Saturday, December 19, 2015

Inverse Condemnation Lawsuit: City Of Palo Alto's Requirements That Mom & Pop Mobile Home Park Operator Pay $8 Million In Tenant Relocation Fees Amount To Unconstitutional "Shakedown" That Prevents Them From Closing Business & Selling Land

In Palo Alto, California, the Silicon Valley Business Journal reports:
  • The family that owns the Buena Vista Mobile Home Park is suing the city of Palo Alto, claiming that the city's requirements over tenant relocation fees amount to an unconstitutional "shakedown" that prevents them from closing the business that they've operated for decades.

    The lawsuit, filed in federal court [] by Sacramento-based Pacific Legal Foundation, is the latest twist in a land-use drama that has garnered international attention. The Jisser family, which owns the park, has been working toward closing the park and redeveloping it for the past several years. But Buena Vista is a rare bastion of naturally affordable housing in the middle of Palo Alto's sky-high residential market, and housing advocates have rallied behind efforts to prevent its closure.

    The debate has raged as other mobile home parks have also faced closure, owing to a couple of factors: Longtime, mom-and-pop owners are retiring, and the market for residential land in Silicon Valley is exceptionally strong, spurring redevelopment interest. In San Jose, the Winchester Ranch Mobile Home Park is also facing closure, with homebuilder PulteGroup in contract to buy it from the longtime family ownership. San Jose's city council has imposed a moratorium on mobile home park conversions in response, and this week San Mateo County did the same thing.

    City officials approved the Buena Vista's closure earlier this year, which is largely a procedural affair. But they imposed new relocation fees that the Jisser's attorneys say amount to roughly $8 million. "Put simply, the City demands that the Jisser Family pay massive sums of money to their tenants or be forced to continue operating a business they want to close, including the unwanted permanent occupation of their land by tenants," attorneys write in the suit.

    The involvement of the Pacific Legal Foundation is notable because the group has a history of winning property-rights cases involving the legal concept of "takings," or the idea of taking property for public use.(1)

    Most recently, PLF has entered the fight over San Jose's inclusionary housing ordinance, [...].
For more, see Owners of Palo Alto's Buena Vista Mobile Home Park sue city over closure 'shakedown'.

See also, Family-Owned Mobilehome Park Sues Palo Alto to Stop Shakedown (PLF lawsuit challenges city’s unconstitutional demand; that Jisser family pay millions for the right to close their business):
  • PLF’s lawsuit on the Jissers’ behalf charges that this staggering financial demand violates the U.S. Constitution’s Fifth and Fourteenth Amendment limitations on taking private property for public use,(2) and also violates a California state law prohibiting conditions on the closure of mobilehome parks that “exceed the reasonable costs of relocation” of a park’s tenants. The U.S. Supreme Court has repeatedly held that government may not force individual property owners to bear the costs of public benefits which, in fairness, should be paid for by the public as a whole.
For the lawsuit, see Jisser v. City of Palo Alto.
(1) Such a taking without compensation is often referred to as an inverse condemnation:
  • Inverse condemnation is a term used in the law to describe a situation in which the government takes private property but fails to pay the compensation required by the 5th Amendment of Constitution. In some states the term also includes damaging of property as well as taking it.

    In order to be compensated, the owner must then sue the government. In such cases the owner is the plaintiff and that is why the action is called inverse – the order of parties is reversed, as compared to the usual procedure in direct condemnation where the government is the plaintiff who sues a defendant-owner to take his or her property

    The taking can be physical (e.g., land seizure, flooding, retention of possession after a lease to the government expires, deprivation of access, removal of ground support) or it can be a regulatory taking (when regulations are so onerous that they make the regulated property unusable by its owner for any reasonable or economically viable purpose).

    The latter is the most controversial form of inverse condemnation. It is considered to occur when the regulation of the property's use is so severe that it goes "too far," as Justice Holmes put it in Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922), and deprives the owner of the property's value, utility or marketability, denying him or her the benefits of property ownership thus accomplishing a constitutionally forbidden de facto taking without compensation. Reference: Wikipedia.
(2) Ibid.

California Couple Tag Tahoe Regional Planning Agency w/ Inverse Condemnation Suit, Saying Government Refusal To Grant Building Permit To Rebuild Home On Now-Vacant Land Constitutes A 'Taking' Of Property w/out Paying Compensation

In South Lake Tahoe, California, the San Jose Mercury News reports:
  • Backed by a conservative legal group, a San Jose couple has taken their six-year feud with Lake Tahoe regional planners to federal court, arguing that a policy keeping them from building a house for their elderly mothers on vacant property is unconstitutional.

    In a lawsuit filed [] in U.S. District Court in Sacramento, Ray and Teresa Burns allege that the government is violating protections against improper taking of property by denying them permits to build the South Lake Tahoe home.(1)

    The couple purchased the property in foreclosure in 2009, two years after a house on that land burned down in the 2007 Angora forest fire. The lawsuit, crafted by the Sacramento-based Pacific Legal Foundation, notes that a house had been on that same property for 30 years prior to the fire, and that the property is surrounded by other homes and businesses.

    Teresa Burns said she was "devastated" when officials with the Tahoe Regional Planning Agency told them they could not build the house on the property, where they had dreamed of moving both of their mothers.

    "It was awful, it was heart wrenching," said Burns, a nurse in San Jose.

    Officials with the planning agency could not immediately be reached for comment. The agency denied permits to build on the land because it was determined to be in an environmentally protected zone as a result of nearby creek and water runoff areas, according to court papers.

    The agency, known as TRPA, operates as a combined California, Nevada and federal regulatory agency, noting on its website that it is responsible for regulating development to protect the lake's watershed.

    The lawsuit seeks court orders finding that the agency actions are unconstitutional and compensation for the fact the couple now cannot build the house on their property.

    "(The agency) is thumbing its nose at basic constitutional protections for property owners," said Christopher Kieser, a lawyer for the couple. "Government can't regulate away all use of land without paying for it."

    Ray Burns, a local construction project manager, is frustrated by the tough stance taken in the environmentally-conscious Tahoe region.

    "We picked that neighborhood because it was everything our parents need," he said.
Source: San Jose couple sues over Lake Tahoe house feud.

See also, Lake Tahoe regulators sued for “taking” a couple’s property (Agency is blocking Ray and Teresa Burns from rebuilding a home on their vacant parcel — in a developed residential area where a house stood for 30 years before a forest fire).
(1) Such a taking without compensation is often referred to as an inverse condemnation:
  • Inverse condemnation is a term used in the law to describe a situation in which the government takes private property but fails to pay the compensation required by the 5th Amendment of Constitution. In some states the term also includes damaging of property as well as taking it.

    In order to be compensated, the owner must then sue the government. In such cases the owner is the plaintiff and that is why the action is called inverse – the order of parties is reversed, as compared to the usual procedure in direct condemnation where the government is the plaintiff who sues a defendant-owner to take his or her property

    The taking can be physical (e.g., land seizure, flooding, retention of possession after a lease to the government expires, deprivation of access, removal of ground support) or it can be a regulatory taking (when regulations are so onerous that they make the regulated property unusable by its owner for any reasonable or economically viable purpose).

    The latter is the most controversial form of inverse condemnation. It is considered to occur when the regulation of the property's use is so severe that it goes "too far," as Justice Holmes put it in Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922), and deprives the owner of the property's value, utility or marketability, denying him or her the benefits of property ownership thus accomplishing a constitutionally forbidden de facto taking without compensation. Reference: Wikipedia.

Jury Kiboshes Foreclosure Investor's Lawsuit Against Cops For False Arrest, Civil Rights Violations, Etc.; Police: Investor Attempted To Intimidate Ex-Homeowner Who Returned To Premises To Legally Remove Personal Belongings From Former Home

In Turlock, California, the Turlock Journal reports:
  • A Stanislaus County jury has tossed out a lawsuit against the City of Turlock, the Turlock Police Department and a Turlock police sergeant as frivolous.

    The jury returned a unanimous verdict in siding with the city in the lawsuit, in which the plaintiff, Roni Roberts, was claiming false arrest, assault, battery, negligence, violation of civil rights and intentional infliction of emotional distress, according to the court records.

    The lawsuit stemmed from an incident that occurred on Feb. 16, 2013 in Turlock. Roberts had purchased a Turlock property at a foreclosure sale in late January 2013. On Feb. 16, 2013, Roberts’ employee saw the previous owner at the property and reported it to the Turlock Police Department as a burglary.

    Turlock police officers, including Sgt. Dave Shaw, responded to the residence, and upon some investigation, Shaw determined the previous owner had a right to remove her personal belongings from the property.

