Saturday, October 24, 2015

Another Central Florida Couple Feels Pinch After Alleged Attempt To Unload Home Without Disclosing Known Sinkhole Activity To Unwitting Buyer; Pair Scored $240K Insurance Settlement, But No Evidence Of Subsequent Remediation Work Was Ever Filed Prior To Sale

In Hernando County, Florida, The Tampa Tribune reports:
  • A Brooksville couple face mortgage fraud charges after selling their home and failing to notify the buyers about sinkhole activity, deputies said.

    Rickey and Frances Shew received a $240,000 settlement from Florida Farm Bureau Insurance after a lawsuit and subsequent investigation in 2010 revealed that sinkhole activity caused structural damage to their home.

    In accordance with Florida law, the insurance company filed a document with the Hernando County Clerk confirming the sinkhole activity.

    There have been no reports filed with the clerk showing that remediation work was completed at the property, according to a release from the Hernando County Sheriff’s Office.

    On Sept. 16, 2010, the Shews paid off their mortgage, records show.

    On June 6, the Shews entered into a contract to sell their home for $229,000 but did not disclose the sinkhole activity, according to the release.

    The Shrews turned themselves in on Oct. 16.
Source: Brooksville couple charged after failing to disclose sinkhole to home buyers.

For the Hernando County Sheriff Office press release, see Detectives Make Arrest in Mortgage Fraud Case.

See Tampa Jury Slams "Secret Sinkhole" Sellers For Failure To Disclose 21-Foot Drop Underneath Home To Buyers Before Sale for a recent report of another Central Florida couple who were accused (and subsequently convicted) in a federal court for failing to disclose sinkhole activity before a sale.

Repair-Needing "Dream Home" Unloaded Onto Unwitting Grandma In Rent-To-Own Deal Turns Into Toxic Nightmare: Young Grandkids End Up Forced Out Of Home w/ Lead Paint Poisoning, She's Criminally Convicted For Failing To Make Unaffordable Remediation, House Ends Up Foreclosed

In Cleveland, Ohio, The Plain Dealer reports:
  • It was Stephanie Thomas' dream to own a home. The 46-year-old grandmother knew the rent-to-own colonial she'd moved into on Lenacrave Avenue needed work.

    She didn't know, though, that her new home was chock full of a dangerous toxin that would soon poison two of her grandchildren, land her in court and ultimately threaten to leave her homeless.

    Thomas' story is just one example that illustrates a slow-moving and disjointed system that responds to lead poisoned children in Cleveland, one where the outcome doesn't necessarily result in eliminating the poisonous hazard.

    Thomas story began in early December of 2012, when the Cleveland Health Department cited her after her her 1-and 2-year-old grandkids tested high for levels of lead in their blood.

    A city inspector investigated and found the lead was coming from her three-bedroom home in the Mount Pleasant neighborhood.

    The city gave Thomas time to fix the problems, which included lead-based paint peeling from the outside of her home and toxic dust from old doors and windows.

    The city's Environment Commissioner Chantez Williams said, in general, the city starts by giving property owners 90 days to fix a hazard, though they can ask for an extension.

    "They try to do the right thing," Williams said. "But what we're finding is that they don't have the necessary resources to do those things so it takes them a little bit more time to do that."

    Thomas's case, though, trailed out three years, through failed attempts at fixing the problem, after her grandchildren moved out of the home, which ultimately went into foreclosure and was sold at Sheriff's sale.


    Public records provided by the city to The Plain Dealer revealed that during a five-year window from 2009 through 2014 it took anywhere from a few months to two years from the time a property owner received an initial citation to the time a city prosecutor filed a criminal case for failure to abate a lead nuisance.

    In Thomas' case, a misdemeanor charge for not abiding by the city health code was filed in Housing Court eight months after she was initially cited.

    Housing Court Judge Ray Pianka put Thomas in a diversion program so she could be given more time to do the work. He also, as he does in many cases, ordered her not to have children staying in the home.

    Court staff referred her to city programs that could have helped with the needed repairs but she said she didn't qualify for some of them because she was behind on her taxes.

    The largest of these programs is federally funded with grants from The U.S. Department of Housing and Urban Development.

    The failed to get one of those grants in 2013 and has had little money to assist homeowners like Thomas since then. The city recently was awarded a $3.3 grant to restart those programs.

    A city program did help Thomas get exterior paint. She and her elderly father scaled ladders, covering over the dangerous old layers of paint. She also replaced several windows but said the work was a bit overwhelming. Thomas paid for the work with tax returns and later, after she was deemed disabled, with money from Social Security payments. "I'm at a point where I just don't want to worry and stress about this any more," Stephanie Thomas said.

    A roof leak and a busted pipe that caused extensive water damage over the winter set Thomas back once again. Soon she was facing foreclosure.

    Pianka eventually found her guilty and placed her on two years of probation but waived the court fines and fees she couldn't afford. [...]

Fannie Mae Unloads Chinese Drywall-Infected Home On Unwitting Central Florida Couple After Giving Foreclosed Property Quick Paint Job, New Appliances

In DeLand, Florida, WFTV-TV Channel 9 reports:
  • A DeLand couple claim that 10 months after buying their new home they feel homeless. They said they moved out within days after discovering it was built with Chinese drywall. The defective drywall releases sulfur gas that makes people sick. The couple believes the seller covered it up.

    “Can you live inside this home?” Action 9 reporter Todd Ulrich asked homeowner Cristina Ridenhour. “No absolutely not,” she said. She said the garage is the only place in the home that she and her husband consider safe. “As soon as I walk in the smell hits me and it causes a headache,” Ridenhour said.

    They bought the home 10 months ago when mortgage giant Fannie Mae sold the foreclosed property which included fresh paint and new appliances. But the week they moved in, neighbors mentioned Chinese drywall to them.

    “Everybody in the neighborhood basically knew it had Chinese drywall, but they figured somebody took care of it,” she said. Ridenhour said she and her two children already had headaches.

    She said through online searches they discovered that defective drywall corrodes copper, air conditioning and appliances. She said her home was suffering similar effects.

    Professional testing confirmed high levels of corrosives gas was released by the Chinese drywall. After getting the result, they moved out for good and sued their home inspection company, that they said didn't find any serious issues and dismissed a strange smell.

    Ridenhour said their biggest target is Fannie Mae, that paid contractors to fix the house it sold "as is."

    “They would have known something is wrong absolutely,” said Joe Ridenhour. “They would not have been able to sell the house had they not covered it up,” Ridenhour said.

    In Florida sellers must disclose known defects. But in foreclosure, sales experts say it’s far harder to prove what a lender and its contractors really knew.

    “Fannie Mae is very difficult to fight. It will be up to witnesses to say who knew what and when,” attorney Karen Wonsettler said.

    Fannie Mae representatives told Action 9 there are protocols for its contractors and Realtors to detect Chinese drywall before the sale and it is reviewing the couple's claim.

    “We can't in good conscious just let our money go to waste,” said Ridenhour.

    A national class action lawsuit against Chinese manufacturers has closed, so they can't qualify for damages.

    Fixing these kinds of homes can cost $80,000 to $120,000, and the remediation can be very complicated.

    According to the Ridenhours, Adams Cameron Realty is working to help get this family back into their home.

Friday, October 23, 2015

Florida Appeals Court To Trial Judges, Banksters In Foreclosure Cases: "The First Lesson In "Foreclosures 101": A Lender Must Prove It Had Standing Before The Complaint Is Filed To Foreclose On A Mortgage!"

