents hundreds of homeowners associations, is talking about chronic delays in recording deeds after a foreclosure sale.

    Under North Carolina law, a foreclosure trustee is supposed to officially record the names of banks or federal agencies like HUD when they take back homes. And it's supposed to be done right after the final report of the foreclosure. Too often, that's not happening.

    A house in the Waterlyn neighborhood in south Charlotte was sold in foreclosure in April 2010. But when Eyewitness News searched county records with Register of Deeds David Granberry, we found the deed wasn’t recorded until August 2012, more than two years after the foreclosure sale was final.

    At a house in north Mecklenburg County, it's even worse. The foreclosure sale was final in August 2010, but a new deed still hasn't been recorded.

    We're talking months and years in some cases,” Sellers said. “It's ridiculous.” "And HOAs are getting caught in the middle?Eyewitness News asked. “Absolutely in the middle,” he said.

    When Eyewitness News began our investigation six months ago, we talked with Jeannie Welch with the Becton Park HOA. “Together it's over $16,000,” she said.

    It took Welch's Becton Park neighborhood two years to collect that much in unpaid HOA fees related to foreclosures, which delayed projects like new roofs and fences. “Is there a big impact for communities?Eyewitness News asked. “Yes, I would say so, especially for us -- a moderate-income community,” Welch said. “We have to set our budget based on the theory that everyone will pay their dues.”

Thursday, November 08, 2012

Fla. Appeals Court: F'closing Lender Must Prove Note Ownership As Of Filing Date; Nixes Retroactive Mortgage Assignments; Says One Year TILA Limitations Statute Inapplicable When Recoupment, Setoff Raised As Defense

In Fort Lauderdale, Florida, the South Florida Sun Sentinel reports:
  • A foreclosure sale isn’t necessarily the end for some homeowners, as one South Florida couple has found.

    An appeals court last week sided with Cesar and Ruth Vidal, who appealed a Broward County Circuit Court ruling granting a lender’s right to repossess their North Lauderdale home.

    The home was sold to a third party at a foreclosure auction in April 2011, but the Fourth District Court of Appeal ruling means that the foreclosure must be overturned, said John H. Ruiz, the couple’s Miami lawyer.

    The appeals court also ruled that the Vidals could continue to seek damages and try to have the mortgage canceled on the grounds that the lender, Liquidation Properties Inc., allegedly violated the federal Truth in Lending Act, Ruiz said.(1)

    He said both rulings could be precedent-setting and have the potential to affect thousands of other foreclosures in Florida. “This is a victory for homeowners in a huge way,” he said.
  • In late 2010, several big lenders temporarily stopped filing thousands of foreclosures nationwide while they investigated possible paperwork errors. Bank employees admitted to signing foreclosure affidavits without reviewing them.

    In the furor that followed, homeowners and their lawyers accused lenders and judges of rubber-stamping foreclosures and compromising defendants’ rights to due process.

    Some homeowners say banks lost the mortgages and improperly submitted back-dated paperwork in an effort to show ownership.

    In the Vidal case, the Broward court ruled that Liquidation Services proved its right to foreclose. But the Fourth District Court of Appeal disagreed, saying the lender didn’t produce an affidavit showing it owned the mortgage prior to filing the foreclosure, as required by law.(2) Lawyers for Liquidation Services could not be reached for comment.

    In filing a mortgage foreclosure suit ... it is incumbent on the plaintiff to be in a position to prove he, she, or it owns and holds the note as of the date suit is filed,” the appeals court wrote.
For the story, see Broward couple wins appeal after house is foreclosed.

For the ruling, see Vidal v. Liquidation Properties, Inc., No. 4D10-3358 (Fla. App. 4th DCA October 31, 2012).

(1) In connection with the alleged violations of the federal Truth in Lending Act, the central point was whether the statute's one year statute of limitations applied when the issue of recoupment was raised by the homeowner. According to the Florida appeals court:
  • The trial court held the affirmative defense of violations of the Truth in Lending Act was legally insufficient because the statute of limitations under that Act had run.

    Federal law imposes a three-year statute of limitations from the consummation of the transaction on any action for rescission under the Truth in Lending Act. 15 U.S.C. § 1635(f) (2006); Dove v. McCormick, 698 So. 2d 585, 587 (Fla. 5th DCA 1997).

    A one-year statute of limitation from the date of violation of the Act applies to actions for recoupment. 15 U.S.C. § 1640(e). However, when recoupment and setoff are raised as a defense, the one-year statute of limitations does not apply. Title 15 U.S.C. 1640(e) states:

    'This subsection does not bar a person from asserting a violation of this subchapter in an action to collect the debt which was brought more than one year from the date of the occurrence of the violation as a matter of defense by recoupment or set-off in such action, except as otherwise provided by State law."

