Saturday, December 22, 2012

Revoked Bar Ticket For Attorney Convicted Of Forging Documents To Snatch $500K+ In Foreclosure Surplus Sale Proceeds From Unwitting Foreclosed Ex-Homeowners

In Madison, Wisconsin, The Associated Press reports:
  • The state Supreme Court has revoked a Brookfield attorney's license after he was convicted of stealing more than half-a-million dollars from Milwaukee County. The court said in a revocation order Tuesday that Thomas Bielinski hurt the integrity of the court system.

    Prosecutors accused the 53-year-old Bielinski in 2011 of defrauding the county out of $542,000. They say he targeted mortgage foreclosure cases in which the owners had failed to file claims for surplus funds. He claimed to represent the owners, filed claims on their behalf and kept the money for himself.

    He pleaded guilty this past February to one felony count of theft and was sentenced to five years in prison. His attorney, Michael Hart, declined comment except to say Bielinski has cooperated with authorities.

Antittrust Feds Score Another Guilty Plea In Ongoing Probe Into Northern NJ Tax Lien Auction Bid-Rigging Scheme

From the U.S. Department of Justice (Washington, D.C.):
  • A New Jersey company in the business of receiving the assignment of municipal tax liens pleaded guilty [Wednesday] for its role in a conspiracy to rig bids for the sale of tax liens auctioned by municipalities in New Jersey, the Department of Justice announced.

    A felony charge was filed [Wednesday] in U.S. District Court for the District of New Jersey in Newark, against Mercer S.M.E. Inc., a company located in Burlington, N.J. According to the charges, from at least 2003 until approximately February 2009, Mercer, in conjunction with a nonprofit corporation and others participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey.

    As part of the conspiracy, the co-conspirators agreed to allocate the liens on which each would bid. Among other things, Mercer was assigned tax liens it understood were purchased in accordance with the unlawful agreement.

    “The conspirators agreed to coordinate their bids and allocate the tax liens amongst themselves, at the expense of distressed property owners,” said Scott D. Hammond, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program. “Today’s guilty plea sends a message that those who profit from illegal, anticompetitive conduct will be held accountable.”
  • [Wednesday]’s plea is the 11th guilty plea resulting from an ongoing investigation into bid rigging or fraud related to municipal tax lien auctions. Eight individuals – Isadore H. May, Richard J. Pisciotta Jr., William A. Collins, Robert W. Stein, David M. Farber, Robert E. Rothman, Stephen E. Hruby and David Butler – and two companies, DSBD LLC and Crusader Servicing Corp., have previously pleaded guilty as part of this investigation.
For the Justice Department press release, see New Jersey Company Pleads Guilty for Role in Bid-Rigging Scheme at Municipal Tax Lien Auctions (Investigation Has Yielded 11 Guilty Pleas).

Watch Out For Those Government Logos On Solicitations Peddling Foreclosure Help

ConsumerAffairs reports:
  • You've seen the Internet ads. They feature President Obama's smiling face or the seal of a federal agency, suggesting the company making the offer has official sanction.

    They don't, and the Consumer Financial Protection Bureau (CFPB) is urging consumers not to fall for this blatant scam.

    “No, really. Just because something has a government logo on it doesn’t mean that it’s legitimate,” the agency warns on its website.

    As a case in point, the CFPB points to enforcement action is has launched against two mortgage modification operations it accuses of ripping off struggling homeowners. The Websites, emails and other promotional materials bear government agency logos, letterhead or other markings that could mislead a consumer into thinking these services are associated with government agencies.

    The government claims these two companies took in more than $10 million by charging consumers for services that falsely promised to prevent foreclosures or renegotiate troubled mortgages.
For more, see Why you should be suspicious of government logos (Pretending to be government-sanctioned is a scammer's favorite ruse).

Russian Immigrant's 'Shtetl' Defense Mitigates Jail Time For Self-Made Millionairess Bagged For Pocketing $77K+ In Federal Low-Income Rent Subsidies; Agreed To Serve 1+ Year, Only Gets 2 Months

In New York City, the New York Post reports:
  • She’s headed for a different kind of public housing now.

    A self-made millionairess was sentenced to two months in the slammer [] for scamming nearly $80,000 in rent subsidies by illegally leasing a taxpayer-subsidized apartment after striking it rich in real estate.

    Russian immigrant Nataliya Dyakovskaya, 65, had agreed to serve more than a year behind bars in a plea deal with the feds, but caught a big break after her lawyer blamed her “crazy” crime on a “shtetl mentality,” using the Yiddish word for the former Jewish villages of Eastern Europe.

    “She has always believed that, notwithstanding her good luck and her success, she was afraid, and still is, that everything could disappear in a day,” defense lawyer Steven Kartagener said.

    Prosecutor Tatiana Martins countered by calling Dyakovskaya’s 14-year scheme “really egregious,” noting that 163,000 families are on a waiting list for the kind of low-income apartment she had in the Vladeck Houses on the Lower East Side.

    “Every time she sat down and took out the [qualification] form and put her name on the form, she knew she was ripping off the US government,” Martins said.

    Judge Alvin Hellerstein rejected Dyakovskaya’s bid for no jail time, saying: “What she did was reprehensible.”