In the very first paragraph of a court ruling issued earlier this month, a Florida appeals court (possibly growing weary of having to continually reverse trial judges - both the dimwitted and the corrupt(1) - for their screw-ups in their incorrect rulings in foreclosure cases unfavorable to homeowners) appears to send this seemingly fundamental message to all the trial judges throughout the state, as well as the sloppy foreclosing bankster's that bring these cases:
  • The first lesson in "Foreclosures 101": a lender must prove it had standing before the complaint is filed to foreclose on a mortgage. The borrower appeals a final judgment of foreclosure after a non-jury trial. She argues, among other issues, that the bank failed the first lesson—it failed to prove standing. We agree and reverse.
For the entire court ruling, see Peoples v. Sami II Trust 2006-AR6, Bank of New York as Successor in Interest to JP Morgan Chase Bank, N.A., 4D14-2757 (4th DCA, October 14, 2014).

(1) Buried in footnote 248 of a recent article in the William & Mary Business Law Review co-authored by two Florida foreclosure defense lawyers who, coincidentally, were part of the successful team of attorneys representing the homeowner in this case, they describe their experiences with some trial judges who, in their opinion, "have engaged in conduct that is such an egregious violation of the law that it extends into malfeasance, rather than simple judicial error":
  • In these instances, trial judges have clearly stated that they know what the law is, that they are bound to follow it, and if they did so they would have to rule in favor of the borrower. They have then ruled in favor of the lender despite their clear acknowledgement that by doing so they are acting in clear disregard for what the law requires of them.

    The authors have seen trial courts enter judgments after acknowledging that the bank’s figures in the judgment could not possibly be correct based simply on the fact that “this is a 2008 case. We are under strict instruction from the Florida Supreme Court to move these cases." Interestingly enough, they are probably under a much stricter oath of office to apply the law.

    The authors of this Article have also seen judges act in complete disregard of their jurisdictional limits to relieve lenders and their counsel from their legal blunders, including vacating final judgments long after they have been rendered based on incorrect legal descriptions and failure to name necessary parties in the original complaint.

    In doing so, trial court judges have repeatedly ignored the law in order to make favorable decisions in favor of lenders on the grounds that “if I don’t have jurisdiction to grant this motion, then your client gets a free house, and I’m just not ok with that.” The authors of this Article have even seen judges vacate a lender’s own voluntary dismissal of a case on the grounds that the judge was mistaken as to the facts, and the lender, therefore, should somehow be absolved of its own strategic errors.

    Roy D. Oppenheim & Jacquelyn K. Trask-Rahn, The Emperor’s New Clothes: How the Judicial System and the Housing-Mortgage Market Have Turned a Blind Eye to the Destruction of the Negotiability of Mortgage Promissory Notes, 6 William & Mary Business Law Review 557, footnote 248.

NY Trial Court Gives Another Bankster The Boot, Saying Expiration Of Six-Year Statute Of Limitations Sinks Foreclosure Action

In Mastic, New York, Newsday reports:
  • A mother and daughter in Mastic got the foreclosure case against them dismissed last week, when a judge ruled their bank missed New York's six-year deadline to file its lawsuit.

    The decision could allow Randi Richman and her daughter Lisa Viola to shed their mortgage and own their home free and clear, more than eight years after their lender sued to foreclose.

    Justice William Rebolini decided in favor of the family on Wednesday, writing that U.S. Bank National Association was "untimely" in suing last year to take back the home.

    "It's just like a weight has been lifted -- I can breathe," Richman, who is 63 and disabled, said Friday.

    Richman has co-owned the three-bedroom, ranch-style home since 2003. In May 2006, she and a family member took out a $250,000 mortgage to fund home repairs, Richman said.

    Within months, she said, the relative left the home and Richman underwent two difficult surgeries. As a result, Richman said, she started missing mortgage payments in October 2006.

    Richman and her daughter said they applied for loan modifications four times, but the lenders who have bought and sold the loan kept turning them down.

    "It was a run-around with every single one of the banks," said Viola, 38, a hairdresser who is disabled.

    A lender that previously held the mortgage sued to foreclose in March 2007, declaring the entire mortgage balance due. By calling in the loan, the lender started the clock on New York's six-year statute of limitations for such lawsuits.

    In January 2013, a judge threw the case out after the lender filed papers saying it could not comply with new, more stringent court foreclosure rules imposed on lenders.

    An attorney who argued the case for U.S. Bank, Sara Boroskin, did not respond to a request for comment Friday. A spokeswoman for the Minneapolis-based bank said Friday the bank had no comment.

    Attorneys for lenders say New York's lengthy court foreclosure process is partly to blame for banks' long delays in filing lawsuits; they argue it is unfair for some homeowners to keep their homes after years of failing to make mortgage payments. It took an average of 995 days to foreclose on a home in New York in the July-to-September period, the eighth-longest delay in the country, according to national real estate data company RealtyTrac.

    The recent court decision seems "inequitable" to the lender, said Bruce Bergman, a Garden City-based attorney who represents lenders and author of the book "Bergman on Mortgage Foreclosures."

    But at the same time, he said, "the statute of limitations exists for a purpose and it's a good purpose, so there is some obligation on the part of a plaintiff . . . to bring the action on a timely basis."

    The lender could have used a legal maneuver to stop the six-year clock, but it failed to do so, the homeowners' attorney, Ivan Young of the Young Law Group in Bohemia, said Friday.

    The lender stated in court papers that the homeowners made mortgage payments that reset the six-year clock. However, the judge ruled the lender failed to prove its case.

    If the lender does not appeal the decision, or if the appeal fails, the homeowners can sue to have the loan dismissed as "unenforceable," Young said.

    A growing number of homeowners across New York are asking judges to dismiss foreclosure cases because the statute of limitations has expired, Young said.

    Last year, a judge dismissed a foreclosure case against a Sound Beach couple because the lender missed the deadline; the lender has appealed.

    Young, who also represented the Sound Beach couple, said he has more than a dozen other cases on Long Island and elsewhere that hinge on New York's six-year deadline.

    "Banks can avoid putting themselves in this situation by just giving homeowners a modification, helping them cure their defaults," Young said. "If they don't do that, they run this risk."

Active Duty Sailor Says Improper Notice Of Lawsuit While Stationed Overseas Leads To Loss Of Home To Foreclosure Over $750 In Unpaid HOA Fees

In Jacksonville, Florida, First Coast News reports:
  • The home Mark Bryant purchased in 2006 is modest but he loves it. "I worked real hard for my house," he said. While stationed at Mayport, the gunner's mate purchased the house in the Creekside subdivision with hopes of returning to Jacksonville when he retires.

    "Now it is being taken away from me due to a wrongful foreclosure," he said.

    Bryant is still active duty in the Navy, stationed in Virginia. He lost his home because of $750 in unpaid homeowners association fees. "It has been stressful," said Bryant.

    How did this happen?

    His documents show he was stationed in Bahrain during the two years the fees went unpaid -- 2012-2014. Bryant said he was never notified. Court records show an unnamed woman was served in Virginia at a previous address. Bryant said the unnamed woman in the record is not his ex-wife.

    "When I got back from deployment October 2014," said Bryant, "there was an eviction notice on the property, and that is the first time me actually knowing."

    The HOA fees went from $750, but when you add interests, late fees, court costs, attorneys fees, it jumped to $4,734.03. The property was foreclosed and sold for $10,300.

    In July, unable to pay an attorney, Bryant filed his own motion to vacate the foreclosure. It was denied

    Attorney Preston Oughton has been reviewing the court case. He found a military affidavit was filed, which should explain where Bryant was stationed, but couldn't view the contents.

    He said Bryant's defense might come down to the notice and whether or not he was properly served

    "If he was not properly served, that would be excusable neglect," said Oughton.

