Saturday, May 11, 2013

Steady Stream Of Lawyers Pour Out Of Woodwork Offering Pro Se Homeowner Free Help After Judge 'Green-Lights' Her Constitutional Challenge To Colorado Foreclosure Laws; She Finds Sudden Turn Of Events "Mildly Amusing" But Is "Grateful"

In Denver, Colorado, The Denver Post reports:
  • More than a dozen lawyers have surfaced with offers to help an Aurora woman in her constitutional challenge of Colorado's foreclosure laws, a case she has battled on her own for about two years.

    After a federal judge's temporary injunction Monday that looks to take on whether homeowners facing foreclosure are treated unfairly, Lisa Kay Brumfiel said her solo plight is finding new followers.

    "There's just been a steady stream of them," the 43-year-old part-time saleswoman said of the attorneys offering to take on her case for free.

    She says she's not bitter that they weren't there to help her before — "Everyone wanted to be paid, but you're facing foreclosure because you can't even meet your house payments," she said — and hopes she can have a team of them take on Colorado's foreclosure process.

    U.S. District Judge William Martinez issued an interim preliminary injunction stopping the foreclosure auction of Brumfiel's four-bedroom house, saying she had prevailed enough to challenge the constitutionality of state law.

    That law allows a lender to foreclose with only the signature of its lawyer saying it has the right to do so. That happens with only a photocopy of the mortgage — which in Colorado is called a note — not the original or even a certified copy, and the lender doesn't have to prove it owns the note.

    Brumfiel said that lawyer's signature, called a statement of qualified holder, violates her constitutional rights to due process under the 14th Amendment. The bank should be required to provide proof that it owns the note and the right to foreclose, she said, not just possess a copy.

    "This theory of 'show me the note' has been tried in many courts without success, but Colorado law is unique in that a lawyer's signature is simply good enough," said Keith Gantenbein, an attorney who has offered to help Brumfiel. "This is an extremely important chance to change a very bad law."

    Martinez set a hearing for May 15 to take on the issue.

    Said Brumfiel: "I find it mildly amusing (the lawyers) show up now, but I'm grateful the table is turning and they're interested."

Texas-Based Real Estate Slum Operator Notorious In Houston & Buffalo For Peddling Crappy Rent-To-Own Deals To Unwitting Wanna-Be Homebuyers Hit With Baltimore Suit Alleging His Business Model Presents Nuisance That Threatens Communities' Well-Being

In Baltimore, Maryland, Baltimore City Paper reports:
  • Backed by the non-profit Community Law Center,(1) six Baltimore neighborhood associations have sued a Texas-based property speculator for $8 million, saying his business model presents a nuisance that “threatens the well being of the communities.”

    The defendant, Scott Wizig, owns about 140 city properties, plus dozens more in Houston, where he is based. In the early 2000s he was charged criminally by the state of New York and dubbed “Buffalo’s worst slumlord,” eventually settling the case for several hundred thousand dollars. He started buying in Baltimore in 2001; City Paper took note of him three years later and not much has happened in the nine years since then.

    He first got our attention with the ‘We buy houses’ signs,” says Kristine Dunkerton, the Community Law Center’s executive director. “He racked up quite a bill with the city for posting the signs. But he never did anything with the properties.”

    (Baltimore city strengthened its ordinance against so-called bandit signs in 2006. The city’s housing department enforces the ban, though with difficulty according to this 2009 City Paper story).

    Wizig buys run down houses via tax sales, paying just a couple thousand dollars each for houses that are arguably worth even less, because most need expensive rebuilding to be habitable. In the early 2000s he was renting them to tenants for about $500 a month through a local property manager. City Paper found tenants who said promised repairs were never made. The manager and Wizig blamed each other and Wizig said he was getting out of the rental business then: “We don’t anticipate doing any more rentals with new customers [in Baltimore], but we are certainly going to look into and make sure the existing customers are being taken care of.”

    In Buffalo and Houston, Wizig’s business model revolved around a lease-to-own contract, often one that required the lessee to rent for a couple of years before being able to exercise their option to buy the property. Houses Wizig picked up for a couple grand would routinely be sold for ten times that—though the buyers often defaulted, beginning the cycle anew.

    New York prosecutors called the scheme deceptive; Wizig eventually pleaded guilty to hundreds of violations of state housing laws there. The Houston Press, an alternative weekly, wrote about Wizig’s deals in Houston, though he has apparently faced much less legal trouble there.

    Land records indicate that Wizig has sold many houses in Baltimore, financing the purchase through one of his companies. It is unclear in the documents whether these are rent-to-own deals. But Wizig’s buyers do not always fare well, and Wizig is himself a defendant in five open foreclosure actions listed in Baltimore courts. The oldest, filed in August of 2011, involves 4046 Park Heights Ave., which a Wizig company called Compound Yield Play sold to Joan E. Lilly in 2008 for $43,200. Wizig had bought the property two years earlier for $2,202.

    Another house Wizig sold to Lilly, 1419 E. Federal St., is now in receivership after city action. Wizig’s bought it for $4,396 in 2006 and sold it to Lilly in 2008 for $39,900.

    Wizig did not return City Paper’s phone call.

    Wizing’s buyers and business partners are not party to the suit. Instead, neighbors of the dilapidated properties are suing under a law called The Community Bill of Rights. The law is more than a decade old, but amended only last year to make it usable to community associations, Dunkerton says. “We decided with the new Community Bill of Rights legislation . . . to put the community in the shoes of code enforcement.”

(1) Community Law Center, a nonprofit law firm, provides legal services to community and nonprofit organizations throughout Maryland to promote stronger nonprofits and more vibrant neighborhoods.

Would-Be Tenant Gets Quick Boot After Paying Thousand$ To Rent Four Bedroom Home From Foreclosed Owner/Real Estate Agent

In Fort Lauderdale, Florida, WPLG-TV Channel 10 reports:
  • "I'm angry... I'm really angry. I'm so frustrated and so exhausted," Jeff Sandler said while packing.

    On his moving day, while surrounded by movers, Sandler still had baggage that wouldn't fit into any box and anger that he couldn't keep a lid on. "It's a huge financial and emotional drain," he told Local 10's Ross Palombo. The drain, though, began as a dream.

    It started when he found a half-million dollar, four-bedroom, three-bath, 3,000-square-foot home to rent in Fort Lauderdale. Owner and realtor Sheri Edewaard leased it to him for $2,700 a month. "And, I rented the home from her. I did everything I was supposed to do legally," Sandler said.

    He thought the deal was signed, sealed, and delivered until something else arrived: an eviction notice.

    "I had a very abrupt knock at my front door... They demanded I leave the premises in 24-hours," Sandler said. The demand came from a "Writ of Possession." He was being evicted because the house was foreclosed upon. "She didn't tell me that her house was in foreclosure and I had been evicted," he added.

    Court records show that the bank began foreclosure in February 2012. By October, a judge finalized the foreclosure. According to the lease obtained by Local 10, Edewaard then signed an agreement in November to rent that house to Sandler. "I just feel ridiculously violated and I don't understand how people can get away with that," Sandler said.

    State record show that Edewaard has been a licensed real estate agent for 13 years and has no formal history of complaints. Local 10 tried several times to locate her at her home and office without success and left several messages asking for her side of the story. Edewaard never agreed to an interview to tell her side of the story.

    The one person who did call to comment was the man who she works with: successful realtor John Castelli. "You don't believe your agent did anything wrong?" Palombo asked. "I don't believe she knowingly did anything wrong," Castelli said.