    The Vidals' affirmative defense seeking recoupment damages and set-off for Truth in Lending violations was not barred an the statute of limitations set forth in the Truth in Lending Act. Liquidation filed no sworn statements showing the defense was not valid. The failure to rebut a properly raised affirmative defense precludes the entry of summary judgment in favor of Liquidation. Servedio v. US Bank Nat'l Ass'n, 46 So. 3d 1105, 1107 (Fla. 4th DCA 2010).
(2) The court addressed this point in the following excerpt:
  • While Liquidation filed the original note and an allonge to the note endorsed in blank, the allonge is not dated, and Liquidation did not file an affidavit demonstrating that the note was transferred prior to the filing of the complaint.

    The assignment of mortgage reflects transfer of only the mortgage, not the note. Although the Assignment of Mortgage was sworn to on February 6, 2009, and states "ASSIGNMENT EFFECTIVE AS OF 01/15/2009," two inferences can be drawn from the effective date language. One could infer that ownership of the note and mortgage were equitably transferred to Liquidation on January 15, 2009, but one could also infer that the parties to the transfer were attempting to backdate an event to their benefit.

    Because the language yields two possible inferences, proof is needed as to the meaning of the language, and a disputed fact exists. Soncoast Cmty. Church of Boca Raton, Inc. v. Travis Boating Ctr. of Fla., Inc., 981 So. 2d 654, 655 (Fla. 4th DCA 2008).
In a footnote, the court briefly addressed the possible use of backdated assignments by foreclosing lenders to cover up their screwups:
  • Allowing assignments to be retroactively effective would be inimical to the requirements of pre-suit ownership for standing in foreclosure cases.

Closing Agent Gets Two Years After Admitting To $680K+ Escrow Account Ripoff Of Cash Intended To Pay Off Existing Mortgage Liens

From the Office of the U.S. Attorney (Baltimore, Maryland):
  • U.S. District Judge Ellen L. Hollander sentenced Sandy P. Kim, age 43, of Ellicott City, Maryland, [] to two years in prison followed by three years of supervised release for wire fraud. Judge Hollander also entered an order that Kim forfeit $684,283, the amount Kim stole from mortgage escrow accounts.
  • According to her plea, from 2005 to 2008, Kim was an agent for a title insurance company, and was the owner and chief operating officer of EK Settlements. Kim was required to maintain an escrow account for EK Settlements in order to receive real estate settlement funds from buyers and pay off mortgage lenders.

    Starting in 2006, Kim stole money from the escrow accounts to pay her personal bills, including taxes and private school tuition for her children. She also used the stolen funds to pay prior loans she had failed to pay off, in order to forestall discovery of her theft.

    On August 20, 2007 Kim performed a closing for a client and caused $175,136 to be wired to an account she controlled. Instead of paying off the client’s prior mortgage, Kim used the money for her own purposes. To conceal the theft, she made several monthly mortgage payments to the prior mortgage lender.

    In 2008 when the title insurance company began to suspect problems and sought to audit her accounts, Kim submitted fraudulently altered bank records. When subsequently interviewed by law enforcement, she admitted to the scheme.

    Kim stole a total of $684,283 from the escrow accounts which were intended to pay off mortgage lenders.

Ohio AG Targets Outfit In Lawsuit Alleging Loan Modification Ripoffs In Response To Complaints Received From Approx. 150 Consumers Nationwide

From the Office of the Ohio Attorney General:
  • Ohio Attorney General Mike DeWine [] announced a lawsuit against Ryan Zimmerman, Consumer Advocates Group Experts, LLC, and Advocates for Consumer Affairs Experts, LLC for violations of Ohio's consumer laws, including failure to deliver and failure to provide refunds for home loan modification assistance. DeWine seeks consumer restitution, injunctive relief, and civil penalties.
  • Ryan Zimmerman, previously of Culver City, Calif., operates Consumer Advocates Group Experts and Advocates for Consumer Affairs Experts. Through online advertising and telephone and mail solicitations, the businesses offered to help consumers avoid foreclosure by working with the consumers' lenders to negotiate a loan modification or otherwise adjust their debt. After accepting the payments, the businesses did little or no work to help consumers. The businesses also failed to provide refunds.

    The Ohio Attorney General's Office, the Better Business Bureau, and Consumer Sentinel have received approximately 150 consumer complaints nationwide against the businesses. In their complaints, consumers state they paid up-front fees for the loan modifications ranging from $1,875 to $2,700.

    The Ohio Attorney General's lawsuit charges the defendants with multiple violations of the Consumer Sales Practices Act, including failure to deliver and failure to provide refunds. Additionally, it charges the defendants with violating the Debt Adjusters Act and the Telephone Solicitation Sales Act.

Wednesday, November 07, 2012

Closing Attorney Gets 51 Months For Ripping Off $3M+ From Trust Account; Loot Intended For Loan Payoffs, Lien Satisfactions

From the Office of the U.S. Attorney (Boston, Massachusetts):
  • A Falmouth man who practiced law in Taunton was sentenced [] for bank fraud in connection with mortgage closings.

    Craig J. Martin, 54, was sentenced by U.S. District Judge Patti B. Saris to 51 months in prison, to be followed by two years of supervised release and $2.9 million in restitution. On Feb. 3, 2012, Martin pleaded guilty to two counts of wire fraud.

