Saturday, September 12, 2015

Cops Pinch Suspect On Burglary, Theft, Computer Crime Charges For Allegedly Pocketing $1,800 From Family In Vacant Foreclosure Rental Scam Peddled On Craigslist

In Wheat Ridge, Colorado, KCNC-TV Channel 4 reports:
  • Francie Nelson was excited about moving into her new Wheat Ridge home.

    She found the house listed on Craigslist for $1,800 a month. She signed a lease, got the keys and moved in. “It was like, ‘Cha-ching’ when we found it,” said Nelson. “We’ve been off and on homeless for about three years.”

    Her teenage children, ages 13 and 16, just finished setting up their bedrooms when they found out the home was a scam. Nelson says police came to her door the day after she moved in, saying the house was in foreclosure. It wasn’t really for rent.

    Nelson says she had paid a woman first month’s rent and signed a bogus lease. “She was here. We met her here, signed a lease, all things that would happen in a normal scenario,” said Nelson.

    Wheat Ridge Police have arrested Michelle Copeland, 39, in connection with the Craigslist scam.

    The Police Department was contacted by neighbors who were concerned that a family had moved into the abandoned home off Harlan and 44th. The neighbors knew the house was in the process of foreclosure and had been vacant for an extended period of time.

    An investigation revealed that the family who was living in the house found it in a ad under the “For Rent” section. The victim had met with Copeland, who was using the false name of Lisa Sandoval, and negotiated lease terms for the home.

    “We said, ‘Thank you’ with tears in our eyes and said ‘Thank you’ and gave her all our money. She handed us keys like she was doing us a favor. I don’t know what kind of person does that,” said Nelson.

    Nelson paid cash for the first month’s rent and deposit. The police department determined that Copeland did not represent the homeowner and had no authority to rent the residence.

    The Wheat Ridge Police Department is working with several community organizations to assist the victim family with their needs.

    Copeland is in custody at the Jefferson County Jail on charges of burglary, theft and computer crime. Police believe there may be additional victims involved.

    Nelson and her children continue to live in the house. They plan to attend the home’s auction this October to see if they can buy the home from the bank or rent it from whoever does.

    Anyone with information related to this case is asked to contact the Wheat Ridge Police Department at 303.237-2220.

Scam Utilizes Fraudulent Foreclosure Notices In Attempt To Lure Unwitting Homeowners

In Brick Township, New Jersey, reports:
  • Authorities are warning residents to be on alert after a resident recently received a fraudulent foreclosure notice.

    The letter, sent from the Foreclosure Fraud Prevention in Fort Lee, warned the resident that his or her home was in danger of foreclosure, and that they should contact the company for further information.

    "If you ignore the demand, it can cause the process of losing your property to accelerate," the letter states. " ... You should contact us so that we can guide you on the correct actions to take when faced with foreclosure."

    The resident who received the letter quickly contacted the Provident Bank, who assured the resident they were not affiliated with the Foreclosure Fraud Prevention, the Ocean County Prosecutor's Office said in a news release

    "The bank's research found the telephone numbers shown do not appear to be registered to the sender of the notice and when placing a call to the numbers shown, the call goes directly to voicemail," the release said.

    The prosecutor's office asked that anyone in the Ocean County area who has received a similar letter to contact authorities at 732-929-2027 or Provident Bank officials at 732-590-9200.

    "Protect yourself and never accept anything as true without doing your homework," the release said.

Friday, September 11, 2015

New NYC Law Prohibits Extended Buy-Out Negotiations With Tenants In Rent-Regulated Apartments; Landlords Limited To One Offer Every Six Months Or Face Harassment Accusations

In New York City, The Associated Press reports (via The Real Deal (NYC)):
  • New York City is reining in landlords seeking to buy tenants out of rent-regulated apartments, a practice that has come under scrutiny in a roaring real-estate market.

    Saying that residents of the city's 1.3 million rent-restricted apartments are being pressured to move out, Mayor Bill de Blasio signed legislation [] barring repeated buyout offers within six months if tenants don't want them. Other provisions would require reminders that tenants can refuse or consult lawyers.

