Saturday, October 03, 2015

One Homeowner's Tragic Odyssey After Unwittingly Buying Newly-Constructed Home Built With Chinese Drywall

In Norfolk, Virginia, The Virginian-Pilot reports on the story of a local resident who suffered the great misfortune of buying a new home that was doomed by the toxic building material known as Chinese drywall. An excerpt:
  • [Michelle] Germano's father, an Italian immigrant, built an apartment on the back of a service station he owned on East Ocean View Avenue between 18th and 19th Bay streets. She lived there with her family after she was born in 1950, but bars and strip clubs eventually moved in and changed the character of the neighborhood.

    "My dad loved Ocean View, and he would say before he died 34 years ago, 'Ocean View is going to come back,' " Germano said.

    Germano served in the U.S. Army Nurse Corps and then held executive positions in health care and recruiting industries in New York, Washington and Connecticut.

    In the late 1990s, she went through a second divorce and lost her job in 2001. Her robust income dropped by two-thirds, and she used up most of her savings.

    After saving enough for a down payment, she decided in June 2006 to act on her younger brother's encouragement and a "spiritual instinct" to return to Ocean View.

    "I picked Harbor Walk because it was a community," Germano said. "I felt it was a nice place to settle, walk my dog and feel a sense of community. I felt I had come back home."

    Chinese drywall ruined lives across the country, but it took years before anyone realized it was the root of seemingly unrelated problems.

    Germano's air-conditioning system failed about a year after she moved into her condo. Months later, a second AC unit failed, as did her television, radio, computer, telephones and hair dryer. Her refrigerator broke six times, and it was eventually declared a lemon by Sears, she said.

    In May 2008, she began to have health problems.

    Germano worked full time from home for Grayling Associates, a Bloomfield, Conn.-based company that recruits executives in the financial services industry. She's currently a vice president.

    She said she spent some days in bed because her body felt paralyzed by pain. She also had severe gynecological, breathing and eye problems.

    Germano's medical records, which she released to The Virginian-Pilot, document extensive trips to specialists over the years, numerous tests and attempts to identify what was causing her pain.

    On January 29, 2009, Germano saw a news report about Chinese drywall, and the pieces started to fall into place. Experts had begun to realize the walls were releasing hydrogen sulfide and other sulfur compounds, especially when humidity rose.

    Hydrogen sulfide, known as "sewer gas," is colorless, flammable, poisonous and pungent. It smells like rotten eggs or burned matches, but after exposure over time, it can become difficult to detect the odor.

    The highly corrosive gas is produced by the breakdown of organic materials, and it pools in low-lying areas because it's heavier than air. It can turn copper wires black and render them useless - even if they're protected by plastic coating. It fries essentially anything that runs on electricity.

    Homeowners noticed that jewelry, dishes, utensils, faucets and light fixtures were turning black and couldn't be polished. Some were pitted, as if something were eating away at them.

    Germano said she lost nearly $250,000 in furnishings and personal belongings.

    Hydrogen sulfide is quickly absorbed by the lungs. Extremely high concentrations can kill a person instantly.

    Studies haven't been done on the health effects of prolonged exposure to lower concentrations. Families in homes built with Chinese drywall have complained about serious health problems from kidney cancer to chronic bladder infections.

    Several families interviewed by The Pilot lost pets while living in the toxic homes, but studies haven't explored the effect of hydrogen sulfide on animals.

    Germano's dog, Spirit, grew weak and had a hard time breathing in the house, she said. She started drinking muddy water outside rather than the fresh water Germano provided inside.

    After several visits to the vet, Spirit was diagnosed with kidney disease but improved after moving out of the condo.

    The U.S. Consumer Product Safety Commission conducted a study of Chinese drywall but didn't believe it had enough evidence for a recall. Another study by the Centers for Disease Control and Prevention found that the drywall could cause such problems as headaches, nosebleeds and breathing difficulty, but the CDC didn't research more serious health problems.

    Most physicians won't link Chinese drywall directly to the most serious health problems, either. Still, Germano and many other families who breathed the gases for years said their symptoms improved or went away after moving out.

    When it became clear in early 2009 that Harbor Walk's developer was not going to repair her condo, Germano moved into a rental and filed a lawsuit through Norfolk attorney Richard Serpe.

    Serpe eventually became the lead attorney in Hampton Roads handling Chinese drywall cases.

    Germano's suit, filed along with a handful of other homeowners', sought restitution from developers, builders, the supplier who imported the material and the Chinese manufacturer. Harbor Walk Development LLC was among the defendants named in the suit.

Phone Call To Homeowner Behind On House Payments Purporting To Be From Mortgage Company Demanding Immediate Payment Of Several Hundred Dollars Under Threat Of Foreclosure A Scam

In Cleveland, Ohio, WKYC-TV Channel 3 reports:
  • A Cleveland man recently picked up the phone from a caller claiming to be a loan officer from a mortgage company, who said the local homeowner would face foreclosure unless he wired hundreds of dollars to a California address.

    The local resident said he was behind on his mortgage payments, so he immediately sent the money.

    But after later contacting his financial institution to confirm the payment, he learned the initial call he received was a fraud.

    The Better Business Bureau is warning consumers to be on the lookout for those types of phone scams. The BBB said con artists typically target homeowners already on the brink of falling into foreclosure.

    "Never agree to make any sort of payment before you verify the call is from your lender," BBB president Sue McConnell said in a statement. "People at risk for losing their homes cannot afford to fall into the hands of con artists."

Friday, October 02, 2015

Duo Indicted For Allegedly Running Sale Leaseback/Short Sale Scam That Clipped Victims For $130K+

From the Office of the Nevada Attorney General:
  • Nevada Attorney General Adam Paul Laxalt announced that Christopher Nelson, 46, of Henderson and Niket Kulkarni, 38, of Los Angeles, CA were indicted by the Clark County Grand Jury on charges of pattern of mortgage lending fraud and racketeering, among others. The defendants operated their business, the American Equity Foundation, between July 2012 and May 2013.

    According to the indictment, the defendants are accused of soliciting customers to participate in a short sale program associated with the federal government called the Neighborhood Stabilization Plan. Defendants falsely represented to their clients that their business could facilitate the short sales of customers’ homes to investors. Clients were also told that they could then lease their homes from the investors for a period of time, before having the opportunity to repurchase those homes at a cost of 90-100% of the home’s market value. Through these representations, the defendants are alleged to have unlawfully obtained more than $133,000 from their clients.