    Martin, in his role as a closing attorney for real estate transactions, received mortgage loan funds from lenders, which were to be held in his attorney trust account and used for the closings. As closing attorney, Martin was responsible for using the loan proceeds to pay off the existing mortgages on the properties.

    But instead, Martin diverted more than $3 million in mortgage funds to other purposes and falsified the loan closing documents to conceal his misappropriation of the funds.
For the U.S. Attorney press release, see Former Falmouth Attorney Sentenced for Bank Fraud.

Threats From Foreclosed Former Owner Keep Recent Home Buyer, Family From Moving Into Recently-Purchased REO

In Columbus, Ohio, The Columbus Dispatch reports:
  • Xavier Salek worked a decade to save enough money to buy his first house. Now he and his family are too terrified to move in.

    Salek’s story should be one of triumph. Instead, it illustrates an ugly aftermath of the housing collapse.

    Salek moved to Columbus a decade ago, a 28-year-old refugee from violence-torn Mauritania in western Africa. During the next several years, he delivered packages, slowly putting money away to buy a home for his family.

    After saving $15,000, he found a house in foreclosure on the Northeast Side with the help of real-estate agent Lyuda Dehlendorf. He borrowed $3,000 from friends and, in late September, paid $18,000 cash for the 1,000-square-foot, three-bedroom ranch. Although the house needs work, he was excited by the idea of having something of his own in America. He liked to think of his two young children playing in the spacious backyard.

    Salek hired friend and fellow Mauritanian Ali Kane, a construction worker, to help renovate the house. Shortly after Kane arrived at the home to start the work, Kane said, a man pulled up in a black pickup truck, hopped out and told him that he was the rightful homeowner and that Salek’s purchase was a “fraud.”

    He said he used to live here,” Kane recalled. “He started talking about how people get shot for moving into other people’s homes.” Kane passed along the exchange, which he took as a thinly veiled threat, to Salek and his wife.

    The family was so alarmed that they refused to move in. (In talking to me for this column, Salek asked that the address and his real name not be used, because he fears what the man might do.)

    Salek called Dehlendorf to see whether he could get his money back. She said no and urged him to call the police. Columbus Police Sgt. David Pelphrey confirmed that Salek should file a report. The next step, if the harassment continues, might be to seek a restraining order.

    Dehlendorf assured Salek that he and his wife are the rightful owners of the home. A title search had revealed nothing unusual, no competing claims.

    According to a neighbor, the description of the man in the pickup matches that of the former owner, who, along with his wife, lost the home earlier this year after failing to make payments on the mortgage.

    The former owner’s anger reflects the lingering bitterness — taken to the extreme — among homeowners who’ve lost homes to foreclosure.

Nebraska Supremes Nix Forced Sale Of Deceased Owner's Multiple Tracts Of Land Where In-Kind Distribution To Heirs Was Feasible; Cash Equalization Ordered To Reflect Varying Values

From a summary of a recent court decision by the Nebraska Supreme Court: appearing in Justia US Law:
  • This was an action for partition of the real property in the estate of Ronald McKillip. At the time of his death, McKillip owned four tracts of land.(1) McKillip's will left the property to his three daughters,(2) "share and share alike."

    The probate court confirmed ownership of the real estate to the daughters in equal shares. One daughter brought an action to partition the real estate. A referee appointed by the county court determined that a partition in kind of the real estate was not possible and recommended a public sale.

    The court approved the report and concluded that the real estate could not be partitioned in kind "without great prejudice to the owners." The court ordered the referee to sell the real estate, and the personal representative appealed.

    The Supreme Court reversed, holding that the real estate should be partitioned in kind.(3) Remanded with directions.
Source: Opinion Summary: In re Estate of McKillip.

For the ruling, see In Re Estate of McKillip (aka Shields v. McConnville), 284 Neb. 367 (Neb. September 21, 2012).

(1) The four tracts of unequal values are described in the ruling as follows:
  • Tract 1 is a 5-acre rural residential property with a house on it. The property is close to McCook, Nebraska, and shares a water well with tract 2. Tract 1 was valued at $190,000 by the court. The amended inventory valued the property at $196,000, as adjusted for roof repairs.

    Tract 2 consists of pastureland (62.74 acres) and cropland (19.49 acres). It was valued at $102,000. Tract 2 could be developed as a subdivision or rural lots. Tracts 1 and 2 are adjoining, and a well on tract 1 is used to water livestock on tract 2.

    Tract 3 is about 6 miles from the Kansas state line. It contains mostly cropland, but also some marginal pastureland. Water for livestock is available from a neighboring property. Tract 3, which consists of approximately 161 acres, was valued at $124,000.