    In California, a property owner has to give a tenant a three-day notice to quit the property. If by the end of the three days the tenant has not left, the property owner can file an eviction lawsuit or an unlawful detainer. An eviction process takes about 30 days. Once a judge has ordered an eviction, a tenant has five days to remove any belongings before the sheriff’s department changes the locks.

    There was nothing in the Stanislaus County Superior Court case index showing an eviction lawsuit filed by Roberts in 2013, however there were some filed by RT Financial Inc., of which Roberts is associated.
    According to the police report, Roberts began walking towards the property and allegedly made threats to kick out the occupants. The City stated Shaw was concerned Roberts might harm the woman removing her belongings and repeatedly told Roberts not to enter the property. When Roberts allegedly attempted to enter the property, Shaw put him under arrest.

    The lawsuit was filed in March 2014 and went through a lengthy court process before the trial began on Dec. 1. The verdict was returned Dec. 10.

    Roberts was represented by Kevin Clune and Ivo Labar of the Kerr Wagstaffe firm in San Francisco. The City of Turlock and Sgt. Shaw were represented by Bradley Swingle and Ameet Birring of the Arata, Swingle, Sodhi & Van Egmond firm in Modesto.

    “I’m pleased that common sense and justice prevailed,” said Mayor Gary Soiseth. “Turlock’s police officers conduct themselves with discipline, professionalism, and—most importantly—respect for the law. It’s a shame that time and resources were wasted on this trial. I applaud our officers, especially Sgt. Dave Shaw, for their integrity and patience throughout the trial.”

Fleeced Out Of $8K For Bogus Driveway Repairs, 92-Year Old Homeowner Turns Tables On Alleged Home Improvement Scammer, Helps Cops Grab Suspect w/ Victim's Check Still In His Pocket

In Midwest City, Oklahoma, KOCO-TV Channel 5 reports:
  • James Funderburg, 92, knew his driveway was full of cracks and in need of repair. The World War II vet said that when a man offered to do the job for him, he was all ears.

    “I listened to him and asked him how much,” Funderburg said. “He never gave me a price.”

    Court documents reveal Ruben Charlie Jones took nearly $8,000 from the Midwest City man.

    “He started doing the work,” Funderburg said. “I didn’t stop him, but when he gave me the final price I said, ‘Well, cotton-picking, that’s an exorbitant price to cover this up.'”

    Midwest City police were notified by a neighbor looking out for Funderburg. “You hate it when somebody takes advantage of somebody his age,” said neighbor Linda Strahorn. “When he told me the guy was coming back, I told James he needed to call police.”

    Court documents reveal the pair called police, and when Jones returned, police were ready. “Two officers hid their car in my driveway,” said Strahorn. Another was inside Funderburg’s home. When the suspect came inside, that’s when police moved in.

    “They started asking him questions,” Funderburg said. “They patted him down, and the next thing you know, they took him off to city jail.

    Police said Jones had a check made out from the victim for more than $8,000.

    Court documents said Jones gave the victim the name Jim Owens. It’s believed to be an alias, along with the name Kyle Moody. The contractor has been charged with two counts of exploitation of the elderly and one count of possession of a forged note.

Friday, December 18, 2015

Sneaky Feds On Planting Warrantless 'Bugs' Outside Courthouse In Effort To Bag Alleged Foreclosure Sale Bid-Riggers: They Have No Expectation Of Privacy - "The Public Auctions Were, Unsurprisingly, Public!"

In Oakland, California, The Recorder reports:
  • Defense lawyers for a group of five Bay Area real estate investors made waves last month when they claimed their clients' privacy rights were violated when FBI agents planted recording devices outside an entrance to the San Mateo County Courthouse without getting a warrant.

    The bugs captured more than 200 hours of audio in 2009 and 2010 as part of the government's sweeping investigation into bid-rigging at public foreclosure auctions, according to defense filings.

    But federal prosecutors contend in court papers filed on Monday that the defendants didn't have a reasonable expectation of privacy during the captured conversations, which were held as bidders gathered for auctions.

    "In sum, the public auctions were, unsurprisingly, public," wrote David Ward, a lawyer in the DOJ's antitrust division.

    The case tests just how far the government can go to capture private conversations held in a public space without judicial sign off. Rory Little, a law professor at UC-Hastings College of the Law, said that underlying issues could catch the attention of U.S. District Judge Charles Breyer, who is overseeing the case. "It just seems to me that you're likely to see further proceedings on these issues. This is the kind of motion that might push off a trial date," said Little, the former appellate chief in the Northern District's U.S. attorney's office. "This is definitely going to be a motion that Judge Breyer finds interesting and it's hard to predict what's going to happen."

    Prosecutors concede that FBI agents did not request a warrant before placing one audio recording device in a sprinkler box attached to the building and another in a planter box near where the auctions were typically held—just outside an employee entrance to the courthouse. Federal agents did, however, get the blessing of the San Mateo County Sheriff's Office, which consulted with county counsel before giving permission, the government's new filing says. Agents placed additional devices that could record both video and audio in an unmarked car parked at a curb designated for police vehicles, but prosecutors point out that defendants aren't challenging the video surveillance.

    In their motion to suppress the recordings, defense lawyers made repeated reference to the potential for the devices to capture privileged conversations between lawyers and clients entering and exiting the building.

    But federal prosecutors say the auctions were conducted on the opposite side of the building from entrances litigants would use. "Moreover," Ward wrote, "attorneys and clients do not have private conversations at public auctions attended by dozens of people."

    Ward also says the defense motion should be found moot since the government doesn't intend to use any of the recordings at trial.

    "The stationary audio recordings are of low quality, contain mostly irrelevant conversations, and did not advance the investigation," he wrote.

    Arguments on the motion are set for January.

    The concession by the government "is a welcome first step but does not moot this hearing," said defense lawyer Jeffrey Bornstein. "There was no judicial authorization for these recordings, nor was there any notice given to anyone that their private conversations would be recorded."

Central Florida Man Gets Three Years For Filing Fraudulent Bankruptcy Petitions Without Homeowners' Knowledge In Connection With Bogus Rent Skimming, Sale Leaseback Foreclosure Rescue Ripoffs

From the Office of the U.S. Attorney (Tampa, Florida):
  • U.S. District Judge James D. Whittemore has sentenced David W. Griffin (44, Lutz) to three years in federal prison for bankruptcy fraud and making a false statement during a bankruptcy proceeding.

    According to court documents, Griffin operated a foreclosure rescue scheme through his companies, Bay2Bay Area Holding, LLC and Business Development Consultants, LLC.

    The purpose of the scheme was to obtain quitclaim or warranty deeds from distressed homeowners facing foreclosure in return for false promises to rescue their homes from foreclosure by negotiating with creditors, renting the properties back to the homeowners to obtain rental income, and falsely promising that the homeowners could repurchase the properties from Griffin.

    To maximize his rental income, Griffin also prevented creditors and guarantors, including the Federal National Mortgage Association (“Fannie Mae”) and the Federal Housing Administration, from pursuing lawful foreclosure and eviction actions against homeowners who had defaulted on their mortgages. This was accomplished by filing, and causing to be filed, fraudulent bankruptcies in the names of the homeowners without their knowledge or consent.

    Griffin also lied under oath in sworn testimony before the Office of the United States Trustee. Under penalty of perjury, Griffin stated that he had no knowledge of a bankruptcy petition filed in the name of his company, Bay2Bay Area Holding Group. In fact, Griffin prepared the petition and directed another individual to sign and file the petition with the United States Bankruptcy Court for the Middle District of Florida.

    Griffin has agreed to make full restitution to the Clerk for the United States Bankruptcy Court for the Middle District of Florida. The losses are approximately $25,125.

Feds Pass On Criminal Prosecution Of SoCal Loan Modification Racket Accused In $2.7+ Million Ripoff; Settle For FTC Enforcement Action To Score Shutdown; Defendants Promise To Never Run Financial Scams Again, Agree To Surrender Certain Assets In Exchange For Avoiding Payment Of Full Restitution To Fleeced Victims (Big Deal!)

The Federal Trade Commission recently announced:
  • Four mortgage modification scammers, Brian Pacios, Chad Caldaronello, Justin Moreira and Derek Nelson will be banned from selling debt relief products and services under settlements resolving Federal Trade Commission charges that they deceived homeowners facing foreclosure.

    The settlements stem from a complaint the FTC filed against Pacios, Caldaronello, Moreira, Nelson, Denny Lake, and relief defendant Cortney Gonsalves in 2015, alleging that, doing business as HOPE Services and HAMP Services, they promised consumers help getting their mortgages modified, but instead stole their mortgage payments, leading some to foreclosure and bankruptcy. Pacios’s settlement also resolves an FTC contempt action against him for violating a 2013 court order that prohibited him from mortgage relief activities.