    “Indictments such as these set a precedent that fraudulent behavior will not be tolerated and will be aggressively pursued,” said Laxalt. “Mortgage fraud can have devastating effects on homeowners and the economy, and my office will hold accountable those who unlawfully collect fees from homeowners using false promises of solutions.”

    Special Agent James Today of the Housing and Urban Development’s Office of the Inspector General (HUD-OIG) added, “Our office continues to be vigilant in protecting FHA insured borrowers from those in the mortgage industry willing to defraud them through foreclosure rescue schemes. This prosecution with the Nevada Attorney General’s Office demonstrates our commitment to protecting HUD’s important work in providing affordable home ownership.”

Federal Appeals Court OKs 23-Year Pokey Stay Given To Foreclosure Rescue Operator Who Screwed Over Three Dozen Victims (Financially Distressed Homeowners, Rent To Own Buyers, Investors) In Her Dubious Deals; Defendant: I Meant No Harm - It Was Just A Failed Business Venture

In Augusta, Georgia, The Augusta Chronicle reports:
  • A former Augusta-area businesswoman was fairly tried and sentenced to more than 23 years in prison for a massive fraud based on a phony mortgage rescue operation, an appeals court has declared.

    In a six-page opinion [...], the 11th Circuit Court of Appeals affirmed Regina Preetor­ius’ convictions for mail fraud, wire fraud and money laundering.

    Preetorius was convicted by a federal court jury in September 2013 of 10 counts of mail and wire fraud and three counts of money laundering for operating a lengthy real estate and investment scam that was exposed by The Augusta Chronicle in 2008.

    Preetorius insisted at trial and during her sentencing hearing that she had no intention of harming anyone. She described what happened as a failed business venture.

    Preetorius ran a firm called SDA & Associates that had three components: obtaining the rights to property of distressed homeowners, finding buyers for lease-purchase agreements for those homes, and convincing investors that their money would be guaranteed safe and secured with the titles of properties.

    It was, however, little more than a Ponzi scheme that led to financial ruin for many of her 39 victims, who lost nearly $1.5 million.

    The federal appeals court noted that defendants face a high bar on appeal and that Preetorius couldn’t cross it. Based on the evidence at trial, a rational jury was entitled to disbelieve Preetorius’ claims of innocence, the court stated.

    The appeals court also found that U.S. District Court Judge J. Randal Hall was correct in increasing Preetorius’ punishment range because she was the leader of a criminal enterprise that involved six other participants, she controlled all aspects of SDA, she recruited others, her scheme lasted for several years and more than two dozen investors were cheated.

    The appellate court also agreed with Hall’s logic that Preetorius’ lengthy prison term was justified because of the scam’s sophistication, the great losses she caused and Preetorius’ refusal to accept responsibility for what she did.

    Preetorius, 48, is imprisoned at the federal prison in Tallahassee, Fla., a low-security facility housing more than 900 female inmates. According to the Federal Bureau of Prisons, her release date is Jan. 21, 2034.

Thursday, October 01, 2015

Unwitting Long Island Couple Who Bought Dilapidated Home (Presumably Without Getting A Title Insurance Policy) Get Refund, But Lose $80K Fix-Up Costs + Sweat Equity After Sheriff's 72-Hour Eviction Notice Revealed Home Was In Foreclosure, Seller Lacked Good Title

In East Hampton, New York, The East Hampton Star reports:
  • A young couple who bought a house on Queens Lane in East Hampton wound up losing hard-earned money and being evicted in February when the Suffolk County sheriff’s office showed up at the door.

    “I was seven months pregnant. There was two feet of snow outside,” Amanda Keyser said Monday. “It was a 72-hour eviction notice.”

    Ms. Keyser was describing what happened 11 months after she and her husband thought they had purchased the house, at 128 Queens Lane, from Hampton Dream Properties, which is run by Michael O’Sullivan and has addresses in Remsenburg and on Fort Pond Boulevard in Springs.

    With a baby on the way, and a son who is now 5, the two-bedroom, one-bathroom house seemed perfect. It had been in foreclosure for years, Ms. Keyser said. Her husband, Shaun Jones, a Montauk commercial fisherman, had several friends who had bought houses through Mr. O’Sullivan’s company, with an East Hampton man, Gerry Kucher, the real estate broker.

    The website for Hampton Dream Properties L.L.C. describes itself as a “real estate investment company specializing in houses in foreclosure and pre-foreclosure.” The site goes on to say, “For over three years we have fought with banks all the way to the Supreme Court and have helped countless homeowners in the process.”

    The company buys and sells at prices that are significantly below market. The Queens Lane house cost $160,000, according to the recorded deed listed in The East Hampton Star last year. Ms. Keyser, an East Hampton native, and Mr. Jones paid $55,000 up front, taking out a five-year mortgage for the balance.

    Then came sweat equity, along with $80,000 to renovate the house, which was dilapidated. They replaced floors and walls, and were almost done, putting off reshingling until spring, when the sheriff came knocking.

    After being served with the eviction notice, the couple called Mr. O’Sullivan. He insisted the sheriff was wrong and that the deed was free and clear of liens, Ms. Keyser said. Ms. Keyser learned that one of the several banks that had held the debt on the previous failed mortgage had challenged Mr. O’Sullivan’s right to sell the property, and had won the case. The couple were forced to place most of their belongings in storage and to move in with Mr. Jones’s parents in Montauk.

    When they demanded their money back, they said Mr. O’Sullivan refused, offering instead to put them in another house temporarily until he found a permanent replacement. The couple refused the offer. Eventually, they said, Mr. O’Sullivan refunded the purchase price, but they are out the $80,000 they put into the house and are also paying off a loan they took out for its renovation, as well as a monthly storage fee.

    “We were lucky,” Ms. Keyser said, alleging that “he is selling houses he doesn’t own.” Mr. O’Sullivan did not return calls asking for comment this week.

    Meanwhile, another website calling itself Hampton Dream Properties has sprung up, which says Mr. O’Sullivan and his attorneys have been “reported to state and federal authorities.” It also lists seven houses in East Hampton, Amagansett, and Montauk, alleging that victims had lost large, and specific, sums of money.
Source: Couple’s House Isn’t Theirs. land contract for deed

Pair Faces Grand Theft Charges For Allegedly Selling Property In Foreclosure To Victim (Who Presumably Failed To Get A Title Insurance Policy) On Deferred Payment Plan, Pocketing $30K In Periodic Installments While Continuing To Stiff Bank Out Of Mortgage Payments

In Townsend Township, Ohio, The News-Messenger reports:
  • Two brothers accused of bilking a Castalia man out of $30,000 face felony charges of grand theft following a grand jury indictment in August, court records show.