    "You don't think a licensed realtor should have know that her home was, one, in foreclosure and, two, foreclosed upon? You don't think she should have known that as a realtor before she signed a lease with someone?" "I don't believe she knew it was in foreclosure," Castelli said several times.

    Edewaard, he said, still works with him.

    Assistant State Attorney Al Guttmann can't speak directly about that case, but said Broward County has seen plenty of foreclosure cases. "Broward has had more than its share of foreclosure and fraud," Guttmann said.

    Foreclosures are on the rise in Broward, according to the County Clerk's office. There were 19,651 in 2011 and 24,076 in 2012, an increase of 18 percent.

    "You're entitled to rent in foreclosure," Guttmann said. "But, here's the catch... you've got to tell your renter." If you don't, he said, it could be fraud or felony fraud. "It's unfortunate. It's a shame, and it could be a crime," Guttmann said.

    "Is that something your office would prosecute?" Palombo asked. "We'd certainly take a look at it," Guttmann replied.

    Edewaad herself hasn't formally been accused of any crime. But S andler is speaking with prosecutors and the state agency that granted Edewaard her license. "Something should be done about it," Sandler said.

    For him, though, nothing could be done in time. After spending thousands of dollars on moving and attorneys, there is now nothing left for him to do but move on. "Unbelievable that we have no rights," Sandler said. "I absolutely feel helpless. I just don't get how we're not protected."
Source: Renter evicted from half-million dollar home (Man evicted because Fort Lauderdale home was foreclosed upon).

Ohio AG Indicts Seven In Home Repair Scam Primarily Targeting Seniors Mostly In Their 80s & 90s; Two Suspects Tied To Similar Earlier Racket That Landed Them Prison Time 10+ Years Ago

From the Office of the Ohio Attorney General:
  • Ohio Attorney General Mike DeWine stood beside Central Ohio law enforcement officers to announce the indictments of seven people who ripped off elderly victims in Fairfield, Franklin, Pickaway, and Ross counties with their door-to-door home improvement scheme.

    “These scammers preyed on people mostly in their 80’s and 90’s,” said DeWine. “They not only preyed upon them once, but in most cases, they continued their lies to get more money. And that has added up to a loss of $102,000 for more than a dozen victims. We know there are more victims, which is why this investigation is not over.”

    The suspects typically would approach a homeowner with a story about something that needed to be fixed like a roof or chimney. The homeowner would agree to the work, only to learn later the bill was much higher than expected and little or no work was performed. Sometimes the suspects would approach a homeowner declaring they’d already fixed the issue on the home (without permission), and they were owed money for the work.

    After the payment check was written, the suspects would return later saying they’d overcharged the homeowner. They’d ask for a second check to be written, ensuring the homeowner that they hadn’t cashed the first check when, in fact, they had. The suspects pulled the check story scam over and over. One 89-year-old woman wrote 14 checks totaling $23,400. One 86-year-old man lost nearly $50,000 writing 29 checks.

    Bruce McFarland, Herschel Mumaw, Mark Christman, Mark Kitchen, Michael Fausnaugh, David Ramey, and Thristian Harding, all from the Circleville area, were indicted in Fairfield County on multiple felony counts including: Engaging in a Pattern of Corrupt Activity; Conspiracy; Money Laundering, and Theft from an Elderly Person.

    McFarland and Mumaw, both of whom were sent to prison as part of the “Circleville 30” convictions more than a decade ago, now face a maximum of 57 years in prison if convicted.

    “Twelve years ago, the Attorney General’s Office sent more than thirty people to prison for robbing senior citizens in this same kind of scam,” Attorney General DeWine said. “When we learned that some of the same people had served their prison time, gotten out, and were continuing their hunt for elderly victims in a new home repair scam, our investigators, along with so many other law enforcement detectives, worked tirelessly to put a stop to this.”

    The “Circleville 30” was a group of relatives and friends who stole hundreds of thousands of dollars from elderly homeowners, after claiming they’d done some type of home improvement work. In 2000, a taskforce led by the Attorney General’s Office convicted more than 30 people.

Disbarred Attorney Indicted For Allegedly Ripping Off 83-Year Old Woman Of $400K+ In Connection With Complex Real Estate Deal

From the Office of the Ohio Attorney General:
  • Ohio Attorney General Mike DeWine and Hamilton County Prosecutor Joseph Deters announced [] the indictment of a disbarred attorney who allegedly stole more than $400,000 from an 83-year-old woman from Morrow, Ohio.

    William G. Goetz, of Cincinnati, was indicted Tuesday by a Hamilton County grand jury on two counts of Theft from the Elderly, two counts of Money Laundering, and one count of Tampering with Records. If convicted, Goetz faces a maximum of 31 years in prison.
  • According to investigators, Goetz prepared legal documents and participated in a complex real estate transaction for the homeowner.

    He allegedly took more than $400,000 from the homeowner that was intended for future tax payments stemming from the land deal. Goetz is accused of depositing the funds into his business accounts for his own personal use.

    As part of the deception, Goetz also created a fake letter from the Ohio Attorney General's office to further his crimes.

    Goetz was disbarred by the North Dakota Supreme Court in 1991 for fraudulent dealings with his clients. He is not and has never been an attorney admitted to the practice of law in Ohio. The Ohio Supreme Court sanctioned Goetz for unauthorized practice of law and fined him $30,000 in 2005.

    A warrant has been issued for Goetz's arrest.

Stockbroker, Hubby Get Seven Years For Conning Dementia-Stricken, 94-Year Old Woman Into Signing Over Control Of Her $10M Estate

In Fort Lauderdale, Florida, the South Florida Sun Sentinel reports:
  • A Hollywood stockbroker and her husband will spend the next seven years in prison after a jury found them guilty of conning a 94-year-old friend into signing over her $10 million estate to them.

    Cynthia Franke, 52, and her husband, Tyrone Javellana, 48, were convicted on March 19 of exploitation of the elderly, a charge that carries a maximum 30-year prison term. The couple were accused of befriending Josephine Troisi, then becoming her financial advisers.

    According to prosecutors and witnesses, Franke and Javellana persuaded Troisi to disinherit her own family members and turn her fortune over to them.

    But Troisi, who suffered from dementia, lacked the capacity to make sound decisions when Franke took her to an attorney to change her will and her trust in 2009.

    Troisi's son, John, had been keeping track of his mother's finances and contacted police when he noticed payments to Franke and Javellana ranging from $500 to $5,000. In all, police said the couple tricked Troisi and her sister, Mary Teris, out of more than $100,000 and set themselves up to inherit even more.

Vet Who Claims He Was Victimized By Local Police Dept. Employee In Land Contract Ripoff That Led To Foreclosure Says Latter Allegedly Invited Her Co-Workers To Loot Premises While He Was Out-Of-Town; Cops Then Placed Alleged Victim Under Arrest For "Misuse Of 911" Saying Reported Burglary Is Only A Civil Matter

In Mt. Pleasant, Michigan, reports:
  • U.S. Navy veteran Ted Visner and his wife, Kathy Smith of Mt. Pleasant, Michigan, have been living out a nightmare. It started two and a half years ago, when the family fell victim to an apparent real estate scam by a local sheriff's department employee.

    Ted Visner says they bought their former home on a land contract, only to learn seven months later, that the seller, Isabella County Sheriff's Dept. employee Shelly Sweet, was not making monthly payments on the house. A bank foreclosed on the property, all unbeknownst to the Visner/Smith family.

    Ted Visner, who builds custom homes for a living, said, "Although we were paying Sweet every month on the purchase of the property, she had not been paying the underlying mortgage and the home fell into foreclosure." I asked Visner if he had records of those payments, he said he does, including canceled checks. You won't believe what happened next.