    “These rip-off artists took struggling homeowners’ last dollars, but we’ve shut down their destructive and illegal schemes,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “Now, in addition to financial judgments, the court has permanently banned them from the industries and practices they exploited.”

    Under stipulated court orders [], Pacios, Caldaronello, Moreira and Nelson are also prohibited from misrepresenting any product or service, profiting from customers’ personal information, and failing to properly dispose of it. Pacios, Caldaronello, and Moreira are banned from telemarketing, and Pacios and Caldaronello are also banned from selling credit-related financial products and services and barred from using aliases. Moreira and Nelson are also prohibited from using material misrepresentations and unsubstantiated claims to sell financial products and services, and Nelson is barred from telemarketing without maintaining records stipulated in the order.

    The orders against Pacios and Caldaronello impose a judgment of more than $2.7 million, which represents the total amount consumers paid. The order against Moreira imposes the same judgment, which will be suspended upon the surrender of certain assets. The full judgment against Moreira will become due immediately if he is found to have misrepresented his financial condition. The order against Nelson imposes a judgment of $859,839, which will be suspended upon the surrender of certain assets, but due immediately if he is found to have misrepresented his financial condition.

    The order against Gonsalves, a relief defendant who profited from the scheme, imposes a judgment of $218,768, which represents the amount Gonsalves received from the scam. Litigation against Lake continues.
Source: FTC Action: Scammers Banned from Mortgage Relief Business, Telemarketing.

Editorial Note: This action, which essentially constitutes little more than a slap on the hand for the scammers, apparently reflects the fact that the Feds just don't have sufficient enough resources to go after every single loan modification racket with criminal prosecution, so they have to go after some of the ripoff artists with civil lawsuits, shut them down, take whatever money they have left from the ripoff, get empty promises from them that they'll never do wrong again, and let them go without prison time.

Another Closing Agent Gets Pinched For Allegedly Glomming $391K In Real Estate Escrow Funds Owed To Seven Victims; Suspect Falsely Claimed To Be Authorized Agent for Major Title Insurer; Two Homeowners Left Facing Foreclosure When Prior Loans Were Not Properly Paid Off During Transaction Closings

The Florida Department of Financial Services recently announced:
  • Florida’s Department of Financial Services (DFS) Division of Insurance Fraud (DIF) [] announced the arrest of Kristine Ann Spahr, 41, after her alleged intentional misappropriation of nearly $400,000 in real estate escrow funds as an effort to gain personal monetary profit while she was illegally operating her Nassau and Duval county-based insurance company, Signature Title and Trust LLC.

    In January of 2015, DIF received a complaint that alleged Spahr’s title agency, Signature Title and Trust, had closed a real estate transaction that listed Chicago Title Insurance Company as the policy evaluator. After looking further into the complaint, DIF established that neither Spahr nor her company had been appointed to represent or sell policies on behalf of Chicago Title.

    At this time DIF, in accordance with DFS’s Division of Agents and Agency Services, moved forward with their investigation revealing that in 2014 Spahr had forfeited her title agency license as a condition to work as an agent for another title insurance company, Grace Title. While working for Grace Title, Spahr continued to illegally operate her previous company, Signature Title and Trust LLC, without the required licensing.

    DIF’s investigation later revealed that on at least seven separate occasions, while illegally operating her previous company, Spahr defrauded her clients by keeping their real estate escrow funds and failing to provide her clients with the title insurance coverage in which they had paid for.

    Of the seven fraudulent transactions, two victim’s homes had prior mortgages that were not paid off from the escrow accounts and were facing foreclosure while unpaid federal and county tax liens were not paid off in several of the other victim’s real estate closings. In total, funds in excess of $391,000 were found to have allegedly been stolen by Spahr.

    Kristine Spahr was booked into the Nassau County Jail and has been charged with one count of organized scheme to defraud, a felony of the first degree. This case will be prosecuted by the Assistant State Attorney Stephen Siegel of the State Attorney’s Office for the Fourth Judicial Circuit, and if convicted, Spahr faces up to 15 years in prison.

Thursday, December 17, 2015

Mobile Jury Awards Wrongfully Foreclosed Couple $400K ($375K In Punitives), Belting Banksters For Allegedly Manufacturing Series Of Mortgage Documents To Justify Illegitimate Foreclosure

In Mobile, Alabama, reports:
  • Following a weeklong trial, a Mobile jury awarded $400,000 to a husband and wife, whose home was wrongfully foreclosed on by Deutsche Bank National Trust Company and its loan servicer, Ocwen Loan Servicing LLC.

    In late 2006, Wilmer and Sonya Caldwell refinanced their home with Challenge Financial, a retail mortgage lender. Four years later, their home was foreclosed on by Deutsche Bank. Before the foreclosure, the Caldwells had never heard of Deutsche Bank. However, Deutsche Bank claimed that it bought the Caldwells' mortgage loan through a complicated series of transfers involving the securitization of thousands and thousands of mortgage loans throughout the United States.

    During the case, the evidence demonstrated that Deutsche Bank never bought or owned the Caldwells' mortgage loan. Instead, Deutsche Bank and Ocwen had created a series of documents, both before and after the foreclosure, in order to make it look like Deutsche Bank owned the Caldwells' mortgage loan.

    "Deutsche Bank and Ocwen knew what they were doing was wrong. However, rather than acknowledging that, they chose to simply manufacture documents in order to legitimize a foreclosure that was illegitimate from the very beginning," said Billy Bonner, a partner with the law firm of Cunningham Bounds LLC, who represented the Caldwells.

    "This was not an isolated occurrence. There are millions of homeowners throughout the country facing foreclosure – and unfortunately, many of them are being forced to give up their homes to banks that do not actually own their mortgage loans," added Bonner.

    The jury's award consisted of $25,000 in compensatory damages and $375,000 in punitive damages. The Caldwells were also represented by David G. Wirtes Jr., a partner at Cunningham Bounds LLC, and Noel Nelson, an attorney in Mobile.

Philly Feds Pinch Three For Allegedly Filing Forged Deeds In Snatch & Flip Home Hijacking Racket; Suspects Also Accused Of Filing Hundreds Of False Tax Forms Against Cops, Judges, Other Gov't Employees In Campaign Of Harrassment & Intimidation

From the Office of the U.S. Attorney (Philadelphia, Pennsylvania):
  • Steven Hameed, 56, Darnell Young, 48, and Damond Palmer, 41, all of Chester, Pennsylvania, were charged by indictment, [], with one count of conspiracy to commit offenses against the United States, one count of bank fraud, and one count of corrupt interference with Internal Revenue laws, announced United States Attorney Zane David Memeger. Hameed also faces three counts of conversion of government property, and Young was also charged with one count of conversion of government property. Hameed and Young also face a count of creating fictitious obligations.

    According to the indictment, the defendants filed false land deeds with the Delaware County Recorder of Deeds Office in an attempt to claim ownership of homes owned by the government or by banks, and then to live in the homes, or rent/sell the homes to unsuspecting persons, for their own financial gain.

    The indictment further charges that the defendants filed hundreds of false tax forms against police officers, judges, and other government employees in an attempt to harass and intimidate them in the course of their official duties. Hameed and Young are also charged with creating a false financial bond in an attempt to purchase property.

Scammers Target Vacant Realtor-Listed Homes For Possession-Hijacking Rent Ripoffs; One Central Florida Agent Says About 1/3 Of Of Local Listings On Craigslist Are Fraudulent w/ Landlord Impostors Operating Email Accounts Using Actual Realtor Names To Reel In Victims

In Kissimmee, Florida, WFTV-TV Channel 9 reports:
  • [I]n the last month, realtor Holly Wolfer said she’s spotted nearly a dozen instances of scammers operating email accounts using actual realtors' names to lure unsuspecting victims.

    In one recent case, a would-be renter found a Craigslist advertisement featuring a home on North Thatcher Avenue in Kissimmee. Before paying a $500 deposit, the person contacted Wolfer, who confirmed the listing was illegitimate. The home was vacant and listed for sale, but a sign posted on the lawn stated the property wasn’t available to be rented.

    “It's easy cash for somebody, especially during the holidays,” Wolfer said. “The focus is really switching to properties that are vacant but for sale.”

    Earlier this week, Wolfer said another family looking to rent a home were scammed of their $500 deposit.

    The realtor estimates about one-third of local real estate listings on Craigslist are fraudulent.

    Wolfer advises prospective renters to search the Osceola County Clerk of Courts website to verify that a property listed in an advertisement isn’t in foreclosure.