    “We won’t let tenants be intimidated and forced out of their homes. These new laws protect tenants from harassment and aggressive buyout schemes, and simultaneously help the City keep neighborhoods affordable," said Mr. de Blasio in a statement. "We have a strong partnership with the City Council standing up for tenants, and we thank the sponsors of these laws for helping combat these unscrupulous practices.”

    He and other proponents say the measures will help keep residents from being browbeaten out of their homes by landlords and professional "tenant relocators" eager to charge more. But some real estate industry experts say the restrictions unduly curb communications with tenants.

    Under state laws, vacant rent-stabilized apartments often can be renovated, deregulated and re-rented at triple the price or more—$5,200 a month instead of $1,700 for a Manhattan two-bedroom, for example. Citywide, about 266,000 apartments have been deregulated since 1994.

    Tenant harassment complaints in city Housing Court have nearly doubled since 2011, officials have said. At a City Council hearing this spring, tenants and their advocates described residents getting knocks on their doors, fielding multiple calls per week and being accosted on the street with unwanted buyout offers. Some said that they'd been threatened with lawsuits or jail if they refused and that relocation specialists had approached tenants' children.

    "Rent-regulated tenants routinely face harassment," and it's especially troubling when the city is striving to preserve affordable housing, said Brandon Kielbasa of the Cooper Square Committee, a tenant advocacy group. He sees the new measures as needed protection.

    But real estate interests have noted that buyout offers—often totaling five or more figures—can be welcome.

    Some tenants solicit them. Others who initially decline reconsider as their circumstances change or the offer increases, says landlords' lawyer Sherwin Belkin. He says he won't force the issue if a tenant says no, but he inquires again in a few months or weeks if he believes they may entertain different terms, or he might send a note inviting them to call if they change their minds.

    The six-month blackout on reapproaching uninterested tenants "prohibits what can be purely benign, non-threatening, non-intimidating—what should be protected free speech," Mr. Belkin said, noting that existing laws already prohibit tenant harassment. A 2014 law doubled the maximum penalty to $10,000.

    Meanwhile, a new city and state anti-tenant-harassment task force logged its first criminal case in June, when a Brooklyn landlord was accused of destroying walls and illegally turning off heat to try to make tenants miserable enough to move.

    The new measures are set to take effect three months after being signed.
Source: New laws prevent landlords from pressuring tenants out (Under a new rule, tenants will have protection against landlords who want them to vacate their rent-regulated units with buy outs).

California Appeals Court: Owner's Use Of Bad Faith "Move-In" Eviction Notice To Initiate Buy-Out Negotiations To Strong-Arm Long-Time (28 Years) Tenant To 'Volunatarily' Vacate Premises Nothing More Than "Landlord's Transparent Attempt To Circumvent" Local Rent Control Regulations

From an Opinion Summary from Justia US Law:
  • Mak owns a Berkeley[, California] rental property with four apartments. In 2012 Mak served on Burns, a tenant for 28 years, a 60-day eviction notice, asserting that Mak intended to occupy the apartment.

    Two months later, Mak and Burns entered a written agreement under which Burns agreed to vacate the apartment, stating that Burns was not doing so pursuant to the 60-day notice, and that such notice “shall upon occupant vacating, be conclusively deemed withdrawn.”

    Burns vacated the apartment and months later the Maks rented the unit to new tenants (Ziems), at more than double the rent that Burns had paid.

    In response to Ziems’s application to the Rent Stabilization Board to lower the permissible rent to that paid by Burns, Mak contended that Burns had voluntarily vacated, so that under the Costa-Hawkins Rental Housing Act, Civil Code 1954.50, the Board was prohibited from limiting the rent at the commencement of the new tenancy.

    The Board(1) and the trial and appeals courts rejected the “landlord’s transparent attempt to circumvent” rent control. The Act creates a rebuttable presumption that a tenant who moves out within one year of service of an owner move-in eviction notice has moved out pursuant to that notice. Mak failed to present evidence overcoming the presumption.
Source: Opinion Summary - Mak v. City of Berkeley Rent Stabilization Bd.

For the court ruling, see Mak v. City of Berkeley Rent Stabilization Board, No. A143671 (Cal. App. 1st Dist. Div. 3 September 2, 2015) (Certified for Publication).

