Saturday, October 10, 2015

Two Holdout Tenants In Grimy NYC Building Score $25 Million Payday To Vacate Premises So That Major Redevelopment Plan Can Move Forward

In New York City, the New York Post reports:
  • Two tenants in a grimy four-story building on a desolate stretch of 10th Avenue in Manhattan scored a $25 million payout — after stalling part of the Hudson Yards redevelopment project by refusing to vacate.

    The men lived together at 10th and West 34th Street, on a rundown corner that had been slated for redevelopment by real estate giant Tishman Speyer.

    The developer had bought the property and its surroundings for $438 million as part of a $20 billion redevelopment plan to create some 17 million square feet of new residential and commercial space west of 10th Avenue from 23rd to 42nd streets.

    But the developer couldn’t proceed with its big plans until the pair moved, and they refused to budge. Tishman actually won in court, but it still caved.

    The men’s lawyer, David Rozenholc, is infamous for tying up cases on appeal, so Tishman offered the men a multimillion-dollar settlement to avoid a prolonged battle, Crain’s New York Business reported.

    Court papers identify the tenants as Gary Schwedock, 58, and Steven Kobrick, 36.

    They now reside on the top floor of Riverbank West, a 44-story doorman building at 560 W. 43rd St. with concierge service, a pool and roof deck.

    “As you can imagine, we’re bound by contractual agreement not to speak about the matter. My hands are tied. I’m very sorry,” Schwedock said when contacted by The Post at their home Monday.

    Rozenholc, 69, did not return a message seeking comment.

    But he told Crain’s that Tishman was right to assume he would continue to fight.

    “I would have taken the next step and come up with another argument. “[Even] if [the developer] wins every step of the way, it will take them five years,” he said.

    “In all the years I have been doing this, this is the most intense period of development, and real estate values are just continuing to go up. I will have deals like that this year — yes, sir,” the lawyer boasted.

    Ben Shaoul, a major residential developer, called Rozenholc “the most feared tenant attorney with respect to development sites.” “I don’t think he has ever lost a case,” he told Crain’s.(1)

    A rep for Tishman Speyer declined to comment to The Post about the settlement.
Source: Battling Hudson Yards project got these 2 tenants $25M — and new luxury digs.

(1) For more on reputedly the most feared tenant's attorney in New York City, see Meet the lawyer who has become the most feared tenant attorney in New York. David Rozenholc is only getting started (Developer pays two tenants $25 million to vacate their apartments).
  • Tishman Speyer made the prudent choice. It settled—and in the process made one of the biggest payouts ever to tenants who refused to give up their apartments. Of course, the two holdouts didn’t get all the money. Their attorney, David Rozenholc, walked away with a third of the sum.

    Although the $25 million settlement was just an unknown footnote in a much bigger real estate transaction, it shows how lawyers are able to use the state’s court system to extract multimillion-dollar paydays for tenants who block development.

    Mr. Rozenholc, who has spent the past 40 years defending renters and negotiating huge settlements for them, is widely regarded as the king of this area of law.

Spurned Socialite To Judge: My Ex-Hubby's Stiffing Me Out Of My Divorce Settlement, So Slap A Lien On His $12.7M NYC Condo So I Can Unload It & Give Him & His New Wife The Boot

In New York City, the New York Post reports:
  • A socialite involved in a bitter split with her playboy former husband is asking a Manhattan judge to award her the $12.7 million pied-à-terre he now shares with his second wife — a much young­er, shapely blonde named Inga.

    Ashley Kozel’s scorched-earth divorce case against her former spouse, ex-Gulf Keystone Petroleum CEO Todd Kozel, revealed that he entertained clients at strip clubs and that he showered $10,000 worth of Prada and Versace on a Lithuanian mistress during their marriage.

    But when it comes to giving money to his ex, Todd has used every trick in his accountant’s book to avoid paying her $38 million settlement, according to ­Ashley’s new Manhattan Supreme Court lawsuit.

    Todd, a University of London grad who founded Texas Keystone and the Falcon Drilling Company, “uses a sophisticated chain of offshore entities to shield his assets from the reach of creditors, such as his former wife,” the suit says.

    The Florida court where Ashley, 47, sued Todd, 48, for divorce after 18 years of a marriage has previously issued an asset injunction against the oil titan.

    The judge found that Todd ­“attempted to make transfers of well in excess of $100 million in marital assets to undermine the judgment and authority of the Florida Court,” according to the Manhattan filings.

    So now Ashley’s going after a harder-to-move asset — a 3,800-square-foot condo in Chelsea’s Walker Tower.

    Her suit says Todd and current wife Inga, a 29-year-old with model looks, use the $14.7 million apartment even though he claims to live in Lithuania — out of the reach of US courts.

    “If he wants to write a check [to compensate Ashley for the pad], then I don’t need to have the apartment sold,” said Ashley’s lawyer, Stephen Meister.

    “If he doesn’t, I’m going to sell the apartment,” Meister warned.

    Ashley’s suit asks the judge to place a lien on the apartment, which is owned by an LLC controlled by Todd. The spurned spouse also wants to prevent her ex from removing or selling any of the furnishings inside the 14th-floor unit.

    During Todd’s deposition, he admitted to plunking down $10,320 on designer duds for his girlfriend during just one month in 2007. He also copped to paying a $5,100 strip-club tab, explaining, “When we do it, we take a lot of people and do it properly,” according to an article by the UK-based Independent newspaper.

    Todd did not respond to messages seeking comment.

Ex-Hubby Asks Judge To Boot Former Wife Out Of Jointly-Owned $14 Million Home So It Can Be Sold Before It's Lost To Foreclosure; Says She Broke Promise To Sell & Split Profits

In New York City, the New York Post reports:
  • The founder of Two Boots pizza has gone to court to kick his ex-wife out of their $14 million East Village town house.

    Philip Hartman, 60, who owns Two Boots’ 17 pizzerias, says ex Doris Kornish, 59, broke a promise from their 2008 divorce agreement to sell their East 2nd Street home and split the profits.

    Now Kornish is on the verge of being foreclosed on, the Manhattan civil suit says.

    Hartman wants Kornish out so they can sell the property before they lose it.

    Kornish told The Post that she has stayed in the five-story home because “it’s my home, my children’s home, and we agreed not to sell the house.”

Friday, October 09, 2015

Snoozing Lender Sleeps On Its Rights, Screws Itself In Homeowner's "Chapter 20" Bankruptcy; Winds Up w/ Wiped Out Lien On Non-Underwater $340K+ 1st Mortgage When It Filed Proof Of Claim, Then Inexplicably Failed To Defend It When Debtors Filed An Objection To It

Financially-strapped homeowners who have availed itself of the bankruptcy planning maneuver colloquially referred to as a "Chapter 20" bankruptcy scored a big win recently, getting a favorable ruling from a federal appeals court that resulted in a snoozing bankster having its interest in a $340,000+, non-underwater first mortgage first mortgage secured by the debtor's personal residence completely voided.