    "On a weekend Sweet knew that we would be out of town, she offered the contents of our home to her friends and coworkers at the Isabella County Sheriff’s Department, claiming we had abandoned the home. Many took her up on her free offer deal and took over $55,000 dollars worth of our personal property."
  • The story seems blatantly criminal in nature, with police banding together to help off their property in its entirety. Visner said, "She just put a sign out and let anybody have what they wanted, she didn't remember who was there. In her own disposition she admits to giving our stuff away."

    Visner says Sweet told her employer, the sheriff's department that Visner and his wife weren't making payments, while Visner is able to prove via canceled checks to Sweet that they were indeed paying. "It was blatantly untrue," Visner added. "There is no evidence to support what the county did, it all shows what we are saying though."
  • Visner, Smith and their kids, returned from their weekend away on Monday September 27, 2010, to discover that they were locked out of their own home. Visner called the law enforcement agency that Sweet worked for. [...] It would take a day before the family was allowed to go back inside of the home, and that is when Smith and Visner learned that 95% of the home's contents had been stolen.

    "A sheriff deputy named 'Steinert' came to our home three times that day and only assisted his coworker while the under-sheriff, sheriff and PA refused to help us after they recognized the totality of the situation," Visner said, adding that the "situation" was 6+ coworkers of Sweet having entered their home and receiving stolen property, which for anyone else in the world is Theft.

    Instead, Visner was arrested for "Misuse of 911" on the deputy's third visit. "The county investigated the crime for almost four months and during this time, I moved my family out of Isabella County for safety, I could not move with them because my indefinitely delayed arraignment still loomed over my head."

    Visner says after losing the home he shared with his family, and 95% of their belongings to the sheriff's department, that the prosecutor's office ignored their complaints and still refused to investigate "their employees". In his words, "Over two and a half years have passed now with law enforcement officials doing nothing except covering for one another."

Friday, May 10, 2013

Settlement Agent, Hubby, Son All Cop Pleas In Scam Involving Illegally Pocketed Proceeds From Repeated Residential Refinancings Without Paying Off Prior Loans; Duped Lenders Clipped For $12M+

From the Office of the U.S. Attorney (Denver, Colorado):
  • Alois Craig Weingart, age 59, of Castle Rock, Colorado pled guilty to one count of making a false statement to a bank, U.S. Attorney John Walsh, IRS Criminal Investigation Special Agent in Charge Stephen Boyd and FBI Denver Acting Special Agent in Charge Steven Olson announced.
  • In the same case, Waunita Weingart pled guilty to two counts of wire fraud on March 13, 2013 and is scheduled to be sentenced on June 17, 2013. John Gallegos pled guilty to one count of making a false statement to a bank and is scheduled to be sentenced on May 6, 2013.

    According to the stipulated facts contained in Waunita Weingart’s plea agreement, beginning in 2000 and continuing through 2008, she devised a scheme to defraud lenders that funded residential mortgage loans. She was an experienced mortgage broker, settlement agent, and licensed title insurance producer. Alois Craig Weingart is her husband; John Gallegos is her son.

    As part of her scheme, she, John Gallegos, and Craig Weingart each repeatedly obtained mortgage loans for their properties in Castle Rock and Boulder, Colorado, pledging the same properties again and again as collateral to each successive lender without paying off the prior loans.

    Waunita Weingart used her mortgage brokerage, G-4 Holding, as well as two escrow/title companies she controlled, Colorado County and Community Title and Real Estate Title, to facilitate her fraud.

    For each new loan, Waunita Weingart made it appear as though the lender would obtain a first priority security interest in the property, knowing that it would not. In preparing the loan applications and providing information to the lenders for the applications, she incorporated false representations as necessary to assure that the borrowers would qualify for the loans.

    Each application substantially overstated the borrower’s true income, falsely representing that he or she had high monthly earnings from employment at another company Waunita Weingart controlled. Each application also falsely represented that the borrower owned numerous properties that he or she did not in fact own. As a result of her scheme, lenders lost over 12 million dollars.
For the U.S. Attorney press release, see Third Defendant In Real Estate Fraud Case Pleads Guilty.

NYC Judge 'Green-Lights' Jilted Wife's Effort To Score Punitive Damages In Divorce Case Where Hubby Is Accused Of Duping Her Into Refinancing $26M Park Avenue Apartment For Some Extra Cash To "Tide Them Over Thru Bad Market"; He Then Allegedly Used Loot To Pay Down Business Debts, Stopped House Payments, Left Her & Kids w/out Support & Home In Danger Of Foreclosure

In New York City, the New York Daily News reports:
  • A real estate big who accused his estranged wife and her family of having forged his name to pocket $270,000 in insurance checks is now being accused of “wanton dishonesty” himself.

    A Manhattan judge is allowing Kent Swig’s wife, Elizabeth, to go after him for punitive damages in their divorce case, after his financial shenanigans nearly cost her her $26 million apartment at 740 Park Ave.

    In papers filed in Manhattan Supreme Court, Elizabeth Swig said her husband convinced her they should take out a $12.5 million loan on their pricey pad that would be used to pay off an earlier $5 million loan and give them enough cash to “tide them over through the bad market.”

    Instead, Swig, a developer who was hard hit by the real estate crash, used the money to pay off some of his other business debts. He then stopped making payoffs on the loans in June 2009 — leaving the apartment in one of the city’s swankiest addresses in danger of foreclosure, court papers say.

    He also stopped paying cash to support Elizabeth and their two kids, leaving her to turn to her parents, real estate giant Harry Macklowe and his wife, for financial help, court papers say.

    Swig later filed for divorce, and has since been ordered to pay $7,000 a month in support for his wife and kids, plus an unspecified amount to make up for the time he was not paying.

    Elizabeth said her hubby’s deception in the loan deal was so outrageous that she should also be entitled to punitive damages in their divorce.
For the story, see Estranged wife of real estate big sues for punitive damages over $12.5 million loan (Kent Swig’s wife, Elizabeth, was allowed by a judge to go after her husband for punitive damages in their divorce case relating to a million-dollar loan the couple took out to pay for their $26 million Park Ave. apartment).

Payment Agent For Crappy National Foreclosure Fraud Settlement Shortchanges 96,000 Screwed Over Borrowers On Paltry Payments

Bloomberg reports:
  • The Federal Reserve said some mortgage borrowers who were insufficiently paid as part of a settlement will be sent supplemental checks next week.

    The borrowers, whose home loans were serviced by Goldman Sachs Group Inc. (GS) and Morgan Stanley, will be sent an additional payment around May 17, the Fed said today in a statement in Washington. They were sent erroneous payments as part of the Independent Foreclosure Review agreement, the Fed said, citing an announcement by Rust Consulting Inc., which processed payments.

    Rust said [] some borrowers were sent checks for less than the amount directed by the Fed and the Office of the Comptroller of the Currency. The Minneapolis-based company is distributing $3.6 billion that servicers agreed to pay to settle claims they improperly seized homes amid the subprime mortgage crisis.

    “The new checks will make up the difference between what was in the original check sent by Rust and what should have been paid,” the Fed said in the statement. “Borrowers should cash both the original checks and the supplemental checks.”

    A settlement with regulators in January deemed Goldman Sachs and Morgan Stanley (MS) responsible for $232 million in cash to borrowers and $325 million to help avert foreclosures, though the New York-based companies no longer own mortgage servicers. In all, the broader settlement compensated about 4.2 million borrowers with loans from 13 mortgage servicers.