Representing the new tenants (ie. the Ziems) who were illegally gouged by the scheming, double-talking landlord for more than double the permissible rent was the East Bay Community Law Center, the community-based component of the Clinical Program of the University of California - Berkeley's Boalt Hall School of Law, where, under the supervision of its clinical instructors, law students provide direct legal services to low-income clients and community groups in Alameda County, California.

(1) From the California appeals court ruling:
  • The Rent Board decision recites substantial evidence that Jason Mak never intended to occupy the premises and that the sequence of events preceding Burns' departure "is squarely within that described in the legislative history of Regulation 1016; specifically, an owner notifies a tenant of their intent to end the tenancy for the owner or a relative to move in, and a tenant who initially refuses to move ends up negotiating a move-out agreement with the owner if an eviction proceeding is begun.

    Then, the owner rents the vacated unit at market in the belief that the tenant `voluntarily' vacated the unit." Here, the decision continues, "It is true that Ms. Burns willingly agreed to move out for a certain sum of money. What hasn't been shown, however, is whether there would have been an agreement at all had the [Maks] not set things in motion by informing her that owner Jason Mak intended to reside in her unit. As to that question, no testimony or other evidence was presented. In fact, the evidence presented suggests otherwise."

    As both the Rent Board and the superior court recognized, Regulation 1016 is a reasonable means of discouraging a landlord from evicting a tenant based on the false representation that the landlord or a family member intends to occupy the premises, and then re-renting the premises at a higher rental rate than could have been charged to the former tenant.

    The record amply demonstrates that this is what occurred in the present case. When Burns agreed to vacate the premises and to enter the agreement undoubtedly prepared by Maks' attorney, she had no reason to believe that the Maks had misstated their intentions and that her eviction was not authorized by the Berkeley ordinance. Nor did she have any reason not to sign the agreement acknowledging that the notice of termination would be withdrawn if she vacated and accept the substantial cash payment offered her by the Maks. Burns had no reason to doubt that if she did not sign the agreement she would still have been required to vacate the premises, without receiving the cash consideration; indeed, the agreement expressly provides that the termination notice would be withdrawn only if she did vacate the premises.

    Under the circumstances, the termination notice inevitably was a significant factor causing Burns to agree to the termination of her tenancy. The finding that the tenancy was terminated pursuant to the termination notice can hardly be questioned, notwithstanding the attempt to mischaracterize the situation in the agreement that Burns agreed to sign. Maintaining the rent level of the former tenant is a rational and proportional deterrent to the use of such an artifice in the future.


    The judgment is affirmed. The Rent Board and the Ziems shall recover their costs on appeal.

Thursday, September 10, 2015

Real Estate Operator Charged With Securing Execution Of Document By Deception For Allegedly Tricking Homeowner In Foreclosure Into Signing Over Home Title Under Guise Of Loan Promise

In Laredo, Texas, the Laredo Morning Times reports:
  • A man has been arrested for deceiving a couple into signing over their property to him, according to Laredo police.

    The suspect, 50-year-old Raj Kumar Shani, was served with a warrant at about 5:30 p.m. Monday in the 2600 block of San Bernardo Avenue. Shani was charged with secure execution of a document by deception, a third-degree felony.

    On July 22, a couple went to police headquarters to report that a man had tricked them into signing a document that affected the ownership of their property, LPD said.

    Reports state a man had arrived at the couple’s home in the 700 block of West Amiens Place in the Mines Road area. The man, later identified as Shani, told them he could help them with their foreclosure by loaning them money, states the criminal complaint.

    Shani was allegedly persistent, and the couple eventually agreed to the loan, police said.

    Shani allegedly told the couple they needed to sign some papers but would not let them see what they were signing.

    “The investigations findings indicate that … Shani deceived (the couple) by causing them to sign a document to grant his company their residential property …” states the complaint.

New Texas Law Aims To Minimize Contract For Deed Ripoffs; Provides That Recording w/ County Records Office Effectively Converts Contract Into Deed Of Trust That Requires Formal Foreclosure Process When In Default

In Weslaco, Texas, The Monitor reports:
  • Representatives of several nonprofit organizations held a news conference this week to announce legislative updates to the deed contract law in Texas.

    On Wednesday, members of the RGV Equal Voice Network’s housing working group and its network partners, Proyecto Azteca(1) and Texas RioGrande Legal Aid,(2) met at Affordable Homes of South Texas in Weslaco announced that buyers will now have legal ownership of their property should they file the contract with their county’s property records.

