Saturday, April 06, 2013

Pair Claiming Adverse Posession In Attempt To Swipe Title To Vacant Bank-Owned REO Get Pinched For Unlawful Entry, Trespassing; Actual Payment Of $2K In R/E Taxes Not Yet Due Fails To Immunize Duo From Arrest

In Ada County, Idaho, the Idaho Statesman reports:
  • A woman sent a certified, notarized letter to the Ada County Sheriff's Office on March 26 saying that she had paid the taxes on a $340,000 home on South Cloverdale Road and would be living there henceforth.

    After determining that the property was owned by a bank after a foreclosure, sheriff's deputies went to the rural home and told the woman that she had no legal right to be there. When deputies demanded that she leave, she refused.

    On Thursday, deputies returned with warrants and arrested Tara Mashburn, 44, and her 21-year-old son, Kassidy McDaid, and charged them with unlawful entry and trespassing, both misdemeanors. Four children living in the house were sent to stay with other relatives.

    Officials say Mashburn might have been attempting a real estate scheme similar to those that have gained traction elsewhere in the country, especially with foreclosed homes.

    Under the plan, a person attempts to use a real estate law called "adverse possession." The person pays taxes on a property and then possesses it; if they can do it long enough, they might be able to claim legal title.

    The Cloverdale case is the first he knows of in Ada County, Chief Deputy Prosecutor Roger Bourne said.


    Officials say that Mashburn walked into the Ada County Courthouse on March 19 and paid the property taxes on the Cloverdale home and its 12 acres, using three postal money orders totaling about $2,000.

    About the same time, Mashburn and her children moved into the 3,000-square-foot home and changed the locks, the sheriff's office said.

    Mashburn has no known connection to the home, which Bank of America has owned since foreclosing in August, officials said.

    The property taxes on the home, assessed at $339,700, were not delinquent; the next payment was not due until June, according to the county treasurer's office.


    The most notable recent case of people attempting to use the adverse possession plan, sometimes called squatter's rights, occurred in Boca Raton, Fla., where a man tried to claim ownership of a $2.5 million home.

    In her letter to the Ada County sheriff, Mashburn used language similar to what's been used in national cases, claiming that she had paid the property taxes and had a right to the home and its land, said Ada County sheriff's spokeswoman Andrea Dearden.

    Under Idaho's adverse possession law, a person who occupies improved or fenced property and pays taxes on the property for 20 years may claim ownership of the property even without the owner's consent, according to county officials.

    The law usually is used to remedy accidents and oversights, experts say. For example, if a property line fence was misplaced and for at least 20 years the owner paid taxes on and maintained the property, that owner can claim adverse possession and take the property.
Source: Mom, son could be squatting in court over Ada County home scheme (Ada officials say it could be the first squat-to-own prosecution here).

Head Polk County Cop To Adverse Possession-Claiming Crackpots: Try That Crap Here & We'll Cart Your Can Off To Jail! "They’re Not Even Going Far Enough w/ Their Fraud & Their Scheme To Pay The Taxes..."

In Lakeland, Florida, Bay News 9 reports:
  • A Lakeland woman whom authorities say moved into a foreclosed-upon home without permission found herself residing in another free residence this week:

    The Polk County Jail.

    Deputies arrested 31-year-old Stacy Ann Fuchs on Tuesday and charged her with burglary and grand theft of $100,000 or more.

    "You just can't move into someone else's legally owned property," Polk County Sheriff Grady Judd said. "There is no such thing as a free lunch, and we are going to arrest people who try this scam to steal homes in Polk County."

    Neighborhood watch President Jean Lichtel first noticed something was wrong and contacted the homeowner, Cynthia Westley. “I was shocked to think people can just go and put this claim in and just move into somebody’s home,” said Lichtel.

    Westley, who had reached an amicable foreclosure agreement with her lender and voluntarily vacated her home at 6383 Tierra Vista Cir., Lakeland, noticed that the locks on the house had been changed. Westley said she contacted her lender, who told her no one had been granted permission to enter the home.

    Deputies went to the home and met Fuchs, who told them she had researched the legal process known as adverse possession and believed she had a legal right to move into the home.

    Deputies disagreed and arrested her. Judd said the adverse possession form he said the suspect filled out before moving in, only applies to homes a person is paying taxes on.

    “In this particular case they’re not even going far enough with their fraud and their scheme to pay the taxes. They’re just changing the locks, moving in and filing the form with the property appraiser,” said Judd.

    Polk County sheriff's deputies arrested 40-year-old Lessie Hurd in a similar case last month.

    She was charged with scheming to defraud, burglary, and grand theft for changing the locks on three houses and claiming adverse possession.

Squatter w/ History Of Getting The Boot Now Making Herself At Home In Vacant $400K Foreclosed REO Free Of Charge; Befuddled Miami-Dade Cops Fiddle

In Miami, Florida, WPLG-TV Channel 10 reports:
  • Neighbors claim a woman moved into home that was once for sale for $1.1 million in southwest Miami-Dade and has been living there for 16 months for free.

    That home, located in the 34600 block of Southwest 218th Street, has since depreciated but is still worth more than $400,000.

    "We paid good money for our home. She's not paying anything. It's ridiculous," said a neighbor who didn't want to be identified. "Why is she there living for free for [nearly] two years now?"

    Police reports show a Kenia Souto has lived there since at least November 2011.

    "She doesn't belong here," the neighbor added. "She just very rude and very mean. We don't need people like that. It's just very threatening when you pass by there."

    Neighbors say Souto simply showed up with boxes early one morning and started unloading. "It was a red flag instantly," said the neighbor. "That's when my husband called 911."

    Police reports show Souto answered the door for officers. She had keys, electricity, furniture, and the house appeared to have someone living in it, the report said. She told police she was in negotiations with a bank to buy the home, but couldn’t remember the name of the bank.

    Miami-Dade police let her stay.

    "She always provides them with some sort of bogus document," the neighbor claimed. "Something needs to be done."

    According to records, $29,158 in property taxes are owed on the home. The original owner lost it during a foreclosure and now Mercantil Commerce Bank owns the home.

    "Are you a renter here? Do you own the home?" Local 10's Ross Palombo asked at the front door. "I have no idea," Souto said. "Well, what are you doing inside the home?" replied Palombo. Souto offered no answer.

    Anyone currently occupying the home is not on the premises through any formal agreement,” the bank said in a written statement to Local 10.

    The original owner, Ranchos Del Sol, tried ejecting Souto from the home in 2012 but gave up as the house was being foreclosed upon. "We had to stop [the lawsuit] because we were spending bad money," said a business associate who also didn't want to be identified.