    But Hellerstein also called her a “good person” who did “good things” for her friends and family, and noted that immigrants often fail to appreciate that “what was OK in a different society” isn’t acceptable here.

    In addition to the jail time, Hellerstein gave Dyakovskaya six months’ house arrest, fined her $25,000 and ordered her to pay more than $77,000 in restitution to the Housing Authority.
Source: Rental Yentl (Yiddish plea can’t save apt. cheat).

Friday, December 21, 2012

Baltimore-Area Foreclosure Mill Lawyer Gets Spanked In Court For Having Others Sign, Notarize His Name On Court Documents

In Baltimore, Maryland, The Baltimore Sun reports:
  • A Hunt Valley attorney who admitted to having his employees sign his name to foreclosure documents was found by a Baltimore County judge to have violated three of Maryland's rules of professional conduct for lawyers, according to court records.

    Thomas P. Dore engaged in behavior that was "prejudicial to the administration of justice" by "routinely and repeatedly" filing "with the courts affidavits purportedly signed by him and attested to by notaries" he employed, according to court documents. Affidavits are the written equivalent of taking the stand to testify under oath and Maryland law does not allow for them to be signed by a proxy.

    The decision against Dore is the latest stemming from a series of petitions by the Maryland Attorney Grievance Commission against lawyers who, during the height of the foreclosure crisis, cut corners in thousands of foreclosure cases in order to manage overwhelming workloads. So far, one attorney has been reprimanded by the state's highest court for such behavior and several other cases are working their way through the legal system.
For more, see Foreclosure attorney violated rules by having others sign his name, court finds (Sanctions, if any, will be determined by Court of Appeals).

Litigating Miami-Dade Foreclosures Becomes A Joke As Judges Begin Bulldozing Cases Through System, Steamrolling Homeowners In The Process

In Miami, Florida, The Miami Herald reports:
  • Miami-Dade Circuit Court — choked with foreclosure cases, many dating to 2009 — has gotten tough on pushing cases through the system.

    Five months into a state-funded project, Florida’s busiest circuit court is conducting hundreds of foreclosure trials a week.

    With $626,000 in special funds for the fiscal year ending July 31, 2013, the court has added two senior judge slots and a staff of case managers to help clear a backlog of some 53,668 foreclosure cases.

    “It’s a rocket docket,” said Miami-Dade Circuit Judge Jon Gordon, a senior judge who is churning through about 50 trials a day.
  • Most trials are short and simple. Judges can plow through a one-witness foreclosure case in 15 minutes if it isn’t contested, the judge said. Contested cases with two witnesses can take a couple of hours.

    Attorneys, especially defense attorneys, don’t like the court’s tough line.

    Bruce Jacobs, a Miami attorney who specializes in foreclosure defense work and hosts a weekly radio program called Mortgage Wars on WZAB-AM 880 in Miami, said the court’s efforts are well intended but can hamper the defense’s ability to challenge a bank’s evidence that it is entitled to foreclose.

    Jacobs said he has shown up in court objecting that lenders have refused to provide documents he requested to prepare a defense until the day of trial. “They haven’t provided me anything, and the judge sends me outside the courtroom to look at them and then it’s, ‘Let’s go to trial,’ ” he said, expressing frustration at being asked to speed-read important documents.

    Jacobs said under the law, it isn’t enough for a lender to show that a homeowner hasn’t paid a loan; the lender must prove it has the right to foreclose. That often can be dicey when mortgage loans have been packaged into securities and are being serviced by a third party and have been passed from one institution to another.

    “I’m all in favor of moving these cases forward, but they’ve got to hold both sides to the rules of procedure,” Jacobs said.

    Last Thursday, Sergio Cabanas, a Pembroke Pines attorney, was in court arguing to postpone a foreclosure trial set for that morning, because, among other things, his attorney had another hearing in Broward County the same morning.

    Gordon, the senior judge, denied Cabanas’ request. “You’re here today,” the judge said.

    Cabanas, who defends foreclosure cases, claimed it would be “almost like a Woody Allen skit,” for him to be both a witness and the attorney in the case, but the judge brushed aside his argument.

    In Miami-Dade, the court typically won’t consider requests for continuances made the day of trial, except in an emergency. Such requests must be filed at least seven business days ahead of time for review by a judge on the foreclosure team.

    Forced to go to trial, Cabanas acknowledged that he hadn’t made payments on the loan since early 2009, even as the bank laid out its documentation to foreclose.

    Asked if a signature on a document was his, Cabanas said it looked like it, but he had “no specific recollection” of signing it.

    Cabanas then raised one issue after another — to no avail. Among other things, he said he was trying to get a loan modification for the rental property, held in a trust.

    He questioned the bank representative’s qualifications to be a witness in the case. He challenged the bank’s right to foreclose at all, demanding proof the mortgage had been properly transferred when the original lender, World Savings, was acquired by Wachovia, which in turn was acquired by Wells Fargo.

    The judge overruled his objections.

    “I’m running out of time, and I’m running out of patience,” Gordon finally told Cabanas. Soon afterward, he ruled in favor of the bank. Cabanas later said he plans to file an appeal.

