Saturday, November 17, 2012

Billing Mechanism Allowing For Tax Liens, Foreclosure Over Unpaid Garbage Collection Fees Reaches Georgia High Court

In Duluth, Georgia, DuluthPatch reports:
  • The Supreme Court recently heard oral arguments by attorneys for Robert Mesteller, a Snellville resident who is taking on Gwinnett County about its way of collecting payment on sanitation services. The issue is that the money is collected on tax bills, something Mesteller claims is illegal and unconstitutional.

    The outcome of Mesteller’s appeal won’t be heard for several weeks. However, even if it fails, state Rep. Brett Harrell, whose district includes Snellville and parts of Loganville and Grayson, is also taking on the issue. He is re-introducing legislation in January to prevent municipalities using tax bills to collect anything other than taxes. Harrell said his reason for re-introducing House Bill 291 is not opposition to any particular program, just with the billing mechanism.

    In Georgia, we have non-judicial foreclosure; so, the lien is placed on your home and you are not even afforded an opportunity to stand before a judge and plead your case - again for non-taxes,” Harrell said, adding he had 60 co-signers to the bill when originally introduced. He acknowledges that he does face opposition.

    The associations of Counties and Cities representing corporate government rather than the citizens of those counties and cities are the primary opponents at the capitol. Around the state, the opponents are those elected and staff members that are more concerned with revenue to the corporate government rather than protecting those they serve.”

    Gwinnett County officials, however, say that if either Mesteller’s lawsuit or Harrell’s legislation is successful, the outcome might not be so good for county taxpayers. Joe Sorenson, communications director for Gwinnett County, warns that if the county were unable to bill for solid waste and recovery services via the property tax billing system, it would have to create a new billing system or significantly modify an existing one.
For more, see Lawsuit Win Could Increase Trash Pickup Cost (Gwinnett trash collection back in courts and at State Capitol. County warns outcome of either could result in increased costs for county residents).

Se also, Ga. Supreme Court to Take A Look At Gwinnett Trash Plan.

Miami 'As-Is' Foreclosed Condo Buy Comes Complete With Squatters; A Chilling New Trend? Maybe So, As Chance To Score Free Rent, Water, Cable TV Too Tough To Pass Up For Some

In Miami, Florida, WFOR-TV Channel 4 reports:
  • Unmasking suspected squatters isn’t simple because they are turning up in homes that are up for sale.

    It used to be that if you bought a house “as is” you got a great deal. Well, a chilling new trend is to buy the house “as is” and that means complete with squatters inside and it’s the buyers’ responsibility to get them out.

    Christina Malloy is living the nightmare as she buys a condo in Downtown Miami.

    For months, CBS4 Investigates has been following her as she purchases and tries to close on a one bedroom apartment; squatters somehow moved in and keep changing the locks and have figured out how to sneak in and out of the building. “What’s your message to them,” CBS4’s Chief Investigative Michele Gillen asked Malloy. “Get out because I am coming for you,” Malloy said.

    As someone who buys and sells property for a living, Malloy said it’s frightening how often she now comes face to face with squatters.

    I go to open the door and there’s people inside. There’s furniture. There’s beds. There’s personal items,” Malloy said.

    And that’s exactly what she finds when she finally gets to see the inside of her unit and videotapes the possessions of the squatter living there; TV hooked up to cable, a place to eat, but no living room furniture. "I absolutely consider them criminals,” said a property manager who is fed up with the problem.

    He describes them as out of control in multiple buildings decorating our skyline. He asked that we mask his identity to protect his condo’s reputation.

    Some people who have no rights to this property move in, use the free water, use the free cable, destroy property and for what? So they can live for free,” he said.

    For months, CBS4 Investigates has been documenting cases across South Florida where police or banks have been notified that people living in vacant and foreclosed homes or apartments – allegedly – don’t legally belong there.

    They are getting a free ride,” said Miami Commissioner Marc Sarnoff. Sarnoff said the number of absentee owners coupled with banks so slow to foreclose is a recipe for disaster.

    Unfortunately, the police are ill-equipped to deal with this because if someone just shows a document, a quit claim deed, a lease, the police treat it as a civil matter. And then you go before a judge that takes time, you have to hire a lawyer and next thing you know you are months, weeks, sometimes almost a year away to get a person out that doesn’t belong in the property,” Sarnoff said.

    When police are called, squatters often say they are the victims. And, in some cases, they may be victims of crooks posing as realtors or property owners.

    On a recent day, Miami-Dade police were called out to a house in Miami-Dade County to investigate a burglary. The alleged criminal: a mother of two who says she was duped by a make believe realtor who took her money and disappeared after renting her the house – a foreclosure not available for rent.

    She was just so convincing,” the woman said describing the demeanor of a realtor who turned out to be a fake. “Did you write a check?” Gillen asked. “No, I gave her cash,” the woman said. Just hours after this exchange, the woman found herself an efficiency apartment and moved her family out of this house.

    There are some honest victims, usually the ones willing to negotiate with you. They are the ones who say, ‘Do I need to pay’,’” said the property manager. But countless numbers are conning the system and you never know whose property they might move into next.

    You don’t know what they have behind that door. But who knows if they have a gun. Who knows if they are going to attack you. Who knows what I’m going to find. Will I find a dog, will I find drugs, will I find guns, will I find someone dead? I just don’t know,” said the property manager.

Financially Strapped Condo Owner Walks Away From Home, Loan Payments; Returns To 'Un-Foreclosed' Apartment Three Years Later To Find A Foreclosed Neighbor Squatting Comfortably On Premises; Complaints To Cops Fall On Deaf Ears

In Little Tokyo, Los Angeles, KABC-TV Channel 7 reports:
  • What would you do if you left your home only to return to find a stranger moved in, changed the locks and won't leave?

    In 2007, Jeff Cote bought a condo in the Little Tokyo Lofts in downtown Los Angeles, Two years later, he lost his job and could no longer make the payments on his loft. Thinking it would go into foreclosure, he packed up and moved out. Cote left it locked and empty.

    But a few months ago, Cote found out his loft, which did not go into foreclosure, is not empty. A stranger is living in his home and has been for three years. "Memorial Day weekend, I found out a squatter was living in my loft," Cote said.

    Cote said the alleged squatter is Johnathan Glover, who Cote said changed the locks, painted a wall and won't leave.

    Court records obtained by Eyewitness News indicate Glover was evicted from his last two residences. One of those residences is the loft right next door to Cote's.

    "He was evicted from 311 and he moved right into my loft, which is 312," Cote said.

    When Cote found out about Glover, he asked him to leave. Glover said he would and even signed an agreement to move out in August. Cote thought the matter was closed and listed his loft as a short sale. That was several months ago. Since then, the squatter has refused to leave, Cote said.

    Cote filed a police report claiming Glover is a trespasser, but was told there was no evidence a crime had been committed, so there was nothing law enforcement could do.

    Dennis Block, an attorney who specializes in evictions, said by law the rightful owner cannot remove a squatter by force. In most cases, the homeowner has to file a civil action in court, prove it's their property and evict the squatter. That process can take months or even more than a year.

    "I think they're tantamount to being thieves, it's as simple as that," Block said. "Somehow the law doesn't look at them like that, they deem this to be a civil dispute and make a landlord file a civil lawsuit. But it's clean and simple, they're stealing."

    Adding to Cote's problems, no one has been paying the homeowner association dues on his loft and he recently received a bill from the association. The bill is nearly $36,000.
  • Glover denies he is a squatter because he claims he makes monthly rent payments of $2,150 to another landlord. When asked for some proof of the payments, Glover said he always pays with cash or a money order, not checks. He also said the rent was last paid in June.

    [Glover's rental] agreement states the payments are to be made to a Thomas Marx with Countrywide Property Management in Citrus Heights near Sacramento. But when Eyewitness News tried to contact Marx, his cellphone number didn't work and his email came back unanswered.
  • "The squatter claims he is going to be out about mid month," Coter said. "He told me that via text, although he has told me a lot of lies."

