Saturday, December 08, 2012

Bay State AG Tags Contractor In Civil Suit For Allegedly Using Bogus Promises To Rip Off Elderly Homeowners & Violating Earlier Entered Judgment, Permanent Injunction

From the Office of the Massachusetts Attorney General:
  • The Commonwealth has filed a lawsuit against a contractor from Hanover, alleging that he violated a prior court order by soliciting and entering into a home improvement contract with elderly consumers, Attorney General Martha Coakley announced [].

    In a contempt action filed Monday in Suffolk Superior Court, the AG’s Office alleges that Richard Myers – operating under the name of Atlantic Restoration Company – violated a final judgment and permanent injunction entered in February 2011 that prohibited him from soliciting or engaging in any home improvement contracting work.

    According to the AG’s Office, from at least December 2011 to January 2012, Myers violated the terms of the permanent injunction by soliciting and entering into a home improvement contract with two elderly consumers who paid him $3,000 for mold remediation and the replacement of flooring within their home. Myers failed to complete the job and refused to provide the consumers with the materials he purchased on their behalf.

    “We allege that this contractor continues to steal thousands of dollars from consumers for renovations he failed to complete, putting the safety and well-being of residents at risk,” AG Coakley said.

    The complaint is seeking consumer restitution and civil penalties in the amount of $10,000 per violation to be paid by Myers, as well as disclosure by Myers of the identities of any additional victims of his conduct.

    In November 2006, the AG’s Office sued Myers, alleging he violated the Home Improvement Contractor Act by illegally engaging in home improvement work on a suspended license, failing to perform agreed-upon work or apply for required building permits, requesting excessive cash advances, and failing and refusing to refund homeowners’ payments for work not performed.

    In February 2011, a final judgment was entered against Myers, requiring him to pay more than $291,000 in consumer restitution, $300,000 in civil penalties and more than $125,000 in fees, and permanently enjoining him from soliciting or engaging in home improvement contracting work in the Commonwealth. Myers has not paid any portion of the judgment.
For the Massachusetts AG press release, see AG Coakley Sues Hanover Contractor for Soliciting Elderly Homeowners with Illegal Home Improvement Contract (Defendant in Violation of Prior Court Order; AG’s Office Seeks Consumer Restitution).

Alabama AG To City Water Authority: Cough Up Refunds For Improperly Clipped Cash From Buyers Of Foreclosed Homes To Pay Off Ex-Owners' Unpaid H2O Bills

In Fayetteville, Alabama, The Daily Home reports:
  • The Fayetteville Water Authority has been refunding residents for unlawful charges they received after moving into foreclosed homes. The authority charged new residents of foreclosed homes the water bill balance previous owners left unpaid.

    To have their water meters turned on, new residents had to first pay in full the balance of the previous owners.

    “Our attorney advised us and the ruling was made that it was legal,” said Fayetteville Water Authority chairman Doug Blair. “And the people that made the foreclosures didn’t agree with us so we asked for the attorney general’s opinion and it didn’t come back in our favor.”

    Blair said the water authority was advised by its attorney, Barry D. Vaughn, that what they were doing was legal, but after customers came in with complaints against the charges, they sought the opinion of state Attorney General Luther Strange.

    In a letter from Vaughn to Strange on behalf of the Fayetteville Water Authority, the following question was posed: “If a bank forecloses on a house and the water meter has been locked off for non-payment under the rules and regulations of the Water Authority, is it lawful and does the Water Authority have the right to refuse to unlock the meter at this residence until the bill has been paid?”

    In a formal opinion letter sent back to Vaughn, Strange concludes: “The Fayetteville Water Authority cannot deny or discontinue water service to a new owner of property purchased at a foreclosure sale for the delinquent charges of a former owner.”

    “We’re not out to do people wrong and do things unlawful,” Blair said. “I said that if we were wrong we would make amends for it.”

    The water authority has already taken steps to amend the situation, which involves refunding a total of about $7,000 to residents that were charged for the previous owner’s water bill balance.

    Reimbursements were listed as “foreclosure refunds” and approved recently at the water authority’s meeting.

    The refunds ranged from $330.48 to $19.08 for a number of residences, businesses and banks in the area.

    “We’re not there to do wrong and we assured our water customers that if what we were doing was not lawful we would do what was correct and that’s what we’re doing,” Blair said.

Homebuyers At Tax Foreclosure Sale Sue City Over Plans To Give Their Recently-Purchased Dilapidated Homes The Wrecking Ball Treatment; Say Some Properties Weren't Listed On Pre-Sale Demo List

In Jackson, Michigan, MLive reports:
  • A group of residents has decided to fight Jackson City Hall.

    The group filed a lawsuit against the city, hoping to halt demolition on homes the residents purchased at the Jackson County tax foreclosure auction Sept. 27. A pre-trial hearing has been set for June 28 before Circuit Court Judge Richard LaFlamme.

    As part of that lawsuit, the plaintiffs also filed a request or preliminary injunction in Jackson County Circuit Court Friday. They're asking a judge to issue an order to prevent the city from tearing down the six houses.

    “Because the city will not work with us we have felt forced to seek an injunction and take legal action in order to protect our investments and our futures,” said Monika Schwab, one of the plaintiffs.
  • Other plaintiffs in the case include Troy and April Jordan, Branden Benson and Pam Fero. Schwab said she is hoping others in the same situation will join with the group.

    Jackson City Manager Pat Burtch said the city cannot move forward with the demolition on the homes until after the pre-hearing trial.

    Although these homes were purchased at the county tax foreclosure auction, they are located in the city of Jackson, and therefore governed by not only city housing codes but state building codes.
  • Schwab bid on and won three lots with homes on them. She paid $100 for 1222 Maple Ave., $550 for 1045 S. Jackson St. and $400 for 111 Stanley St. [...] Two of the lots were already scheduled for demolition by the city before she bid on them in September. Auction-goers were warned that some of the parcels up for bid could be scheduled for demolition or have already been demolished.

