Saturday, July 27, 2013

Woman Admits To Forging Hubby's Signature, Submitting Fraudulent Documents To Illegally Pocket Proceeds From Home Loan

From the Office of the U.S. Attorney (Billings, Montana):
  • The United States Attorney's Office announced that [...] ANGELA CORSON SMITH, a 32-year-old resident of Billings, pled guilty to bank fraud. Sentencing has been set for October 28, 2013. She is currently released on special conditions.

    In an Offer of Proof filed by Assistant U.S. Attorney Jessica T. Fehr, the government stated it would have proved at trial the following:

    On October 23, 2009, SMITH submitted an application for a home equity loan to Altana Federal Credit Union. Altana Federal Credit Union is federally insured and was at the time of the conduct.

    In support of the home equity loan SMITH presented a power of attorney purporting to give her authority to sign for her husband, B.S. The power of attorney contained a forged signature of B.S. as well as his father who was listed as a witness to the document.

    The document was notarized by Angela Corson, SMITH's maiden name. The bank would not have authorized the home equity loan with B.S.'s consent so the forged power of attorney was material to the decision of the bank. In addition to forging the power of attorney, SMITH also forged all of the loan documents for the bank, some of which were not signed until May of 2010.
For the U.S. Attorney press release, see Angela Corson Smith Pleads Guilty In U.S. Federal Court.

Two NYC Landlords Outslick, Bust Tenant For Illegally $ubletting Rent-Regulated Apartment As 'Hotel Room'; Use Private Investigator Posing As Tourist To Nab Renter Who Now Faces The Boot

In New York City, the New York Post reports:
  • Two Nolita landlords went the extra step to nail a tenant they suspected of illegally renting out her pad online to strangers — by hiring a private eye to pose as a tourist to catch her in the act.

    Building owners and siblings Ken and Susan Podziba shelled out $20,000 for the ploy — and say it was well worth the dough.

    They found that tenant Amy Parness has been flagrantly flouting a recent legal ruling that declared short-term online sublets illegal, by pulling in $4,500 a month for her rent-stabilized one-bedroom pad — for which she pays $1,400 — according to Manhattan Housing Court papers.

    Parness — the 38-year-old niece of a retired Manhattan Supreme Court judge — rents out her walk-up unit for $220 a night to strangers through travel Web sites, the court documents state.

    Meanwhile, Parness, who owns the Web site SparkleLabs, which sells gadgets to tech geeks, lives with her Parsons professor husband, Ariel Churi, in Montclair, NJ, the Podzibas said.

    In May, a judge ruled that such online hotelier practices violate city codes and state law. Still, industry leaders estimate 3,000 New Yorkers rent out their apartments to visitors, making an expected $1 billion in profits this year.

    The Podzibas said Parness reaped a total estimated $500,000 from illicit rentals in the past four years.

    They said in court papers seeking her eviction that she not only rents out her own apartment, but had handled the subletting of two other tenants’ pads in the eight-unit building, taking a cut for her services.

    “She’s the tenant from hell,” Ken Podziba said.

    Parness — who allegedly uses her middle name, Magdalena, on the Web sites — is the leaseholder of Apartment No. 3 at 250 Elizabeth St., but the Podzibas say they have documented evidence that she lists the unit on Airbnb and as a “Nolita Nest” at 250 Mott St.

    When the private investigator, posing as a tourist, queried her about the discrepancy, Parness claimed it was an error by the travel sites, legal papers say.

    Her apartment is fully booked through the end of the summer, online records show.

    On July 9, Parness’ lawyer told Housing Court Judge Sheldon Halprin that Parness’ stepbrother was staying in the unit through August.

    But the Podzibas seemed to have caught her in a lie — they confronted the tenant, who admitted in an affidavit that he’s a Stanford University student interning in New York for the summer.

    “I’m not a friend or relative of Magdalena,” the tenant said in the statement, adding that he rented the place through Airbnb.

    Parness replied to e-mail messages but declined to answer questions about the apartment.

Dozens Of Long-Term Motel Tenants Get Short Notice Boot As Pending Foreclosure, Code Violations, Water & Power Shutoff Force Premises Shutdown

In Myrtle Beach, South Carolina, WPDE-TV Channel 15 reports:
  • People who had been staying at motel in Myrtle Beach must find a new place to live. Friday afternoon they were told the Golden Sands Inn was shutting its doors.

    "He just pretty much left us stuck holding the bag," said Rodney Rohan. Rohan has been staying at the motel for two years now. The property isn't in the best condition. He showed WPDE NewsChannel 15 a gaping hole in the ceiling, and Rohan said it used to leak water.

    Rohan and others staying at the Golden Sands Inn were living there long term and paying weekly. They include families and foreign exchange students. Friday, the owner told them that the water and electricity are going to turned off on Monday.

    Myrtle Beach police responded to the property Friday, because the people staying there were upset with the short notice.

    According to Horry County online court records there's a pending foreclosure on the property.

    "The police told me that he's known since January the place will be shut down. He failed to meet code and they owe taxes on the building," said Heather McCall. She's been staying there for the last few months with her fiance and four children.

    "Most of us this past week have paid him for the last week of June through July and have no more money left to go anywhere. I don't," McCall added.

Tenant In Foreclosed Home Gets Boot, Estimates $5K In Personal Items Taken By Trash-Out Outfit Despite Scoring 11th Hour 30-Day Stay Of Eviction

In Jacksonville, Florida, First Coast News reports:
  • A Jacksonville man said he was told to get out in 24 hours. He said he never saw it coming. Now, he is fighting.