    “In my case, they’re overlooking certain burdens of proof and other evidence that would never be tolerated in other proceedings,” Cabanas said. “They’re under the gun, no matter what, come hell or high water, to push these cases off the cliff.’’
For the story, see Miami-Dade court puts foreclosures on fast track (Miami-Dade Circuit Court is aggressively setting foreclosure cases for trial as it tries to clear the backlog that ensued from the ‘robo-signing’ delays).

Mozilo's Unloading Of Countrywide: Beleaguered BofA Continues To Choke On Stockpile Of Inherited Crappy Loans

Bloomberg reports:
  • Bank of America Corp. has amassed $64 billion of mortgages that are at least six months delinquent and have yet to enter foreclosure, more than twice the amount held by its four largest competitors combined.

    The loans are monitored as part of February’s $25 billion settlement between the top five U.S. lenders and state attorneys general over allegations of abusive foreclosure practices. Bank of America’s stockpile of deteriorating debt is mostly from its 2008 acquisition of Countrywide Financial Corp., once the nation’s largest mortgage provider. Wells Fargo & Co., the biggest U.S. servicer, has $15.3 billion of such unpaid loans.
For more, see Bank of America Delinquent Loans Mean Losses: Mortgages.

In a related story, see Forbes: As Bank Of America Tries To Recover, Mozilo Says Countrywide Was Never The Problem (The man at the top of the mortgage company that nearly crippled Bank of America says he has no regrets).

Thursday, December 20, 2012

Banksters To Score Major Advantage In Lending To Consumer Borrowers: Protection Against Homeowner Lawsuits

From The New York Times' Dealb%k blog:
  • As regulators complete new mortgage rules, banks are about to get a significant advantage: protection against homeowner lawsuits.

    The rules are meant to help bolster the housing market. By shielding banks from potential litigation, policy makers contend that the industry will have a powerful incentive to make higher quality home loans.

    But some banking and housing specialists worry that borrowers are losing a critical safeguard. Industries rarely get broad protection from consumer lawsuits, and banks would seem unlikely candidates given the range of abuses revealed during the housing bust.

    "A lot of bad things are done in the name of expanding access to credit, as we found out," said Sheila C. Bair, former chairwoman of the Federal Deposit Insurance Corporation and now a senior adviser to the Pew Charitable Trusts.

    The legal protection stems from the Dodd-Frank Act, the sweeping regulatory overhaul passed in 2010 to help repair the financial system.

Vegas Juries Convict Ex-Process Server Of 35 Felonies In "Sewer Service" Racket; Bogus Docs Filed In Debt Collector Lawsuits

In Las Vegas, Nevada, the Las Vegas Review Journal reports:
  • A jury convicted former process server Maurice Carroll [] of 17 forgery counts in a scheme to file false affidavits in Las Vegas, Henderson and North Las Vegas justice courts. The 12-member panel deliberated for three hours after a week of testimony and arguments.

    Carroll, 43, a former Las Vegas police officer, was previously convicted of 17 counts of filing false court documents and one count of obtaining money under false pretenses in the 2010 scheme.

    At the request of prosecutors, District Judge Elissa Cadish ordered Carroll remanded into custody while he awaits his Jan. 16 sentencing on all 35 felony charges. "I think it's finally caught up with him," Chief Deputy District Attorney Mike Staudaher said afterward.

    The charges focus on phony court affidavits Carroll was accused of putting together in civil cases involving one of his clients, debt collector Richland Holdings.

    Carroll was accused of failing to serve documents in 17 Richland Holdings cases in May and June 2010, though he certified them as served in Justice Court affidavits.

    As a consequence, people named in the affidavits were not notified they were being sued by Richland Holdings.

    Earlier in the weeklong trial, Staudaher told the jury many of the people Carroll swore he had served weren't even home at the time. Some were at work, one couple was in England, and one address didn't exist, Staudaher said.
For more, see Ex-process server convicted of more counts in affidavit scheme.

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

Ohio Payday, Auto Title Lending Outfits Do End-Run Around State Interest Caps To Lock Financially Strapped Borrowers Into E-Z To Get, Hard-To-Pay-Off Loans

In Columbus, Ohio, the Dayton Daily News reports:
  • Storefront and online lenders are offering a new form of expensive credit — with fees and interest rates totaling more than 300 percent in some cases — by exploiting the same legal loopholes used to sidestep voter-approved rate caps on standard payday loans, a Dayton Daily News investigation found.

    “Auto title loans” give borrowers quick and easy access to cash but at a steep price. Not only do the agreements carry high fee and interest costs — far above the 28 percent rate ceiling that Ohio voters endorsed for short-term loans in 2008 — but consumers risk having their vehicles repossessed.
  • An employee at a newly opened LoanMax store at 2601 S. Smithville Road in Dayton told an undercover Daily News reporter that someone taking out a $400 loan would have to pay back $536 after 30 days. On a $1,000 loan, a borrower would have to repay $1,325, the employee said.

    If those fees and interest were calculated as an annual percentage rate, both loans would have an effective APR of around 400 percent.

    Consumer advocates call auto title lending a dangerous practice that traps people in debt and sometimes takes away an asset that is worth more than the loan: their car or truck. In Texas, an average of 93 people a day have their cars repossessed by auto title lenders, which works out to be a 6 percent repossession rate, according to 2012 data from the Texas Office of Consumer Credit Commissioner.
  • Critics say lenders are doing an end-run around the state’s 2008 Short Term Loan Act, which was heavily opposed by the payday lending industry and overwhelmingly approved by voters in a statewide referendum.
  • Payday and auto title lenders sidestep the strict limits imposed by the Short Term Loan Act by licensing their businesses under the Second Mortgage Loan Act or the Credit Services Organization Act. Both laws permit fees on top of whatever interest rate is charged.

