Saturday, May 18, 2013

Illinois Family Facing Imminent Foreclosure Dodges Boot After Cleaning Out Kitchen Cookie Jar & Finding $4.85M

In Geneva, Illinois, WBBM-TV Channel 2 reports:
  • The timing couldn’t have been better for a family from north suburban Geneva when they hit the jackpot after finding some old Lotto tickets stuffed in a cookie jar.

    Earlier this month, Ricardo Cerezo said his wife was cleaning the kitchen in the home they were about to lose to foreclosure. She told him to take the old Lottery tickets out of the jar and have them checked, or toss them out. “It was either take them, get them checked, or she was going to trash them that night,” he said.

    So he took the tickets to a local gas station to get them scanned. The first 8 or 9 tickets weren’t winners. “The following one was $3, so I was excited. I get to pay for my Pepsi. And then the last one said file a claim,” he said.

    Cerezo went online to check the ticket, and couldn’t believe it when the numbers matched the Feb. 2 Lotto drawing.

    “As each number kept matching, the smile kept going higher and higher, and when I realized we had all six numbers, it was that shocking moment of ‘Whoa, can this really be?’” he said. “Fast forward to the next day, Monday; called in sick from work, went down into Chicago. It’s one of feelings where it’s okay if they fire me.”

    He visited the Lottery offices in Chicago, and learned he’d won $4.85 million.

    Just three months before finding the winning ticket, Cerezo stood before a judge at a foreclosure hearing for their home. He was given a few more months to find a new home before they would be evicted.

    “That was on February 12th, so we were sitting on $4 million at that time in this jar,” he said. Cerezo said the family plans to pay off their home loan, get new cars, and give some of the winnings to charity.

200+ Attorneys, Support Staff That Represent Low-Income New Yorkers At NYC Non-Profit Public Interest Firm Conduct Mass Walkout Over Salary, Benefits Squeeze

In New York City, The Wall Street Journal reports:
  • More than 200 attorneys and support workers with Legal Services NYC, which aids impoverished New Yorkers, walked off the job Wednesday in a dispute over salary increases and retirement and health-care benefits.

    Legal Services NYC is the largest provider of civil legal services in the country and receives about a third of its funding from the federal government. The group expects that by 2015, it will have lost half of the federal funding it had in 2010, in part because of widespread spending cuts known as the sequester, said Executive Director Raun Rasmussen.

    The organization works with more than 45,000 low-income clients on issues such as eviction and foreclosure, domestic violence and unemployment insurance. Mr. Rasmussen said unless it reduces costs, as many as 50 employees would have to be laid off by the end of next year.
For more, see Lawyers Who Aid Impoverished New Yorkers Walk Off Job (Workers at Legal Services NYC Protest in Dispute Over Salary, Benefits).

See also:

NYC Feds' $17.75 Forfeiture Score Biggest In U.S. Marshals Service History; 14-Room Upper East Side Co-Op's Former Owner Now To Reside In Slammer For 12 Years For Running $292M Ponzi Scheme On Notorious Banksters

In New York City, the New York Post reports:
  • The US Marshals Service said [] that its $17.75 million sale of fraudster Hassan Nemazee’s plush Park Avenue penthouse marked the biggest real-estate deal in the agency’s 224-year history.

    The 14-room duplex was forfeited by the former Democratic campaign bundler as part of his guilty plea for running a $292 million Ponzi scheme on Bank of America, Citibank and HSBC.

    Combined with other properties and possessions that Nemazee coughed up — including an apartment in Rome, a Westchester estate, a 2008 Maserati Quattroporte and a 2007 Cessna airplane — the banks have gotten back more than $90 million, Manhattan US Marshal Joseph Guccione said.

    Nemazee’s former co-op at 770 Park Ave. was bought in March by hedge-fund analyst Thomas Purcell and his wife, Marina Shields Purcell, who’s the half-sister of actress Brooke Shields.

    The sprawling, 5,130-square-foot apartment was initially listed for $28 million in 2011.(1)

    Nemazee is serving 12 years in the slammer for bank and wire fraud.
Source: Park Ave. Ponzi pay.

(1) For a view of the lifestyle that a $292 million Ponzi scheme fuels, see Curbed NY: Inside a Jailed Fraudster's $28 Million Park Avenue Palace.

S. Florida Feds Pinch Tax Preparer On Charges Relating To Alleged False Claims Of Entitlement To 1st Time Home Buyers Credit On Behalf Of Himself & Some Of His Customers

From the Office of the U.S. Attorney (Fort Lauderdale, Florida):
  • Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and Michael J. DePalma, Acting Special Agent in Charge, Internal Revenue Service, Criminal Investigations (IRS-CI), announced that Efrain Felipe, 41, of Hallandale Beach, was charged in a two count Information with making and subscribing a false tax return on behalf of a client, and aiding and abetting, in violation of Title 26, United States Code, Sections 7206(1) and 7206(1).
  • According to the charges, Felipe operated a tax preparation business in Broward County, and prepared fraudulent tax returns on behalf of his customers by claiming that some customers were entitled to a First Time Home Buyers Credit (FTHBC) of $7,500.00, for properties they did not own or for properties that were purchased years earlier. Felipe also falsely claimed the FTHBC on his own personal tax return.

Woman With Two Foster Children Faces Foreclosure Evictions Despite Protections Under Federal Law; Bankster Says Existing Lease Not "Bona Fide"

In Wilmington, North Carolina, WECT-TV Channel 6 reports:
  • Sheree Harrell, a woman who fosters children with autism, is facing eviction. The home she rents in Landfall was foreclosed on by the bank after the homeowner fell behind on his mortgage payments.

    Right now, Harrell has two foster children living with her. She said it would be disruptive to the children's progress if she's forced out of the house.

    The company the bank hires to handle foreclosures, Brock and Scott, sent Harrell an eviction notice.

    Under the Protecting Tenants at Foreclosure Act of 2009, renters must be allowed to stay in their homes until the end of their leases - if the home their renting is foreclosed on by the bank.

    There is a provision that said the renter can be evicted if they don't have what's called a "bona fide" lease. A lease is considered bona fide if the mortgagor or a child, spouse, or parent of the mortgagor under the contract is not the tenant, if the lease was the product of an arm's-length transaction, or if the rent is substantially less than fair market rate.

    Still, Harrell said the company is contesting her loan. Emails provided to us by Harrell show the company's position is that Harrell's lease is not bona fide.

    "They're going to have to drag me out of here," she said. "I will not go willingly. I know what they're doing is illegal and I'm not going to tolerate it." She said she's not leaving without a fight for the sake of her foster children.

Antitrust Feds Tack On Obstruction Of Justice Charge Against Accused Foreclosure Sale Bid Rigging Suspect In Connection With Alleged Deletion Of Electronic Records Related To Case, Software Installation Designed To Prevent Review, Recovery Of Destroyed Records

From the U.S. Department of Justice (Washington, D.C.):
  • A federal grand jury in U.S. District Court for the Eastern District of California in Sacramento [] returned a superseding indictment charging Andrew B. Katakis, of Danville, Calif., with obstruction of justice related to a federal investigation into conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions held in San Joaquin County, Calif., the Department of Justice announced.

    The remaining allegations are unchanged from the original indictment, which was returned by a federal grand jury on Dec. 7, 2011. The pre-existing counts charge Katakis, Donald M. Parker, Anthony B. Joachim and W. Theodore Longley with conspiring with other unnamed co-conspirators to rig bids and commit mail fraud when purchasing selected properties at public real estate foreclosure auctions. Wiley C. Chandler, another real estate investor who was also charged in the original indictment, pleaded guilty on Feb. 24, 2012.

    The added charge alleges that after Katakis received a letter notifying him that a federal grand jury had subpoenaed his bank account, he deleted and caused others to delete electronic records and documents related to the conspiracies.

    The superseding indictment alleges that Katakis also installed and caused others to install and use a software program that overwrote deleted electronic records and documents so that they could not be viewed or recovered.
For the Justice Department press release, see Northern California Real Estate Investor Indicted on Additional Charge (Superseding Indictment Adds Obstruction of Justice to Bid-Rigging and Mail Fraud Charges).

Friday, May 17, 2013

Bay State Senator To Feds: Why The Hell Aren't You Ever Taking The Sleazy Banksters To Trial?

Mother Jones reports:
  • On Tuesday, fierce consumer advocate and needler of banks Sen. Elizabeth Warren (D-Mass.) called out Wall Street regulators for their habit of giving tepid punishments to misbehaving banks, and asked the agencies to justify their policy of settling with the wrongdoers out of court.