    But, the home on Maple Avenue was added to the city’s demolition list the day before the auction and she had no idea. The same thing happened to Troy Jordan who is part of the group that filed the lawsuit.
  • Troy and April Jordan have eight children. They bid on and won a lot with a home on it at 809 S. Blackstone Street. In September, Troy Jordan was thrilled that he was able to purchase his first home and looked forward to making necessary repairs and moving his family in.

    His home was also added to the city demolition list the night before the auction.

    Jordan was shocked when he heard the news because he checked the city list to make sure he wouldn’t be bidding on a house that was scheduled to be demolished. It wasn’t listed.

    After approaching the city for permits, Jordan was again shocked to find out how much the repairs would cost. His repair estimate came in at $76,543 and he was hoping to do some of the work himself, cutting down on the costs. “Because I’m not a contractor they won’t give me permits,” Jordan said.

Heat/Hot Water-Lacking Renter Sues Foreclosing Bankster For Failure To Provide Essential Landlord-Associated Services

In Chicago, Illinois, WBBM-TV Channel 2 reports:
  • Remember the winter of 2010-11, and the Groundhog Day blizzard that dumped more than 21 inches of snow on Chicago? Rochelle McIntosh remembers it all too well. “I was abused. I was abused,” she said.

    CBS 2’s Mike Parker reports McIntosh came home to her West Side apartment that winter after major surgery, and found out she had no heat and no hot water.

    “It was miserable. It really was. It affected my self-being as Rochelle McIntosh, as an intelligent human being,” she said.

    It turned out her apartment building had gone into foreclosure, and was now owned by New York-based HSBC Bank.

    She has sued she is now suing HSBC, claiming they ignored her complaints about no heat and no water, until the spring, when the city of Chicago levied hundreds of dollars in Housing Court fines against the bank.

    “The mortgage foreclosure mess has gotten so many people jammed up, and is so impersonal,” McIntosh’s attorney, Edward Campbell, said. “Tenants, who are innocent parties, who have absolutely no fault of their own … they can just get railroaded.”

    The Lawyers’ Committee For Better Housing said, between 2009 and 2011, almost 17,000 apartment buildings were hit by foreclosure in Chicago; one out of 10 tenants were affected.

    “We found that more apartment building units are impacted by foreclosure than single-family and condominium units,” said Patricia Fron, the group’s building programs administrator. The findings don’t surprise her, given all the calls she gets each day from renters in foreclosed apartment buildings.

    The group’s legal director, Mark Swartz, said “I think that banks open themselves up to a lot of liability if they don’t maintain buildings, and treat tenants respectfully.” Swartz pointed out, when a bank forecloses on an apartment building, it legally becomes the landlord.

Financially Strapped Homeowner Admits To Hatching Plot To Abduct Attorney, Hold Him For Ransom To Score At Least $30K To Save Home From Foreclosure

In East St. Louis, Illinois, the St. Louis Post-Dispatch reports:
  • A man trying to avoid foreclosure on his home acknowledged in federal court Tuesday in East St. Louis that he hatched a plan to abduct and hold a lawyer, living in Granite City, for ransom.

    But the defendant, Brett L. Nash, 46, refused to admit what prosecutors claimed earlier this year — that he had considered various murder plots, including a hot-tub electrocution that he would blame on the victim’s cat.

    As part of Nash’s guilty plea to a charge of solicitation of a crime of violence, prosecutors agreed to drop other charges, which included murder-for-hire.

    Nash spent several months, beginning in late 2011, trying to persuade his wife to help him, court documents say.

    The intended victim, whom Nash considered wealthy, had a romantic interest in Nash’s wife, a former dancer he had known for several years and who had a key to his house.

    Nash needed at least $30,000 to avoid losing the couple’s home, near Pontoon Beach, to foreclosure, his plea says.

    But his wife refused to help, despite the arguments and physical violence it spawned, the document says.

    He admitted pulling out some of his wife’s hair and threatening to leave it at the crime scene.

    So Nash turned to a fellow union member and barge deckhand who also had a criminal record, officials said. That man notified authorities.

Friday, December 07, 2012

Retired Maine Attorney Scores $100K Award In Recognition Of Foreclosure Defense Volunteer Work

In Portland, Maine, the Morning Sentinel reports:
  • In April 2008, Thomas Cox joined the Maine Volunteer Lawyers Project to fight against unfair foreclosure practices.

    His reward for his services? $100,000.

    Cox, the retired attorney who uncovered the practice of "robo-signing" and other illegal practices in the mortgage industry, was one of five people honored Wednesday with the 2012 Purpose Prize, which recognizes people older than 60 who work toward the public good and rewards them with $100,000.

    It's a stunning turnaround for a man who once was a lawyer for Maine banks, helping with debt collection and foreclosures.

    "I feel more alive and vital than I think I've ever felt," Cox, 68, said Wednesday. "I couldn't feel more satisfied with my work right now."
  • [I]n the past four years, he's uncovered scores of cases in which mortgage lenders wrongly kept customers delinquent and foreclosed on homes using improper accounting, illegal fees and an "egregiously inflated" forced-place insurance. "Some of the practices that were being used were truly incredible," he said.
For more, see Portland lawyer, who works for free, rewarded with $100K prize (Thomas Cox helped "blow the lid" off foreclosure fraud by some of the country's biggest banks, saving tens of thousands of homes).