    Daniel Keegan, 45, of Castalia, and David Keegan, 47, of Sandusky, could face up to 18 months in jail after a Castalia man said he entered into an agreement to purchase real estate at 7349 E. Ohio 101 only to find out the brothers did not own the land and allegedly were not making mortgage payments to the bank.

    The Keegans were booked into the Sandusky County Jail and released on their own recognizance.

    Sandusky County Prosecutor Tom Stierwalt said the indictment covers $30,000 paid for the property before it was foreclosed on in October 2013.

    The indictment says the Keegans did not use the funds Brake gave them to pay the mortgage from Citizens Bank between May 2013 and December 2014.

    After renting the property under the impression the brothers owned the land, Jason Brake asked if he could buy the home for the listed $125,000 if he gave them a $10,000 downpayment.

    “They told me they owned it. I assumed it was paid free and clear,” Brake said.

    After paying the $10,000, Brake said he and the Keegan brothers signed a contract for the purchase of the property whereby Brake would pay the remaining balance in monthly installments of $1,000.

    Brake said the contract to buy the property also included two mobile homes.

    Brake said he has two options for the property, where he still wants to live.

    It is going up for sheriff’s auction and I can bid on it and buy it for a third time, or someone can bid more than $50,000 and I can get that money and use it to pay off all the people I have borrowed from,” Brake said.

Ex-NBA Superstar Succumbs To 'Baby Mama Squeeze;' Agrees To Cough Up Keys To $800K Home To Settle Up Alleged Child Support Shortfalls With Mother Of One Of His Kids

In Orange County, California, TMZ Sports reports:
  • Former NBA superstar Larry Johnson was nearly a million bucks in the hole with one of his baby mamas -- but he found a way to make her happy ... hand over the keys to a house!!

    Laura Tate filed docs claiming the ex-Knicks and Hornets player was way behind in child support payments -- to the tune of around $900,000. She wanted the court to liquidate his assets so she could get paid, but we've learned Johnson hammered out a deal with her.

    According to the docs he filed ... Larry will hand over his $800,000 home in Orange County, CA. He'll also pay Tate a total of $55k over time ... a loooong time. He's scheduled to make $1,500 monthly payments.

    The last time LJ made anyone as happy as we imagine Tate is with this deal -- he was knocking down the legendary 4-point play in '99. Great times in NYC.

Wednesday, September 30, 2015

Sting Yields Palm-Greasing Indictment Against Clerk In Cook County Recording Office; Chicago Feds: Suspect Agreed To Prepare, Record Backdated Fraudulent Real Estate Title Transfer For $200, Giving Us A Break On Her Usual $500 Fee For Doing 'Dirty Deeds'

From the Office of the U.S. Attorney (Chicago, Illinois):
  • A former clerk for the Cook County Recorder of Deeds accepted a $200 cash bribe in exchange for preparing and agreeing to record a back-dated deed on an Oak Park home, according to a federal indictment [...].

    REGINA TAYLOR accepted the bribe from an individual who purportedly wanted to add a relative’s name to the deed of a residence in Oak Park, according to the indictment. Unbeknownst to Taylor, the individual was actually an undercover law enforcement agent, the indictment states.

    The indictment was returned [] in U.S. District Court in Chicago. It charges Taylor, 59, of Chicago, with one count of mail fraud and two counts of wire fraud.[...]

    According to the indictment, Taylor offered and agreed to prepare a false quit claim deed that added the purported relative to the deed of the Oak Park property, which was allegedly owned by three deceased individuals.

    Taylor told the undercover agent that she usually charges $500 to prepare and record the fraudulent documents, but that in this instance she was willing to charge only $200, the indictment states.

    Taylor directed the undercover agent not to tell anyone that the other individuals on the deed were deceased, according to the indictment. She then prepared a fraudulent quit claim deed and back-dated it by 18 months, confirming the purported relative as a grantee.

    After giving the fraudulent quit claim deed to the undercover agent to get stamped at the Village of Oak Park, the undercover agent gave Taylor $200 in cash, according to the indictment. Taylor further directed the undercover agent to bring back the stamped copy of the fraudulent deed so that Taylor could file it at the Office of the Cook County Recorder of Deeds, according to the indictment.

Sacramento Feds Pinch Trio Accused Of Running Purported 'Spiritually-Based' Loan Elimination Scam, Alleviating Homeowners Afflicted w/ Unaffordable House Payments By Using Phony Lien Satisfactions, Other Dubious Docs To Fraudulently Alter Chain Of Title, Then Pocketing Million$ By Flipping 37 Affected Homes

From the Office of the U.S. Attorney (Sacramento, California):
  • Three persons were arrested [] on felony charges contained in a 42-count indictment returned by a federal grand jury in Sacramento on September 10, 2015, United States Attorney Benjamin B. Wagner announced.

    The indictment, [...], charges John Michael DiChiara, 57, of Nevada City; James C. Castle, 51, formerly of Santa Rosa; Remus A. Kirkpatrick, 58, formerly of Oceanside; George B. Larsen, 54, formerly of San Rafael; Laura Pezzi, 59, of Roseville; Larry Todt, 63, formerly of Malibu; and Michael Romano, 68, of Benicia, charging them with conspiracy, bank fraud, false making of documents, and money laundering. Tisha Trites, 49, and Todd Smith, 44, both of San Diego, pleaded guilty to related charges before U.S. District Judge Garland E. Burrell Jr. on September 4, 2015.

    DiChiara was arrested [] in Cool, and Pezzi and Romano were arrested at their homes. The other four defendants listed in the indictment have yet to be arrested.

    According to the indictment, DiChiara held himself out as the Archbishop of a spiritual organization named Shon-te-East-a, Walks With Spirit, the mission of which was to help individuals spiritually by alleviating them of their home mortgages.

    DiChiara and Castle (along with Trites who pleaded guilty to a related charge) are alleged to have orchestrated a mortgage-elimination program that fraudulently altered the chain of title on residential properties, selling the properties, and receiving the sales proceeds. Kirkpatrick, Larsen, Todt, Romano, and others allegedly recruited homeowners into the program with the promise of relief from foreclosure and a share of the sales proceeds. DiChiara and others used Shon-te-East to control the sale of the properties.