Upstate New York Landlord Under Investigation For Hijacking Possession Of Vacant Bank-Owned Foreclosed Home, Then Renting It To Unwitting Couple, Fleecing Them Out Of $46K

In Brockport. New York, WHAM-TV Channel 13 reports:
  • Brockport police and the New York State attorney general are now investigating a Penfield man accused of renting out a foreclosed home he never owned.

    13WHAM broke this story on Wednesday. Thursday, a Your Stories investigation also revealed this man has dozens of properties and owes the federal government money.

    Brockport Police Chief Daniel Varrenti says Charles Hain could face fraud, grand larceny, impersonation and burglary charges for collecting rent on property he didn't own.

    "We take these allegations very seriously," the chief said.

    Public records show Hain's troubled history as a landlord dates back to 2009. The attorney general's office settled a lawsuit against Hain and his sister for withholding security deposits.

    "Desperate people do desperate things," Varrenti said. "This is just an example of, unfortunately, the world that we live in. People are capable of doing virtually anything for their own independent gain."

    Records at the Monroe County clerk's office show Hain owns dozens of properties. Liens are filed against 21 of them. County records also show Hain owes the I.R.S. $2 million in taxes from the spring of last year.

    "How many more people are going to go through this? It's crazy," said Jamie Ergott, who paid him to rent their home, but he didn't own it. The couple's accusing Hain of duping them out of $46,000.

    This was even news to the bank that did own the home. The bank released the following statement:

    "We completed a foreclosure sale in August and were preparing to transfer the property to HUD when we were surprised to learn that it had been rented to tenants by an unauthorized third party."

    This week, 13WHAM tried to ask Hain questions about this situation, but he got it in his pickup and drove away.

    With local and state authorities now investigating, he could face criminal charges.

    "It definitely makes me feel better. At some point, justice will be served and he won't continue to do this to other people and mess with their families," Ergott said.

Wednesday, December 16, 2015

Maryland Appeals Court Declares Reverse Mortgage Loan Void, Not Merely Voidable When Made To Borrower Adjudicated 'Disabled' & Where Court-Ordered 'Guardianship' Appointment Is Properly Recorded; Title Agent Screw-up Leaves Bankster Holding The Bag & Entitled To No Relief (ie. No Mortgage Ratification, No Restitution Via Unjust Enrichment, No Lien Subrogation)

From a client alert from the law firm Pessin Katz Law, P.A.:
  • The Maryland guardianship laws do not fully describe the consequences of a disabled person’s entry into a transaction without the knowledge of their guardian.

    Is the transaction void or voidable? Is one who advances funds entitled to ratification of that act by a guardian? Are they entitled to restitution? Can such a person earn a right of subrogation in the case of the payment of a prior lien?

     In Nutter v Black, (No. 1563, Sept. 30, 2015, Kehoe, J.), the Maryland Court of Special Appeals, agreeing with the Baltimore County Circuit Court, held that a reverse mortgage entered into by Edwina E. Black, (“Black”) without the knowledge of her court appointed guardian, attorney David L. Moore, (“Moore”) was void. Consequently, James B. Nutter & Co. (“Nutter”) was not entitled to ratification by Moore, reimbursement by way of a theory of “unjust enrichment”, or subrogation as a result of the loan transaction and the satisfaction of Black’s existing mortgage.

    The opinion of the Court of Special Appeals described Black as “disabled”, meaning one of those “…persons who have been adjudicated by a court to be unable to manage their property and for whom a guardian of the property has been appointed.” The Court stated that such an individual is to be distinguished from an “incompetent”, the latter being one of those “…individuals who may be unable to manage their property, but who are not subject to guardianship proceedings.” The Court remarked that the distinction was “critical to the outcome of this appeal”.

    The facts of the case were straightforward. Black was a disabled person. Nutter was a reverse mortgage lender. Moore was Black’s court appointed guardian. Black entered into a reverse mortgage involving Black’s residence with Nutter without Moore’s knowledge or consent. Nutter asked Moore to ratify the transaction or make restitution. Moore refused. Nutter filed suit to compel ratification or, in the alternative, for restitution or subrogation under the prior purchase money mortgage for Black’s residence.

    Title to Black’s residence was in the name of Moore, as her guardian, and was subject to a deed of trust, again in the name of Moore.

    The parties stipulated that the title agent for the reverse mortgage “failed to properly identify the guardianship action in the Court record.” The stipulation did not mention if the title agent was aware of Black’s disability based upon the deed and deed of trust for her residence.

    As part of the closing on the reverse mortgage, Nutter paid off the deed of trust on Black’s residence, paid settlement costs and advanced funds to Black. After Moore was notified of the satisfaction of the loan used to purchase Black’s residence he investigated the Nutter loan. After several months of trying to reach Moore, Nutter subsequently wrote to Moore and asked him to either ratify the transaction or return the funds paid out at closing.

    Moore advised Nutter that the transaction was void as a matter of law and he had no obligation to return the monies paid out by Nutter. Nutter contended that the transaction was voidable and it was entitled to a declaratory judgment so stating and related relief.

    The Baltimore County Circuit Court agreed with Moore. The reverse mortgage was void, not voidable; Nutter had “constructive notice of Ms. Black’s disability”; and, therefore, Nutter was not entitled to restitution because the transaction was void, not voidable.

    The Circuit Court denied Nutter’s claim for restitution because that claim was premised solely upon Nutter’s contention that the reverse mortgage transaction was voidable. The reasoning of the Circuit Court was that because the transaction was void, Nutter acquired no rights in Black’s residence property and “thus was not compelled to pay the [existing] mortgage in order to preserve any rights.”

    Before the Court of Special Appeals, Moore argued that because of Ms. Black’s disability, the reverse mortgage transaction was void and Nutter’s only rights, if any, lie in restitution or subrogation. Nutter contended that the reverse mortgage transaction was voidable based upon Moore’s not timely rescinding the loan. Had he done so, Nutter argued, it would have been made whole by repayment upon rescission. Because of the delay and failure to rescind on the part of Moore, Nutter asserted that he “constructively affirmed” the reverse mortgage.

    The Court of Special Appeals noted that Maryland courts have limited ruling deeds to be void due to possible subsequent consequences involving the chain of title to those circumstances involving the “face of the deed”, meaning forgery, by example. However, Moore was, in essence, asking the Court to rule that Black’s deed was, indeed, a forgery due to her lack of capacity.

    The Court of Special Appeals agreed with Moore. It reasoned that because Maryland’s guardianship statute vested title to all property of a disabled person in that person’s guardian, the disabled person was like a forger: “Owning nothing, she can convey nothing.”

    Furthermore, the Court stated that a properly recorded court appointment of a guardian is “constructive notice to the world that the disabled person is without authority to convey his or her property.” The Court noted that “imprudence” in a title search bears its own risks, and a deed by a disabled person should be treated no differently than “any other readily-recognizable title flaw.”

    From an equitable standpoint the Court pointed out there were policy reasons to treat the transaction as void rather than voidable citing depletion of the guardianship estate by the reduced equity in the property as a result of the transaction; and, consequently, any increase in the property’s value inuring solely to Nutter; and, furthermore, ratification of the transaction possibly depriving Black eventually of all equity in the property; and, finally, rescission of the loan forcing Black to produce funds which were not available to her or her guardian and which would have to be secured from other sources.

    Nutter’s woes were further compounded on appeal by the observation of the Court of Special Appeals that any argument regarding Nutter’s right to restitution had not been properly preserved for appeal. As a result, the Court refused consideration of any argument regarding a right of Nutter to restitution.

    The Court of Special Appeals also spoke to the voluntary nature of the payoff of the existing mortgage on the property. It indicated that an “officious payor” (volunteer) would not be entitled to any relief for its actions by way of the argument of “unjust enrichment” and, in this case, that is how it viewed Nutter.

    In finding Nutter an “officious payor”, the Court stated that since Black lacked capacity any “contract” between she and Nutter was void and, therefore, Nutter was not acting under a legal duty when it paid off the existing mortgage. Nor did Nutter act “under any sense of moral duty” due to the business nature of the transaction. Also, because the contract was void, it was not acting to protect any interest it might have had in the property. Finally, Nutter could not claim it was acting at Black’s behest since she lacked the capacity to enter into the business transaction. The fact that Nutter may have been acting on mistaken information was irrelevant to its argument for relief.

    In conclusion, the Court’s opinion was that Black’s lack of capacity; Nutter’s lack of “diligence and prudence” in extending the loan to Black; and the deed to Black’s residence and the associated purchase money deed of trust “unambiguously informed anyone who bothered to read them that [Black] was under a disability and that Moore was the guardian of her property” were sufficient to deny Nutter any equitable relief arising out of theories of unjust enrichment or subrogation. Nutter was a volunteer, purely as a result of the action of Black being void, not entitled to equitable relief.