    Bryant said his service time overseas and the improper notice are why he's fighting to get this foreclosure vacated.(1) But he needs legal help to win his case.
Source: Active duty sailor loses home to unpaid HOA fees.

(1) It may be worth evaluating whether the foreclosing homeowners' association may have gotten tripped up by the Servicemember's Civil Relief Act, which provides a wide range of protections for individuals entering, called to active duty in the military, or deployed servicemembers. It is intended to postpone or suspend certain civil obligations to enable service members to devote full attention to duty and relieve stress on the family members of those deployed servicemembers. A few examples of such obligations are:
  1. Outstanding credit card debt
  2. Mortgage payments
  3. Pending trials
  4. Taxes
  5. Terminations of lease.

Foot-Dragging Judge Unintentionally Saves Property Owner From Losing House At Tax Foreclosure; Snoozing Jurist's Failure To Promptly Sign Sale Confirmation Paperwork Allows Slow-Pay Owner Add'l Time To Scrape Up Cash For Last-Minute Property Redemption Before Deed Was Issued To Paid-In-Full Buyer

In Springfield, Ohio, the Dayton Daily News reports:
  • The Clark County Sheriff’s Office called a recent tax sale in which the buyer had to give back the house a “fluke.”(1)

    But the incident serves as a lesson for anyone bidding at sheriff’s sales that hiccups in the court system can happen, said Tom Wright, who runs real estate transactions for the Clark County Sheriff’s Office.

    Doug Swain was the only bidder on a duplex at 732-734 W. Pleasant St. at an Aug. 28 auction. He paid the minimum bid of just more than $5,000.

    The home had been owned by Inside Out Youth Homes Inc., a local non-profit with the mission of helping at-risk youth. The organization hadn’t paid property taxes on the home since 2012, according to county records.

    After paying for the property on a Friday, Swain said he was told he could access the property, change the locks and begin renovations. The paperwork would be submitted to a judge on Monday and be processed quickly, he said he was told.

    But 11 days later, a representative of Inside Out showed up at the house with a receipt for payment of the delinquent taxes, Swain said, and wanted to take back the home.

    The law says the property doesn’t actually change hands until a judge signs a confirmation of sale, which then allows the sheriff to sign over the deed, Wright said. That usually takes a couple of days, but in this instance the paperwork sat on Judge Richard O’Neill’s desk for more than a week.

    In that amount of time, Inside Out paid more than $4,500 for the delinquent property taxes, reclaiming the property. “If I had known that he had that option, I wouldn’t have gone in there,” Swain said.

    He’d already spent more than $500 working on the home, informed a tenant that he was the new landlord and collected rent from them.

    After the mix-up was discovered, the county refunded him the purchase price and Swain negotiated with Inside Out to purchase the property for $12,000 — more than twice what he originally paid.

    “The person who needs to be responsible here is the judge,” he said. O’Neill didn’t return a call for comment.

    Buyers need to be aware, Wright said, and are informed at the auction that with foreclosure sales the owner has a 30-day right of redemption. With tax sales there is no exact timeline, but the owner can still claim the property until the confirmation document gets signed by the judge.

    Wright and Clark County Assistant Prosecutor Bill Hoffman said they both remember that caveat being expressed to buyers at the Aug. 28 sale.

    County officials usually tell people they can secure the property as they see fit prior to the sale going through, and recommend they get insurance for the amount they’ve paid. Foreclosure sales require a 10 percent payment at time of purchase and tax sales require total payment up front.

    But they warn against spending money on repairs until the buyer has the deed in hand. “If it’s vacant you can clean up the property. Do some very basic things, you know, mow the grass, change the locks. But don’t do anything that’s going to cost money,” Wright said.

    This incident is the first time he’s aware of that someone has paid their delinquent taxes after the property was sold at auction, so it hasn’t been an issue before for buyers to work on their new properties as the paperwork gets completed.

    Even on foreclosure sales, it’s never happened since Wright’s been running the auctions that someone has reclaimed their property in the 30-day window.

    An Inside Out representative who didn’t want to be named said it was a staff oversight that allowed the property taxes to get behind. An employee saw people working inside the home, which alerted them to the sale and prompted them to settle the debt, the organization said.

    The treasurer’s office checked with the court before allowing the payment, Hoffman said, and discovered the judge hadn’t finalized the sale. “They checked with the clerk’s office … They didn’t just take the money,” he said.

    Several hours after that payment was made, O’Neill signed the confirmation of sale, Wright said, but it was null and void.

    “This is one of those flukes of buying a house at a tax sale or a foreclosure sale,” Sheriff Gene Kelly said. “This guy did everything right, he really did.”
Source: Springfield home returned to delinquent owner in “fluke” tax sale.

(1) While certainly uncommon, it isn't unheard of for winning bidders at foreclosure sales to lose out on their winning bids due to unexpected snags in the court system. See, for example, Clerk's Refusal To Immediately Issue Certificate Of Sale Upon Winning Bidder's Payment Of Purchase Price Leaves Door Open For Foreclosed Florida Homeowner To Subsequently Sneak In & Save Home w/ Last Minute Tender Of Funds In Exercising Right Of Redemption.

Thursday, October 22, 2015

Brooklyn DA Collars NYPD Officer For Allegedly Being Both Cop & Robber; Accused Of Filing Forged Deed In Attempt To Hijack Title To Bed-Stuy Brownstone From Dead Owner's Heirs That Sat Vacant, Neglected For Many Years

In the Bedford-Stuyvesant section of Brooklyn, the New York Post reports:
  • A veteran NYPD cop who claimed she was a victim of deed fraud is now facing the very same charges after an investigation found she tried to steal a vacant ​Brooklyn townhouse, authorities said Monday.

    Blanche O’Neal’s alleged housing scheme fell apart in April, when she called the Sheriff’s Office to complain that someone had transferred the deed to her home at 23A Vernon Avenue ​in Bedford-Stuyvesant ​to a corporate entity without her permission, authorities said.

    That’s because the home’s rightful owners, the family of deceased Lillian Hudson, were trying to sell the property to someone else when they discovered it was in O’Neal’s name, according to the Brooklyn DA’s Office.

    After the Sheriff’s Office launched an investigation, O’Neal allegedly claimed she had purchased the dilapidated property for $10,000 from Hudson’s nephew and filed the deed in her name in 2012, the city’s Department of Finance said.

    She also tried to claim she was given the home as part of a $5 million judgment she won in a 2008 civil lawsuit filed against Hudson for a slip-and-fall outside the residence.

    But sources said that suit was dismissed altogether – and that O’Neal never received any windfall.

    The 45-year-old cop, who works at the 83rd precinct in Bushwick and lives down the block at 4 Vernon Ave., was indicted on charges of second-degree grand larceny, offering a false instrument for filing and criminal possession of a forged instrument.

    She’s also charged with perjury after testifying before a grand jury in an unrelated burglary case that the home belonged to her.

    Her lawyer, Edward Harold King, pleaded not gui​​lty on her behalf at her arraignment Monday in Brooklyn Supreme Court. O’Neal was released on her own recognizance and faces up to 15 years in prison. “Bottom line is, she is not guilty,” King told reporters outside the courtroom.

    Brooklyn DA Ken Thompson called the allegations against O’Neal even “more disturbing” because she’s a police officer.

    This defendant allegedly stole a house from its rightful owner with the stroke of a pen, apparently hoping no one would notice,” he said. “But her brazen actions have unraveled and she will now be held accountable.”
Source: Veteran cop tried to steal vacant Brooklyn townhouse, DA says.

