Wednesday, July 09, 2008

Brooklyn Judge Presides Over A Corporate "Kansas City Shuffle" In Foreclosure Action?

In a Brooklyn, New York foreclosure action decided in January, 2008, certain actions involving the acquisition of a mortgage in default and the subsequent execution of the assignment documents by the mortgage "entities" IndyMac Bank, Deutsche Bank and Mortgage Electronic Registration Systems left one Brooklyn trial judge scratching his head. In denying foreclosure (with a right to refile the action) against a local homeowner, Brooklyn Supreme Court Justice Arthur M. Schack (wondering if he was presiding over a corporate "Kansas City Shuffle"- explained below) writes:
  • With the assignor MERS and assignee DEUTSCHE BANK appearing to be engaged in possible fraudulent activity by: having the same person execute the assignment and then the affidavit of facts in support of the instant application; DEUTSCHE BANK's purchase of a non-performing loan from INDYMAC; and, the sharing of office space in Suite 400/500 in Kansas City, the Court wonders if the instant foreclosure action is a corporate "Kansas City Shuffle," a complex confidence game. In the 2006 film, Lucky Number Slevin, Mr. Goodkat, (a hitman played by Bruce Willis), explains (in memorable quotes from Lucky Number Slevin, at www.imdb.com/title/tt425210/quotes):

  • "A Kansas City Shuffle is when everybody looks right, you go left . . . It's not something people hear about. Falls on deaf ears mostly . . . No small matter. Requires a lot of planning. Involves a lot of people. People connected by the slightest of events. Like whispers in the night, in that place that never forgets, even when those people do."

  • In this foreclosure action is plaintiff DEUTSCHE BANK, with its "principal place of business" in Kansas City attempting to make the Court look right while it goes left?

For more, see Deutsche Bank Natl. Trust Co. v Maraj; 2008 NY Slip Op 50176(U) [18 Misc 3d 1123(A)]; Decided on January 31, 2008, Supreme Court, Kings County.

For an article containing some observations on this case, see New Rules Toughen Servicers' Foreclosure Procedures.

For other posts that reference the failure of some mortgage lenders and their attorneys to file the required loan documents when starting foreclosures, Go Here, Go Here, Go Here and Go Here. missing mortgage foreclosure docs gamma

Public Citizen Gets Another Foreclosure Overturned Due To Lack Of Proper Notice To Homeowner; Michigan High Court Overturns Two Lower Court Decisions

In Washington, D.C., Public Citizen Litigation Group recently announced:
  • In an important victory for consumers, the Michigan Supreme Court unanimously ruled [last] Wednesday that the Wayne County Treasurer violated a 75-year-old woman’s constitutional right to due process by foreclosing on her house without notifying her first.

  • In overturning a lower court ruling, the justices noted that the county treasurer did not send a notice to Stella Sidun’s Birmingham, Mich. home, despite having her address readily on hand on the deed to the property. Instead, the county sent notices to the old address of Sidun’s late mother, who had been a co-owner of the property. Public Citizen and local counsel John Hermann had argued that the return of the certified-mail notices should have been a red flag that the notice had failed.

  • Especially during the current foreclosure crisis, consumers should be able to trust that government agencies and banks will make a good faith effort to contact them before attempting to foreclose on their property,” said Public Citizen attorney Deepak Gupta, who argued on Sidun’s behalf before the Michigan Supreme Court. “The lack of effort to track down Ms. Sidun was appalling. We applaud the high court for sending a strong message to those who might take a homeowner’s right to due process lightly.”

***

  • After she lost the property, which had provided her retirement income, Sidun sued the county. The trial court ruled against her, as did the appellate court. In reversing the lower court decision, the Michigan Supreme Court found that the lower court’s ruling conflicted with the U.S. Supreme Court’s 2006 decision in Jones v. Flowers, another case in which Public Citizen lawyers successfully challenged the lack of notice of a home foreclosure. Sidun’s case now goes back to the circuit court, where she has the option of seeking compensation or reclaiming her home.

For more, see Michigan Supreme Court Overturns Foreclosure, Rules Owner Not Given Proper Notice (Public Citizen Argued That Woman’s Right to Due Process Violated).

For links to the related court documents (brief, reply brief, and Michigan Supreme Court decision), see Sidun v. Wayne County Treasurer.

Go here and go here for other posts on foreclosures involving faulty notifications to property owners. SidunFaultyForecloseNotice

Alleged Mortgage Scam "Identified" By Rejected Borrower's ID Theft Report

In San Diego, California, the San Diego Union Tribune reports:
  • Last year, an Orange County man was rejected for a personal loan at his credit union. To his surprise, his credit report had been red-flagged because he was six months behind on mortgage payments on a $660,000 home in Oceanside. That was news to him. He had never bought a house in Oceanside. So he contacted police, who uncovered that his identity had been stolen to make the purchase in October 2006.

  • Now the home on Overlook Drive is in foreclosure. The real estate agent involved in the deal, Robert Hugh Decker, is in custody in San Diego. Prosecutors allege that Decker's company was paid nearly $37,000 in commissions and that he was collecting $1,800 per month in rent from tenants.

For more, see Foreclosures bringing cases of alleged fraud to light (Alleged Scams include ID theft and cash kickbacks).