    Nutter highlights the observation that those who deal with a disabled person whose guardian has attended to all formalities of a court ordered guardianship do so at their own peril. Had Black been merely incompetent, the result of the case may have been different. In Nutter, the Court of Special Appeals has stated that it will not allow the rights of the disabled to be compromised because of the actions of third parties. The case may find its way to the Maryland Court of Appeals, the State’s highest court.

Tennessee Supremes: MERS Not Entitled To Notice Of Sale For Property Sold Out From Under It For Unpaid Real Estate Taxes; Says Registry Has No Independent Interest In Land Entitling It To Notification Of Public Auction

From the Tennessee State Courts website:
  • In a lawsuit filed to set aside a tax sale of mortgaged land in Hamilton County, the Tennessee Supreme Court has held that a mortgage registry business was not entitled to prior notice of the sale because it did not have an interest in the land that is protected under the Due Process Clause of the U.S. Constitution.

    Mortgage Electronic Registration Systems (MERS) operates a national electronic mortgage registry system for lenders who are MERS members. MERS electronically tracks the transfer of residential mortgages so that its members will not have to record each transfer in the county’s land records.

    The purchasers of the Hamilton County land borrowed money from a MERS member lender. The purchasers signed a promissory note secured by the property and a deed of trust, which was recorded with the Hamilton County Register of Deeds office. The deed of trust described MERS as “a separate corporation that is acting solely as nominee for [the lender]” and said that MERS was the beneficiary of the deed of trust “solely as nominee” for the lender and any successor to the lender.

    Later, after the original lender sold the note to another lender, the property owners failed to pay their 2006 property taxes, so Hamilton County initiated tax foreclosure proceedings. The county sent notice of the foreclosure and the tax sale to the borrowers and to the original lender, but not to MERS. Eventually, the property was sold at a tax sale to Carlton Ditto.

    After learning of the sale, MERS filed a lawsuit to set aside the tax sale, naming Hamilton County and Mr. Ditto as defendants. MERS argued that Hamilton County violated its constitutional right to due process of law by selling the land without notifying MERS. MERS claimed that the deed of trust gave MERS its own independent interest in the Hamilton County property, so it was constitutionally entitled to prior notice of the tax sale.

    The trial court ruled against MERS, holding that MERS was merely an agent of the lender without a separate interest in the property, and not entitled to prior notice of the tax sale. MERS appealed to the Court of Appeals, which affirmed the trial court’s decision for a slightly different reason, holding that MERS did not have standing to bring the lawsuit. MERS was then granted permission to appeal to the Tennessee Supreme Court.

    The Supreme Court considered whether Hamilton County was required to give MERS prior notice of the tax sale. The Court recognized that the Due Process Clause of the U.S. Constitution generally applies when the government sells a taxpayer’s land to satisfy unpaid taxes, so if the government fails to give the taxpayer such notice, the sale is unconstitutional and void.

    The Court then considered whether MERS had an interest in the land that was protected under the Constitution. The Court first noted that the deed of trust for the Hamilton County transaction used contradictory language to describe the role of MERS in the property loan transaction; it described MERS as a “beneficiary” but also said that MERS acted “solely as nominee” for the lender. Considering the parties’ roles in the loan transaction, the Court held that MERS was not in fact a beneficiary but only an agent for the true beneficiary, the note holder, and that MERS acquired no independent interest in the Hamilton County land.

    Because MERS did not have an interest that was constitutionally protected, Hamilton County was not required to give MERS notice before it sold the land to pay the unpaid tax obligation. For this reason, the Supreme Court affirmed the trial court’s judgment in favor of Hamilton County and the tax sale purchaser, Mr. Ditto.
Source: Supreme Court Rules Mortgage Registration Business has no Constitutionally Protected Interest in Property.

For the ruling, see Mortgage Electronic Registration Systems v. Ditto, No. E2012-02292-SC-R11-CV (Tenn. December 11, 2015).

Editor's Note: It remains to be seen how long it takes for the banksters to use their lobbyists to bribe cajole state legislators into changing its state statute (if they haven't already done so) so that this ruling has no effect on similar cases going forward (the way Massachusetts legislators were cajoled into changing its state law to knock most of the teeth out of the Ibanez ruling - see Bay State Banksters & Title Insurers Rejoice, Screwed Over Foreclosed Massachusetts Homeowners Lament As Governor Signs Bill That Clears So-Called "Ibanez Title Defects" To Homes Sold In Void Foreclosures Three Years After Sale).

Thanks to Deontos for the heads-up.

More Crappy Foreclosure Rulings By Florida Trial Judges Forthcoming? One Local Chief Judge Expects Problems Processing Backlog Of Cases In 2016 (ie. More Rubber-Stamped Foreclosure Judgments?)

In Fort Lauderdale, Florida, the Daily Business Review reports:
  • It might take help from Florida's 19 other judicial circuits to keep Broward's foreclosure division afloat in coming months.

    Already serving one of the hardest hit regions after the U.S. housing market collapse, deep budget shortfalls and dozens of lost employees left court administrators struggling to find a way to continue to work through thousands of foreclosure cases clogging the dockets.

    And another loss this year will likely make that job harder after state legislators failed to renew specially allocated funding for 381 days' worth of pay for senior judges in Broward's foreclosure divisions.

    That's why next spring, Broward Circuit Chief Judge Peter Weinstein plans to approach judicial circuits less affected by the housing crisis to borrow from their allocation of senior-judge days.

    "If I can't, then we're going to have a problem," he said.

    The chief judge already steps in to preside over foreclosure suits at least twice a week.

    Most of the cases last hours, but some cut through entire mornings or afternoons, leaving the chief judge and others with full civil calendars increasing their caseload to support a division still reeling from the economic collapse.

    "I'm doing my share, and other judges are doing as much as they can," Weinstein told the Daily Business Review.

    The worst might be over, but the fallout from the market crash continues to plague the Broward court system.

    As of September, the court's 11th division—which handles foreclosures from 2011 and later—had 6,023 pending cases. That month, it disposed of 774, but saw 363 new filings added to the 955 it reopened.

    "We're doing what we can, but it's a big caseload," Weinstein said.
For more, see Broward Hopes to Borrow Hours for Senior Judges in Foreclosure Cases.

Editor's Note: The situation described above can only lead to more bad trial court rulings, more appeals, and more reversals. See generally, Florida Appeals Courts Spent A Busy 2015 Reversing Trial Court Screw-ups In Foreclosure Cases.

1st Circuit To Home-Inheriting Siblings: Nice Try, But No Dice...Pay The Piper! Reverse Mortgage Lender's Failure To File Probate Claim Upon Death Of Homeowner/Borrower Does Not Extinguish Lien

From a client alert from the law firm Maurice Wutscher:
  • The U.S. Court of Appeals for the First Circuit recently held that a failure to file a probate claim does not extinguish a mortgage lien under Rhode Island law. In so ruling, the Court held that "the piper must be paid."

    The plaintiffs, a brother and sister, inherited their mother's house. During her lifetime, the mother had taken out a reverse mortgage secured by the house. The mortgage securing the loan contained an acceleration clause and power of sale and became due and payable upon the mother's death.

    The mother died intestate. Her son and daughter commenced a probate proceeding in Rhode Island state court. Notice was given to creditors, including the mortgagee, but the mortgagee did not file a claim in the probate proceeding. The probate case was administered and closed, with the court granting the decedent's interest in the property to the plaintiffs.

    In late 2010, the plaintiffs received a notice of foreclosure, which was published pursuant to Rhode Island law. A foreclosure proceeding followed and the mortgagee recorded the foreclosure deed granting the Property to it in November of 2011.

    The plaintiffs filed suit in federal district court, invoking diversity jurisdiction, challenging the validity of the mortgage assignments and the foreclosure. After the close of discovery, the mortgagee moved for summary judgment, which the trial court granted. This appeal followed.
    The First Circuit rejected the heirs' [] argument that "the failure to submit a claim to the probate court within the statutorily prescribed period … bars [the mortgagee] from later foreclosing against the Property to satisfy the underlying debt" because "the statute of limitations applicable to foreclosures in Rhode Island is the general 20-year statute of limitations" and the "limitations period associated with the probate claim-filing statute … does not apply."