    As it worked before, the seller retained legal title to the property until the balance was paid.

    Citing additional protections for rural residents in Texas who purchase their land via contract for deed, it was further stressed at the press conference that because there are many families in the Valley who would not qualify for a conventional property loan, “they find themselves with no other option than to enter into a risky rent-to-own agreement.”

    The changes went into effect on Tuesday, Sept. 1, and also allows for buyers to apply for tax discounts. Also, the date in which a contract is signed cannot prevent it from acting as a warranty deed so long as it is filed with the county.

    This, according to TRLA representatives, may also ease refinancing opportunities and also requires the seller to undergo a formal foreclosure process if buyers fall behind on their contracts.

    “Under a contract for deed, a buyer makes regular payments to the seller (property owner) until the amount owed is paid in full or the buyer finds another means to pay off the balance,” read a press release issued by Amber Arriaga-Salinas, public relations director for Proyecto Azteca and press officer for the Equal Voice Network.

    “It is a huge step forward; if you have a contract for deed you can just file it at the courthouse and it automatically becomes a deed of trust,” said Proyecto Azteca Executive Director Ann Williams Cass, who also serves as chair of the Equal Voice housing working group.

    Residents who have a contract for deed can call the TRLA office at (956) 393-6220 to learn more about their rights under the new law.
Source: Nonprofits stress state contract for deed law’s new protections.

(1) Proyecto Azteca is a nationally recognized, community-directed, self-help housing organization that has financed and trained more than 600 families in the construction and first time ownership of their own homes in over 150 Hidalgo County colonias (isolated rural unincorporated communities characterized by third world living conditions).

(2) Texas RioGrande Legal Aid (TRLA) is a non-profit organization that provides free legal services to low-income residents in sixty-eight counties of Southwest Texas, and represents migrant and seasonal farm workers throughout the state of Texas and six southern states: Kentucky, Tennessee, Alabama, Mississippi, Louisiana and Arkansas.

Wednesday, September 09, 2015

NJ Feds Pinch Dad, Son For Allegedly Running Two Fraudulent Short Sales, Using Straw Buyers, Controlled Business Entities To Fund, Repurchase Each Property

From the Office of the U.S. Attorney (Newark, New Jersey):
  • A father and son were arrested [...] for engaging in a scheme that used straw buyers and short sales on two Bergen County properties to defraud mortgage lenders out of hundreds of thousands of dollars, U.S. Attorney Paul J. Fishman announced.

    George Bussanich Sr., 56, of Park Ridge, New Jersey, and George Bussanich Jr., 35, of Upper Saddle River, New Jersey, are charged by indictment with one count of conspiracy to commit bank fraud and two counts of bank fraud. [...]

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

    Between 2009 and 2012, Bussanich Sr. and Bussanich Jr. allegedly conspired to defraud mortgage lenders through the sham short sales of two properties located on Jefferson Avenue in Emerson, New Jersey and Lillian Street in Park Ridge.

    Bussanich Sr. controlled various purported medical clinics and surgical centers in New Jersey. He recruited his business partner and an employee from a sleep clinic in Cliffside Park, New Jersey, to pose as legitimate, unrelated buyers of the properties. In order to conceal his involvement, Bussanich Sr. used a business entity he controlled to fund each short sale transaction and the subsequent repurchase of those properties. Bussanich Jr., the record owner of both properties, negotiated the short sales with the lenders using materially false information that misrepresented the circumstances of the short sales, the relationships of the parties and the source of funding for the transactions.

    Approximately two years after the fraudulent short sales, Bussanich Sr., bought the properties back from the straw purchasers using money that he owed the aforementioned business partner from a prior business venture.

Antitrust Feds Reel In Another Real Estate Operator For Role In Foreclosure Sale Bid-Rigging Racket; Count At 11 Convictions In Ongoing Probe Into Corruption At Public Auctions In Alabama

From the U.S. Department of Justice (Washington, D.C.):
  • A southern Alabama business man has pleaded guilty for his role in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in southern Alabama.

    Michael P. Barbour admitted to conspiring to fraudulently acquire title to foreclosed properties at artificially low prices by agreeing with others not to bid against each other at public foreclosure auctions in southern Alabama.