    Ryan Burns and a couple roommates said they have been renting a modest home on Post and Rubel streets since October 2012. "I loved having my own house," Burns said.

    Until a final notice of eviction reportedly showed up on his front door June 25th. It said in part they had 24-hours to leave, which is standard under Florida law. "I was surprised," Burns said. "We had no other indication that was happening."

    Burns claims he paid rent on time, but he also claims the landlord didn't tell him the home was facing foreclosure. FCN scoured court documents and found an order to stay in the home was granted, on June 26th, by a circuit court judge for 30 days.

    That order was filed on the June 27th, which was the same day as the eviction. The Jacksonville Sheriff's Office confirms the eviction was done June 27th.

    Burns claims a company came in and removed roughly $5,000 in personal items from the home. The company claims it followed all the rules. "A wallet, containing driver's license social security card," Burns said, as he went through a list of what he said was taken. Burns' mother, Cathie, said "The social security card, that's a big deal because...I mean, you can do anything with that. that's identity theft."

    Even with the judge's 30-day extension, unfortunately for Ryan, the house is sold. In the meantime, JSO is still investigating.

    FCN tried several times over the past few days to reach the previous homeowner with no success. FCN will continue to try to do so.

    First For You, real estate attorney, Francis Boyer, said these are your rights:

    1) Renters can stay in the property until a notice to vacate runs out.

    2) Property owners do not have the right to take the renter's property. It must be stored and notice given. If that is not done - consider hiring legal help.

    3) The Protecting Tenants at Foreclosure Act says in part, if your landlord is foreclosed upon, and does not inform you and you are a bona fide tenant (meaning you are not related) you have a right to 90 days notice to move.

Single Mom, Two-Year Old Dodge Unexpected Boot, Score Security Deposit Refund With Help From Media Outlet After Unwittingly Renting Out Home On Verge Of Foreclosure

In Virginia Beach, Virginia, WTKR-TV Channel 3 reports:
  • Emotionally drained, Courtney Gourgoulianis broke down on Monday.

    She says earlier that morning, a sheriff’s deputy came to evict her and her two-year-old daughter from their Virginia Beach home. “He’s like, ‘You are the victim of this and I’m really sorry, but I have to execute,” explains Gourgoulianis.

    That’s because, she says, she signed a one-year lease in early May to rent a property on Governors Way. Days later though, she says, the house went into foreclosure and the Virginia Housing and Development Authority (VHDA) took over ownership. She had no clue any of this happened until she was served with an eviction notice last Wednesday. It gave her five days to get out.

    “I pull it out and I read it and I was like, wow, are you kidding me like what is this? Who calls a leasing company when they know their house is getting foreclosed on? Then, what leasing company doesn’t investigate a house that they’re going to put out there?” Gourgoulianis said.

    Gourgoulianis got in touch with the leasing company, At first, she says, they were trying to help. The woman she spoke with says they had no idea this was going on either.

    The woman even made her aware of the federal law, “Protecting Tenants at Foreclosure Act”, which gives tenants at least 90 days’ notice before evicting them. But when Gourgoulianis called the lawyer representing VHDA, she says, she was told that federal law doesn’t apply to her. “She went completely dead silent and said that’s not true, and I’m like, ma’am, please don’t. I’m not stupid,” says Gourgoulianis. She was told prior notices were sent out. And, court documents show, an Unlawful Detainer was posted on her door in late May. But, Gourgoulianis says, she never saw anything.

    Apparently, the rental agency also told her the owner of the house is MIA, and supposedly living outside the country. “I don’t know how people like that sleep at night. They’re human they know the situation they know that they’re putting a mom and baby out and I didn’t do anything wrong,” says Gourgoulianis.

    So NewsChannel 3 took action and got results. We got an outside attorney involved, Jason Messersmith, in Newport News.

    Within a couple hours, he managed to come to an agreement with VHDA and their lawyer allowing Gourgoulianis to move back into the home and giving her through the end of September to find a new place to live. [...] NewsChannel 3 also reached out to the leasing agency, who now says, they will refund Gourgoulianis for her security deposit, pet deposit and one month’s rent totaling $2,750.

    It’s money Gourgoulianis never thought she’d get back. “I don’t think any of this would have happened the way it did if you guys hadn’t have helped me.”

Friday, July 26, 2013

Florida Homeowner Facing Foreclosure Scores Big Win; Appeals Court Throws Out Case On Technicality, Expiring Statute Of Limitations Prevents Bankster From Refiling

In Jupiter, Florida, WPEC-TV Channel 12 reports:
  • Too many people in our area know the pain of losing their home to foreclosure, but a Jupiter woman is sharing with CBS 12 her story of beating foreclosure.

    Susan St. Claire faced losing her town home in The Estuary at Jupiter Dunes. She says several lawyers told her to start packing.

    But St. Claire's new attorney, Mark Johnson, realized the bank suing St. Claire had filed a motion to substitute the suing party. The 4th District Court of Appeal had ruled the suing party had to really have the mortgage.

    St. Claire's foreclosure was old enough, explained attorney Johnson, the statute of limitations had expired for filing a new foreclosure suit against St. Claire.

    "As long as they're alive, they can stay in (the home)," said Johnson. "But they can't sell it... because there's a lien on it."