Tuesday, December 15, 2015

Champion Mortgage At It Again: Belligerent Bankster Begins Foreclosure, Refusing To Accept 82-Year Old Reverse Mortgage Borrower's Claim That She's Not Dead, Demanding Proof She's Still Alive; Foreclosure Eventually Called Off When Local Media Troubleshooter Intervenes

In Milwaukee, Wisconsin, WTMJ-TV Channel 4 reports:
  • A local woman's mortgage company insisted she was dead and then threatened to take away her home. The I-Team looked into the case to find out exactly what type of protection and rights homeowners have.

    Dolores Olson is very much alive, and she's angry. The fear of losing her home of almost 30 years has been stressful and then some.

    "I never had anybody tell me I was dead," she shared with us.

    Dolores has seen a lot in her 82 years, but this is a first.

    "They said 'well, we know you're dead.' And I said, 'I'm what?' I said 'no I'm not dead. I'm right here talking to you.'"

    A phone call in October from Champion Mortgage changed everything. Her home went into foreclosure status because the company believed she was dead, and Dolores was told she had to prove she's alive. "You sit around thinking well are we gonna get thrown out in the road somewhere you know. Or what's gonna happen?"

    Dolores has a reverse mortgage, offered only to people 62 or older. There are no monthly payments, and the terms for this type of mortgage are different than a standard mortgage. If the homeowner dies, the outstanding balance on the home has to be paid.

    Paperwork from Champion Mortgage said the family had 30 days. Letters were being addressed to "the estate of" Dolores Olson. And according to Dolores' daughter, Cyrene, there were also calls from two different companies trying to appraise the property. "I asked them why and they said 'because it's from the mortgage company. They say the loan is due and payable.'"

    Having no luck with Champion, the family contacted Call 4 Action and then the I-Team got involved. It turns out Champion Mortgage had the wrong person telling us "clearly this was the wrong account." Dolores' home is no longer in foreclosure. A unique situation, but not knowing how to resolve a mortgage issue is common.

    Bill Druliner with GreenPath Financial Wellness pointed out "it can be very easy for folks to shut down or to not really know where to turn."

    GreenPath is a nonprofit that offers free housing counseling. He says if you're not having any luck with the mortgage company a nonprofit is the first place borrowers should go. "There are are free resources available to help. Anybody who's offering mortgage help and is charging a fee for that, that should raise a red flag."

    For Dolores, finally some relief knowing she doesn't have to fight to stay in her home. "This is where I've been for the past 30 years, and I'm not ready to go."

    Dolores and her daughter also told us Champion's customer service reps were belligerent. Something the company stated it's looking into and will provide more training if that's the case.

Champion Mortgage Stops Monthly Payments To 88-Year Old Widow, Then Begins Foreclosing On Her Reverse Mortgage Saying It Was Due To Her Death; Her Defense: "Do I Look Dead To You???" Resolution Reached After Call To Local Media Troubleshooter

In Johnson City, Tennessee, WJHL-TV Channel 11 reports:
  • Minnie Fish nearly lost her home all because the company that holds her reverse mortgage spent the last six months thinking she was dead.

    Champion Mortgage first started sending statements to Fish’s estate this summer, saying the 88-year-old’s loan was due because of her death. It became so serious that last month the company actually alerted her estate that her loan was being referred for foreclosure processing.

    Do I look dead to you?” Fish said Friday. “I’ll be 89 in January. I’m alive I think. Some people think I’m not, but I’m sitting here talking.”

    Fish signed up for the reverse mortgage years ago after her husband’s death. It allowed her to secure a loan to pay her bills using her home as collateral. The deal stipulated when she eventually dies the company would get to sell her property.

    “I’d hate to lose (my house) while I’m still living,” Fish said.

    Not only did she worry she was going to lose her house, but she says she also no longer had access to her loan, so she couldn’t pay her bills or taxes.

    “It’s infuriating that my mom or any other person would have to go through this kind of ordeal,” her daughter Dot Sexton said. “It may sound trivial to some people, but it is not.”

    Champion’s parent company Nationstar Mortgage says Fish no longer has anything to worry about. The company chalked up the situation to an incorrect death report.

    “We have been working with Ms. Fish over the last few months to resolve this issue, and as of Nov. 30 we received the final documentation required to correct her file,” the company said in an email. “We certainly feel for Ms. Fish in this unfortunate circumstance, and now that we have received the final required documentation as of Nov. 30 her file has been moved back to active.”

    Fish says the company never told her the situation was resolved.

    “I didn’t hear from them last Monday,” she said today. “We gave them all the information we asked for and they never really worked with us with anything.”

    Instead, a week later, we were the ones to share the good news. “Just thank God it’s over,” she said. “That’s lifted off of me.”

    Fish welcomed the reverse mortgage reversal with her regular humor.

    “They’re going to bring me back to life,” she joked. “Reincarnation. In my home for Christmas and New Years and hopefully several years after that.”

Another Illegal Foreclosure Trashout: Bankster's Handiwork In Foreclosed Home Without First Getting Court Order Lands Lifetime Of Personal Belongings, Family Heirlooms In Dumpsters

In Hartford, Connecticut, WTNH-TV Channel 8 reports:
  • Sean Gorman’s funeral service did not have many photos of him and his family. A lifetime of photos were in the home he had raised a family in for more than 30 years. Before he died, the locks were changed.

    When he died, the house went into foreclosure. The bank had a right to the property, and the family, who no longer had claim to the home itself saw no issue with the bank taking possession of the house.

    The issue came, however, when Sean’s daughter Eileen Gorman got a call not from the bank or mortgage servicing company, but from someone in the neighborhood. All of her father’s belongings was being put into dumpsters.

    Seven dumpsters were filled with everything amassed in the former furniture salesman’s life. It was the personal belongings and family heirlooms that Gorman said were the hardest to see in the dump. “My mothers’ china, my crystal collection, silver sets,” lists Gorman. “They’re all gone.”

    “My life was thrown out like a piece of trash and garbage. anything in my life that meant anything to me anything I could pass onto my daugher was thrown out,” she said.

    After weeks of calls and emails, someone representing Nationstar Mortgage finally called. The staff member apologized “for the inconvenience and frustration” that the Gorman’s were experiencing. And she was doing something else: Everything outside was going back in.

    The Gorman’s were not allowed to remove anything from the home, because a legal order had not been issued. Before a home can be emptied, something called an “ejectment” has to be issued by a court.

    In this case, the house was emptied before that ejectment was filed. One was finally ordered months after the damage was done.

    Nationstar would not comment on the Gorman’s foreclosure case, or explain why no ejectment was filed before the house was emptied.

    “If the house burnt down, I would have lost it. You can explain that,” said Gorman. “This I can’t explain.”

    Eventually, Gorman was allowed into the home to catalog what was left behind and remove what she could salvage.

    What happened to the Gorman home is not isolated. Attorney Sarah White with Hartford’s Connecticut Fair Housing Center said her office homeowner complaints about “trashouts” about once a month.

    “What’s unfortunately happening sometimes is that banks are bypassing this process and for whatever reason going in and changing the locks, cataloguing the contents and sometimes just throwing things into a dumpster,” said White. “Its certainly not isolated and I think its’s endemic of a larger problem with this industry.”

    In fact, complaints against mortgage companies is one of the quickest growing categories of complaints, according data from the Consumer Financial Protection Bureau.

    Nationstar, a Texas mortgage company, who boasts a bottom line in the hundreds of billions, has one of the largest numbers of complaints, compared to other mortgage companies.

    In Connecticut, complaints have gone from five in 2012 to 48 in 2015, a nine-fold increase. Across the country, similar complaints have quadrupled.

    This year, Gorman is complaining about the tactics that mean she never can share her father’s life with her daughter. and working with an attorney to decide what her next move is.

    “[Attorneys] are looking at all avenues,” said Gorman.(1)
Source: Trashed House: How a Mortgage Mistake Cost A Family Everything.
(1) For those homeowners who've been screwed over by wrongful lockouts by foreclosing lenders (and their confederates) and seek some possible guidance on how much their cases might be worth if they seek to sue, see:
For examples of filed lawsuits involving illegal bank break-in, "trash-out" lockout cases, see:

Monday, December 14, 2015

Recent Elderly Victim Who Had Vacant Harlem Brownstone Sold Out From Underneath Her Recovers Title, Victimized Unwitting Buyer Gets Repaid, Alleged Scam Organizer Awaits Trial While Three Others Cop Guilty Pleas, Title Insurer Left Holding The Bag; Officials Say Ease Of Access To Property Records Online Make Title Hijacking Rackets A Cyberthreat

In New York City, The Wall Street Journal reports:
  • The clues were there for months, but property investor Sybil Patrick didn’t put them together. The locks to a vacant Harlem brownstone she owns were changed. Belongings weren’t in the same place she left them.