    The Second Mortgage Loan Act was originally designed for borrowers taking out a cash loan with their house put up as security. The CSO act was aimed at regulating the credit repair businesses that collected fees but did little to help consumers consolidate debt or clear up credit blemishes. Now payday lenders licensed as CSOs offer to help borrowers repair their credit by obtaining a payday or auto title loan.
  • When the Daily News undercover reporter visited the LoanMax store on South Smithville, the employee outlined a dizzying array of potential fees. Asked what would happen if a loan wasn’t repaid in 30 days, the employee said as long as a borrower made a “minimum payment” roughly equal to the fees and interest (paying $142 on the $400 loan), they could essentially start over with a new loan of the same amount.

    The employee pointed out that the minimum payment would only pay down $6 of the principal on the loan, then added that “you can do that as many times as you need to.”

    If a borrower did that three times, the dollar amount on fees and interest would be higher than the original loan amount.

    The cost is more steep for those who can’t pay off the loan or make the minimum payment. “If you don’t pay either one of these, there’s 30 days before we would repo the car,” the employee said.
For more, see Popular auto title loans offer fast cash at steep price (Lenders exploit legal loophole to exceed caps on payday loans).

Wednesday, December 19, 2012

'Independent' Foreclosure Review Not So Independent

Investigative reporter Paul Kiel writes in ProPubica:
  • The Independent Foreclosure Review is the government's main effort to compensate homeowners for harm they suffered at the hands of banks — and, as its name indicates, it's supposed to be independent.

    But until recently, that was hardly the case with Bank of America. Supposedly independent, third-party reviewers would sit at a computer, analyzing each homeowner's case by going through hundreds of questions, such as whether the bank had properly reviewed a homeowner for a modification or had charged bogus fees.

    But the reviewers weren't starting from a blank slate. Bank of America employees had already supplied the answers, which the reviewers would have to override if they did not agree.

Bail Set At $25K For Westchester County Man Facing Grand Larceny, Scheme To Defraud Charges Revolving Around Upfront Fees Collected For Purported Foreclosure Rescue, Refi Services

In Peekskill, New York, the Peekskill-Cortlandt Patch reports:
  • A 50-year-old Peekskill man faces grand larceny charges after he allegedly bilked residents with a home refinancing scam.

    Anthony Vecchio is scheduled to appear in Peekskill court [] after city police arrested him and charged him with fourth-degree grand larceny, a felony, and scheme to defraud, a misdemeanor.

    Vecchio allegedly obtained money from residents for refinancing and foreclosure on their homes, but never processed the required paperwork. Police said they arrested Vecchio following a six month investigation. Vecchio was arraigned and sent to Westchester County Jail with bail set at $25,000.
Source: Peekskill Man Charged in Home Refinance Scam (Police are reaching to anybody who may have been victimized by Anthony Vecchio, 50, Peekskill. Police said Vecchio charged clients for home financing and foreclosure processing, but he never submitted any paperwork).

County Lawsuits Tagging Fannie, Freddie Over Failure To Pay Deed Transfer Taxes Continue

In Springfield, Illinois, WRSP-TV Channel 55 reports:
  • Macon County is the latest Illinois county to file a lawsuit against Fannie Mae and Freddie Mac over failing to pay real estate transfer taxes on foreclosure properties.

    Officials in the central Illinois county filed suit Dec. 4 in federal court in Springfield, asking a judge to order the two federal mortgage finance companies, as well as the Federal Housing Finance Agency, which oversees them, to pay the transfer taxes; issue a declaration that they are subject to having to pay them; and award damages, interest, penalties, costs and attorney fees.

    Macon County also wants its suit to be certified as class-action to include all 102 counties in Illinois.

    A transfer tax is an excise tax that has to be paid when a property is sold or transferred to a new owner. Illinois’ statewide transfer tax rate is 50 cents for every $500 of the property’s value. There also is a county transfer tax that is 25 cents for every $500 of value.

    Macon County officials say Freddie Mac and Fannie Mae have handled numerous foreclosure sales in Illinois but have not paid the transfer taxes. The few times the agencies paid the taxes, they did so “under protest,” insisting they are exempt because they are governmental bodies, officials say.

    Fannie Mae and Freddie Mac are not governmental bodies, Macon County officials argue, saying they “are, and have been, private, publicly traded corporations since approximately 1968.” A Michigan judge agreed earlier this year in a similar suit there, saying the entities are not exempt from the transfer taxes because they are excise taxes, not direct taxes.

    It’s unclear from the lawsuit how much back taxes are at stake in Macon County.
    In June, several northern Illinois counties filed a similar lawsuit. DeKalb, Will, Winnebago, Whiteside, Kendall and Kane counties all are asking a judge to rule that Fannie Mae and Freddie Mac are subject to the taxes. DeKalb County officials estimated they were owed about $40,000 for the past five years.