For the Brooklyn District Attorney press release, see New York City Police Officer Indicted for Stealing Townhouse; Allegedly Transferred Title to Bedford-Stuyvesant Property to Herself:
  • The District Attorney said that, according to the indictment, on September 12, 2012, the defendant, who is an NYPD officer assigned to the 83rd precinct, executed a deed that stated that she bought the property, 23A Vernon Avenue, from the nephew of the deceased homeowner, Lillian Hudson, who died in 1993. The nephew and three other relatives inherited the property, though it sat vacant and neglected for many years.

NYC In Early Stages Of Real Estate Title Hijacking Epidemic? Local Sheriff Aware Of Nearly 1,000 Cases - Befuddled Gov't Regulator Suspects Number Is But A Fraction Of Actual Tally; City Spokesperson: “No One's Talking About It, But We’re Seeing This Every Day ... I Don’t Think Anyone Realizes How Big This Story Is!”

A recent story in The Nation magazine alludes to what may be the beginning of a real estate title hijacking epidemic in the City Of New York in the following excerpts:
  • Much like the housing bubble that sparked the Great Recession, the Brooklyn real-estate market is rife with crime, as developers at all levels snatch at quick profits in once-poor neighborhoods. Deed fraud—in which someone fakes documents to illegally claim ownership of a property—is one of the most acute problems.

    New York City Sheriff Joseph Fucito says his office was aware of nearly 1,000 possible cases of deed fraud as of August 2015. State regulatory officials, who are overwhelmed by the sheer volume of transactions in the market, suspect that number is a fraction of the actual tally.

    No one is talking about it, but we’re seeing this every day,” says Sonia Alleyne, press secretary for the New York [City] Department of Finance, which is the agency that processes property deeds for the [city]. “I don’t think anyone realizes how big this story is.”


    Eventually, Zi was indicted for five instances of deed fraud, thanks in part to recordings obtained by Falero in which Zi admits to stealing documents from Queen Dobbins—and identifies the Makhanis as his partners. In one conversation, Zi can be heard describing a scheme organized by the Makhanis to “hijack” titles throughout the city. And yet the Makhanis are still in the real-estate business today.


    Sonia Alleyne at the [NYC] Department of Finance says that Commissioner Jacques Jiha is looking for remedies for the broader deed-fraud crisis, mostly by tightening the filing rules. “We made recent changes to LLC disclosures, and now we’re also introducing some legislative changes around the notaries.” Meanwhile, Sheriff Fucito says he knows of 15 deed-fraud arrests in the last year. That number is dwarfed by the more than 1,000 leads and 125 criminal investigations and, just beyond those, a literally uncounted number of unexamined deed transfers.

    The problem is this open process that allows people to just walk in and file false instruments,” says Christie Peale, executive director of the Center for New York City Neighborhoods, an organization that studies deed and mortgage fraud. The Department of Finance has strikingly basic standards for accepting deed paperwork: As long as the documents are in “recordable form”—that is, completed—they are processed. “That has to change,” Peale adds, “because right now the Department of Finance doesn’t have a comprehensive approach to picking out problematic documents before they are accepted for processing.”
For the story, see How a Gentrification Scam Threatens New York’s Community Gardens (Shady developers know one easy way to build luxury condos: Claim ownership of communal land).

Sleazy Developers Use Dubious Deeds To Target, Lay Claim To Once-Worthless, Now-Valuable Vacant Building Lots That Residents Throughout Brooklyn Converted From Eyesores Into Communal Gardens

A recent story in The Nation magazine highlights the activities of a pair of brothers, questionable real estate operators with a dubious history who are attempting to claim title to a once-neglected, now-valuable piece of land with a deed that appears to be forged of suspicious origin (to put it kindly) in the Prospect-Lefferts Gardens neighborhood of Brooklyn, New York. The lot, a one-time eyesore, had been converted by area residents into a neighborhood communal vegetable garden:
  • In late summer 2014, after nearly two years of silence, Michael and Joseph Makhani appeared at 237 Maple Street claiming ownership of the land. They are principals in Housing Urban Development LLC. First it was just the two of them. They ripped down garden signs attached to the fence at the front of the property and, according to affidavits, warned the gardeners who were present, “You’ll leave when the backhoes get here.”

    The next morning, a moving truck pulled up and a crew emerged. The men went right to work, ripping up a vegetable bed. Nancy Treuber rushed to the scene, as did several others. “Moms, kids—word got out, and members left work to meet on the sidewalk in front of the garden,” she recalls. They milled about, unsure what to do, yet certain that their presence mattered. Treuber pulled out her phone and filmed the action. Her voice is heard off camera, calm but loud: “You are vandalizing the property, please do not do that.” The crew ignores her, continuing with their work.

    One of the gardeners called the cops. They arrived within minutes, as did the Makhanis. The cops told the Makhanis to come back with a court order, and so the legal battle began. Three months later, the Makhanis filed applications with the city to construct a five-story, 17-unit luxury-condo building on the lot. Their applications are still pending.

    The Makhanis have produced a deed that shows they acquired the property in 2003 from Alan and Alexander Kirton—who they claim were nephews of the deceased owners—for just $5,000. The hypermodest purchase price is itself suspicious, but the Makhanis’ deed also has numerous irregularities: The notary’s signature is illegible, and his or her name and license number are missing from the copies filed with the court; the notary misspelled the city (“Worchester” instead of “Worcester”) and state (“Massachusets” instead of “Massachusetts”) where the deed was ostensibly recorded; and the Social Security number provided for Alexander Kirton, whose signature appears throughout the documents, belongs to someone else. “He doesn’t exist,” says Paula Segal, the lawyer representing the gardeners. “Or he’s using someone else’s Social Security number. Either way, it’s a problem.”

    The deed isn’t the only bit of questionable paperwork. When Housing Urban Development applied to begin construction on its luxury-condo building, the application was submitted under the name Mike McKany. This is, one can assume, Michael Makhani, but spelling variations can make it harder to match disparate public records and, thus, easier to avoid scrutiny.

    * * *

    Michael and Joseph Makhani are brothers who together operate several limited-liability companies (LLCs) involved in housing. They have a long record in the sordid history of real-estate bubbles over the past 20 years.

    In 1998, Joseph Makhani was sentenced to three months in prison for rigging bids at foreclosure auctions; he was also convicted of filing false deeds in Queens. In the years leading up to the foreclosure crisis, the Makhanis used Housing Urban Development to sell subprime mortgages in low-income neighborhoods throughout Brooklyn. Their deceptive practices are documented in a 2008 student film, Subprimed, in which the filmmakers call the Makhanis to ask about their corporation’s misleading name. Joseph Makhani certainly doesn’t dodge the question: “If the client is stupid, that’s not my problem. We’re not going to have classes to teach people how to read.”

    While investigating other claims that the Makhanis have made on properties throughout New York, Segal came in contact with a lawyer named Marisa Falero. In 2009, Falero was appointed to evaluate the estate of an elderly property owner named Queen Dobbins. When Dobbins died, Falero put the Harlem building she owned up for sale on behalf of her estate. When the residential building went on the market, a man named John Zi came forward and claimed he already owned it. He produced a contract for sale showing that he had acquired the building from a woman named Virginia Kelley, a longtime friend of Dobbins who Zi claimed had an ownership stake.

    Falero knew Zi was lying: Kelley did not exist in the ownership papers. But when she went to Dobbins’s former apartment to retrieve the documents, they were gone. “They had been in her apartment,” Falero says. “They took everything of importance out.” On behalf of the estate, she asked the court to invalidate Zi’s deed immediately. “They showed up in front of the judge, and the little old lady couldn’t form a sentence,” she says of the frail Kelley.