    The indictment alleges that, once the homeowners were enrolled in the program, Pezzi and others created fictitious deeds of trust, a falsely made deed of reconveyance, and, where necessary, a falsely made notice of rescission of notice of default. The fictitious deed of trust was recorded at the county recorder’s office, and gave the appearance that the homeowner had refinanced the mortgage with a new lender. Todd Smith (who pleaded guilty to one count of conspiracy) or an entity controlled by the defendants was listed as the new lender, ensuring that when the properties were sold, the defendants would receive the sales proceeds. The defendants then caused to be recorded at the county recorder’s office a falsely made deed of reconveyance, indicating that the mortgage debt had been repaid to the financial institution holding the mortgage and reconveying title back to the homeowner.

    With these fraudulent documents on file at the county recorder’s office, a title search on the property would give the impression that the homeowner had refinanced, and no other debt was owing on the property. When the defendants caused the sale of these properties, they were able to divert the sale proceeds away from the lending institutions to their own benefit.

    The defendants are alleged to have sold 37 properties through the mortgage elimination program, and attempted to sell at least an additional 97 properties, obtaining profits in excess of $8 million. They attempted to extinguish in excess of $60 million in legitimate mortgage loans.

Pair (30 Months & 46 Months) Get Shipped Off To Prison While 3rd Scammer Awaits Sentencing For Roles In Racket Where They Acquired Title To Homes In Foreclosure, Then Recorded Fraudulent Satisfaction Of Mortgage, Then Flipped Property Now Purporting To Be Free & Clear Of Liens To Unwitting Buyers, Pocketing Million$

In Honolulu, Hawaii, the Honolulu Star Advertiser reports:
  • A federal judge [] sentenced two people to 30 months and 46 months in prison for their roles in a mortgage fraud scheme that involved seven properties in Honolulu and Kona.

    Visiting U.S. District Senior Judge Charles R. Breyer sentenced Sakara Blackwell, the real estate broker formerly known as Dawn Sakaguchi, to the 30-month prison term. It was Blackwell who handled the sales of the properties that still had mortgages on them to buyers who were unaware of the mortgages.

    One of the unsuspecting buyers is an employee of the court’s Probation and Pretrial Services.

    Breyer, who is from the Northern California District, handled Tuesday’s sentencing because all of the Hawaii District judges had recused themselves.

    He handed the 46-month term to Marc Melton, who drafted all of the bogus documents the trio used to convince escrow companies that the properties were unencumbered by mortgages.

    Breyer ordered Melton to forfeit to the government $129,307 authorities seized from a bank account associated to him and ordered Melton to pay, along with his co-defendants, $881,755 restitution.

    The restitution amount is the difference between what the buyers paid for the seven properties and what the properties are worth.

    Breyer ordered Blackwell to also pay restitution. What portion of the $881,755 for which she is jointly responsible will be determined at a later date. What will also be determined at a later date is who will receive the restitution..

  • A third defendant, Jennifer McTigue, will be sentenced on Oct. 26.

    According to court documents, the three worked together to buy and sell homes, creating false documents to trick banks and the state. They would purchase properties that were in foreclosure and submit false documents to obtain a title on the home that eliminated the lien on the property.

    They would then turn around and sell the home for profit, collecting a total of more than $3 million illegally.

Tuesday, September 29, 2015

Wife Abused POA, Scoring $60K Loan Secured By Formerly Mortgage-Free Marital Home While Unwitting 74-Year Old Disabled-Vet Hubby Was Laid Up In Nursing Home; Leaves Him Facing Foreclosure

In Louisville, Kentucky, The Courier-Journal reports:
  • Pierced by shrapnel 46 years ago in Vietnam, 74-year-old Cleveland Graham is paralyzed from the waist down.

    After breaking his neck a second time in a 2001 wheelchair accident, his hands are gnarled, he is scarred by bed sores, and he must relieve himself through a catheter and colostomy bag.

    Using his veteran's benefits, Graham paid off his modest home in the Ken Carla subdivision near Prospect decades ago. But now, New York-based Citigroup, which last year made $7.3 billion in profits, is trying to take it away from him.

    In a move his lawyer describes as "obscene," Citigroup's mortgage unit has sued to foreclose on his house — despite a judge's findings that $80,000 in debt and interest was run up against it by his ex-wife, who spent it "lavishly solely for her own benefit."

    Delores Graham took out a loan against the property while her husband was in a nursing home, found Family Court Judge Deborah Deweese, then spent it so "frivolously" — including to rent a car for more than a year — that the judge ruled last month that she "shall be solely responsible" for the CitiMortgage line of credit.

    Citi, which has assets of $1.7 trillion and 200 million accounts in more than 160 countries, is unmoved by Cleveland "Cleve" Graham's plight.

    Through its lawyer, Shannon Egan of Fort Mitchell, it says the Family Court ruling in the Grahams' divorce is irrelevant. Delores had a valid power of attorney when she took out the loan against the house, Egan says in court papers. Neither Graham nor his ex-wife has made a payment for three years.

    In an interview at his home, Graham, who struggles to speak because swelling in his spine presses on his voice box, said he never knew his ex-wife took out the loan — and never saw any of the money.

    "If I knew about it, it would be a different story," said Graham, a Central High School graduate who grew up at 34th Street and Southern Avenue.

    Cleveland M. Graham Sr. and Delores A. Brandon Graham were first married in 1970, later divorced, then remarried in 2004, when she moved from Ohio back to Louisville to care for him.

    In and out of hospitals and nursing homes, Graham gave Delores power of attorney over his affairs, and in April 2007, she used it to take out a $60,000 loan against his home.

    Graham said he never knew about the loan; Delores said he did — and that she did her best over the years to tend to him, according to court papers.

    But Deweese found that her spending over the years "suggests otherwise" and that some of her testimony "runs contrary to the weight of the evidence."

    For example, while she claimed she used some of the money to retrofit the house, VA records show the agency paid for the modifications, Deweese said.

    Delores Graham couldn't be reached for comment. She doesn't have a listed number at her home in Crestwood and her former lawyer, Jim Williamson, no longer represents her.

    She admitted in court that that she gave some of the loan proceeds to her family members, and Deweese found she spent it "far more frivolously than she should have," including to rent a car from Enterprise for more than a year.

Out-Of-Control Court-Appointed Guardians Strike Again; Racket Yields Big Profits For Unscrupulous Players, While Elderly Victims Fear Losing Everything, Including Homes

In Las Vegas, Nevada, KTNV-TV Channel 13 reports:
  • Some of the people who need help the most are being robbed of their money and freedom.

    Contact 13's investigation of Nevada's guardianship system has revealed double-billing, bank accounts drained and families torn apart. Some have lost even more.

    "Everything in this house is a memory," said Phyllis Moskowitz-Crowe as she looked wistfully around her modest home.