    Over this past weekend, an Eyewitness News producer spotted Glover outside the loft and asked who he was. He denied he was Glover, but later confessed to his identity. Eyewitness News followed him into the loft. He said he was in the process of moving out after three years of living there.

    This week, Cote finally got his loft back and his first task was to get the locks changed.

Blind, Disabled Thief Scores Big Win; $.11 On The Dollar Deal Allows Him To Pay $50/Month For 2 Years To Buy Out Of Felony Burglary Charge, Jail Time After Boosting $11K In Property From F'closed Neighbor's Home; Victim Left In Tears

In Paris, Maine, the Bangor Daily News reports:
  • A Rumford man who pleaded guilty to stealing items valued at $11,000 from his neighbor’s house in May will get no jail time.

    Charles E. Hamilton, 47, of 26 Rangeley Place, was given a two-year deferred disposition in Oxford County Superior Court on Wednesday. That means he has to make restitution of $1,200 at $50 a month through the district attorney’s office and refrain from committing another crime, said Joseph O’Connor, assistant district attorney.

    If Hamilton meets those conditions, the case against him would be dismissed after two years.

    That did not sit well with Jodi McKenna, who identified herself before Justice Robert W. Clifford as the single mother from whom Hamilton stole home furnishings and irreplaceable family mementos.

    There were things in that house that can’t be replaced, family items,” said an emotionally distraught McKenna, formerly of 30 Rangeley Place. “It upsets me to no end that someone I trusted could do this to me.”

    O’Connor acknowledged that Hamilton is legally blind and on disability. “Obviously, the amount that would be paid in restitution does not come close to the amount lost by Miss McKenna,” O’Connor said.

    Clifford said the amount of restitution was based on Hamilton’s financial condition. If he fails to meet the obligation, he will face up to five years in prison and a $5,000 fine.

    Twelve hundred dollars doesn’t even come close to what I lost,” McKenna said, starting to sob. “I’m unemployed and trying to support my daughter.”

    The case began Wednesday when Hamilton gingerly approached the judge, sweeping a walking cane for the blind from side to side ahead of him. He stood beside his court-appointed lawyer, Maurice Porter, who told Clifford he and the DA’s office had agreed to a plea deal wherein a felony burglary charge stemming from the May 3 incident and arrest would be dismissed.

    Hamilton pleaded guilty to a felony theft charge and Clifford read into the record a lengthy list of McKenna’s belongings that were stolen by Hamilton.

    They included a ¾-cut diamond ring and assorted jewelry, five rolls of insulation, a cooler, napkins with rings, compact discs, two step ladders, a training potty, a dog dish, a Coleman stove, a boot dryer, tree injections, a lamp, a memory-foam bed roll, a safety helmet, Christmas decorations, three gas cans, two pitchforks, solar lights, a state quarter book with quarters, a 32-inch television set, a Nintendo Wii, a Dell computer, Stihl and Black & Decker weed whackers, silverware, a nightstand, furniture, five blankets, four pillows, assorted children’s toys, Hallmark Christmas ornaments, a scanner, a Hewlett Packard printer, an antique bassinet, a Coleman tent, assorted tools, a pocketbook, a clock, paintings, darts, a Sony video camera, three baskets and a home gym system.

    O’Connor told the court that had Hamilton not pleaded guilty, he would have said that McKenna was forced to move out of her home in January 2012 when a bank started foreclosure proceedings. He said the bank changed the locks on the building.

    McKenna returned this past spring to discover her house had been ransacked and that the thief entered through a broken window in the basement. She contacted Rumford police Cpl. Lawrence Winson, who interviewed Hamilton and got a confession.

    Hamilton, however, said McKenna told him he could take the belongings, which McKenna denied, O’Connor said. Hamilton claimed the door was unlocked; McKenna said the bank locked it up.

Dozens Of Confused Rent-Paying Tenants Worry About Possible Pre-Xmas Boot After Discovering Foreclosure Notice Directed To Their Landlord

In Greenville, North Carolina, WITN-TV reports:
  • There was concern and confusion from dozens of apartment residents in Greenville Tuesday after a notice of pending eviction was posted on several buildings. Some said it would mean they need to move out just days before Christmas.

    One resident told WITN he talked to the property management company who said a notice was taken to the wrong apartments, but the sheriff's office says it was posted correctly.

    Resident William Ward looked over the summons posted by the Pitt County Sheriff's Office Monday on the apartment building where he lives on Caldwell Court. It ignited confusion over whether or not he and other residents in the area would have a place to live at the end of the month.

    "You've been paying your rent on time, you don't expect to be left in the dark until the last minute and then boom all of the sudden this pops up," said Ward.

    The papers which include a notice on a foreclosure hearing set for December 4th, names four owners to appear. If the ruling is against the owners, a notice of ejection is also attached that has people thinking they may be removed days before Christmas. The summons lists the debt owed as more than $743,000 to BB&T as of October 18th.

Friday, November 16, 2012

Attorney Faces Heat Over Missing Trust Account Cash, Failure To Pay Off Mortgages At Real Estate Settlements; Invokes 'Victim' Card, Pins Blame On Estranged Wife For Allegedly Taking $2M+ Dip Into Closing Proceeds

In Columbus, Georgia, the Ledger-Enquirer reports:
  • A year into a Columbus real estate fallout, the State Bar of Georgia has begun disciplinary proceedings against attorney Michael A. Eddings, alleging a list of professional conduct violations that could jeopardize his law license.

    The bar this month filed a thick formal complaint outlining 10 disciplinary matters that involve hundreds of thousands of dollars diverted from his firm's trust account. The allegations come as federal agents conducted an apparent search of Eddings' north Columbus law office Tuesday, carting off bins of documents sealed with FBI evidence tape.

    Investigators wouldn't comment on their activity at 860 Brookstone Centre Parkway or the prospect of criminal charges, but the seizure seemed to highlight an intensifying law enforcement interest in the firm's dealings, even as Eddings remains mired in civil litigation. Eddings and his defense attorney, Rob Poydasheff, were seen conversing with the FBI, suggesting Eddings has continued to cooperate with investigators.

    The bar complaint and FBI search marked the latest legal turmoil for Eddings, a well-known attorney and business owner whose fall from grace has stunned fellow attorneys and the local real estate community. Over the past year, Eddings, a former Army infantry officer, has seen his cafés and downtown restaurant shuttered and faced a flurry of lawsuits from clients whose lives were affected when Eddings' firm failed to pay off their mortgages at real estate closings.

    "What's frustrating is we've done nothing wrong, but we're the ones that are paying the price," said Christa Humphrey, a former Columbus resident who fears Eddings' failure to pay off the mortgage on her home last year could affect her husband's credit and delay his retirement from the military. "I am a little bit frustrated by it because it is taking so long."

    Eddings, 48, has filed for divorce and blamed his estranged wife for his firm's legal issues, portraying himself as a victim and accusing Sonya L. Eddings of converting more than $2 million from the escrow account. But the bar's 44-page complaint points out Michael Eddings' responsibilities as an attorney.

    It claims he "allowed" improper withdrawals from his trust account and failed to keep "measures giving reasonable assurance that the conduct of non-lawyers employed or retained by him were compatible with his professional obligations." The bar requested a special master be appointed to hear the disciplinary proceedings, and Michael Eddings was given until early next month to respond to the allegations.

    He referred a request for comment to Poydasheff, who did not return repeated messages Tuesday from the Ledger-Enquirer.

    The fallout came to light about a year ago when Eddings' trust account was frozen and he was suspended from closing transactions amid an audit of his finances. Sonya Eddings told the auditors of a title insurance company more than a year ago that she failed to make several payoffs from closings and began, in 2007, transferring "small amounts" from the firm's escrow account to cover expenses for another business.

    Sonya Eddings -- whose current address is listed as "unknown" in the bar complaint -- has insisted that no one else at the firm was aware of her actions. She also is accused of creating false wire confirmations to cover her actions but has not yet been charged.