    “Including this defendant, 11 individuals have been convicted for conspiring to corrupt the public foreclosure auction process in Alabama,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division. “Together with our partners at the FBI, we will continue to obtain justice for the homeowners and banks victimized by these crimes.”


    According to documents filed with the court, from 2003 until 2010, Barbour conspired with other potential bidders for foreclosed properties to designate one person to bid at certain public foreclosure auctions. Once the designated bidder won the property at the public auction, the conspirators held a secret, second auction open only to members of the conspiracy where they paid each other off. As a result of these crimes, homeowners and banks received less than competitive prices for the properties.

    A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for a Sherman Act charge may be increased to twice the gain derived from the crime or twice the loss suffered by the victims if either amount is greater than the statutory maximum fine. A count of conspiracy to commit mail fraud carries a maximum penalty of 20 years in prison and a fine in an amount equal to the greatest of $250,000, twice the gross gain the conspirators derived from the crime or twice the gross loss caused to the victims of the crime by the conspirators.

    The investigation into fraud and bid rigging in the Alabama real estate foreclosure industry is being conducted by the Washington Criminal II Section of the Antitrust Division and the FBI’s Mobile Field Office, with the assistance of the U.S. Attorney’s Office of the Southern District of Alabama. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Washington Criminal II Section of the Antitrust Division at 202-598-4000, call the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258 or visit

Tuesday, September 08, 2015

Lien Stripping Of Wholly Underwater Junior Liens From Homeowners' Residences In So-Called "Chapter 20" Bankruptcy Still Alive & Well

A recent client alert from the law firm Weil, Gotshal & Manges LLP had a discussion of a recent bankruptcy case (In re Boukatch) which dealt with a homeowner-couple's use of the so-called "Chapter 20" bankruptcy maneuver to successfully lien strip a wholly underwater 2nd mortgage from their residence.
  • One year after obtaining a discharge in a Chapter 7 case, the individual debtors in Boukatch filed a Chapter 13 case. In each case, the debtors identified two liens against their residence: a first lien held by Wells Fargo and a second lien held by MidFirst Bank. In the subsequent Chapter 13 bankruptcy, the debtors identified MidFirst’s second and wholly underwater lien and asserted that MidFirst held an “empty lien” because the debtors’ personal liability had been discharged in their previous Chapter 7 case. Accordingly, the debtors filed a motion seeking to avoid MidFirst’s lien. Although no one (including MidFirst) objected to the motion, the United States Bankruptcy Court for the District of Arizona denied the lien-stripping motion, on the grounds that a “Chapter 20” debtor who is not receiving a discharge is not permitted to strip off liens.

    On the debtors’ appeal from that order, the Bankruptcy Appellate Panel for the Ninth Circuit held that a “Chapter 20” debtor can strip off a wholly underwater junior lien even though the debtor is not receiving a discharge. The Boukatch panel discussed three different approaches used by courts considering this issue:

    1) Stripping off a wholly underwater lien in a Chapter 20 case is impermissible because lien stripping is tantamount to a de facto discharge, which is not permitted in a Chapter 20 case.

    (2) Chapter 20 lien stripping is permissible in theory, but the parties’ prepetition rights are reinstated by operation of law after the Chapter 13 plan has been consummated, unless the claim is discharged or paid in full. Therefore, the lien avoidance can never be permanent. These courts have reasoned that Chapter 13 cases end either through conversion, dismissal or discharge, and if a Chapter 13 case is dismissed or converted prior to the successful completion of all plan payments, any avoided liens are reinstated.

    (3) Chapter 20 lien stripping is permissible because nothing in the Bankruptcy Code prevents it. This group of courts has held that the specific Bankruptcy Code mechanism that voids the lien is plan completion, rather than the discharge of the debtor, and that a successful Chapter 20 case would not be dismissed or converted but rather would end in an administrative closing. Accordingly, these courts have found that because the Bankruptcy Code sections that reverse any lien avoidance are only implicated if a Chapter 13 case is converted or dismissed, those provisions do not apply so long as debtors make all the payments under their Chapter 13 plans. In other words, the lien stripping is not dependent upon the debtor receiving a discharge but rather is dependent on the debtor successfully making all of the plan payments.