    Not the ideal way to live, admits St. Claire, but at least she has a roof over her head in a desirable location.

    "It's a miracle," exclaimed St. Claire. "I keep telling you, it's a miracle. I do believe, I do believe."

    Johnson says St. Claire's case is not typical, though. And going forward, he says, even fewer people will be able to beat foreclosure like St. Claire because the banks have adapted to the new court rulings.

Bankster Breaks Into Wrong Home In Another Foreclosure Trash-Out Gone Wrong; Innocent Homeowner Estimates $18K In Personal Items Are Missing; Cops Refuse To Pursue Case

In McArthur, Ohio, WBNS-TV Channel 10 reports:
  • An Vinton County woman is looking to get her belongings back after a bank incorrectly broke into her house and took them.

    Katie Barnett says that the First National Bank in Wellston foreclosed on her house, even though it was not her bank.

    They repossessed my house on accident, thinking it was the house across the street,” Barnett said.

    Barnett, who had been away from the house for about two weeks, said she had to crawl through the window of her own house in order to get in after she used her own key that did not work.

    Some of the items in her house had been hauled away, others were sold, given away and trashed.

    It turns out the bank sent someone to repossess the house located across the street from Barnett’s house, but by mistake broke into hers instead.

    “They told me that the GPS led them to my house,” Barnett said. “My grass hadn’t been mowed and they just assumed.”

    She called the McArthur Police about the incident, but weeks later, the chief announced the case was closed.

    Barnett said that according to the bank president, this was the first time something like this has happened.

    She presented him with an $18,000 estimate to replace the losses, but the president refused to pay.

    “He got very firm with me and said, ‘We’re not paying you retail here, that’s just the way it is,’” Barnett said. “I did not tell them to come in my house and make me an offer. They took my stuff and I want it back.”

    The shock of having her house broken into and belongings taken by mistake has now turned into anger.

    “Now, I’m just angry,” Barnett said. “It wouldn’t be a big deal if they would step up and say ‘I’m sorry, we will replace your stuff.’ Instead, I’m getting attitude from them. They’re sarcastic when they talk to me. They make it sound like I’m trying to rip the bank off. All I want is my stuff back.”

    No one from the bank would go on camera with 10TV about the incident. The bank president told 10TV News that the bank is trying to come to terms with Barnett.
Source: Vinton County Woman Wants Possessions Back After Bank Tried To Repossess Wrong House.

(1) For those homeowners who've been screwed over by wrongful lockouts by foreclosing lenders (and their confederates) and seek some possible guidance on how much their cases might be worth if they seek to sue, see:
For examples of filed lawsuits involving illegal bank break-in, "trash-out" lockout cases, see:

Thursday, July 25, 2013

NH Sale Leaseback Peddler Invokes "Bad Businessman" Defense As His Trial Begins For Alleged Fraud In Connection With Equity Stripping, Foreclosure Rescue Outfit; Says Company Was Nothing More Than "Failed Business Model", Not Criminal Enterprise

In Concord, New Hampshire, The Associated Press reports:
  • Lawyers for Michael Prieto, who is charged with bilking financially distressed homeowners and lenders out of $13 million, say his mortgage rescue company amounted to a "failed business model" not a criminal enterprise.

    "My client was a bad businessman," defense attorney Jaye Rancourt told jurors in her opening statement Tuesday in federal court in Concord. "Being a bad businessman is not a crime."

    Prosecutors say Prieto persuaded people who were having difficulty making their mortgage payments to turn their homes over to him, continue living in the homes and pay rent with the prospect of buying back the homes in two years.

    Assistant U.S. Attorney Michael Gunnison told jurors Prieto paid others to buy the homes to mask his role as both the seller and buyer.

    Gunnison said Prieto then remortgaged the homes — sometimes at interest rates as high as 14 percent — then defaulted on the loans.

    "Mr. Prieto was the boss, the controller of all the money and the arranger of all the fraudulent transactions," Gunnison told jurors. He said Prieto left lenders, homeowners and the "straw" buyers he paid to purchase the homes "holding the bag."

Lawsuit: Banksters Illegally Snatched Cash From Sunshine State Man's Bank Account To Partially Satisfy Out-Of-State Foreclosure Judgment Without First Registering Judgment In Florida & Requesting Garnishment Summons From Local Court

In St. Clair County, Illinois, The Madison-St. Clair Record reports:
  • A Florida man claims two Illinois banks illegally obtained more than $3,000 from his bank account to satisfy a portion of the more than $80,000 he owed them.

    Jermaine Johnson filed a lawsuit June 18 in St. Clair County Circuit Court against First Collinsville Bank and Wells Fargo Bank.

    In his complaint, Johnson alleges he owed First Collinsville Bank more than $80,000 as part of a mortgage foreclosure case that had been filed in St. Clair County Circuit Court.

    In order to partially satisfy payment of the debt, First Collinsville issued a garnishment summons, which would have required any money held by Johnson to be applied toward the $80,000 settlement in the mortgage foreclosure, according to the complaint.

    First Collinsville Bank had the summons served on Wells Fargo Bank in Florida on May 24. In turn, a Wells Fargo process server withdrew $3,590.39 from Johnson’s two accounts, the suit states.

    Johnson claims the move was illegal because First Collinsville issued the summons across state lines.