Kansas Appeals Court Jams Judgment Creditors In Failed Attempt To Circumvent State Homestead Law

In Kansas, The Kansas City Star reported last month:
  • From the time it entered the union in 1861, Kansas has had a constitutionally enshrined homestead exemption, barring [judgment] creditors from forcing the sale of a family’s home. That means that court judgments, which typically attach to real estate, don’t attach to the family homestead. That’s been the law since 1869, when the Kansas [Supreme Court] ruled to that effect in a case called Morris v. Ward.

  • Two judgment creditors recently tried to circumvent that principle of Kansas law. They argued that the homestead exemption only prevented them from enforcing their judgment liens as long as the property remained a homestead or until the mortgage holder instituted foreclosure proceedings against the property.

***

  • The trial court disagreed, citing the homestead exemption, [...] and last [month] the Kansas Court of Appeals ruled that the 139-year-old Morris case remains good law in Kansas.

For more, see Kansas homes remain safe from court judgments (if link expires, try here or try here).

For last month's decision of the Kansas Court of Appeals, see Deutsche Bank Nat'l Trust Co. V. Rooney, et al. (Kansas Court of Appeals; June 20, 2008).

For a recent failed attempt by a judgment creditor to circumvent the Florida Homestead law, see Homestead Waiver Declared Invalid; Big Win For Florida Homeowners As State Exemption From Forced Sale Dodges Bullet.

IndyMac: A Case Study In Rise & Fall Of America’s Mortgage Market?

A June 30, 2008 report issued by the Center for Responsible Lending ("CRL") states that an investigation they have conducted "has uncovered substantial evidence that IndyMac Bank and its parent, IndyMac Bancorp, engaged in unsound and abusive lending during the mortgage boom, routinely making loans without regard to borrowers’ ability to repay. These practices left many deep in debt and struggling to avoid foreclosure."

Their report begins with the following introduction:

  • IndyMac’s story offers a body of evidence that discredits the notion that the mortgage crisis was caused by rogue brokers or by borrowers who lied to bankroll the purchase of bigger homes or investment properties. CRL’s investigation indicates many of the problems at IndyMac were spawned by top-down pressures that valued short-term growth over protecting borrowers and shareholders’ interests over the long haul.

For the CRL report, see IndyMac: What Went Wrong? (How an "Alt-A" Leader Fueled its Growth with Unsound and Abusive Mortgage Lending).

For two examples of homeowner lawsuits IndyMac faces as a result of their alleged lending practices (available online courtesy of the Center for Responsible Lending):

  • Simeon Ferguson v. IndyMac Bank, U.S. District Court for the Eastern District of New York, filed February 14, 2008 (His attorneys claim a mortgage broker steered 86-year old Mr. Ferguson, who was suffering from dementia, into an IndyMac "stated income" loan program for retirees. IndyMac made no effort to verify retirees’ income, attempting to duck accountability "by deliberately remaining ignorant of the borrower’s ability to pay the mortgage," his lawsuit says ),

  • Elouise Manuel v. American Residential Financing, Inc., et al, Superior Court of Gwinnett County, State of Georgia, April 3, 2008 (In the case of Elouise Manuel, a 68-year-old Decatur, Georgia retiree, IndyMac instructed the mortgage broker to send copies of her Social Security award letters with the dollar amounts expunged: "Need copy of SSI letter blacked out for the last 2 yrs w/no ref to income", according to the lawsuit),

  • Willie Lee Howard v. Countrywide Home Loans Inc. et al., U.S. District Court for the District of Columbia, March 25, 2008 (According to CRL, Mr. Howard’s allegations echo those in other legal claims against IndyMac. Lawsuits accuse IndyMac of working with independent mortgage brokers to land borrowers into predatory loans. Several of the lawsuits claim that borrowers were bamboozled by brokers who promised low, low rates that would last a year or even five years. Instead, the lawsuits say, the teaser rate evaporated within one or two months. Along with IndyMac and Countrywide, other lenders named as defendants include Washington Mutual Bank and WMC Mortgage Corporation).

The following class action lawsuit attempts to take IndyMac to task with respect to their allegedly deficient lending practices:

Tuesday, July 08, 2008

Maryland Statewide Foreclosure Prevention Pro Bono Initiative Begins This Week

The Baltimore Sun reports:

  • As foreclosure cases continue to mount unabated, Maryland nonprofit groups, elected officials and the courts are joining forces to urge attorneys to help residents in danger of losing their homes. Called the Foreclosure Prevention Pro Bono Project, the effort will train lawyers to take on cases, advise homeowners or assist housing counseling agencies. Training sessions begin this Thursday in Baltimore and are scheduled throughout the state over the summer.

***

  • [Baltimore nonprofit legal services network] Civil Justice says it [...] intends to show attorneys that there are opportunities to make money through court-awarded fees. "While they're helping and doing good, they may be able to do well," said Civil Justice's [Phillip] Robinson, who won attorney fees last week for a foreclosure case in Montgomery County Circuit Court as well as damages for the homeowner.

For more, see A cry to help save homes in Maryland (Top judge seeks to stop foreclosures).

Go here for registration and for schedule of attorney training sessions.

Go here for other posts referencing legal fee awards in pro bono cases. legal fee pro bono

Restructuring Home Loans Foremost In Mass AG's Mind When Zero-ing In On Lawsuit Targets

In Boston, Massachusetts, Reuters reports:
  • From suing one subprime-mortgage lender for unfairly targeting blacks to ordering another to halt all foreclosures, Massachusetts is at the heart of a state-led assault on America's predatory lenders.

  • At the center of the first-in-the-nation litigation is a career prosecutor sworn in last year as the state's first female attorney general, Martha Coakley, who said she was considering more lawsuits aimed at holding subprime lenders accountable.