    Tract 4 is 2 miles north of the Kansas state line and a few miles southwest of tract 3. Tract 4, which totals approximately 240 acres, consists of dryland fields and pastureland. A windmill and two dams provide water for livestock. It was valued at $143,000.
(2) From the ruling:
  • At the time of his death, McKillip was survived by three daughters: Sandra K. McConville, Cinthia S. Shields, and Laura Klaus. McKillip's will left his estate to his daughters "share and share alike." The estate included four tracts of real estate valued at $565,000 in the amended inventory, as well as cash and certificates of deposit in excess of $720,380. McConville was named personal representative of the estate.
(3) The Nebraska high court ruled as follows:
  • [14,15] It is generally held that until the contrary is made to appear, the presumption prevails that partition in kind is feasible and should be made, and that the burden is on those who seek a sale of the property in lieu of partition in kind to show the existence of a statutory ground for such sale. See Trowbridge v. Donner, supra. A sale in partition cannot be decreed merely to advance the interests of one of the owners, but before ordering a sale, the court must judicially ascertain that the interests of all will be promoted. See id.

    In this case, there was no dispute as to what property constituted the assets in the estate. There was no dispute as to the value of the real estate, and there was no claim that the value of the real estate as one parcel was greater than the value of the sum of the individual tracts. There was evidence that two of the devisees, McConville and Klaus, wanted to retain the real estate for personal and sentimental reasons. Shields requested a partition and testified that she wanted the distribution of the real estate to be fair.

    [16] The statutory ground for a sale is a showing that partition cannot be made without great prejudice to the parties. See Neb. Rev. Stat. §§ 25-2181 and 25-2183 (Reissue 2008). The generally accepted test of whether a partition in kind would result in great prejudice to the owners is whether the value of the share of each in case of a partition would be materially less than the share of the money equivalent that could probably be obtained for the whole. Trowbridge v. Donner, 152 Neb. 206, 40 N.W.2d 655 (1950) (citing 40 Am. Jur. Partition § 83 (1942)).

    Whether partition in kind will result in great prejudice to the parties requires comparing two amounts. The first is the amount an owner would receive if the property were divided in kind and the owner then sold his portion of the property. The second is the amount each owner would receive if the entire property were sold and the proceeds were divided among the owners. If the first amount is materially less than the second amount, great prejudice has been shown. See id.
The court directed that the four tracts real estate (of unequal values) contained in the estate of the sisters' deceased father to be split up in kind, rather than sold by public sale, stating the following:
  • The facts necessary for a partition in kind are not in dispute. The appraiser's valuation of the property is not contested, nor is his testimony that sale of the tracts as a whole would not bring a greater amount than sale of the tracts individually. All the property, both real and personal, is to be divided equally among the sisters.

    We reject McConville's proposed distribution in kind for the following reasons: Tracts 1 and 2 should not be separated. Separating 19.49 acres is not practical and would create more problems than it would solve. A well on tract 1 provides water to tract 2, and separating tracts 1 and 2 would require arrangements for tract 2 to continue to utilize the well on tract 1 or would necessitate the expense of drilling a new well on tract 2, which may not be feasible.

    Accordingly, tracts 1 and 2 should be awarded to one of the devisees. Tract 3 should be awarded to another devisee along with cash from the estate. Tract 4 should be awarded to the remaining devisee along with cash from the estate. The amended inventory of the estate shows that tracts 1 and 2 are valued at a total of $298,000 ($196,000 and $102,000 respectively). (We employ the figures from the amended inventory to account for $6,000 in roof repair to the house on tract 1 not covered by the appraisal.) Tract 3 is valued at $124,000, and tract 4 is valued at $143,000.

    The estate contains cash assets in the amount of $720,380.42, and the will directs that the personal property be divided among the devisees. For purposes of this partition, each sister should receive $298,000 in real estate or a combination of real estate and cash from the estate to equalize the distribution. This is accomplished by awarding one sister tracts 1 and 2, one sister tract 3 and $174,000 in cash assets, and the third sister tract 4 and $155,000 in cash assets. Following these distributions, each sister will have received $298,000 from the estate, either in real estate or real estate and cash. Cash assets of $391,380.42 will remain in the estate for later distribution along with other assets of the estate.

    Because the county court did not partition the property in kind, it did not consider which sister should receive which tract. Accordingly, the cause must be remanded to the county court with directions to distribute tract 1 and 2 to one sister, tract 3 and $174,000 to one sister, and tract 4 and $155,000 to one sister in order to equalize the distributions of the real estate using cash from the estate.

    If the parties cannot agree as to which distribution should be made to each devisee, the court is directed to have the clerk of the court number the shares and then draw the names of the future owners by lot. See Neb. Rev. Stat. §§ 25-2182 and 25-21,102 (Reissue 2008). Section 25-2182 gives a trial court the power to allot particular portions of the land to particular individuals, and unless so allotted, the shares may be drawn by lot, as provided by § 25-21,102. See Trowbridge v. Donner, 152 Neb. 206, 40 N.W.2d 655 (1950).