    The Boukatch panel joined “the growing consensus of courts” that follow the third approach. The panel held that nothing in the Bankruptcy Code prevented the debtors from stripping off a wholly underwater lien against their principal residence, notwithstanding that the debtors were not eligible for a discharge. The panel made a distinction between discharge – which would have enjoined the creditor from enforcing the debt against the debtor personally but would not have released the lien from the debtor’s property – from avoiding the lien. The panel concluded that the Bankruptcy Code does not prevent individual debtors from stripping off a wholly underwater lien in their Chapter 13 plan. The only way the lien would not be avoided would be if the debtors failed to complete all of the payments required under their Chapter 13 plan and the case was subsequently converted or dismissed. Accordingly, the panel reversed the bankruptcy court’s decision to deny the lien-stripping motion.

Foreclosed NC Property Owners Successfully Use Their Own Joint Affidavit To Stiff-Arm Bankster's Summary Judgment Motion In Post-Foreclosure Deficiency Judgment Action

From a client alert from the Hutchens Law Firm (North Carolina):
  • Following a foreclosure sale the general rule is that the amount of the debt is reduced by the net proceeds realized from the sale, setting the deficiency amount the foreclosing creditor may seek to recover. N.C.G.S. § 45-21.31(a)(4). However, when the foreclosing creditor is the successful high bidder at the foreclosure sale this general rule is abrogated by N.C.G.S. §45-21.36, which provides the debtor with two alternative defenses. Branch Banking & Trust Co. v. Smith, 769 S.E.2d 638, 640 (N.C. Ct. App., 2015). Either the deficiency is eliminated if it is shown “that the collateral was fairly worth the amount of the entire debt”, or the deficiency may be reduced “by way of offset” where it is shown the creditor’s high bid was “substantially less” than the actual value of the collateral. Id.

    In reversing summary judgment for the creditor, the North Carolina Court of Appeals in United Community Bank v. Wolfe, 2015 WL 4081940 (N.C. Ct. App., July 7, 2015) observed that in opposing the motion, the debtors “relied on their own joint affidavit, stating that it was “made on [Defendants’] personal knowledge” and that Defendants “verily believe [ ] that the [property] was at the time of the [foreclosure] sale fairly worth the amount of the debt it secured.” Wolfe, at 2. The value of the collateral, in a deficiency action, is generally a material fact. Id, at 2, citing Raleigh Fed. Sav. Bank v. Godwin, 99 N.C.App. 761, 763, 394 S.E.2d 294, 296 (1990).

    Since the “Supreme Court has repeatedly held that the owner’s opinion of value is competent to prove the property’s value”, Wolfe, citing Dep’t of Transp. v. M.M. Fowler, Inc., 361 N.C. 1, 6, 637 S.E.2d 885, 890 (2006), and the owner is presumed competent to give his opinion of the value of his property, id, at 2, citing North Carolina State Highway Comm’n v. Helderman, 285 N.C. 645, 652, 207 S.E.2d 720, 725 (1974), the affidavit raises a genuine issue of material fact so as to prevent the entry of summary judgment.

    The lesson here is that a foreclosing creditor contemplating a post-foreclosure deficiency action against a solvent borrower may want to make additional efforts to encourage a third-party sale, for example by broadening the advertising of the sale, or – where permissible - adjusting its sale bid. This may avoid the uncertainty and expense of a trial in the deficiency action.

Monday, September 07, 2015

NYC Fair Housing Group Squeezes Bankster Out Of $485K, Injunctive Relief To Settle Allegations That It Set Tougher Loan Underwriting Standards For Minorities Than It Did For Whites

In New York City, the Fair Housing Justice Center recently announced:
  • [F]ederal District Judge Katherine D. Forrest signed a settlement agreement which resolves a lawsuit filed in February by the Fair Housing Justice Center (FHJC) and nine African American, Hispanic, South Asian and white testers against the M&T Bank Corporation.

    The lawsuit was based on the results of a two year testing investigation conducted by the FHJC. The complaint alleged that M&T Bank had adopted neighborhood racial criteria for one of its residential loan products and that loan officers had discriminated against FHJC testers based on race and national origin.

    Testers were trained to pose as prospective home buyers and request that loan officers help them figure out how much they could afford to purchase before beginning their search and prior to working with a real estate professional. In all cases, minority testers were assigned more income, greater assets, fewer debts, and better credit scores than their white counterparts.