  • But as subprime lenders face growing anger and litigation across the United States, she cautioned that courts are not always the answer. "One of the things we keep in mind is: Do we sue or do we try and negotiate something in the meantime? Because the biggest problem right now is trying to get the attention of the lenders and brokers to try and restructure as many mortgages as possible," she told Reuters in an interview.

For more, see To sue or not to sue? Top attorney eyes banks.

Questionable Colorado Springs Home Sales Get Closer Look

In Colorado Springs, Colorado, The Gazette reports:

  • The Colorado Real Estate Commission has subpoenaed a Colorado Springs title company's files related to a series of house sales on Balsam Street that resulted in five foreclosures. [...] The subpoena ordered Legacy Title Group to turn over all documents related to the sale of houses at 5134, 5144, 5164, 5174 and 5184 Balsam Street.

***

  • On April 15, [El Paso County Assessor Mark] Lowderman asked [Colorado Division of Real Estate director Erin] Toll to look into allegations and admissions made by Colorado Springs landscaper Andrew C. Aranda, who bought all five of the houses within a 48-hour period in November 2006, using $1.9 million obtained from five lenders.

***

  • The five houses ended up in foreclosure; four have resold, each for about $100,000 less than the price Aranda paid.

For more, see Title company’s files subpoenaed (Possible kickback scheme investigated).

For more from The Gazette on this story, see:

Court OKs Stiffing Of Lender On Fire Loss Claim; Servicer's Failure To Notify Insurer Of Commencement Of Foreclosure Action Voids Coverage

Insurance companies looking to get out of having to pay out on a hazard insurance claim when a home in foreclosure goes up in smoke is the subject of this post.

Back in March, Tennessee & Arkansas attorney Toney Brasuell, with the law firm of Wilson & Associates, P.L.L.C. reported at Housing Wire that a Tennessee appeals court ruled that an insurance company properly rejected a fire loss claim submitted by a mortgage lender when the servicer failed to notify the insurer of the commencement of foreclosure proceedings on a home that subsequently caught fire and was destroyed.

Reportedly, the decision is currently on appeal to the Tennessee Supreme Court.

For more, see Insurers, Lenders Fight Over Foreclosure’s Policy Impact.

For the court decision, see U.S. Bank v. Tennessee Farmers Mutual Insurance Company (Tenn. App. Ct.; Case No. W2006-02536-COA-R3-CV - December 21, 2007).

------------------

For another post where a foreclosing lender was left holding the bag on a home in foreclosure that went up in smoke, see Judge Jams Foreclosing Lender's Improper Grab For Excess Insurance Cash On Fire-Destroyed Home.

For other stories on fires & foreclosures, go here, go here, go here, and go here. foreclosure arson whale

Florida Federal Jury Convicts Six Straw Buyers In Alleged Scam Involving $15M+ In Fraudulently Obtained Loans; $5M+ In Lender Losses

Th U.S. Attorney for the Southern District of Florida, jointly with several other law enforcement officials, recently announced that:
  • [A] jury convicted the remaining six defendants, Jaqueline Perez-Castillo, Yanny Cruz Pavon, Lizabeth Perez, Erick Clavijo, Aurora Ramentol, and Ester Crespo of fraud in the matter of United States v. Juan Torrens, et al, [...]. The six defendants convicted were straw buyers in a mortgage fraud scheme in South Florida that resulted in more than $15,000,000 in fraudulent loans, and losses of more than $5,000,000 to lenders. With [last Thursday's] convictions, all 31 of the defendants originally charged have been adjudged guilty.(1)

For more, see Jury Convicts Last Six defendants Involved In Multi-Million Dollar Mortgage Fraud Scheme.

For a copy of the original indictment, see United States of America vs. Torrens, et al.

(1) According to the U.S. Attorney's press release, "this case revolves around defendants Juan Torrens, the de facto owner of Amsouth Trust & Investment Corp. (“Amsouth”) and president of Countryside Land & Development, Inc., Rachael Torrens, president of 1st Choice Realty of South Florida, Inc. and de facto owner of First United Mortgage USA Corp., Daniel Ramos, Alfonso A. Muxo, a State of Florida certified real estate appraiser and owner of Palm Bay Real Estate Appraisals, Inc., and Katherine Harris, former president and part owner of Floridian Home Title Corporation, all of whom were charged with conspiracy to commit wire fraud and/or wire fraud for their participation in a massive mortgage fraud scheme. Their scheme involved fraudulent mortgage loans obtained for the purchase of 28 properties located in Miami-Dade and Broward Counties, and in the City of Marco Island. All those charged in the conspiracy pled guilty, and are awaiting sentence."

The press release continues: "Also charged in the Indictment were defendants Mario E. Diaz, Aurelio Pozo, Oscar Barreiro, Lellany Rodriguez, Jose Asensi, Carlos Morales, Damaris Jimenez, Lizabeth Perez, Mario Blanco, Rene Rodriguez, Tamaris Angulo, Alicia Loaiza, Ester Crespo, Jesus Enrique Guevara, Janette Lugo, Priscilla Fleitas, Erick Clavijo, Luis DeJesus Planas, Moises Llorens, Milva Roque, Aurora Ramentol, Gladys Lens, Nancy Fundora, Yanny Cruz Pavon, Roger Rosario and Jacqueline Perez-Castillo (“the straw buyer defendants”). These defendants were charged with wire fraud for their participation in this mortgage fraud scheme."

Consumer Guide On New Maryland Foreclosure Law Now Out

In Baltimore, Maryland, the Maryland State Bar Association recently announced:
  • [I]n light of new state foreclosure laws, the Maryland State Bar Association (MSBA) has just released a newly revised foreclosure proceeding legal information guide and is giving it away free to Maryland consumers as a public service.

  • MSBA’s Foreclosure Proceedings in Maryland public awareness brochure offers assistance to consumers facing or fearing a foreclosure. This free pamphlet provides legal information to help the public better understand the new foreclosure law, effect April 4, 2008, which offers new protections for homeowners. It explains the new law in basic terms and outlines the steps of the revised foreclosure process, including new notice requirements and extended time periods for foreclosure sales, so consumers know what to expect when facing a foreclosure situation.

For more, see:

Monday, July 07, 2008

Legal Services Firm Helps Newark Man Succeed In Keeping Home After Being Snagged In Alleged Equity Stripping Scam

In Newark, New Jersey, The Star Ledger reports:
  • [Aleem] Morris was the victim of a mortgage rescue scam that promised to help get him out of debt and keep the Newark home on North Munn Avenue out of foreclosure. Instead, the so-called foreclosure specialist stripped the home of equity, had someone take the deed and borrow as much as possible against the value of the home. [...] With the help of Abbott Gorin, an attorney with Essex-Newark Legal Services, a Superior Court judge stopped the foreclosure and Morris obtained a reverse mortgage.

***

  • He filed a complaint with Superior Court Judge Kenneth Levy, who stopped the foreclosure, rescinded the second mortgage and allowed Essex-Newark Legal Services to intervene and help Morris. [The foreclosure rescue operator] and the straw buyer were subpoenaed but never showed up in court.

For more, see One man's relentless fight for his home. foreclosure rescue

Two Financially Strapped Boston-Area Homeowners Get Mired In Foreclosure Rescue Deals Gone Sour

In Boston, Massachusetts, WBZ-TV ran a story on the experiences two local homeowners reportedly had with a local foreclosure rescue operator:
  • He says he's trying to help people take back their lives and save their homes from foreclosure. He says he'll pray for you and your family. But the I-Team looked into John Seigler's business deals and discovered Seigler and his associates aren't praying for people -- they're preying on poor people and taking their homes. There's no stopping Marie Magny, one of the associates of Blue Hills Investors Group, as she's out for a walk. We wanted to ask her why some say she's working with John Seigler and swindling people's homes, but when she saw our camera she picked up the pace.

***

  • These homeowners say Seigler and Magny led them down a dead end headed for foreclosure and took their homes along the way. According to court documents obtained by the I-Team, they were told to stop paying their mortgages and to sign their deeds over to Magny to stop the foreclosure. [...] The civil suits against Seigler also name the banks and mortgage companies involved in these deals.

For more, see Foreclosure Rescue Scheme Preys On Poor (read story) (watch video).

In a related story, see WBZ-TV: I-Team: Alleged Home Swindler Preyed On His Family.

Massachusetts Man Fights To Keep Home Lost In Alleged Unwitting Title Transfer

In Boston, Massachusetts, the Boston Herald reports:

  • A disabled Navy veteran who’d hoped to save his Dorchester triple-decker from foreclosure has launched a legal battle accusing the man who now owns the house of duping him out of it, according to court records and interviews. But the purchaser, David A. Ouellette, 28, of South Boston, says far from deceiving the plaintiff, 60-year-old Calvin L. Morris, he helped Morris get out from under a money-losing property and cleared the vet’s debts in a fair deal.

***

  • Calvin Morris said he ended up homeless after signing documents he says he thought would pave the way for him to pocket $475,000 to $525,000 from his triple-decker’s sale. “It’s devastating,” said Morris, who bought the home at 124 Selden St. with his brother, Primas, 68, in 1971. “This has really taken a lot out of me. Things were promised to me that did not happen.”

***

  • Between May 23, 2006, and June 18, 2007, Calvin Morris signed 13 documents that put the real-estate sale in motion, placed 124 Selden St. into the proposed trust and eventually relinquished his interest in that trust to Ouellette. “Ouellette, in the mountain of paperwork, also tucked in another document that Mr. Morris signed within three seconds of the trust document which transferred the beneficial interest in 124 Selden St. to himself,” Morris’ attorneys, Linda G. Champion and Douglas T. Babcock, alleged in a May 12 memorandum filed in Massachusetts Land Court, where the case is before Judge Alexander H. Sands.

For more, see 1 house plus 2 owners equals big mess. foreclosure rescue

Missing Loan Docs, Lender Implosion Key To One Homeowner's Initial Success At Fending Off Foreclosure

Consumer Affairs recently ran a story on a financially strapped Independence, Missouri homeowner who has reportedly been having success at fending off a foreclosing mortgage company by, according to the story, "[c]ontesting the foreclosure on the grounds that between the implosion of the lender, the lack of a paper trail, and the bad terms of the loan, they were essentially defrauded and couldn't be held liable." An excerpt from the story:
  • "She [the homeowner] has been able to stop foreclosure three times, maybe four by demanding that the servicer attempting to foreclose show proof that they own the mortgage and they can't," [one consumer advocate] told ConsumerAffairs.com. "Because mortgages were sold again and again and then to Wall Street where they were securitized and sold all over the world, I wonder how many homeowners have been foreclosed by a company that couldn't even show proof that they owned the mortgage."