    “Illinois courts may not enforce Illinois judgments outside the state of Illinois,” the suit states. “If defendant First Collinsville Bank wished to serve a garnishment summons on a garnishee located in Florida, it was required to first register the Illinois judgment in Florida under the Florida Uniform Registration of Foreign Judgments Act, then request issuance of the garnishment summons, to be served in Florida, from the Florida court.”

    Shortly after First Collinsville’s garnishment, Johnson visited Wells Fargo in an attempt to withdraw the money from his accounts, but was not allowed to do so, the complaint says.

    Because of the banks’ actions, Johnson claims he has suffered extreme emotional and mental distress.

    In addition to the money that was allegedly taken from him, Johnson seeks $150,000 in attorney’s fees, punitive damages of $3 million and court costs.

Ex-Mogul Sentenced For Murdering Wife To Score Life Insurance Proceeds In Last Ditch Effort To Save Mansion From Foreclosure, Real Estate Empire From Financial Collapse

In San Mateo, California, The Daily Journal reports:
  • The Woodside man convicted of shooting his wife twice in the head and staging the bloody bedroom of their foreclosed mansion to look like a suicide to activate more than $30 million in life insurance policies that eradicated a mountain of debt was sentenced [] to life in prison without the possibility of parole.

    But before Pooroushasb “Peter” Parineh, 67, received the sentence, he read a lengthy handwritten letter to his three grown children, by turns telling them the monetary value of family items, describing his wife’s facelift and blaming them for what he said was his wife’s suicide.
  • Jurors deliberated nearly full four days in May before convicting Parineh of first-degree murder with the special allegation he did so for financial gain. Prosecutors opted against seeking the death penalty but the sentence imposed Friday means Parineh will die behind bars.
  • Parineh, who testified in his own defense, steadfastly maintained his innocence in his wife Parima Parineh’s April 13, 2010 shooting. Defense attorney Dek Ketchum told jurors Parima Parineh, 56, killed herself because she was bipolar, depressed and making a last-ditch effort to stave off the collapse of the family’s fortune while her life insurance policies were still valid. Ketchum also introduced evidence that she had overdosed on pills just six weeks before her death.

    Prosecutor Jeff Finigan built a case focused on the Parineh family’s financial collapse, from real estate empire to five properties in foreclosure — including the Fox Hill Road mansion where the crime happened — a commercial building that had been taken over for lack of payment and a legal judgment.

    The life insurance policies on Parima Parineh wiped out the debt, put an extra $600,000 in his pocket and deposited the rest in his three grown children’s trust from which he immediately tried to borrow, Finigan said.

    Finigan also informed jurors about Parineh’s remaining close friendship with a former mistress and questionable behavior after his wife’s death like avoiding the memorial service, staying in a hotel with the former paramour and hounding his children about the money. Jurors also learned that the March 2010 suicide attempt was possibly a pact with her husband in which he didn’t hold up his end of the bargain, Finigan said.

Wednesday, July 24, 2013

Notorious National Foreclosure 'Trash-Out' Contractor Tied To Another Allegedly Illegal Lockout; Lawsuit-Filing Homeowner Says He's Current On House Payments & Is Still The Owner

In Carmel, Indiana, WRTV-TV Channel 6 reports:
  • A Hamilton County family is taking legal action after they were locked out of their Carmel townhouse.

    Michael, who is father of three and husband, asked RTV6 not publish his last name. His family has lived at 11889 Esty Way for 10 years until April, when they decided to move to a bigger home and rent out their townhouse.

    Michael found a tenant, but he was forced to refund the money when their townhouse was locked and the utilities were turned off. "Our lender changed the locks on us," Michael said.

    A notice was left on the Esty Way townhouse from Safeguard Properties , a company that works with mortgage lenders in securing homes being returned to the banks. Safeguard's posting alerted the family that, "all persons entering this property (must) provide an explanation of their visit, sign and date the form."

    Michael was locked out, even though his bank statements show he is current with his mortgage and his loan doesn't mature until 2033.

    "That's the glitch. That's the problem and that's why we're hoping you can help," Michael told Call 6 Investigator Rafael Sanchez. "We try to do everything honestly on the up and up. It's been very stressful. It's been hard."

    The family hired lawyer Kathy Davis to deal with their mortgage servicer Green Tree Financial.

    "The woman told me -- this is something that I will never forget, honestly -- she told me that they were the mortgage company, and if they wanted to change your locks, they could," Davis said.

    Davis has handled more than 100 cases involving mortgage companies. "This is something I have never heard of, ever," she said. "(It's the) first time I've seen something like this." Davis has filed a lawsuit in Hamilton County seeking damages.

    The family was unable to regain access into their property until late June. "In this case, I don't know if they don't want to admit they made a mistake," Davis said.

    Green Tree Financial and Safeguard Properties declined to comment on this story due to the pending litigation.
For more, see Family mistakenly locked out of home even though mortgage payments current (State foreclosure rules overlooked).

See Report: Insider Says Allegations Of Incompetence, Malevolence & Larceny Are All In A Day's Work For Trash-Out Contractor That Screws Over Distressed Homeowners for an earlier post on the now-notorious foreclosure trash-out contractor Safeguard Properties.