Tuesday, November 06, 2012

Foreclosure Review Consultants Scoring Big From National Bankster Mortgage Settlement; Screwed Over Homeowners: Not So Much

American Banker reports:
  • In the wake of the financial crisis, banks mishandled foreclosures on such a scale that regulators stepped in. Led by the Office of the Comptroller of the Currency, they ordered banks to hire independent outsiders to identify homeowners who were wrongly foreclosed on and to provide compensation.

    Instead of righting a large-scale wrong, however, the "lookback" reviews have become nearly as controversial as the original servicing blunders. Consumer advocates have blasted the reviews as lacking in independence. They allege that regulators have allowed banks to subvert the program by choosing their reviewers, weighing in on whether borrowers were harmed and even appealing consultants' decisions.

    Obscured in the feuding is an issue potentially even more troubling than the questions about the consultants' independence: the cost of running the reviews has spiraled out of all proportion to their potential benefits.

    Designed to compensate wronged homeowners, the review programs are almost certain to deliver several times more cash to the consultants overseeing them. Bankruptcy filings by ResCap, the former GMAC mortgage servicer slated to be acquired by Ocwen, state that the company will pay consultant PricewaterhouseCoopers $12,500 to review each of 20,000 loans for a total cost of a quarter-billion dollars. Yet ResCap expects to pay only $35 million to $60 million to harmed homeowners.

    PwC employees working on the review are billing between $235 and $630 an hour, depending on seniority. The auditing firm declined to respond to emailed questions on the cost and its procedures.

    Other servicers appear to be paying foreclosure reviewers similar fees per file, and the OCC has offered no reason not to use ResCap's filings as a proxy for the costs of its peers. The massive bills being incurred indicate that the banks aren't calling the shots, industry sources argue — the institutions are simply following orders and footing the tab for a program that has gone off the rails

    "This is Kafkaesque," says an industry source who requested anonymity to avoid angering the OCC and independent reviewers. "The reviews don't provide any closure [to borrowers], and their cost is going to be orders of magnitude beyond what banks pay out."

Use Of 'Contracts For Deed' As Way To Skirt Regulations Raises Concerns For Minneapolis Housing Officials

In Minneapolis, Minnesota, Minnesota Public Radio reports:
  • Minneapolis officials and housing advocates are concerned about a trend in the housing market. They say more property owners are striking up informal "contract for deed" deals as a way to sell homes to people who don't qualify for loans.

    Some of these sellers are landlords the city says are using the arrangement to skirt safety and housing laws.(1)
  • The problem is that many buyers don't understand what they're getting into, according to Legal Aid attorney Luke Grundman. As credit continues to be tight, he said unregulated contracts for deed are fueling housing fraud in areas like north Minneapolis, where foreclosed homes come cheap.
  • As the number of contracts for deed rise, Acting Director of Regulatory Services Henry Reimer is concerned that landlords are using these deals to avoid regulations and rent without a license.

    "Then that means that we have people that are living in properties that might not be safe and folks that truly don't have the ability to control their environment not being provided with protections for which we require rental licenses," Reimer said.

    "They're not deals, they are steals," said north Minneapolis resident Nekia Tetter.

    Tetter and her fiance recently turned down their landlord's offer of a contract for deed. Tetter, 38, said her landlord lost his rental license and the house was in terrible condition. The city posted a red sticker warning of unpaid assessments on the property. Tetter worries that her neighbor, who accepted a contract for deed with the landlord, got a bad deal.

    "If you're poor and you feel like your landlord is saying 'oh my god I'm giving you a good deal and this is your home, now you own this, this is not mine anymore.' And a lot of people take this small garbage that they say instead of looking at the big picture," she said.

    To prevent more people from entering into contracts they don't understand, Minneapolis officials are surveying neighborhoods to find out how many contracts for deed are out there. Meanwhile, housing advocates are crafting legislation for next session they say would give more protection to contract for deed buyers.
For the story, see Beware of 'contract for deed' housing schemes, Mpls. officials warn.

(1) Contracts for deed can also provide a handy way for unscrupulous real estate investors to unload, onto unwitting novice home buyers, the burdens of owning crappy property that cannot be sold through conventional means due to a variety of problems (structural defects, title defects, environmental hazards (mold, methamphetamine contamination, lead-based paint, etc.)). The victims of these home-buys typically are too unsophisticated to appreciate the need for:
  • having a professional home inspection (structural & termite) conducted,
  • having a professional title search and property survey conducted, and
  • obtaining title insurance.

N. California Couple Wins 'Dual Tracking' Wrongful Foreclosure Suit, But Gets Hammered Anyway; Damages Limited To 'Lost Equity', Leaving Underwater Homeowners Empty-Handed

In Brisbane, California, the San Francisco Chronicle reports:
  • While Mark and Jenny Gin were making dozens of calls and submitting reams of paperwork to get a loan modification from OneWest Bank, another department of the bank proceeded to foreclose on their Brisbane home.

    That's not unusual. Thousands of homeowners have complained about such "dual tracking" - so many, in fact, that California will ban the practice starting Jan. 1, when the state Homeowners Bill of Rights takes effect.