    Moskowitz-Crowe has traveled the world, but for the past year and a half she wasn't allowed to step through her own front door.

    "All of a sudden my whole life just blew up. And to this day I don't know why."

    Spring of 2014 was what Moskowitz-Crowe calls "the beginning of the worst experience of my life."

    The then 76-year-old was recovering in the hospital after a fall when the court granted private, for-profit guardian April Parks absolute power and control over her life and estate.

    The sign Moskowitz-Crowe put on her door says "Let Freedom Ring" but the sign Parks put in the window means quite the opposite.

    In fact, when Parks took over Moskowitz-Crowe's home, at some point she stopped paying the HOA dues so Moskowitz-Crowe says she nearly lost the house and everything in it.

    "I'm alone. I was independently wealthy. I have no bills. Except I have a small reverse mortgage on my house. That was it! Perfect target!"

    The homeowners' association foreclosed on Moskowitz-Crowe's home because the dues weren't being paid.

    But Moskowitz-Crowe had no idea that was happening because at the time, she didn't even know she was under guardianship, claiming she was kept in the dark about her own affairs.

    "My home being seized, my car being seized. My bank accounts being emptied. My mail. 496 days without my mail to date."

    "This is a huge scam!" said senior advocate Rana Goodman, who's also a member of the newly-created State Guardianship Commission.

    "It's morally so reprehensible to me that they literally go in and clean these people's bank accounts out -- leaving them destitute -- and then take their home away from them too," Goodman said.

    With help from advocates and friends, Moskowitz-Crowe paid the past due HOA fees and stopped the foreclosure.

    "It was a blessing when I walked through that front door. I may be destitute. But it was like walking into a castle. That's how much it means to me."

    Elizabeth Indig wasn't so lucky.

    She and her mother share the same name. And the same emotions over what happened to Indig's home.

    "Completely helpless. Depressed. Out of control. Violated."

    While recovering in the hospital from a fall in her driveway in May, 2012, Indig was deemed to be incompetent by the court, and April Parks was made guardian.

    "She took control over the home and everything in the home which were trust assets. And she had no right to!"

    Indig says the family home was essentially stolen.

    Just like in Moskowitz-Crowe's case, the HOA dues weren't paid after Parks took control. The foreclosure went through.

    County records show the house the Indigs paid $320,000 for, was sold at auction in November, 2013 for just $22,000.

    All the personal property in the house should have been protected by the trust.

    "My mom had gold silverware sets. My mom had Hering porcelain, which is hand-painted Hungarian porcelain."

    But that didn't stop Parks from holding an estate sale.

    "A two-day estate sale," Indig said. "Everything was sold. She was even selling my mom's clothes. My mom's nightgowns."

    That might be expected had her mother died. But she's still very much alive. Her daughter said she could do nothing to stop it.

    "She locked me out. She took the keys. Changed the locks. She told the guard gate not to let me in. She told me that I would be arrested for trespassing and never be able to see my mom again if I went near the home."

    April Parks refused to return our multiple calls for comment on this story.

    At the time, we did ask her about family concerns from people like Indig.

    "I don't threaten them to stay out of things." Parks said. "That's not a threat to me. If you say to me, I'm gonna go to court, fine! Please go to court! I need you to have your side heard of this."

    Indig says the court ignored her pleas until after Contact 13's investigation exposed major shortcomings in the system.

    Hearing Master Jon Norheim was booted off all adult guardianship cases and the judge who replaced him signed a court order stating the "court did not give April Parks permission to do anything with trust assets and Elizabeth Indig can file a criminal complaint with the District Attorney."

    As for Moskowitz-Crowe, she wants to know how our state leaders can allow all this suffering.

    "The legislators ought to be ashamed of themselves and I mean deeply ashamed."

    Phyllis was recently released from guardianship and allowed to return to the home she fought for, but ironically, her battle over the house is not over.

    Despite the fact that she was forced into an assisted living facility while under guardianship, her reverse mortgage company now wants to take her house, saying she violated their contract by not using it as her primary residence.

    The nonprofit National Association to Stop Guardianship Abuse says these cases are not uncommon. "Unscrupulous guardians 'flipping' wards' homes or properties for profit is a constant complaint" they hear from members across the country.
Source: Families caught up in guardianship system losing their homes.

See generally, The Wall Street Journal: Abuse Plagues System of Legal Guardians for Adults (Allegations of financial exploitation and abuse are rife, despite waves of overhaul efforts) (Non-WSJ subscriber? Try here, then click appropriate link).

Go here for earlier posts on the ripoffs of the dead and incapacitated under cover of court-sanctioned guardianship/conservatorship/public administrator systems. granny-snatching

Cops: Suspect Abused POA To Rip Off Elderly Man, Causing Victim's Home To Be Foreclosed, All His Bank Accounts To Be Overdrawn

From the Calcasieu Parish, Louisiana Sheriff’s Office:
  • On September 24 the Calcasieu Parish Sheriff’s Office received a complaint regarding Mark A. Eldridge, 42, Lake Charles, misappropriating the funds of an elderly man, whom he was the power of attorney for.

    During the investigation, detectives learned that Eldridge was in charge of paying the victim’s bills, but between January 2013 – June 2015, Eldridge was misusing the victim’s monthly retirement income of approximately $4,000, causing his home to be foreclosed and all of his bank accounts overdrawn.

    Eldridge, who was already incarcerated at the Calcasieu Correctional Center on unrelated charges, was charged with theft of assets of an aged or disabled person. Judge Michael Canaday set his bond at $75,000.

Monday, September 28, 2015

U.S. Supremes Asked To Address Foreclosing Banksters' Claims That Homeowners Lack Standing To Contest Assignments (Void or Voidable???) That Fail To Comply With Terms Of Trust's Governing Documents

In New York City, Law 360 reports:
  • Property owners have asked the U.S. Supreme Court to review their suit against several banks, saying the Second Circuit did not appropriately determine whether they had standing to claim that mortgage-backed securities trusts managed by the banks did not own the petitioners' mortgages.

    In an Aug. 31 petition, the property owners said that their mortgages were transferred to 37 MBS trusts that the banks — Bank of New York Mellon Corp., HSBC Bank NA, US Bank NA, Deutsche Bank National Trust Co. and Wells Fargo Bank NA — were trustees for, but that those transactions were invalid.

    The appeals courts are split on how to determine the standing of property owners who challenge mortgage transfers, and the Second Circuit conflated standing with the merits of the instant case by way of an analysis that “swallows its own tail and makes no sense,” according to the petition.