    First American Title Insurance Company has sued the Eddingses for conversion and fraud, claiming they failed to disburse more than $2 million after various real estate transactions.

    The bar complaint rests on similar allegations, including the case of Humphrey, a typical victim of the missing payoffs.

    Michael Eddings represented Humphrey and her husband, Dustin Humphrey, an Afghanistan war veteran formerly stationed on Fort Benning, when they sold their home in September 2011. According to the bar complaint, the lender deposited about $142,000 into Eddings' trust account, but the firm did not pay off the mortgage on the Humphreys' property.

    Community Bankers Mortgage called the Humphreys in October 2011 asking for the mortgage payment, apparently unaware that the property had been sold. Dustin Humphrey called Eddings' office, the complaint says, and an unidentified employee "knowingly and falsely" told him the payment had been made via wire transfer "and that the situation would be remedied."

    The Humphreys later received notice from Community Bankers Mortgage that a check drawn on Eddings' trust account had been returned due to a stop payment. The complaint says this led to foreclosure proceedings.

    Christa Humphrey, who now lives in Springdale, Ark., said she fears the foreclosure will go forward now that her husband has returned from overseas. A foreclosure likely would mean her husband won't be able to retire from the military in four or five years as he planned, and it could hurt his credit and limit their ability to buy another home.

    "The fact that this could affect his military career is just beyond me," she said. "How could anybody let that happen? It's not the bank's fault, but it's not our fault, either."
Source: Local attorney Michael Eddings accused of professional conduct violations.

(1) The Clients' Security Fund of the State Bar of Georgia (Part X - Rule 10-101 et.seq., Georgia Bar Rules Handbook) was established to reimburse clients who have suffered a loss due to misappropriation or embezzle­ment by a Georgia-licensed attorney.

For similar "attorney ripoff reimbursement funds" that sometimes help cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:
Maps available courtesy of The National Client Protection Organization, Inc.

State Bar Shuts Down Attorney's Operations In Another Law License Rental Racket Involving Convicted Felon, Loan Modification Ripoffs

The State Bar of California recently announced:
  • The State Bar of California announced [] it has shut down the operations of an Ontario lawyer who allowed his name and law license to be used in a scheme to defraud distressed homeowners.

    The bar obtained a court order [...] to assume jurisdiction over the law practice of Gary David Tracy, 50, (bar # 167212). His firm, known as Realty Attorney Group APC and Realty Group & Consulting LLC, gave false hope to dozens of clients whose homes were already in foreclosure. Many of the clients’ homes had already been sold.

    In return for thousands of dollars in fees, the firm filed shell petitions in U.S. Bankruptcy Court that only delayed the inevitable loss of the clients’ homes.

    The bankruptcy fraud scheme represents the newest variation of the loan modification scams emerging from the housing crisis. Since February 2009, the State Bar’s Office of Chief Trial Counsel has received thousands of complaints against attorneys regarding loan modification fraud. More than 100 attorneys have been disciplined so far, including 22 who have been disbarred.

    Tracy formed an illegal partnership with a convicted felon and abdicated responsibility and control of his law practice to non-attorneys, Deputy Trial Counsels Mia R. Ellis and Lara Bairamian alleged in their petition to assume jurisdiction of the practice.

    The clients in these situations are desperate and in financial turmoil,” the petition said. “They are vulnerable and seeking a lifeline from a legal professional that can save their home.”

    In July, the U.S. Bankruptcy Court for the Central District in Santa Ana sanctioned Tracy $10,000 after it found his firm was responsible for 80 bankruptcy filings, most of which did not identify the firm as the preparer of the petition.

    The State Bar has identified at least nine clients who paid money to the firm and were abandoned. One woman paid the firm $12,400, including an $800 payment deducted from her account after she lost her home and was evicted. Many of the clients had never met Tracy.

    [The] order by San Bernardino County Superior Court Judge Brian S. McCarville authorized the bar to secure the firm’s files, freeze its bank accounts and notify its clients to seek new counsel. Clients who have additional questions are advised to call the State Bar at 213-765-1778.
For the California State Bar press release, see State Bar Shuts Down Law Firm Involved In Bankruptcy Fraud Scheme.

(1) The State Bar of California Client Security Fund was established to reimburse clients who have suffered a loss due to misappropriation or embezzle­ment by a California-licensed attorney.

For similar "attorney ripoff reimbursement funds" that sometimes help cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:

Maps available courtesy of The National Client Protection Organization, Inc.

Recently-Disbarred South Florida Lawyer Agrees To Plead Guilty To Trust Account Ripoff Of Cash Belonging To Unwitting Clients

In Fort Lauderdale, Florida, the South Florida Sun Sentinel reports:
  • A recently disbarred lawyer who admits he stole about $1 million — including money from the widow and three young children of a friend who died in an accident — was jailed [] on a fraud charge.

    Scott Rovenger, 59, who practiced in Fort Lauderdale and Plantation, expects to serve eight years in state prison under the terms of a plea agreement reached with the Broward State Attorney's Office, his attorney, Howard Greitzer, said. Rovenger will formally plead guilty to scheming to defraud in the next few weeks and will remain locked up until he has served his full punishment, Greitzer said.

    Rovenger admitted that he stole from many of his clients during the past 20 years and entered into fraudulent and bogus settlements that he lied about, according to a sworn statement he gave to state prosecutors and the Broward Sheriff's Office.
  • Rovenger agreed to be disbarred in May after a Florida Bar investigation uncovered a small part of his misconduct — that he inappropriately removed money from one trust account. He was previously admonished in 2009 over a fees dispute with another lawyer.

    Rovenger stole money from another account to settle the case that was questioned by the Bar, court records show. He realized in the past several months that he couldn't keep doing what he'd been doing for years and decided to confess and face the consequences, his lawyer said.

    He confessed and provided sworn statements to former clients and others to try to help them get as much money back as possible from him and a Florida Bar fund that helps repay wronged clients.(1)
For more, see Disbarred lawyer jailed after admitting he stole about $1 million from clients.

(1) The Florida Bar's Clients' Security Fund was established to reimburse clients who have suffered a loss due to misappropriation or embezzle­ment by a Florida-licensed attorney.

For similar "attorney ripoff reimbursement funds" that sometimes help cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:
Maps available courtesy of The National Client Protection Organization, Inc.

Thursday, November 15, 2012

Conned By Broker Into Taking Name Off Deed, Widow Suffers Heart Attack, Then Boot When Hubby's Unexpected Death Triggers BofA's Reverse Mortgage Foreclosure

In Leavenworth, Kansas, KCTV Channel 5 reports:
  • [T]wenty years ago, Rebecca and Walter Simpson bought a modest home on Klemp Street in Leavenworth, KS, where they could retire and quietly live out their lives. "It was a lovely place and we enjoyed it very much," Rebecca Simpson said.

    The enjoyment faded in the spring of 2007, when the couple's adjustable rate mortgage kicked in and pushed their monthly loan payment to an unmanageable amount.

    When Walter Simpson broke that news to his wife, she says he also promised to figure out a way to keep them afloat financially. "He said we can't make the payments if we don't take the reverse mortgage," she said.

    According to her, he had already talked with a broker who was willing to write up the reverse mortgage. But there was a catch.

    She said the broker refused to do the deal unless her name was removed from the deed. "They said that's the only way we'll do it," she said.

    She said she balked at the idea of her husband's name alone appearing on their property records. She acquiesced after the broker offered a reassuring promise. "If something happened, they would bring the reverse mortgage back to me and I'd have to renew it," she said.

    With her husband insisting a reverse mortgage was the only way for them to make their next payment, she put pen to paper. "I signed away my rights," she said. "And it just became Walter's home only."

    It was a signature she deeply regrets. Less than three years later, on Valentine's Day 2010, her husband slumped over in his favorite chair while watching television. "I gave him mouth to mouth and I just couldn't get him to… he opened his eyes and just closed them back," she recalled. "He loved me with all that was in him, and I loved him."