    Records show Souto was removed from a Miami property in 2004. She was also removed from a Coral Gables property in 2010.

    Local 10 tried several times to get Souto’s side of the story, but she refused any further comment. The man she claims is her attorney did not return several phone calls. As it stands, Miami-Dade Police have neither tried to evict her nor charged her with any crime.

    Neighbors see no end in sight as Souto shows no sign of leaving.
Source: Woman lives for free in once $1.1M home (Neighbors claim Kenia Souto moved into southwest Miami-Dade home in Nov 2011).

County Appraiser First Miami-Dade Official To Move Against Adverse Possession Hijacking Rackets Targeting Vacant Homes In Foreclosure; Targets Crackpots Who Have Filed Paperwork, But Failed To Cough Up The Unpaid R/E Taxes

From a recent editorial in The Miami Herald:
  • As the foreclosure mess continues in South Florida, it’s overwhelming the courts while scammers and squatters are finding loopholes in the law to try to live the high life on the cheap.

    Squatters like the ones recently found living in a Coral Gables mansion claiming they were renting from owners who don’t exist. Scammers who rent abandoned homes they do not own to unsuspecting renters while the true homeowners are in the foreclosure process.

    Then there was the case of a pool home in foreclosure “rented” to a pimp and hookers just up the street from the Broward County property appraiser’s home.

    The Florida Legislature can’t continue to ignore this mess.

    At least Miami-Dade County Property Appraiser Carlos Lopez-Cantera is moving swiftly to set the legal records straight in the county and end some of the abuses that his office can control: the so-called adverse possession claims.

    Mr. Lopez-Cantera did the necessary due diligence to get rid of 44 percent of all adverse-possession claims that were pending since he took office in January. It wasn’t that difficult to do. He checked with the Tax Collector’s Office to see who had been paying the property taxes on those homes to determine the true owners.(1)

    The “adverse possession” gimmick has served scammers well. They just have to come in to the Property Appraiser’s Office, sign some forms, and — presto! — they can make a claim on the land and the building that sits on it. Except they never owned the property, which likely is waiting for resolution in the foreclosure process.

    The adverse possession law dates back to 1876, when quick access to property records over the Internet couldn’t even be imagined. In truth, the law doesn’t protect swindlers, but it does become a costly mess for the true homeowners to set the record straight in court.

    That’s why Mr. Lopez-Cantera’s due diligence is a good first step in stopping the abuse.

    If this law is to remain on the books, then it should be updated for the 21st century to put the burden on those seeking to take “adverse possession” of property to prove that there are legitimate reasons for them to take ownership.
Source: No more land grabs for squatters (OUR OPINION: Miami-Dade property appraiser right to move swiftly on ‘adverse possession’ cases).

(1) It appears that the county property appraiser is taking the position that if the "owner of record" has paid the taxes, the claim of adverse possession is automatically disqualified, a position that finds strong support in Section 95.18(7)(d) of the Florida Statutes.

As a casual observation, it seems to me that, as used in Section 95.18(7)(d), the term "owner of record" can refer to either:
  • the individual homeowner,
  • the bank holding the mortgage, on behalf of the homeowner pursuant to its recorded security interest in the home and/or pursuant to an associated mortgage escrow agreement,
  • a purchaser at a foreclosure sale (which could include the foreclosing lender now holding title to the home as an REO), or
  • anyone acquiring title from a foreclosure purchaser.

Atlanta-Area 'Sovereigns' Continue Hijackings Of Vacant Bankster-Owned REOs

In Atlanta, Georgia, WGCL-TV Channel 46 reports:
  • People in one East Atlanta subdivision have a new neighbor who they said is not welcome.

    The new neighbor, Angelique Judice, considers herself a "Sovereign Citizen." She moved into a foreclosure on Silver Hills Terrace. Fannie Mae owns the house. It is listed for sale with Sanford Realty.

    The real estate agent, Bonnie Sanford, told CBS Atlanta News she did not sell or lease the home to Judice.

    Judice is a mother of two young toddlers.

Friday, April 05, 2013

Report: Crappy $26B Foreclosure Fraud Settlement Even Crappier Than First Believed; Banksters Continue Trampling On Consumer Rights: Housing Counselors

From the California Reinvestment Coalition:
  • A new survey of housing counselors in California reveals that banks are violating several consumer protections that were mandated by the $26 billion National Mortgage Settlement (NMS) and the California Homeowners Bill of Rights.

    In addition, the survey reveals that bank practices continue to disproportionately affect disadvantaged and hard-hit communities including limited English proficient (LEP) borrowers, widows, and people with disabilities. The results of the survey were released today in a report, “Chasm Between Words and Deeds IX: Bank Violations Hurt Hardest Hit Communities

GAO To Hammer Federal Reserve, OCC In Upcoming Report For Mishandling Of Clean-Up Necessitated By Flawed Foreclosures

The New York Times reports:
  • Federal authorities plan to issue a stinging critique of how banking regulators responded to wide-ranging foreclosure abuses, blaming officials for a bureaucratic maze that delayed relief to homeowners.

    In a long-anticipated report, the Government Accountability Office will take aim at the Federal Reserve and the Office of the Comptroller of the Currency for their role in cleaning up flawed foreclosures at the nation’s biggest banks, according to a preliminary draft of the document provided to DealBook. The regulators, the report found, failed to properly coordinate a review of foreclosed loans and even potentially allowed some errors to go undetected.

    The regulators did not comment on the report. In a letter to the Government Accountability Office, however, the comptroller’s office said it “appreciates your understanding of the complexity” of the foreclosure review process and the “intent of your recommendations.” The agency added that it would incorporate suggestions from the the report into its future oversight of the banks.

    People briefed on the report cautioned that it was not yet final and could still be changed. The accountability office is expected to release the report in the coming days.

    The report stems from an investigation that began in 2011 at the behest of Congressional Democrats, including Representative Maxine Waters, who is now the ranking Democrat on the House Financial Services Committee. Ms. Waters raised concerns about the use of private consultants to conduct a sweeping review of the foreclosures. The consultants, tasked with unearthing whether homeowners were wrongfully evicted, had close ties to both the regulators and the banks they were expected to examine.

    The report shows that lawmakers had reason to worry. The review was fraught from the start, according to the Government Accountability Office, as consultants racked up more than $2 billion in fees while reviewing only a fraction of the loans in question.