    Warren sent a letter to the Justice Department, as well as to the Securities and Exchange Commission and the Federal Reserve, asking them for evidence on how a settlement that doesn't require a bank to admit guilt would be better policy than taking the bad apple to trial. If regulators at least show that they are willing to play tough, she argued, it will help deter bad behavior and allow regulators to negotiate bigger fines in the event of a later settlement.

    Here are a few snippets:

    There is no question that settlements, fines, consent orders, and cease and desist orders are important enforcement tools, and that trials are expensive…But I believe strongly that if a regulator reveals itself to be unwilling to take large financial institutions all the way to trial…the regulator has a lot less leverage in settlement negotiations and will be forced to settle on terms that are much more favorable to the wrongdoer…If large financial institutions can break the law and accumulate million in profits, and if they get caught, settle by paying out of those profits, they do not have much incentive to follow the law.

NYS Intermediate Appeals Court: OK To Screw Big-Time Bond Insurer In Collateralized Crappy Mortgage Transaction; Victim Was Too Commercially Sophisticated, It Should Have Known Better Than To Get Into A Deal Like That!

The Wall Street Journal reports:
  • Goldman Sachs Group Inc. obtained a victory in New York state appeals court in a case involving a complex mortgage security, moving the firm further from a crisis-era cloud.

    The New York state appeals court tossed out a lawsuit on Tuesday by bond insurer ACA Financial Guaranty Corp., which got burned in a complex security deal along with investors while hedge fund Paulson & Co. scored big profits.

    ACA had maintained that Goldman fraudulently induced it to insure the collateralized-debt- obligation deal known as Abacus 2007-AC1.

    A CDO is a pool of loans, such as subprime mortgages, sold in slices to investors. Goldman arranged it just as the housing market was collapsing in 2007 in the months leading up to the financial crisis.

    The New York State Supreme Court’s Appellate Division, in a 3-2 decision, dismissed ACA’s fraud claims against Goldman, saying as a “highly sophisticated commercial entity,” ACA should have realized something was amiss.
  • “It’s a good day for Goldman, but the other shoe may still drop,” said John Coffee, a professor at Columbia Law School in New York. With a 3-2 decision on a high-profile case, the matteris likely to go up to the court of Appeals,” Mr. Coffee added.
For more, see Judge Says Insurer Should Have Known Better on Debt Deal (Goldman Sachs scored a victory in a New York state appeals court Tuesday, winning the dismissal of a lawsuit filed against it by a bond insurer over a financial product that went sour during the financial crisis).

Robosigning, Sewer Service Allegations Continue Dogging Banksters In Recent California AG Suit Tagging Chase For Practices In Credit Card Collection Cases

From the Office of the California Attorney General:
  • Attorney General Kamala D. Harris [] filed an enforcement action against JPMorgan Chase & Co. (Chase) alleging that the bank engaged in fraudulent and unlawful debt-collection practices against tens of thousands of Californians.

    The suit alleges that Chase engaged in widespread, illegal robo-signing, among other unlawful practices, to commit debt-collection abuses against approximately 100,000 California credit card borrowers over at least a three-year period.

    “Chase abused the judicial process and engaged in serious misconduct against California credit card borrowers,” Attorney General Harris said. “This enforcement action seeks to hold Chase accountable for systematically using illegal tactics to flood California’s courts with specious lawsuits against consumers. My office will demand a permanent halt to these practices and redress for borrowers who have been harmed.”

    From January 2008 through April 2011, Chase filed thousands of debt collection lawsuits every month in the State of California. On one day alone, Chase filed 469 such lawsuits in California. The Attorney General’s complaint against Chase alleges that, to maintain this pace, Chase employed unlawful practices as shortcuts to obtain judgments against California consumers with speed and ease that could not have been possible if Chase had adhered to the minimum substantive and procedural protections required by law.

    “At nearly every stage of the collection process, Defendants cut corners in the name of speed, cost savings, and their own convenience, providing only the thinnest veneer of legitimacy to their lawsuits,” the complaint states.

    Chase used California’s judicial system as a mill to obtain default judgments, the suit alleges, using illegal tactics to flood the state’s court system in order to secure default judgments and garnish wages from Californians.

    The alleged misconduct includes:

    Robo-signing: Chase illegally robo-signed various litigation filings, including sworn documents, declarations, and verified complaints, without reviewing the relevant files or bank records or even reading the documents before signing.

    Sewer Service”: Chase failed to properly serve notice of debt collection lawsuits against consumers while claiming they had been served as required by law. This practice, known as “sewer service,” deprives the consumer of any notice of the lawsuit.

    Filing Irregularities: Chase haphazardly assembled its official legal filings. For example, Chase failed to redact consumers’ personal information in attachments to filings, potentially exposing them to identity theft and in violation of California law. In addition, when asking courts to enter default judgments against consumers, Chase consistently swore under penalty of perjury that the consumers were not on active military duty. In fact, Chase never checked. This deprived servicemembers of important legal protections to which they are entitled while on active duty.

More Homeowner Horror Stories To Come As Banksters Begin Unloading Servicing Rights; Trouble Expected As Buying & Selling Servicers Begin Fumbling Handoffs

In Charlotte, North Carolina, the News & Observer reports:
  • Millions of homeowners around the country have received an unexpected message from their banks: Goodbye.

    After years of collecting mortgage payments from as many people as they could, big U.S. banks such as Bank of America and Wells Fargo are scaling back. As servicing mortgages grows less lucrative, they’re selling the rights to do so in deals measured by the billions.

    The buyers are specialty companies much less known to the public. And as the massive transfers take place, regulators have signaled they are concerned about a small but growing fraction of homeowners who report falling through the cracks.

    Some have found their online accounts unavailable. Others have reported delays in receiving account numbers. The details of some promised loan modifications haven’t been carried through with the new servicer.

    In Charlotte, one man said his short sale, arranged with Bank of America, wasn’t honored after the mortgage was transferred. The home is now in foreclosure.

    Tales like these have led the Consumer Financial Protection Bureau and Conference of State Bank Supervisors to warn the industry they’ll be paying close attention to how the handoffs work.

Defaults On Mortgages Where Borrower Need Not Make Any Monthly Payments Of Principal & Interest On The Upswing?

The Wall Street Journal reports:
  • Growing numbers of older borrowers with reverse mortgages are delinquent on these loans. But a little-known federal guideline can help steer such individuals out of financial trouble.

    Reverse mortgages allow people age 62 or older to convert their home equity into cash. The homeowner can elect to receive a lump sum, a line of credit or monthly payments. With a conventional loan, such as a home-equity line of credit, a borrower can tap into a home's equity but must make monthly repayments. Reverse mortgages, in contrast, are due with interest when the borrower dies, moves or sells the house.

    Defaults occur when a borrower fails to pay property charges, including property taxes and homeowners insurance. Of the almost 600,000 reverse mortgages outstanding, 9.8% are currently delinquent, up from 8% in 2011, the first year for which statistics are available, according to the federal Department of Housing and Urban Development, whose Federal Housing Administration insures virtually all reverse mortgages.

    Delinquencies have increased in recent years as up to 70% of borrowers have opted for lump-sum payouts.

    "For many homeowners, taking all eligible cash upfront results in insufficient cash flow in later years for property upkeep, taxes and insurance," HUD warned in a November report to Congress.

    The good news: Help is available. Under guidelines HUD released in 2011, lenders—before initiating foreclosure proceedings—are required to notify borrowers who fall behind of free financial counseling. Such sessions can help them get back on track by, among other things, tapping benefit programs for some older individuals.

    Unfortunately, many older borrowers "don't know about these programs," says Ramsey Alwin, senior director of economic security at the National Council on Aging, one of a handful of nonprofits that provide the free counseling.

Thursday, May 16, 2013

Federal Judge Leaves Constitutional Question Involving Colorado Foreclosure Laws Open While Formally Halting Homeowner's Foreclosure Sale

In Denver, Colorado, The Denver Post reports:
  • A federal judge Tuesday formally stopped the foreclosure auction of an Aurora woman's house, leaving unanswered whether he can determine whether a part of Colorado's foreclosure laws is unconstitutional.

    While U.S. District Judge William J. Martínez's order enjoins U.S. Bank, the trustee on Lisa Kay Brumfiel's mortgage, from seeking a public-trustee foreclosure, it doesn't stop the bank from pursuing her house the old-fashioned way — via a lawsuit in state court.
  • Although U.S. Bank said it would never again seek a public-trustee foreclosure against Brumfiel's house — essentially rendering her federal lawsuit mootMartínez did not dismiss her complaint outright, because the state judge hasn't ruled yet.

    That means the question of whether Brumfiel's constitutional right to due process — guaranteed by the 14th Amendment — is violated remains on the table for now. But that can change.