    As part of the injunctive relief contained in the settlement, the Bank agreed not to use neighborhood racial criteria in any of its residential mortgage programs. M&T will adopt a bank-wide policy prohibiting steering, post its revised fair lending policy on its website, and retain a consultant to revise its fair lending training for loan officers and other Bank employees.

    Within the twelve-county service area covered by the FHJC, the Bank will revise its website to provide additional information about home loan products and add contact information for M&T loan officers. M&T loan officers in FHJC’s service area will also provide written estimates, upon request, to consumers concerning loan amounts, loan products, home purchase prices, interest rates, and down payment requirements. For the three years that the settlement is in effect, the Bank will provide Home Mortgage Disclosure Act (HMDA) data by loan product to the FHJC and allow the FHJC, upon request, to review documentation regarding the Bank’s fair lending training program.

    In addition to the injunctive relief, the bank will pay $485,000 to the plaintiffs for damages and attorney’s fees.
Source: M&T Bank and FHJC Resolve Fair Housing Case (Bank Pays $485,000 and Changes Lending Practices).

Outfit Accused Of Running Loan Modification Ripoffs Avoids Criminal Hot Water; Agrees To Give Back Whatever Money It Has Left From The $885K It Pocketed, Promising To Never Peddle Debt Relief Services Again

The Federal Trade Commission recently announced:
  • A mortgage relief services company and its owner, have agreed to settle allegations that they illegally charged homeowners an up-front fee for help they promised but never provided, and they will be banned from selling debt relief services under a federal court order.

    The settlement resolves allegations that Wealth Educators and Veronica Sesma falsely promised they could lower consumers’ mortgage payment or interest rate, or obtain loan modification or restructuring, and illegally collected fees before homeowners got a written offer from their lender or servicer that they deemed acceptable. A court had ordered a halt to the alleged violations and frozen the corporate defendant’s assets pending litigation.

    The stipulated court order also prohibits the defendants from making misrepresentations about any products or services, and financial products and services in particular, and from selling or otherwise benefitting from customers’ personal information.

    The order imposes a $885,677 judgment that represents the total amount of fees taken by the scheme. It will be partially suspended upon surrender of funds in the frozen corporate bank accounts. The full judgment will become due immediately if the defendants are found to have misrepresented their financial condition.

Sunday, September 06, 2015

Looking For A Nursing Home? Watch Out For Pre-Dispute Arbitration Clauses Buried In Long, Complex Admission Agreements Authored By Lawyers

From a story in
  • When a family goes through the process of choosing a nursing home, assisted living or rehabilitation center, they develop a sense of trust and an expectation that the facility will provide good care to their loved ones. Admitting a family member to a long-term care facility is a decision typically made with little time to prepare. It is also a decision that involves strong, difficult and, at times, conflicting emotions. Because family members of nursing home residents may not be able to be present at all times, they may be afraid to speak-up or disagree for fear of "rocking the boat."

    Unfortunately, some companies take advantage of this trust and reluctance to disagree. Whenever someone moves into a health care institution, they or their family members are normally required to sign an admission agreement. It is a long and complex document written by lawyers that is usually filled with legal jargon that a layperson may find difficult to understand. When giving the document to family members, many admissions directors quickly flip to the signature blocks and just say, "sign or initial here," which families almost always do without actually reading documents' contents, let alone understanding it.

    One of these signature blocks typically involves pre-dispute arbitration. By signing, the resident and their family completely give up their rights to a jury trial if something goes wrong, even in the event of the worst abuses, such as rape or murder. Instead of going to court, family members would go to secret arbitration.

    Long-term care companies prefer arbitration because the proceedings and the facts of the incidents themselves remain confidential. Additionally, studies have clearly shown that arbitration awards tend to be much lower than jury trial awards, and there are no court systems to monitor the arbitrators' compliance with actual law. Because of this, many arbitrators are repeatedly hired by the health care companies, creating a perception of bias.

    Despite the fact that arbitration is rarely beneficial for the families of the victims in these circumstances, the documents and materials given to them upon arrival to the facility are designed to persuade the families into thinking otherwise, focusing on how arbitration saves time and money. This is generally not true, and in almost every case, it only saves time and money for the facility or long-term care company.