    Eventually, Zi was indicted for five instances of deed fraud, thanks in part to recordings obtained by Falero in which Zi admits to stealing documents from Queen Dobbins—and identifies the Makhanis as his partners.

    In one conversation, Zi can be heard describing a scheme organized by the Makhanis to “hijack” titles throughout the city. And yet the Makhanis are still in the real-estate business today. Segal created a database of 99 properties associated with them since 2001, as well as a network of LLCs supposedly doing business out of the same address on file for Housing Urban Development. It’s from this address that the Makhanis have sent out teams of lawyers to file cases against the Maple Street gardeners.
For more, see How a Gentrification Scam Threatens New York’s Community Gardens (Shady developers know one easy way to build luxury condos: Claim ownership of communal land).

Wednesday, October 21, 2015

Local DA Busts Border County 'Snatch & Flip' Real Estate Title Hijacking Racket; Four Suspects Bagged, Three Others On The Run In Forged Deed Scam That Scored $400K+ Targeting Unwitting, Cash-Paying Victims Unfamiliar w/ Buying Formalities

In Cameron County, Texas, KGBT-TV Channel 4 reports:
  • The Cameron County District Attorney's Office busted a real estate crime ring, which left victims without thousands of dollars and their investment property.

    Victims of Allan Ramirez Rodriguez and his accomplices defrauded unsuspecting buyers for years.

    Over the six-month-long investigation, dubbed Surreal Estate, fraud was uncovered being committed by Rodriguez and six others, according to the district attorney.

    Rodriguez would convince buyers to invest or purchase properties he and his accomplices never owned, and they even provided fake deeds.

    "Ramirez explained that he was associated with Mr. Tony Yzaguirre, the Cameron County Tax Assessor," according to an affidavit for warrant obtained by CBS 4 News.

    Over $400,000 were stolen from unsuspecting victims since 2013.

    "In this situation the ring would approach the Mexican citizen and offer to sell the property and the Mexican citizen would come up with cash," said Luis Saenz, the Cameron County District Attorney.

    The following men and women were arrested this week:

    {>}Melissa Rangel Ramirez, 27, was charged with theft of property and engaging in organized criminal activity.

    {>}Yolanda Rodriguez, 59, was charged with engaging in organized criminal activity

    {>}Sergio Alberto Alcocer, 35, was charged with two counts of theft of property and two counts of engaging in organized criminal activity.

    {>}Jesus Edward Ibarra, 29, was charged with engaging in organized criminal activity and impersonating a public servant.

    Ibarra was wearing a jacket with a tax office seal on it and told an investor he worked with the Cameron County Tax Assessor, according to the affidavit.

    Ringleader Allan Ramirez Rodriguez, Rene Ramirez and Luis Blanco remain on the run and are wanted by the Cameron County District Attorney's Office.

    There could be more victims of the crime ring, according to Saenz.

    "If you come up with cash, that means you do not have go to mortgage company, you're not going to have to get a bank involved, you're not going to have lawyers involved," Saenz said. "And really, those are the safeguards and checks and balances."

    Allan Ramirez Rodriguez may have fled to Mexico, and the investigation remains ongoing.

    Most victims were Mexican citizens unaware of the process of buying legitimate property.

Trio Pinched For Allegedly Conning Elderly Man To Move Out Of His Home Under Loan Modification Pretext, Then Filing Forged Deed To Illegally Snatch His Property Title

From the Office of the Ventura County, California District Attorney:
  • District Attorney Gregory D. Totten announced [] the arrests of Patrick Abrahamian, Michelle Abrahamian and Taline Indra. Patrick Abrahamian is charged with three felony counts of filing a forged instrument. Michelle Abrahamian and Taline Indra are each charged with a felony count of filing a false instrument and a felony count of forgery. The defendants are also alleged to have taken property in excess of $500,000. The charges are the result of an investigation conducted by the District Attorney’s Real Estate Fraud Unit.

    Patrick Abrahamian is alleged to have approached the 65-year-old victim in 2012 with an offer to help negotiate a modification of his mortgage. In return, the victim agreed to move out and lease his home to Abrahamian while Abrahamian supposedly negotiated a new mortgage. At the end of the lease term, Abrahamian refused to vacate the home as the victim requested. After consulting with an attorney, the victim learned that a notarized grant deed had been recorded that conveyed his home to Abrahamian’s wife, Michelle Abrahamian, a licensed real estate broker.

    The deed was allegedly signed by the victim in the presence of a notary public, defendant Taline Indra, who is the sister of Michelle Abrahamian. The investigation determined the victim never met Indra nor signed the grant deed. After the deed was recorded, Patrick Abrahamian is further alleged to have impersonated the victim in a lawsuit filed by Abrahamian against the victim’s lender.

S. Florida Woman Arrested For Scamming Recently-Widowed, Dementia-Stricken Man; Conned Senior Into Signing Over Deeds To Two Homes & Looted Bank Account While Purporting To Be His POA-Holding Caretaker

In Fort Lauderdale, Florida, the South Florida Sun Sentinel reports:
  • As far as the 86-year-old man knew, Maria Pikuta Wilkinson was his wife and not a self-appointed caretaker who defrauded him out of more than $178,000 in cash and real estate, according to Fort Lauderdale police.

    Wilkinson, 65, was arrested [] and charged with elderly exploitation, court records show.

    The Pompano Beach man was diagnosed with dementia shortly after the death of his real wife on March 31, investigators said.

    He was transferred to a live-in rehabilitation facility where Wilkinson met him, visited him frequently, and assumed the role of caregiver, according to the arrest report filed in the case.

    The man mistakenly assumed Wilkinson was his wife and, according to the report, Wilkinson checked him out of the rehab center and moved him into her Fort Lauderdale home in April.

    Later, she persuaded the man to add her to his Sun Trust bank account and she was able obtain power of attorney in order to control his assets, investigators said.

    The Sun Sentinel is not identifying the 86-year-old man because of his medical condition. His doctor of five years told investigators that an evaluation completed in late July showed he did not have the capacity to make complex financial decisions.

    However, before the formal mental health evaluation was done, Wilkinson had the man sign two quitclaim deeds that gave her ownership of two single-family homes in Pompano Beach valued at $78,270 and $74,520,(1) detectives said.

    On July 14, Wilkinson closed the joint Sun Trust account and withdrew $25,850 which was then deposited into her personal account, police said.

    The value of the two properties and the bank account totaled $178,640, according to the investigative report.

    Wilkinson is listed as the owner of a domestic services company based in Fort Lauderdale.

    Efforts to reach her for comment were unsuccessful.

    She was released from jail [...] on a $10,000 surety bond, jail officials said.
Source: Woman defrauded widower, 86, out of $178K, posed as his wife, cops say (A woman was able to convince an 86-year-old widower that she should control his assets).

(1) These values appear to be nothing more than the values each property is assessed for on the local tax rolls. The true fair market value for each home is probably significantly greater.

Tuesday, October 20, 2015

Feds Continue Effort In Bagging Bid-Rigging Real Estate Operators, Scoring 9th Guilty Plea In Ongoing Atlanta-Area Antitrust Probe Into Dubious Public Foreclosure Auctions

From the U.S. Department of Justice (Washington, D.C.):
  • A Georgia real estate investor pleaded guilty [] for his role in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Fulton and DeKalb counties, Georgia.

    Morris Podber admitted that he conspired with others not to bid against one another at public real estate foreclosure auctions on selected properties. After the public foreclosure auctions, Podber admitted that he and his co-conspirators would divvy up the targeted properties in private side auctions, open only to the conspirators. Podber admitted to conspiring to use the mail to carry out their fraud, which included making and receiving payoffs and diverting money to co-conspirators that should have gone to the mortgage holders and others.