State AG To Confused, Cynical Oklahoma Homeowners Screwed Over In Foreclosure Fraud Scandal: 'Those Dopey 'Settlement' Postcards You Got In The Mail From 'Rust Consulting' Offering Foreclosure Compensation Really Are Legit!'

From the Office of the Oklahoma Attorney General:
  • Attorney General Scott Pruitt Tuesday issued an alert for Oklahoma residents about a new federal mortgage settlement from the U.S. Department of the Treasury.

    The Attorney General’s Office has received dozens of calls from residents confused about the settlement and the postcards they received from “Rust Consulting,” believing the cards were part of a scam.

    The settlement is a legitimate agreement between the Treasury Department’s Office of the Comptroller of the Currency and 14 mortgage servicers. It is not related to the federal mortgage settlement by the Justice Department or Oklahoma’s mortgage settlement announced last year.

    Oklahomans who receive the postcards should contact the toll-free number on the card to determine their eligibility for foreclosure compensation. Borrowers will not be required to execute a waiver of any legal claims they may have against their servicer as a condition for receiving payment. Beware of anyone who asks you to call a different telephone number than the one provided on the card or to pay a fee to receive a payment under the agreement.

    For more information, call 1-888-952-9105 or go online to

Thursday, April 04, 2013

BofA Refuses To Admit Fault, But Agrees To Cough Up $165M Anyway To Settle Suit For Role In Peddling Crappy Home Mortgage-Backed Securities To Failed Credit Unions

The National Credit Union Administration recently announced:
  • The National Credit Union Administration (NCUA) [] announced a settlement with Bank of America and certain of its subsidiaries ("Bank of America") for $165 million for losses related to purchases of residential mortgage-backed securities by failed corporate credit unions.

    “As a result of the Bank of America settlement, NCUA has now successfully recovered more than a third of a billion dollars on behalf of credit unions,” said NCUA Board Chairman Debbie Matz. “These settlements and our ongoing lawsuits further NCUA’s goal of minimizing the losses of the corporate crisis and cutting future costs to credit unions.”

    In all, NCUA has obtained more than $335 million in legal settlements. NCUA was the first federal regulatory agency for depository institutions to recover losses from investments in these securities on behalf of failed financial institutions. NCUA uses the net proceeds to reduce Temporary Corporate Credit Union Stabilization Fund (Stabilization Fund) assessments charged to federally insured credit unions to pay for the losses caused by the failure of five corporate credit unions.

    Today’s announced settlement with Bank of America follows three similar agreements with Citigroup, Deutsche Bank Securities and HSBC totaling $170.75 million. Bank of America did not admit fault as part of the settlement.

    “We have a statutory obligation to secure recoveries for credit unions and ensure that consumers remain protected,” added Chairman Matz. “We will continue to expend every possible effort to fulfill that important responsibility.”

    NCUA has filed ten lawsuits against several other firms, including Barclays Capital, Credit Suisse, Goldman Sachs, J.P. Morgan Securities, RBS Securities, UBS Securities, Wachovia, Washington Mutual and Bear, Stearns alleging violations of federal and state securities laws in the sale of mortgage-backed securities to the five corporate credit unions.
For the NCUA press release, see NCUA Recoveries for Corporate Credit Union Losses Top $335 Million (​$165 Million Settlement with Bank of America Will Further Reduce Assessments).

Miami-Dade Property Appraiser Puts Kibosh On 44% Of County Adverse Possession 'Hijackings'; Subsequent Tax Payments By Record Owners Disqualify Claims

In Miami, Florida, WPLG-TV Channel 10 reports:
  • The Miami-Dade property appraiser canceled 44 percent of adverse possession claims in the county in response to the growing problem of squatters.

    In a news release mailed out Tuesday, the office said it received 41 claims in the first three months of 2013, which is more than half the total amount received in 2012.

    The office, which has 160 claims for all years on record, found 71 of them were non-compliant with Florida Statute Section 95.18, which states that if there is record of a tax payment by the property owner before April 1 following the year in which the tax is assessed, it no longer meets the requirements for claiming adverse possession.(1)

    “Our goal is to help put an end to the abuse of adverse possession claims," said Miami-Dade Property Appraiser Carlos Lopez-Cantera. "This effort is making it easier to ensure that those who file an adverse possession claim are complying with Florida law."

    A Local 10 investigation found squatting nearly tripled from 2011 to 2012 in Miami-Dade County.
Source: Property appraiser cancels adverse possession claims (Office cancels 44% of claims to respond to growing problem of squatters).

(1) Section 95.18(7) provides:
  • A property appraiser must remove the notation to the legal description on the tax roll that an adverse possession claim has been submitted and shall remove the return from the property appraiser’s records if:

    (a-c) [...],

    (d) The owner of record or the tax collector provides to the property appraiser a receipt demonstrating that the owner of record has paid the annual tax assessment for the property subject to the adverse possession claim during the period that the person is claiming adverse possession.

Home Improvement Contractor Pinched In Ripoff For Pocketing $300K, Abandoning Project; Failure To Treat Cash As Trust Funds & Provide An Accounting Constitute Violations Of NYS Lien Law

From the Office of the Rockland County, New York District Attorney:
  • Rockland County District Attorney Thomas P. Zugibe [] announced that Peter Provenza (DOB 01/15/68) of 144 Strawtown Road, New City, New York has been charged with one count of Grand Larceny in the Second Degree, a class “C” Felony.

    Provenza, a licensed home improvement contractor who conducts his business under the corporate name of Provenza Contracting, Inc., is alleged to have stolen over $100,000 from a Clarkstown homeowner with whom he had contracted to perform renovations, including major remodeling and a room addition. The defendant surrendered himself to the Clarkstown court.

    According to the charges, the victim contracted with Provenza in April, 2011 to remodel the residence at a total cost of $485,000. Over the next several months, the victim paid the defendant over $300,000.

    In December, 2011, Provenza allegedly walked away from the job. All attempts by the victim to have money refunded and to procure an accounting of what renovations were completed were allegedly ignored by the defendant.

    Provenza is accused of abandoning the project and failing to provide an accounting or return of the victim’s money.

    The arrest of the defendant resulted from an investigation conducted by the Rockland County Special Investigations Unit and the Rockland County Department of Consumer Protection.

    The defendant will be prosecuted for Grand Larceny through application of the New York State Lien Law, which mandates that, upon acceptance of funds in connection with a contract for improvement of real property or home improvement, those funds become a trust, which can be used only to pay for costs incurred in the performance of that homeowner’s project.

    The use of that money for any other purpose is a larceny under the Lien Law.