    Martínez also allowed two advocacy groups — the Colorado Center on Law and Policy and the Colorado Progressive Coalition — to file briefs regarding the constitutionality issue.

Class Action Accuses So-Called Payment Processor Of Screwing Consumers Seeking Debt Relief Services With Inflated Fees Executed Through Network Of Front-End Outfits

In San Francisco, California, Courthouse News Service reports:
  • So-called payment processor Meracord "loots" customers' accounts by taking exorbitant, fraudulent fees through a network of "front end" debt relief companies, customers claim in a RICO class action.

    Lead plaintiff Donte Cheeks sued Meracord LLC and its sureties, Fidelity and Deposit Company of Maryland and Platte River Insurance Company, in Federal Court.

    The four named plaintiffs claim that Meracord, based in Tacoma, Wash., changed its name from NoteWorld "after a number of class action lawsuits were filed against Note World. ... (M)any of the events described herein took place when the company was called 'NoteWorld,'" the complaint states.

    The Courthouse News database shows similar complaints against Meracord, including two class actions, in upstate New York, in two other California venues, and in Cleveland and Cincinnati.

    "Meracord engages and relies upon a network of 'front-end' debt relief companies ('Front DRCs') that it utilizes to recruit customers," the complaint states. "The Front DRCs offer to act as intermediaries between distressed and distraught debtors and their creditors, using inflated claims and misrepresentation about their services to sign up customers, and charging exorbitant, abusive, and often illegal fees once the mark is on the hook.
  • The class claims that Meracord changed its name from NoteWorld to try to hide from lawsuits just like this one: "By changing names, companies in the industry are able to wipe clean their online reputation virtually overnight, making it more difficult for consumers to associate the companies with lawsuits and other negative consumer feedback," the complaint states.

    The class claims that Meracord is a defendant in "numerous cases" around the country, and has settled at least two cases "that have severely depleted its available assets, including insurance policies."

    The complaint lists dozens of Front DRCs Meracord allegedly uses.

    The plaintiffs seek class certification and damages to be paid from "over $17 million" in surety bonds that Meracord allegedly carried. They are represented by Steve Berman with Hagens Berman Sobol Shapiro of Seattle.

Four Convicted For Fraudulently Collecting Upfront Fees, Using Phony Letters With Bankster Logos In Screwing Hundreds Of Homeowners Seeking Loan Modifications

From the Orange County, California District Attorney:
  • Four men were convicted yesterday, May 8, 2013, of defrauding hundreds of victims in a real estate scam that included fraudulently collecting upfront fees for loan modification services and sending fake letters with the CitiFinancial or CitiMortgage logos offering home loan modification assistance. Victim losses in this case are estimated to be in excess of $130,000.
  • Jacob John Cunningham, 26, and John D. Silva, 28, both from Irvine, pleaded guilty to one felony count each of conspiracy to collect illegal upfront fees and conspiracy to commit theft by false pretenses. Cunningham and Silva are each expected to be sentenced to six months in jail and five years formal probation, during which they will be prohibited from engaging in loan modification or loan consulting practices. They are also ordered to jointly pay $60,000 toward restitution by their sentencing date and will be ordered to pay additional restitution in an amount to be determined at a later hearing.

    Justin Dennis Koelle, 23, Costa Mesa, pleaded guilty to one felony count each of conspiracy to collect illegal upfront fees and conspiracy to commit theft by false pretenses. He is expected to be sentenced to nine months in jail, five years of formal probation, during which he will be prohibited from engaging in loan modification or loan consulting practices, and ordered to pay restitution in an amount to be determined at a later hearing.

    Dominic Adam Nolan, 32, Irvine, pleaded guilty to one felony count of conspiracy to collect illegal upfront fees. He is expected to be sentenced to six months in jail, five years of formal probation, during which he will be prohibited from engaging in loan modification or loan consulting practices, and ordered to pay restitution in an amount to be determined at a later hearing.

    Andrew Michael Phalen, 26, Mission Viejo, pleaded guilty June 4, 2012, to one felony count each of conspiracy to collect illegal upfront fees and conspiracy to commit fraud. He was sentenced to one year in jail, five years formal probation, during which he is prohibited from engaging in loan modification or loan consulting practices, and ordered to pay restitution in an amount to be determined at a later hearing.
For more, see Four Men Convicted Of Defrauding Hundreds Of Victims In Real Estate Loan Modification Scam (*Hundreds of fake letters with CitiFinancial or CitiMortgage logos sent as part of scam).

NY Lawyer Peddling Debt Relief Services Becomes First To Ever Be Criminally Prosecuted On Charges Stemming From CFPB Referral

In New York City, The Blog of LegalTimes reports:
  • The Consumer Financial Protection Bureau [] filed suit against two lawyers and two debt relief companies, alleging they charged thousands of consumers illegal advance fees and left some worse off financially.

    One of the lawyers, Michael Levitis, also faces mail and wire fraud charges brought by the Manhattan U.S. Attorney’s office - the first-ever criminal charges stemming from a CFPB referral.

    Brooklyn-based Levitis and his company, Mission Settlement Agency, as well as New Jersey lawyer Michael Lupolover and Premier Consulting Group, allegedly sold debt-relief services to consumers, promising to renegotiate or settle their debts, according to the complaint filed in U.S. District Court for the Southern District of New York.

    But the CFPB said the defendants illegally paid themselves first, with Mission and Levitis collecting $1.1 million up-front fees; Lupolover allegedly taking in $112,000 and Premier collecting $188,000. The Federal Trade Commission’s Telemarketing Sales Rule makes it illegal for debt relief providers to collect fees until at least one successful result has been achieved for the consumer.

    The Manhattan U.S. Attorney’s Office provided additional details, reporting that Mission had approximately 2,200 customers who paid a total of nearly $14 million for debt settlement services. Of these funds, Mission allegedly took more than $6.6 million in fees, while paying just $4.4 million to customers’ creditors.
For more, see CFPB Charges Two Lawyers in Debt Relief Scam.

For the U.S. Attorney press release and links to the formal charging documents, see Manhattan U.S. Attorney Charges Debt Settlement Company And Six Individuals For Multi-Million Dollar Scheme That Targeted Debt-Ridden Consumers (Two Former Employees of the Debt Settlement Company Have Already Pled Guilty; First-Ever Criminal Charges Based on Consumer Financial Protection Bureau Referral).

Ohio AG Tags Outfit Allegedly Peddling Bogus Loan Modification Services With Civil Suit

From the Office of the Ohio Attorney General:
  • Ohio Attorney General Mike DeWine [] announced a lawsuit against N.M.M.S.R. Incorporated, doing business as Making Home Affordable USA, and its owner Jason Keating of Maumee. The lawsuit charges Keating and his business with multiple violations of Ohio’s consumer laws. 
  • Making Home Affordable USA is located at 120 10th Street in Toledo. It offers loan modification and foreclosure assistance services through its “National Mortgage Modification Stimulus Home Saver Program.” Although the business’ name and website closely resemble that of the federal government’s Making Home Affordable program, Making Home Affordable USA is not associated with the federal government.

    According to the Attorney General, the business instructed consumers to stop making their mortgage payments (even if they were current on their payments) and stated that banks and lenders would not negotiate unless consumers were behind on their payments.

    Consumers paid 60 to 65 percent of their current mortgage payment to the business after the business assured them that the funds would be held in escrow and submitted to their lenders once a modification was reached. Consumers’ lenders never received any of the funds placed into the accounts.

Wednesday, May 15, 2013

Another Federal Suit Implicating Constitutionality Of Colorado Foreclosure Law Surfaces; Despite Dismissal Of Entirety Of Complaint, Judge Says Inartful Pleading Was Nevertheless Good Enough To Grant Pro Se Homeowner A 'Do-Over'

In Denver, Colorado, The Denver Post reports:
  • A second federal lawsuit contesting the constitutionality of Colorado's foreclosure laws has emerged.

    Unlike the case of an Aurora woman who obtained an interim federal injunction against the foreclosure auction of her house, the other involves a federal judge who decided a Denver man's 14th Amendment guarantee of due process was in question.

    U.S. District Judge Philip Brimmer last week dismissed the entirety of John Mbaku's complaint against Bank of America that challenged the bank's right to foreclose on his condominium.

    However, Brimmer determined there was a constitutional issue, though Mbaku didn't bring it up specifically.

    Because Mbaku, a law-school graduate who doesn't practice law, is representing himself, the judge is given wider latitude to read between the lines of a complaint since plaintiffs might not be as sophisticated or well-versed in the complexities of law.(1)

    In the introduction to his lawsuit filed last year, Mbaku noted how Colorado law allows a bank or lender to foreclose without showing how it obtained ownership of the loan.