It may be of some interest to point out that the bankster apparently shot itself in the foot in this case by filing a proof of claim in the Chapter 13 portion of the maneuver (which it ostensibly didn't have to do - Section 506 of the Bankruptcy Code; the lienholder is not required to file a proof of claim at all, and may instead look to its lien for satisfaction of the debt), and then inexplicably, failing to defend its claim when the homeowner/debtors filed an objection to it.

Another point of some note - the homeowner-couple only did not wait very long after receiving their Chapter 7 discharge before filing their Chapter 13 petition - they filed for Chapter 13 the very next day. The appeals court, as well as the lower courts, upheld the filing, finding no bad faith in such filing under the facts and circumstances of this case.(1)

An excerpt laying out some of the facts from the case:
  • In 2007, Robert and Darlene Blendheim filed for bankruptcy under Chapter 7 of the Bankruptcy Code. The Blendheims eventually received a discharge of their unsecured debts in 2009.

    The day after receiving the discharge in their Chapter 7 case, the Blendheims filed a second bankruptcy petition under Chapter 13 to restructure debts relating to their primary residence, a condominium in West Seattle. In their schedule, the Blendheims listed their condo at a value of $450,000, subject to two liens: a first-position lien securing a debt of $347,900 owed to HSBC Bank USA, N.A., and a second-position lien securing a debt of $90,474 owed to HSBC Mortgage Services. The first-position lien is the only interest at issue in this appeal.

    The first-position lien holder ("HSBC"), represented in bankruptcy proceedings by its servicing agent, filed a proof of claim in the Chapter 13 proceeding seeking allowance of its claim, which authorizes a creditor to participate in the bankruptcy process and receive distribution payments from the estate.

    The Blendheims filed an objection to the claim on the basis that, although HSBC properly attached a copy of the relevant deed of trust to its proof of claim, HSBC failed to attach a copy of the promissory note.[1] The Blendheims also alleged that a copy of the promissory note they had previously received appeared to bear a forged signature.

    For reasons unknown, HSBC never responded to the Blendheims' objection to its proof of claim. The deadline for responding passed, and in November 2009, hearing no objection from HSBC, the bankruptcy judge entered an order disallowing HSBC's claim. Even after the Blendheims served HSBC and its counsel with a copy of the disallowance order, HSBC took no action in response. Instead, it withdrew its pending motion and requested no future electronic notifications from the court.

    In April 2010, the Blendheims filed an adversary proceeding complaint seeking, among other things, to void HSBC's first-position lien pursuant to 11 U.S.C. § 506(d), which states that "[t]o the extent that a lien secures a claim against the debtor that is not an allowed secured claim, such lien is void." The Blendheims contended that because HSBC's claim had been disallowed, its lien secured a claim that is "not an allowed secured claim" and thus the lien could be voided.

    The bankruptcy court held a hearing the following month, specifically advising HSBC to take action to address the disallowance order. Voidance of the lien posed a more drastic consequence than simple disallowance of HSBC's claim in the bankruptcy proceeding: voiding the lien would eliminate HSBC's state-law right of foreclosure.

    Even though the threat of voidance loomed, a year passed, and still HSBC took no action to set aside the order.
For more, see In re Blendheim, Nos. 13-35354, 13-35412 (9th Cir. October 1, 2015), aff'g In re Blendheim, Bankruptcy No. 09-10283-MLB (Bankr. W.D. Washington, 2011).

See also:

(1) The court explained its finding that the Chapter 13 petition was filed in good faith in this excerpt:
  • Examining the facts presented here, and considering the totality of the circumstances, the bankruptcy court did not err in finding that the petition and plan were filed in good faith.

    The Blendheims received their Chapter 7 discharge in January 2009 and filed their Chapter 13 petition the following day; their Chapter 7 case was not closed until November 2010.

    Contrary to HSBC's contention that the Blendheims sought Chapter 13 relief solely to avert foreclosure, the bankruptcy court found that the Blendheims sought Chapter 13 protection for additional, valid reasons. The Blendheims filed their Chapter 13 case to deal with fraud claims and other issues surrounding the first-position lien, to repay secured debt owed to their homeowners association, and to clarify how post-petition debts would be paid.

    According to the court, the Blendheims "do not appear to be serial `repeat filers' [who are] systematically and regularly abusing the bankruptcy system." And with respect to the automatic stay, the court stated: "Although the Chapter 13 filing appears to be motivated by Debtors' wish to avoid the foreclosure sale of their Residence, the Court does not find that filing for Chapter 13 bankruptcy under those circumstances necessarily constitutes bad faith." It explained, "[m]any Chapter 13 debtors file for bankruptcy on the eve of foreclosure sale as a last resort." The bankruptcy court did not clearly err in concluding that the Blendheims filed their Chapter 13 petition in good faith on these facts.

    We conclude that the bankruptcy court properly voided HSBC's lien under § 506(d), confirmed the Blendheims' Chapter 13 plan offering permanent voidance of HSBC's lien upon successful plan completion, and found no due process violation or bad faith purpose in filing the Chapter 13 petition. Accordingly, we affirm the bankruptcy court's lien voidance order, plan confirmation order, and plan implementation order.

Loan Servicer's Mortgage Reinstatement Letter Containing 'Estimated' 'Anticipated' Fees & Costs Not Yet Incurred May Provide Fertile Ground For Homeowners Filing FDCPA Lawsuits

From a recent client alert from the law firm Maurice Wutscher LLP:
  • Earlier this summer we explained here that the Third Circuit’s decision in Kaymark spelled Fair Debt Collection Practices Act trouble for mortgage lenders and servicers who make statements seeking to recover estimated fees and costs. [...]

    In Beard v. Ocwen, a federal district court, citing Kaymark, recently held a mortgage servicer liable under the FDCPA for a reinstatement letter made by its foreclosure counsel, which included fees and costs that had not been incurred.

    Word Placement Matters When Describing ‘Anticipated’ Fees

    Jaynie Beard defaulted on her mortgage loan. Following the default, the mortgage loan’s servicing was transferred to Ocwen Loan Servicing. At some point, the decision does not tell us exactly when, a foreclosure action was started. Beard, through counsel, requested the amount needed to reinstate her mortgage. Foreclosure counsel sent Beard’s attorney a letter that included the following statement: “REINSTATEMENT AMOUNT ANTICIPATED GOOD THROUGH 9/20/2013″ and then went on to list attorneys fees and costs that had not actually been incurred.

    Beard sued the mortgage servicer and foreclosure attorney alleging that the reinstatement letter’s demand for payment of unincurred fees and costs was false and deceptive in violation of FDCPA § 1692(e)(2), (e)(10) and sought to collect amounts not authorized by any agreement or law in violation of FDCPA § 1692 f(1).

    The Court began by noting Kaymark applied the FDCPA’s “least sophisticated consumer” standard to communications even when they are transmitted to a consumer’s attorney.

    Using this standard, it concluded that when such a consumer read the reinstatement letter she would not understand that the fees and costs had not been incurred. First, because the word “anticipated” was not placed next to each fee and cost that had not been incurred. And second, because “anticipated” was placed immediately prior to “good through 9/20/2013″ which “speaks to the date that payment was due, not the amount of the fees.”