(1) For those homeowners who've been screwed over by wrongful lockouts by foreclosing lenders (and their confederates) and seek some possible guidance on how much their cases might be worth if they seek to sue, see:
For examples of filed lawsuits involving illegal bank break-in, "trash-out" lockout cases, see:

Broken Tail Light In Georgia Leads To $425K Bail In California For Extradited Suspect Accused Of Squeezing Banksters In 'Cash For Keys' Scam By Illegally Occupying Vacant Foreclosures, Then Applying For & Pocketing Relocation Assistance

From the Office of the San Bernardino County, California District Attorney:
  • A Roseville man wanted for real estate fraud was extradited last week from Georgia.

    On July 3, 48-year-old Eimbari Kemet was extradited from Lawrenceville, Georgia, back to California by San Bernardino County District Attorney investigators. Kemet was arrested in Georgia for an outstanding warrant following a traffic stop for a broken tail light.

    After being brought back to San Bernardino County, Kemet was booked into West Valley Detention Center in Rancho Cucamonga and bail was set at $425,000.

    In Feb. 2012, investigators from the District Attorney's Real Estate Fraud Prosecution Unit issued a felony arrest warrant for 48-year-old Eimbari Kemet who was suspected of taking part in an alleged “cash for keys” scam in Rancho Cucamonga. Also charged in the scam is Quddusa Lynette Anderson, 38, of Patton, who was sentenced last year to 252 days in County Jail and ordered to pay $10,000 restitution to the victims.

    Anderson and Smith are accused of conspiring to defraud mortgage giants, Freddie Mac and Bank of America, and taxpayers, by illegally occupying foreclosed homes and applying for relocation assistance known as "Cash for Keys.” To avoid a lengthy eviction process, mortgage lenders like Freddie Mac, Fannie Mae, and Bank of America offer legitimate tenants what is known as "Cash for Keys," to move out of the residence by a specific date and leave the property in turnkey condition.

Homeowner Dodges Tax Foreclosure Threat By Coughing Up $486 To Satisfy Unpaid $10 City Special Assessment

In Reno, Nevada, KRNV-TV Channel 4 reports:
  • Margarita Bryant teaches concert piano from her home on Lakeside Drive. But Margarita's life and livelihood hit a sour note when she found she was on the verge of losing her home.

    All over a bill from the city of Reno in January of this year for $10.17 that she admits she overlooked.

    "They just told me no, i'ts not a mistake. We're going to put your house into foreclosure," Bryant told us.

    That bill was part of a larger assessment for recent improvements on Lakeside Drive. Margarita says she was out of town when the original bill came to her house. And she says she mistook several reminders sent out by the city's collection agency as junk mail since the city's logo was nowhere to be seen on any of them.

    The next thing she knew the city had tacked on $545.23 in late charges and foreclosure fees for a total of $ 555.40. Margarita says she couldn't afford that. "I don't know how the financial department can do this to citizens," Bryant said.
  • So is the city cracking too hard on these unpaid bills ? We asked financial director Robert Chisel.

    Chisel admits it is disturbing to have a $10 assessment lead to foreclosure. He says they do try to work with homeowners but he says if some people don't pay it means others in the assessment district will wind up paying more to cover the costs. So the city can only budge so much. And after six months it's foreclosure.

    "It's absolutely non-sense," Bryant said, shaking her head in disgust.

    But the bottom line according to finance director Chisel: "Everyone has to pay their bills."

    After we interviewed Chisel, the city of Reno did agree to take off some of the late fees and Margarita wound up paying $486 to keep the city from selling her house.

Tuesday, July 23, 2013

Forging Signatures To Obtain Fraudulent Mortgage Secured By Unwitting Elderly Couple's Home Among Scams That Land Loan Officer 35-Month Sentence In Federal Slammer

In Milwaukee, Wisconsin, the Journal Sentinel reports:
  • A commercial loan officer was sentenced to 35 months in federal prison [] for creating and approving multiple fraudulent loans while working at financial institutions in Burlington and northern Illinois

    James Scalzo, 46, was also ordered by U.S. District Court Judge Lynn Adelman to serve three years of supervised release following his prison term. Restitution will be computed later.

    Scalzo pleaded guilty in January to bank fraud and money laundering for creating more than $1.4 million in phony loans while working at Fox River State Bank in Burlington and Consumer's Credit Union in Round Lake Beach, Ill.

    The bulk of the fraudulent loans — or nearly $1 million worth — were written while he was at Fox River State Bank, records show. The loans were written using the names of people — including some of Scalzo's relatives — who were not qualified to receive the funds or did not know Scalzo was using their names on loan documents.

    The scheme ran from April 2008 until October 2009. Money generated from the fraudulent loans went into Scalzo's accounts or was used to make payments in order to keep scheme afloat.

    Among Scalzo's victims was an elderly couple whose home he used as collateral for a fraudulent loan by forging the signatures of the owners. The home later went into foreclosure.
Source: James Scalzo sentenced to 35-month prison term for bank fraud (Former commercial loan officer created more than $1.4 million in phony loans).

Paperwork Screw-Up On Mortgage Refinance That Inadvertently Left Homeowner Without Fire Insurance Not Discovered Until Subsequent Blaze Guts Home

In Albert County, New Brunswick, CBC News reports:
  • The Royal Bank is putting a house foreclosure on hold after a Harvey man raised questions about why his house no longer had fire insurance, a fact he discovered after his home was gutted by a fire.

    Brad McCullough, a licenced carpenter in Harvey, said he’s always had fire insurance on his home.

    But when he and his wife refinanced their mortgage with the Royal Bank, they did it through the financial institution, without a lawyer.