    More important, because loan ownership is determined by who has possession of the document — known as indorsement in blank — Mbaku said anyone could come by that right, even a thief.

    "Plaintiffs could illegally obtain or otherwise steal a promissory note ... from any bank ... and present themselves at a ... hearing and be deemed ... to be the proper party to foreclose," Mbaku wrote.

    Brimmer thought that was enough to keep the lawsuit alive.

    The state hearing Mbaku is challenging is called a Rule 120 for the civil procedure that governs it. Brimmer liberally read the complaint and decided Mbaku's introduction was enough to merit attention. And because Bank of America didn't address it in a motion to dismiss, Brimmer let it stand.

    The judge on Thursday advised Colorado Attorney General John Suthers that a state law was under constitutional review and that Suthers has 60 days to respond.

(1) For a couple of the many Federal court rulings mandating that trial judges cut pro se litigants a considerable amount of slack when hearing their cases, see:

Haines v. Kerner, 404 U.S. 519 (1972), in which the U.S. Supreme Court reversed the rulings of two lower courts, the court stated:
  • The only issue now before us is petitioner's contention that the District Court erred in dismissing his pro se complaint without allowing him to present evidence on his claims.

    Whatever may be the limits on the scope of inquiry of courts into the internal administration of prisons, allegations such as those asserted by petitioner, however inartfully pleaded, are sufficient to call for the opportunity to offer supporting evidence. We cannot say with assurance that under the allegations of the pro se complaint, which we hold to less stringent standards than formal pleadings drafted by lawyers, it appears 'beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.' Conley v. Gibson, 355 U.S. 41, 45—46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957). See Dioguardi v. Durning, 139 F.2d 774 (CA2 1944).

    Accordingly, although we intimate no view whatever on the merits of petitioner's allegations, we conclude that he is entitled to an opportunity to offer proof. The judgment is reversed and the case is remanded for further proceedings consistent herewith.
Platsky v. Central Intelligence Agency, 953 F.2d 26 (2d Cir. 1991), in which a Federal Appeals Court ruled:
  • Pro se plaintiffs are often unfamiliar with the formalities of pleading requirements. Recognizing this, the Supreme Court has instructed the district courts to construe pro se complaints liberally and to apply a more flexible standard in determining the sufficiency of a pro se complaint than they would in reviewing a pleading submitted by counsel. See e.g., Hughes v. Rowe, 449 U.S. 5, 9-10, 101 S.Ct. 173, 175-76, 66 L.Ed.2d 163 (1980) (per curiam); Haines v. Kerner, 404 U.S. 519, 520-21, 92 S.Ct. 594, 595-96, 30 L.Ed.2d 652 (1972) (per curiam); see also Elliott v. Bronson, 872 F.2d 20, 21 (2d Cir.1989) (per curiam). In order to justify the dismissal of a pro se complaint, it must be " 'beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.' " Haines v. Kerner, 404 U.S. at 521, 92 S.Ct. at 594 (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957)).

    In light of these principles, we think that the district court should not have dismissed Platsky's complaints without affording him leave to replead.
  • The district court also dismissed the complaints for their failure to plead facts that were sufficiently specific. The district judge held that Platsky failed to allege the concrete and particularized injury required to establish standing and to state a claim upon which relief could be granted.
  • We think that Platsky should have a chance to state his claim more clearly. It is not "'beyond doubt that the plaintiff can prove no set of facts in support of his claim[s],' " Haines v. Kerner, 404 U.S. at 521, 92 S.Ct. at 595, and therefore we hold that the better course would have been for the district court, in dismissing Platsky's pro se complaints, to grant him leave to file amended pleadings. See Elliott v. Bronson, 872 F.2d at 22. We have instructed Platsky that his complaint must set out, with particularity and specificity, the actual harms he suffered as a result of the defendants' clearly defined acts.

    Accordingly, we vacate the judgment and order below, and remand the case to the district court with instructions to allow the plaintiff to replead.
See also Estelle v. Gamble, 429 U.S. 97 (1976), which supports the mandate that trial judges cut pro se homeowners slack when bringing their cases:
  • The handwritten pro se document is to be liberally construed. As the Court unanimously held in Haines v. Kerner, 404 U.S. 519 (1972), a pro se complaint, "however inartfully pleaded," must be held to "less stringent standards than formal pleadings drafted by lawyers" and can only be dismissed for failure to state a claim if it appears "`beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.'" Id., at 520-521, quoting Conley v. Gibson, 355 U.S. 41, 45 -46 (1957). [429 U.S. 97, 107]

Loan Officer Gets 42 Months For Role In Scam That Included Identity Theft In Connection With Processing Mortgage Applications; Suspect Sold His Own Home To One Unwitting Victim For A $320K Profit; Another Swindled Victim Took $193K+ Hit

From the Office of the U.S. Attorney (Alexandria, Virginia):
  • Kenneth H. DiPasquale, 38, of Morgantown, W. Va., was sentenced [] to 42 months in prison, followed by three years of supervised release, for his role in a series of fraudulent mortgage loan transactions, including one in which he stole an individual’s identity and “sold” that individual his home for a nearly $320,000 profit. DiPasquale was also ordered to pay a total of $3,354,773 in restitution to his victims and to forfeit $529,098 in proceeds from his crimes.
  • According to court records, DiPasquale was employed in 2007 as a loan officer at Landover, Md., mortgage lender Citywide Mortgage. DiPasquale used that position to process loans based on false and fraudulent information, including for borrowers who had not applied for loans and who had no idea their names and identities had been used as borrowers in the transactions.

    In particular, DiPasquale processed fraudulent loans in exchange for kickbacks from a co-conspirator. When he had trouble selling his own home in Bowie, Md., in October 2007, he stole the identity of an individual living in Arlington, Va., and “sold” this victim his house at a nearly $320,000 profit.

    He also engineered a series of transactions involving a homeowner in Hyattsville, Md., whom he swindled out of over $193,000.

    Co-conspirator Nadin Samnang, a former Virginia realtor and title company owner, was convicted of mortgage fraud-related charges following a trial in April 2012 and was sentenced to 84 months in prison.

    Co-defendant Lyle C. Williams pleaded guilty to conspiracy and identity theft charges in November 2012 and was sentenced to 18 months in prison.

C. Florida R/E Operator Lacks Needed Cash To Take Prosecutor Up On 'Jail Time Buy Out" Offer; Gets 36 Months For Duping Homeowners In Foreclosure To Sign Over Their Deeds, Then Pocketing Cash By Selling/Renting To Unwitting Victims Without Paying Existing Liens

In Brooksville, Florida, the Tampa Bay Times reports:
  • Gaetano Antonelli promised to make dreams come true by selling foreclosed homes to buyers with bad credit.

    The problem, prosecutors say: Antonelli didn't own the homes, and in some cases the buyers didn't realize that until after they had moved in and made renovations.

    On Thursday, the 63-year-old pleaded no contest to fraud and selling real estate without a license. He was sentenced to 36 months in prison, with credit for time served since November. As part of a plea agreement, Circuit Judge Daniel B. Merritt Jr. ordered Antonelli to pay five victims a total of $40,667 in restitution. Payments owed to a sixth victim who recently died would have brought the total to nearly $50,000, Assistant State Attorney Mark Simpson said.(1)

    If convicted at trial on both counts, Antonelli faced up to 20 years in prison.

    Simpson said it's unclear if Antonelli has the money to pay restitution. During plea negotiations, however, Simpson offered to seek a more lenient sentence if Antonelli came up with money to repay the victims. When he didn't, Simpson pushed for the prison term. "This wasn't somebody who just found a bag of money that fell of a Wells Fargo truck and made a mistake," he said. "This is somebody who systematically went out and started doing this to folks knowing he had no right to do so."

    Investigators say Antonelli found homeowners facing foreclosure, telling them he could relieve them of their mortgages by suing their mortgage company. He told them they could walk away and maybe even get money back if they signed their deeds over to him by a power of attorney agreement. Then he listed the houses for sale on Craigslist without the knowledge of the homeowners.

    But Antonelli's scheme was based on a false premise: Once the foreclosure process begins, as it had in these cases, the owner has no legal right to sign over the deed. Antonelli later told Hernando Sheriff's detectives that he had the right to sue banks and mortgage companies because mortgages are not legally binding contracts.
For the story, see Man gets 36 months for selling homes he didn't own.

(1) Did death disentitle this scam victim (or more specifically, this scam victim's estate) from receiving restitution?