    Very quickly, the consequences of a reverse mortgage without her name became a reality. According to her daughter, Cynthia Brown, "The ground hadn't even settled on him (Walter Simpson). They sent her that foreclosure letter, 30 days (later)."

    That foreclosure notice, sent by Bank of America, nearly caused a second death in the family. After reading it, Rebecca Simpson suffered a heart attack. "Three days later they were inserting a pacemaker, they had to do it that quick," Brown said.

    Unaware of the reverse mortgage, Brown wrote a letter, from her mother's hospital room in Kansas City, MO, asking the court to halt the foreclosure. Her only answer came during a visit to check on the Leavenworth home.

    Instead of the clean, beautiful house she was expecting to see, Brown said she confronted by filth, cracked toilets, missing heirlooms and bright orange stickers that read "Winterize, do not use." The stickers served as evidence that BOA had already sent a third-party company into the now bank-owned house.

    Brown claims those contractors botched the job, causing unbelievable damage to the home. "So when it came winter, the pipes froze and burst; Destroyed the downstairs," Brown said.

    Even if Rebecca Simpson felt well enough to apply for a new reverse mortgage, Brown no longer believes her mom could qualify. The equity the house once held no longer exists and therefore a new reverse mortgage likely wouldn't cover the cost of repairs. "We don't have the money to fix it. It's a shell of what it used to be. It's condemnable, I think," Brown said.
  • Without her name on the deed, her only real option is to hire a lawyer and sue BOA for the loss of and damages to her personal property left in the home when the bank foreclosed. What the Simpson's went through is not supposed to happen.

    Under federal law, the Simpsons should have received counseling before signing anything. Rebecca Simpson doesn't remember any counseling.

    According to law professor and reverse mortgage expert Victoria Duke, a good counselor should have warned Rebecca Simpson about what coming off the deed would mean in the event of her husband's death.

    "Women outlive men," Duke said. "If I had a client in front of me, where the wife is younger than the man, I would absolutely say no. Don't sign away your interest."

    Duke adds that the broker handling the Simpsons reverse mortgage may have been aware of the likelihood of Walter Simpson dying first and the home returning to the bank. Duke said the broker may actually have earned a bigger commission by inking a deal with only Walter Simpson's name on it.

    "That broker may have intent to get that senior to sign up for a reverse mortgage that may not be good for them," Duke said

    Not good is a perfect way to describe the outcome of Rebecca's reverse mortgage.

California State Bar Brings Disciplinary Charges In Connection With Attorney Allegedly 'Renting Out His Law License' To Loan Modification Operator In Exchange For Share Of Fees

The State Bar of California recently announced:
  • The State Bar of California has filed disciplinary charges against a Garden Grove attorney accused of taking illegal advanced fees from distressed homeowners and partnering with non-lawyers in a large-scale loan modification scheme.

    Stephen Lyster Siringoringo [Bar # 264161] has been charged with 25 counts of misconduct including collecting advance fees for loan modification services, forming a partnership with a non-lawyer, sharing fees with a non-lawyer, moral turpitude and aiding in the unauthorized practice of law.

    Siringoringo heavily advertised his services in southern California, even though the state Legislature has prohibited the acceptance of advance fees for loan modification work.

    "Mr. Siringoringo's acceptance of advanced fees in disregard of California law is a stark reminder that almost three years after the passage of SB 94, loan modification abuses and fraud are alive and well and that some of the most financially distressed and vulnerable members of the public are still being victimized and exploited for financial gain," said Ashod Mooradian, deputy trial counsel at the State Bar.

    According to the notice of disciplinary charges against him, Siringoringo, 31, first met his non-lawyer partners Alfred Clausen and Josh Cobb, the owners and operators of Clausen & Cobb Management, Inc. (CCMI), in December 2009. Soon after, Siringoringo agreed to allow them to open an office his name in Upland, in exchange for a share of the legal fees it brought in.

    The office, staffed by CCMI employees who operated independently, performed legal services and with met clients without Siringoringo's supervision. The operation generated enough money to open two other locations in Siringoringo's name – in Glendale and Rancho Cucamonga.

    Filed Oct. 10, the disciplinary notice lists at least 23 victims of the loan modification scam, some of them couples. It also accuses Siringoringo of “habitually” disregarding his loan modification practice and misleading his clients into believing he was actually in charge of their cases “when in truth and fact CCMI was in charge and operated the loan modification law practice known as Siringoringo Law Office or the Law Offices of Stephen L. Siringoringo.” The State Bar has placed a consumer alert on his online attorney profile page.

    Siringoringo's case represents the latest in the State Bar's ongoing efforts to combat loan modification fraud. Since February 2009, the State Bar’s Office of Chief Trial Counsel has received thousands of complaints against attorneys regarding loan modification fraud. More than 100 attorneys have been disciplined so far, including 22 who have been disbarred.
Source: Garden Grove Attorney Charged With Taking Advanced Fees From Distressed Homeowners, Forming Partnerships With Non-Lawyers.

See ETHICS ALERT: Legal Services to Distressed Homeowners and Foreclosure Consultants on Loan Modifications for a California State Bar advisory addressing the professional ethics issues arising in relationships between attorneys and non-attorney loan modification operators.

Asset-Heavy Mortgage Guarantors & Co-Signers Beware: No "One-Action" Rule In Sunshine State; Foreclosure Judgment-Holding Lenders In Florida Can Opt To Snatch Your Personal Assets Before Setting Date For Public Sale Of Loan Collateral

From the Florida Banking Law Blog:
  • In a typical foreclosure action in Florida, a creditor forecloses the real property first, the court determines the fair market value of the property as of the date of the foreclosure sale (usually through a deficiency hearing under Fla. Stat. §702.06), and then the creditor pursues a money judgment under a breach of note or breach of guaranty count.

    The borrowers and guarantors are entitled to a setoff equal to the fair market value of the collateral, which determines the amount of the deficiency judgment.

    However, creditors sometimes find themselves in a situation where they do not want to, or perhaps are unable to, foreclose the property (e.g. there are potential environmental liabilities associated with the collateral, the collateral is subject to an automatic bankruptcy stay, or the collateral is simply undesirable).

    It may also be the case that the guarantors have assets that a creditor would like to pursue immediately, and the creditor does not want to wait for a foreclosure sale.
  • [W]here a foreclosure sale has not yet been set, there is nothing to preclude a Plaintiff in Florida from pursuing its legal remedy first, and then if the judgment is unsatisfied, pursuing the equitable remedy of foreclosure second.(1)

    In [a] recent case,
    Royal Palm Corporate Center Ass’n, Ltd. v. PNC Bank, NA, [89 So.3d 923] (Fla. 4th DCA 2012), the court expressly declined to set a foreclosure sale date so that the Plaintiff could first pursue, and execute upon, its money judgment before foreclosing the property and before setting a deficiency hearing under Fla. Stat. §702.06.

    In order to ensure that the plaintiff did not receive double recovery, the plaintiff certified to the court that the money judgment had not been satisfied, after which it could elect to foreclose the property.

    Royal Palm illustrates that a creditor does not have to set a foreclosure sale before obtaining and executing upon a money judgment against borrowers and guarantors. This is particularly true where the creditor holds an absolute guaranty.

    Since the ability to execute a judgment is of paramount importance, particularly where defendants are solvent, this case is an important tool for creditors to consider as they evaluate their options in the foreclosure context.
For more, see Creditors Who Want to Execute on a Money Judgment Need Not Foreclose First.