    The Federal Housing Finance Agency responded to the suit, saying that while it recognizes the hardship faced by local officials because of shrinking tax bases, it must resist local governments imposing “unlawful” tax-raising programs that end up costing taxpayers across the country.

    Counties in other states also have filed similar suits, including Minnesota, North Carolina, South Carolina, Ohio and Florida.

Tuesday, December 18, 2012

NYS High Court: County Not Required To Seek Out Landowner's New Mailing Address After Move When Tax-Foreclosing On Real Estate

In Warren County, New York, the North Country Gazette reports:
  • The state’s highest court has ruled that Warren County officials were not constitutionally required to try and seek out a new address to give a property owner notice before seizing his property in the Town of Chester for overdue taxes and selling the property at a foreclosure sale in 1999 after he had moved and his forwarding address had expired.

    In an unanimous decision, the Court of Appeals ruled that W. James and Andrea Mac Naughton of Short Hills, NJ, had not been deprived of their property without due process of law and that the county had satisfied due process requirements in its effort to notify the property owners that an in rem tax foreclosure proceeding had been been initiated against their property after documents sent to the address listed for them on the tax roll were returned by the postal service as undeliverable.

    When an owner of real property moves and does not give a new address to the collector of real property taxes, he or she may fail to receive notices of overdue taxes and related legal proceedings and the property may consequently be lost in foreclosure.

    The U.S. Supreme Court and NY Court of Appeals have held that, in such situations, due process requires taxing authorities to take reasonable steps to track down the missing taxpayer being seizing and selling her or her property.

    This case raised the question of how much a taxing authority is required to do. The MacNaughtons had argued that, when notice mailed to them at their last known address, in New Jersey, proved undeliverable, the tax collector was required to find some means of making personal service on them, or to address a notice to “occupant” at the former address, or to search New Jersey public records for a new address.

    In 1988, the MacNaughtons acquired a vacant lot in the Town of Chester in Warren County. They then lived in South Orange, NJ, and their South Orange address appeared on the deed.

    The Town sent them real property tax bills at that address, and the MacNaughtons paid them.

    In 1993, the MacNaughtons moved from South Orange to Millburn,NJ. They arranged with the post office to forward their mail, but they did not then inform the Town of Chester taxing authorities of their new address.

    The 1994 tax bill was forwarded from South Orange to Millburn, and paid.

    The MacNaughtons claim that, after receiving the forwarded bill, they gave their new address to the Town in a handwritten note and in a telephone call, but plaintiffs have no record of either communication, and neither is reflected in the Town’s records.

    To accept undocumented claims of this kind would be to invite abuse”, the court wrote, “and we therefore conclude that plaintiffs’ ‘bare allegation’ is insufficient to defeat summary judgment on the issue of whether they gave notice of their change of address to the Town; we take it as established that they gave no such notice”.

    A year after the MacNaughtons moved, their forwarding arrangement with the post office expired. Tax bills for the next three years, mailed to them at the South Orange address, were returned to the Town.

    In 1998,Warren County sent a warning letter to the South Orange address that was also returned, and then began a foreclosure proceeding. It served plaintiffs with the petition and notice of petition by certified mail addressed to the South Orange address. The mailing was returned with the notation: “Undeliverable as Addressed – Forwarding Order Expired.”

    The MacNaughtons defaulted in the foreclosure proceeding and title to the property passed to the County, which sold it at auction in 1999.

    The MacNaughtons did not learn of these events until 2003.

    After unsuccessful federal litigation, they began the state action in 2005, asserting that the attempts to give them notice of the foreclosure were constitutionally inadequate, and seeking a declaration that they still owned the property.

    Supreme Court granted the County’s motion for summary judgment, and the Appellate Division affirmed. The MacNaughtons then appealed to the Courty of Appeals as of right.

    At the time the county began its foreclosure proceeding in 1998, the Real Property Tax Law required that notice of the proceeding be published in at least two newspapers and that it be “mailed, by ordinary first class mail” to the owners of the property. It is not disputed that the County complied with the statutes. The question is whether the State or Federal Constitution required it to do more.

    The Court says no. However, it should be noted that the law has been changed and Real Property Tax Law now requires that notice be mailed by certified and first class mail. If these documents are returned, additional steps must be taken by municipal authorities to locate the property owner, including contacting the postal service to determine if other mailing addresses are available and on file.
Source: Court: County Didn’t Deny Due Process In Property Sale.

For the ruling, see Mac Naughton v. Warren County, 2012 NY Slip Op 08442 (NY December 11, 2012).

Minnesota Lets Robosigning Zombie Debt Buyer Off With Hand Slap; Consent Order Requires Outfit To Do What It Should Have Already Been Doing Anyway When Clipping Consumers For Unpaid Bills

From the Office of the Minnesota Attorney General:
  • Minnesota Attorney General Lori Swanson [] announced a Consent Judgment with Midland Funding, LLC, one of the country’s largest debt buyers and which has offices in St. Cloud, to settle a lawsuit she filed against the company last year for filing unreliable “robo-signed” affidavits in collections lawsuits and sometimes targeting the wrong people for payment of old bills that it purchased from credit card companies and banks for pennies on the dollar.