    Further, the contractor must maintain separate ledgers for each job for which he has contracted. By failing to provide an accounting of how the money had been used and by not returning the money upon the demand of the consumer, the contractor is accused of violating both the Penal Law and the Lien Law.

Wednesday, April 03, 2013

Federal Judge Upholds Bankruptcy Court's $3M+ Punitive Slam Against Bankster Over Willful, Egregious Misconduct, Exhibition Of Reckless Disregard For Automatic Stay

From the National Consumer Bankruptcy Rights Center blog:
  • Despite repeated bludgeoning by the courts for its conduct, Wells Fargo Home Mortgage, Inc., has tenaciously and relentlessly fought against accepting responsibility for misapplying mortgage payments and charging unapproved fees.

    Now the district court for the Eastern District of Louisiana, has upheld a punitive damages award of over $3 million against Wells Fargo.
For more, see $3 Million Punitive Damage Award Upheld against Wells Fargo.

For the ruling, see Jones v. Wells Fargo, No. 12-1362 (E.D. La. March 19, 2013).

Thanks to Deontos for the heads-up on the court ruling.

City Bulldozes Vacant House Into The Ground On Eve Of Owner's Suit To Halt Demolition

In Lorain, Ohio, The Chronicle Telegram reports:
  • On the same day a lawsuit was being filed to prevent the city from tearing down a house it deemed dilapidated, a work crew was busy pulling it to the ground.

    “Even as we were filing suit, we learned, to our amazement, the city had demolished the property,” attorney Brent English said.

    The Cleveland lawyer is representing George Schneider, a Lorain man who owns numerous rental properties in the city and county, including the duplex that was at 500 W. 25th St. in Lorain.

    The unoccupied house was torn down as English said he was in the process of filing suit to halt the demolition by seeking a temporary restraining order against the city. English contends the house wasn’t slated to be torn down until later in the week as part of a weeklong demolition of housing declared nuisances to public health or safety.

    “They had a contractor there despite the fact the house was scheduled for (demolition) Thursday,” English said. “We don’t know what happened, but the house is gone. Now we’ll be amending the suit to seek damages for wrongful destruction of my client’s property.”

    English estimated he would seek damages in the $50,000 range for the value of the house.

    It appears they fast-tracked this to tear it down,” English said. “The same city that tore it down issued a permit to fix it,’’ English said. “Now they can just pay for it.”

Lawsuit Alleges Non-Citizen Nurse Married Elderly Patient To Score Green Card, Then Bumped Him Off To Snatch $1.5M In Real Estate

In Brooklyn, New York, the New York Post reports:
  • A Jamaican nurse married one of her patients to get a green card — then hastened his death to get his $1.5 million Brooklyn properties, the man’s family charges in a stunning lawsuit.

    Relatives of Garth Lewis, 67, claim that his marriage to caregiver Janet Lloyd was nothing but a sham — and that she “was directly responsible” for the diabetes-stricken man’s death because she didn’t care for him properly, according to court papers.

    Lloyd, a 47-year-old mother of five, denied the allegations, telling The Post, “I did not cause my husband’s death, and the doctors know that.”

    The family brought their concerns to the Brooklyn District Attorney’s Office. A source said the case was referred to federal immigration authorities. Lewis, of Flatbush, died Feb. 26 of a heart attack. He and Lloyd had been married for a year.

    Lewis’ death, his family charges, “was premature and orchestrated by [Lloyd], whose sole purposes were to marry [Lewis] in order to obtain her green card and to deplete his assets,” according to the lawsuit. Lloyd “never acted as, nor was, a wife in reality to [Lewis],” the relatives claim.

    The marriage was real, Lloyd insisted — even showing a Post staffer a photo of her and Lewis engaged in a sex act to prove it. “They said our relationship wasn’t intimate. Does this look intimate to you?” she fumed.

    Her dead husband’s relatives accuse Lloyd of causing not just Garth Lewis’ death, but her first husband’s as well. Lloyd’s first husband “also died under similar, very questionable circumstances,” Lewis’ family claims in Brooklyn Supreme Court papers. Lloyd claims her first husband was a cop who was murdered in her native Jamaica while she was living in the United States.

    Lewis’ mother, Eileen, and cousin, Shirley Cleardawn-Lewis, are fighting Lloyd’s efforts to have Lewis cremated because the family “strongly believes that preventing cremation is critical to determine the cause of [Lewis’] death and to prevent other men from experiencing the same fate,” according to court documents.

    The nature of [Lloyd’s] profession — nursing — provides her access to knowledge of ending a life based upon the diseases being untreated and the proper medication not properly administered,” the relatives allege in the lawsuit.

    Lewis and Lloyd had met when she became his nurse, his family said.

    “He needed particular medical care; he needed to be fed properly and at certain definite times during the day. [Lloyd] did not properly administer the necessary treatment,” the lawsuit alleges.

    Neighbors allegedly exposed Lloyd’s poor treatment of Lewis and alerted his family, the relatives claim in court papers.

    Lloyd insisted the shocking allegations are nothing more than a money grab by her dead husband’s relatives, who want to take over the three residential Brooklyn buildings he owned.

    Public records show the buildings have a market value of about a half-million dollars each.

    “They are crazy,” Lloyd said, crying. “I didn’t take care of my husband?” Lloyd said her cousin had introduced her to Lewis. “When I met him, I was married, so we couldn’t have a relationship,” she said.

    She was about to return to Jamaica for good, Lloyd said, when Lewis begged her to stay. “He said, ‘Janet, stay,’ and I said, ‘How can I stay in America?’ He said, ‘Marry me,’ ” she recalled.

Tuesday, April 02, 2013

Rockland DA Amnesty Program Allows Homeowners Claiming Illegal Homestead Tax Exemptions To Voluntarily Step Up, Fork Over Fraudulently-Obtained Property Tax Discounts Or Face Criminal Prosecution

From the Office of the Rockland County, New York District Attorney:
  • Rockland County District Attorney Thomas P. Zugibe [] announced a unique amnesty program to allow STAR program violators to pay up and avoid criminal charges and possible arrest.

    The amnesty initiative comes during an ongoing effort to root out county residents who are double-dipping their STAR, or New York State School Tax Relief property tax break.

    During the past eleven months, detectives in the Special Investigations Unit have already uncovered more than $679,000 in improperly or fraudulently claimed STAR exemptions from 2012 representing a grand total from Rockland’s five towns.

    District Attorney Zugibe said, “STAR is only available on your primary residence, but our investigation has identified dozens of individuals who own two homes and get the exemption on both. Our figures represent the tip of the iceberg. Those who double-dip STAR exemptions are cheating the system, at a time when the state’s finite resources are of critical importance.”