Pair Peddling Nationwide "Walk Away Today" Foreclosure Rescue Racket Admit Scheme Was Nothing More Than Giant Rent Skimming Operation That Reaped Million$; 100s Of Duped Homeowners Signed Over Deeds; Perpetrators Then Pocketed Cash From Subsequent Tenants While Filing Phony HAMP Loan Mod Requests To Prolong Stiffing Lenders Out Of House Payments

From the Office of the U.S. Attorney (Alexandria, Virginia):
  • Mark S. Farhood, 49, formerly of San Diego, Cal., and Jason S. Sant, 37, of Lecanto, Fla., pleaded guilty [] to conspiracy charges in connection with their operation of a nationwide online foreclosure rescue scam that went by various names, including Home Advocate Trustees and Walk Away Today, and used various web sites, including and, to deceive hundreds of vulnerable, distressed homeowners into surrendering their properties to the company.
  • According to court records, Farhood and Sant co-owned Home Advocate Trustees, which also went by the names Walk Away Today, First Equity Trustees, Home Security Consultants, Sell Fast USA, Short Sale Buyer, USA Sell House Fast, and USA Rental Housing. They marketed the businesses nationwide as purchasers of distressed real estate and a means by which vulnerable homeowners could avoid foreclosure and the accompanying negative effects on their credit.

    The companies told homeowners they were in the business of negotiating with lenders to purchase mortgage notes at a discount and falsely claimed to have been in business for seventeen years, to have experienced a 90% success rate in purchasing such notes, and to be the nation’s largest volume buyer of short sale and over-leveraged real estate.

    As Sant and Farhood admitted in connection with their pleas, the businesses were a fraud, no such negotiations with lenders ever took place, and the scheme was merely a way for them to take possession of hundreds of residential properties, including homes within the Eastern District of Virginia, at virtually no cost and then reap millions of dollars in profits by renting the homes to unsuspecting tenants.

    Farhood and Sant further admitted that as part of the scheme, they submitted fraudulent loan modification applications to mortgage lenders under the U.S. Department of the Treasury’s Home Affordable Modification Program (“HAMP”) in the name of homeowners, without the homeowners’ knowledge or consent.

    Farhood and Sant used the fraudulent applications to stall foreclosures on the properties under their control and for which no mortgage payments were being made and to maximize the time period during which they could collect rental income.

SC Appeals Court Reinstates Criminal Charges Against Sale Leaseback Peddler; Continuing To Prosecute Scammer After Earlier Contempt Convictions In Same Case Not Double Jeopardy

In Myrtle Beach, South Carolina, The Sun News reports:
  • Appeals court orders new trial for man in scam that targeted homeowners facing foreclosure

    Robert Steve Jolly, who operated an illegal foreclosure rescue scam through his Socastee-based Jolly & Associates, will face another trial on charges that he obtained clients’ property under false pretenses, the S.C. Court of Appeals ruled on Wednesday.

    The court reversed an earlier ruling by Judge Benjamin Culbertson, who in 2011 dismissed two of five felony charges that Jolly obtained property under false pretenses. Culbertson said in his ruling that prosecuting Jolly on the two charges would amount to double jeopardy because Jolly previously had been found guilty of contempt of court related to foreclosure actions in those two cases.

    The appeals court said the contempt charges were separate and different from the fraud charges, even though all of the charges stemmed from the same activity, clearing the way for another trial.(1)

    Jolly, 64, was convicted during a jury trial of the other three charges of obtaining property under false pretenses. He is serving a 10-year prison sentence at MacDougall Correctional Institution in Ridgeville. The appeals court dismissed Jolly’s appeal of those convictions earlier this year.

    No new trial date has been scheduled for the two felony charges Jolly still faces.

    Court documents show Jolly targeted home owners who were in danger of defaulting on their mortgages, saying he could save their homes if they would sign the properties over to him through a quit-claim deed. Jolly told the home owners that he would pay off their mortgages once they transferred the property. He also told the home owners to submit future mortgage payments to him instead of the original mortgage holder.

    Jolly never paid the mortgages and kept the money for himself, causing foreclosure lawsuits to be filed against at least 45 of his clients. Once the properties were in foreclosure, Jolly filed multiple frivolous actions in the cases to stall the lawsuits, according to court documents. Jolly’s filings created such a backlog of cases that Judge Michael Baxley was assigned to clear them.

    Baxley eventually voided all of the quit-claim deeds Jolly had filed and issued an order holding Jolly in criminal contempt of court. In his order, Baxley said Jolly’s actions through court filings and during hearings exhibited disrespect for the court and hampered witnesses and “were calculated to obstruct, degrade and undermine the administration of justice.” Jolly was sentenced to six months in jail on the contempt charge.
For the story, see Appeals court orders new trial for Myrtle Beach area man convicted in foreclosure rescue scam.

For the ruling, see State v. Jolly, No. 2011-190688 (SC App. May 8, 2013).

(1) A short excerpt from the court's ruling:
  • The State argues the trial court erred in dismissing two indictments for obtaining property by false pretenses based on double jeopardy because the elements of obtaining property by false pretenses were distinctly different from the elements of criminal contempt and each required a proof of fact the other did not. We agree.
  • "A defendant may be severally indicted and punished for separate offenses without being placed in double jeopardy where a single act consists of two distinct offenses." Brandt, 393 S.C. at 538, 713 S.E.2d at 597 (internal quotation marks omitted).

Tuesday, May 14, 2013

BofA Feels Sharp Teeth Of Newly-Minted California Homeowner Bill Of Rights; Borrower's Successful Arguments In Scoring Injunction Could Cost Bankster Upwards Of $60K In Legal Fees & Costs Alone

Housing Wire reports:
  • A California man successfully halted a foreclosure sale on his property using the newly minted California Homeowner Bill of Rights to obtain a court injunction against two foreclosing parties: Bank of America and its ReconTrust Co. subsidiary.

    For simply obtaining the HBOR injunction, the homeowner’s attorney is requesting $20,255 in legal fees and costs – a compensation request that is permissible under HBOR since the legislation allots borrowers reasonable attorneys fees and expenses for successfully obtaining an injunction.

    Attorney Robert Jackson with Jackson and Associates out of California says the injunction alone may cost BofA/Recontrust upwards of $60,000 when calculating in attorneys fees and expenses from both sides.

    "The biggest problem with the HBOR from the investor standpoint is the litigation risk of having to pay legal fees," Jackson said. "The way the thing breaks down is when you get an injunction, the prevailing borrower gets all of their legal fees paid by the servicer and the investor."

    This is one of the first legal disputes to show the real strength of HBOR and it’s effectiveness in stalling proceedings and increasing expenses for servicers that are accused of violating one of the provisions of HBOR.

    Jackson has spent months warning servicers about the hidden litigation expenses facing firms when they pursue nonjudicial foreclosures in an HBOR world.

    The new case in question – Singh v. Bank of America (Recontrust Co.) – was filed by a borrower who accused BofA and Recontrust of violating HBOR’s ban on dual-tracking.

    Singh claimed the bank failed to respond to his request for a loan mod before filing for a foreclosure sale.

    Using the HBOR provision against dual-tracking, Singh filed suit in the U.S. Eastern District of California, requesting injunctive relief to prevent the sale of his home during the pending dispute.

    The court granted his motion and even noted the California Homeowner Bill of Rights "offers homeowners greater protection during the foreclosure process."

    In evaluating HBOR and the plaintiff’s allegations, the court said the homeowner "has adequately shown he is likely to succeed on the merits in light of California’s new Homeowner Bill of Rights."

    The court granted the injunction, which is loaded with potential attorneys fees.

    If you add in the bank's own attorney fees, the injunction alone could carry a $60,000 price tag, Jackson estimates.

    "They now have to file an answer to this thing, and they have to produce evidence showing they are in compliance before this case can go on," he added.

    Not to mention, the bank is now subject to discovery – with those costs possibly running the financial firm another $50,000 at least, Jackson said.

    The servicer also will have to pay legal fees and expenses to make a factual showing to set aside the injunction, which could be another $50,000 to $60,000 in legal expenses, Jackson suggested.

    Meanwhile, the property in question has an online estimate of around $273,000, the veteran real estate attorney pointed out. So when you assess legal fees long-term, servicers could face $100,000 or more in legal expenses on a property not worth much more.

    Jackson predicted early on that more servicers and investors would file judicial foreclosures, fearing litigation expenses stemming from HBOR. He believes the $20,000 in automatic attorneys fees for a successful injunction alone is proof of a legal landmine.

    "This is just one motion that was granted," he said.

    "Under HBOR, the injunction is in place until Bank of America proves that it didn’t violate the HBOR to the satisfaction of the court. They have to file an answer to this thing, and they have to produce evidence that they are in compliance before this case can go on," Jackson concluded.
Source: California Homeowner Bill of Rights blocks BofA foreclosure.