Single Mother Of Two Unwittingly Moves In, Pays $8K Deposit For Home In Foreclosure; Now Faces Boot; Slick Operator Who Pocketed Cash Dodges Media Camera, Denies All Accusations

In Kansas City, Missouri, WDAF-TV Channel 4 reports:
  • A young mom thought she was buying her dream home. But a few days after moving in, she learned the house was in foreclosure and her $8,000 deposit to Jim Daniels of Three Door Properties had disappeared.

    Angenette Hollins, a hard-working, single mom of two, put $8,300 down on a spacious southeast Kansas City ranch house. She described it as “a nice, large house that me and my children wouldn’t grow out of.”

    Or so she hoped. But days after moving in, Hollins got a letter in the mail saying her dream home was in foreclosure and would be sold on the courthouse steps.

    “My heart just dropped,” she said. “I didn’t what was going on with me and my kids. Where were we going to stay?”

    She called the attorney handling the foreclosure, who told her that her purchase of the home was never legal because the man who sold her the house had no authority to do so.

    Who was that man? Jim Daniels of Three Door Properties in Kansas City. Hollins called Daniels and demanded to know what went wrong with the sale.

    “I asked him when I sat down and met with him, ‘are you a con man? You can’t show me anything on this house,’” she recalled. “You say you own this house and you don’t own it, and you are holding on to my money.’”

    She said Daniels insisted he did own the home, but told her he would return her money, but only if she first moved out of the house. No longer trusting Daniels, she refused.

    She’s not the only person who doesn’t trust him.

    Lori Bath and her husband bought a house from Daniels in May. It still doesn’t have a working furnace despite Daniels’ repeated promises. Their attempts to reach Daniels are rarely successful. “We’ve called a lot,” said Bathe. “Every day, sometimes up to 20 times a day.”

    We tried to track down Jim Daniels, or anyone from Three Door Properties. The company operates out of a room in the back of this adult daycare center on Hickman Mills Road. But no one was there when we came calling. So we visited another address linked to the Three Door Properties, a private home, and left a business card. A few days later, Jim Daniels called us, declining to talk on camera and denying everything.(1)
For more, see Mom Fights to Keep Home Sold to Her Under Shady Circumstances.

(1) The business practice described in the story sounds similar to one that recently got a slick Detroit, Michigan-area real estate operator pinched by the Feds. See:
As a reminder to those who mistakenly assune that these apparent ripoff deals are nothing more than civil cases, it is clear that all the sophisticated paperwork in the world (ie. business/purchase contracts, leases, closing statements, etc.) isn't enough to permit scammers to insulate themselves from criminal prosecution when they target their victims with legitimate-looking business propositions when screwing their victims over. Criminal prosecutors have the authority to "pierce through" such attempts to disguise a blatant criminal real estate ripoff as a common, legitimate business deal.
Clear precedent exists for such a "pierce through" approach to overcome any objections that will certainly arise when the scammers make the argument that the arrangement was just a civil transaction that, if challenged, should be done with a civil lawsuit, not a criminal prosecution. See, for example:
  • People v. Frankfort, (1952) 114 Cal.App.2d 680, 700; 251 P.2d 401:

    The simple answer to this argument is that "The People prosecuting for a crime committed in relation to a contract are not parties to the contract and are not bound by it. They are at liberty in such a prosecution to show the true nature of the transaction." (People v. Chait, 69 Cal.App.2d 503, 519 [159 P.2d 445]; People v. McEntyre, 32 Cal.App.2d Supp. 752, 760 [84 P.2d 560]; People v. Jones, 61 Cal.App.2d 608, 620 [143 P.2d 726]; People v. Pierce, supra, p. 605.)

  • People v. Jones, (1943) 61 Cal.App.2d 608, 620 [143 P.2d 726]:

    Defendant argues that the deal with each "seller" was a civil transaction; [...] Cloaked in the draperies of his corporation and pretending to act in its behalf, he boldly approached his unsuspecting victims.


    Although each deal in its incipiency bore the color and trappings of a normal, civil contract, yet when subjected to a postmortem it exhaled the stench and disclosed the carcass of a fraud. (People v. Epstein, 118 Cal.App. 7, 10 [4 P.2d 555].) There appears no sign of good faith at any turn. Each taking and appropriation was a grand theft.

    The use of the corporate name and the promises made in accomplishing his purpose were a camouflage of such common variety that no excess of genius was required to discern the fraud. Parol evidence of all that occurred was admissible to show the intention of defendant. (People v. Robinson, 107 Cal.App. 211, 221 [290 P. 470].)

Financially Strapped Homeowner: Wells Fargo Wiped Out My $250K Home Equity By Losing My Loan Modification Docs Over & Over, Then Forcing Foreclosure Sale

In San Francisco, California, the San Francisco Chronicle reports:
  • Larry Faulks says his bank robbed him of over a quarter of a million dollars.

    By selling Faulks' San Francisco house at a foreclosure auction, Wells Fargo wiped out all his equity, he said. Unlike most struggling homeowners, Faulks, 59, was not underwater on the home his family bought in 1962; it was worth considerably more than he owed on it.

    Wells Fargo says it tried to work with Faulks but couldn't find a way to avoid foreclosure, as his income was too limited.

    Outside legal experts who reviewed his case said it highlights how California law doesn't safeguard the rare homeowners with equity in a foreclosure.
  • In Faulks' case, after an illness and failed surgery left him too disabled to continue his work as a technical writer, he sought a loan modification on his mortgage, which carried a sky-high interest rate of 8.2 percent.

    Once he could no longer afford his payments in spring 2010, he embarked on a two-year quest in which he submitted multiple applications, faxed in reams of paperwork, spent hours on the phone, attended in-person counseling events, contacted politicians, housing counselors and government agencies - all to no avail.

    "The bank lost document after document and then claimed I never sent them, and forced me to repeatedly start over," he said.
  • At a foreclosure auction in May, a real-estate investment company called DMG Asset Management bought the house for $705,000. That was a bargain compared with its apparent value.