    In an earlier decision involving the same foreclosure counsel, the Court noted a similar communication escaped FDCPA liability because “the word anticipated was written in parentheses next to each and every unincurred fee — six times in total.”

    Providing statements of the amount due or of the amount required to cure a default – such as in Notices of Intention to Foreclose, periodic statements, and the like — is risky for mortgage servicers under the Kaymark decision. And as we predicted earlier this year, Kaymark impacts how a mortgage servicer can include unincurred fees and costs in its communications with defaulted borrowers, at least in the Third Circuit (Delaware, New Jersey, Pennsylvania and the Virgin Islands).

Thursday, October 08, 2015

Federal Appeals Court OKs $20K Court Sanction Against Real Estate Operator With History Of Abusing Court System With Groundless Lawsuits In Connection With Running Rent Skimming Racket

In a recent ruling from a Federal appeals court, a trial court's sanction award of $20,000 was affirmed against a real estate operator who was apparently in the business of buying foreclosures for low stated dollar amounts where the foreclosing entity was a homeowner association holding a lien subordinate to an existing mortgage.

More specifically, the purchaser of property subject to the existing mortgage had a long history of buying properties in these situations, and then delaying foreclosures of the existing mortgages in order to 'milk' the properties for as much rent as it could squeeze out them (ie. referred to by some as a rent skimming racket), according to the court ruling.

In addition. in this particular case, the real estate operator sought to squeeze additional money (ie. "key" money) directly from the bank (in what seemingly resembled a shakedown/ extortion payoff ) by threatening to cloud the title to the collateral unless the bank coughed up the cash, according to the court ruling.

An excerpt from the appeals court ruling describing the findings of the trial court:
  • The court described DTND as "a frequent litigator in Texas federal and state courts" whose "business model appears to consist entirely of purchasing deeply discounted homes at homeowners association foreclosure sales, collecting rental income from the properties, and then, when superior purchase-money mortgage lien holders attempt to foreclose, filing civil actions in state court attempting to halt the foreclosure."

    Reviewing DTND's litigation history in federal court since 2011(1) — which included seventeen cases that "have been dismissed with prejudice pursuant to a motion to dismiss" and thirty that "have been voluntary dismissed or dismissed without prejudice with [DTND's] consent" — the court observed that "four of the lawsuits that were dismissed on the merits included claims under the DTPA and TDCA arising out of a bank's failure to notify [DTND] of a right to cure."[2] The court concluded that "[DTND's] apparent wish to avoid a determination on the merits is less than surprising because its legal theories are frivolous."

    The district court determined that sanctions were warranted based on DTND's litigation history and its conduct in this case. DTND's counsel had offered to "release [DTND's] claims to the property for $20,000" and told Citi that "even if our lawsuit is dismissed fully and finally, we can more than likely create a bar to the selling of the home. We have been paid off by Title Companies because they are very wary of issuing a title insurance policy when we have a recorded deed."

    Based in part on that statement, the court found "that this action was filed with knowledge of its groundlessness and for the purposes of harassment and delay" in violation of Texas Rule of Civil Procedure 13 and Chapter 10 of the Texas Civil Practice and Remedies Code. The court imposed a $20,000 sanction against DTND and its law firm "to deter DTND and its counsel from continuing to file groundless, harassing lawsuits." DTND maintains that the court lacked jurisdiction to impose sanctions and alternatively that the sanctions are an abuse of discretion..
For the entire appeals court ruling, see DTND Sierra Inv., LLC v. Citimortgage, Inc., Case No. 14-51141 (5th Cir. Sept. 4, 2015).

(1) Go here for links to a slew of other litigation involving this outfit.

Florida Appeals Court Boots Another Standing-Lacking Bankster, Rejecting An Attempt To 'Backdate' Mortgage Assignment To Save Suit After Commencement Of Foreclosure Action

Another Florida trial court ruling in a foreclosure case was recently reversed on appeal in a case where the bankster lacked standing to foreclose in that it failed to prove it owned the promissory note prior to commencement of the action in court.

The appeals court rejected the bankster's attempt to execute the necessary assignment after it filed the foreclosure action, where said assignment contained a purported effective date before the complaint was filed in court. Further, the bankster's witness was unable to provide any information to verify when assignment took place, except for the text contained on the assignment itself.

For the ruling, see Kenney v. HSBC Bank USA, National Association, as Trustee, No. 4D13-4165 (Fla. 4th DCA Sept. 24, 2015).

One Florida Trial Court Gets It Right; Says Bankster Has No Standing To Foreclose Merely By Reason Of Note & Mortgage Ownership By Its Wholly-Owned Sub

From a client alert from the Florida law firm Burr & Forman:
  • The ownership of the promissory note by a subsidiary corporation of the Plaintiff cannot alone establish standing to foreclose. In HSBC Bank USA, N.A. v. Ryan Kahan, et al., the Court granted the borrowers’ motion for involuntary dismissal or directed verdict due to (1) Plaintiff’s failure to establish standing at the commencement of the action; and (2) Plaintiff’s inability to establish a prima facie case of foreclosure due to its failure to provide any testimony as to Plaintiff’s damages.

    On October 8, 2012, Plaintiff HSBC Bank USA, N.A. (“HSBC Bank”) commenced this residential foreclosure action. In its complaint, HSBC Bank alleged that it was the owner and holder of the subject promissory note. Attached to the complaint was a copy of an unendorsed promissory note payable to HSBC Mortgage Corp. USA (“HSBC Mortgage”). The borrowers asserted several affirmative defenses, including HSBC Bank’s lack of standing.

    During the bench trial, HSBC Bank’s only witness (an employee of its mortgage servicer) testified that HSBC Bank had standing because it was the owner of all outstanding and issued stock of HSBC Mortgage. The witness testified that HSBC Mortgage was therefore a wholly-owned subsidiary of HSBC Bank.

    In order to establish HSBC Bank’s standing, a composite exhibit was entered into evidence that contained various corporate documents establishing the relationship between HSBC Bank and HSBC Mortgage. HSBC Bank’s witness had no personal knowledge of the corporate documents or the corporate structure of either HSBC Bank or HSBC Mortgage. HSBC Bank argued it had standing by virtue of its alleged status as the parent company of a wholly-owned subsidiary.

    The Court stated that Florida law is clear in that “[a] parent corporation and its wholly-owned subsidiary are separate and distinct legal entities. . . . As a separate legal entity, a parent corporation . . . cannot exercise the rights of its subsidiary.” Wright v. JP Morgan Chase Bank, N.A., 169 So. 3d 251 (Fla. 4th DCA 2015) (quoting Am. Int’l Group, Inc. v. Cornerstone Bus., Inc., 872 So. 2d 333, 336 (Fla. 2d DCA 2004)).

    Despite this, HSBC Bank put forward two documents to establish standing: (1) an Assignment and Assumption Agreement from HSBC Mortgage to HSBC Bank; and (2) a Secretary’s Certificate (dated after the commencement of the action) from HSBC Mortgage indicating that HSBC Bank is the sole shareholder of HSBC Mortgage. The Court concluded that neither document could be utilized to demonstrate that HSBC Bank had standing.