    96,000 Borrowers

    About 96,000 borrowers whose loans were serviced by former Goldman Sachs subsidiary Litton Loan Servicing LP and Morgan Stanley’s Saxon Mortgage Services Inc. unit were sent checks for less than the amount that the Fed directed Rust to pay, Rust and the central bank both said in statements [].

    The Fed said it learned of a possible discrepancy [] and contacted Rust to assess the problem. Rust was hired as the agent to distribute in payments to borrowers who faced foreclosure in 2009 and 2010.

Thursday, May 09, 2013

Attorney Ripoff Reimbursement Fund Coughs Up $38.4M In Connection With R/E Settlement Proceeds Pilfering, Despite Scheme Being Masterminded By Non-Lawyer; 10,000 BC Bar Members Get Clipped With Special Assessments To Fund Payout Necessitated By Rogue Closing Counsel's Handiwork In Scam

In Vancouver, British Columbia, The Vancouver Sun reports:
  • Vancouver property developer Tarsem Singh Gill, whose fraudulent activity cost B.C. lawyers nearly $40 million and placed immeasurable stress on dozens of homebuyers and lenders, has entered an 11th-hour guilty plea.

    During a 45-minute appearance in B.C. Supreme Court on Friday, Gill pleaded guilty to defrauding 77 homebuyers and 30 lenders of $31,165,111 from 2000 to 2002. [...] With a guilty plea in hand, Judge Terry Schultes adjourned the matter until May 17, at which time he will set a date for a sentencing hearing.
  • Gill perpetrated his crimes through Vancouver lawyer Martin Wirick. Homebuyers entered into agreements to buy properties from Gill-controlled companies or Gill nominees. They sent their money to Wirick, who was acting on Gill's behalf, on his undertaking to pay off the existing mortgages and deliver clear title.

    However, instead of using the money as promised, he remitted the funds to Gill, who used them for his own purposes.

    In a similar vein, lenders - nearly all well-known financial institutions, most notably Vancouver City Savings Credit Union - forwarded money (on behalf of their borrowing clients) to Wirick on his undertaking to clear off existing mortgages and register their charge in first position on the property.

    Once again, Wirick failed to discharge his duties and instead diverted the funds to Gill, who used them for his own purposes.

    The charges do not appear to capture the entire amount of the fraud. The B.C. Law Society, which ensures the public against lawyer fraud, paid out $38.4 million in claims on account of Wirick's participation.(1)

    Sorting out the claims, many of which were overlapping, took hundreds of man hours. And to finance the payouts, the society had to impose a special assessment on its 10,000 lawyer-members.

    If there was one consolation to Wirick's conduct, it was that he almost immediately went into mitigation mode.

    When the scheme was uncovered in May 2002, Wirick resigned from the law society, admitted his part in the scheme and agreed to permanent disbarment. And when the case came to court in June 2009, he pleaded guilty and was sentenced to seven years in jail.

    Many of the victims were new Canadians who suffered the initial shock of learning that prior mortgages on their homes had not been discharged, then the anxiety of living in homes that were laden with debt not of their own making.

    Although the law society eventually compensated them, the experience took a heavy emotional toll:

    "It was only with tremendous effort that we were able to purchase a new condominium in 2002," one person stated in a victim impact statement at Wirick's sentencing

    "Since it had been nearly 10 years (since our last holiday), we joined a tour to Disneyland. ... But we received the letter from the court a few days prior to our departure. That night, my wife and I cried in each other's arms. And the days thereafter were full of sorrow and sadness."

    Another victim described the wrenching psychological impact: "Under constant threat of foreclosure and lawsuit, sleep was impossible and escalating episodes of panic, despair and hours of uncontrollable sobbing alternated with periods of complete numbness."

    While Wirick mercifully expedited the proceeding, Gill not only maintained his innocence, he played a game of musical chairs with his lawyers.
For more, see Vancouver property developer pleads guilty to massive fraud (Tarsem Singh Gill defrauded 77 homebuyers and 30 mortgage lenders of $31.2 million from 2000 to 2002).

(1) The Lawyers' Insurance Fund of the Law Society of British Columbia was established to reimburse clients who have suffered a loss due to misappropriation or embezzle­ment by an attorney licensed in British Columbia.

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

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

Settlement Agent Cops Plea To Siphoning Off Closing Proceeds From R/E Deals, Failing To Pay Off Existing Liens; Bag-Holding Title Underwriter Expected To Cough Up On $ubtantial Claims

From the Office of the U.S. Attorney (Pittsburgh, Pennsylvania):
  • A resident of Butler, Pa., pleaded guilty in federal court to charges of conspiracy and money laundering, United States Attorney David J. Hickton announced[]. Jeffrey Garbinski, 44, pleaded guilty to two counts before United States District Judge Cathy Bissoon.

    In connection with the guilty plea, the court was advised that Garbinski owned and operated the Closing Company of PA ("Closing Company"), which closed residential real estate transactions.

    Sabrina Spetz was an attorney who closed many of the transactions at issue. Garbinski also operated a mortgage broker business called Main Street Mortgage Services, which did business as Asset Mortgage and Financial Services, Inc., and he was a title insurance agent.

    Closing companies have trust accounts. What is supposed to happen is that the money from the lenders funding the loans goes into the trust account. At or shortly after the closing, those funds are disbursed consistent with the lender's instructions and the settlement statements. Most significantly with regard to this case, is that liabilities associated with the collateral are supposed to be paid immediately. Thus, the liens related to the property are paid and the lender stands in first lien position.

    Rather than immediately paying the liabilities, Garbinski, with Spetz's knowledge and assistance, siphoned money from the company for years to support his lifestyle and for other business ventures.

    He would then use the money from the next transactions to pay the liabilities from the previous transactions.(1)

    He would pay the monthly mortgage payments on the outstanding mortgages that should have already been paid to avoid discovery of his fraud.(2) Eventually, the liabilities grew so large that Garbinski was no longer able to pay the liabilities and he filed for bankruptcy.

    Although Garbinski committed this scheme regarding customers of the Closing Company, he also committed this scheme with his own personal residence. Dollar Bank funded a $600,000 loan to Garbinski arranged through his mortgage broker business and closed by the Closing Company.

    Basically, the loan through Dollar Bank was a typical refinance transaction in which all of the liabilities associated with the collateral, which was Garbinski's personal residence, were supposed to be paid off. Garbinski submitted a loan application that failed to report two significant mortgages on the property, and he also arranged to submit fraudulent title search records that did not reveal the two mortgages.

    Long after the loan closed, Dollar Bank discovered that they were in third lien position rather than first lien position. Now that Garbinski has filed for bankruptcy, Dollar Bank expects to suffer a total loss on that loan because the sale of the collateral is unlikely to pay off the first two liens on the property.

    Ultimately, the title insurance company will likely have to pay substantial claims because of this fraud. The Closing Company was a representative of Fidelity National Title Insurance Company ("Fidelity").

    Fidelity conducted an audit of the Closing Company of PA pursuant to the title insurance contract between Fidelity and the Closing Company. As part of that audit, Fidelity requested and obtained from Spetz bank statements that did not show the fraudulent withdrawals because the statements had been altered by Spetz at Garbinski's direction.
For more, see Butler Man Pleads Guilty In Mortgage Fraud Scheme.

(1) This maneuver is commonly referred to as a Ponzi scheme.

(2) These payments, typically made in the context of a Ponzi scheme, are often referred to as "lulling payments," intended to delay the discovery of the fraud by "lulling" the unwitting scam victims into a sense of security (lulling the victim to sleep, so to speak), in an effort to conceal the true nature of the scheme.