    The house, built by famed developer Joseph Eichler and on a level lot in Diamond Heights, is surrounded by homes that sell for over a million dollars. Online real estate site Zillow pegs its value at $1 million; DMG's attorney said it's worth $950,000 to $975,000.

    Faulks' mortgage was $574,627. After adding in missed payments and late fees, his total debt was $691,914. As is required by law, he was sent $13,086 for the difference between the $705,000 auction sales price and his debt. Wells also offered him $20,000 in relocation assistance.

    But that amount is dwarfed by what he might have netted on the open market. If he had sold the home himself for $1 million, he would have been able to pay the bank everything he owed and walk away with a nest egg of at least $250,000.

Thursday, December 06, 2012

California Appeals Court: Non-Judicial Foreclosure OK When No Trustee Named On Deed Of Trust, Provided One Is Named Prior To Initiation Of Process

From a client release from the law firm Seyfarth Shaw LLC:
  • Deciding an issue of first impression in California, the Second District Court of Appeal has held that a lender properly may foreclose when the Deed of Trust fails to name a Trustee, provided that a Trustee is named prior to foreclosure. Shuster v. BAC Home Loans Servicing LP, No. B235890 (Nov. 29, 2012). In doing so, the court followed the weight of authority from other jurisdictions on this issue.
  • The Court of Appeal rejected the borrowers’ argument that the Deed of Trust’s failure to designate a Trustee transformed the instrument into a mortgage which may be foreclosed only through judicial foreclosure. In reaching this conclusion, the court relied on authorities from other jurisdictions as well as California authorities holding that equity will not allow a trust to fail for lack of a trustee.

    The court also rejected the borrowers’ challenges to various alleged irregularities in the foreclosure process, reiterating that a debtor must allege tender of the amounts due under the loan in order to invalidate a foreclosure sale.

Foreclosure Rescue Peddler Gets 35 Years For Forging Loan Modification Approvals, Then Structuring Mailing Scheme To Hijack Subsequent Payments On Phony Mortgage Workout Deals

In Baltimore, Maryland, The Baltimore Sun reports:
  • Con artist Rodney Getlan did not just take people's money — his actions caused them to lose their homes.

    That he stole the sanctuary of a roof and four walls may have led to Getlan's getting a much longer prison term. Baltimore County Circuit Judge Vicki Ballou-Watts sentenced Getlan to 35 years in prison this week, a sentence on par with punishment for some violent crimes.

    "Rodney got what he deserved," said Lauri Hartz, who attended the court proceeding as one of nearly 50 known victims of Getlan's scheme to divert mortgage payments to his own accounts.
  • In the Getlan case, Hartz and her mother, Sally Begun-Gordon, 83, lost about $30,000 to the fraud. But their financial and emotional distress has been much greater, Hartz said. Now both of their homes are in the foreclosure process. Hartz is going through mediation with her lender; her mother has not reached that point yet.

    The two Rockville residents were referred to Getlan by their mortgage broker, so they had reason to think he was legitimate, Hartz said.

    Prosecutors have alleged that Getlan caused direct losses of about $400,000, though the amount of restitution owed is still being litigated. Getlan pleaded guilty to crimes related to nine homeowners on the condition that the state's attorney would not pursue the remaining claims.

    Prosecutors said that the scheme began in 2009, in the middle of the housing crisis, and survived a cease-and-desist order and even his first guilty plea. In addition to charging an advance for a loan modification — generally illegal in Maryland — Getlan also forged documents to make it appear that lenders had approved the modifications, according to the charging document.

    Getlan, 45, of Owings Mills, then used several bank accounts and fake company names to make homeowners think they were sending their monthly payments to their mortgage servicers — even though the money was actually being sent to mail forwarding services across the country that he set up, prosecutors said.

    He also changed the mailing addresses on his victim's accounts so that their mortgage servicers would not notify them that something was amiss.

    Throughout the scheme, Getlan was on notice that his actions were illegal, prosecutors say, and he continued to flout the law. A company he was affiliated with, U.S. Equity Solutions LLC, received a cease-and-desist order in mid-2009.

    Then, in February 2011, Getlan was charged in Baltimore County with theft related to a mortgage modification he'd pretended to procure for a man in South Carolina. He pleaded guilty to the single count of theft but continued to receive monthly mortgage checks form dozens of other victims, prosecutors said.

    "He was collecting money from this group after he was sentenced," Naylor said.

    While Ballou-Watts suspended 10 years of Getlan's sentence, and Maryland's parole guidelines mean he will likely be behind bars for less than a decade, the sentence is a long one for mortgage fraud when compared to federal sentences in similar cases.
For the story, see Long sentence highlights efforts to prosecute mortgage fraud (Owings Mills man given 35-year sentence by Baltimore County judge).

Duo Who Ripped Off $600K In Home Equity From Victims Of Foreclosure Rescue Ruse Get Five Years For Theft By Deception; Pair Remain Sociopathically Uncertain About What They Did Wrong, Despite Fleeing When Arrest Warrants Issued

In Mercer County, New Jersey, The Trentonian reports:
  • A Ewing couple was sentenced to five years in prison, for exploiting and deceiving vulnerable homeowners and large banking institutions, out of more than $1 million, through a two-year-long mortgage fraud scheme.

    Joann Smith, 47, and her boyfriend Wayne Betha, 42, pleaded guilty in July to theft by deception and failure to file tax returns. According to the N.J. Office of the Attorney General, the couple ran a Trenton-based real estate firm and admitted they defrauded mortgage companies out of $641,800 and stole $600,000 from home sellers between August 2006 and February 2008.
  • The couple, which used their firm, S&B Property Management and Maintenance LLC of Trenton deposited more than $600,000, from proceeds Smith received from the sale of 11 homes, into their personal accounts. The victims, according to reports, were suffering from severe financial problems, and could not pay their mortgages.