To contrast the apparent rule in Florida that allows a stiffed mortgage lender to seek multiple remedies simultaneously with the rule in California and Michigan that prohibits this, see
(1) Regarding a mortgagee's right to pursue multiple remedies simultaneously, the Florida appeals court stated:
  • It has long been the common law that, to collect money owed on a note, a mortgagee may pursue its legal and equitable remedies simultaneously, until the debt is satisfied. In the early case of Booth v. Booth (1742) Eng. & Wales Chancery, 2 Atk. 242 (3d. ed. 1754), the plaintiff brought an action against the defendant for the accounting of an estate owned by the plaintiff's brother, for which estate the defendant had been the guardian and on which he had obtained a mortgage. Id. at 242-43. The defendant brought the action of ejectment for possession of the estate[2] and, at the same time, an action "to foreclose the equity of redemption."[3] Id. The plaintiff sought a stay of the defendant's ejectment action because of his concurrent foreclosure proceedings. Id. Lord Chancellor Hardwicke wrote, "Though the defendant is foreclosing the equity of redemption here, yet he is not precluded from bringing an ejectment at law at the same time, unless there is something very particular to take it out of the common case."[4] Id. at 243. But because whether the mortgage was already satisfied was in dispute, "it is not quite so clear as the common case," and the chancellor stayed the ejectment. Id.

    More than 200 years later, the supreme court of New Mexico articulated the complete rule, its rationale, and the minority view:

    Under the traditional common law rule, upon default by the mortgagor, a mortgagee has independent remedies which he or she may pursue. The mortgagee may sue either on the note or foreclose on the mortgage, and may pursue all remedies "at the same time or consequently." As long as there is no double recovery on the debt, the mortgagee may pursue either or both remedies. Absent a statute to the contrary, "state courts have uniformly held that holders of notes secured by a deed of trust can both sue the maker or guarantor and foreclose on the property regardless of which action they pursue first."

    The distinction between the two remedies is found in the historic view that a foreclosure action is purely quasi in rem, affording relief only against the secured property, and a suit on a bond or note is in personam.[[5]] A judgment of foreclosure applies only to the property secured by the mortgage, and does not impose any personal liability on the mortgagor. If the foreclosure of the mortgaged property fails to satisfy the debt secured by the mortgage, the creditor may then pursue an action on the underlying note.

    Some jurisdictions have adopted legislation providing for a "one action" rule that requires a mortgagee to file only one lawsuit in which he or she pursues all remedies for a debt that is secured by a mortgage. One of the purposes of such statutes is to protect the mortgagor from multiple lawsuits since the mortgagee's separate causes of action, even though theoretically distinct, are closely connected and should be decided in one suit.

    Kepler v. Slade, 119 N.M. 802, 896 P.2d 482, 484-85 (1995) (footnote omitted) (citations omitted).

    The traditional common law rule is the majority rule in the United States; it has been recognized by the Supreme Court of the United States on at least three occasions.[6] As the Kepler court noted, the jurisdictions that do not follow the rule have statutes that require a mortgagee to file only one suit for all of his remedies (the "one-action rule"), or consecutively.[7]

    Florida is in the majority. Less than a year after Florida became a state, the Supreme Court noted this tenet of the common law without any disagreement in Manley v. Union Bank of Florida, 1 Fla. 160 (Fla.1846). There, a mortgagee argued "that a mortgagee has, at common law, three remedies, all of which he may pursue at the same time, viz: that he may bring suit at law, upon the bond or note secured by the mortgage; institute an action of ejectment, to put himself in possession of the rents and profits of the estate; and file a bill in Chancery, to foreclose the mortgage." Id. at 214. To this, the Court responded, "All this is very true." Id. Even if the Supreme Court had not approved the rule, it would have been the common law of this state by operation of statute.[8]

    We have found no Florida statute, and none has been called to our attention, that would prevent a mortgagee from pursuing legal and equitable remedies at the same time.

    The statute concerning deficiencies, section 702.06, Florida Statutes (2008), is more limited in nature than the statutes in the minority of states. Although the reporters of the Restatement seem to believe that section 702.06 is something of a one-action rule, see Restatement (Third) of Property (Mortgages) § 8.2 cmt. b (1997), neither its language nor its history or purpose support that reading.

    Section 702.06 binds a plaintiff to a deficiency decree once the plaintiff sets the deficiency process in motion, but expressly provides that "the complainant shall also have the right to sue at common law to recover such deficiency," except against an original mortgagor when the mortgage was for the purchase price of the subject property, the original mortgagee buys the property at the foreclosure sale, and the original mortgagee obtains a deficiency decree against the original mortgagor.[9] Not only has PNC not yet started the deficiency process, but the mortgages here were not for the purchase price of the subject properties. If PNC certifies non-satisfaction of the money judgments, it will be bound to the deficiency process and only if the trial courts do not adjudicate the merits of a deficiency will PNC be able to bring separate law actions on the foreclosure judgments for the deficiency.

    With regard to the statute's history, the legislature enacted what is now section 702.06, which took the place of an old equity rule of like effect, to grant a court the power to enter deficiency decrees; "[b]efore the adoption of [the equity rule] in 1873 ... no deficiency was authorized in equity courts, and the only remedy for a balance due was a suit at law."[10] See Letchworth v. Koon, 99 Fla. 451, 127 So. 321, 322 (1930). Section 702.06's grant of such power was designed to "relieve the parties from the expense and vexation of two suits, one equitable and one legal," and to allow "the whole controversy [to] be adjusted in one suit." Edwards, 130 So. at 59 (emphasis added). This is what PNC has done.

    It appears we have not seen these remedies pursued at the same time in the same action because, before 1967, a suit at law on a note and a suit in equity to foreclose a mortgage proceeded in separate courts. In 1967, Florida adopted rules of civil procedure which gave circuit courts jurisdiction to hear cases in which counts at law and counts in equity could be set forth in the same complaint as alternative grounds for relief. In re Fla. Rules of Civil Procedure 1967 Revision, 187 So.2d 598, 600 (Fla.1966); Fla. R. Civ. P. 1.040, 1.110(g). In fact, Rule 1.110(g) provides that claims may be "stated in the alternative," "regardless of consistency and whether based on legal or equitable grounds or both."

    As alluded to by the Kepler court, the reason that an action at law on a note may be pursued simultaneously with the equitable remedy of foreclosure is that the two remedies are not inconsistent. Junction Bit & Tool Co. v. Village Apartments, Inc., 262 So.2d 659, 660 (Fla. 1972). "[P]ursuit of one without satisfaction is not a bar to the other." Klondike, Inc. v. Blair, 211 So.2d 41, 43 (Fla. 4th DCA 1968), approved, Junction Bit, 262 So.2d at 660; see also Gottschamer v. August, Thompson, Sherr, Clark & Shafer, P.C., 438 So.2d 408 (Fla. 2d DCA 1983) (an action on a note and an action to foreclose on a mortgage are not inconsistent remedies).

    Klondike is distinguishable but instructive. In Klondike, the plaintiffs first obtained a judgment on the note, did not cause execution to issue, and never received any payments; over a year after the issuance of the final judgment on the note, the plaintiff sued in foreclosure.[11] 211 So.2d at 41. We reversed a summary judgment in favor of the defendant, holding that the doctrine of election of remedies did not apply because the remedies were not inconsistent. Id. Unlike the plaintiff in Klondike, PNC did not bring separate actions on the notes before pursuing foreclosure. But, the principle articulated in Klondike is broad enough to apply here.

    In light of the common law, the merger of equity and law courts, and the consistency of the remedies, the instant suit at law on the note and guaranties was properly joined with the mortgage foreclosure. Nothing precluded PNC from pursuing its legal remedy first;[12] if the judgment is unsatisfied, the court has retained the ability to set a foreclosure sale. That sequence — money judgments first, foreclosures second — approximates the procedure upheld by this Court in Klondike and the supreme court in Junction Bit & Tool Co., and it is consistent with the principle that an unsatisfied money judgment is no bar to a later foreclosure.