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

Nebraska Supremes: Special 3-Month Statute Of Limitations When Seeking Deficiency Judgments Applies Only To Non-Judicial Foreclosures; Lenders That Go To Court Seeking Trust Deed Enforcement Get Five Years To Initiate Deficiency Proceedings

From US Law:
  • Defendants gave a promissory note to Bank and secured a loan with a trust deed on real property. Defendants defaulted on the note, and Bank initiated foreclosure proceedings. The property was sold after a sheriff's sale. Bank subsequently filed a complaint to recover the deficiency.

    The district court granted Defendants' motion for summary judgment, holding that because Bank filed its complaint ninety-nine days after the sheriff's sale, the action was barred by the three-month statute of limitations in Neb. Rev. Stat. 76-1013.

    The Supreme Court reversed, holding (1) the special three-month statute of limitations on actions for deficiency set forth in the Nebraska Trust Deeds Act applies where a lender elects to judicially foreclose upon the real estate, but the special limitation applies only where the property has been sold by exercising the power of sale set forth in the trust deed; and (2) because the judicial foreclosure of the trust deed in this case did not result in the sale of property under a trust deed, it did not fall under the statutory language in section 76-1013, and the deficiency action was governed by the general statute of limitations for actions on written contracts.(1) Remanded.
Source: Opinion Summary - First Nat'l Bank of Omaha v. Davey.

For the court ruling, see First Nat'l Bank of Omaha v. Davey, 285 Neb 835 (Neb. May 3, 2013).

(1) Excerpts from the court ruling's Introduction and Conclusion:
  • In this appeal, we must determine whether the special 3-month statute of limitations on actions for deficiency set forth in the Nebraska Trust Deeds Act (Act)[1] applies where a lender elects to judicially foreclose upon the real estate. We conclude that the special limitation applies only where the property has been sold by exercising the power of sale set forth in the trust deed.

    As we will explain, our conclusion follows from our previous decisions under the Act, is faithful to the plain language of the statute, avoids absurd results, and is consistent with decisions in other states. We therefore reverse the contrary decision of the district court.
  • Based on a previous interpretation by this court, we conclude that the statute of limitations in § 76-1013 applies only to deficiency actions filed after the exercise of the power of sale provided in a trust deed.

    A deficiency action brought following the judicial foreclosure of a trust deed is governed by the general 5-year statute of limitations for actions on written contracts in § 25-205.

    Because First National's deficiency action was brought within 5 years of the judicial sale of the real property, the district court erred in granting the Daveys' motion for summary judgment on the ground that the action was barred as untimely. Accordingly, we reverse the judgment and remand the cause for further proceedings consistent with this opinion.

Nevada Supremes: Little Downside For Banksters Engaging In Mediation-Associated Bad Faith; Trial Judge's Failure To Impose Loan Modification OK; Well Within Court's Discretion To Limit Lender Sanctions To Simply Withholding FMP Certificate & Granting $3,500 In Homeowner Attorney's Fees

From US Law:
  • Homeowner attended a first Foreclosure Mediation Program (FMP) mediation with Citimortgage, after which Defendant was denied a loan modification. The district court subsequently ordered a second mediation.

    PennyMac Corp. later obtained beneficial interest in the deed of trust and promissory note and attended the second mediation.

    The mediator determined that PennyMac failed to bring the promissory note, deed of trust, and other documents to the mediation and that PennyMac's representative lacked authority to negotiate.

    Homeowner filed a petition for judicial review, requesting sanctions, attorney fees, and a judicially imposed loan modification.

    The district court imposed sanctions against PennyMac but declined to impose a loan modification or monetary sanctions beyond the amount of attorney fees.

    The Supreme Court affirmed, holding (1) Homeowner had standing to challenge the district court's order on appeal; and (2) the district court acted within its discretion in denying an FMP certificate and in determining sanctions.(1)
Source: Opinion Summary - Jacinto v. PennyMac Corp.

For the court ruling, see Jacinto v. PennyMac Corp., 129 Nev. Advance Opinion 32 (May 2, 2013).

(1) From the Nevada Supreme Court ruling:
  • A deed of trust beneficiary seeking an FMP certificate must attend the mediation, participate in good faith, bring the required documents, and if attending through a representative, the representative must have authority to modify the loan or have access at all times to such a person. NRS 107.086(4), (5); Leyva, 127 Nev. at ___, 255 P.3d at 1279.

    If the district court finds noncompliance with these requirements, the bare minimum sanction is that an FMP certificate must not issue. Holt v. Reg'l Tr. Servs. Corp., 127 Nev. ___, ___, 266 P.3d 602, 607 (2011). In the absence of factual or legal error, the choice of any further sanctions in addition to withholding the FMP certificate is committed to the district court's sound discretion. Pasillas v. HSBC Bank USA, 127 Nev. ___, ___, 255 P.3d 1281, 1287 (2011).

    In Pasillas, we set forth a nonexhaustive list of factors for the district court to consider in weighing the appropriate sanctions to impose when a party has violated the FMP requirements. 127 Nev. at ___, 255 P.3d at 1287.

    Relevant to this matter is "whether the violations were intentional, the amount of prejudice to the nonviolating party, and the violating party's willingness to mitigate any harm by continuing meaningful negotiation." Id.

    Here, the district court found that PennyMac violated NRS 107.086(4) by failing to bring certified copies of the promissory note and deed of trust, although it did provide noncertified copies, and the district court found that PennyMac failed to provide an appraisal, violating FMR 11's document-production requirements. The court further concluded, consistent with the mediator's findings, that PennyMac's representative lacked sufficient authority to negotiate a modification. The district court found that PennyMac was a flagrant violator of the document-production requirements, and concluded that PennyMac had participated in the FMP process in bad faith.

    It therefore granted Jacinto's petition for judicial review, denied an FMP certificate, and imposed additional sanctions of $3,500, which represented the attorney fees incurred by Jacinto for the second mediation and hearing on the petition for judicial review, but the district court denied Jacinto's request for a loan modification.

    Having reviewed the record and considered the parties' arguments, we conclude that the district court made sufficient findings and conclusions, it properly considered the nonexhaustive Pasillas factors, and it acted within its sound discretion in determining the amount and nature of sanctions. Pasillas, 127 Nev. at ___, 255 P.3d at 1286-87.

    The district court found that PennyMac acted in bad faith and violated the document-production requirements. Based on those findings, it ordered the FMP certificate withheld as required, but it also imposed monetary sanctions against PennyMac, thus imposing more than the minimum sanction. Holt, 127 Nev. at ___, 266 P.3d at 607.

    We perceive no abuse of discretion with regard to the district court's decision to decline Jacinto's request for the imposition of a loan modification or with regard to the amount of monetary sanctions imposed against PennyMac. Pasillas, 127 Nev. at ___, 255 P.3d at 1286-87.

State AG's Claims That Bankster Abused Probate Process To Name Itself Personal Representative Of At Least 25 Dead Homeowners' Estates To Screw Heirs & Fast-Track Foreclosures Gets Nowhere; Agrees To Accept $140K Settlement Along With Servicer's Promise To Never Do It Again In NM

From the Office of the New Mexico Attorney General:
  • Attorney General Gary King [] announced a settlement with Green Tree Servicing, a major lender and servicer of consumer loans, resolving claims that Green Tree abused the probate process to fast-track foreclosures against the estates and families of deceased homeowners in New Mexico.

    AG King alleges that in at least twenty-five (25) cases in New Mexico, Green Tree became the personal representative of a deceased homeowner’s estate in order to quickly complete a foreclosure against the home of the deceased consumer. As part of the settlement, Green Tree agreed to never again be appointed as the personal representative of a homeowner’s estate in New Mexico.

    The AG alleges that Green Tree would file documents in court stating that it was unaware of any heirs with legal priority over Green Tree when, in some cases, Green Tree clearly knew that a surviving spouse or children existed and could be located. The Attorney General’s Complaint asserts that such false statements to the court were misrepresentations in the collection of a debt in violation of the Unfair Practices Act.

    As a result of the unlawful acts, AG King alleges that Green Tree would complete the foreclosure without giving the lawful heirs an opportunity to save the home or to defend the foreclosure case. Green Tree would then sell the home and pay itself the proceeds.

    Green Tree agreed to pay $140,000.00 to the Attorney General to resolve the claims. The funds will be used for consumer protection enforcement and education. The parties agreed to the settlement terms in a Consent Decree that must be approved by the Court.

    Green Tree denies that it engaged in unlawful conduct. The claims settled by the proposed Consent Decree are allegations only, and liability was not determined in a trial.
For the New Mexico AG press release, see Mortgage Lender Accused of Foreclosing on Deceased (AG Stops Practice by Green Tree Servicing In New Mexico).