    What distinguishes the Gin family is that they sued - and won. A San Mateo Superior Court jury last month found that OneWest acted fraudulently. Legal experts said it may be the first instance of a California jury finding that a bank committed wrongful foreclosure by dual tracking.

    However, the jury awarded the Gins just $13,500, which didn't even cover their legal expenses. To get the house back, they'd have to pony up the full amount they owe on the mortgage, which they can't do.

    A cautionary tale

    Their story is a cautionary tale that illuminates California's legal landscape for the many homeowners who feel they were wrongfully foreclosed upon. Even in the rare instances where borrowers prevail against banks in court, the rewards may not be worth their trouble.
  • His attorney, Steven Finley of San Francisco's Hennefer, Finley & Wood, explained the reasoning. The jury "found that the foreclosure was wrongful and fraudulent, but because the property was underwater, (the Gins) received no damages," he said. "Under wrongful foreclosure actions, you only get lost equity."

    California offers just two remedies for wrongful foreclosure, Finley said. One is damages, but they are limited to lost equity. The other is to get the house back, but that requires tendering all the money owed on the mortgage.

    "California really screws the borrower. If your house was wrongfully foreclosed and you want it back, you have to offer the whole amount," Finley said.

    The jury declined to award punitive damages. "Jurors said, 'We feel your client has been defrauded but it wasn't directed maliciously against him,' " Finley said.

    The $13,500 awarded to the Gins was to pay them back for a remodeling project they had started. With their first child on the way, they borrowed money from relatives to make the house more child-friendly after being assured by OneWest that they would receive a loan modification, Gin said.

Monday, November 05, 2012

Federal Judge: Pennsylvania Law Requires, Not Merely Permits, Recording Of All Mortgage Assignments; Refuses To Dismiss County Suit Tagging MERS For Failing To Cough Up Associated Recording Fees

From a client alert from the law firm Ballard Spahr:
  • A Pennsylvania federal court recently refused to dismiss a putative class action filed against Mortgage Electronic Registration Systems (MERS) by a county recorder of deeds seeking to compel MERS to record past, present, and future mortgage assignments and pay the associated recording fees.

    In Montgomery County, Pennsylvania, Recorder of Deeds v. MERSCORP, Inc., and Mortgage Electronic Registration Systems, Inc., the court interpreted Pennsylvania's recording statute to require, rather than merely permit, the recording of all conveyances.

    Although a mortgage is recorded naming MERS the mortgagee as nominee for the lender and its assigns, no assignment is recorded when the note secured by the mortgage is transferred to a new owner who is a MERS system member. Instead, the change in beneficial ownership is registered in the MERS electronic database.

Jury-Convicted South Florida Pair Who Ran Sale Leaseback, Equity Stripping Foreclosure Rescue Racket Get Multi-Year Prison Sentences

From the U.S. Department of Justice (Washington, D.C.):
  • Lisa Wright, 46, and Cathy Saffer, 52, of Pompano Beach, Fla., were sentenced [] to serve 66 and 60 months respectively for defrauding homeowners and mortgage lenders as part of a foreclosure rescue scheme, the Justice Department announced. The two women were sentenced by U.S. District Judge Kenneth A. Marra in the Southern District of Florida.

    Wright pleaded guilty on March 27, 2012, to one count of conspiracy to commit mail and wire fraud, one count of mail fraud and one count of wire fraud. Saffer was convicted of one count of conspiracy to commit mail and wire fraud, three counts of mail fraud and two counts of wire fraud, following a two week jury trial in July.

    According to the indictment and evidence presented at trial, Wright and Saffer operated Foreclosure Solution Specialists (FSS) from 2006 to 2009. Through FSS, Wright and Saffer targeted homeowners facing foreclosure, advertising that FSS could assist those homeowners in remaining in their homes.

    When contacted by distressed homeowners seeking assistance, Wright and Saffer misrepresented to those homeowners that their homes would be sold to investors. They also claimed that customers could remain in their homes after the sales and promised them an opportunity to repurchase the homes at a later date. Rather than selling the homes to legitimate investors, Wright and Saffer designed sham sales to straw purchasers whom they paid to participate in the scheme.

    According to the indictment and evidence presented at trial, Wright and Saffer paid Florida Certified Public Accountant Barrington Coombs to write a fraudulent letter which falsely vouched for the fraudulent information on various loan applications. Coombs, who was also convicted by the jury, is scheduled to be sentenced Dec. 7, 2012.

    Mortgage transactions completed by FSS drew equity out of the homes, which Wright and Saffer pocketed for their own purposes. After doing so, Wright and Saffer allowed the loans to go into foreclosure. Homeowners ultimately lost all of the equity in their homes, and most of the victims were forced to move out of their homes.(1)
For the Justice Department press release, see Two Florida Residents Sentenced for Roles in Foreclosure Rescue Scheme (As Part of Scheme Lied to Homeowners Facing Foreclosure They Could Stay in Their Homes).