Foreclosure Screw-Up Leads Subsequent Unwitting Purchaser To Buy Land Bank Never Actually Owned; Error Discovered A Few Years Later On Attempted Resale; Agency Originally Insuring Title Hangs Up Phone When Questioned About Problem

In Lehigh Acres, Florida, WFTX-TV Channel 4 reports:
  • If you've ever owned property, you know how it's supposed to work.

    You pay for it, you get the title. And you would think that property's yours, right? Not so fast.
    Four In Your Corner's Liza Fernandez introduces us to a couple who bought a lot in Lehigh Acres that's now in legal limbo.

    This Lehigh Acres house was supposed to be a dream retirement home for Kathy and Gerry Powers. "All the paperwork and everything came through, and we basically had the the two half-acre lots and the house," Kathy tells us by phone.

    Snagged at a great price in a 2009 foreclosure, the Indiana couple then decided to sell when their retirement plans changed a few years later. They felt lucky to find a buyer.

    "Then we got a call. Their title insurance company discovered an error that the half acre that was supposed to accompany our home did not actually legally belong to us. And it could not be sold," Kathy explains.

    You better believe it -- the couple attorney Todd Allen shows us the documents.

    "Countrywide (mortgage company) never had a mortgage on that lot. They had a mortgage on this lot the one that the house is on. But somehow in the foreclosure process, they included lot #9 as part of the foreclosure proceeding," says Allen.

    The initial foreclosure action document shows only one lot. But later documents do, in fact, show the lot in question had somehow been added to the paperwork in the process. So when the Powers bought the foreclosure, they thought they were getting both lots.

    "You could point fingers at the bank for not doing its due diligence, you could point finger at the judge, for not reviewing the legal description when they completed the foreclosure. And you could point the finger at the title company for not catching it when they insured the transaction," says Allen.

    As for the Powers: "Basically what it's done is, it put everything on hold. We weren't able to pursue everything we want to do, and it has strapped us financially. It's definitely put our life on hold," says Kathy.

    The original mortgage company, Countrywide, is now out of business. But 4 In Your Corner contacted the law firm out of Tampa that handled the transaction and the company the Powers bought from -- Freddie Mac. Reps for both say they're looking into it. The title company that insured the transaction hung up when we explained the problem.

Wednesday, May 08, 2013

NY AG Announces Intent To Sue Banksters For Allegedly Failing To Uphold Their End Of Crappy, Anti-Homeowner Nationwide Foreclosure Fraud Settlement

Bloomberg reports:
  • Bank of America Corp. and Wells Fargo & Co. (WFC) violated terms of a nationwide settlement reached last year over banks’ residential mortgage foreclosure practices, New York Attorney General Eric Schneiderman said.

    The two banks have failed to comply with standards established for processing homeowners’ loan modification applications, Schneiderman said [] in a statement. He said he plans to sue the banks unless a committee set up to monitor the settlement’s terms takes action.

    “Wells Fargo and Bank of America have flagrantly violated their obligations under the settlement,” Schneiderman said [] at a news conference.

    Schneiderman said delays by the banks in processing mortgage loan modifications have caused New Yorkers to incur fees and fall further behind in payments, putting them at even greater risk of losing their homes.

Colorado Federal Judge Temporarily Slams Brakes On Foreclosure Sale To Allow Pro Se Homeowner To Pursue Legal Issue Over Whether State Law-Sanctioned Use Of Unsworn Statements By Banksters In Process Of Taking Homes Violates Constitution's Equal Protection Clause

In Denver, Colorado, The Denver Post reports:
  • A federal judge on Monday made the rare move to stop the foreclosure auction of an Aurora woman's house in a case that squarely takes on the constitutionality of Colorado's foreclosure laws.

    U.S. District Judge William Martinez issued a preliminary injunction against the sale of Lisa Kay Brumfiel's four-bedroom home, scheduled for Wednesday in Arapahoe County, until the judge can decide whether parts of state law are unfair to homeowners facing the loss of their house.

    At issue is a provision in state law that allows lawyers to assert that their client, typically a bank, has the right to foreclose on a property even though they might not have the original mortgage paperwork to prove it.

    What makes the case compelling isn't just that a federal judge was persuaded to step into an issue involving state law — extremely difficult to do — but the plaintiff in the case is a part-time saleswoman who has taken on the battle without a lawyer.

    Brumfiel, 43, says she didn't know a thing about the law. Despite fumbles in decorum and formal court procedure, she has taken on U.S. Bank and Larry Castle, one of Colorado's most powerful foreclosure lawyers.

    Despite several setbacks and outright losses, she has made it farther than many lawyers. "There's an issue of fundamental rights, and I won't back down," Brumfiel said after Martinez's decision.

    Though Martinez's ruling gives Brumfiel until May 15 to argue why Colorado's law violates the equal-protection clause of the 14th Amendment to the U.S. Constitution, he gave early glimpses to his thinking.

    "Colorado is the only state in the country that allows an unsworn statement by an attorney for a foreclosing party — without any penalty — to say, 'Trust me, judge, these guys are the qualified holder for this deed of trust,' " Martinez said. "Is there another state that has lowered the bar for a foreclosure any lower?"
  • How U.S. Bank came to hold the note was in question, and Brumfiel wanted proof. Banks often sell mortgages to one another and, rather than record those transfers at the county recorder of deeds — an expensive process — they self-track them via the Mortgage Electronic Registry System.

    Though many states allow MERS to be the assignee of a mortgage and foreclose when homeowners default, Colorado doesn't. MERS often assigns ownership of the note to the foreclosing bank.

    But there's no proof in public records of those transfers in ownership, because they're never recorded.

    County public trustees auction foreclosed houses, but that can't happen until a district-court judge authorizes it. That occurs at a Rule 120 hearing, named for the court procedure that governs it.

    Before signing, a judge is to answer two questions: Is the homeowner in default, and are they in the active military?

    The judge's decision is final, cannot be appealed and allows for no discovery. Homeowners misunderstand the rule to the extent that Rule 120 hearings are rarely held. And any challenge to the decision must be taken up as a separate lawsuit, which critics say is unfair since homeowners facing foreclosure are unlikely to have the money for a lawyer.

    In 1989, the Colorado Supreme Court ruled that judges must also consider at a Rule 120 hearing whether a bank has the right to foreclose, known legally as having standing.

    As banks sold mortgages more and more, and MERS was to track who owned which, coming up with original paperwork to prove standing became difficult.

    Then, when the mortgage crisis hit along with the economic meltdown, the flood of foreclosures made it virtually impossible to keep up.

    With the backing of the state's public trustees, who are to oversee the foreclosure process impartially, Castle and other foreclosure lawyers in 2006 drafted legislation, HB 1387, that made a critical change to foreclosure rules.

    Lawyers could now sign a document, called a statement of qualified holder, that was their guarantee — without the need to provide proof — that their bank client had the right to foreclose.

    Critics say it takes away a homeowner's rights to due process guaranteed in the Constitution. But none has succeeded in making a challenge until Brumfiel.

    "It's great the federal court is invoking fundamental constitutional principles to reviewing a foreclosure process that obviously needs to be fixed," said attorney Stephen Brunette, who has tried to change the law since.

    Two legislative efforts at changing the law have failed, both by Rep. Beth McCann, D-Denver. And a voter initiative last year stalled for lack of funds to raise the signatures needed to make the ballot.

    Court challenges have also failed, including at the federal level where judges are reluctant to tread on state business.

    Monday's decision, however, sets the stage for a showdown over the constitutionality of the qualified-holder statement.