Homeowner: Mortgage Servicer Belted Me For $6K+ In Charges On $2,289 Loan Balance For Being 91 Days Late In Payments, Refuses To Allow Principal Payoff

In Green Cove Springs, Florida, First Coast News reports:
  • Diane Ham is done with Ocwen, her mortgage servicing company. "I cannot get them to even understand," she said. Ham, who lost her law enforcement job three years ago, said they were trying to keep their mortgage loan current until it happened.

    "We had gotten behind," said Ham, "and my bank account was wiped out by identity thieves." She said it left her account $325 in the negative balance before her credit union was able to correct it.

    Her husband's income was the only cash coming in and soon, they were 90 days late. Ham said in November, she tried to make a payment to Ocwen Loan servicing and it was rejected.

    "They told me I was 91 days past due," said Ham, "and I would have to pay $1707 by the end of December and that would solve the issue."

    Her mortgage balance is $2,289 so she asked for a pay off and Ocwen sent her a statement for $8,507.56. "I was just overwhelmed," she said.

    She is being charged thousands in foreclosure fees, but according to court records she is currently not in a foreclosure lawsuit. There was a lawsuit in 2006, but the records show that was dismissed and not relative to 2012.

    "I'm trying to pay my bill, but when you turn around and hit me with $5,000 additional money, that is not right," said Ham.

    Attorney Tim Pribisco with the Oughton Law firm said most mortgage agreement have a provision for the lender to recover foreclosure fees if it has to retain an attorney, but there has to be a foreclosure. "If there's no foreclosure action started what are the foreclosure fees?" asked Pribisco.

    He said given the evidence he has seen this seems like an act of bad faith. Pribisco said Ham needs an attorney to walk her through the legal mess. Ham said she just wants the fees removed.

    "Give me a justified payoff so that I can pay this off," said Ham.

    Attempts for comment from Ocwen were unsuccessful.

Monday, December 17, 2012

Retired Cowboys Watch Ex-Gridiron Teammate "Mean Gene, The Hitting Machine" Get Sacked For 54 Months After Guilty Plea For Quarterbacking Dallas-Area Equity Stripping Straw Buyer Ripoff Of Financially Strapped Homeowners

From the Office of the U.S. Attorney (Dallas, Texas):
  • Eugene Lockhart, Jr. was sentenced [...] to 54 months in federal prison and ordered to pay approximately $2.4 million in restitution following his guilty plea to one count of conspiracy to commit wire fraud, stemming from his leadership role in a massive mortgage fraud scheme that he and others ran in the Dallas area from approximately 2002 to 2005.

    Lockhart, of Carrollton, Texas, is the last of 10 defendants who were convicted in the scheme to be sentenced.

    Lockhart played for the Dallas Cowboys from 1984 to 1990 and used his name and fame, according to evidence in the case, to get business and further the scheme.
  • Lockhart was involved with real estate entities, some formed by him and Tisdale, which had names that were often derived in some fashion from a reference to the Dallas Cowboys, including America’s Team Mortgage; America’s Team Realty; America’s Team Funding Group; Ace Mortgage; Cowboys Realty; Cowboys Mortgage; and KLT Properties. Tisdale was involved with Pinnacle Development and Realty Corporation; Atilla Capital Corporation; and KLT Properties. Jones was involved with Pinnacle Development and Realty Corporation and Atilla Capital Corporation.

    The defendants ran a scheme in which they located single-family residences for sale in the Dallas area, including distressed and pre-foreclosure properties, and negotiated a sales price with the seller. They created surplus loan proceeds by inflating the sales price to an arbitrary amount substantially more than the fair market value of the residence.

    Generally, they recruited individuals to act as nominee or “straw purchasers” or “straw borrowers,” promising to pay them a bonus or commission of between $10,000 and $20,000 for their participation in a particular real estate transaction. The conspirators caused the loan applications for each straw borrower to include false financial information, often including inflated false income figures to conceal the borrower’s true financial condition so that the lender would more likely approve the loan. The conspirators concealed from the lenders the true status, financial conditions, and intentions of the named borrowers, knowing that loans would not likely be approved if the lender knew the true role, credit worthiness, and risk of each straw borrower.

    The conspirators falsely represented in loan documents that the straw purchaser intended to use the property as their primary residence, intentionally concealing from the lender that each straw borrower viewed himself as an “investor,” who never intended to occupy the home.

    Some of the conspirators also caused bogus and fraudulent “marketing fees” to be listed on loan closing documents to provide a means for the conspirators to receive surplus/excess loan proceeds.

    The scope of the conspiracy involved approximately 54 fraudulent residential property loan closings resulting in the funding of approximately $20.5 million in fraudulent loans. The actual loss to lenders is nearly $3 million.
For the U.S. Attorney press release, see All Defendants Sentenced in More Than $20 Million Mortgage Fraud Scheme Led by Former Dallas Cowboy Eugene Lockhart.

See also, Bloomberg: Ex-Dallas Cowboy Lockhart Gets 4 1/2 Years for Scam:
  • U.S. District Judge Jorge A. Solis in Dallas handed down the punishment [] as several one-time Cowboys players, including Hall of Fame defensive lineman Randy White, looked on. Lockhart, once known as “Mean Gene the Hitting Machine,” pleaded guilty last year to one count of conspiracy to commit wire fraud, days before the scheduled start of his trial.
  • Appearing with White at the sentencing [] were fellow defensive lineman Ed “Too Tall” Jones, receiver Drew Pearson and defensive back Everson Walls.