    Defendants rely heavily on Farah v. Iberia Bank, 47 So.3d 850 (Fla. 3d DCA 2010), to argue that PNC was limited to the deficiency process if it sought to obtain judgments beyond foreclosure. However, Farah is factually distinguishable. Though the opinion is light on facts,[13] it appears that the Farah final judgment contained both a money judgment and a foreclosure judgment; the money judgment ordered that "execution issue," and the foreclosure judgment set a sale of the property. Thus, the Farah final judgment simultaneously allowed the plaintiff to execute on the money judgment and foreclose on the subject property, which is impermissible. The third district struck the language "for which let execution issue" from the money judgment and allowed the foreclosure to proceed.

    Unlike the Farah final judgment, the judgments here did not both issue an immediately executable money judgment and initiate the foreclosure process by setting a sale of the property.

    Rather, the judgments set up the procedure contemplated by Klondike and Junction Bit, allowing pursuit of the legal remedies and permitting the initiation of the foreclosure sale process only after PNC certified that the money judgment had not been satisfied. This structure assures that, while PNC was able to pursue both remedies, it will not get a double recovery.

Wednesday, November 14, 2012

Indictment Returned Against Local Resident For Allegedly Filing Bogus Liens Asserting Monetary Claims In The Billion$ Against Chicago Federal Judges, Prosecutors, Agents

From the Office of the U.S. Attorney (Fairview Heights, Illinois):
  • A federal grand jury sitting in Chicago, Illinois, has returned a 12-count felony indictment against Chicago resident Cherron Marie Phillips for filing false liens against the real property of a dozen federal employees in the Northern District of Illinois, the United States Attorney for the Southern District of Illinois, Stephen R. Wigginton, announced [].

    Phillips, 42, also known as “River Tali,” is accused of knowingly filing false liens against two federal prosecutors, five federal agents, a federal court clerk, and four federal judges, including the Chief Judge of the United States District Court for the Northern District of Illinois – all on account of the performance of their official duties.

    The indictment further alleges that each lien contained a materially false, fictitious, and fraudulent statement and representation, including a false claim that the victims each owed Phillips’ brother (who was separately convicted in an unrelated proceeding) one hundred billion dollars.
  • We take these cases very seriously.” United States Attorney Wigginton stated. “We will continue to prosecute to the fullest extent of the law all who seek to intimidate, harass, and retaliate against federal judges and employees by filing false liens against their property. Federal workers, and all workers, should be able to fairly do their jobs without fear of this kind of harassment.”
  • This case is being brought by the United States Attorney’s Office for the Southern District of Illinois in order to prevent any claims of bias or favoritism, since some of the Counts deal with employees of the United States Attorney’s Office for the Northern District of Illinois.

More On People Losing Their Homes To Foreclosure Over Unpaid Water Bills & Inflated Tack-On Charges

In Baltimore, Maryland, ABC News reports:
  • Actor and musician Richard Burton is facing foreclosure on his Baltimore home, but not because he didn't pay his mortgage on time. In his case, he says it all began with an overdue $1,037.42 water bill.

    Burton lost his job playing "Shamrock" McGinty on HBO's "The Wire" when the show went off the air. He couldn't afford the bill and claims it was incorrectly inflated to begin with.

    However, the cash-strapped city of Baltimore turned to a controversial way to collect. The city sold his unpaid debt to a private company that also inherited a lien on Burton's home. Then, the company tacked on 18 percent interest and more than $2,000 in legal charges.

    "You have no choice but to pay or you lose your home, that can't be right," Burton said.

    A Colorado Springs-based company called LienLogic is trying to foreclose on Burton's home if he doesn't pay. [...] LienLogic, the company that bought Richard Burton's debt, makes $100 million a year from its lien business, which it operates in multiple states.

    The company initially declined an interview with ABC News, forwarding us to the National Tax Lien Association for comment. The executive director of that organization agreed to an interview, and then backed out.
  • Not all cities sell unpaid debts to private companies. In Houston if you don't pay your water bill, the city will shut your water off and try to get you help. Officials there would never give someone the potential right to take your home away if you don't pay.(1)
For more, see Unpaid Water Bills Leading to Foreclosed Homes.

See also, Losing It All: American families losing their homes because they didn't pay their utility bill for the ABC News video on this story.

(1) See The Other Foreclosure Crisis: Property Tax Lien Sales, a report from the National Consumer Law Center on state laws that permit local governments to sell property through a tax lien foreclosure process if the owner falls behind on their property taxes, water and sewer bills, etc.

NM Judge Slams Fastbucks For Locking Borrowers Into Recurring Inescapable High-Cost Consumer Loans; 'Star' Employee Testifies: "We Just Basically Don’t Let Anybody Pay Off!"

Law Professor Nathalie Martin writes on Credit Slips:
  • [T]he New Mexico Attorney General’s office has sued Fastbucks for providing unconscionable loans to New Mexico citizens, both under the common law unconscionability doctrine and the state’s Unfair Practices Act’s unconscionability provision.(1) Read the short, pithy opinion Download Fastbucks decision.

    The court’s opinion, karmatically handed down on Yom Kippur 2012, found that FastBuck steered borrowers into loans that subjected them to higher interest rates and kept them locked into recurring cycles of debt, that the FastBucks entities were experts in the loan products they created, and that these experts demonstrated their superior knowledge of these alternative loan products through their explicit actions to maneuver around the regulation of payday loans.

    The court also found that defendants provided incentives to their representatives for steering borrowers into the more expensive installment loan products and away from less expensive loan products, and for promoting and prolonging recurring inescapable indebtedness.

    One FastBucks employee testified in court that “[w]e just basically don’t let anybody pay off [a loan]…. we tell them how their tax refund is better used at Wal-Mart . . . than at FastBucks, and we basically talk them into making a payment and continuing to be our customer.”

    She said she was congratulated for her approach and used as an example for how other employees of FastBucks could conduct themselves to earn the conspicuous financial rewards.
For more, see New Mexico Court Finds FastBucks Loans to be Unconscionable.

For the ruling, see State of New Mexico v. Fastbucks Holding Corporation.

(1) The Unfair Trade Practices Act (UPA) is New Mexico'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.

(2) See Santa Fe New Mexican: Judge Vigil, just retired, wins $1 million lottery.

Tuesday, November 13, 2012

Federal Appeals Court: Minnesota Homeowners' Quiet Title Action Claiming F'closing Banksters' Mortgage Assignments Either Were Unrecorded Or Executed By Those Lacking Legal Authority May Have Legs; Lower Court Dismissal Overruled

Law 360 reports:
  • The Eighth Circuit in a published opinion Thursday revived a quiet title action by foreclosed-upon homeowners who say assignments of the titles to their properties were faulty, distinguishing their claims from a discredited theory requiring a foreclosing party to hold an original promissory note [ie. "show-me-the note theory"].

    In its eight-page opinion, the three-judge panel said Minnesota borrowers had advanced a pair of arguments that might have legs.(1)
For more, see 8th Circ. Revives Foreclosure Suit Over Faulty Assignments.

For the ruling, see Murphy v. Aurora Loan Services LLC, 699 F.3d 1027 (8th Cir. November 8, 2012).

See Homeowners Have Standing To Challenge Faulty Mortgage Assignments From One Bankster To Another, But Only Where Defects Render Conveyance Absolutely Void, Not Merely Voidable for another recent federal case where banksters again failed in a move to nullify a homeowner challenge to the validity of mortgage assignments by dismissively attempting to associate said challenge with the "show-me-the-note" theory.

(1) The appeals court addressed these two arguments in this excerpt:
  • However, because two of the quiet-title theories do not rely on the failure of the foreclosing party to produce the note, see Compl. ¶ 57(f), (g), we conclude that the district court erred in its wholesale dismissal of the quiet-title claim pursuant to Jackson.

    Under these two theories, assignments from MERS to Aurora of legal title to the mortgages either were unrecorded or executed by individuals lacking the legal authority to do so.

    The resulting defect in  the chain of title of the mortgages, according to Homeowners, deprives Aurora of the authority to foreclose on their properties. In contrast to the complaint in Butler, these theories do not rely on the discredited “show-me-the-note” theory.