Brooklyn Feds Frog-March Once-Powerful Local Pol/Lawyer For Allegedly Snatching $440K In Foreclosure Sale Surplus Proceeds While Acting As Court-Appointed Referee, Then Using Loot To Fund Failed Campaign To Head County DA's Office

In Brooklyn, New York, the New York Daily News reports:
  • They've been charged with taking bribes, lying under oath, even trying to buy their way into office — but until now, there has never been a political corruption case in New York like this.

    State Sen. John Sampson was charged Monday with embezzling $440,000 and using some of it to bankroll a bid for one of the highest law enforcement jobs in the city, Brooklyn district attorney. And when he feared getting caught, he told an associate he could track down informants and “take them out,” according to an indictment unsealed Monday.

    Brooklyn U.S. Attorney Loretta Lynch called it “one of the most extreme examples of hubris and arrogance we have ever seen.” She said Sampson even pressed a high school friend working in her office, paralegal Sam Noel, to uncover information that might ease his mounting legal troubles.

    For Sampson, 47, it was an incredible fall from grace. He was once one of the most powerful politicians in New York, as Democratic conference leader of the Senate. After surrendering Monday to the FBI, Sampson pleaded not guilty — but he already had incriminated himself, according to the indictment.

    In July, when FBI agents questioned Sampson in the driveway of his Flatlands, Brooklyn, home, they told him he was lying. His response was self-destructive. “Not everything I told you was false,” the indictment said.

    According to the indictment, Sampson’s crimes began in 1998 when he started embezzling money from foreclosure sales he oversaw as a court-appointed referee.

    Sampson, a lawyer, then siphoned some of the money into his 2005 Democratic primary campaign against Brooklyn District Attorney Charles Hynes, the indictment said. But Hynes prevailed, beating Sampson, 41% to 37%.

    The following year, a worried Sampson got a Queens businessman, Edul Ahmad, to “loan” him $188,500 so he could put some of the money back, prosecutors said. But the loan allegedly had no written terms and Sampson never repaid it.

    Things got worse for Sampson in 2011 when Ahmad was arrested on mortgage fraud charges.

    Worried Ahmad would reveal the secret “loan,” Sampson offered to track down witnesses against Ahmad and “take them out,” the indictment said.

    What Sampson didn’t know is that Ahmad was already cooperating with the feds and recorded the conversation.

    The FBI later discovered a handwritten list of informants against Ahmad on the desk of Noel, the paralegal who was Sampson’s mole in the U.S. attorney’s office. Noel was fired and is now cooperating with investigators.

    Officials said they found no evidence that Sampson ever followed through on his “take them out” threat.

    Sampson was charged with embezzlement, obstruction of justice and lying to FBI agents. He was offered a plea deal calling for 36 to 47 months in prison, but entered a not-guilty plea in federal court. He faces up to five years in prison if the case goes to trial.
For the story, see Another state lawmaker busted: Brooklyn state Sen. John Sampson surrenders to FBI on charges of embezzlement and obstruction of justice (Indictment says Sampson was recorded as saying he would track down an informant and "take them out").

For the U.S. Attorney press release, see State Senator From Brooklyn Charged With Embezzlement And Obstruction Of Justice (Former State Senate Minority Leader Used Embezzled Escrow Funds to Finance DA Campaign).
  • Beginning in the late 1990’s, Sampson served as a court-appointed referee for foreclosure proceedings conducted by the Kings County Supreme Court. As referee, Sampson controlled escrow accounts holding proceeds of foreclosure sales of Brooklyn properties.

    Between 1998 and 2008, Sampson embezzled approximately $440,000 in surplus funds from the foreclosure sales of four Brooklyn properties.

    The prior owners of the Brooklyn properties, and other parties with a lawful interest, had a right to receive the funds embezzled by Sampson.(1) Sampson indicated that he had illegally diverted the stolen funds to pay expenses arising from his unsuccessful run for Kings County District Attorney in 2005.
For the Indictment, see U.S. v. Sampson.

(1) According to the indictment, by helping himself to the surplus proceeds, Sampson, an attorney, allegedly violated a fiduciary duty to the Brooklyn Supreme Court. If true, and if the funds ultimately cannot be recovered, and assuming that only licensed attorneys can act as court-appointed referees in New York, it may be that the violation of this duty may be enough to enable the court, as well as the ultimate victims (ex-homeowners and subordinate lien holders of the four foreclosed homes) to recover some or all of the pilfered proceeds from The Lawyers’ Fund For Client Protection Of the State of New York, the state's attorney ripoff reimbursement fund.

For information on "attorney ripoff reimbursement funds" in other states and Canada, see:

Tuesday, May 07, 2013

Hawaii Class Action Names 32 Trial Judges As Defendants For Alleged Failure To Conduct Evidentiary Hearings To Determine Fair Value When Calculating Deficiency Judgments After Foreclosure Sales

In Honolulu, Hawaii, Courthouse News Service reports:
  • A Hawaii family and a developer filed a federal class action against every Circuit Court judge in Hawaii, accusing them of using "ancient judge-made procedures" to enforce foreclosure judgments.

    Jerry Agbannaoag, Ke Kailani Development et al. claim the judges' practice fostered the "flipping" of properties and unjustly enriched lenders. [...] They sued the honorable judges of the First, Second, Third and Fifth Circuits of Hawaii - all 32 judges.

    "Hawaii courts matter-of-factly merely assume routinely when determining and enforcing foreclosure deficiency judgments that the confirmed sale price minus the net proceeds of sale controls and mathematically determines by subtraction the monetary deficiency amount," the complaint states. "This procedure completely ignores reality," the plaintiffs say. They call it an "arbitrary and mechanical method" that fails to protect borrowers.

    The plaintiffs claim other states have passed laws against the practice. "Today, many state legislatures have passed anti-deficiency statutes, requiring that after a foreclosure auction, state courts must hold a separate, evidentiary hearing to determine the 'fair value' of the foreclosed property, which is not necessarily the 'auction price,'" they say in the complaint.

Evidence Continues To Roll In That National Foreclosure Fraud Settlement Is Even Crappier Than Originally Thought

Freelance writer David Dayen writes in Salon Magazine:
  • The absolute least Americans can hope for from a major government settlement with a large industry over well-documented crimes is that the industry wouldn’t, after signing the settlement, just continue to commit the same crimes day after day. After all, following the tobacco industry settlement, cigarette makers did manage to stop advertising to teenagers that their product had no medical side effects.

    But new evidence reveals the nation’s largest banks have apparently continued to fabricate documents, rip off customers and illegally kick people out of their homes, even after inking a series of settlements over the same abuses.

    And the worst part of it all is that the main settlement over foreclosure fraud was so weakly written that it actually allows such criminal conduct to occur, at least up to a certain threshold. Potentially hundreds of thousands of homes could be effectively stolen by the big banks without any sanctions.
For more, see Turns out much-hyped settlement still allows banks to steal homes (New data reveals mega-banks still illegally foreclosing on thousands. Get this: The housing settlement allows it).

Florida Foreclosure Mill Lawyers Yet To Face Serious Sanctions Over Robosigning Rackets Despite 100s Of Complaints; State Bar Drags Feet While State AG Does Nothing

In Orlando, Florida, The Associated Press reports:
  • Since Florida's mortgage crisis began about six years ago, banks have agreed to pay millions of dollars to settle allegations that they wrongfully foreclosed on thousands of homeowners. Prosecutors have charged loan servicers with filing fraudulent documents on behalf of banks.

    But the law firms and lawyers that homeowners and judges contend took part in those same practices? Some critics are accusing Attorney General Pam Bondi and the Florida Bar of not going after them hard enough.