Wednesday, October 07, 2015

Boston Feds Pinch Homeowner For Alleged Fraud In Obtaining Five Home Loans On Her Residence, Then Recording Phony Lien Satisfactions For Each One, Creating The False Appearance That Earlier Loans Had Been Fully Paid

From the Office of the U.S. Attorney (Boston, Massachusetts):
  • A Hingham woman was charged in U.S. District Court in Boston [] with defrauding mortgage companies in connection with multiple mortgages she obtained on a single residence.

    Denise Bruce, 56, was indicted on five counts of bank fraud.

    According to the indictment, between 2004 and 2008, Bruce fraudulently obtained five mortgage loans from different banks in amounts ranging from $325,000 to $487,500 on her Hingham property by submitting false information regarding her employment history, income, assets, and debt.

    The indictment also alleges that Bruce filed fraudulent discharges of mortgages with the Plymouth County Registry of Deeds to create the appearance that earlier loans had been paid in full, when in fact, none of the loans had been paid.

Warrant-Wielding Cops Raid Court-Appointed Guardian's Office Seeking Evidence Of Alleged Abuse Of Power Over Wards; One Victim Who Lost Home To Foreclosure Now 'Serving Life Sentence' In Nursing Home; Another Barely Dodges Foreclosure, But Left Destitute

In Boulder City, Nevada, KTNV-TV Channel 13 reports:
  • Breaking news in an ongoing Contact 13 investigation as search warrants are served at multiple locations.

    Contact 13 Chief Investigator Darcy Spears has been shining a spotlight on guardianship exploitation for nearly a year. Now law enforcement is taking an unprecedented step.


    As of this morning, private guardian April Parks can no longer avoid accountability over allegations of double dipping, misspent money and abuse of power. Police served search warrants at Parks' home in Boulder City and also at her office on St. Rose Parkway near the 215.

    The law enforcement activity spearheaded by the Attorney General's office comes about five months after Contact 13 first exposed allegations against Parks for exploiting her wards.

    Rudy and Rennie North. Mrs. Elizabeth Indig. Phyllis Moscowitz-Crowe. They're just a few of the more than 100 people who were made wards of the court with Parks as their guardian.

    Now, police are looking at what Parks did with their money and assets.

    Investigators from the Nevada Attorney General's office, Las Vegas Metropolitan Police Department, and Boulder City Police carted out boxes of documents from Parks' office and spoke to her at her home.


    The joint law enforcement investigation, which includes the Clark County District Attorney, is the first of its kind and, according to affected families, it's long overdue.

    Rick Black, whose father-in-law died under guardianship in July, said last week to the State Guardianship Commission, "When criminal activity is identified in the Family Court historically here in Clark County, that's been ignored when it pertains to the private guardians and their lawyers."

    But with the service of today's warrants, that could be changing.

    Law enforcement's focus on Parks began in June when Boulder City Police began investigating the disappearance of eight of Parks' wards.

    She'd moved them without notice from Lakeview Terrace in Boulder City--leaving a trail of unpaid bills behind.

    Contact 13 also caught Parks double dipping into the bank accounts of Rudy and Rennie North, which she spoke about in May.


    Just last week, we told the story of Phyllis Moscowitz-Crowe who was left destitute and almost lost her home after Parks became her guardian. "She's so evil and so vicious even the devil wouldn't have her in his zone," Moscowitz-Crowe said.

    Elizabeth Indig's mother did lose her home after Parks let it slip into foreclosure. It was sold for pennies on the dollar and then Parks sold most of Mrs. Indig's clothing and belongings.

    "My mom is now sentenced to a life in a nursing home when we had a trust and we had made plans to keep her in her own home with all of her things until she died," Elizabeth said.

    We've asked the court what will become of all the people April Parks has guardianship over--now that police have seized her files, paperwork and computer equipment. We're still waiting on a response and we will stay on this story as it develops.
For the story, see Search warrants served as police investigate guardianship exploitation.

In a related story, see Families caught up in guardianship system losing their homes.

See generally, 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 the court-sanctioned guardianship/public administrator system. granny-snatching

Tenants' Stove Removal Without First Shutting Off Gas Before Vacating Premises May Be To Blame In Blast That Left One Resident Dead, Another Missing, Numerous Others Injured, Dozens Displaced As City Issues Vacate Orders For Five Buildings; Landlord Left w/ Hollowed-Out Shell

In Borough Park, Brooklyn, the New York Daily News reports (via The Real Deal (NYC)):
  • The removal of a high-end stove may have sparked a massive gas explosion that tore the front off a Brooklyn building and left one woman dead Saturday, officials said.

    With the wreckage marring the Borough Park street, police were still searching early Sunday for another resident who was missing.

    FDNY Commissioner Daniel Nigro said the gas leak that triggered the deadly blast may have been caused when second-floor tenants of the 13th Ave. building near 42nd St. recently moved.

    They took the stove, but apparently neglected to have the gas line turned off.

    “They were moving out of the apartment and wanted to take that stove with them,” Nigro said at a Saturday afternoon news conference. “(Taking) a stove with you entails disconnecting the gas line which leads us preliminarily to look in that direction for the cause of this explosion.”

    The force of the explosion left behind a hollowed-out shell along a string of aluminum-sided, three-story buildings.

    “The front of this building was blown out into the street,” Nigro said. “We have not yet been in that building because of the structural damage.”

    The dead woman was believed to be a Dominican in her 60s who lived on the third floor, according to sources.

    Her burned body was found on the building stairwell, officials said.

    Firefighters laid a sheet over her before continuing their search for survivors, witnesses said.

    Three victims, including a 34-year-old man, his 9-year-old son, and a 27-year-old man were caught in the storm of debris.

    They were rushed to New York Methodist Hospital with minor injuries to their legs, officials said.

    “It was a tough day here in Borough Park,” said Mayor de Blasio as he returned to a community he once represented in the City Council Saturday. “This is a tragedy because we know that we have lost one person. It is also the Sabbath day. I know it was a real shock to the residents of this community to hear this explosion.”

    Shell-shocked neighbors said a menacing black plume of smoke descended on the street as the fire ripped through the building that once held the “Pots N Watts” appliance store.

    “It was dark ... like night,” said 11-year-old Roza Arafa Chowdhury, recalling the moments after the 1:05 p.m. blast. “A guy was trying to take his father (away from the scene) but the fire was too big and they were burned.”

    Five out of the more than 200 firefighters who responded to the scene suffered minor injuries, Nigro said.

    Salvadore Toree, who lives next door to the doomed building, had just gotten into his friend’s car when he heard the blast.

    “We got out and saw smoke and glass everywhere,” he told The News, speaking in Spanish. “I thought about my family. The flames were huge and I was scared that the building could collapse.”

    His building wasn’t damaged but the one next door was consumed in flames, he said.

    Panicking, he ran up to his third-floor apartment and told his wife, two daughters and son that everyone had to leave.

    “They left with nothing ... without shoes,” he said. “I was afraid something else would explode. Thank God we’re OK.”

    By Saturday evening, the fire was out, but the building remained structurally unsound.
Source: Explosion at Brooklyn building that killed one woman may have been caused by tenants removing high-end stove: officials.