    Neither party provided briefing specific to the two remaining quiet-title theories. For instance, it is not clear whether the Homeowners still have any interest in the properties. Minnesota’s foreclosure-by-advertisement statute explains that once a sale is recorded and the time period for redemption has passed, “all the right, title, and interest of the mortgagor in and to the premises” is conveyed to the purchaser. Minn. Stat. § 580.12 (2012); see also Herber v. Christopherson, 15 N.W. 676, 677 (Minn. 1883).

    Furthermore, no party has discussed whether the Homeowners’ interest is “adverse” to the interest held by MERS or Aurora for purposes of the quiet-title statute, as Aurora claims essentially a security interest in the properties and the Homeowners’ complaint concedes that valid security interests in the properties were created and transferred out of the Homeowners’ bundle of property rights.

    Although we may affirm a dismissal on grounds not relied upon by the district court, where the parties did not adequately develop an issue, remanding to allow the district court to address the matter in the first instance is appropriate. See Reeder v. Kan. City Bd. of Police Com’rs, 733 F.2d 543, 548 (8th Cir. 1984). We leave these and any other issues surrounding the two remaining quiet-title theories for the district court to address.

Bar Boot Urged For California Attorney Who Peddled Law License To Loan Modification, Forensic Audit Racket For $250/Month Per Client

In San Francisco, California, the San Francisco Chronicle reports:
  • A State Bar judge has recommended disbarment for a Marin County lawyer who made $177,000 while representing homeowners who were falsely told they could prevent foreclosure by withholding their mortgage payments and suing their lenders.

    Greenbrae attorney Sharon Lapin insists she was unaware of the wrongdoing by US Legal Services, which contacted thousands of distressed homeowners and promised to protect them from foreclosure. She was a contract attorney with the company from August 2009 to November 2010 and represented 130 of its clients.

    But Lapin "caused significant harm to vulnerable, desperate clients, the public and the administration of justice," Judge Lucy Armendariz of the State Bar Court said in a ruling made public Friday.

    The bar immediately suspended Lapin, 57, who has practiced law since 1993. She can seek review from a panel of the court or appeal directly to the state Supreme Court, which must approve all disbarments.

    Meanwhile, the state attorney general's office has shut down US Legal and is suing the company, its owners and Lapin for damages.

    Armendariz said US Legal told owners they could save their homes by suing lenders for predatory practices. Owners were persuaded to pay thousands of dollars for worthless loan "audits" and were often told to stop paying their mortgage and send half of their usual payment to US Legal to underwrite the meritless lawsuits, the judge said.

    The company assigned clients to Lapin and paid her $250 a month per client. But she allowed US Legal to handle the lawsuits, took no action to prevent dismissal of the suits and did not return clients' phone calls, Armendariz said.

    Attorney Richard Lubetzky, who represents Lapin in the disciplinary proceedings, said she filed legitimate suits, did not mislead clients and was unaware that US Legal was advising them to withhold mortgage payments. "She got caught up and became a victim," Lubetzky said.

More Spotlight For Online Tribal Payday Lenders & Their Ripoffs

Law Professor Nathalie Martin writes in Credit Slips:
  • As reported on Turtle Talk [...], Oregon and Washington are none too pleased about tribal payday lenders making loans to citizens of their state, in contravention of their state usury laws.

    Online tribal payday lenders are setting up shop on Native land in order to get the benefits of sovereign immunity, as Josh Schwartz and I wrote about in our Washington and Lee Law Review article.

    According to a story posted on a Portland Oregon tv web site, tribal loans are now at the center of a legal battle at the highest levels of the U.S. Government. An Oregon senator is now trying to push a bill that he authored through the U.S. Senate, which would provide that lenders may not operate out of a tribal reservation or overseas, or anywhere else, if the resulting loans violate of state laws.

    If this federal bill became law, the Consumer Fraud Protection Bureau would have the power to stop the lending.The turtle talk post also linked to a warning to consumers posted by the Oregon Division of Finance and Corporate Securities. This link contains a partial list of the tribal payday lenders.

Monday, November 12, 2012

Ex-TARP IG: It "Goes Beyond Irony" That Exec In Charge Of Chase' Independent Foreclosure Review Was Named By Feds In Suit As Alleged Facilitator Of Scheme To Defraud Fannie, Freddie While Working At Countrywide/BofA

Investigative Reporter Paul Kiel writes in ProPublica:
  • An executive who the Justice Department says facilitated a scheme to defraud Fannie Mae and Freddie Mac is now spearheading JPMorgan Chase's role in the government's program to compensate victims of the big banks' abusive foreclosure practices.

    The executive, Rebecca Mairone, worked at Countrywide and Bank of America from 2006 until earlier this year, when she left for JPMorgan Chase, according to her LinkedIn profile.

    In a lawsuit filed last month in federal court in New York, Justice Department attorneys allege that Countrywide, which was bought by Bank of America in 2008, perpetrated a two-year scam to foist shoddy home loans on Fannie and Freddie.

    Neither Mairone nor any other individuals are named as defendants in the civil suit, and no criminal charges have been filed against her or anyone else in connection with the alleged misconduct. But Mairone is one of two bank officials cited in the suit as having repeatedly ignored warnings about the "Hustle," as the alleged scheme was called inside the company, and she prohibited employees from circulating some of those warnings outside their division.

    Mairone was chief operating officer of the Countrywide lending division that allegedly carried out the "Hustle." She took the helm of JPMorgan Chase's involvement in the Independent Foreclosure Review this summer, according to a former Chase employee.

    The review, overseen by federal banking regulators, requires the nation's biggest banks to compensate victims for harm they inflicted on borrowers. Victims can receive up to $125,000 in cash or, in some cases, get their homes back. But the review has already been marred by evidence that the banks themselves play a major role in identifying the victims of their own abuses, raising the question of whether the review is compromised by a central conflict of interest.

    Mairone's role raises additional questions about the Independent Foreclosure Review.

    The review "never seemed designed to place first the interests of those who were supposed to be helped — victimized homeowners," said Neil Barofsky, the former federal prosecutor who served as the special inspector general for the Troubled Asset Relief Program, better known as the bank bailout.

    "Finding out that the person running it for JPMorgan Chase is a person whose conduct in the run-up to financial crisis was allegedly so egregious that she somehow managed to be one of the only people actually named in a case brought by the Department of Justice goes beyond irony," he continued. "It speaks volumes to the banks' true intent and lack of concern for homeowners when addressing the harm that they caused during the foreclosure crisis."

Recent Ohio High Court Ruling Could Effect Thousands Of Closed Foreclosure Cases Across State

In Dayton, Ohio, the Dayton Daily News reports:
  • A unanimous Ohio Supreme Court ruling that invalidated the foreclosure of a Xenia couple’s home could have broader implications, effecting hundreds, if not thousands of closed cases across the Dayton region, according to local real estate attorneys.

    I think it’s going to be monumental,” said Randall Smith, staff attorney for the Miami Valley Fair Housing Center. “It’s now going to require lenders to be responsible.”

    For years, the standard practice across Ohio and other states has allowed lenders to file foreclosures even if they don’t have the proper paperwork in order — and can’t show that they own the property, according MVFHC Executive director Jim McCarthy. With mortgages being repackaged and resold repeatedly, the process has become sloppier and harder to track. But local courts have allowed the lawsuits to go forward, with the understanding that the proper paperwork will eventually catch up with those lawsuits.

    We, as consumer advocates, have been arguing that its improper, all along,” McCarthy said. “Just fundamentally, that sounds wrong.”

    On Oct. 31, the Ohio Supreme Court agreed, ruling that a party’s standing to initiate a mortgage foreclosure lawsuit is determined at the time of the filing — meaning that if the lender did not have proper paperwork to show ownership at the time of filing, that lawsuit can be voided.