    Then one day last spring, Ms. Patrick, a 79-year-old former nurse, showed up to tend the front yard. The superintendent next door asked why she was visiting a house she had already sold.

    “I told you I was never, ever going to sell,” she recalled saying.

    But it turned out the superintendent was correct: The house had been sold, without her knowledge, about a year earlier for roughly $750,000.

    The case was one of about 30 related incidents in Manhattan in which a group of people allegedly forged or attempted to forge new deeds using easily available online records, to sell the homes and collect the proceeds, according to officials at the Manhattan district attorney’s office. Since last fall, New York prosecutors have arrested four people on grand larceny charges connected to the sale of Ms. Patrick’s house, according to the district attorney’s office.

    Prosecutors in Chicago and Detroit also said they have seen a spike in a category of crime known as deed fraud.

    Investors who own several properties are especially vulnerable, prosecutors said, as they are less likely to notice if someone moves into a home they don’t visit regularly. Ms. Patrick owns the Harlem brownstone in addition to her primary residence.

    “This crime has always happened, but it’s been made much more prolific” by having records online, said Executive Assistant District Attorney David Szuchman, chief of the investigation division in the office of Manhattan District Attorney Cyrus Vance Jr.

    The rise in such crimes is an unintended consequence of an effort to put documents on the Internet to promote transparency in local real-estate markets.

    It had a noble purpose and was a good idea, but in fact has become one-stop shopping for fraud,” said Mr. Szuchman, dubbing the problem an “epidemic” in Manhattan.

    A hot property market in some cities is making the crime easier as well. Swindlers often price homes just below market values, putting pressure on buyers to snap them up as quickly as possible, preferably with all cash, prosecutors said. Ms. Patrick’s house, for example, is valued at more than $1 million, prosecutors said, based on an appraisal they commissioned.

    In New York City, it is possible to view online copies of deeds, mortgages and other documents, which often include owners’ signatures, primary addresses, emails and phone numbers, lawyers’ names, the amount of the mortgage and whether there are liens on the property. Such information makes it easier to obtain additional details, such as birth dates and Social Security numbers.

    The swindlers then use that information to impersonate the owner and create a new, fake deed transferring the property to the new owners.

    The New York City Department of Finance, which started tracking such crimes about a year ago, said it is currently investigating 120 cases. To combat the problem, the agency this summer began notifying property owners automatically whenever a new deed is recorded for their property.

    Despite the potential for deed fraud, some lawmakers and regulators continue to support the push for online records, which have made buying and selling properties significantly easier. Deeds are available online in a number of U.S. counties.

    “It impedes the process of the transfer of real estate” not to have property records readily available, said Annette Hill, assistant commissioner at the New York City Department of Finance. “It’s always been public information. It’s just now across the country it’s available online.”

    Chicago officials said they have seen an uptick in cases in recent years as more records are available online. The Cook County recorder of deeds currently has 62 open investigations of suspected fraud, a spokesman said.

    In Detroit, the Wayne County prosecutor’s office said it has seen more complaints about deed fraud this year than in any other since it started tracking them five years ago. Local officials said many European and Asian investors have been buying properties in a bet on the city’s renaissance, making them easy targets for fraud.

    Kanwarjeet Malik, the alleged organizer of the fraudulent sale of Ms. Patrick’s house, was arrested and charged with grand larceny. He was arraigned in mid-November in New York State Supreme Court and pleaded not guilty. A lawyer for Mr. Malik declined to comment.

    Mr. Malik allegedly operated behind the scenes while several people he worked with either impersonated or found people to impersonate property owners and real-estate brokers, furnishing them with false photo IDs. Some of those people were charged. In some cases, the closings were also attended by legitimate lawyers and brokers who were unaware of the fraud.

    Mr. Malik’s co-defendants— Christopher Cable, Kajetan Belza and Carrie Stevens—pleaded guilty before trial and are expected to serve prison time.

    A lawyer for Ms. Stevens said she received the minimum sentence, one to three years, and is “paying her debt to society.” Lawyers for Messrs. Cable and Belza declined to comment.

    Ms. Patrick had left the house empty for years, at one point hoping to turn it into a home for unwed mothers. She now has it back, and the buyers were able to settle with their title insurance company to get repaid. Competing owners often have to fight over rightful ownership in civil court, prosecutors say.

    After the stress of the past couple of years, Ms. Patrick now rarely visits the house, which she bought for $110,000 in 1989. She is starting to think that keeping it might be too much trouble. “I don’t know if it’s still even worth it,” she said.
Source: Latest Cyberthreat: Stealing Your House (Deed fraud, helped by proliferation of online records, is reaching ‘epidemic’ levels in Manhattan and becoming more common elsewhere in the U.S.).

May require subscription; if no subscription, go here, then click appropriate link for the story.

Feds Pinch S. California Man For Allegedly Fleecing $1.2+ Million In Foreclosure Rescue Scam By Peddling Bogus Loan Modifications, Falsely Promising To Pay Off Mortgages At Heavy Discounts, Using Fraudulent Checks To 'Satisfy' Debts, Filing Phony Land Documents In County Recorders' Offices

From the Office of the U.S. Attorney (Santa Ana, California):
  • An Orange County man who allegedly bilked distressed homeowners with false promises that he could help them avoid foreclosure by obtaining modifications to their mortgages – or even completely eliminating their loans – was arrested this morning on federal fraud charges by Special Agents with the FBI.

    Antonio Marquette, 56, was arrested without incident at his residence in the community of Midway City. Marquette is expected to be arraigned on a 12-count indictment this afternoon in United States District Court in Los Angeles.

    According to the 12-count indictment, which was returned [] by a federal grand jury in Santa Ana and was unsealed upon [his] arrest, Marquette operated Bolsa Marketing Group in Garden Grove in 2010 and 2011 and allegedly charged homeowners up to $70,000 in cash for services that simply were not rendered.

    Through Bolsa Marketing, Marquette allegedly ran a scheme that targeted distressed homeowners and induced them to pay up-front fees to obtain mortgage relief services. The indictment alleges that Marquette operated the scheme by “falsely promising homeowners mortgage loan modifications that would substantially reduce their mortgage payments, avoid foreclosure, or eliminate their mortgage loans entirely.”

    As part of the scheme, Marquette allegedly made various promises to homeowners, including making guarantees that he could reduce their outstanding debt to 25 percent of the loan balance in only four months. Marquette also sent fraudulent checks to “pay off” mortgages and filed bogus documents county recorders offices, according to the indictment.

    “Mr. Marquette is charged with preying on vulnerable homeowners who seemingly would do anything to avoid foreclosure,” said United States Attorney Eileen M. Decker. “While Marquette took steps to make it appear he working on behalf of homeowners, he in fact did nothing to help them, and many victims lost their homes.”

    The indictment alleges that Marquette took in more than $1.2 million from victim-homeowners, most of whom were members of Vietnamese communities in Southern California, the Bay Area and Houston. However, investigators believe there may be additional victims who have not yet been identified. Members of the public who have information about Marquette’s scheme or believe they may be a victim of the scheme are encouraged to call the FBI’s Los Angeles Field office at (310) 477-6565.

Philly Feds Charge Title Insurance Agency Owner w/ Allegedly Glomming Onto Clients' Cash Held In Escrow, Causing Over $1 Million In Losses To Victims

From the Office of the U.S. Attorney (Philadelphia, Pennsylvania):
  • Anthony R. Angelo, 69, of Philadelphia PA was charged [] by Information with wire fraud and bank fraud, announced United States Attorney Zane David Memeger.

    The Information alleges that Angelo was the owner of Aracor Search & Abstract Services, Inc., a title company that provided real estate title insurance services and transactions, located in Philadelphia, Pennsylvania. Because Ararcor was in debt, Angelo caused funds from dedicated escrow accounts to be used to pay off other escrow obligations and operating costs, causing a loss of over $1 million to the victims.

Sunday, December 13, 2015

Brooklyn Landlord Agrees To $95K Squeeze To Settle Race Discrimination Suit Alleging That It Was Bagged Quoting Black Fair Housing Testers Higher Rents & Security Deposits Than It Did To Comparably Qualified White Testers

In New York City, the Fair Housing Justice Center recently announced:
  • On November 24, 2015, U.S. District Judge William H. Pauley III signed an agreement resolving a housing discrimination lawsuit involving 43-unit rental building in Brooklyn.

    The complaint, filed in January 2015 by the Fair Housing Justice Center (FHJC) and three African American testers, alleged that a rental agent for FGC 710 Avenue S. LLC engaged in racially discriminatory rental practices. The complaint alleged, among other things, that African American testers were quoted higher rents and security deposits or were told no apartments were available while the same agent quoted lower rents and security deposits and provided information about available apartments to comparably qualified white testers.