See also, Crews Seek Missing Woman and Cause After Brooklyn Explosion:
  • About 50 residents were evacuated from the area and forced to seek shelter elsewhere overnight, Mr. Lander said. The Fire Department said 10 firefighters had been treated for minor injuries. Three neighboring buildings were damaged by the explosion, fire and smoke, officials said. [...] On Sunday, the block where the explosion occurred was a “frozen zone,” where business were closed and five buildings remained under orders to vacate, the police said.

Tuesday, October 06, 2015

Unable To Negotiate "Fair Market" Deals For Land With Some Coney Island Property Owners, NYC Decides To Invoke Eminent Domain To Simply Wrestle It Away From Them For New Amusement Park; Area Business Owners Left Stunned By Scheme

In the Coney Island section of Brooklyn, the New York Post reports:
  • Frustrated by stubborn Coney Island landowners, the de Blasio administration plans to seize property under the city’s rarely used power of eminent domain in order to spur long-stalled economic development in the People’s Playground, The Post has learned.

    The Parks Department plans to create new amusements and other amenities by grabbing up three vacant beachfront sites through condemnation proceedings — including a 60,000-square-foot tract that once housed the original Thunderbolt roller coaster immortalized in Woody Allen’s 1977 film “Annie Hall,” officials said.

    It’s unclear what type of attractions the city wants to bring to these sites, which together total 75,000 square feet and also include smaller tracts off the Boardwalk on West 12th Street and on West 23rd Street.

    City officials said they’re turning to eminent domain because they’ve been unable to cut “fair-market” deals with the property owners after exhaustive efforts.

    But area business owners said they were stunned by the scheme, which includes using seized land to build new streets and parks that were outlined in a rezoning plan approved in 2009, under former Mayor Michael Bloomberg.

    “It’s not nice to take people’s property. We live in America. We’re not communists here,” said one Boardwalk business owner.

    The head of the neighborhood community board, meanwhile, told The Post he had no idea this was even being contemplated.

    “This is the first I am hearing of it,” said Community Board 13 Chairman Butch Moran.

    Reviving Coney Island is considered one of Bloomberg’s legacy projects, but he vowed never to use eminent domain to speed the process up — even when his plans were held up for years by heated real-estate negotiations with local developer Joe Sitt.

    The city ultimately only moved forward with building Luna Park and other new attractions after it agreed in November 2009 to shell out a staggering $95.6 million to Sitt for nearly seven acres of prime amusement-district property.

    The original Thunderbolt, which opened in 1925, stopped operating in 1982. A sleeker, looping new version of the ride opened last year on a narrow acre of city-owned land, which is part of a much larger site that once housed the original wooden coaster of the same name and other amusements.

    The family of Kansas Fried Chicken tycoon Horace Bullard, who died in 2013, and longtime business partner Peter Sheffer own the rest of the old Thunderbolt property by West 15th Street and the Boardwalk.

    Sheffer said the city has yet to speak to him about the condemnation plan. He said city officials have made “multiple offers” for the site — and that all overtures were “unacceptable.”

    Bullard and Sheffer’s property eyed for condemnation is zoned for indoor and outdoor amusements, restaurants and other amenities.

    The Thunderbolt site also includes a 12,500-square-foot parcel on Surf Avenue that is zoned for building future hotels, but that portion is not targeted for eminent domain.

    A public hearing will be held Oct. 19 at Coney Island Hospital to solicit community input on the condemnation plan. It will start 1:30 pm.

    The original Thunderbolt was built atop a 19th-century home, originally known as the Kensington Hotel. In “Annie Hall,” the house under the coaster — occupied until the mid 1980s — was the childhood home of lead character Alvy Singer.

    Despite calls for the Thunderbolt to be landmarked, it was razed without Bullard’s consent in 2000 on orders from then-Mayor Rudy Giuliani, who saw it as an eyesore for fans of a new ballpark for the Mets’ minor-league Brooklyn Cyclones, whose stadium opened in 2001.

Elderly Homeowners Stand To Take Financial Beating, Then Get The Boot At Hands Of Eminent Domain-Invoking Local Government In One St. Louis Neighborhood

In St. Louis, Missouri, the St. Louis Business Journal reports:
  • Bernice Richerson, 76, has lived for 50 years at 2516 Montgomery St. She raised her children in the 110-year-old house, with an appraised value of $10,000. “It’s a quiet neighborhood,” she said from her porch, which oversees a neatly manicured lawn.

    The city of St. Louis wants Richerson and her neighbors to make way for a new $1.6 billion headquarters for the National Geospatial-Intelligence Agency (NGA), which uses satellites to gather information for the Defense Department and employs 3,100 people at a facility near the Anheuser-Busch brewery. Richerson and 18 other owners, including controversial developer Paul McKee, are being threatened with eminent domain, a forced sale of properties that could wrap by late this year or early 2016.

    Richerson said she likely could not buy another home with the money being offered by the city, and would have to rent somewhere in north St. Louis County. “It’s not fair,” Richerson said. “I don’t have the energy to move.”

    Jocqualyn Holley has lived down the street with her husband and two kids for more than a year. Her 5,100-square-foot house, at 2544 Montgomery St., is targeted for eminent domain, though Holley said her landlord, Cardinal Properties of St Louis VII, would move her somewhere else.

    “This neighborhood right here is fine,” Holley said. “But a lot of these neighborhoods, if they need to tear them down, that’s fine,” she said, gesturing farther east into the proposed NGA site.

    If the wrecking ball does come, Holley said she did not know where her neighbors could go. Most, like Richerson, are elderly, Holley said.

    “They’ve been here for years,” she said. “Maybe some will go to the nursing home, maybe some with family.”

    Eighty-two-year-old James Spencer, of 2517 Benton St., said he will fight eminent domain. The city’s latest offer, about $116,000, isn’t enough, Spencer said. Another house he owns, at 2210 Benton St., is targeted for eminent domain. There are 29 in all — not including McKee’s, according to a resolution filed with the Board of Aldermen that would OK the condemnations.

    Where am I going to get a house for that?” Spencer said, adding that the amount does not consider what he could rent the house for, about $700 a month. Still, he said he knows he can’t beat the city. “They ain’t going to offer what I want,” he said while sitting in a chair beside his fish tank.

    The city, which wants to retain the $2.4 million in annual tax revenue contributed by the NGA, says it has made good-faith offers to all homeowners in the site. It runs just south of St. Louis Avenue to the north; Jefferson Avenue and Parnell Avenue to the west; Cass Avenue to the south; and North 22nd Street to the east.

    Officials have said they may be willing to physically move certain houses. They also point out that much of the 100-acre site is vacant, with just 47 owner-occupied residences. Seven of those are currently targeted for eminent domain, but negotiations continue.

    Annie Mae Washington raised her five children — and some grandchildren — two houses west of Spencer’s, at 2521 Benton St. Although the neighborhood has changed over 42 years, she does not want to leave. Washington, like others interviewed Thursday, said the city’s latest offer wouldn’t allow her to buy another home, and she cannot make mortgage payments on a fixed income.