    STAR is New York's version of a homestead exemption or a property tax discount for an owner-occupied primary residence.
  • As part of the amnesty, those who have wrongfully taken exemptions have until April 1st, 2013 to take corrective measures and make good on their financial obligations. Those violators who fail to take advantage of the amnesty face considerable consequences, including criminal charges of theft, potential arrest, sizable fees and court costs and a criminal record.

Elmira 'Crimebusters' Tag Non-Owner-Occupant Property Owners With Criminal Charges, Jail Time For Code Violations

In Elmira, New York, the Press & Sun-Bulletin reports:
  • The first Elmira property owner convicted of criminal code violations in 15 years was sentenced Friday to jail time by City Court Judge Steven Forrest and must continue to make repairs to one of the homes after she leaves jail.

    Elizabeth Holloway, formerly of Endicott, was sentenced to 60 days in the Chemung County Jail for violations at her 514 W. Water St. property and 60 days in jail for property at 262 Caldwell Ave. that was included in Chemung County’s annual tax foreclosure real estate auction Wednesday.
  • Forrest said he would levy no fines or surcharges. “The court feels that’s overkill,” he said. [...] “I have taken responsibility to do the best with both properties,” she said, starting to cry before being sentenced for the Caldwell Avenue property.

    Kelly said Holloway is retired, on a limited income and has invested $70,000 in repairs to the properties. “She has no more retirement,” he said, speaking against “putting this poor little old lady in jail.”
  • Holloway pleaded guilty Nov. 20 before Forrest to failing to maintain the exterior of 514 W. Water St. and failing to maintain windows at 262 Caldwell Ave. Her sentencing had been adjourned several times since January. She knew there was a possibility of jail time when she pleaded guilty, Forrest said Friday.
  • Forrest said he agreed that Holloway has put quite a few improvements in the West Water Street property, but the bottom line is she was convicted for failing to maintain the exterior. “It’s this court’s hope you’ve learned from this experience,” Forrest said.
  • Also Friday, Franklin and Harriet Lee of Westbury, Long Island, the former owners of 456 W. Water St., were each sentenced to $250 fines that are to be paid in $50 monthly increments starting April 15.

    They were originally criminally charged with failure to maintain porches in a structurally sound condition and good repair, and failure to maintain an extension overhang in good condition. However, that property also was part of the county’s tax foreclosure auction Wednesday.

    Campanella said the couple had no prior record of code violations. They pleaded guilty to a reduced code charge of violation of use.
For more, see Elmira property owner, who lived in Endicott, goes to jail for code violations (Elmira property owner, who lived in Endicott, goes to jail for code violations).

Cobb County Crackpot Accused Of Hijacking Homes With Bogus Paperwork Faces New Charges For Alleged Intimidation Attempts On Judges Overseeing Her Cases, Others

In Cobb County, Georgia, WSB-TV Channel 2 reports:
  • A woman arrested after a series of Channel 2 investigations is now in even more trouble, accused of trying to intimidate the judges overseeing the cases against her.

    A Cobb County grand jury indicted Susan Weidman Thursday on a new charge of racketeering, and deputies arrested her as she tried to enter the courthouse. Weidman is now in jail with no bond.

    Weidman was already facing racketeering charges in Cobb and DeKalb counties for filing bogus documents and trying to take over foreclosed homes.

    She spent months in jail the last time she was arrested. Since she's been out on bond, prosecutors say she's filed dozens of new court documents including a lawsuit against two counties, two judges, and a demand for the state of Georgia to pay her $65 million.
  • "The reason this new indictment came up is because of the filings she had that were endeavoring to intimidate and impede the justice system," [Cobb County Deputy Chief Assistant District Attorney John] Melvin said.

    For example, a federal lawsuit Weidman filed in June against the state of Georgia, Cobb and DeKalb counties, and Judges Tangela Barrie and Dorothy Robinson demanding $300 million for false arrest and malicious prosecution.

    Weidman also sent a bogus claim to the state's risk management office, demanding $65 million in federal judgments that don't exist.
For the story, see Woman accused of stealing homes faces new charges of intimidating judges (Susan Weidman, the subject of a Channel 2 investigation, is also accused of trying to bilk state out of millions).

Monday, April 01, 2013

Atlanta-Area "Super Lien" Rackets Openly Use Collusion, 'Quite Auctions' In Connection With Tax Foreclosure Auctions To Wrestle Away Homes, Accumulated Equity From Hapless Homeowners Behind On R/E Taxes

In Atlanta, Georgia, The Atlanta Journal Constitution reports:
  • Using a loophole in Georgia’s foreclosure laws, savvy investors are snatching houses away from taxpayers who get behind on bills, short-circuiting legal safeguards designed to help them keep their homes.

    It’s done by putting claims against properties that are so swift and powerful they’re called “super liens.

    In the worst circumstances, investors can obtain a home for a fraction of its value. A super lien can leave homeowners with nothing, even if they had substantial equity.

    Several Atlanta law firms working on behalf of investors have taken advantage of the loophole in recent years to put claims against hundreds of properties, an investigation by The Atlanta Journal-Constitution has found.

    “This whole thing is a big racket,” said Richard Rowan, who has filed for bankruptcy to keep from losing his Buckhead home to a roughly $80,000 super lien, created after his mother died and he fell more than $40,000 behind on taxes.

    “These people need to be stopped,” he said. “This is just not right.”

    The practice is legal, as established by a series of state Supreme Court and Appeals Court decisions between 2003 and 2010. But critics say super liens can be used to exploit homeowners who may not understand Georgia’s dizzying tax foreclosure process — particularly the sick and the elderly.

    It’s basically a hijack lien,” said Hugh Wood, a real estate attorney who defended clients from super liens in five separate incidents. “(Investors) can structure the super lien in a way that it’s impossible to get your property back.”

    Attorneys who deal in super liens defend the process, saying delinquent taxpayers can always get their properties back, so long as they come up with the overdue taxes and penalties — the same as in any case where a house gets sold at tax auction.

    However, that argument sidesteps some major risks to homeowners. With super liens, they may face much higher costs to reclaim their property following a tax auction, and they have less time to act.

    That’s because the winning bidder at the tax auction, if they’re working in tandem with someone holding a second lien, can place much higher bids, knowing they’ll be reimbursed later. The higher the bid price, the higher the penalty a homeowner must pay the winning bidder to recover the property.

    And instead of having a year to come up with the money to get the property back, that homeowner’s right of redemption can be cut short. The second lien holder can step ahead of the property owner, redeem the property and proceed to foreclosure.