    White, who in 1994 was inducted into the Pro Football Hall of Fame in Canton, Ohio, and is a member of the Cowboys’ Ring of Honor, testified for Lockhart at [] sentencing. "I don’t think him having to go to jail is going to help anyone,” White told the court. He called his former teammate “an honest guy.”

Newark Feds Tag Another With Sale Leaseback-Peddling Equity Stripping Racket As Guilty-Pleaded Son Awaits Sentencing For Role In Same Ripoff

From the Office of the U.S. Attorney (Newark, New Jersey):
  • An Ocean County, N.J., man was indicted [Thursday] for his alleged role in a phony foreclosure rescue scheme that was part of a $4.4 million mortgage fraud, U.S. Attorney Paul J. Fishman announced.

    Vito C. Grippo, 58, of Jackson, N.J., the president of Morgan Financial Equity Shares and Vanick Holdings LLC, was indicted by a federal grand jury on one count of conspiracy to commit wire fraud and three counts of filing a false tax return for the years 2006 through 2008.

    According to the Indictment:

    Between January 2008 and February 2010, Vito Grippo held Morgan Financial out to the public as a company that could help homeowners in financial distress who faced foreclosure on their homes through something Grippo called the “Equity Share Program.” As described by Grippo and his associates, the Equity Share Program involved creating a limited liability company (“LLC”) in the name of the homeowner’s house in which LLC the homeowner would supposedly own a 90 percent interest with the rest to be owned by one or two private investors.

    In reality, the so-called investors invested nothing and were instead straw buyers recruited by Vito Grippo or his son, Frederick “Freddie” Grippo because they had good credit. The Grippos and their associates then made out mortgage loan applications in the names of the “investors” for the purchase of the properties owned by the homeowners in distress. Freddie Grippo pleaded guilty before Judge McNulty on Nov. 28, 2012, to conspiracy to commit wire fraud.(1)

    A homeowner in distress would come to a closing in Vito Grippo’s office and be given a stack of documents to sign. The homeowners would be led to believe the documents would prevent foreclosure and frequently did not understand that they would be transferring title to their homes to the “investor.”

    The so-called investor was, in reality, a straw buyer of the homeowner’s house. The new mortgage loan applications filled out by the Grippos or their associates in the name of one of the investors contained materially false information about the loan applicant’s monthly income, his assets and whether the residence to be bought would be his primary residence.

    The new loan application would be submitted to Worldwide Financial Resources for processing, where Freddie Grippo, a loan officer at Worldwide, would see to it that the loan was approved. The loan money was wired to the settlement agent for a given transaction and Vito Grippo would direct the settlement agent to forward a portion of those loan proceeds to bank accounts that Vito Grippo controlled.

    Properties whose original owners fell victim to the Equity Share Program were found throughout the metropolitan area, including homes in Rutherford, N.J., Monroe, N.J. and Brooklyn, N.Y.(2)
For the U.S. Attorney Press release, see Ocean County, N.J., Man Indicted In Mortgage Fraud Scheme.

For the Indictment, see U.S v. Grippo.

(1) See Newark Feds Score Another Foreclosure Rescue Guilty Plea; Suspect Admits Role In Peddling Sale Leaseback Ripoffs To High Equity, No-Cash, Financially Distressed Homeowners.

Inasmuch as the younger Grippo has yet to be sentenced (March 6, 2013, according to this press release), I wonder if he has already sung to the Feds against his old man, throwing Dad under the bus to score a more lenient sentence for himself while allowing prosecutors to squeeze a guilty plea out of senior Grippo and quickly wrap this case up:
  • "When a conspiracy is exposed by an arrest or execution of search warrants, soon-to-be defendants know that the first one to "belly up" and tell what he knows receives the best deal. The pressure is to bargain and bargain early, even if an indictment has not been filed." United States v. Moody, 206 F.3d 609, 617 (6th Cir. 2000) (Wiseman, J., concurring).

(2) Both father and son were also recently tagged by the Office of the New Jersey Attorney General on state charges relating to the allegedly illegal sale leaseback-peddling racket. See Theft By Deception/Failure To Make Required Disposition Of Property Received Among Charges Facing Pair Pinched By NJ AG In Alleged Sale Leaseback, Equity Stripping Foreclosure Rescue Peddling Racket.

Foreclosure Rescue Operator Gets 40 Months For 13 Felonies In Connection With $120K Homeowner Ripoff

In Monterey County, California, The Californian reports:
  • A woman was sentenced [] to prison for scamming homeowners in foreclosure, the Monterey County District Attorney’s Office said. Blanca Sanchez, also known as Blanca Maciel, received three years and four months in prison, the District Attorney’s Office said. Sanchez was found guilty by a jury Sept. 28 of 13 felonies, they said.

    During the trial, the District Attorney’s Office said, jurors heard testimony from eight homeowners who testified that they believed Sanchez was a licensed professional who could help save their homes from foreclosure.

    They said the homeowners were persuaded to pay Sanchez thousands of dollars to negotiate a lesser monthly mortgage payment. One homeowner paid more than $40,000 in fees, the District Attorney’s Office said, but lost her home in foreclosure anyway. Only one homeowner did not lose their home, they said.