    “Me and my neighbors are holding out to see what happens,” Washington said. “Instead of trying to get us out, why can’t they build up around here?”

    “There’s room to build,” she said, looking toward empty fields with a view of the Gateway Arch.

Elderly Widow, Neighbors Dodge Boot, Beat Back Bully Trump, Bought & Paid For Local Pols Invoking Condemnation/Eminent Domain In Failed Atlantic City Land Grab

A recent story in The Guardian recounts the two decades-old story of homeowner Vera Coking, an elderly widow, who, along with a couple of her Atlantic City, New Jersey neighbors, successfully fought off a blatant land grab attempt by current Republican presidential candidate Donald Trump to snatch their properties from them and give them the boot when he was planning construction of one of his not-so-successful casinos.
  • Since he shot to the top of the presidential polls, Donald Trump’s serial bankruptcies and bullying nature have made big headlines. But no one seems to have brought up a bullying business practice he’s particularly fond of: eminent domain.

    The billionaire mogul-turned-reality TV celebrity, who says he wants to work on behalf of “the silent majority,” has had no compunction about benefiting from the coercive power of the state to kick innocent Americans out of their homes.

    For more than 30 years Vera Coking lived in a three-story house just off the Boardwalk in Atlantic City. Donald Trump built his 22-story Trump Plaza next door. In the mid-1990s Trump wanted to build a limousine parking lot for the hotel, so he bought several nearby properties. But three owners, including the by then elderly and widowed Ms Coking, refused to sell.

    As his daughter Ivanka said in introducing him at his campaign announcement, Donald Trump doesn’t take no for an answer.

    Trump turned to a government agency – the Casino Reinvestment Development Authority (CRDA) – to take Coking’s property. CRDA offered her $250,000 for the property – one-fourth of what another hotel builder had offered her a decade earlier. When she turned that down, the agency went into court to claim her property under eminent domain so that Trump could pave it and put up a parking lot.

    Peter Banin and his brother owned another building on the block. A few months after they paid $500,000 to purchase the building for a pawn shop, CRDA offered them $174,000 and told them to leave the property. A Russian immigrant, Banin said: “I knew they could do this in Russia, but not here. I would understand if they needed it for an airport runway, but for a casino?”

    Ms Coking and her neighbors spent several years in court, but eventually with the assistance of the Institute for Justice they won on July 20, 1998. A state judge rejected the agency’s demand on the narrow grounds that there was no guarantee that Trump would use the land for the specified purpose.(1) “TRUMPED!” blared the front page of the tabloid New York Post.

    It wasn’t the only time Trump tried to benefit from eminent domain. In 1994, Trump incongruously promised to turn Bridgeport, Connecticut, into “a national tourist destination” by building a $350m office and entertainment complex on the waterfront. The Hartford Courant reported: “At a press conference during which almost every statement contained the term ‘world class,’ Trump and Mayor Joseph Ganim lavished praise on one another and the development project and spoke of restoring Bridgeport to its glory days.”

    But alas, five businesses owned the land. What to do? As the Courant reported: “Under the development proposal described by Trump’s lawyers, the city would become a partner with Trump Connecticut Inc and obtain the land through its powers of condemnation. Trump would in turn buy the land from the city.” The project fell apart, though.

    Trump consistently defended the use of eminent domain. Interviewed by John Stossel on ABC News, he said: “Cities have the right to condemn for the good of the city. Everybody coming into Atlantic City sees this terrible house instead of staring at beautiful fountains and beautiful other things that would be good.” Challenged by Stossel, he said that eminent domain was necessary to build schools and roads. But of course he just wanted to build a limousine parking lot.

    In 2005 the Institute for Justice took another eminent domain case to the Supreme Court. By 5-4 the Court held that the city of New London, Connecticut, could take the property of Susette Kelo and her neighbors so that Pfizer could build a research facility. That qualified as a “public use” within the meaning of the Constitution’s “takings” clause. The case created an uproar.(2)

    Polls showed that more than 80% of the public opposed the decision. Justice Sandra Day O’Connor issued a scathing dissent: “Any property may now be taken for the benefit of another private party, but the fallout from this decision will not be random. The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms … The Founders cannot have intended this perverse result.”

    Conservatives were especially outraged by this assault on property rights. Not Donald Trump, though. He told Neil Cavuto on Fox News: “I happen to agree with it 100%. if you have a person living in an area that’s not even necessarily a good area, and … government wants to build a tremendous economic development, where a lot of people are going to be put to work and … create thousands upon thousands of jobs and beautification and lots of other things, I think it happens to be good.”

    When Donald Trump says: “I give to everybody. They do whatever I want,” this is what he’s talking about: well-connected interests getting favors from government. Vera Coking knows the feeling.
Source: Donald Trump's eminent domain love nearly cost a widow her house.

(1) Casino Reinvestment Dev. Auth. v. Banin, 320 N.J.Super. 342, 727 A.2d 102 (Law Div. 1998). The following excerpt describes how it was Trump who ran to the government public agency to initiate the attempted land grab (for property that, by the way, wasn't even needed to construct the project) after it couldn't acquire the property directly from the owners:
  • This project did not begin as many redevelopment projects do, with the public agency identifying and putting together an assemblage of land in order to attract a developer.

    This was a project proposed by Trump Plaza where Trump Plaza already owned or controlled most of the land. With the exception of a new driveway which did not involve these properties, all of the significant construction was to occur on the land already owned or controlled by Trump.

    The parcels owned by the defendants were in use as a residence by Coking and as active businesses by Banin and Sabatini. The plans which justified including defendants' properties in this project and subjecting them to the power of eminent domain called for the most minimal development possible.

    Coking's property to be blacktopped and used for surface parking and Banin and Sabatini's properties would be planted with grass and used for a park or green space.
(2) By the way, the proposed development of the New London, Connecticut property snatched from the homeowners in the Kelo case failed; the property is now currently vacant. See New London may build a “memorial park” honoring victims of eminent domain on the former site of the Kelo house:
  • [A]lthough the land was originally condemned for the purposes of promoting “economic development,” the poorly designed original development plan and a number of later proposals fell through; the condemned property lies empty to this day, used only by feral cats.

New Orleans Homeowner: City Redevelopment Authority Illegally Took My Home & Auctioned It Off, Falsely Claiming It Was Blighted & Abandoned, & They Never Gave Me Notice Of The Expropriation Proceeding

In New Orleans, Louisiana, the Louisiana Record reports:
  • A New Orleans woman is suing a local redevelopment agency claiming they improperly deemed her home blighted and abandoned and expropriated it from her.

    Natasha Gaudin filed suit against New Orleans Redevelopment Authority in Orleans Parish Civil District Court.

    Gaudin claims she purchased a property located at 536-538 South Tonti Street in New Orleans on Feb. 2, 2004 by act of sale and was given clear title of the property. In 2008 New Orleans Redevelopment Authority (NORA) allegedly filed a petition for expropriation by a declaration to take possession of the property.

    Gaudin contends contends that NORA alleged her property was abandoned or blighted. However the plaintiff claims the property was neither abandoned nor blighted.