    This is the ninth real estate investor held accountable for bid rigging at public foreclosure auctions in Georgia,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division. “We will continue to root out anticompetitive conduct at foreclosure auctions and obtain justice for homeowners and lenders.”

    According to documents filed with the court, the purpose of the conspiracies was to suppress and restrain competition and divert money to the conspirators that otherwise would have gone to pay off the mortgage and other holders of debt secured by the properties, and, in some cases, the defaulting homeowner. Podber admitted to participating in a conspiracy in Fulton County from July 2005 until August 2010; and to participating in a conspiracy in DeKalb County from October 2006 to August 2011.

    “Incidents of bid rigging at public real estate auctions continue to be an issue in Georgia and elsewhere in the United States, and the FBI would like to remind the public that such matters are violations of federal law,” said Special Agent in Charge J. Britt Johnson of the FBI’s Atlanta Field Office. “The FBI will continue to work with the U.S. Department of Justice’s Antitrust Division in identifying, investigating and prosecuting those individuals engaged in such activities.”

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

Another Crackpot Mortgage Elimination Racket w/ Sovereign Citizen Ties That Fleeced Nearly Two Dozen Homeowners Draws FBI Scrutiny; Operator Gets Hit w/ $200K In Penalties, $74K Restitution Order In Separate Bankruptcy Case

In Maui, Hawaii, Hawaii News Now reports:
  • The FBI is investigating a mortgage fraud scam that victimized nearly two dozen homeowners on Maui.

    Hawaii News Now has also learned that a federal bankruptcy judge has ordered an Aiea man at the center of the case, Henry Malinay, to repay $74,000 in restitution along with a stiff fine.

    "Because his conduct was considered so egregious, so outrageous, the bankruptcy court awarded the state $200,000 in penalties," said Stephen Levins, executive director of the state Office of Consumer Protection.

    Many of the victims were Filipino-American homeowners, who alleged that Malinay and others promised to cut their mortgage payments in half.

    Hilaria Taborada, of Lahaina, said she was first told not to make payments for five months. "After two months, (the banks) sent their letter that they're going to foreclose on my house. And I don't want to lose my house," she said. "I had to borrow money from my mom."

    Malinay's attorney said he's not the ringleader. "He was clearly a victim in this case. He was drawn in by a couple of sharp businessmen," lawyer Peter Hsieh said. "The real culprits are still out there. The main guy made him a patsy."

    Hsieh is referring to Anthony Williams, who heads an entity known as Mortgage Enterprises.

    Williams is a member of the sovereign citizens movement on the Mainland and calls himself a private attorney general for the Common Law Office of America.

    According to the state, he and Malinay told homeowners that they the could reduce mortgage payments by attaching what's known as Uniform Commercial Code statement to their mortgages in the state's Bureau of Conveyances.

    "Filing these UCC statements are just frankly nonsense. It's not going to stop the foreclosure," Levins said.

    More details on the FBI investigation weren't immediately available.

    See the federal bankruptcy judgment against Malinay here.

Use Of Informal Sale Process, Onerous Terms, Broken Oral Promises Are Central To Texas Rent-To-Own, Contract For Deed Rackets Targeting Unsophisticated, Wanna-Be Homebuyers; Victims Often Face Boot Threats After Being Duped Into Investing Thou$and$ In Downpayments & Home Improvements In Dubious Deals

In Austin, Texas, the Austin American-Statesman reports:
  • Several dozen Dove Springs residents gathered [] to call for a state agency to investigate a local real estate group they blame for deals under which neighbors lost their homes, or have been threatened with foreclosure or eviction.

    On Monday evening, Texas RioGrande Legal Aid(1) and Austin Interfaith, as well as a representatives from the offices of state senators Kirk Watson and Judith Zaffirini and Austin City Council Member Delia Garza, who represents Dove Springs, met residents in the neighborhood seeking more information.

    Attorneys are seeking to bring the residents’ allegations to investigators with the Texas Department of Savings and Mortgage Lending.

    “The scale is remarkable,” said Austin civil rights attorney Brian McGiverin. “This company offered what seemed like a good deal at the time.”

    Legal aid attorneys said they are investigating whether a rotating cast of four firms, all owned and controlled by the same people, targeted Latino and Spanish-speaking buyers in the Southeast Austin neighborhood, many of whom didn’t qualify for traditional loans, reaching them through fliers posted around the neighborhood.

    Molly Rogers, a staff attorney with Texas Rio Grande Legal Aid and manager of its foreclosure prevention team, said the firms in question are HomeTex Enterprises LLC, F&S Capital LLC, Tenzing Investments LLC and The Lending Group LLC.

    Residents on Monday night said that Jeff Evans, listed as the property director for HomeTex Enterprises on his LinkedIn page, lured them into unfavorable housing contracts.

    Evans could not be reached late Monday. An attorney who has represented associates of HomeTex did not respond to a request for comment Monday afternoon.

    Legal aid attorneys allege the group took advantage of an informal sales process — buyers were often unrepresented by a real estate agent, title company or attorney — and signed people up for financing packages that included large balloon payments. According to Rogers, some buyers did not realize a payment for the remaining balance on the home would come due within five or so years, while others believed the balloon payment would be far lower than it turned out to be. In some cases, according to attorneys, homeowners were promised a chance to refinance balloon payments but were then denied at the critical moment, resulting in default.

    Several residents at the meeting said they signed contracts without fully understanding them after receiving assurances from Evans.

    Rogers said that was common among the Dove Springs residents, many of whom she said thought were buying homes, but were “actually being treated more like renters.”

    Several of the residents gathered Monday night said they contacted Evans after seeing signs around the neighborhood advertising home ownership for small down payments or rent-to-own opportunities.

    Rogers said that in many cases, residents paid hefty down payments and then put in thousands of dollars in repairs and improvements on homes they were then forced to leave.

    Martha Leal, 56, said she paid more than $10,000 for a down payment as well as thousands for tile flooring and a new porch while she tried to improve her credit score as part of a rent-to-own contract.

    She said the contract called for her to get her credit into good enough shape to purchase the house within five years. But when she missed a February deadline, she says Evans threatened to remove her option to buy; she said the deadline has since been moved to December.

    “It’s not fair,” she said. “It’s very scary.”

    Attorneys are seeking to file a formal complaint with the Texas Department of Savings and Mortgage and are hoping that the City of Austin will step in to help residents, though it was unclear Monday night how that would happen.
For the story, see Dove Springs residents seek investigation of real estate group.

Texas lawmakers are apparently trying to do something to control the numbers of unsophisticated homeowners being screwed over by these types of rackets. See New Texas Law Aims To Minimize Contract For Deed Ripoffs; Provides That Recording w/ County Records Office Effectively Converts Contract Into Deed Of Trust That Requires Formal Foreclosure Process When In Default.

(1) Texas RioGrande Legal Aid (TRLA) is a non-profit organization that provides free legal services to low-income residents in sixty-eight counties of Southwest Texas, and represents migrant and seasonal farm workers throughout the state of Texas and six southern states: Kentucky, Tennessee, Alabama, Mississippi, Louisiana and Arkansas. In addition, TRLA operates public defender programs in several Southwest Texas counties, representing the poor who are accused of felonies, misdemeanors and juvenile crimes.

Monday, October 19, 2015

Central Florida Clerk Of Court Responds To Foreclosure Mill's Cease & Desist Letter Demanding Removal Of 759-Page Forensic Examination From County Website: 'Take A Hike!'