    “The Second Circuit effectively reached the merits of an issue while simultaneously claiming that the parties before it were not suitable to present those issues to it in the first place,” the petition said. “The contradiction in such an approach is palpable and calls into question the integrity of the decision-making process.”

    The Racketeer Influenced and Corrupt Organizations Act suit alleged the banks have collected mortgage payments and initiated foreclosure proceedings based on the assumption that they own the mortgages. However, the petition contended that the banks do not own the mortgages and have been fraudulently collecting payments and foreclosing on properties.

    The issue of whether the banks own the mortgages turns primarily on whether the mortgages were validly transferred from the originating banks to the trusts. The petition argued that the transactions did not comply with the terms of the agreements that created the trusts because the trusts already closed at the time of the attempted transfers, meaning that New York law renders those transfers void.

    The New York federal court dismissed the case with prejudice, saying the petitioners lacked standing to challenge the validity of the transfer. The district court agreed with the banks that the property owners were neither parties to, nor third-party beneficiaries of, the agreements they claimed the banks did not comply with, and that the owners thus had no right to assert that the agreements were breached.

    In reaching that conclusion, the district court addressed a disputed issue about the merits of the case — whether the banks' failure to comply with the agreements rendered the transactions completely void under New York law or merely voidable if a party to, or third-party beneficiary of, the transactions wanted to void them.

    The district court ruled that the latter was true, a decision the Second Circuit upheld, saying the claims were indistinguishable from the claims in the circuit's own 2014 decision in Rajamin v. Deutsche Bank National Trust Co.

    However, the circuit's 2014 decision conflicts with the First Circuit's 2013 ruling in Culhane v. Aurora Loan Services of Nebraska, the petition said.

    The Rajamin court reasoned that the alleged injuries were merely hypothetical because the petitioners did not dispute the underlying debt, did not say they were not in default and did not claim they paid more than they owed.

    In Culhane, the First Circuit found that an appellant facing foreclosure had constitutional standing to challenge the validity of her mortgage assignment, as well as foreclosure, even when she was not a party to or beneficiary of that transaction, because the “essence of standing is that a petitioner must have a personal stake in the outcome of the litigation.”

    Regarding prudential standing, the Second Circuit in Rajamin looked at the merits of the petitioners' argument and concluded that unauthorized actions were not void but merely voidable.

    Meanwhile, the First Circuit in Culhane said that decisions finding mortgagers lacked prudential standing to challenge mortgage assignments because they were not parties or third-party beneficiaries painted “with too broad a brush.”

    By deciding the question of prudential standing on a superficial consideration of the merits of the claim, the Second Circuit paid little attention to state-law issues better addressed fully on the merits, the Aug. 31 petition said.

    The banks could not be reached for comment Tuesday.

    The petitioners are represented by Erik S. Jaffe of Erik S. Jaffe PC.

    Counsel information for the banks was not available Tuesday.

    The case is Tran et al. v. Bank of New York, et al., case number 15-260, in the Supreme Court of the United States.
Source: Row Over Mortgage Transfers To MBS Trusts Hits High Court.

Foe the homeowner's petition to the U.S Supreme Court, see Anh N. Tran, Et Al. v. Bank of New York (August 31, 2015).

Thanks to Deontos for the heads-up on this litigation.

NY AG Reaches Settlement With Sleazy Lawyers, Title Agent, Mortgage Broker For Their Roles In Sale Leaseback Foreclosure Rescue Racket That Caused 14 Long Island Homeowners To Lose Their Deeds, Home Equity

On Long Island, New York, Newsday reports:
  • New York Attorney General Eric T. Schneiderman announced [] that his office has reached a more than $400,000 settlement in a mortgage foreclosure "rescue" scam that caused 14 Long Island homeowners to lose their deeds and equity.(1)

    "This shameful scam re-victimized families already suffering from the collapse of the housing market," Schneiderman said in a statement.

    Empire Property Solutions in Medford and Bethpage advertised services to help struggling families save their homes from foreclosure by refinancing mortgages and repairing credit scores, Schneiderman said.

    Empire principals John Rutigliano and Kenneth Kiefer encouraged homeowners to turn their deeds over to them through "sale-leaseback" agreements, in which they were told they could stay in their homes, pay rent, build up their credit, and after a year, the deed would revert to them, the attorney general said.

    An investigation found Rutigliano and Kiefer failed to make good on their promises to use the homeowners' payments to pay down their mortgages. In the end, the homeowners faced foreclosure and eviction.

    Schneiderman said other parties to the scam were: the Zornberg & Hirsch law firm in Hauppauge and its married principals, attorney Barry Zornberg, since disbarred, and Nanci Hirsch; H & Z Abstract, a title company owned by Hirsch; Hauppauge attorney Cory Covert; and Baldwin mortgage broker Leonie Neufville.

    The state filed a civil complaint and multiple settlements were reached, with Zornberg agreeing to pay $340,000; Covert $67,500; and Neufville $10,000, plus a five-year ban on acting as a broker, Schneiderman said.

    Schneiderman's office also received a default judgment against Rutigliano and Kiefer, which it said will be converted into a monetary judgment.

    The funds will be used to compensate victims of the fraud. The attorney general's office said it is working with several of the victims to return their deeds to their rightful ownership.

    Attorneys for Empire and the individuals named in the state lawsuit could not be reached for comment [].
Source: AG: settlement reached in LI mortgage foreclosure scam.

See also, A.G. Schneider Reaches $400,000 Settlement With Alleged Participants With Alleged Participants In Mortgage Rescue Scam That Stole Deeds From Long Island Homeowners (Sale-Leaseback Fraud, Perpetrated At Height of Housing Crash on Long Island, Cheated 14 Families Out Of Their Homes’ Deeds and Equity):
  • One of the homeowners who will get her deed back is Rosalie Thomas, a licensed nurse practitioner from Elmont, NY. After receiving a foreclosure notice in 2006, Thomas called Empire Property Solutions for help. Empire Property Solutions claimed Thomas could avoid foreclosure by signing onto their payment plan, but she still received a foreclosure notice a year later after spending tens of thousands of dollars.

    “This whole ordeal has been very scary and stressful,” said Rosalie Thomas. “My youngest son was born in the house that Empire Property Solutions tried to take away from me. It’s the only home he’s ever known. I’m looking forward to finally getting the deed back and finally putting this behind me.”

    Ronald Lambre and Marie DiManche, Haitian immigrants who live in Medford, NY, are working with [the Office of the New York Attorney General] to purchase a new home with money from the settlements.