    It’s unclear what the exact impact will be, and attorneys are trying to determine that. McCarthy called that “the multi-million dollar question.”
  • Here, it is undisputed that Federal Home Loan did not have standing at the time it commenced this foreclosure action,” Justice Terrence O’Donnell wrote in the Oct. 31 decision, which over-ruled the appeals court and caused dismissal of Freddie Mac’s case.

    This is kind of ‘first-year law school stuff,’” said attorney Andrew Engel, who represented the [homeowners], who said the lenders took a “file first, clean up the paperwork later” approach unheard of in other civil actions.
For more, see Court ruling could have broad impact on foreclosures.

For the ruling, see Fed. Home Loan Mtge. Corp. v. Schwartzwald, 2012-Ohio-5017 (Oh. October 31, 2012).

California Appeals Court: OK For Trust Deed Beneficiary To Contract Away Its Right To Foreclose To Loan Servicer

Law 360 reports:
  • In a recent decision, the California Court of Appeal for the Fourth District held, in the absence of any clear statutory authority, that the beneficiary of a deed of trust may contract its right to judicially foreclose to its loan servicer, which may then validly pursue a judicial foreclosure.
For more, see Arabia v. BAC — More Leverage For Calif. Loan Servicers.

For the ruling, see Arabia v. BAC Home Loan Servicing, LP., No. D060923 (Cal. App. 4th Dist. Div. 1, August 13, 2012).

Sunday, November 11, 2012

Minnesota Couple Who Recovered Home After Being Victimized In Sale Leaseback Equity Stripping Scam Attend Scammers' Sentencing

In Minneapolis, Minnesota, the Star Tribune reports:
  • Kevin and Kris Brown's trip to federal court began on their wedding day, Dec. 28, 2002. That's the day that they and their six children were evicted from their home in Hastings by Jim Hoffman in an equity-stripping scheme.(1)

    On Thursday, they sat quietly in a Minneapolis federal courtroom to see Hoffman and his wife, Teresa Gay Hoffman, sent to federal prison. "We've been waiting for this day for a long time," Kevin Brown said afterward. "It's amazing it's taken 10 years," Kris Brown added. "And he's kept hurting people."

    Jim Hoffman, 53, pleaded guilty in February to money laundering and tax evasion, and Teresa Hoffman, also 53, pleaded guilty to tax evasion.

    U.S. District Judge David Doty sentenced Jim Hoffman to 6 1/2 years in prison -- the top of the advisory guidelines' range -- followed by three years of supervised release. He sentenced Teresa Hoffman to a year -- six months below the minimum in the sentencing guidelines -- followed by two years of supervised release.

    The charges in the plea agreement fail to illustrate Jim Hoffman's trail of crimes, Assistant U.S. Attorney David MacLaughlin argued.

    "He is a true fraudster," MacLaughlin said, arguing for the stiff sentence. Unlike some people who resort to fraud because of economic hardship, he argued, "fraud is all that he has done since the 1990s."
  • The Browns attended the sentencing hearing along with a representative of the state attorney general's office, which helped them get back into their home seven months after Hoffman evicted them. They seemed satisfied with Jim Hoffman's sentence, but said Teresa Hoffman got off too easily.

    "I think she could've gotten more," Kris Brown said. "My kids have learned great lessons from what we've been through. Their kids have learned nothing."
For the story, see 10 years later, justice in fraud scheme.

For the U.S. Attorney press release, see Stillwater Couple Sentenced For Orchestrating $5 Million Mortgage Fraud Scheme.

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

Foreclosed Borrower Accuses Hard Money Lender Of Pocketing Her $2M In Surplus Sale Proceeds In Excess Of Outstanding Debt Owed After Public Auction

In Paulding County, Georgia, WGCL-TV Channel 46 reports:
  • A widow from Paulding County is continuing a decade-long fight for her children's inheritance that she says was taken by a hard money lender.

    Linda Bullock, of Dallas, said Ronald Lipsitz, owner of Capital Mortgage Corp. and Realty Resources Corp. on Hammond Drive in Sandy Springs, made $2 million from foreclosing on Bullock's land in 2001. Bullock said that by law, that money is hers.

    "The worst part about it is the way it happened," said Bullock, who took out two loans with Lipsitz totaling $585,000 in 1997 and 2000. Bullock said she borrowed the money to build rental properties that would help her and her husband pay rising taxes. But the Bullocks got behind in payments and Lipsitz foreclosed on 300 acres of land they used as collateral. The land is a portion of property that had been passed down in the Bullock family for generations.

    After foreclosing on three plots of land, Lipsitz filed three court documents known as deed under power that showed he paid $938,655.91 for each piece, for a total of $2.8 million.

    "He's only entitled to what's owed to him - less than $800,000; but he kept the $2 million which is illegal," said Bullock.

    According to Georgia foreclosure law, if the foreclosure sale price is more than the unpaid debt, the surplus must be paid back to the original property owner.

    "It's devastated her financially and emotionally," said consumer attorney Chuck Pekor. Bullock hired Pekor, a former federal prosecutor, to investigate her case after she lost a lengthy court battle with Lipsitz.

    "The official foreclosure sale was for considerably more than the face amount of what she was owed. They just ignored that. Never paid anything back," said Pekor.

    Documents filed in Paulding County court show Lipsitz sold some of the property for $2.2 million. According to his website, he's actively working to sell the rest of the property.

    "Those conclusions are completely wrong and we have sent you adequate proof," said Lipsitz when questioned by CBS Atlanta outside his office. Lipsitz repeatedly declined to be interviewed on camera. In documents provided by his spokesperson, Lipsitz insisted there was no surplus to pay Bullock and that he paid $938,655 for all three pieces of land – not each one.

    Lipsitz declined to provide tax records to CBS Atlanta News which could clear up how much he paid for the land. One thing is for sure: Lipsitz profited nicely from Bullock's valuable land.

    Bullock said she plans to continue fighting for the $2 million she intended to leave for her children. "You're just not going to get away with this. It's just too bad. Too horrible," said Bullock.

Probe Into Raleigh-Area Foreclosure Sale Bid-Rigging Conspiracy Begins To Pick Up Steam As Antitrust Feds Score 2nd Guilty Plea; Suspect Agrees To Sing

From the U.S. Department of Justice (Washington, D.C.):
  • A real estate investor pleaded guilty [] to conspiring to commit mail fraud at public real estate foreclosure auctions held in Raleigh, N.C., and surrounding areas, the Department of Justice announced. This is the second charge in the department’s ongoing investigation into real estate foreclosure auctions in eastern North Carolina.

    According to the one-count felony charge filed on Oct. 4, 2012, in the U.S. District Court for the Eastern District of North Carolina, in Greenville, real estate investor, Darren K. Phillips, conspired with a group of real estate speculators to participate in a scheme to defraud financial institutions, homeowners and others with a legal interest in select properties, and to obtain money and property from financial institutions, homeowners and others with a legal interest in rigged properties through false and fraudulent pretenses or representations. According to the plea agreement, Phillips has agreed to cooperate with the department’s ongoing investigation.

    The primary purpose of the conspiracy was to fraudulently acquire title to rigged foreclosure properties offered through public auctions at artificially suppressed prices, to make and receive payoffs from co-conspirators and to divert money away from financial institutions, homeowners and others with a legal interest in the rigged foreclosure properties, the department said in court papers.
  • Phillips is the second person to be charged in this investigation. In September 2010, Christopher Deans, a real estate speculator from Raleigh, pleaded guilty in the U.S. District Court in Greenville in connection with the investigation.

    T[his] plea arose from an ongoing federal antitrust investigation of fraud and bidding irregularities in certain real estate foreclosure auctions in the Eastern District of North Carolina. The investigation is being conducted by the Antitrust Division’s Atlanta Field Office and the FBI’s Atlanta Field Office, with assistance from the U.S. Attorney’s Office for the Eastern District of North Carolina.

    Anyone with information concerning bid rigging or fraud related to real estate foreclosure auctions should contact the Antitrust Division’s Atlanta Field Office at 404-331-7100, or visit