    Atlanta attorney Robert Proctor is credited with coining the term “super lien” in a 2003 lawsuit. Of the Atlanta lawyers working on behalf of investors in the super lien business, only Proctor would speak publicly about the issue. He identified others as John “Buddy” Ramsey and attorneys with the law firms Clark Caskey; Ayoub & Mansour and Weissman; and Nowack, Curry & Wilco.

    Proctor conceded that super liens do shorten the time property owners have to pay back a debt. But he contends that super liens ultimately do not harm property owners, but only speed up the process of obtaining the property or resolving the debt. Otherwise, he said, delinquents get to live in their house for a year for free.

    “What’s your ideal situation?” Proctor said. “Don’t collect taxes?”

    He also said homeowners have additional protections they wouldn’t have in a typical foreclosure by a mortgage company because super liens require judicial foreclosures and approval of a Superior Court judge.

    “Any sale conducted as a result of the foreclosure of the super-lien is conducted by the sheriff. And the sale must then be confirmed by the judge. This is a lot more due process than ordinary mortgage foreclosure in Georgia,” he said in an email.

    Super liens involve such a complicated legal process, though, that many judges may not fully recognize the potential for abuse.

    In some cases, lawyers representing the super lien holder have persuaded judges to allow them, rather than the sheriff’s office, to conduct foreclosure auctions. Then, they may hold the auction quietly on the courthouse steps while no one is listening, assuring no one else bids and they can pay bottom dollar.

    Proctor said he has never done that, but he knows some lawyers that have. He said he has admonished them to stop. Still, he says such quiet auctions are rare. Ninety percent of foreclosure auctions go for 70 to 80 percent of the value of the property, Proctor said.


    But that slice that goes on the cheap can create fat profits at the expense of homeowners and mortgage holders.

    That’s because super lien holders also can take away homeowners’ and mortgage companies’ ability to preserve some part of their investment when a property gets auctioned to pay back taxes.

    Normally, if the property owner can’t pay and wants to walk away from the property, that owner gets the excess funds — the difference between the tax debt and the auction price. Or, if the owner has an outstanding mortgage, the bank can claim that money.

    But with a super lien, the holder yanks away excess funds along with the right to redeem. “This is an issue that doesn’t get a lot of attention,” said Joe Brannen, president of the Georgia Bankers Association. “But if you’re hit with it – man!”

    Losers in super liens often don’t know what hit them. Susan Dilbeck is still trying to understand what happened with her home.

    She owed about $4,000 in taxes and penalties on her Cobb County home and several hundred dollars in homeowners’ association fees. For that, the 66-year-old was threatened with the loss of a house valued at almost $222,000, even though she has no mortgage on it.

    She fell behind on taxes after suffering from an autoimmune disease that required chemotherapy. She had no insurance and the treatment cleaned out her savings. She said she has struggled with her health since then.

    In 2007, a company called American Lien Fund bought her property at tax auction for $185,000. Then another company called Cornett Consulting acquired a homeowners association lien, redeemed the property and claimed $177,000 in excess funds.

    “I have no idea what’s going on,” Dilbeck said. “I don’t know today what is going to happen, but no matter what the outcome, it can’t be favorable to me.”

    Dilbeck is fighting back in court. During the litigation American Lien Fund transferred its interest in the tax deed to a company called ALF Holdings, and Cornett transferred its interest in the homeowners’ association lien to another company, Tax Relief Investments. That company had the sheriff auction the home. The winning bidder has tried to have her evicted.

    Dilbeck’s lawsuit claims defendants conspired to seize her house. The defendants deny that.

    Eric Reaves, of Tax Relief Investments, said he and other defendants now want to undo the super lien and walk away. But Dilbeck is seeking punitive damages, attorney fees and other costs, Reaves said.

    “I would love for this to be over without more legal expenses flying,” he said. Reaves said he’ll advise his company not to invest in any more tax deeds because “they’re dangerous.”

    Lawrence Forester, a defendant and the registered agent of four companies involved in the case, said he got into the super lien business to help people keep their homes. Ideally, he said, homeowners can be put on payment plans to pay off the companies or a bank can roll the debt into the homeowner’s mortgage.

    “I’m an honest person,” Forester said of the lawsuit, which accuses him and others of “unrelenting predatory conduct” toward a sick woman. “I’m not the type of person who would do that.”

    Dilbeck said she just wants to clean up the title mess so she can move on. Her attorney, Frank X. Moore, said that if the investors hadn’t targeted her home, she could have sold it, paid off her debts and lived comfortably off Social Security and a sizable nest egg.

    Dan Davis, executive director of the Georgia Association of Tax Officials, said what happened to her is wrong. “They’ve essentially tied her hands,” he said. “Being a delinquent taxpayer doesn’t put in her the best light, but they shouldn’t steal her property.”


    Because super liens can be lucrative, some companies seek out partners for a coordinated tax deed purchase and redemption, the bankers association says.

    One company buys the property at the tax auction. The other has already sought out any lien they can buy — even a $50 judgment lien from a lawn care service company will do — to trigger the super lien.

    In more than 55 super lien cases in 2011 and 2012 in Fulton and Gwinnett counties, the AJC found three companies repeatedly involved on each. In many cases, Vesta Holdings — the largest purchaser of tax liens in the two counties — put properties up for tax auction. SPGA Acquisitions LLC won the properties, and Myriad Asset Management obtained super liens on them.

    Rowan’s house was among them. He said that after his mother died in a car wreck, he began having personal and health problems and stopped working. He said he probably couldn’t have come up with the taxes, but were it not for the super lien, he could have sold the house and used the proceeds to settle the bills.

    Rowan said he has long suspected the companies were working together. “It’s just too slick of a move,” he said. “Once you get behind, things tend to escalate, and you can’t catch up.”

    Ramsey — an executive with Vesta — has represented both SPGA Acquisitions and Myriad Asset Management. But Proctor, a long-time Vesta attorney, said those two companies have a new attorney now.

    The two companies, through their current attorney, declined to comment.

    Even if companies do work in tandem, Proctor sees no problems with that. “So what? What difference does it make?” he said.(1)

    Wood, who has tangled with companies in the super lien business, said the difference is that Vesta has the opportunity to work with other companies because it has an inventory of thousands of tax liens purchased from county governments.

    When it has a bundle of liens against one property, it can peel off one and sell it, Wood said. The buyer then can use that lien to quickly pull properties out from under homeowners.

    Vesta itself, Proctor said in an email, has never acquired a super lien.