    At the sentencing, the District Attorney’s Office said, Sanchez sought for felony probation, stating that she deserved a second chance and would work to pay back the money she took - which came to more than $120,000.

    Superior Court Judge Mark Hood agreed with the prosecution of Sanchez’s terrible conduct and reprimanded her for not accepting responsibility over her actions.

Sunday, December 16, 2012

Angelo Mozilo Depo: Underwater Homeowners' Borrower Ruthlesness At Fault For Mortgage Crisis; Has "No Regrets About How ... Countrywide Was Run, It Was A World-Class Company!"

From CNBC's blog, NetNet with John Carney:
  • The Big Picture [...] posted the transcript of the deposition of Angelo Mozilo taken in connection with MBIA's lawsuit against Bank of America over loans Countrywide originated.

    Perhaps the most jarring moment in the deposition is when Mozilo lays out a completely self-serving and bonkers theory of the financial crisis.


    [from the deposition:]

    This is a matter of record. The cause of the problems of foreclosures is not created by Countrywide, nor MBIA. This is all about an unprecedented, cataclysmic situation, unprecedented in the history of this country. Values in this country dropped 50 percent.

    ...And for the first time in the history of this country people decided that they were going to leave their homes because the value of their home was below the mortgage amount. Never in the history of this country did that ever happen,and that could never have been assessed in the risk profile.

    These people didn't lose their jobs. They didn't lose their health. They didn't lose their marriage. Those are the three factors that cause foreclosure. They left their home because the values went below the mortgage. That's what caused the problem.So I have no regrets about how I -- how Countrywide was run. It was a world-class company.


    Bravo to the attorney for MBIA who managed to provoke Mozilo into this rant. It really is revealing to see that the events of the financial crisis have not introduced even a sliver of doubt into his mind about the lending practices of Countrywide.

Moving From Robo-Signers To Robo Witnesses: The Recent Shift In Foreclosure Fraud Practices

David Dayen at Firedoglake writes:
  • Last week, Thomas Cox, the Maine lawyer who performed the deposition that basically exposed robo-signing, won the $100,000 Purpose Prize for his work on behalf of homeowners at risk of foreclosure. I spoke with Cox this week to get a ground-level picture of what is happening in the courts in the post-settlement landscape. Have banks cleaned up their foreclosure practices? Are homeowners still getting the shaft?

    Sadly, Cox told me that very little has changed with regards to foreclosures.
  • [W]hile Cox believes that the mass signing of foreclosure documents by “limited signing officers” with no underlying knowledge of the loan file has generally stopped, he has encountered in his cases in Maine a more subtle problem.

    Now the servicers have litigation departments with specialists,” Cox said. “They are trained as trial witnesses to say certain things in court. But they still don’t have the experience level. The Maine Supreme Court said witnesses had to have personal knowledge of the loan documents, to be intimately involved with the details. These people in these departments are not intimately involved.”

    Basically, we’ve moved from robo-signers to robo-witnesses, at least from Cox’ experience.

NJ Closing Attorney Admits To Ripping Off Clients, Law Partners Of $885K+; Handiwork Left Several Clients With Double Mortgages, Leaving Insurers Holding The Bag

From the Office of the U.S. Attorney (Trenton, New Jersey):
  • A former partner of a law firm based in Freehold, N.J., admitted [] to defrauding the firm and its clients by improperly diverting more than $885,000 from the law firm, U.S. Attorney Paul J. Fishman announced.

    Timothy Provost, 57, of Millstone Township, N.J., pleaded guilty before U.S. District Judge Michael A. Shipp in Trenton federal court to an Information charging him with one count of mail fraud.

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

    Provost admitted that between April 2004 and January 2011, he embezzled from the law firm, referred to in court documents simply as “Law Firm,” by wrongfully writing checks from the law firm’s attorney trust and business accounts to himself and his personal creditors to pay for his and his family’s personal expenses, including his mortgage, his children’s tuition, and horse stable expenses. Provost then mailed some of the checks to his personal creditors. He further admitted to attempting to hide his theft by using the stolen funds to purchase cashier’s checks payable to his creditors or to himself.

    Provost, who was a partner at the firm, had access to the law firm’s bank accounts in order to conduct real estate transactions on behalf of clients, including closings and refinancings.

    Provost’s embezzlement left several clients with double mortgages, which insurance then stepped in to cover. In total, Provost stole more than $885,000 from the attorney trust and business accounts for his personal benefit.(1)
For the U.S. Attorney press release, see Former New Jersey Lawyer Admits Embezzling More Than $885,000 In Law Firm Funds.

For the formal charges, see U.S. v. Provost.

(1) The New Jersey Lawyers' Fund for Client Protection  was established to reimburse clients who have suffered a loss due to dishonest conduct of a member of the New Jersey Bar. According to the Fund's website, for loss claims that are determined to be eligible for a reimbursement there currently is a limit of $400,000 per claimant for claims arising after January 1, 2007 and an aggregate maximum for claims against a single attorney of $1,500,000. Lower per claimant maximums apply to claims arising prior to January 1, 2007, its website states.
For similar funds established to reimburse clients who have suffered a loss due to the dishonest conduct of attorneys in other states and Canada, see: