Thursday, July 17, 2008

Judge Orders Mediation With DC Homeowners Snagged In Alleged Metropolitan Money Store Foreclosure Rescue Scam

In Washington, D.C., The Washington Post reports:
  • A D.C. Superior Court judge ordered prosecutors and mortgage lenders yesterday to begin mediation with District residents who were among 400 Washington area homeowners caught in an alleged mortgage scheme operated by a Prince George's County company.

***

  • D.C. Superior Court Judge Joan Zeldon ordered the District's prosecutors and the 13 attorneys representing various mortgage lenders to enter into mediation with owners of 25 D.C. homes and 20 area residents who became straw buyers in the scheme. The mediation is designed to quickly return houses to the original owners.

  • Prosecutors said Metropolitan [Money Store] never paid the agreed-upon mortgages and left the houses, some of which have since gone into foreclosure, with the straw buyers. Seven of the straw buyers who attended yesterday's hearing agreed with the judge's decision. District prosecutors have said that once the houses are returned to the owners, they will not pursue charges against the straw buyers.

For more, see Mediation Is Next To Save Homes (Houses Went to Straw Buyers).

Go here and go here for other posts on the alleged Metropolitan Money Store foreclosure rescue scam. joyjackson

Brooklyn Trial Judge Nixes "Rubber Stamp Method" Of Adjudicating Foreclosures; Lenders, Lawyers Lacking Legal Standing To Bring Actions Get Bounced

In a recent article in the National Law Journal, Brooklyn Supreme Court Justice Arthur M. Schack, in connection with his approach to the apparent sloppy paperwork being filed by foreclosing lenders and their attorneys, was quoted as follows:
  • "I deny more foreclosures than I approve," [...]. "I want to see the servicing agent's power of attorney, I want to see all the paperwork before I approve it. If the paperwork is garbage, I deny it. If you're going to take away someone's home, it should be done properly."
After a review of some of his foreclosure cases, it appears that he wasn't kidding. Certainly, he has opted against using the ever-popular "rubber stamp method" of adjudicating foreclosures that many of his judicial colleagues around the country have found so handy when in a hurry to clear their respective caseloads.

Further, in most of the cases listed below, the homeowner facing foreclosure either was not represented by an attorney, or didn't bother to show up to court at all. Inspite of this, Justice Schack took out his fine tooth comb anyway, went through all the documents, and asked a lot of questions that the lenders were going to have a tough time answering.

Among the issues Justice Schack points to in some of his decisions when denying a foreclosure because the alleged plaintiff did not have legal standing to file the action are:
  1. defective powers of attorney,
  2. faulty affidavits,
  3. failure to file pooling and servicing agreements with the court,
  4. conflicts of interest of individuals signing assignments, affidavits, etc. as officers for various mortgage companies,
  5. defective verified complaint,
  6. assignments of the mortgages being foreclosed subsequent to the commencement of the foreclosure action,
  7. failure to record corporate resolution, and
  8. no evidence of alleged assignments.
He has also shown no reluctance in admonishing lenders' attorneys by giving terse warnings of sanctions for filing actions that may be frivolous, in that, by filing foreclosure actions for companies that lacked standing to sue, the actions appear to be a waste of judicial resources, typically discussing the Part 130 Rules of New York law, which give the courts a remedy to deal with frivolous conduct.

In rendering these decisions, he gives this reminder to the lenders and their attorneys of the requirement that if they don't have legal standing to sue, they have no business bringing the foreclosure actions and wasting judicial resources:
  • The Court of Appeals (Saratoga County Chamber of Commerce, Inc. v Pataki, 100 NY2d, 901, 812 [2003]), cert denied 540 US 1017 [2003]) held that "[s]tanding to sue is critical to the proper functioning of the judicial system. It is a threshold issue. If standing is denied, the pathway to the courthouse is blocked. The plaintiff who has standing, however, may cross the threshold and seek judicial redress." In Carper v Nussbaum, 36 AD3d 176, 181 (2d Dept 2006), the Court held that "[s]tanding to sue requires an interest in the claim at issue in the lawsuit that the law will recognize as a sufficient predicate for determining the issue at the litigant's request." If a plaintiff lacks standing to sue, the plaintiff may not proceed in the action. (Stark v Goldberg, 297 AD2d 203 [1d Dept 2002]). "Sine [sic] standing is jurisdictional and goes to a court's authority to resolve litigation [the court] can raise this matter sua sponte." (Axelrod v New York State Teachers' Retirement System, 154 AD2D 827, 828 [3d Dept 1989]).

HSBC Bank USA, N.A. v Yeasmin, 5/02/2008, 2008 NYSlipOp 50924(U) [19 Misc 3d 1127(A)]; Decided May 2, 2008.