  • [The homeowner] says that more homeowners should challenge foreclosures by lenders who can't prove they legitimately hold the loan, and that many innocent buyers are the victims of "very unscrupulous activity" propagated by lenders and investors who are motivated by "nothing but greed."

For more, see Fighting Foreclosure: One Family's Story (How fighting back enabled a family to keep its home).

For other posts that reference the failure of some mortgage lenders and their attorneys to file the required loan documents when starting foreclosures, Go Here, Go Here, Go Here and Go Here. missing mortgage foreclosure docs beta

Attorney Fee Awards Imposed On Losing Lenders May Be Available In Successful Foreclosure Defense In Florida

Attorneys in Florida who are considering taking on the pro bono representation of a homeowner facing foreclosure may be interested in the possibility of converting their pro bono opportunity into a fee-paying, contingency fee case.

A 1999 court decision by a Florida appeals court illustrates how attorneys representing Florida homeowner/defendants in a foreclosure action can, if successful in their defense, request and may be granted court awarded legal fees, the liability for which will be imposed on the losing foreclosing plaintiff, the mortgage lender.

For more, see Attorney Fee Awards For Successful Foreclosure Defense In Florida, posted on the companion blog.

Go here for other posts referencing legal fee awards in pro bono (contingent fee) cases. legal fee pro bono

Sunday, July 06, 2008

Breaking A Lease-Option Contract? Some Considerations For Landlords

A recent Q&A columnn at Bankrate.com notes some considerations for landlords seeking to terminate a lease-option arrangement with a tenant:

  • [T]here could be serious complications to breaking a lease-option before the tenant's option term expires. If the renters/buyers had the foresight to file a Memorandum of Agreement with the county clerk, indicating the tenants have an interest in the property, it may place a cloud -- though not a lien -- on your home's title. Further down the line, a prospective buyer may see this notation and demand the matter be resolved before moving forward with a sale.

  • Some lease-option tenants will fight eviction and claim in court they have an "equitable interest" in the property. The more "equity" the tenant has amassed, the more likely it is a judge will rule the arrangement an equitable mortgage, forcing you to go the foreclosure route. In some cases, the IRS has identified lease-option payments as installment-sale payments and made the original owner pay tax and penalties on them.

  • You didn't say whether the renters/buyers have lived up to their end of the agreement. If the tenant has stopped paying rent but the total option money you received thus far exceeds 5 percent of the agreed-upon purchase price, you may indeed be required to go through the foreclosure process.

For more, see Breaking a lease-option contract.

Editorial Note:

Any tenant entering into a real estate transaction involving a lease with an option to buy, lease-purchase, or other similar type of "deferred conveyance" home purchase would be well advised to go down to the local county government office where deeds and mortgages are recorded and record a memorandum of agreement showing the tenant's interest in the property.

Further, a prospective tenant may also want to make sure that the landlord holding him/herself out as the property owner is, in fact, the current title holder of the home.

If the prospective tenant has to ante up a significant cash deposit, it may be a good protective measure to obtain a title search of the subject property and possibly even a title insurance policy insuring the leasehold interest being acquired by the tenant, making sure the landlord is the true owner, and is not in foreclosure or is otherwise setting up the tenant for a rent skimming scam (where the landlord pockets the rent, fails to make the mortgage payments, and allows the home to go into foreclosure; for posts where tenants entering into these types of rent to own arrangements have gotten screwed over by the landlord, go here).

Finally, as noted in the article, if a landlord tries to terminate the lease-option early against the tenant's wishes (or if the tenant otherwise thinks he/she is getting screwed over by the landlord - like in a foreclosure rescue scam), the tenant might be able assert an equitable mortgage claim in court. If a judge agrees that an equitable mortgage claim is valid, the landlord will be unable to oust the tenant through eviction proceedings, but rather, will have to initiate a foreclosure action, treating the tenant as the actual owner and the landlord as a mortgage lender.

(For those looking to begin research on the case law on equitable mortgages and don't know where to start, try here, and then scroll down and click any of the "equitable mortgage posts by state" links in the sidebar on the left side of the page).

Florida Attorney Faces Discipline For Allegedly Pocketing Surplus Foreclosure Cash Belonging To Clients

In Central Florida, the Ocala Star Banner reports:

  • A Florida Bar referee will recommend that Orlando attorney Norman Sanders Moss be permanently disbarred for allegedly stealing money owed his clients, including a Marion County man. Referee Alan A. Dickey, who conducted the disciplinary proceedings in June, found Moss guilty of violating the Bar's rules regulating trust accounts. The matter now goes before the Bar's Board of Governors' July 23 to 27.

  • Moss, a 64-year-old retired Orlando attorney, allegedly absconded with a total of $107,000 of surplus foreclosure money owed to five clients, including $31,453.10 belonging to Nicolas Cabrera, Jr. of Marion County.

Surplus foreclosure money is simply the excess of the proceeds paid by a buyer for property sold at a foreclosure sale over the amount necessary to pay off the amount owed to the foreclosing lender. These overages were quite common in foreclosure sales during the recent real estate boom period; they're a lot less common now.

For more, see Lawyer may be disbarred for role in foreclosures.