In Osceola County, Florida, the Osceola News-Gazette reports:
  • Among the criticisms that Osceola County Clerk of Court Armando Ramirez has received for various policies and personnel moves since taking office in 2013, backing down from a legal challenge isn’t one of them.

    Ramirez has refused to remove a 759-page forensic examination of property records and mortgage files his auditors claim are fraudulent — and have led to foreclosures that cost local residents their homes — from his office’s website, The website includes a notice about what constitutes mortgage fraud according to state statute.

    This comes after receiving a cease and desist letter from a Tampa law firm whose clients, various lenders, are named in the report.

    On Sept. 25, Ramirez received the notice from the Gilbert Garcia Group in Tampa, which claims the report, which was published on Dec. 29. 2014, includes “perceived defamatory statements.”

    “The report itself contains serious, untrue, and highly defamatory accusations towards Gilbert Garcia Group,” its managing partner, Michelle Garcia Gilbert, wrote to Ramirez. “Some contain malicious falsehood. By serving as host for the website that publishes the report, the defamatory comments are published to people throughout the state of Florida and beyond its borders, posing a serious threat to the professional reputation of Gilbert Garcia Group. The Osceola Clerk of Court website is continuing to perpetuate information and statements contained within the report which directly questions the reputation of the firm.”

    The letter also states the report is libelous and questions the due diligence in verifying Ramirez’s claims of mortgage fraud, and demanded he remove the report and disclaimer from the website and issue the firm an apology. Garcia gave Ramirez 10 days to comply before taking legal actions. As of Tuesday, he had not heard back from Ramirez’s office.

    Ramirez sent a return letter on Oct. 1 to the Gilbert Garcia Group, shared with the News-Gazette, noting his legal grounds for publishing the report and that it would continue to appear on the clerk’s website.

    It’s outrageous they’re asking me to remove the report and disclaimer, considering they’re one of the offices that have engaged in producing fraudulent documents,” he said. “We have the legal grounds to keep it up. I have gotten the approval of our Sheriff’s Office and the state attorney to do so. And it’s within my scope of authority as the clerk to do this.”

    Just as the law firm had done, Ramirez sent a copy of his letter to the County Attorney’s office and the Board of Osceola County Commissioners. County Attorney Andrew Mai said this week his office it was not involved in the matter.

    Ramirez noted Congressman Alan Grayson’s support of his office’s efforts and the forensic exam. He shared a letter Grayson penned to U.S. Attorney General Loretta Lynch.

    “I urge you to view Mr. Ramirez’s report and direct your department to pursue all available legal remedies against any and all persons found to have engaged in the fraud covered by Mr. Ramirez’s examination,” Grayson wrote to Lynch.

    Ramirez originally sent the local findings to the Osceola County Sheriff’s Office, which has yet to return any findings of criminal activity against any banks or lenders. “I think it would be proper for the Attorney General’s office to step in,” he said.

NJ Federal Court Reverses So-Called "Free House" Mortgage Foreclosure Ruling; Says 20-Year Statute Of Limitations Applies, Not Shorter 6-Year Period

From a client alert from the law firm Maurice Wutscher LLC:
  • The U.S. District Court for the District of New Jersey recently held that New Jersey’s 20-year statute of limitations for residential foreclosures applied to a re-filed foreclosure action, reversing a bankruptcy court’s ruling that the shorter six-year statute of limitations period applied.

    The Court noted that the bankruptcy court interpreted the words “six years from the date fixed for making the last payment or maturity date set forth,” to mean an “accelerated” mortgage or advanced maturity date.

    However, the Court held, the word “accelerated” does not appear in the relevant subsection and is not defined. Moreover, the Court found no indication in the record to indicate that the maturity date in the loan documents (March 1, 2037) was accelerated by the default or by the filing of the foreclosure action.

    In addition, the Court found persuasive two state court rulings, holding that if the maturity date were accelerated to the date of default then the plain meaning of the language in the six-year limitations period would be rendered superfluous, and that merely filing a complaint does not reasonably accelerate the mortgage and note. See Pennymac Corp. v Crystal, No. F-31289-14 (N.J. Super. Ct. Ch. Div. May 8, 2015); Wells Fargo Bank v. Jackson, No. F-29217-14 (N.J. Super. Ct. Ch. Div. May 6, 2015).(1)

    The Court also held that applying the shorter six-year statute of limitations would ignore the intended purpose of the statute. The Court noted that the New Jersey residential foreclosure statutes of limitations have “been construed to address problems caused by the presence of residential mortgages on property records, which have been paid or which are otherwise unenforceable,” and that the policy behind the statute is that “all homeowners should be given every opportunity to pay their home mortgages and that mortgagees benefit when defaulting loans return to performing status.”

    In addition, and perhaps most importantly, the Court repeated the bankruptcy court’s words that “[n]o one gets a free house.” The Court held that “[d]eeming the mortgage collection claim as time-barred would be inequitable,” and “would be contrary to public policy by depriving [the creditors] of any remedy for [the borrower’s] default.”
For the entire alert, see NJ fed court reverses bankr court ruling that foreclosure was barred by NJ six-year statute of limitations.

For an earlier post on this story, see Expiring Statute Of Limitations Leaves New Jersey Homeowner With Free & Clear Home While Foreclosing Lender Left Holding The Bag.

For the court ruling, see Specialized Loan Servicing LLC v. Washington, No. 2:14-cv-8063-SDW (D. N.J. August 11, 2015).

(1) It appears that, inasmuch as these trial court rulings do not constitute binding precedent on others who may be in similar circumstances (although they do bind the actual litigants in this case), it will ultimately take a ruling by the New Jersey Supreme Court (the best authority on New Jersey law, according to the U.S. Supreme Court) to sort out, once and for all, which limitations period applies in the state under these facts. See Commissioner v. Estate of Bosch, 387 U.S. 456 (1967) and the subsequent cases thereunder ("This is not a diversity case but the same principle may be applied for the same reasons, viz., the underlying substantive rule involved is based on state law and the State's highest court is the best authority on its own law.").

Failure To "Strictly Comply" ("Substantial Compliance" Not Enough) w/ Applicable California Notice Requirement Mandating Personal Service Informing Homeowner Of HOA's Decision To Foreclose Lien For Unpaid Fees Sinks Subsequent Foreclosure Sale

From the office of California lawyer Kenneth Eade:
  • In California, the Davis-Stirling Common Interest Development Act, gives a homeowners association the authority to levy assessments, which become an involuntary lien against the homeowner’s interest when the HOA records a “Notice of Delinquent Assessment,” and gives the HOA the right to enforce that lien in any manner permitted by law, including foreclosure. Thus, if the homeowner does not pay a delinquent assessment, his or her interest may be sold at either a judicial or non-judicial foreclosure sale, resulting in the possibility of the HOA becoming the owner of the unit and evicting the homeowner from their own home.

    In the case of Pelegrino v. Marina Strand Colony #1 Homeowners Association, Los Angeles Superior Court Case No. SC122125, the Superior Court ruled in favor of the homeowner’s to invalidate a foreclosure sale that had taken place after the HOA received a judicial foreclosure decree in L.A. Superior Court Case No. SC112127, on the grounds that the HOA did not strictly comply with the pre-foreclosure requirements of the Davis-Stirling Act. The court ruled that the foreclosure was improper because the HOA did not personally serve notice of its board’s decision to foreclose as required by section 5705(d) of the California Civil Code.

    Prior to the case of Diamond v. Superior Court, 217 Cal. App. 4th 1172 (2013), decided by the Sixth District Court of Appeal on June 18, 2013, courts were refusing to overturn foreclosures if the HOA could demonstrate “substantial compliance” with the statute.