Monday, May 13, 2013

Sleazy Bankster Backs Down When Confronted On Use Of Dubious Foreclosure Paperwork; Abruptly Withdraws Action In Apparent Attempt To Dodge Pro Se Homeowner's Constitutional Challenge To Provision In Colorado Foreclosure Law By Rendering The Controversy Moot

In Denver, Colorado, The Denver Post reports:
  • US Bank on Friday backed down from its efforts to foreclose on an Aurora woman whose federal court battle against it has taken on the constitutionality of Colorado's foreclosure laws.

    Just days after lawyers for the bank told a federal judge they've always had the original documents necessary to foreclose on Lisa Kay Brumfiel's tri-level house legally — and U.S. District Judge William J. Martínez said to produce them — the bank rescinded the whole thing.

    Despite the move to make a nearly two-year nightmare to save her house go away, Brumfiel on Friday insisted she's pressing on.

    "I would rather risk losing my house again than to selfishly watch this corrupt process continue for others," said Brumfiel, a 43-year-old part-time saleswoman who took on the court battles without a lawyer. "I know too much, and I don't want the blood of it on my hands."

    But the ultimate decision might now be out of her hands.

    US Bank on Friday told the Arapahoe County public trustee to withdraw the foreclosure case it filed in September 2011, then filed a request with Arapahoe County District Court Judge J. Mark Hannen to dismiss the order he signed last December to sell Brumfiel's house.

    Closing the foreclosure case is automatic. The motion to the judge is not.

    The bank's move could be a tactical one, legal experts said, designed to make not just Brumfiel's foreclosure go away, but her federal lawsuit, too.

    Theoretically, US Bank could get Hannen to dismiss his order — whether Brumfiel agrees or not — and then ask for the federal case to be dismissed. Should Martínez agree, the bank could start a new foreclosure case against Brumfiel, forcing her into a whole new cycle of court battles.

    But Martínez could also choose to ignore the request and move ahead with Brumfiel's claim that Colorado foreclosure law violates her constitutional right to due process.

    Brumfiel's federal lawsuit initially sought to enjoin the county foreclosure sale of her house. To obtain that, Brumfiel must first prove she's in danger of imminent harm if the sale occurred.

    Martínez issued an interim preliminary injunction Monday and scheduled a hearing for Wednesday. But with no foreclosure, there might be no case.

    "It's a tactic that would allow you to argue there's no longer any immediate harm because there's no longer a foreclosure," Keith Gantenbein, a foreclosure lawyer not involved in the case, said of the bank move to rescind.

    "But then you turn right around and file again, forcing the homeowner to go through it all for another two years. It's designed to wear you down," he said. "Sadly, it happens a fair bit." Attorneys for the bank refused to comment.(1)
  • In an order filed Thursday, Martínez told US Bank that he wanted to see original endorsements on the note and deed of trust by Friday. Endorsements are the signatures that appear on the back of the documents showing the chain of ownership.

    The bank told the court Friday that it had only the blank undated indorsement on the loan from First Franklin.
For the story, see US Bank walks away from foreclosure on Aurora woman.

See also, Banks' right to foreclose in dispute (The bank foreclosing on an Aurora woman challenging the constitutionality of Colorado's foreclosure laws did not formally own the right to take her house until a month after it filed its case to do so, public real-estate records reviewed by The Denver Post show).

(1) It appears that by rescinding the foreclosure, the bankster is attempting rendered moot the homeowner's Constitutional challenge to the relevant provision in the Colorado foreclosure law at issue. If so, the bankster could then argue that no actual case or justiciable controversy is left to be decided and, consequently, would ostensibly leave the federal court without jurisdiction to hear the case. To go forward and hear the case at this point may lead to a judicial pronouncement that does not affect the rights of the litigants in the case before it, but merely represents an impermissible advisory opinion.

See, for example, North Carolina v. Rice, 404 U.S. 244 (1971), in which the U.S. Supreme Court made this observation in this regard:
  • Early in its history, this Court held that it had no power to issue advisory opinions, Hayburn's Case, 2 Dall. 409 (1792), as interpreted in Muskrat v. United States, 219 U. S. 346, 351-353 (1911), and it has frequently repeated that federal courts are without power to decide questions that cannot affect the rights of litigants in the case before them. Oil Workers Unions v. Missouri, 361 U. S. 363, 367 (1960).

    To be cognizable in a federal court, a suit "must be definite and concrete, touching the legal relations of parties having adverse legal interests. . . . It must be a real and substantial controversy admitting of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts." Aetna Life Ins. Co. v. Haworth, 300 U. S. 227, 240-241 (1937).

    However, "[m]oot questions require no answer." Missouri, Kansas & Texas R. Co. v. Ferris, 179 U. S. 602, 606 (1900). Mootness is a jurisdictional question because the Court "is not empowered to decide moot questions or abstract propositions," United States v. Alaska S. S. Co., 253 U. S. 113, 116 (1920), quoting California v. San Pablo & Tulare R. Co., 149 U. S. 308, 314 (1893); our impotence "to review moot cases derives from the requirement of Article III of the Constitution under which the exercise of judicial power depends upon the existence of a case or controversy." Liner v. Jafco, Inc., 375 U. S. 301, 306 n. 3 (1964). See also Powell v. McCormack, 395 U. S. 486, 496 n. 7 (1969).

    Even in cases arising in the state courts, the question of mootness is a federal one which a federal court must resolve before it assumes jurisdiction. Henry v. Mississippi, 379 U. S. 443, 447 (1965). Liner v. Jafco, Inc., supra, at 304.

On the other hand, if it can be demonstrated that the bankster's withdrawal of the foreclosure is nothing more than a blatant attempt to abort the homeowner's challenge to the bankster's allegedly illegal or unconstitutional conduct and thereby evade judicial review, the case may not be considered moot.

In United States v. WT Grant Co., 345 US 629 (1953), the U.S Supreme Court made these comments in this regard:
  • Both sides agree to the abstract proposition that voluntary cessation of allegedly illegal conduct does not deprive the tribunal of power to hear and determine the case, i. e., does not make the case moot. United States v. Trans-Missouri Freight Assn., 166 U. S. 290 (1897); Walling v. Helmerich & Payne, Inc., 323 U. S. 37 (1944); Hecht Co. v. Bowles, 321 U. S. 321 (1944).

    A controversy may remain to be settled in such circumstances, United States v. Aluminum Co. of America, 148 F. 2d 416, 448 (1945), e. g., a dispute over the legality of the challenged practices. Walling v. Helmerich & Payne, Inc., supra; Carpenters Union v. Labor Board, 341 U. S. 707, 715 (1951).

    The defendant is free to return to his old ways.[4] This, together with a public interest in having the legality of the practices settled, militates against a mootness conclusion. United States v. Trans-Missouri Freight Assn., supra, at 309, 310.

    For to say that the case has become moot means that the defendant is entitled to a dismissal as a matter of right, Labor Board v. General Motors Corp., 179 F. 2d 221 (1950). The courts have rightly refused to grant defendants such a powerful weapon against public law enforcement.[5]

    The case may nevertheless be moot if the defendant can demonstrate that "there is no reasonable expectation that the wrong will be repeated."[6] The burden is a heavy one. Here the defendants told the court that the interlocks no longer existed and disclaimed any intention to revive them. Such a profession does not suffice to make a case moot although it is one of the factors to be considered in determining the appropriateness of granting an injunction against the now-discontinued acts.

    Along with its power to hear the case, the court's power to grant injunctive relief survives discontinuance of the illegal conduct. Hecht Co. v. Bowles, supra; Goshen Mfg. Co. v. Myers Mfg. Co., 242 U. S. 202 (1916).

    The purpose of an injunction is to prevent future violations, Swift & Co. v. United States, 276 U. S. 311, 326 (1928), and, of course, it can be utilized even without a showing of past wrongs. But the moving party must satisfy the court that relief is needed. The necessary determination is that there exists some cognizable danger of recurrent violation, something more than the mere possibility which serves to keep the case alive.
See also, ACLUM v. Conference of Catholic Bishops, 705 F. 3d 44 (1st Cir. January 15, 2013) (discussing the 'voluntary cessation doctrine'  which provides for an exception to mootness):
  • The voluntary cessation exception "traces to the principle that a party should not be able to evade judicial review, or to defeat a judgment, by temporarily altering questionable behavior." City News & Novelty, Inc. v. City of Waukesha, 531 U.S. 278, 284 n. 1, 121 S.Ct. 743, 148 L.Ed.2d 757 (2001).