No Fee For Brooklyn Attorney, Ordered To Pay Back $400K+ In Allegedly Improper Payments Taken In Guardianship Matter Of Retired Judge

In New York City, the ABA Journal reports:
  • Attorney Emani Taylor apparently was hoping to get $853,000 for three years of work as a guardian for a former New York judge. Instead, the New York lawyer got a lecture on legal ethics from Acting Supreme Court Justice Michael Ambrosio and a $403,000 surcharge for improper payments she had earlier made to herself from selling real estate owned by former Civil Court Judge John Phillips, reports the New York Law Journal. The article was reprinted by New York Lawyer (reg. req.).
***
  • [Judge] Phillips, who suffered from Alzheimer's, died in February at age 83. At one point he reportedly held real estate worth some $10 million. Taylor has been suspended from the practice of law by the Appellate Division, First Department, for, as Ambrosio puts it, "at best, withdrawing funds from the guardianship account for legal fees without court permission, or, at worst, intentionally converting guardianship funds."
For more, see No $853K Guardian Payday for N.Y. Lawyer; Also Hit With $403K Surcharge.
For a more detailed account of this story, see New York Lawyer: NY Lawyer Must Pay Back $403,000, Denied All of $853,000 Fee Request (free registration required).
  • Justice Ambrosio lacerated Ms. Taylor's performance, calling her conduct "egregious" and reflecting "a fundamental lack of understanding of what her role as a guardian entailed." At one point, he called her explanation for not producing time sheets and other records a "dog ate my homework excuse."
For earlier posts on this story, see:

L.A. City Attorney Steps In To Stop Attempted Illegal Foreclosure Evictions

In Los Angeles, California, KABC-TV Channel 7 reports:

  • [W]hat was once an eviction letter is now in shreds. City officials said the tenants at one South L.A. duplex and four other homes were illegally targeted for eviction by Countrywide after their landlords lost the buildings in foreclosures. "The brokerage house that represents Countrywide and sent that letter has agreed to rescind the letter today on this property by 2 o'clock," said L.A. City Attorney Rocky Delgadillo.

  • The problem is the building is rent-stabilized, which means the tenants, under city law, would be entitled to $6,800, all the way up to $17,000, if they were to be evicted. But the city says Countrywide is trying to skirt those payments.

  • The letter sent to the renters offered just $1,000 if they cleaned up their apartments and left by August 1, 2008. "This letter was in violation of city laws which forbid eviction just because a property changes ownership due to foreclosure," said L.A. City Councilman Eric Garcetti. [...] Countrywide issued a statement [...] saying the eviction letters were the result of a mix-up by a real estate agent working with the Calabasas-based mortgage lender [...].

***

  • The City Attorney's office [...] has opened an investigation into Countrywide's dealings with renters and wants to hear from others who may have faced the same kind of illegal eviction that [one tenant feature in the story] narrowly escaped.

For more, see Eviction notices wrongly sent to renters. countrywide consumer problems equity skimming unwittingly digamma

Saturday, July 05, 2008

"Wilbur The Pig" Seeks New Home

In Lake County, Ohio, The News Herald reports:
  • [T]he newest guest at the [Lake Humane Society pet] shelter is proving that the [foreclosure] crisis is affecting more than typical household pets.The shelter recently took in Wilbur, a black pot-bellied pig whose family had to relocate and surrender their special pet. The staff is hoping the friendly porker will find a new family to love. "(Wilbur) is used to more freedom, and shelter life just isn't his puddle of mud," says Gail Keegan, executive director of the Lake Humane Society. "He seems unaffected as he wags his tail and plays with his food ball, but he is a very social pig.

For more, see Pig victim of foreclosure.

$19.5M Long Island Mansion Faces Foreclosure

In Bridgehampton, New York, The Wall Street Journal Blog reports:
  • The foreclosure mess is casting a shadow over New York’s Hamptons this summer. One result: An 18,000-square-foot Bridgehampton home has been reduced from its $27 million asking price to “just” $19.5 million.

For more, including a link to what appears to be an online tour of the home, see $19.5 Million Hamptons Mansion In Foreclosure.

In a related story on foreclosures in The Hamptons, see New York Post: Trouble In LI Paradise (Foreclosures Looming For The Hamptons' Poshest Pads).

Increase In Vacant Home Arsons Concerns Firefighters

Bloomberg News reports:
  • [T]he biggest surge of mortgage defaults in seven decades coincides with an increase in blazes in foreclosed properties led by states with the most repossessed homes, according to fire safety officials in Nevada, Massachusetts and Ohio. "The more empty houses we have, the more fires we are going to see,'' said James Wright, chief of the Nevada State Fire Marshal Division in Carson City, the state's capital. "It's particularly dangerous for firefighters, because they don't know what condition these buildings are in or what they might find in them.''

***

  • Firefighter Mark Reed knows how dangerous a vacant, foreclosed property can be. He was critically injured battling a June 2007 fire in Buffalo, New York, set by arsonists in a foreclosed home on the city's east side. Bricks from the chimney crushed Reed, who was then 36. His mangled right leg later was amputated.

For more, see Arson Surges Across U.S. for Foreclosed Homes Lost to Subprime.

Renting Homes In Foreclosure, Utility Shut Offs, Trash Accumulatons, Code Violations Among The Accusations Against One Landlord

In Adams, Massachusetts, The Berkshire Eagle has published a couple of articles recently that describe local code enforcers, legal aid attorneys and tenants reportedly having their hands full with the alleged conduct of local property manager and landlord Daniel Borer.
  • "Every time (Borer) is not responsive to the tenants or our orders, tenants are suffering," said Scott F. Koczela, Adams code enforcement officer. "He shows up for rent, the tenants tell him about the problems, and guess what — he never comes back." Officials are tired of spending so much of the town's resources on one property owner, Koczela said. So now they're trying a new tactic in their struggle to protect the public health, and have gone to court to have the four properties put under control of a third party to bring them back up to code and ensure tenants' safety.