***

In Ameriquest Mtge. Co. v Basevich, 6/26/2007, 16 Misc 3d 1104(A), 2007 NYSlipOp 51262(U), (among other cases), Justice Schack writes:

  • Professor David Siegel, in NY Prac, § 136, at 232 [4th ed] instructs that: [i]t is the law's policy to allow only an aggrieved person to bring a lawsuit . . . A want of "standing to sue," in other words, is just another way of saying that this particular plaintiff is not involved in a genuine controversy, and a simple syllogism takes us from there to a "jurisdictional" dismissal: (1) the courts have jurisdiction only over controversies; (2) a plaintiff found to lack "standing" is not involved in a controversy; and (3) the courts therefore have no jurisdiction of the case when such a plaintiff purports to bring it."(1)

The following is a compilation of links of some of Justice Schack's decisions over the last year and a half or so in which he has denied foreclosure because of the questionable and/or faulty paperwork submitted in a foreclosure action that led him to the conclusion that the alleged plaintiffs in the following foreclosure actions did not have legal standing to bring suit:

  1. American Brokers Conduit v Zamalloa, 9/11/2007, 2007 NYSlipOp 32806(U);

  2. Ameriquest Mtge. Co. v Basevich, 6/26/2007, 16 Misc 3d 1104(A), 2007 NYSlipOp 51262(U);

  3. Aurora Loan Servs., LLC v Sattar, 10/09/2007, 17 Misc 3d 1109(A), 2007 NYSlipOp 51895(U);

  4. Bank of New York v Mulligan, 6/03/2008, 2008 NYSlipOp 31501(U);

  5. Bank of New York v Orosco, 11/19/2007, 2007 NYSlipOp 33818(U);

  6. Countywide Home Loans, Inc. for the Benefit of DB Structured Products, Inc. v Persaud, 01/15/2008, 2008 NYSlipOp 30076(U);

  7. Deutsche Bank Natl. Trust Co. v Castellanos, 5/11/2007, 15 Misc 3d 1134 (A), 2007 NYSlipOp 50978(U);

  8. Deutsche Bank Natl. Trust Co. v Castellanos, 1/14/2008, 18 Misc 3d 1115(A), 2008 NYSlipOp 50033(U);

  9. Deutsche Bank Natl. Trust Co. v Clouden, 9/18/2007, 16 Misc 3d 1140(A), 2007 NYSlipOp 51767(U);

  10. Deutsche Bank Natl. Trust Co. v Maraj, 1/31/2008, 18 Misc 3d 1123(A), 2008 NYSlipOp 50176(U);

  11. EMC Mtge. Corp. v Batista, 6/05/2007, 15 Misc 3d 1143(A), 2007 NYSlipOp 51133(U);

  12. Fremont Inv. & Loan v McBean, 11/26/2007, 17 Misc 3d 1132(A), 2007 NYSlipOp 52229(U);

  13. GE Capital Mtge. Servs., Inc. v Powell, 11/13/2007, 18 Misc 3d 228, 2007 NYSlipOp 27463;

  14. HSBC Bank USA v Perboo, 7/11/2008, 2008 NYSlipOp 51385(U);

  15. HSBC Bank USA, N.A. v Betts, 4/23/2008, 2008 NYSlipOp 31170(U);

  16. HSBC Bank USA, N.A. v Charlevagne, 11/15/2007, 2007 NYSlipOp 33673(U);

  17. HSBC Bank USA, N.A. v Cherry, 12/17/2007, 18 Misc 3d 1102(A), 2007 NYSlipOp 52378(U);

  18. HSBC Bank USA, N.A. v Valentin, 1/30/2008, 18 Misc 3d 1123(A), 2008 NYSlipOp 50164(U);

  19. HSBC Bank USA, N.A. v Yeasmin, 5/02/2008, 2008 NYSlipOp 50924(U);

  20. NYCTL 2006-A Trust v Kin Kan Wong, 1/09/2008, 2008 NYSlipOp 30037(U);

  21. NYCTL-1 Trust v Cruz, 6/07/2007, 15 Misc 3d 1144(A), 2007 NYSlipOp 51144(U);

  22. NetBank v Vaughan, 6/13/2007, 15 Misc 3d 1147(A), 2007 NYSlipOp 51197(U);

  23. Nomura Credit & Capital, Inc. v Washington, 4/30/2008, 2008 NYSlipOp 50883(U);

  24. Perla v Real Prop. Solutions Corp., 4/28/2008, 2008 NYSlipOp 50846(U);

  25. U.S. Bank National Association v Maynard, 11/26/2007, 2007 NYSlipOp 33766(U);

  26. U.S. Bank National Association, Trustee v Grant, 11/09/2007, 2007 NYSlipOp 33631(U);

  27. U.S. Bank Natl. Assn. v Bernard, 2/14/2008, 18 Misc 3d 1130(A), 2008 NYSlipOp 50247(U);

  28. U.S. Bank v Videjus, 4/29/2008, 2008 NYSlipOp 50851(U);

  29. Wells Fargo Bank, N.A. v Farmer, 2/04/2008, 18 Misc 3d 1124(A); 2008 NYSlipOp 50199(U);

  30. Wells Fargo Bank, N.A. v Farmer, 6/05/2008, 2008 NYSlipOp 51133(U);

  31. Wells Fargo Bank, N.A. v Guy, 5/01/2008, 2008 NYSlipOp 50916(U);

  32. Wells Fargo Bank, Natl. Assn. v Reyes, 6/19/2008, 2008 NYSlipOp 51211(U).

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.