    NORA also allegedly sent notice to a number of homeowners whose property would be expropriated. However, the plaintiff alleges she did not receive notice of the proceeding and there is no return of service indication that she received a notice.

    Gaudin purports on March 28, 2015 NORA sold the property for $130,000 in a NORA-sponsored real estate auction. The plaintiff contends that the taking of her property was an improper purchase of her property.

    The plaintiff has asked the court to issue a temporary injunction against the defendant, NORA restraining enjoining and prohibiting it from transferring ownership of the plaintiff’s property.

    An unspecified amount in damages is sought for all cost of the proceedings and other relief that the court deems just and equitable.

Monday, October 05, 2015

Westchester DA Pinches Now-Disbarred Attorney For Allegedly Stealing $1.4M From Clients; Charges Come On Heels Of Suspect Buying His Way Out Of 2 To 6 Year Prison Sentence In Earlier Unrelated Case By Giving Back $150K He Fleeced From Dead People Without Wills While Working In Bronx Public Administrator's Office

In White Plains, New York, the ABA Journal reports:
  • Michael Lippman, a suburban New York City lawyer, was recently charged with stealing more than $1.4 million from clients. The accusation comes a year after he settled felony grand larceny charges, stemming from allegations that as an attorney in the Bronx Public Administrator’s Office he stole more than $1.5 million from estates he settled.

    Regarding the more recent charges, reports that Lippman allegedly took the money from 13 clients, between 2010 and 2015.

    For the Bronx matter, Lippman in September 2014 pleaded guilty to two counts of grand larceny, and avoided jail time by paying approximately $150,000 in restitution, according to a 2014 press release from the Bronx District Attorney’s Office. He was disbarred the same month that the plea agreement was announced.

    Murray Richman, Lippman’s lawyer, told the newspaper that his 70-year-old client has a gambling problem, and it’s unlikely he can repay the recently alleged thefts. According to Richman, Lippman has been living in his law office, located in Westchester County’s Hastings-on-Hudson.

    “It’s all a result of his addiction,” Richman said. “It’s ruined his life.”

    Lippman, charged with grand larceny, criminal tax fraud and scheme to defraud, was released on $50,000 bail.

    According to the Scarsdale Patch, in one instance, Lippman reportedly took approximately $159,000 from a foreclosure client who thought the money would be used to pay off a mortgage and stave off a foreclosure, and in another took $431,000 from someone planning to complete a property purchase.
Source: Lawyer who avoided jail time by paying restitution reportedly steals more money a year later.

See also:

Role In Closing Bogus Straw Buyer Transactions, Including Fraudulent Short Sales Involving Purchasers, Sellers Working Together To Retain Control Of Property While Hoodwinking Bankster Into Approving Deals Lands Attorney 14-Month Stay In Prison

In Stamford, Connecticut, the Stamford Advocate reports:
  • A federal judge sentenced Christopher Brecciano, a 37-year-old Stamford resident, to 14 months in prison for knowingly closing mortgage transactions for “straw buyers” who hoodwinked lenders into lending money for other people to use purchasing properties in Stamford, Bridgeport and Norwalk that subsequently ended up in foreclosure.

    U.S. District Judge Janet Hall ordered Brecciano to pay $8.4 million in restitution to lenders.

    Between 2006 and 2010, Brecciano and others made false statements on mortgage applications that included the verification of purported down payments, according to the office of U.S. Attorney Deirdre Daley. Brecciano was also was involved in short sales in which he knew a buyer and seller were working together to retain control of the property, while representing to the lender that the sales were arms’ length transactions.
For the U.S Attorney (District of Connecticut) press release, see Stamford Attorney Sentenced to Prison for Role in Mortgage Fraud Scheme.

Arizona AG Shakes $130K Out Of Attorney (With An Add'l $400K In Penalties To Be Suspended Provided He Keeps His Nose Clean) In Settlement Of Allegations That He BS'd Financially Strapped Homeowners When Peddling Crappy Loan Modification Services

From the Office of the Arizona Attorney General:
  • Attorney General Mark Brnovich announced [] a consent judgment obtained against Arizona-licensed Foreclosure Attorney Brent Randall Phillips. Phillips violated the Arizona Consumer Fraud Act by engaging in fraudulent and deceptive practices when offering loan modification services to struggling homeowners facing foreclosure. The judgment bars Phillips and his law firms, Phillips Law Center, P.L.C., d/b/a Randall Law Group, and Farmers Law Group from conducting mortgage loan modification services in the State of Arizona or on behalf of Arizona consumers and obtains restitution for victims.

    “These homeowners were about to lose their homes to foreclosure and trusted Phillips to help them, but he betrayed their trust,” said Attorney General Mark Brnovich. “This office will not tolerate schemes that target and prey on vulnerable consumers who are struggling to pay their mortgages or facing foreclosure.”

    This consent judgment resolves the State’s lawsuit, filed in July 2014, alleging that Phillips and his law firms violated the Arizona Consumer Fraud Act, the Federal Mortgage Assistance Relief Services Rule (the MARS Rule), and various other state laws and regulations. The lawsuit was part of a joint federal-state sweep by 15 states, the Federal Trade Commission, and the Consumer Financial Protection Bureau targeting operators of fraudulent mortgage rescue or loan modification schemes that preyed on delinquent homeowners or those facing foreclosure.

    The State’s lawsuit alleged that Phillips and his law firms engaged in deceptive practices while operating as law firms that advertised and performed loan modification services. According to the consent judgment, Phillips and his law firms:

    1) sent out advertisements to approximately 20,000 Arizona consumers that created the misleading impression of being a communication from the consumer’s mortgage loan holder and offering mortgage restructuring, a principal reduction, payment relief, interest reductions, or the elimination of a second mortgage;

    2) used marketing materials that contained misleading promises about their services, such as unsubstantiated representations that the consumer could “rest assured with certainty” that they would obtain mortgage relief for the consumer; and

    3) misrepresented that they had the right to charge and collect illegal upfront fees for mortgage assistance relief.

    [The] settlement provides for restitution of $65,000 to approximately 20 consumers, $15,000 for attorneys’ fees and costs, and $450,000 in civil penalties. The State will release its claim to $400,000 of the civil penalties if the Defendants comply with all of the terms set forth in the consent judgment.

Sunday, October 04, 2015

Financially Distressed Homeowners Get No Favors From HUD, Which Is Unloading Its Non-Performing Home Loans Out From Under Borrowers At Steep Discounts To Hedge Fund Investors Seeking 'Foreclose & Flip' Opportunities

The following highlights (see 11 things we learned investigating how the government sells mortgages to investors) have been lifted from a recent investigative report from The Center For Public Integrity, a nonprofit organization that does investigations and analyses of public service, government accountability, and ethics related issues:
  • 1. Over 98,000 “bad” mortgages have been sold to investors through a government program since 2010.

    2. The Department of Housing and Urban Development (HUD) sells mortgages to investors at a steep discount — at times as little as 41 percent of the mortgages’ collective value.

    3. Homeowners typically aren’t informed when their mortgages are sold. This prevents them from advocating for better terms, which they’re entitled to under Federal Housing Administration protection.