    The couple didn’t realize they lacked fire insurance until it was too late and their home had been destroyed.

    Instead of having their home covered by insurance, they were initially told by the Royal Bank that they were being foreclosed on.

    The problem started when they refinanced their mortgage with the bank.

    "When we remortgaged then that should have been brought up, and I thought it must be added into my payment, type of thing. I don't want to step on anybody's toes. It's my fault, plain and simple,” McCullough said.

    David Peterson, a Fredericton lawyer, said banks require lawyers handling mortgages to have proof of fire insurance. But, he said, banks don't apply the same rules to themselves.

    “The bank told the McCulloughs, I'm sure, like they tell every other customer, 'You don't need a lawyer, we will look after your legal services.’ And with that goes the responsibility to do it correctly,” Peterson said.

    And the bank didn't do it correctly, they didn't make sure the property was insured, they didn't follow up for the insurance coverage, and they should eat it and put these people back in the position they would have been in if they'd had insurance.”

    It is unknown what will happen to the McCulloughs. The Royal Bank, however, has put the foreclosure on hold.

    Officials with the Royal Bank declined a request for an on-camera interview.
For more, see RBC questioned over Harvey man's missing fire insurance (Royal Bank puts Brad McCollough's foreclosure on hold pending investigation).

Wanna-Be Homeowner Claims She's Out Several Thou$and After Buying Foreclosed Home On Craigslist From Seller That Wasn't Real Owner

In Evansville, Indiana, Tristate reports:
  • Evansville Police are investigating a very bizarre scam. A woman is out thousands of dollars after buying a home on eBay.

    Letitia Melendrez claims she spent just under $2,000 to buy the North Third Avenue home on eBay. She then drove thousands of miles and moved in. "I thought that was a pretty good deal, wouldn't have to pay rent the rest of my life," she says. She thought she'd settle here, have family visit.

    "We bought it so that his son would have a home the rest of his life, and we were going to fix this place up and do something with it," Melendrez says. "Me and my son put about three to four thousand dollars into the house after we bought it."

    That good deal has turned into a bad and costly experience. Realtor Angela Bullock saw the home listed, but knew it had been foreclosed upon and is set to be auctioned off next month. "There were a lot of back assessments and back taxes that were owed," Bullock says. "It was a very substantial amount." Police say she drove by, saw people inside and called 911.

    "Police showed up to my house and said I didn't own it my home," Letitia says. "I showed them the paperwork I had."

    Melendrez's story checked out and she knows the sellers weren't the real owners. Now although she doesn't face any charges...She's out a home and thousands of dollars.

    This was a scam. I got scammed," she says.

    Bullock says the foreclosure crisis created plenty of opportunities for scammers. She adds if you're buying a home, make sure to know who you're buying it from and check for any unknown back taxes or fees owed.

Monday, July 22, 2013

Avoiding A Mortgage Lien In Bankruptcy & What It Means

  • A chapter 7 trustee sought to avoid an unrecorded first mortgage on the debtor’s property and to preserve the mortgage lien for the benefit of the bankruptcy estate. The debtor responded by claiming that even if the trustee was successful, he could not sell the property without first foreclosing the mortgage in accordance with state law. The bankruptcy court rejected the debtor’s claims and granted the trustee’s motion for summary judgment. The debtor appealed to the bankruptcy appellate panel.

    The debtor executed a mortgage on her home to secure a $200,000 loan. Unfortunately for the mortgagee, the mortgage was never recorded. The debtor later granted a second mortgage to secure a line of credit (which was recorded), and recorded a homestead declaration under state law.

    The debtor’s bankruptcy schedules showed the value of the home as $223,500, the second mortgage claim of ~$30,000 and the unperfected first mortgage claim of ~$186,000. She also claimed a homestead exemption of $500,000.

    Since the first mortgage was unrecorded, the trustee was able to exercise the strong arm powers under Section 544 of the Bankruptcyto avoid the mortgage. (See Bankruptcy “Strong Arm” Powers: Bye Bye Mortgage.) Under Section 551 of the Bankruptcy Code, a transfer that is avoided (in this case the grant of a lien pursuant to the mortgage) is “preserved for the benefit of the estate.” It was clear that the trustee could avoid the mortgage and that some sort of benefit would be preserved for the benefit of the bankruptcy estate.

    The question was exactly what benefit. [...]

Fraudulent Joinders To Keep Banksters From Removing Homeowner Lawsuits To Federal Court, Repeated Use Of Rejected "Show Me The Note" Theory Allegedly Among Tactics Used By Foreclosure Defense Attorney That Have Landed Him In Hot Water

In Minneapolis, Minnesota, the Star Tribune reports:
  • The Eighth Circuit Court of Appeals took the unusual step [] of threatening to impose its own sanctions on a Minneapolis foreclosure attorney for continuing to file appeals, using legal arguments that have been repeatedly rejected by the district court in Minnesota as well as the federal appeals court.

    Attorney William B. Butler already faces possible discipline from the federal district court in Minnesota and the Minnesota Lawyers Professional Responsibility Board, both of which are currently conducting investigations of him. Butler's problems were described in the Star Tribune last Thursday.

    It is the third time in five days that the appeals panel has upheld the dismissal of a Butler lawsuit.