    This is to avoid a manipulative litigant immunizing itself from suit indefinitely, altering its behavior long enough to secure a dismissal and then reinstating it immediately after. See Already, LLC v. Nike, Inc., ___ U.S. ___, ___, 133 S.Ct. 721, ___ L.Ed.2d ___, 2013 WL 85300, No. 11-982, slip op. at 4 (U.S. Jan. 9, 2013); Brown, 613 F.3d at 49; see also United States v. W.T. Grant Co., 345 U.S. 629, 632, 73 S.Ct. 894, 97 L.Ed. 1303 (1953) (noting that if a court declares the case moot, "[t]he defendant is free to return to his old ways").

    As the Supreme Court stated last term, "[s]uch ... maneuvers designed to insulate a decision from review ... must be viewed with a critical eye" and, as a result, "[t]he voluntary cessation of challenged conduct does not ordinarily render a case moot." Knox v. Serv. Emps. Int'l Union, Local 1000, ___ U.S. ___, 132 S.Ct. 2277, 2287, 183 L.Ed.2d 281 (2012) (citation omitted).

    However, even in circumstances where the voluntary cessation exception applies, a case may still be found moot if the defendant meets "the formidable burden[[9]] of showing that it is absolutely clear the allegedly wrongful behavior could not reasonably be expected to recur." Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 190, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000) (citing United States v. Concentrated Phosphate Exp. Ass'n, Inc., 393 U.S. 199, 203, 89 S.Ct. 361, 21 L.Ed.2d 344 (1968)); Parents Involved in Cmty. Sch. v. Seattle Sch. Dist. No. 1, 551 U.S. 701, 720, 127 S.Ct. 2738, 168 L.Ed.2d 508 (2007).
Go here for links to other cases discussing the stringent test in determining mootness in cases where the party alleged to have engaged in illegal conduct voluntarily ceases said conduct under threat of a pending lawsuit.

    Ex- Homeowner Who Lost Home To Foreclosure Nearly 20 Years Ago Discovers He May Be Victim Of Recently-Revealed NYC Surplus-Snatching Scam

    In Brooklyn, New York, WNYC News reports:
    • William Easterling and his wife used to own 165 Forbell Street, a two-family home in Brooklyn on the border of Cypress Hills and Ozone Park. The couple raised their four kids there. But they haven’t lived there in almost 20 years.

      Easterling had been violently mugged on his way to work in 1992 and his wife said, "enough." They moved. But his troubles didn't end there. He had to file for bankruptcy and was forced to surrender the Brooklyn property.

      What he didn't know was that his old property was listed in the indictment against Senator John Sampson, who's accused of keeping money that came from the foreclosure sale.

      He also didn’t know that years ago he may have had a right to claim some of the $80,000 Sampson reported from the sale of 165 Forbell Street.

      “Otherwise I would have the attorney looking into it with all the money I had to spend, plus with the money I lost in the home,” he said. “But I had no idea, no.”

      Sampson is accused of embezzling $440,000 from the foreclosure sales of four properties. In each case, he was appointed by the courts to serve as the referee. In that role, he was overseeing the foreclosure auction and making sure that any surplus funds were returned to the Kings County clerk for disbursement. Sampson is accused of keeping that money for himself. He has pleaded not guilty to the charges.

      Josh Zinner, co-director of NEDAP, a nonprofit that works on economic justice issues, says the extra money from foreclosure sales often represents the families' leftover equity — and possibly their only source of wealth after they had lost their homes in foreclosure.

      Easterling thinks someone should have told him there was money out there owed to him.

      “I'm 70 years old, okay. I wasn't born yesterday. I mean I look in the mirror and I don't think I look that stupid,” he said. “If I should have been owed something, I feel like it should have been up to the court to inform me.”

      A spokesman for the Office of Court Administration admitted there is no system in place to make sure referees actually deposit surplus funds from a foreclosure sale to families. And, technically, it wasn't up to the court to notify Easterling.

      Even if Easterling had known he should claim it, prosecutors are saying, the money wasn't there to give. Sampson allegedly kept it.(1)
    Source: Sampson Corruption Scandal Hits Home for One Family.

    (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:

    Missing S. Florida Lawyer's Antics Cost Client His Home; Victim Loses $72K Held In Trust, Another $40K Non-Refundable Deposit On Residence Being Bought On Rent To Own Basis

    In Fort Lauderdale, Florida, the South Florida Sun Sentinel reports;
    • The day before Boca Raton attorney Timothy McCabe disappeared last month he blindsided a Broward County couple with a request to wire him $60,000 to complete their deal to buy a new home, the couple's attorney said Wednesday.

      George and Lori Miquel didn't send the money because they thought they had enough cash in McCabe's trust account — up to $72,000 — for the closing. They soon discovered the money was gone and so was McCabe, said the Miquels' attorney, H. Dohn Williams.

      The Miquels have become the first to file what is anticipated to be a series of lawsuits related to McCabe's April 2 disappearance. The Florida Bar has alleged that more than $3 million is missing from his law firm's trust account and his title company's escrow account.
    • The Miquels knew McCabe's family through North Broward Preparatory School in Coconut Creek, where the attorney's three daughters go to school, Williams said.

      The couple had been depositing money in a trust account controlled by McCabe since April 2011 with some of it to be used to buy a new home, according to the Palm Beach County Circuit Court lawsuit. The Miquels recently had moved into a house near North Broward Preparatory with an agreement to lease it before buying, Williams said.

      They put down a $40,000 nonrefundable deposit for the home, Williams said.

      With McCabe's disappearance, the deal to buy the house collapsed, they lost the deposit and they had to quickly move out, Williams said.(1)

      The April 29 lawsuit, seeking $112,000 plus punitive damages, is not only against McCabe and his law firm, but also names McCabe's wife, Donna, and his law partner, Steve Samiljan, as defendants. Williams alleges that some of the Miquels' missing trust money was used to pay off a $386,000 mortgage on the McCabes' Boca Raton home.(2)

      Samiljan said Wednesday that he had not seen the lawsuit. He said he hasn't heard from McCabe since the April 2 email and he's unaware if McCabe was trying to get clients to wire him money before he left.
    For the story, see Boca Raton attorney's disappearance leads to lawsuit.

    (1) The victimized client may be able to assert an equitable claim against the home seller that a lease-purchase, contract for deed, installment land sale contract, rent-to-own, or any other similar such arrangement where the victim and his family paid a substantial deposit and has already taken possession of the premises constituted an equitable mortgage, whereby the victimized client would be deemed the equitable owner.

    In the event a court deems the arrangement an equitable mortgage, the home buyer will be treated as the holder of equitable title and the home seller's only recourse to recover said title and possession of the premises would be to file a full blown foreclosure action; a simple landlord tenant eviction procedure would legally not be sufficient to recover equitable title & possession..

    See, generally., H & L Land Company v. Warner, 258 So. 2d 293 (Fla. App. 2d DCA 1972):
    • The doctrine of equitable conversion is established in Florida. See Arko Enterprises, Inc. v. Wood, Fla.App. 1966, 185 So.2d 734, and cases cited therein. If a land sale contract is specifically enforceable, and is free of equitable imperfections, the vendee becomes the equitable owner of the land and the vendor holds legal title as security for the vendee's performance.

      Moreover, we concur with the decision of the District Court of Appeal for the First District in Mid-State Investment Corporation v. O'Steen, Fla.App. 1961, 133 So.2d 455, holding that an installment land sale contract is in essence a mortgage, and pursuant to Fla. Stat. § 697.01, F.S.A., the safeguards for the debtor and the remedies for the creditor are the same as those between a mortgagor and mortgagee.

      Appellant urges us to disregard the Mid-State holding, on the ground that the installment seller in that case was really no more than one who financed the buyer's purchase from a third party, whereas in the case now before us the installment seller made a direct sale to the buyer. We are unwilling to declare that the Mid-State reasoning is inapplicable here.

      By way of dictum, the Supreme Court of Florida in Huguley v. Hall, Fla. 1963, 157 So.2d 417, recognized that in Florida a defaulting purchaser pursuant to a contract for deed is ordinarily entitled to an opportunity to redeem (sometimes inaccurately called an "equity of redemption"), subject to the protection of a court of equity.
    See also, Henry v. Ecker, 415 So. 2d 137 (Fla. App. 5th DCA 1982):
    • [A]s between the parties, when no rights of a third party are involved, such equitable title and interest in the land should not be summarily terminated as forfeited, nor should it be adjudicated in a possessory action at law, but should be terminated only by an action in equity, in which action the purchaser, even one who has defaulted, is always judicially given one last fair equitable opportunity to redeem his right in equity to a conveyance of the legal title to the property by payment of all sums due and by himself "doing equity" as may be necessary.
    Go here and go here for a non-all-inclusive survey of some Florida case law on the court-created doctrine of equitable mortgage.

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

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