    4. Wall Street investors pay only two-thirds* of the full mortgage value when they buy mortgages from the government (*median price).

    5. Homeowners aren’t so lucky: they must pay about 124 percent* of the property value to keep their homes (*median price).

    6. HUD sells the mortgages in bundles as large as 5,944 loans. HUD designed the program to include nonprofits and community organizations, but the size of the bundles means large, institutional investors have a leg up in blind auctions. Currently only 2 percent of sold mortgages go to nonprofits.

    7. HUD’s mortgage sales program is meant to help distressed homeowners avoid foreclosure. But rather than offering better terms to borrowers, the new owners of these homes often flip them for a profit, advocates say.

    8. Only 16.9 percent of the mortgages HUD sold to investors between 2010 and 2013 have avoided foreclosure.

    9. Of those 16.9 percent, less than a third are performing, and over 10 percent have either sold through a third-party sale or been handed over through a deed-in-lieu, still resulting in a homeowner without a home.

    10. Even if a home isn’t foreclosed, there’s a high chance that the homeowner will lose their house anyway. According a Center for Public Integrity analysis of address data, Bayview Loan Servicing, LLC, took ownership of 1,319 properties. Other beneficiaries: JP Morgan Chase: 841 properties. Bank of America: 639.

    11. Many homeowners say they were still involved in renegotiating their loans while their mortgages were sold to investors. HUD’s own rules state the lender can only turn the loan over to HUD for sale once all efforts to keep homeowners in their home are exhausted.
For the full investigative report, see Hedge funds get cheap homes, homeowners get the boot.

HUD OIG Report Cautions Against So-Called Sovereign Citizens Running Real Estate Rackets Affecting Financially Distressed Homeowners, Renters, Contractors, Property Inspectors, Real Estate Agents

From a recent report from the Southern Poverty Law Center:
  • Antigovernment “sovereign citizens” – those “rules and laws don’t apply to me” folks who illegally occupy houses all over the United States – are finally getting the attention of the federal Department of Housing and Urban Development.

    HUD’s Office of Inspector General just released a 7-page report advising contractors, property inspectors, Section 8 housing administrators and Realtors how to recognize antigovernment sovereign citizens occupying vacant properties or using false deeds to support leasing.

    The FBI, which considers sovereigns a domestic terrorism threat, and HUD’s Inspector General both “have noticed a resurgence of sovereign citizen fraud” in federal housing programs, the report says.

    In the last four years, HUD investigators have presented a number of cases to federal attorneys for prosecution, resulting in 20 convictions and criminal recoveries of more than $17 million, the report says. Sovereign citizens also have been investigated for not only illegally occupying HUD properties, but also improperly deeding HUD-owned properties to themselves, the report says in detailing various scams.

    Frequently, when sovereign citizens occupy a vacant property, they post a warning notice or deed on the door or window. “It is often written in legal gibberish,” the government report says.

    Sovereign citizens are antigovernment extremists who do not recognize the authority of the federal government. They believe they are separate or sovereign from the United States and therefore exempt from federal, state and local laws as well as taxing and licensing requirements.

    In recent years, there have been several instances of violent encounters involving police and sovereign citizens.

    These groups take advantage of state laws that require county clerks to accept and file any quit claim deed presented to them as long as the forms are properly signed and fees are paid,” the report says. These sovereign citizen scams are often successful, it says, because no proof of ownership is required.

    The report says HUD’s Inspector General recently has become aware of sovereigns participating in the HUD subsidized Section 8 Housing Choice Voucher program, posing as landlords, using properties that they do not own.

    “They provide fraudulent deeds to housing authorities to establish ownership rights so they can participate as a landlord,” the report warns.

    Sovereign citizens also have been active in “foreclosure-rescue schemes.” In these scams, sovereign citizens find homeowners who are in mortgage default “to quit claim their deeds to them with the promise of stopping the foreclosure.” Then, extremists collect monthly payments from the homeowners, promising to return the deeds in the future. Desperate homeowners frequently believe these lies, the report says.

    “Eventually, banks evict the homeowners, and they have to contend with severely damaged credit histories,” the report adds.

    The report also warns people dealing with HUD housing that they likely could have contact with sovereign citizens “who may unlawfully occupy houses you inspect or may fraudulently represent themselves as potential landlords for the Section 8 program.”

    “Engaging in a verbal argument with these individuals could spiral into a violent confrontation,” the government report warns. “If you feel that you are in danger, contact local law enforcement immediately."

    “Unlike other squatters, sovereign citizens may retaliate if you confront them,” the report warns. Sovereign citizens are known to often file frivolous liens, seeking huge for penalties.

    “While in most instances, you can get these claims dismissed, it takes time and money to do so [and] the claims may affect your credit or delay financial transactions,” the report adds.

Debtors' Prisons: Alive & Well In New Hampshire?

From a recent report by the American Civil Liberties Union of New Hampshire:
  • In a practice startlingly akin to the debtors’ prisons of the 19th and early 20th centuries, Circuit Court judges in New Hampshire commonly jail those who have no ability to pay fines without a meaningful hearing and without providing access to counsel. This practice imposed on our most vulnerable citizens is unconstitutional, financially unsound, and cruel.

    In an alarming number of cases where indigent defendants appear in court to address an unpaid fine, judges do not inform these defendants of their rights. Judges do not afford them a lawyer. Judges do not even determine whether they can pay the fine. Judges simply put them in jail.

    This practice is systemic. A year-long investigation conducted by the American Civil Liberties Union of New Hampshire (“ACLU-NH”), in conjunction with University of New Hampshire School of Law Professor and ACLUNH Board Chair Albert E. Scherr, has revealed that the problem is not limited to a rogue judge or court, but is occurring throughout the state.

    This practice is also illegal. The United States Constitution, New Hampshire Constitution, New Hampshire law, and New Hampshire’s own Circuit Court rules all prohibit this modern-day version of a debtors’ prison. The law clearly states that, before an individual can be incarcerated for failure to pay a fine or fee, the court must (i) meaningfully inquire into the reasons for the failure to pay and (ii) determine that the individual is willfully refusing to pay despite having sufficient resources. The law prohibits courts from jailing individuals who simply cannot afford to pay.

    The Federal and State Constitutions further require representation by counsel if the judge is considering incarceration for failing to pay a fine or fee in a criminal case. In criminal cases, the State already has representation in the form of a prosecutor.

    Yet, according to our data, in 2013 New Hampshire judges jailed people who were unable to pay fines and without conducting a meaningful ability-to-pay hearing in an estimated 148 cases. In all of these cases, defendants were sent to jail without representation by counsel. And in three cases handled by the ACLU-NH in 2014, two Superior Court Judges and the New Hampshire Supreme Court granted relief to three individuals—Alejandra Corro, Richard Vaughan, and Dennis Suprenant—who were (or were going to be) jailed by Circuit Courts in violation of these constitutional principles. These cases, which are described in the “Personal Stories” section below, show that debtors’ prison practices can counterproductively lead to termination of an individual’s new employment, impede ongoing efforts of that individual to gain employment, and prevent struggling parents from caring for their infant children.
For the rest of the report, see Debtors’ Prisons in New Hampshire.