    After seeing an ad in the newspaper, Ms. Dimanche, a certified nursing assistant, called Empire Property Solutions and set up a payment plan that was initially half of what she and her husband were paying on their mortgage. After a year, Empire Property Solutions tripled the monthly payments and threatened to evict Lambre and DiManche if they did not pay. Their family, which includes six children, left the home and has since moved three times. OAG came across their case after opening an investigation.

    There is no way to describe how you feel when your home is stolen,” said Marie DiManche. “I’m from Haiti, and it was my dream to own a house. How do you tell your kids you can’t get back what you lost? Thanks to these settlements, my family will finally have a chance to start over again.”

    The federal government also brought a criminal investigation against the partners of this sale-leaseback fraud. The United States Attorney’s Office (USAO) indicted Rutigliano and Kiefer on charges of conspiracy to commit wire fraud. USAO also indicted Zornberg for lying to federal investigators about his role in the scam.

    The indictment has been dismissed against Rutigliano due to his death. Kiefer pleaded guilty and is awaiting sentencing. Zornberg pleaded guilty to perjury as part of a plea deal and has agreed to pay approximately $1.3 million in compensation to the victims of the fraud. Zornberg is awaiting final sentencing in federal criminal court.(2)

(1) A couple of the key players have already copped guilty pleas for the crimes associated with this racket, with one dying while charges were pending. See Former Attorney Pleads Guilty To Lying To Federal Investigators About His Role In A Million-Dollar Fraud Scheme (Agrees To Pay More Than $1 Million To Ten Families Who Fell Victim To The Scheme).

(2) For more on this type of foreclosure rescue ripoff, see:

Judicial Foreclosures In California & The Potential Potholes That Could Arise During The One-Year Post-Sale Redemption Period

From a recent post on the Money and Dirt blog:
  • Judicial foreclosure is uncommon in California. In most cases, lenders will pursue nonjudicial foreclosure (aka “trustee’s sales”), which are simple, quick, and efficient. But when a lender is dead-set on recovering a deficiency judgment (assuming one is available), judicial foreclosure is the only permissible route.

    In a judicial foreclosure, recovering a deficiency judgment is possible, but the borrower retains important rights, including fair value protection (in the form of an evidentiary hearing following the foreclosure sale) and the ability to redeem the property — i.e., to regain ownership by the end of the redemption period by paying the amounts required by a statutory formula.

    The redemption period in most cases (where a deficiency remains following the sale) is one year. (Code Civ. Proc. §729.030.) There are several things that can go “sideways” during that year, creating problems for both lenders and borrowers. Here are a few [...]

Sunday, September 27, 2015

Contentious Battle With Community Association Leads To Foreclosure Judgment For Ex-Footballer Consisting Of $4,600 Debt To HOA With Add'l $100K+ Owed To HOA's Attorneys

In Tallahassee, Florida, The Independent Florida Alligator reports:
  • Errict Rhett, a former UF [University of Florida] standout running back and NFL veteran, will lose his house and owe just more than $100,000 to a local community association, according to court documents [...].

    Alachua County Eighth Judicial Circuit judge Monica Brasington ruled [] that Rhett intended to commit fraud by transferring the deed of his house, located in the Woodfield neighborhood, from his nonprofit corporation, The Errict Rhett Foundation, to his construction company, Errict Rhett Construction, according to the documents.

    The legal battle between Rhett, who was enshrined in the University Athletic Hall of Fame in 2005 as UF’s career rushing leader, and the Woodfield Community Association began in August 2013 when the association filed a lawsuit against Rhett for violating the conditions and restrictions mandated by the subdivision, citing dead grass, rotted wood on the house and an “unsightly 25-foot light pole” as evidence, according to court documents.

    On March 9, Alachua County Eighth Judicial Circuit Victor Hulslander ordered Rhett to pay the community association $4,647.75 in taxable costs and $64,522 in attorney’s fees, for a total sum of $69,169.75, according to the documents.

    However, less than 20 minutes before the judge’s ruling, Rhett filed a pair of liens on the house - one dated July 15, 2013, valued at $127,000 from E. Rhett Construction, owned by Rhett, and another dated June 6, 2012, and valued at $395,000 from Alco Construction Corp., owned by Rhett’s brother, Michael, according to the documents.

    The pair of claims would ensure that Rhett wouldn’t have to pay the amount owed to the Woodfield Community Association, according to the documents.

    Rhett also filed a warranty deed — dated July 15, 2013, but filed March 9 — transferring the deed of the home from The Errict Rhett Foundation to E. Rhett Construction, according to the documents. The house had been listed as one of two offices for the foundation since 2006, a year after Rhett purchased the house from former Florida wide receiver Willie Jackson for$100, according to the documents.

    On May 11, the association filed a motion against the foundation, alleging the liens and warranty deed were invalid and issuing a Sheriff’s levy, asking the Alachua County Sheriff to sell Rhett’s house to pay the $69,169.75 sum owed. Woodfield also alleged in the motion that Rhett filed the liens to avoid paying the sum owed, according to court documents.

    Just over a month later, on June 16, The Errict Rhett Foundation, which specializes in housing and scholarship, suggested bankruptcy, which was dismissed after Rhett failed to meet with creditors, according to the documents.

    Throughout the court proceedings, Rhett missed at least two court hearings and a deposition, resulting in a $3,000 fine, according to a source who attended the hearing on August 27. Rhett’s attorney, Brett Elam, quit after the hearing, according to a source at the hearing.

    Rhett still wasn’t present in court Thursday when Brasington ruled the liens and the warranty deed invalid because the notary stamp, reportedly stamped by Jerome Cooper, appeared to have been altered on all three documents.

    As a result of the judge’s ruling, the Sheriff levy was granted and the Woodfield Community Association can move to sell Rhett’s house to pay the sum owed. Rhett now owes just over $100,000 after recent attorney fees of $33,066.43 were added to the original sum owed.

    Rhett, a native of Pembroke Pines, played for the Gators and coach Steve Spurrier from 1990 to 1993.

    He finished his UF career with 4,163 yards rushing and 34 touchdowns, breaking the record held by NFL Pro Football Hall of Fame running back Emmitt Smith.

    Rhett was a first-team All-Southeastern Conference selection in 1991 and 1993 and was named the Most Valuable Player in the Gators’ 41-7 victory over the West Virginia Mountaineers in the 1994 Sugar Bowl. Rhett was selected by the Tampa Bay Buccaneers in the second round of the 1994 NFL Draft, where he played seven seasons before retiring.
Source: Documents: Former UF football player Errict Rhett to lose house after intending to commit fraud (He will also owe just more than $100,000 to a local community association).