    More than two years after wrongdoing by lawyers caused banks to stop foreclosures temporarily, these lawyers and their firms, which handled hundreds of thousands of foreclosures, have been accused of falsifying documents through fake signatures and backdating records and not giving homeowners proper notice that they faced foreclosure. Yet they continue to practice without facing any type of discipline, either from the criminal justice system or the Bar.

    Bondi says her attorneys' hands were tied after an appellate court blocked an investigative subpoena from her office, saying it lacked authority under the state's unfair trade practices law. Because of the court decision, she said any discipline would have to come from the Bar, which so far has initiated disciplinary proceedings against two attorneys out of more than 330 cases it has investigated.

    Attorneys for homeowners say there are other ways Bondi could go after firms that engaged in fraudulent practices other than using the unfair trade practices act. State prosecutors could have gone after subsidiaries of the law firms or pursued criminal investigative subpoenas.

    "The door was left wide open and the AG did nothing," said attorney Tom Ice, who has represented homeowners who say they were cheated.

    Added attorney Matt Weidner, "You have an attorney general shrugging her shoulders and walking away. How is this allowed to occur?"

Monday, May 06, 2013

Head Of Now-Defunct Robosigning Outfit Gets 40 Months To 20 Years For Role In Authorizing Fraudulent Signing Of Mortgage Documents Filed In Michigan

From the Office of the Michigan Attorney General:
  • Michigan Attorney General Bill Schuette today announced Lorraine Brown, former president of mortgage document processor DocX, was sentenced to 40 months to twenty years in prison on one count of Conducting Criminal Enterprises (Racketeering) for her role in authorizing the fraudulent signing of mortgage documents filed in Michigan.

    Brown was sentenced on May 2, 2013 by Kent County's 17th Circuit Court Judge Mark Trusock. Following the sentencing, Brown was remanded to the custody of the Michigan Department of Corrections to begin serving her sentence. Brown pleaded guilty to the racketeering charge on February 11, 2013. Brown's conviction followed an Attorney General investigation into questionable mortgage documentation filed with Michigan's Register of Deeds offices during the foreclosure crisis.

Florida Appeals Court Reinstates Foreclosure Action Where Earlier Dismissal With Prejudice Was Due To Conduct Of Now-Replaced Foreclosure Mill; Neither Bankster Nor New Counsel Engaged In Any Wrongdoing Or Act Of Disobedience

In West Palm Beach, Florida, the South Florida Sun Sentinel reports:
  • A Central Florida judge overreacted when he dismissed one of the foreclosure cases in the robo-signing scandal involving Plantation attorney David Stern, an appeals court ruled this week.

    The 4th District Court of Appeal reinstated the case, National City Bank v. Ronetta White, after determining that Stern had been replaced as a lawyer by PNC Bank, the bank that originally held the mortgage on White's Okeechobee home.

    Stern ran the largest foreclosure practice in Florida, handling more than 100,000 cases statewide. But it was accused in 2010 of engaging in robo-signing, affixing signatures to documents without notarization and without knowing whether the information contained in the documents was correct.

    An Okeechobee judge dismissed the White foreclosure in early 2012 to penalize the bank for failing to keep its counsel-of-record documents up-to-date. The appeals court reversed that decision on Wednesday.(1)
Source: Appeals court reinstates David Stern foreclosure case (Plantation lawyer involved in robo-signing scandal had been replaced, court finds).

For the ruling, see National City Bank v. White, 4D12-469 (Fla. App. 4th DCA May 1, 2013).

(1) The court concluded its ruling with the following excerpt:
  • In this case, the trial court dismissed this case for the Bank’s confiscatory wasting of the trial court’s time. Although the factors set forth above which apply to counsel may have been met as to DJS in this case, it does not appear that the client was personally involved in any act of disobedience or that there was any real prejudice to Okeechobee County for the delay. Delay after the second summary judgment hearing was primarily due to the trial court’s rejection of the stipulations for substitution of counsel.

    Because the trial court did not grant any of the three attempts by WWR to be substituted, the Bank was without counsel. Hub Fin. Corp. v. Olmetti, 465 So. 2d 618, 619 (Fla. 4th DCA 1985).

    Here, there is no contention that the client or its new counsel was involved in any wrongdoing or act of disobedience. Further, no prejudice to Okeechobee County appears in the record. The delay after the second summary judgment motion was, at least in part, a result of the delay in accepting the Stipulation for Substitution.

    The Bank had no way to represent itself until new counsel was accepted. Most essentially, however, the trial court failed to consider the Kozel factors in deciding to dismiss the case with prejudice.

    Clearly, there was no finding here of a deliberate disregard of court directives by either counsel or client and there is an insufficient record to support a sanction against the client of dismissal with prejudice.

NY Appeals Court To Foreclosing Banksters: Little Downside To Screwing Over Homeowners By Failing To Negotiate In Good Faith In Foreclosure Settlement Conferences Since State Lawmakers Failed To Specify Sanctions, Remedies

Reuters reports:
  • A New York state judge's order sanctioning Wells Fargo for failing to negotiate during a foreclosure settlement conference violated the bank's constitutional rights, a state appeals court ruled Wednesday.

    The Appellate Division, Second Department, reinstated a foreclosure action brought by Wells Fargo Bank N.A. against Paul and Michela Meyers.

    In doing so, the court held that Acting Supreme Court Justice Patrick Sweeney in Suffolk County had overstepped his authority by dismissing the complaint and ordering the bank to enter a loan modification.

    The order violated the Contract Clause - which bars the impairment of a contractual relationship - by effectively rewriting a mortgage and loan agreement, as well as Wells Fargo's due process rights by not giving it notice that the Supreme Court was considering the dismissal and modification, Dickerson wrote.

    "It is obvious that the parties cannot be forced to reach an agreement, CPLR 3408 does not purport to require them to, and the courts may not endeavor to force an agreement upon the parties," Justice Thomas Dickerson wrote in a unanimous opinion.

    CPLR 3408 is a law passed in 2008 that requires parties in foreclosure settlement conferences to negotiate in good faith.
  • Sweeney found that Wells Fargo had not met its obligations, and ordered the bank to enter into a modification agreement with the defendants. He also dismissed the foreclosure complaint.

    The Second Department upheld Sweeney's ruling with regard to Wells Fargo's failure to meet its obligations under CPLR 3408 to negotiate in good faith.

    However, the appeals court found that Sweeney created his own sanction for violating CPLR 3408 by dismissing the complaint and making the bank enter the modification agreement.(1)

    Dickerson was joined by Justices Daniel Angiolillo, Leonard Austin and Jeffrey Cohen.
  • A lawyer for the defendants, Diana Ruiz, said that the decision made it clear that the ball was in the legislature's court to hold banks accountable for their actions during foreclosure settlement conferences.

    "The court makes it clear there was bad faith, the question is what we're going to do about it," Ruiz said.
For the story, see Sanction vs bank in foreclosure case went too far: appeals court.

For the court ruling, see Wells Fargo Bank, N.A. v Meyers, 2011-00482 (NYS App. Div. 2d Dept. May 1, 2013).

(1) An excerpt from the court's opinion:
  • In sum, it is beyond dispute that CPLR 3408 is silent as to sanctions or the remedy to be employed where a party violates its obligation to negotiate in good faith.

    In amending CPLR 3408 to add subdivision (f), the Legislature declined to authorize or set forth any particular sanction or penalty to impose upon a party found to have failed to satisfy its obligation under CPLR 3408(f)to negotiate in good faith.