    Proceeds from the sales were able to be diverted by telling the sellers and title companies that they owed expenses for property repairs that were never done. The couple also demanded consultant fees that the sellers had not authorized.
  • “I’m kind of lost here your honor I heard everything (the prosecutor) said and everything my lawyer presented and I understand about the plea agreement and everything and even when I read the pre-sentencing agreement about what I did,” said Betha when addressing the court. “But a lot of people got their money back, so I don’t understand, it was never my intention to harm anybody or hurt anybody, I faked salaries, but (the victims) were going to lose their houses, I was trying to help,” he said with tears in his eyes.

    When Smith was asked to address the judge, she seemed defiant, uncertain that she had done anything wrong or if in fact there were victims of the scheme. “Your honor we’ve been going through this case for four years, not one victim came forward to try to recoup their money back, not one person came forward try to get not even $10 back,” she said.

    No victim ever came forward, they never came to court, that’s what I feel if they’re saying I took all these people money, not one came forward.”(1)

Wednesday, December 05, 2012

Massachusetts AG Suit Alleging That Bankster Foreclosure Process Commenced Without First Holding Mortgage Violates State Consumer Protection Law Allowed To Move Forward

In Boston, Massachusetts, Bloomberg reports:
  • JPMorgan Chase & Co. (JPM), Citigroup Inc. (C), and Wells Fargo & Co. (WFC) must face claims over home foreclosure practices in a lawsuit brought by the Massachusetts attorney general, a judge ruled.

    Allegations that the banks violated state law by conducting invalid foreclosures can proceed, according to a decision by Justice Judith Fabricant of Suffolk County Superior Court in Boston dated Nov. 30.

    Invalid foreclosures resulting in properties with clouded titles may have caused harm to third-party purchasersand the real estate market as a whole, and thereby to the public,” Fabricant wrote.

    The three banks along with Bank of America Corp. and Ally Financial Inc. (ALLY)’s GMAC Mortgage were sued last year by Attorney General Martha Coakley. Coakley accused the lenders of using fraudulent documents in home foreclosures, foreclosing without legal authority, undermining public land records and misrepresenting loan-modification programs.

    Some of the claims in the lawsuit were settled as part of a $25 billion agreement between the banks and 49 states reached earlier this year.

    Coakley claimed the banks violated the state’s consumer protection law by initiating foreclosures on homes before holding the mortgage. Fabricant said that claim could move forward against the banks except Bank of America. The judge said the state didn’t identify “any instance” in which the bank conducted a foreclosure sale when it didn’t hold the mortgage, the judge said.

Lawsuit: Attempting To Sell Home To Pocket Equity, Elderly Couple Facing Foreclosure Takes Property Off Market After Getting Bankster's Loan Mod Promise; Latter Then Takes Title Thru Foreclosure Anyway

In Delano, Minnesota, Minnesota Public Radio reports:
  • John Chun has lived the American dream.

    After escaping from North Korea to South Korea in 1957, he moved to the United States, learned to speak English and went to college.

    Eventually, Chun became an engineer and car designer for Ford Motor Co, where he designed the Shelby Cobra, one of the most iconic hotrods of the 1960s.

    But Chun's dream is turning into a nightmare. At 84, he and his wife Helen, who also is from Korea, may lose the home they have owned since the 1970s to foreclosure, even though they have plenty of equity.
  • [W]hen an IndyMac representative offered the Chuns a loan modification that year through the federal Home Affordable Modification Program, they eagerly applied. The program is designed to help struggling homeowners obtain loan modifications or to refinance their home and avoid a foreclosure.

    But the bank rejected their application on the grounds that their documents weren't complete. After the first rejection, they tried again and were again rejected.

    In court documents, the Chuns allege bank representatives told them their applications were in fact complete.

    With a modification seemingly out of reach, the Chuns hired a realtor to put their house on the market. The property listed for $1.4 million. According to their real estate agent, the couple stood to recoup at least $265,000 in equity if they sold their home.

    An IndyMac representative again contacted the Chuns with offers of another loan modification and promised their application would be approved on the third try, they said. Hoping to save the house where they had raised their children, the Chuns then took their home off the market to apply for another modification.

    But while IndyMac processed the Chuns' application for a loan modification, the company sold their home at a foreclosure auction. The bank then bought the home for just over $685,000.

    The Chuns are suing One West in federal court, alleging that the company misrepresented their loan and made false promises to them. A judge issued a restraining order to block their eviction until the case is settled. The attorney handling the case for One West bank did not return repeated requests for comment.

    In court documents, the bank disputes many of the Chuns' allegations. Bank attorneys say lending agents denied the Chuns a loan modification because they failed to provide the necessary financial documents in time. The bank has asked a judge to dismiss the Chun's case.

    But the Chuns' attorney, Todd Murray, said his clients case' is about more than the loan modification.

    "The issue is they deserved to be treated honestly and to be told the truth," Murray said. "They weren't told the truth and they lost their house and they lost a lot of equity in their house as a result of that."

    Minnesota courts have traditionally ruled in favor of banks in such cases. Judges often say that if promises by a bank aren't in writing, homeowners cannot rely on them.

    Murray, however, thinks the Chuns have a shot.

    "Banks should not have the ability to just lie to people about the modification process," he said.

    What happened to the Chuns was common during the height of the foreclosure crisis, Murray said. In a "dual track foreclosure," bank officials proceed with a foreclosure at the same time they are processing an application for a loan modification.

    Consumer advocates have argued forcefully that the process misleads homeowners and puts them in a difficult position of trying to figure out whether to rely on the promises of the lender regarding the loan modification or to take actions to try and protect themselves.