Non-Profit Landlord Of Below-Market Rate Senior Building Gives Elderly Tenants The Word: We're Selling - You've Got A Year To Pack Your Bags Or Face The Boot; Resident: We're Mostly "Middle-Class People Who've Gone Broke!"

In Chicago, Illinois, the Chicago Tribune reports:
  • Crowder Place is not a fancy place, but the senior citizens who live there love it.

    For years they've taken comfort in the belief that they could live out their lives in one of the building's 40 small apartments.

    They like the friendly Lakeview neighborhood, the easy walk to doctors and to church, the clean carpets and the community room where they can gather to play cards, work on the shared computer or watch "Father Brown" on TV.

    Some are in their 80s or 90s, though most are younger, and they're mostly, in one resident's words, "middle-class people who've gone broke."

    Despite the downturn in their fortunes, living in Crowder Place has made them feel lucky.

    "I thought I'd never have to worry about having a roof over my head again," a 75-year-old resident named Lisa said Friday when I went to visit. "But I tell you what. I'm worried."

    In August, the residents of Crowder Place, along with tenants of two other subsidized buildings owned by Presbyterian Homes, a faith-based nonprofit, received notice that the buildings were up for sale and they would have to move by November 2016. They were stunned.

    "We were told we would be here forever," said a 75-year-old resident who didn't want her name used. "They just hit us over the head with a brick."

    Many residents say the same thing: When they moved in, they were told they could stay until they died.

    The shock of learning that they have to leave is compounded by the fact that until now everyone at Presbyterian Homes had treated them so kindly.

    "Like family," said Betty Holcomb, 64, who says she moved in after losing her home in foreclosure. "This is a tragedy."

    "Let's use the proper word," said Lisa, who says she once owned a home in the neighborhood and lives on $750 a month from Social Security. "It's cruel."

    Now when residents pass each other in the halls, they ask, "What are you going to do?"

    Almost always the answer is, "I don't know."

    Now a table in the community room is covered with papers — sheets from HUD and Habitat for Humanity, glossy brochures featuring happy gray-haired couples — and all of it adds up to one thing.

    "Confusion," Carole Hendricks, 76, said as she leafed through the papers Friday.

    She is trying to keep things simple. So far she has made one application, to the Little Sisters of the Poor.

    Here's how Presbyterian Homes explains the decision to sell:

    It has been subsidizing three buildings on the North Side for years, with no government funding and relatively small donations. The cost of maintaining the buildings in the future had become too much.

    While continuing to do charitable work, the organization is shifting its focus to the market-rate senior homes it runs in the north and northwest suburbs.

    As for telling people they could live in the three subsidized "neighborhood homes" for life?

    "I don't know what was said to them," said Robert Werdan, vice president of marketing and public relations, noting that once residents can't live independently they move out anyway, into some kind of assisted living.

    "This is a difficult thing for everybody," he said. "We've known some of these residents for 20 years. We've had great relationships with them. It's not been an easy thing for us to do."

    What rankles the residents is not so much that Presbyterian Homes is selling the buildings — business is business — but that the organization hasn't tried hard enough to sell to an affordable housing developer.

    Werdan says Presbyterian Homes looked into the possibility but it didn't seem feasible, and further discussion would probably be unproductive.

    Many local politicians disagree.

    "I'm puzzled and I'm very angry," James Cappleman, alderman of the 46th ward, said Friday.

    He said he and other politicians — including state Rep. Sara Feigenholtz, Alderman Tom Tunney and state Senate President John Cullerton — have proposed affordable developers ready to buy, at market rate.

    "We gave them names of affordable buyers and they never contacted those buyers," Cappleman said. "It's not adding up."

    A few days ago, Jan Schakowsky and Mike Quigley, members of the U.S. Congress, reinforced the plea in a letter to Presbyterian.

    "Please protect those who have relied on the affordable housing that you have provided for so long," they wrote, "... and allow these residents to age with dignity and security."

    Presbyterian Homes has a done a very good thing for many years. Selling to an affordable housing developer would keep the good going.

    Dignity. Security.

    "All this is doing," said Lisa, looking around the small sitting room at Crowder Place, "is allowing me to stay in my neighborhood and not feel I've been tossed out on a trash pile."

Tenant Association Sues NYC After Getting The Boot From Co-Op Conversion Program Designated To Offer Low-Income Tenants In East Harlem Building A Chance To Own Their Own Homes

In the East Harlem section of uptown Manhattan, DNAInfo New York reports (via The Real Deal (NYC)):
  • A tenant association of a building where half the residents are behind on their rent is suing the city after they got kicked out of a co-op conversion program.

    In May, the department of Housing Preservation and Development sent tenants of 240 E. 119th St. a letter notifying them that they would be removed from their Third Party Transfer program, which is meant to give low-income tenants a chance to own their apartments as co-ops.

    HPD cited low attendance at mandatory training sessions, tenants not having current leases, and 54 percent of tenants being in rent arrears.

    The tenants, who filed a lawsuit in state Supreme Court Tuesday, are blaming their noncompliance issues on a nonprofit that manages the building.

    According to the lawsuit, the nonprofit SoBRO — which is not named in the lawsuit — issued defective lease renewals, miscalculated rents and failed to make repairs.

    “We want to get rid of SoBRO,” said resident Anibal Lopez, 72. “We want to be a co-op.”

    SoBRO denied the allegation and said it spent millions on renovating the building. It also worked with both HPD and the tenant association to get the building converted into a co-op, the nonprofit said. Unfortunately, the residents were not able to reach any of the conversion milestones, the orgainzation added.

    “HPD bent over backwards to try to accommodate them,” SoBRO President Phillip Morrow said. “It’s been a struggle with that building. The fact of the matter is that it is very difficult to get people to fill out paperwork. A lot of them didn’t want to do it.”

    The lawsuit claims HPD’s decision to remove the building from the co-op conversion program was arbitrary because tenants were not informed of how long the evaluation period would be.

    To become a co-op, buildings must meet attendance and rent-collection standards of at least 80 percent of the tenants. The building had a 58 percent attendance record and 46 percent of rents collected, according to a January letter from HPD.

    While those numbers increased to 64 percent and 77 percent the next month, they were still under the 80 percent requirement, according to another HPD letter.

    The tenant association’s lawyers did not respond to questions about the case.

    If the building is removed from the program, residents will lose the opportunity to own their homes and their apartments will become rent stabilized.

    “It’s a difficult situation,” Morrow said. “We did everything we could, but it just didn’t look like it was going to happen.”