    On Thursday and Friday it issued separate opinions, upholding dismissals of his suits by Minnesota District Court judges.(1)

    On Monday, a three-judge appeals court panel issued its latest ruling, upholding a decision by U.S. District Judge Patrick Schiltz, who dismissed a case filed by attorney Butler last August.(2) The appeals panel called Butler's continued rehashing of arguments "troubling," citing three similar Minnesota cases in which his arguments were rejected.

    "HIs deliberate attempt to ignore these cases suggests that he has the intention of deceiving or misleading the court into ruling in his favor," the panel said in Monday's decision. "At the very least, it suggests he lacks a nonfrivolous basis for appeal. Such conduct may provide a basis for this court to impose its own sanctions in the future."(3)

    The appeals court quoted liberally from Schiltz's harsh criticism of Butler for using the "show me the note argument" that the foreclosing entity no longer possesses the original foreclosure borrowing note, making the foreclosure invalid. In his August ruling, Schiltz imposed sanctions totalling $79,766. Butler has said he will not pay the sanctions by local federal judges, insisting his position is correct, the courts are wrong and he will eventually prevail. The sanctions now total $323,307, according to Star Tribune calculations.

    In his latest ruling the appeals court quoted Schiltz, describing Butler's strategy:

    "Butler takes a group of a dozen or so individuals who are facing foreclosure but otherwise have no connection to one another; he gins up a dozen or so claims against a dozen or so defendants grounded mostly on the show-me-the-note theory; and he fraudulently joins a single nondiverse defendant (typically a law firm that represented one of the lenders in a foreclosure proceedings) in an attempt to block removal to federal court.

    "The defendants generally remove the cases to federal court, and Butler then moves to remand. If the judge denies Butler's motion, he might 'remand' the case himself by voluntarily dismissing it and refiling in state court within a day or two, thereby starting the process all over again.(4)

    To hide his conduct, Butler will reorder the names of the plaintiffs or substitute a new plaintiff for one of the old plaintiffs, so that the refiled case will have a different caption.

    "When Butler's claims are finally challenged on the merits, he makes false representations and spins out contradictory and often absurd arguments in the hope that their sheer weight and number, multiplied by the number of parties and claims, will overwhelm his opponents and the court...."
Source: 8th Circuit Court of appeals threatens Minneapolis lawyer with sanctions.

(1) Johnson v. Deutsche Bank National Trust, No. 12-2605 (8th Cir. July 11, 2013),  Mustafa v. Bank of America, N.A., No. 12-3217 (8th Cir. July 12, 2013).

(2) Welk v. GMAC Mortgage, LLC, No. 12-3141 (8th Cir. July 15, 2013).

(3) From the court's ruling:
  • In his briefs to this court Butler similarly omits any discussion of the recent cases rejecting his "show me the note" theory and jurisdictional arguments, and he makes no attempt to distinguish or argue against them. He simply represents that Minnesota law requires a foreclosing mortgagee to possess the note and that the district court lacked jurisdiction to hear the case.

    This is troubling. Butler himself has argued several cases in which we rejected his "show me the note" theory under Minnesota law. E.g., Murphy, 699 F.3d at 1030; Butler v. Bank of Am., N.A., 690 F.3d 959, 959 (8th Cir. 2012); Stein v. Chase Home Fin., LLC, 662 F.3d 976, 977 (8th Cir. 2011).

    His deliberate attempt to ignore these cases suggests that he has the intention of deceiving or misleading the court into ruling in his favor. At the very least, it suggests that he lacks a nonfrivolous basis for appeal. Such conduct may provide a basis for this court to impose sanctions of its own in the future. See Fed. R. App. P. 38.
(4) See, generally, Erroneous Removal As A Tool For Silent Tort Reform: An Empirical Analysis Of Fee Awards And Fraudulent Joinder for more on the 'cat-and-mouse' games played by state court plaintiffs and defendants jockeying around to either move or block moves of state court cases into federal court.

Class Action Settlement Near In NJ Bid-Rigging Lawsuit Involving Municipal Tax Lien Auctions

In Hunterdon County, New Jersey, the Hunterdon County Democrat reports:
  • Several defendants in a class action suit regarding municipal tax lien certificates (TSCs) have reached agreements on settlement proposals.

    A dozen New Jersey homeowners are now parties in a suit claiming that they were victims of a conspiracy. The homeowners were either facing foreclosure or had been foreclosed upon.

    Many of the more than two dozen defendants in the federal suit are among those pleading guilty to federal criminal charges.

    One defendant, Crusader Servicing Corp., purchased a lien in Lebanon Township. In March 2012, the owner of that home was the first to file suit in Superior Court in Hunterdon County. The suit was transferred to federal court and then consolidated with other suits like it.

    So far, 17 defendants have reached six different settlement agreements. Attorneys for the property owners are asking the court to certify the proposed settlement class and to give preliminarily approval to five of the most recent settlement agreements.

    A hearing is scheduled on the matter for Aug. 5.

    Under the proposed settlements the tax lien holders will offer discounts of 10% to 15% for property owners to redeem the certificates. The lien holders also agreed to delay any foreclosure proceedings until at least 90 to 120 days following approval of the settlement.

    The defendants also made payments to a settlement fund.

    Due to the number of property owners involved, the attorneys are seeking a delay of having to notify all the potential class members until the settlement fund reaches at least $1 million, or for two years, whichever comes first.

    So far the settlement fund totals $955,000.

    Attorneys are still negotiating with the other defendants.

    The Department of Justice said that the conspiracy limited competition in public auctions for municipal tax liens so the liens could be purchased at higher interest rates, many at the maximum 18% interest rate.