    As part of the injunctive relief in this case, the defendants agreed to adopt, post, and distribute a fair housing policy, require employees and agents to participate in fair housing training, ensure that available rental units are publicly advertised, and require uniform standards and procedures for showing available apartments and dispensing information about them. The order provides that the defendants will maintain rental records and the FHJC will be able to monitor compliance with the agreement for a period of four years. Finally, the defendants agreed to pay the plaintiffs $95,000 for damages and attorney’s fees.
Source: Landlord Pays $95,000 to Resolve Fair Housing Case (FHJC Testing Investigation Yielded Evidence of Race Discrimination).

See Changing Contexts and New Directions for the Use of Testing for more on the use of fair housing testers to bag discriminating housing providers.

Reference: Cityscape: A Journal of Policy Development and Research for additional articles on the use of fair housing testers and housing discrimination, generally.

Bay State Bank Agrees To Cough Up $1.1+ Million To Settle Suit Accusing It Of Clipping Black, Hispanic Borrowers Higher Prices For Home Loans Than It Did For Similarly Qualified White Counterparts

From the U.S. Department of Justice (Washington, D.C.):
  • The Justice Department filed a complaint and proposed consent order [] to resolve allegations that Sage Bank, headquartered in Lowell, Massachusetts, violated the Fair Housing Act and the Equal Credit Opportunity Act (ECOA) by engaging in a pattern or practice of discrimination on the basis of race and national origin in the pricing of its residential mortgage loans.

    The United States’ complaint alleges that Sage Bank charged African-American and Hispanic borrowers higher prices for home loans than Sage Bank charged to similarly situated white borrowers for reasons unrelated to their creditworthiness.

    Specifically, under Sage Bank’s pricing policy, each of its loan officers was assigned a “target price,” which was the price a loan officer was required to achieve on each home loan, regardless of a borrower’s creditworthiness. The complaint alleges that those loan officers whom Sage Bank assigned higher target prices disproportionately served African-American and Hispanic borrowers. The complaint also alleges that loan officers had discretion to price loans above their target prices and did so to a greater extent for African-American and Hispanic borrowers than for white borrowers. The result, the complaint alleges, was that the average African-American borrower paid approximately $2,500 more for his/her loan than did a similarly qualified white borrower; the average Hispanic borrower paid approximately $1,400 more.

    The consent order, which is subject to court approval, was filed in conjunction with the Justice Department’s complaint in the U.S. District Court for the District of Massachusetts. Under the consent order, Sage Bank will pay $1,175,000 into a settlement fund to compensate borrowers and applicants who were harmed by Sage Bank’s policies. The consent order also requires Sage Bank to establish a new loan pricing policy and a new loan officer compensation policy, have loan officers and bank employees undergo fair housing and fair lending training, and establish a monitoring program to detect future unlawful disparities in mortgage loan pricing.

    “Sage Bank’s loan pricing policies created the risk that borrowers would be treated differently based on impermissible characteristics like race and national origin, and that was in fact the result,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “This settlement ensures that all potential borrowers will be treated equally, regardless of race and national origin, and Sage Bank has agreed to restructure and monitor its lending practices to ensure that it is meeting those obligations.”

Private Developer Files Fair Housing Lawsuit In Effort To Force Northern NJ Town Into Re-Zoning 47-Acre Parcel For Multi-Family Affordable Housing; Accuses Borough Of Discriminating Against Blacks, Hispanics Through Exclusionary Zoning Practices

In Upper Saddle River, New Jersey, reports:
  • New Jersey's largest office landlord, Mack-Cali Realty, is suing the borough in federal court in support of a proposal to build up to 560 units of multifamily housing at the 47-acre site of an office building once occupied by Pearson.

    The federal lawsuit, filed last Monday in U.S. District Court, is the latest development in Mack-Cali's yearlong legal challenge to the borough. Mack-Cali, which has filed an application in the borough to demolish the office building, is claiming civil rights violations by Upper Saddle River on the state and federal level.

    Mack-Cali says the borough is refusing to change zoning to allow for the project, which would include a set-aside for low- and moderate-income housing mandated by the state courts. By doing so, Mack-Cali claims, the borough is unlawfully and intentionally discriminating against African-Americans and other black, Latino and Hispanic persons.

    "The borough has continuously and purposely acted to reject and obstruct the creation of any affordable and integrated multifamily housing opportunities by engaging in exclusionary zoning practices, which has actually or predictably perpetuated existing racial and ethnic housing segregation," reads the lawsuit.

    Mayor Joanne Minichetti said the borough had just been served the federal lawsuit on Thursday and that legal representatives were not ready to comment Friday.

    No one from Mack-Cali was available for comment on Friday.

    Mack-Cali says the borough has violated the federal Fair Housing Act and New Jersey discrimination law by depriving "John Does" of their right to equal housing. The company also is saying that the borough is depriving Mack-Cali "of its right to make housing available."

    In its federal lawsuit, Mack-Cali is asking the court to keep defendants from enforcing "discriminatory or exclusionary provisions of its [Upper Saddle River's] zoning ordinance." The company also is seeking a court order forcing the borough to change the zoning to allow for multifamily housing and it wants reimbursement of legal fees.

    Mack-Cali further claims Upper Saddle River engages in segregation and is asking the federal court to force the borough to take steps to "overcome the effects of past discriminatory practices."

Virginia Landlord/Developer Agrees To Retrofit Recently-Built 151-Unit Building To Comply w/ Disability-Accessibility Requirements & Pay $600K In Damages, Attorney Fees To Settle Fair Housing Suit

In Richmond, Virginia, the Richmond Times-Dispatch reports:
  • Housing Opportunities Made Equal of Virginia Inc., or HOME, and the National Fair Housing Alliance said [] they had reached a settlement in a housing discrimination lawsuit against a prominent Richmond developer and architect and a Henrico County contractor.

    The settlement with Hunt Investments, architect Walter Parks, MGT Construction Management Inc. and other entities involves the recently built Shockoe Valley View Apartments, a 151-unit complex on Cedar Street in Church Hill.

    The development team agreed to retrofit the complex to make it more accessible for people with disabilities and to pay $600,000 in damages, costs and attorneys’ fees. The agreement settles all claims.

    The lawsuit, filed in October 2014, alleged that the project violated the federal Fair Housing Act by failing to design and construct the apartments according to accessibility requirements for people with disabilities.

    The case was dismissed in April in U.S. District Court in Richmond, but reinstated in June after the U.S. Department of Justice got involved, filing a statement of interest in support of HOME and the national alliance.

    “The cost of going forward with litigation was very, very high,” Parks said. “The best course of action was to settle it.” “We settled it and we are moving on,” said Ronald H. Hunt, owner of Hunt Investments and Genesis Properties, which owns and manages thousands of apartments in the Richmond area.

    We always try to comply with the ADA (Americans With Disabilities Act), but it’s really difficult, “ Hunt said. “The law is so ambiguous and it’s difficult to make sure you’re doing exactly the right thing.”

    Hunt said he hired a consultant to make sure the project complied and changes were made accordingly during construction. “We had a consultant and they (HOME) has a consultant and the two conflicted all the time.”

    Hunt said the settlement won’t prevent him from doing another new construction project, but he will hire an ADA consultant to review the plans and inspect the project through construction.

    Parks and Hunt have worked together on several apartment projects in Richmond, including American Heritage, the former American National Bank at 1001 E. Main St. and one of the first skyscrapers here; and Manchester Motorworks at 616 Hull St., which was Martin Chevrolet’s showroom in the 1920s.

    The builder, MGT Construction Management, is a subsidiary of Henrico-based Cushman & Wakefield | Thalhimer real estate brokerage.

    HOME said it will use $100,000 of the settlement to establish a fund to help retrofit other homes in the community.

    Much of the housing stock in the region was built before 1991, including rehabbed and repurposed structures, and they are not required to meet the accessibility requirements of the Fair Housing Act, said Heather Crislip, president and CEO of HOME. “This is why making sure new properties are built in compliance is so important,” she said.

    “Everyone deserves the opportunity to choose where they want to live and to have access to all of the amenities of a housing complex,” Crislip said. “We are proud that the resolution of this case helps to dismantle indifference within the building industry of the rights of persons with disabilities.”

    Shanna L. Smith, president and CEO of the National Fair Housing Alliance, said she hoped “this settlement will send a clear message to architects, builders and developers in Virginia and across the country that apartment buildings must be designed and built so people with disabilities can travel around the property and maneuver through their apartments without encountering barriers.”