    Fulton and to some extent Gwinnett counties have become ground zero for super liens. That’s because their tax commissioners, by their practice of selling liens, create more opportunities.

    But Fulton County Tax Commissioner Arthur Ferdinand disagrees with the court decision that created the concept of super liens.

    “Our office would certainly support any action taken by the Georgia General Assembly that would ensure that there is no negative impact on the property owner due to the ‘super lien,’” Ferdinand said in an email to the AJC.

    However, attempts by lawmakers to address super liens have failed to gain traction, and no bills dealing with the sale of municipal tax liens passed in the recent session. State Rep. Wendell Willard, R-Sandy Springs, had planned to introduce legislation cracking down on lien sales to third-party collectors. But he abandoned that effort, saying he couldn’t find the right bill to add the language to.

    Willard said he’s aware that super liens may force mortgage holders to pay exorbitant amounts to save their investments. But any legislative fix, he said, will have to wait until next year.

    Gwinnett County Tax Commissioner Richard Steele has taken action of his own. He said he first became aware of the super lien risk late last year. It’s one reason he said he decided to stop selling liens on houses with homestead exemptions. Otherwise, he said, homeowners in tough times are wide open to super liens.

    “I don’t know of anything right now,” he said, “that would stop that from happening to a homeowner who is living in their home and wants to keep their home, but just gets behind on their taxes and payments.”
For the story, see Super liens a super risk to homeowners.

(1) It is difficult to believe that the blatant ripoff being perpetrated here does not constitute, what the U.S. Justice Department's 'Antitrust Feds' would describe as, a collusive scheme between/among real estate investors aimed at eliminating competition at real estate foreclosure auctions in violation of the Sherman Act.

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

Guilty Verdict For Final Two Defendants In Ponzi Scheme That Duped Victims Into Refinancing Homes, Drawing Down Retirement Savings For Fraudulent Investments; Racket Pushed 201 Homes Into Foreclosure

In Riverside County, California, The Press Enterprise reports:
  • Six years ago, Anna Richter stood shoulder-to-shoulder with 40 people at a busy Temecula intersection to chide law enforcement and call attention to a Ponzi scheme that had shattered their lives.

    Homes had been lost. Savings depleted. Reputations ruined.

    A civil racketeering case was brewing against the culprits of a real estate and currency exchange scheme that was taking place in California, Arizona, Texas, Washington, Oregon, Arkansas and on federal military lands.

    The FBI, Securities and Exchange Commission, Riverside County investigators and prosecutors in several states were probing the alleged pyramid-styled investment scam. But the protesters were getting anxious. They said evidence was being destroyed.

    Standing outside The Promenade mall clad in orange T-shirts in May 2007, the families revealed the profit-making scheme and labyrinth of shell companies that James Benjamin Duncan, Hendrix Montecastro, Christopher Oetting and Maurice McLeod ran with other co-conspirators to entice hundreds of “core clients” to refinance their homes, draw down retirement and other savings and max out credit cards for fraudulent investments on houses, hospitals, diamonds and dinar, the Iraqi currency.

    By the time the dust settled on the $142 million real estate and securities fraud case, investigators said 201 homes in Riverside County were pushed into foreclosure. Duped investors across the West were sent into financial ruin.

    “It seems like an old, bad nightmare,’’ Richter said. “We came out of it beaten and bruised.”

    Montecastro and his mother, Helen Pedrino, were found guilty March 25 of hundreds of felony crimes for their role in the mortgage and securities investment scam.

    Richter said she will not feel total vindication until she sees the last two of seven convicted co-conspirators behind bars for a long, long time. Together, prison sentences for the son and his mother could exceed 130 years.


    Montecastro, 40, of Maryland, was convicted of 304 counts that included grand theft, destruction of evidence and felony fraud against 26 of 27 named victims — with asset losses totaling $3.6 million, Riverside County Chief Deputy District Attorney Vicki Hightower said.

    He faces a prison sentence of more than 100 years.

    Pedrino, 61, of Murrieta, was found guilty of 54 felonies based on her recruitment of five victim investors. She faces a sentence of more than 30 years, Hightower said. The two, who have been jailed since the verdicts were read, face a bail hearing Tuesday, April 2. Sentencing is set for April 22.

    Duncan, the mastermind who struck a plea agreement with the state and testified against Montecastro and Pedrino, is also expected to be sentenced in April, along with McLeod, another top lieutenant in the Ponzi scheme.

    Oetting, another admitted swindler, hanged himself Feb. 16, 2010, at his home on Sagewood Drive in Palm Desert. Months before, he admitted to money laundering, conspiracy and four counts of filing false tax returns and awaited sentencing while free on $225,000 bond.

    The others — Charlie Choi, Cindy Kelly and Thuan Nhan Du — are on probation after pleading guilty to selling securities without a license.

Another Bankster Tagged By WV Non-Profit In Suit For Allegedly Screwing Over Homeowner With Unauthorized, Illegal Fees Clipped When Servicing Mortgage

In Charleston, West Virginia, The West Virginia Record reports:
  • A couple are suing U.S. Bank National Association after they claim it violated their mortgage contract.

    The defendant repeatedly misrepresented amounts due on John and Esther Stitt’s account and assessed a variety of illegal fees to the account, according to a complaint filed March 14 in Kanawha Circuit Court.

    The Stitts claim the defendant also refused to credit payments on the account by either returning payments or placing the payments in suspense. Rather than provide the Stitts with any assistance, the defendant ultimately chose to pursue foreclosure, in violation of their mortgage contract, according to the suit.
  • The Stitts claim during the course of servicing the loan, the defendant assessed unauthorized and illegal fees to their account and added fees that were never agreed to. U.S. Bank National Association breached its contract with the Stitts, according to the suit.

    The Stitts are seeking actual damages and civil penalties. They are being represented by Daniel T. Lattanzi, Jennifer Wagner and Bren J. Pomponio of Mountain State Justice Inc.(1)
For more, see U.S. Bank National Association accused of violating mortgage contract.

(1) Mountain State Justice, Inc. is a non-profit public interest law office dedicated to pursuing litigation focusing primarily on combating predatory lending and abusive debt collection techniques on behalf of low-income West Virginians, and which provides free legal services in its areas of practice to qualifying individuals.

See Despite Jury's Actual Damage Award Of $0, Booted WV Homeowner Walks Away With $32K In Inflation-Adjusted Civil Penalties, $30K In Attorney Fees Anyway In Connection With Foreclosing Lender's Unlawful Debt Collection Practices for a post on a recent West Virginia Supreme Court of Appeals case in which Mountain State Justice scored a win for another screwed over homeowner.