    Unless the Legislature chooses to specify appropriate sanctions or remedies to be employed in such circumstances, the courts will continue to endeavor to enforce the mandate of CPLR 3408(f) as best they can in the absence of a sanctioning provision.

NY Appeals Court To Standing-Lacking Banksters: OK To Litter Brooklyn Trial Judge's Courtroom With Dubious Foreclosure Paperwork & Otherwise Make Mockery Of Judicial System When Taking Homes Where Homeowner's Failure To Answer Lawsuit Is Deemed A Waiver Of Defenses

Forbes Magazine reports:
  • A New York appeals court reversed a Brooklyn judge’s 2011 decision throwing out a foreclosure and ordering $15,000 in sanctions against lender HSBC, saying the judge had abused his discretion by consulting the Internet and newspapers for evidence ofrobosigning.”

    It was the second time Kings County Judge Arthur Schack had his hand slapped for taking the politically popular, but legally questionable move of dismissing foreclosure proceedings against borrowers who had clearly defaulted on their loans. The judge was also reversed in a similar case in 2011, and in its March 20 decision the Appellate Division of the New York State Supreme Court chided Schack for failing to follow the law.
  • Judge Schack, after performing his own investigation including reading newspaper articles and the Internet, decided that HSBC lacked standing to foreclose because the bank had engaged in robosigning, or submitting court documents that were signed by low-level employees without direct personal knowledge of their contents. He also determined that the original lender, not HSBC, was the only party with the right to foreclose because the transaction transferring the note to HSBC was invalid.

    The judge also criticized HSBC for allowing Ocwen, the mortgage servicer, to handle the foreclosure, and ordered $15,000 in sanctions against the bank and its lawyers for that and various other transgressions.

    But the appeals court threw out the sanctions and ordered the foreclosure proceedings reinstated, strongly criticizing Schack in the process. First, the appeals court noted, Schack had no power to use lack of standing as a reason for dismissing the foreclosure since the borrower had waived that argument by failing to show up in court. The judge also abused his discretion by holding a hearing on sanctions.
For more, see NY Court Reinstates Foreclosure, Chides Judge For `Robosigning' Sanctions.

For the ruling, see HSBC Bank USA, NA v. Taher, 2013 NY Slip Op 1806 (App. Div. 2d Dept. March 20, 2013).

Thanks to Bill Collins of Frontier Abstract & Research Services for the heads-up on the court ruling.

Sunday, May 05, 2013

Foreclosure Defense & "The Elephant In The Room"

In Sandusky, Ohio, local foreclsoure defense attorney Dan McGookey writes in the Sandusky Register:
  • [A]s we [] often see, once you stand up to the banks, call them out on their fraud and expose the weaknesses of their case, they do a tactical retreat in their push to foreclose. The reason for this is what we call “the elephant in the room.”

    By definition, a securitized loan is one which is bundled with thousands of others in a loan pool or trust. This means that if even one of those loans is exposed to be fraudulent, the collectability of the rest is put in jeopardy.

    The elephant in the room is the unspoken but very real fear on the part of the banks that billions of dollars of loans could be lost. And that is a risk they are often unwilling to take. The result often is that the banks blink, which in turn leads to a great loan modification for the financially-stressed homeowner.

Indiana Appeals Court Denies Serial Home Hijacker Title To Vacant Home In Legal Limbo Comandeered Through Quiet Title Suit, Foreclosure On Purported Common Law Liens; Crackpot A Suspended Lawyer Who Represented Himself In Court

From a recent post in The Indiana Lawyer:
  • A suspended Gary attorney who was awarded a quiet title to an abandoned, foreclosed property after he entered a house without authorization and began to maintain it was stripped of the title [] by the Indiana Court of Appeals.

    The appellate panel ruled that Robert Holland was not entitled to the trial court’s grant of summary judgment on his quiet title action. The COA reversed and remanded to Lake Superior Judge Calvin D. Hawkins with orders that summary judgment instead be entered on behalf of the foreclosing lender. The case is Countrywide Home Loans, Inc. v. Robert Holland, 45A04-1202-PL-53.

    This is at least the third installment in a series of appellate cases stemming from Robert Holland’s attempts to appropriate vacant residential properties by entering them without invitation and allegedly making improvements,” Judge Ezra Friedlander wrote for the court.

    Holland has entered vacant residences he considers nuisances, made or attempted repairs, and filed actions for quiet title and to foreclose on purported common-law liens.

    In the instant case, he argued that Countrywide failed to take possession or move the property to a sheriff’s sale after the homeowner vacated, leaving behind a derelict haven for criminals.

    Holland won summary judgment on his petition for quiet title and damages of $1 against Countrywide.

    Both those trial court rulings were error, the COA held. “Holland has alleged facts that would, at most, support a conclusion that the property created a public nuisance,” Friedlander wrote. “…Holland has not, however, made any allegation that he suffered any special or peculiar injury apart from the injury suffered by the general public. Accordingly, he has not established a private right to relief premised on public nuisance.”

    The court reminded Holland of a 2012 COA opinion regarding an earlier instance in which he sought to gain title to an abandoned property, Holland v. Steele, 961 N.E.2d at 525. The panel in that case wrote, “The crux of Holland’s contentions is that he, as a private individual, should have an unfettered citizen’s right to act to abate a nuisance that contributes to urban blight. However, it is not within our purview to opine on policy questions surrounding a legislative or governmental response to urban problems.”

    In the present case, the court ordered summary judgment entered in Countrywide’s favor, even while noting that no such motion had been made. “Because Holland has not asserted any plausible claim to legal title of the property, he cannot prevail on his action to quiet title. We therefore remand with instructions to vacate summary judgment in Holland’s favor and enter summary judgment against him on his quiet title claim.”

    The panel in a footnote wrote that “Holland’s arguments are confused and disorganized, and we have expended a great deal of time and effort in attempting to understand them.”
Source: Suspended attorney stripped of quiet title to foreclosed home he repaired.

For the ruling, see Countrywide Home Loans, Inc. v. Holland, 45A04-1202-PL-53 (Ind. App. April 30, 2013).

Thanks to Deontos for the heads up on this story.

School Teacher, Hubby Face Grand Theft Charge For Use Of Adverse Possession Claim In Attempted Hijacking Of Home In Foreclosure; Sheriff On 2nd Such Bust In Month: "We Gave This Teacher A Field Trip To The County Jail!"

In Lakeland, Florida, ABC Action News reports:
  • A Polk County school teacher and her husband face charges of grand theft after changing locks, purchasing electricity, and moving into a home they didn't own.

    It's the second adverse possession case, or "squatters", busted by the Polk County Sheriff's Office in less than a month.

    "They just move in, turn the electricity on, and take over," said Sheriff Grady Judd. "That's like suggesting that, after Walmart closes tonight, if you stay there, it's your store."(1)

    Cherie Fields, 25, and her husband, Owen Fields, 27, filed for adverse possession on the $160,000 residence located at 6861 Echo Lane near Lakeland on March 27, 2013.

    The home is in foreclosure, but still owned by a woman in California. PCSO contacted her, and she confirmed that no one had legal access to it.
  • The couple only lived in the home for a month, but because their crime is considered grand theft over $10,000, they may call jail their new home for several years.

    "Come on, girl! You've got a college education. You should know better than that," Sheriff Judd said. "Some people aren't learning very quickly, even when they are school teachers. In fact, some of your best lessons in life, are learned outside of the classroom. We gave this teacher a field trip to the county jail."
For the story, see Fort Meade teacher charged with squatting - second adverse possession case by PCSO in one month.

(1) Fortunately for Walmart, many of their stores are open 24 hours.