***

  • "The problem is, he keeps getting away with it," said North Adams Mayor John Barrett III. "The arrogant attitude he shows — he walks into court a half-hour late for his hearings. He has no respect for anybody. He has no respect for the local enforcement officers, no respect for the courts, no respect for the people he rents to."

Reportedly, one tenant, a widowed mother of three, is out nearly $6,000 because the apartment she rented from Borer was foreclosed on three weeks after she moved in. Another single mother lost $2,600 when she moved to North Adams thinking she had arranged for an apartment rental from Borer, but she learned there was no apartment at all, according to one of the articles.

Lack of heat & hot water, accumulating garbage, health and safety hazards and forced moves on short notice are among the alleged problems Borer's tenants, their advocates, and local officials are trying to address. For more, see:

Homeowner Confusion Observed In Complaints, Objections Filed In Class Action Settlement

Mike Dillon over at GetDShirtz.com comments on the apparent confusion experienced by some homeowners in their attempts to file complaints, and object to or opt-out of, a class action settlement involving the mortgage servicing firm formerly known as Fairbanks Capital Corp. (now known as Select Portfolio Services) in a case involving alleged loan servicing improprieties. He provides a sampling of the complaints and objections filed by the affected homeowners.

For more, see getdshirtz.com/JMCpapers.

Friday, July 04, 2008

Trouble At 179 Ludlow

In New York City, The Village Voice tells the story of 179 Ludlow, a seven-story cinderblock building, just footsteps from Katz's Deli on Houston Street, that was part of the construction boom in the trendy Lower East Side that owner Michelangelo Russo reportedly paid $5.2 million for the property 13 months ago.

According to the story:

Russo reportedly put about a million bucks into the building, installing European-style molding, white-marble bathroom counters, heated terraces, and a private roof deck in the penthouse. Unfortunately for Russo, before he could finish the project, he ran out of cash and is now facing foreclosure. One contractor was reportedly stiffed for $300K, according to the story. Once work stopped, the almost-finished building at 179 Ludlow fell into disrepair. The building was never properly sealed and soon began attracting rats. This excerpt from the story gives a glimpse of the conditions inside the building:
  • In the abandoned building itself, rats have taken over, and a 2,000-square-foot retail space that could have brought in $25,000 a month is now ankle-deep in rat sh[**].

For the story, see Runnin' Scared: The Gentrification Project That Turned into a Rat Castle on Ludlow.

Vacant Homes In Foreclosure Being Used As Hang-Outs, Party Pads

The following recent stories report how some vacant homes in foreclosure are being put to use:
  • Mesa, Arizona: Vandals using vacant homes as party pads (Police in east Mesa noticed a "flare up" earlier this month in vacant houses being broken into and vandalized by teenagers looking for a place to hold parties),

  • Framingham, Massachusetts: Foreclosed Framingham house attracts trouble (Police go the same house for two reported break-ins within 12 hours; the officers reportedly got there just in time to see a group of four people leaving the house, trying to run away - all four were caught and told cops they were "hanging out" in the empty house),

  • Oxnard, California: 15 arrested in activities at 2 homes left vacant (According to police, two handguns were recovered from one of the homes in what they say appeared to be a gang-related gathering. They found gang graffiti and vandalism at both homes, which had several thousand dollars in damage, according to a police statement),

  • Macomb County, Michigan: Teens arrested, released (According to police, a 19-year-old man and a juvenile were arrested after neighbors spotted them coming out of a house that is in foreclosure; the suspects reportedly told deputies they stayed in the house after they got the keys from a girl who used to live there before foreclosure proceedings started).

Go here for other posts on vacant homes being used for parties, hang-outs, etc. teen parties vacant homes

Florida Couple, Adult Children Get Jail In Connection With Scheme To Avoid Home Foreclosure

In Clay County, Florida, My Clay Sun reports:
  • An Orange Park couple and their adult children were sent to Clay County jail following a scheme to avoid foreclosure on their $1 million Orange Park riverfront home. In April 1996, Andrew and Ruth Crawford and their children, James and Kelli Patterson, bought a 5-bedroom, 7-bathroom home [...] but made only a few mortgage payments. To avoid foreclosure, they refinanced the home several times and filed Chapter 13 bankruptcy more than a dozen times.

  • [A]ttorneys for [the mortgage lender] convinced a judge to dismiss the [most recent] bankruptcy and to ban them from filing bankruptcy yet again. Then Kelli Patterson, on three occasions, sent a phony fax from her workplace to the Clay Today newspaper to stop legal advertisements announcing the public sale of the home. Her faxes contained a forged signature of [the lender's] attorney.

For the story, see 4 jailed in foreclosure of Clay home.

Go here for other posts on serial bankruptcy filings. SerialBankruptcyFilings

Florida Lawmakers Put Squeeze On Landlords Filing Eviction Actions

The Tampa Tribune reports:
  • As if dealing with a delinquent tenant wasn't bad enough. Starting [July 1], Florida landlords will have to pay more to file eviction notices - nearly 240 percent more. "Frequently, the landlords have already gone one to two months with no income from the home," said lawyer Robert Altman of New Port Richey. "This is even more of a burden on top of what they've already got to deal with." The fees, recently passed by the Legislature, will bring tenant eviction filings to $270, up from about $80, in Hillsborough, Pasco and Pinellas counties.

For the story, see Eviction Fees For Landlords Up Dramatically.