    In these resident contracts, the arbitration documents must be signed "pre-dispute," or before someone is hurt or killed and no lawyers are available to help explain the document's contents or the arbitration process to the families. This begs the question: "If arbitration is such a great deal for everyone, why not just agree to it after an incident occurs?"

    Unfortunately, the reason why these documents must be signed pre-dispute is that no one would logically agree to their terms once they understand its contents. Families are unknowingly being coerced into signing these documents before being able to consult with counsel to help them advocate for their rights.

    In the event your family is faced with making this difficult decision, know that you are not required to give your rights away without getting anything in return. Before you sign, learn as much as you can about your options for protecting your rights and the rights of your family members living in long-term care facilities. At the very least, be sure you consult with legal counsel.
For the story, see Read the fine print: Pre-dispute arbitration language in long-term care contracts strips families of their rights.

In a related story, see An end to mandatory arbitration agreements in nursing homes? (Nursing home and patient advocates alike say a new proposed rule from the CMS forbidding such facilities from requiring residents to sign binding arbitration agreements is long overdue. But some say parts of the proposed rule might create legal gray areas for patients and nursing home facilities).

Maryland Attorney Faces Non-Criminal Accusations Of Fleecing Homeowners In Foreclosure By Peddling Crappy Loan Modification Services

From the Office of the Maryland Attorney General:
  • Attorney General Brian E. Frosh announced [] that the Consumer Protection Division has filed charges against the Towson-based Law Office of Daniel M. Radebaugh, LLC and its founder Daniel M. Radebaugh, for allegedly charging at least 400 consumers illegal advance fees and not providing promised refunds after failing to negotiate successful loan modifications.

    The administrative charges [ie. non-criminal charges] allege violations of the Maryland Credit Services Businesses Act and the Maryland Consumer Protection Act between 2010 and 2013. According to the Division, Mr. Radebaugh made false and misleading representations to consumers. The firm claimed it could obtain loan modifications, required consumers to pay prohibited up-front fees of up to $2,495 when nonprofit organizations offer the same services for free, and guaranteed refunds if they were not successful in securing loan modifications.

    In addition to requiring that restitution be paid to all consumers harmed by these practices, the charges also seek to impose a civil penalty of up to $1,000 on Mr. Radebaugh and his firm for each of the alleged violations of the Consumer Protection Act.

    A hearing is scheduled for October 1 at the Office of Administrative Hearings. Consumers with complaints against Mr. Radebaugh or his law office should call the Consumer Protection Division at 410-576-6569 or write to 200 St. Paul Place, 16th Floor, Baltimore, MD 21202.
Source: Attorney General Frosh Sues Provider of Loan Modification Services (Towson firm allegedly took thousands in advance payments, but didn't deliver promised services or refunds to consumers).

Indiana AG Begins Distribution Of $67.2K In Restitution Payments To 29 Hoosier-Homeowners Victimized By Scammers Running Loan Modification Ripoffs

In Fort Wayne, Indiana, The Journal Gazette reports:
  • Foreclosure fraud victims have started receiving payments from Indiana's Consumer Protection Assistance Fund, the Indiana attorney general's office said today.

    The 29 victims will each receive more than $67,200 in total payments, with each one receiving an equal amount of their loss up to $3,000, it said. Administration will be by the attorney general's office.

    The victims are from Allen, Adams, Hamilton, Marion, Fountain, St. Joseph, Henry, Grant, Lake and Dearborn counties.

    The victims were targeted by foreclosure-rescue fraud, in which scammers charge customers who are already late on their mortgage payments, or are in foreclosure, a large upfront fee in exchange for help in reducing monthly mortgage payments. The victims pay the fee, but don't get the services or a refund.

    The money used in the fund comes from companies sued by the attorney general alleging they violated consumer protection laws.

    Homeowners who are facing foreclosure should contact the Indiana Foreclosure Prevention Network at 1-877-GET-HOPE for free foreclosure prevention counseling, the statement said. Homeowners may qualify for help from Indiana's Hardest Hit Fund. This state program offers foreclosure assistance at no charge.

    If you think you may be victim of foreclosure-relief fraud, file a complaint with the attorney general’s office at or by calling 800-382-5516.