Sunday, July 21, 2013

Oregon Jury Verdict Favors Homeowner/Couple Victimized In Another Bankster-Perpetrated Loan Modification Jerk Around That Ended In Foreclosure

In Washington County, Oregon, The Oregonian reports:
  • A Washington County jury on Thursday rebuked JPMorgan Chase's handling of a foreclosure case, ruling the nation's second largest bank likely had broken promises it made to borrowers Bela and Eva Lengyel, resulting in the seizure of their home.

    The case is believed to be the first wrongful foreclosure suit to go before a jury in Oregon since the beginning of the housing crash, though many cases have gone before judges in the state. It offers a glimpse into how juries may deal with fallout from the mortgage crisis and the way the nation's leading banks reacted.

    "If I were a transnational bank, I would be very concerned about facing juries in this state," said attorney Terry Scannell, who represented the couple.

    Bela Lengyel said he contacted the bank in November 2008 seeking to lower the monthly mortgage payments he and his wife, Eva, were making on the home where they also operate an adult foster care business. The bank told him it would help, but he had to first default on his payments, he said.

    By January 2009 he had done just that, setting him on the road to an August 2010 foreclosure even though he contends he had the money to pay even the original, higher payments. Shortly thereafter, the Lengyels sued.

    Attorneys for Chase, which serviced the loan owned by federally backed mortgage giant Freddie Mac, argued no such promise was made. They presented a form signed by Lengyel that said no modification agreements would be made verbally, only in writing. And the bank's records didn't show such a promise had been made.

    Still, 10 jurors found that the bank had agreed to modify the loan after the Lengyels went into default and that they qualified for such a modification. (One juror was undecided on each point, and one fell ill and missed the final day's testimony.)

    The jury awarded $10,850 in damages, and presiding Judge Don Letourneau will rule later on whether the Lengyels may remain in the home.

Judge Temporarily Blocks Bankster Foreclosure Amid Allegations Of 'Dual Tracking'/Loan Modification Jerk Around That May Violate California Homeowner Bill Of Rights

In Yuba County, California, the Appeal Democrat reports:
  • A Yuba County judge has temporarily blocked the foreclosure sale of an Olivehurst home after the property owner accused Wells Fargo of breaching a loan modification agreement.

    A hearing is set next week in Yuba County Superior Court on Elias Lopez's request for a preliminary injunction against the bank.

    Yuba County Superior Court Judge Benjamin Wirtschafter issued a temporary restraining order on July 3. The bank had scheduled a trustee sale on July 8.

    "We have worked with Mr. Lopez since 2010 to identify options that would allow him to stay in the home.Given that there is active litigation around (his) loan, we can't discuss the case in any more detail at this time," Wells Fargo spokeswoman Julie Campbell said in an email.

    In court papers, Lopez's lawyer, Janice Dudensing, said Lopez, who owns a home in the 1800 block of McGowan Parkway, was placed in a trial payment plan last year after he submitted a loan modification application. He had fallen behind on his mortgage payments.

    After making payments, Wells Fargo "refused to permanently modify the loan," Dudensing alleged.

    Lopez "was told to start the whole loan modification process over," Dudensing wrote. Lopez was confused because the bank simultaneously started foreclosure proceedings.

    Lopez alleged in his lawsuit that Wells Fargo violated the state's Homeowner Bill of Rights by offering to modify the loan while also starting foreclosure proceedings, what Dudensing called "dual tracking."

    Efforts by Lopez to contact bank officials about the loan were unsuccessful, according to the lawsuit.

Michigan AG Pinches Suspected Scam Operator On Charges Of False Pretenses, Larceny By Conversion For Allegedly Clipping Upfront Fees From Consumers In Exchange For Purported Real Estate Negotiation Services

From the Office of the Michigan Attorney General:
  • Michigan Attorney General Bill Schuette [] announced the arrest of Eric Lamarr Drake, 37, of Detroit, for allegedly operating a fraudulent mortgage banking business under false pretenses by promising mortgage services, retaining clients' money and never delivering refunds to those clients. The charges follow an investigation by the Attorney General's Corporate Oversight Division.
  • Drake allegedly owned and operated D & F Funding, using a bogus Novi post office box listing and advertising two fake Southfield offices, all located in Oakland County. He misrepresented himself to clients allegedly posing as a mortgage banker with Pathway Financial, LLC in Southfield at a time when Pathway Financial was no longer in business. Drake also allegedly promoted himself as a real estate negotiator, who allegedly collected upfront fees to broker mortgages, bargain down home prices, modify mortgages and pre-approve mortgage credit.

    He allegedly collected fees between $1,000 and $5,480 for his services in the Oakland and Wayne County realty markets. Drake disappeared before any of his clients received the promised end of their bargain and allegedly retained money from at least five southeastern Michigan victims. When pressured for refunds, Drake allegedly promised several of his victims recompense. Those refunds were never made.

    Schuette filed the following criminal charges against Eric Lamarr Drake on Thursday, July 18, 2013:

    Five Counts of False Pretenses - $1,000 or more but less than $20,000, a felony punishable by 5 years and/or $10,000, or 3 times the value of the money or property involved, whichever is greater; and,

    Five Counts of Larceny by Conversion - $1,000 or more but less than $20,000, a felony punishable by 5 years and/or $10,000, or 3 times the value of the property stolen, whichever is greater.