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

Sacramento, Antitrust Feds Score 26th Guilty Plea In Ongoing N. California Foreclosure Sale Bid-Rigging Probe

In San Francisco, California, the San Jose Mercury News reports:
  • A Concord man has agreed to plead guilty to a conspiracy to rig bidding at public real estate auctions in the Bay Area, authorities said.

    Norman Montalvo, a real estate investor, was charged with four felonies Thursday in the U.S. District Court for the Northern District of California, according to an FBI news release. Montalvo is the 26th person who has admitted to a role in the conspiracy to rig bidding and fraud at the foreclosure auctions.

    Montalvo was also charged with using the mail to fraudulently acquire title to properties sold at auctions, to send and receive payoffs, and to send money to co-conspirators. Montalvo's role in the scheme began as early as June 2008 and lasted until about September 2010, according the FBI.

    By conspiring to purchase properties at non-competitive prices, Montalvo and others were preventing mortgage holders from getting fair prices for their properties, and in some, cases, keeping money out of the hands of defaulting homeowners, according to the FBI.

    Montalvo is charged with bid rigging and fraud at auctions in San Francisco and San Mateo counties, but the Department of Justice's antitrust investigation also covers auctions in Contra Costa and Alameda counties.
Source: Concord investor will plead guilty to foreclosure fraud, authorities say.

For the U.S. Department of Justice press release, see Northern California Real Estate Investor Agrees to Plead Guilty to Bid Rigging at Public Foreclosure Auctions (Investigation Has Yielded 26 Plea Agreements to Date).

Denver-Area Foreclosed Home-Snatching Suspect's Spouse Faces Felonies In Foreclosure Scheme; Hubby Faces Similar Allegations

In Denver, Colorado, The Denver Post reports:
  • The wife of a man already indicted by a Denver grand jury for violating Colorado's racketeering law now faces similar charges for her role in a scheme where the couple falsely bought and sold homes that didn't belong to them.

    Maria Carrillo, 50, is now charged with violating the Colorado Organized Crime Control Act and faces other felony counts of forgery, conspiracy to commit forgery and attempt to influence a public servant.

    Her husband Alfonso Carrillo, 50, now faces seven new counts for a total of 25 counts of theft, burglary and criminal trespass among others, according to the District Attorney's Office.(1)

    The indictment alleges that Alfonso Carrillo found homeowners facing foreclosure and convinced them to relinquish their property for a fee, misrepresenting it as a way to avoid foreclosure.

    Then he and Rudy Breda, 54, would falsify a sale of the properties to others, taking their money for the "purchase" even though later those "buyers" were forced to vacate the properties when mortgage lenders or actual property owners found them living in the homes.

    The scheme was targeting Spanish-speaking home buyers, often undocumented and reluctant to work aith investigators out of fear.

    Jose Caraveo and Veronica Fernandez-Beleta were originally named as co-defendants in the indictment, but charges have been dropped and they are now listed as victims of theft. Breda remains at large.

Sunday, November 04, 2012

WV AG Tags Out-Of-State Law Firm For Allegedly Duping Consumers Into Thinking They Must Pay Fees To Collect Benefits From Nat'l Mortgage Settlement

In Charles Town, West Virginia, The Associated Press reports:
  • West Virginia Attorney General Darrell McGraw is suing a Texas company for allegedly charging fees to receive benefits from a national mortgage settlement.

    Claim forms already were sent to more than 5,000 West Virginians who lost their homes to foreclosure eligible for payments under the settlement between lenders and states.

    But McGraw said Thursday that some companies have sought to profit from the settlement by misleading consumers into thinking they must pay a fee to obtain their checks.

    The attorney general's office sued Murray LLP and four individuals in Jefferson County Circuit Court. The suit asks the court to block Murray from taking 20 percent of consumers' money as a fee for completing the claim form.

    The company's phone number does not allow callers to leave a message.
Source: W.Va. AG sues law firm for exploiting consumers.

For the West Virginia Attorney General press release, see Attorney General McGraw Sues Texas Firm, Murray LLP, to Halt Exploration of Consumers Who Lost Homes Through Foreclosure (Suit Seeks To Block Murray From Charging Fees For Benefits From National Mortgage Settlement Intended To Be Free).

C. Florida Real Estate Operator Bagged Again For More Dubious Dealings With Homeowners; 3rd Arrest Since June, Now Held Without Bail

In Brooksville, Florida, the Tampa Bay Times reports:
  • A Brooksville man accused of trying to sell foreclosed properties he never legally owned to unsuspecting buyers(1) is in jail again, this time on a charge of selling real estate without a license, authorities said.

    Gaetano Antonelli, 62, was arrested Thursday after a detective, following up on a tip, witnessed Antonelli showing a home on Fairlawn Street in Spring Hill, the Hernando Sheriff's Office said in media release. During a traffic stop immediately afterward, Antonelli admitted he was there to show the property.

    His real estate sales license expired in 1999, investigators said.

    The woman who owned the home said she contacted Antonelli after seeing his "we buy homes" ad in a coupon booklet. She signed a contract with Antonelli to work for a profit, the Sheriff's Office said.