    So-called dual track foreclosures are now prohibited under the recent attorneys general settlement between 49 states and the nation's five largest loan servicers over foreclosure practices. One West is not a party to the settlement as it isn't one of the biggest servicers.

Freddie, Fannie Call Off Xmas-Season Foreclosure Eviction Lockouts

Freddie Mac recently announced:
  • Freddie Mac [] announced it is suspending evictions nationwide between December 17, 2012 and January 2, 2013 on foreclosed occupied single family homes, and 2-4 unit properties, that had Freddie Mac mortgages. This is in addition to the previous announcement suspending evictions in eligible major disaster areas caused by Hurricane Sandy.

    "We are instructing our foreclosure attorneys to suspend pending eviction lockouts on foreclosed homes in order to provide a greater measure of certainty to families during the holiday season."

    The two-week holiday suspension will only apply to eviction lockouts on Freddie Mac-owned REO homes and will not affect other pre- or post-foreclosure processes.

    Although no evictions will take place, firms handling local evictions for Freddie Mac will continue to file documentation in preparation for evictions, scheduled after January 2, 2013.

    [This] announcement is separate from the 90-day eviction suspensions in eligible Hurricane Sandy disaster areas, which continue through February 2013.

Tuesday, December 04, 2012

Loan Servicer Refuses To Accept House Payments From Elderly Widow Because She's Not Named In Deceased Hubby's Mortgage, Leaving Her Facing Foreclosure

In Jacksonville, Florida, The New York Times reports:
  • Geraldine Bates lost her husband to kidney failure last year. Now, she has fallen behind on her mortgage payments and is terrified that she will lose her home in Jacksonville, Fla.

    Ms. Bates, 70, is caught in a foreclosure trap that is ensnaring widows across America: she cannot get help lowering her payments until her name is added to the mortgage note, but the lender says she must be current on payments before that can happen. “I keep praying,” said Ms. Bates, who is fighting with the bank to stay in the four-bedroom house.

    Just as the housing market is recovering, a growing group of homeowners — widows over the age of 50 whose husbands alone were holders of the mortgage — are losing their homes to foreclosure because of a paperwork flaw that keeps them from obtaining loan modifications.

    In the latest chapter of the foreclosure crisis, homeowners over 50 are falling into foreclosure at the fastest pace of any age group, according to nationwide data, in part because women are outliving their spouses and are unable to cope with cuts in their pensions, ballooning medical costs — and the fine print on their mortgages.
  • [I]nterviews with elder-care advocates, housing lawyers and borrowers suggest that the problem is spreading fast, propelled by an aging population. Legal aid offices in California, Florida, Ohio and New York say it is among the top complaints from clients. Billy Howard, a consumer lawyer in Tampa, Fla., said he had more than two dozen cases involving widows, up from virtually none before 2007.

    “These women are essentially invisible,” said Gladys Gerson, a lawyer for Coast to Coast Legal Aid of South Florida.
  • The trouble for Ms. Bates, of Jacksonville, Fla., began after her husband Robert, a World War II veteran, died last February. Mr. Bates had obtained a trial loan modification but died before he could make the first payment. Determined to make good on the hard-won plan, Ms. Bates said she notified HSBC, the servicer, of her husband’s death and sent in a check for $1,125.47.

    Ms. Bates said she was devastated when the check was returned, with a letter explaining the money could not be accepted because she was not on the mortgage.

Bank Bookkeeping Screw-Up Leaves 79-Year Old Widow With $12K Legal Bill & In Foreclosure, Despite Never Having Missed House Payments

In Tualatin, Oregon, ABC News reports:
  • A woman in Tualatin, Ore., says she's at the end of her rope fighting a three-year battle with Wells Fargo for mistakenly stating she has missed mortgage payments on her home, which is now in foreclosure.

    Dee Dingman, 79, and her late husband moved into their four-bedroom home in 1967. After her husband, Leland, died in March 2008, Dingman took out a new mortgage while she paid off his medical bills, never missing a payment. Court records show she promised to pay $308,000 plus interest on June 16, 2008.

    The next year, after Wells Fargo's acquisition of Wachovia was completed in Jan. 2009, Dingman began receiving foreclosure notices. She believes the bank did not corrrectly process her payment since around Oct. 2009. But her bank records show her mortgage payments have been deposited by Wells Fargo. Despite efforts to clear up the mistake and paying nearly $12,000 in attorney fees, her home is now in judicial foreclosure.

Servicer Agrees To Accept $13K From State-Run, Federally-Funded Program To Cover Homeowner's Late House Payments, Then Proceeds With Foreclosure Sale Anyway

In Mableton, Georgia, The Atlanta Journal Constitution reports:
  • Andu Trisa Long thought her home had been saved. Unemployed for nearly a year, she had fallen behind on her mortgage payments after burning through savings. Through a state-run, but federally funded program, her mortgage company would be receiving thousands of dollars in taxpayer money to stave off foreclosure.

    But, as the 54-year-old Mableton woman stood in her foyer one October afternoon, she could hardly believe what she was reading. It was an eviction notice and offer to give her as much as $3,000 if she quietly moved out of the house she built with her husband in 1999. Just leave the keys, the letter from law firm Pendergast & Associates said.

    In the coming weeks, the state would wire CitiMortgage, the servicer for her loan, at least $13,000 to make Long’s mortgage current. But unbeknownst to the state or Long, Citi had already foreclosed, despite reaching an agreement with the program, known as Homesafe Georgia.

    Long’s foreclosure shows just how little protection Georgia consumers really have. Even when they’ve been awarded state and federal assistance, homeowners can get caught by a foreclosure machine with little oversight or repercussions for errors.