Sunday, March 31, 2013

Failure To Cough Up $215K In Court-Ordered Homeowner Restitution In Civil Suit Leads To Short Jail Stay For Head Of Long Island Condo Conversion Outfit

From the Office of the New York Attorney General:
  • Attorney General Eric T. Schneiderman [] announced that Richard T. Mohring, Jr., the developer of the Cambridge Park Condominium on Long Island, was arrested on contempt of court charges for failing to pay $215,000 in restitution to the victims of his and his wife, Deborah Mohring’s fraud.

    [The] arrest by the Nassau County Sheriff’s Department comes after the Mohrings failed to abide by three separate court orders last year requiring them to make repairs to the Cambridge Park Condominium, at 711-725 Willis Avenue, Williston Park, New York.

    The Mohrings, who live and work in Glen Cove, developed and sold apartments in the Cambridge Park Condominium while promising purchasers that they would make repairs to a retaining wall on the property. That promise has festered for years and to this day the wall remains in danger of imminent collapse.

    “By their willful inaction and indifference, Richard and Deborah Mohring put the residents of the Cambridge Park Condominium in danger,” Attorney General Schneiderman said. “What's more, they have failed to pay the money they owe in open defiance of repeated court orders. This office will not stand by when property developers like the Mohrings cheat homebuyers, put their victims in physical danger and flout court orders.”

    Manhattan Supreme Court Justice Carol E. Huff signed warrants for the arrests of Richard Mohring, 58, and Deborah Mohring, 59, last month. Richard Morning, who was released after appearing before the judge, was ordered to make a payment of $50,000 [] or face re-arrest. The arrest warrant against his wife was also vacated pending that deadline.

    Attorney General Schneiderman filed a lawsuit in Manhattan Supreme Court against the Mohrings and their property development company, R & D Willis Avenue, LLC, in March 2011 and established in court that the business partners pocketed the proceeds of the apartment sales while failing to repair the retaining wall.

    They also failed to obtain necessary certificates of occupancy for nearly half of the apartments in the condominium, rendering many of them illegal to occupy or rent and virtually impossible to resell.

    The Mohrings ignored subsequent court orders to remedy the established fraud and Richard Mohring even filed for bankruptcy in an attempt to get around paying restitution. That filing was dismissed by a federal judge last fall for failure to make all required submissions.
For the press release, see A.G. Schneiderman Announces Arrest Of Long Island Condo Developer For Contempt Of Court (Richard T. Mohrning, Jr. Is Arrested On Long Island after Defying Repeated Court Orders to Pay $215,000 In Restitution; Schneiderman: This Developer Was Arrested For Indifference To The Safety Of His Victims And the Law, Is Still Required to Pay What He Owes).

For an earlier story, see The Real Deal: Court to L.I. developer: pay $215K or go to jail (Condo units lacked certificate of occupancy, retaining wall in danger of collapse):
  • A state Supreme Court judge [...] ordered the developers of Cambridge Park Condominium in Williston Park, N.Y., to pay $215,000 within 72 hours for failing to fix a crumbling retaining wall at the 37-unit complex or face up to five days in jail, The Real Deal has learned.

    Judge Manuel Mendez ordered the developers, Richard and Deborah Mohring, to pay the funds after state Attorney General Eric Schneiderman sued the pair for fraud and misrepresentation.

    The Mohrings, who operate a company called Mohring & Sons Enterprises in Sea Cliff, N.Y., sold all 37 units at the complex, a conversion of two former rental buildings at 711-725 Willis Avenue, but pocketed all the proceeds and reneged on numerous promises to fix defective construction at the complex, according to the State Attorney General’s office.

Hawaii Regulator Clips Loan Modification Outfit For $10K In Civil Penalties, Orders Full Refunds To Homeowners For Collecting Upfront Fees, Failing To Deliver Promised Services

From the State of Hawaii Department of Commerce and Consumer Affairs:
  • The State Department of Commerce and Consumer Affair's ("DCCA") Office of Consumer Protection ("OCP") [...] obtained a judgment against Sean Keala Remos ("Remos") and Loan Network Honolulu LLC fka LoanNetwork Honolulu LLC ("Loan Network").

    The judgment prohibits Remos and Loan Network from violating Hawaii’s consumer protection laws, requires them to pay back consumers and imposes civil penalties of $10,000.

    OCP's lawsuit alleged that Remos acted as distressed property consultant and promised to help distressed homeowners obtain loan modifications. He collected up-front fees from the homeowners and failed to get loan modifications or provide refunds.

Georgia Supremes: Legal Malpractice Claim Against R/E Closing Attorney May Be Assignable To Title Insurer Where Lawyer's Employee Snatched $500K+ In Escrow Cash & Closes Bank Account

From US Law:
  • In 2007, Appellant Derick Villanueva acted as the closing attorney for a mortgage-refinance transaction in which Homecomings Financial, LLC served as the lender supplying funds to pay off earlier mortgages on the secured property.

    Appellee First American Title Insurance Company issued title insurance on the transaction. Pursuant to Villanueva’s instructions, Homecomings wired funds into a specified escrow account.

    However, the funds were not used to pay off the earlier mortgages; instead, the funds were withdrawn and the account closed by a person not a lawyer.(1)

    First American paid off the earlier mortgages(2) and, pursuant to its closing protection letter to Homecomings, became "subrogated to all rights and remedies [Homecomings] would have had against any person or property…."

    First American then filed this lawsuit against appellants, the estate of another attorney, the escrow account, the non-lawyer who withdrew the funds from the escrow account, and others, seeking damages for legal malpractice and breach of a contract with Homecomings.

    The trial court denied summary judgment to appellants. The issue before the Supreme Court was whether a legal malpractice claims were not per se unassignable.

    After studying the issue, the Court agreed with the appellate court that legal malpractice claims are not per se unassignable.
Source: Opinion Summary - Villanueva v. First American Title Ins. Co.

For the ruling, see Villanueva v. First American Title Ins. Co., S12G0484 (March 18, 2013).

(1) The non-lawyer, one Neal Allen, who had been made a signatory on the escrow account by Villanueva's law partner George Moss, withdrew more than $500,000. At the time, close to $800,000 was still owed on the homeowner-client's existing mortgages that were being refinanced. Shortly before the withdrawal, Allen had made some payments on the homeowner-client's existing mortgages in an apparent attempt to hide the shortage in the escrow account. See Villanueva v. First American Title Ins. Co., 721 SE 2d 150 (Ga. App. 2011).

(2) Ibid.