    The Diamond case held that the notice requirements of former sections 1367.1 and 1367.4 must be strictly construed, “pursuant to the plain language of the statutes and their legislative history” and set aside the foreclosure sale in that case for the HOA’s failure to send the homeowner a copy of the recorded notice of delinquent assessment and failing to give the required pre-lien notice of a right to demand alternative dispute resolution.

    In the Pelegrino case, the homeowners sued the HOA for declaratory relief after the HOA received a judicial foreclosure judgment. The HOA in that case claimed that the statute did not specify when notice of the board’s decision to foreclose should be served, and that the notice could be served in any manner in which a summons could be served. The HOA argued they could serve it any time before the foreclosure sale. However, the reason for personal service in accordance with CCP section 415.10 is to give notice of a legal process in order to comply with the principles of due process.

    The fourteenth amendment to the United States Constitution provides that “no state shall deprive any person of life, liberty or property without due process of law.” The legislative history of the amendment creating section 1367.4, plainly requires the HOA board to provide notice of its decision to foreclose as a condition of foreclosure, which is a taking of property authorized by the state.

    Notice is a concept of due process, and to require that notice to be given by personal service, as opposed to the other methods of service specified in the Code of Civil Procedure, the legislature plainly prescribed the highest form of notice. The purpose of such service statutes is to assure that due process is satisfied. See American Express Centurion Bank v. Zara, 199 Cal. App 4th 383 (2011).

    Since the statute specifies personal service of the board’s decision as a precondition of foreclosure, that service must occur before the commencement of foreclosure proceedings, to allow the homeowner notice and the opportunity to defend against them.
Source: Legal Ruling Strikes Blow to Homeowners Association (Foreclosure sale after judicial foreclosure judgment is void due to failure to follow pre-foreclosure requirements of Davis-Stirling Act).

Sunday, October 18, 2015

Squeezing Developers For Lucrative Payouts On Behalf Of Rent-Regulated Tenants Asked To Vacate Their Apartments All In A Day's Work For NYC Tenant's Lawyer; 'Trumping' Current Republican Presidential Candidate Among His Earliest Conquests

A recent story in Crain's New York Business featured New York City lawyer David Rosenholc and the role he recently played in scoring a $25 million payday on behalf of two holdout tenant/clients in exchange for their agreement to vacate their apartment and allow for a big real estate developer to move forward on a major redevelopment project.
  • [T]ishman 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.

    He’s the most feared tenant attorney with respect to development sites,” said Ben Shaoul, a major residential developer. “I don’t think he has ever lost a case.”

    In the world of real estate, where developers must rush to build projects in time to capitalize on sunny economic conditions before a downturn, lawyers like Mr. Rozenholc don’t need to actually win in court to triumph. Instead, victory can come by simply forcing lengthy delays.

    Developers, faced with having to slug it out in front of a judge for months or even years, often drop cases or pay up, even if they think they can win in the long run.

    That’s especially true now. With developers shelling out more cash than ever for parcels, setbacks are costlier than ever, and exorbitant tenant buyouts are increasingly viewed as the price of doing business in New York. Which is why Mr. Rozenholc believes the astronomical settlements will only get bigger.

    Mr. Rozenholc disputes the notion that he’s doing anything unethical. He insists that it is landlords, not tenants, who have the upper hand in court and that he must use every approach at his disposal to even the playing field.

    “If General Motors is in a lawsuit, they hire the best lawyer, who raises every single legal argument he can,” he said. “But when you do it for the underdog, people complain.”


    One of his earliest victories came over self-proclaimed perpetual winner Donald Trump. Mr. Trump spent five years in the 1980s trying to empty out 100 Central Park South, tear it down and build a luxury condo tower on the site. Instead, Mr. Rozenholc blocked the evictions, and Mr. Trump was forced to take a consolation prize, converting the building’s unoccupied apartments to luxury dwellings. The case, which ended in 1986, sent a highly prominent message to landlords that they would not be able to steamroll Mr. Rozenholc in court.

    Mr. Rozenholc hit a career apex in the mid-2000s, when he secured $17 million and a $1-per-month luxury apartment for life for a holdout tenant to leave the Mayflower Hotel, which was being demolished to make way for 15 Central Park West. The case is thought to be the biggest-ever payout to a ­single tenant.

    “I like to win,” Mr. Rozenholc said. “Winning was more important to me than making money. And that’s why I have made a lot of money.”
For more on who some consider the king of  tenant's attorneys 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).

Pressure To Vacate Their Landlord-Owned Homes Continues For Rent Regulated Apartment Dwellers In New York City

In New York City, DNAInfo New York reports (via The Real Deal (NYC)):
  • The apartment down the hall from Joan Harden has granite countertops, stainless steel appliances, and marble finishes in the bathroom.

    Her kitchen, meanwhile, has mold instead of granite and, this summer, the bathrooms ceiling caved in because of a leak.

    Harden is one of many tenants of rent stabilized units at 75 Saint Nicholas Place who say their landlord is trying to push them out using unequal treatment and harassment because they pay $1,200 a month for rent compared to the $3,000 a month those in the renovated units pay.

    Harden declined a $5,000 offer to move out earlier this year, she said.(1)

    “[A property manager] came in to look at my kitchen and he said, ‘We’ll we need to do a lot of repairs, have you thought about moving out?’” said Harden. “That was like a slap to the face. I said, ‘No, if there are so many repairs that need to be done then fix them.’”
For more, see Rent Stabilized Harlem Tenants Say Landlord is Trying to Push Them Out.

(1) It may be time for these tenants and others to get the help from lawyer David Rosenholc, the reputed king of tenants' attorneys 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).

California's Public School Teachers Provide Hundred$ Of Million$ To Finance 'Foreclose & Flip' Opportunities For Private Equity Fund Buying Bad Mortgage Loans

In Oakland, California, the East Bay Express reports:
  • California's pension fund for public school teachers invested hundreds of millions of dollars in a company that has been criticized for foreclosing on property owners and kicking them out of their homes, including dozens in the East Bay, records and interviews show. The company, Caliber Home Loans, is owned by the private equity firm Lone Star Funds and was featured in a New York Times story last week because of its controversial practices.

    In an email to the Express, officials for the California State Teachers Retirement System (CalSTRS) confirmed that the pension fund invested $660 million in two different funds managed by Lone Star, and that the company has used the money to buy up distressed home loans, foreclose on the homeowners, and resell the homes. CalSTRS spokesperson Ricardo Duran said that Lonestar officials have told pension fund managers that the investment has resulted in a lower rate of foreclosure than the industry standard. But according to Duran, CalSTRS has not been provided with data from Lone Star to substantiate these claims.


    Over the years, Lone Star has relied on billions of dollars from public employee pension funds to buy out "distressed" home mortgages. And CalSTRS, which manages the retirement savings of 879,000 California public school employees, is among Lone Star's biggest investors.

    The scale of Lone Star's mortgage business is dizzying. Lone Star has purchased 18,747 mortgages worth $3.16 billion from the federal government and government-sponsored housing agencies since 2010, according to records maintained by the US Department of Housing and Urban Development (HUD). The acquisition of these mortgage loans was made through a government program that policymakers claim was intended to reduce foreclosures — not make them worse.
For more, see California Teachers Have Been Financing Evictions (The teachers' pension fund invested hundreds of millions of dollars into company that has foreclosed on and evicted numerous homeowners, including dozens in the East Bay).

Editor's Note: New York is apparently also having the same problem with this outfit. See Lone Star-Backed Lender Faces Probe by N.Y. Attorney General ("A lender backed by private equity firm Lone Star Funds is under scrutiny by New York Attorney General Eric Schneiderman amid union allegations it may be using predatory practices in its mortgage business").