Monday, December 03, 2012

Michigan Judge To Cough Up $6K+ In Back Taxes, Penalties Over Improper Homestead Claim; Joins Her State High Court Justice-Mom With Real Estate Controversies

In Wayne County, Michigan, the Observer & Eccentric reports:
  • Before Dana Hathaway takes the bench on the Wayne County Circuit Court, she might want to get her house in order.

    Two homes, actually.

    Hathaway owes Birmingham Schools approximately $6,500 in additional taxes, plus penalties and interest to Oakland County and the city of Birmingham after she rescinded a house at 174 Catalpa as her principal residence for the past three years.

    Birmingham Billing Manager Janet Laing said Hathaway purchased the house in 2010 and had been paying taxes at the principal residence rate. She came into Birmingham City Hall on Nov. 5 with an affidavit declaring the Catalpa Street house as a non-principal residence.

    Laing said Hathaway has to pay the additional taxes because in Michigan, a property owner is not allowed to declare two homes as their primary residence.

    Hathaway was elected in November to serve a six-year term on the Wayne County Third Circuit Court. She's the daughter of Michigan Supreme Court Justice Diane Hathaway, who's being investigated by the FBI over allegations of mortgage fraud.(1)

    Dana Hathaway declined to comment on this story. She's listing a house in Grosse Pointe Farms as her principal residence, a necessary move since she ran for office in Wayne County.

    According to real estate records, she and her husband purchased the house in March 2010 for about $310,000. It was placed into foreclosure by the previous owner. The 3,657-square-foot house was built in 2000. It's now back on the back on the market with a listed selling price of $560,000.

Underwater Homeowner Slams 11th-Hour Brakes On Bank-Approved Short Sale After Discovering That HOA Was Snatching Lender-Promised $13K 'Walking Money'

In Jupiter, Florida, WPTV-TV Channel 5 reports:
  • Lynne Zurback is getting ready for Christmas. Today she's hand-painting a nativity set. “I paint. I do flowers. That's my goal, is to open up a flower shop that only sells local products," Zurback said.

    So when she got letters offering her $13,000 to have a short sale on her condo in Abacoa she thought it was the new start she desperately needed.

    “They call me and say, 'You're going to be here tomorrow at noon,' and I was like, ‘Oh that's wonderful. I'll get my money. I can move on. I can do what I want to do.’ 'Oh no, you're not getting any money.' And I was you've gotta be kidding me," Zurback said.

    Upset with the news, she cancelled the sale. Zurback was told the money was bypassing her hands and going towards past HOA dues.

    "I just said then that's it. No one’s getting any money. I was shocked," Zurback said.

    She contacted Impact 5 to see if it was legal.

    “When you do a short sale you'll generally get what's called a short sale agreement from the bank,” real estate attorney Shari Olefson said.

    Olefson told NewsChannel 5 not only is it legal, it's common.

    “It's really important that you read the terms of that agreement carefully as soon as you get it because hidden in that fine print is going to be a disclosure that says that the money may be used to pay off lien holders and that you'll be required to give good title to the property,” Olefson said.

Homeowner, Attorney Who Showed Up At Bank Branch With Cops, Court Order & Repo Van To Foreclose On BofA Look To Make Incident Into Hollywood Movie

In Naples, Florida, the Naples Daily News reports:
  • Some friends questioned whether it was a good idea to show up at a Bank of America branch with a repo van, demanding that the bank pay up.

    Yet rookie attorney Todd Allen still took the chance and it has paid off.

    Allen made national news when he arrived at a Bank of America branch on Davis Boulevard in East Naples in June 2011 with Collier County sheriff's deputies, a moving company and a court writ permitting them to seize furniture and cash to satisfy the $2,500 judgment. It was a last alternative.

    He left after the branch manager cut a check for the judgment and expenses incurred in executing the levy.
  • Bank of America tried to foreclose on Warren and Maureen Nyerges' Golden Gate Estates home in 2010. But their home had been fully paid for and didn't have a mortgage.

    It was a mistake that was reported by the media. The story also was featured on the "Daily Show" on Comedy Central.

    "Daily Show" correspondent John Oliver told the story of how Allen showed up with repo men to foreclose on a banking giant, making everyone laugh.

    "That is the single, greatest story I have ever heard," Oliver said on the show.

    Oliver told the trio that the case could turn into a movie. That's exactly what happened. A movie on the big screen is in the works, according to the attorney and couple.

    Bank of America representatives couldn't be reached for comment for this story.
  • In summer 2011, Allen and the Nyergeses signed with a producer in Los Angeles and entered into a contract to make a movie. "The idea is being shopped around to movie houses but nothing has happened yet," Allen said.

    Allen said he doesn't have a preference of which company decides to do the film as long as the scope of the foreclosure crisis and the impact it has on people is accurate.

    When asked who he wants to play his part, the married father of three children said he really doesn't care. "I just want it to be funny," he said of the movie.

    Warren Nyerges said he doesn't have a preference of which actor plays his role, as long as he is handsome. "It would make an amusing story," he said about the potential film.

Sunday, December 02, 2012

Court Gives "John Beck Amazing Profits" Tax Foreclosure-Buying System $113M+ Slam; Product-Peddling TV Infomercial Star Bragged About Buying "Thousands" Of Properties Using His System, Admits Under Oath To Only Buying Ten

Anyone wondering why one-time, late-night TV infomercial star John Beck, known for peddling his "pennies on the dollar", "free & clear" tax foreclosure acquisition system, has been conspicuously absent from the airwaves recently may be interested in the following, borrowed from Rebecca Tushnet's 43(B)log:
  • [A California federal] court granted the [Federal Trade Commission - "FTC"] summary judgment on liability for violation of §5 and the Telemarketing Sales Rule with respect to three “wealth-creation” products sold via infomercials, the John Beck system (promising real estate riches), the John Alexander system (ditto), and Jeff Paul’s Shortcuts to Internet Millions (guess what). The FTC successfully held the named originators, their companies, and related companies liable.(1)

    The John Beck system claimed to help consumers make money by buying real estate at tax foreclosure sales by paying the delinquent back taxes. The relevant defendants falsely represented that consumers could quickly and easily earn lots of money by buying homes in their area “free and clear” for “pennies on the dollar,” then reselling them for full market value or renting them for a profit.