    This is Antonelli's third arrest since June. He already faces six counts of organized fraud and was out on bail at the time of his arrest Thursday.

    Investigators say Antonelli targeted homeowners facing foreclosure, telling them he could relieve them of their mortgages by suing their mortgage company. Antonelli told them they could walk away and maybe even get money back if they signed their deeds over to him by a power of attorney agreement, detectives say. Then he would list the houses for sale on Craigslist without the knowledge of the homeowners.

    But Antonelli's scheme was based on a false premise, detectives say: Once the foreclosure process begins, as it had in these cases, the owner has no legal right to sign over the deed to him.

    He remained in the Hernando County jail without bail Thursday. His vehicle and cash are being seized by the Sheriff's Office.

California Homestead Exemption: Automatic vs. Declared

California attorney Marlene S. Cooper writes in The Pasadena/San Gabriel Valley News Journal:
  • In these days of rampant debt faced by many of us, protecting the family home through a declaration of homestead could take on new significance.

    When financial obligations go unpaid, a person's creditor can go to court to seek payment of the debt. If a judgment is obtained against the debtor, the creditor can then file a judgment lien against the person's real estate, including the debtor's personal residence.

    Many times unsecured creditors simply wait for the house to be voluntarily transferred (or re-financed) and collect on the debt from the escrow proceeds; however, sometimes the house is sold involuntarily in foreclosure by the holder of a trust deed on the property or a sale is forced in execution of a money judgment.

    Homestead laws are designed to protect the sanctity of the family home against a loss caused by a forced sale of the home by creditors. It can ensure that insolvent debtors and their families are not rendered homeless by virtue of an involuntary sale of the residential property they occupy.

    The [California] homestead exemption can be obtained in two ways: (1) the automatic homestead exemption granted as a matter of law to every homeowner, and (2) an express declaration of homestead by the homeowner which is notarized and recorded with the county recorder.

    The amount of the exemption may be $50,000, $75,000 or $150,000 according to which statutorily-defined class of persons the homeowner falls into. The amount of equity protected is the same for each type of homestead exemption; however, they operate quite differently in terms of the protection afforded.

    The declared homestead provides much greater protection for the property owner than the automatic homestead.

    With the automatic homestead, the homeowner['s equity] is protected in the event of a forced foreclosure sale but not a voluntary sale. With the declared homestead, however, the exempt proceeds from a voluntary sale may be reinvested within six months, thus allowing the debtor to invest in another residence.

    With the automatic homestead, judgment liens attach to all interests in the property that are subject to the enforcement of money judgments. For the declared homestead, however, a judgment lien filed after the declaration of homestead can only attach to equity in an amount greater than the homestead exemption and any preexisting liens on the property.

    Another important distinction is that the declared homestead survives the death of the homestead owner whereas the automatic homestead does not.

    A Declaration of Homestead form can be purchased at office supply or legal stationery stores. For those who are internet savvy, the form can also be downloaded from the Registrar-Recorder's website in the real estate section ( The fee to have the Declaration notarized and recorded is approximately $25.00. There is certainly nothing to lose but much to gain by taking the simple step of filling out and recording the declaration.

Use Of 'Cash Register Justice' By Financially-Strapped Municipality Leads To Arrest Over Unpaid Administrative Fee For Ex-Offender Long After Probation Term Ended

In Augusta, Georgia, NBC News reports:
  • Kathleen Hucks was walking her dogs down the dirt road that leads out of Mim’s Rentals, a small trailer park in rural Augusta, Ga., when a police officer in a cruiser stopped her on Labor Day weekend.

    The officer asked the slight 57-year-old for identification and ran her name through the system. Nothing came up for Richmond County, where she lives. Then the officer ran one more search.
    He says, ‘Ma'am I have to place you under arrest -- Columbia County’s got a hold on you for violation of probation,’” Hucks remembered.

    When her husband, 64-year-old James Hucks, saw his wife getting arrested even though she was no longer on probation, he thought there had been an error. “I said, ‘Look here, don’t y’all realize this case is dead?’”

    It was no mistake. A warrant for Hucks’ arrest had been issued in 2010, long after she completed a 24-month probation term arising from a 2006 conviction for drunken driving, possession of marijuana and driving with a suspended license. The reason: She hadn’t paid all the fees she owed to the for-profit company that supervised her probation.

    Even though the company’s ability to collect the debt had expired when her probation did, she was arrested. Hucks spent 20 days in jail before a judge freed her.

    Last week, Hucks filed suit against Sentinel Offender Services alleging that the Irvine, Calif.,-based company violated her civil rights. The outcome has implications beyond the case of one woman in Augusta because it claims that the Georgia law that allows for a for-profit company to act in a judicial capacity violates the due process clause of the state Constitution.

    Hucks’ case is the latest of several lawsuits filed in Georgia and elsewhere challenging private probation companies, which operate in about 20 states.
For more, see 'Cash register justice': Private probation services face legal counterattack.

Thanks to Deontos for the heads-up on the story.