Thursday, July 03, 2008

California Foreclosure Relief Bill Ready For Governor's Signature; Gives Local Municipalities Right To Fine Unmaintained Vacant Foreclosed Homes

The San Francisco Chronicle reports:
  • A bill designed to help Californian homeowners avoid foreclosure is headed for the desk of Gov. Arnold Schwarzenegger, who said Wednesday that he supports the measure. [...] The bill, which came in response to California's subprime mortgage crisis, requires mortgage holders to contact homeowners by phone or in person at least 30 days before filing a notice of default and calls for discussions about alternative payment options. The bill also doubles the time preceding eviction from foreclosed rental properties from 30 to 60 days, and gives local governments the authority to fine owners of vacant [foreclosed] lots that are not maintained.

For more, see Foreclosure aid bill in hands of governor.

Possible Connection Being Investigated Between Prosecutor & Man Suspected In Alleged Deed Theft Of Dead Woman's Home

In Dallas, Texas, CBS 11 News reports:
  • How did the top prosecutor for Dallas County and his wife end up crossing paths with a career criminal indicted for theft and forgery? CBS 11 Investigator Bennett Cunningham discovered how it happened and why the Texas Attorney General is now investigating the case.

  • Robert Wayne Mitchell, 51, is in jail. According to state records, he's been in and out of prison for theft. But this time, the charges are much more sophisticated. Back in 2005, Dallas County records show a woman named Ella Mae Walker deeded her Dallas home on Bonnie View Road to Mr. Mitchell. The CBS 11 Investigators showed Mitchell the warranty deed with his name and her signature on it. When we asked Mitchell how he had come to own that house, he replied, "I don't want to particularly answer."

  • Mitchell might not want to answer because, unless you can bring back the dead, there is a problem with the deal. The day Mrs. Walker signed the warranty deed she'd been dead for more than six months.

***

  • Land records show Mr. Mitchell sold Ella Mae Walker's property to the Good Street Missionary Baptist Church, just adjacent to her house. According to a letter from the Dallas District Attorney's Office, District Attorney Craig Watkins not only owns the title company that reviewed the title on the Walker deal, but that the DA did some legal work for the title company while he was serving as the county's top prosecutor. Texas statute prohibits the practice of law by a state prosecutor. Also, the notary on this part of the deal was Tanya Watkins, the DA's wife. Now both are potential witnesses in any case that may be brought against Mr. Mitchell.

For more, see Career Criminal Crosses Paths With Dallas DA, Wife (read story) (watch video).

Go here, go here, and go here for other posts related to deed theft by forgery, swindle, etc. deed theft xenon

Illinois AG Help Line Flooded With Calls Since Filing Countrywide Lawsuit

In Illinois, the Naperville Sun reports:
  • The Illinois attorney general's office is encouraging homeowners with a Countrywide Financial Corp. loan to seek professional help if they're questioning the terms of their loan. Illinois Attorney General Lisa Madigan this week filed a lawsuit in Cook County Circuit Court against the nation's largest mortgage lender and servicer, claiming the company used deceptive practices to lure borrowers into unaffordable loans.

***

  • A spokesman with Madigan's office said Thursday that consumers with a 30-year fixed mortgage should not be alarmed, but carefully reviewing all documents of the loan is recommended. "Make sure you actually have that fixed mortgage," spokesman Natalie Bauer said.

***

  • The attorney general's office also has provided a homeowners referral help line, 866-544-7151, which officials say has been inundated with calls.

For more, see Madigan advises home buyers to review Countrywide loans.

Go here, Go here and Go here for more on other Countrywide lawsuits & other problems. countrywide consumer problems

Iraq Vet Unwittingly Rents Home In Foreclosure; May Be Out $4K

In Columbus, Georgia, WRBL-TV Channel 3 reports:
  • Imagine signing a lease for a year, then two weeks later being told - you need to move out. Well it happened in Columbus - and its happening around the country. [...] At this point we all know that foreclosures are on the rise - but what you may not know is that if the place you're renting is foreclosed on - there's nothing you can do about it - just ask the Wall family...Master Sgt. John Wall just got back from Iraq - and the place seemed just right.

  • We spent about four thousand just to get in the house - now you gonna tell me I have to pay that (again) and move out.” That's right - just as fast as they moved in - they're moving out - not by choice. Says John’s wife, Shelley, “We find a lease in good faith and 16 days later - we're told we need to find a new place to live?”

For more, see Foreclosing and Renters.

Another Case Of Mistaken Identity As Notice Of Foreclosure Sale Is Posted On Home With Fully Paid Off Mortgage

In Santa Cruz County, California, the Santa Cruz Sentinel reports:
  • Bob Richter was puzzled when a man rushed up to his home in Santa Cruz Gardens one Saturday and posted a foreclosure notice offering him cash to turn in his house keys. The man took a photo of the posted notice, then left. Richter and his wife bought the house in 1977, and the mortgage is paid. It turned out the posting was in error.

***

  • In this case, the notice announced that a foreclosure sale had taken place, and that a request to begin eviction proceedings had been forwarded to attorneys. The occupant was directed to Coldwell Banker's Corporate REO Division. The notice came from Homecomings Financial, a division of GMAC.

***

  • "They shouldn't allow people to do that," said Richter, who worries that unsuspecting homeowners might be persuaded to turn over their house keys. "It made me wonder if there is something that we signed that opened the door for this," he added. "I haven't borrowed money in 15 years. The mailman came by and he was shocked."

For the story, see Oops! Foreclosure notice in error.