    The informercials also claimed that buyers would get a free 30-day membership to “John Beck’s Property Vault,” but failed to disclose that it was a continuity plan that subsequently charged them $39.95/month, in violation of the Telemarketing Sales Rule.
  • Just looking at the John Beck system, the claims that consumers could “purchase” homes for “pennies on the dollar”; buy homes in their own area, regardless of where they lived; make money “easily” and with little financial investment; and make money “free and clear of all mortgages” were disproved by the kit materials themselves.

    Buying tax liens doesn’t mean you get a deed, only a right to collect delinquent taxes, which only ends up with title and right to possess or sell in exceptional circumstances. Tax sales are held only once a year and bidding typically starts at a very high percentage of fair market value.

    Beck’s deposition testimony also showed the falsity of the infomercials; while he expressly claimed to have bought “thousands” of properties with his system, at deposition he admitted that he did so “very infrequently”—only 10 times.

    Beck claimed that his daughter had bought over 90 properties using his system, but admitted that he knew of only 4 “students” who’d been able to get title to homes like those shown in the infomercial, and those instances required several years of waiting, including a court trip to foreclose on the right of redemption. Purchasing property at tax sales is elaborate and time-consuming.

    Dozens of consumer witnesses further confirmed this falsity. They testified that it was difficult or impossible to find tax sales in their area, and difficult or impossible to earn substantial money using the Beck system.
  • The court dismissed small print disclaimers that endorsers’ experiences were unique. “The prints are so tiny that, under the circumstances, consumers are unlikely to read them while watching and listening to the testimonials of the endorsers.”
For more, see FTC wins against "make money fast" claims.

For the federal court ruling, see F.T.C. v. John Beck Amazing Profits, LLC, 865 F. Supp. 2d 1052 (C.D. Cal. 2012). (Go here for the lawsuit filed by the FTC).

Go here for links to certain other court documents filed in the case made available by the FTC.

(1) According to the federal court ruling, Beck was found to be jointly and severally liable with a couple of others for $113,374,305, which was the amount of injury suffered by consumers, or unjust enrichment obtained by him and the others, in connection with the practices alleged in Count 1 of the Complaint.

Ex-Law Firm Employees Plead Guilty To Ripping Off $788K+ From Clients' Real Estate Trust Account Funds, Company's Business Accounts

From the Office of the U.S. Attorney (Trenton, New Jersey):
  • Two former employees of a law firm based in Edison, N.J., admitted [] to conspiring to defraud their former employer by improperly diverting more than $788,000 from the law firm, U.S. Attorney Paul J. Fishman announced.

    Marla Deptula, 45, of Sayreville, N.J., pleaded guilty to an Information charging her with one count of conspiracy to commit mail fraud and one count of subscribing to a false tax return. Rose L. Crabbe, 31, of Plainfield, N.J., pleaded guilty to an Information charging her with one count of conspiracy to commit mail fraud. Both defendants entered their guilty pleas before U.S. District Judge Peter G. Sheridan in Trenton federal court.

    According to documents filed in this case and statements made in court:

    Deptula and Crabbe each admitted that between February 2005 and September 2007, they conspired to embezzle, and did, in fact, embezzle, from their former employer, referred to in court documents only as the “Law Firm,” by wrongfully writing checks from the law firm’s trust and business accounts to themselves and their personal creditors to pay for their personal expenses, including credit card bills, real estate taxes and child care expenses.
  • Deptula, who had access to the law firm’s bank accounts in order to perform her duties as a secretary in the law firm’s real estate section, used that access to divert more than $788,000 from the attorney trust and business accounts for her and Crabbe’s personal benefit.(1) Deptula received the vast majority of the stolen funds and failed to report any of the income on her federal tax returns.
For the U.S. Attorney press release, see Former New Jersey Law Firm Employees Admit Embezzling More Than $788,000 In Law Firm Funds.

(1) According to the formal charges against Deptula, she "caused checks to be issued from the LAW FIRM'S trust account payable to clients of the LAW FIRM, forged the clients' endorsements on the back of the checks, and then deposited those checks into bank accounts that she controlled."

Oregon Regulator Issues Caution On Doing Business With Payday Lenders & Other Short Term Loan Sharks Affiliated With Federally-Recognized Indian Tribes

From the State of Oregon Division of Finance and Corporate Securities:
  • It has come to our attention that a number of lenders offering short-term loans (payday loans) to Oregon consumers are subdivisions of, or affiliated with, federally-recognized Indian tribes. As a result, these companies may not be subject to the jurisdiction of the Oregon Department of Consumer and Business Services (DCBS). We are still evaluating the law and the various tribes’ positions to determine if tribal lenders are outside Oregon’s authority.

    Most Internet-based payday lenders, including the companies listed below, are not licensed to do business in Oregon. If you are considering using the services of an Internet-based payday lender or any other company not licensed to do payday lending in Oregon, you should be aware that they typically charge interest rates and other fees significantly above the limits found in Oregon law.

    Based on consumer complaints received by DCBS and information received from other states, it appears that the following are tribal-run payday lenders. (Note: this is likely not an exclusive list.):

    US Fast Cash
    United Cash Loans
    Star Cash Processing
    Instant Cash USA
    500 Fast Cash
    Rio Resources
    Xtra Cash
    One Click Cash
    Preferred Cash