(1) If a court grants a foreclosure judgment in a case where it is subsequently determined that the plaintiff mortgage lender lacked standing (and accordingly, the court lacked jurisdiction over the case), does this mean that the foreclosure judgment is void? If so, does this mean that everything devolving from that judgment (ie. the subsequent foreclosure sale, and any subsequent private sales or other conveyances of the foreclosed property) is also void? Can anyone imagine the mess that may currently exist with defective real estate titles around the country that have a recent foreclosure in its chain of title where the court lacked jurisdiction because of mortgage lenders and their attorneys who were as sloppy as those described in the above list of cases? I can only imagine that this is an issue that title insurance underwriters and agents don't want anyone thinking or asking about. missing mortgage foreclosure docs beta missing mortgage foreclosure docs gamma SloppyForeclosuresAlpha

WaMu Temporarily Blocked From Booting Tenants In 17 Duplexes As Foreclosed Landlord Files 11th Hour Bankruptcy

In Grand Rapids, Michigan, The Grand Rapids Press reports:
  • Call it a stay of eviction. Tenants expecting to be evicted from some foreclosed Northeast Side apartments as soon as today received a 30-day reprieve, according to the bank holding the mortgage. Washington Mutual Bank dropped its court plans Tuesday to claim properties once owned by Tom and Melody Jacobs and force eviction of tenants from apartments in the 900 block of Maybelle Street NE.

***

  • "The borrower filed Chapter 7 bankruptcy, which stays all proceedings. For the tenants, it means they are not in danger of being evicted. At the minimum, there is a 30-day wait before anything can happen," said bank attorney Marshal Isaacs from his Troy office. Lawyers say the monthlong window is expected to extend to tenants in other of the Jacobses' foreclosed properties who recently were slapped with last-minute eviction notices at 903-911 Diamond Ave. NE and the Northfield Apartments at 1239-1245 Northfield St. NE.

For more, see Evictions on hold at foreclosed apartment units.

For an earlier post on this story, see Tenants In 17-Unit Complex Face Foreclosure Eviction; Offered $1,000 To Leave Or Face The Boot. equity skimming unwittingly digamma

As Code Enforcement Caseload Grows In One Upstate NY Municipality, Prosecutors Seek Foreclosed Owners' Help In Going After Lenders

In Lockport, New York, the Lockport Union Sun & Journal reports:
  • A fresh batch of housing cases involving financially strapped property owners has emerged in Lockport City Court. [...] Nearly half the new cases involve property that is being taken by a lender or was deserted by an owner for lack of means to maintain it.

***

  • [D]efendants claiming their mortgages were foreclosed must bring proof of that, so the city can see lender identities and contact information and start hitting them up for repair commitments. [...] Initially [local prosecutor Michael] Brooks took the prosecutorial stance that the owners of problem properties remain responsible for code violations even if they’ve been ousted by a foreclosing lender or don’t have the financial means to deal with them.

  • Now Brooks is asking foreclosed owners’ help to secure justice from lenders, who arguably have some ownership interest in property even if they don’t possess the titles. He’s doing so at the direction of Mayor Michael Tucker, who objected strongly to the outcome of a recent case involving an impoverished owner and a reluctant bank.

For more, see HOUSING COURT: City is seeking lender information.

Go here for other posts on code violation problems associated with homes in legal limbo; when a foreclosing lender is reluctant to complete a foreclosure action or fails to record its deed after foreclosure sale to avoid getting clipped with housing fines. responsibility code violations foreclosure

Vacant Foreclosed Home Being Used As A Local Dump; Clean-Up Without Court Order Would Be Criminal Trespass, Says City

In Centennial, Colorado, CBS4 reports:
  • People who live in one Centennial neighborhood are worried more piles of trash could end up in front of foreclosed homes as owners are evicted and banks take over after mortgages are defaulted. The front yard of one home has turned into a dump after the family moved out. [...] "People are coming through and using it as a dump now, there's more there now then there was to start with," said [...] another neighbor.

***

  • As for the trash pile, Centennial's code enforcement spokesperson said Fidelity Bank now owns the property. The city said trespassing to clean it up would be a crime. [...] A judge would have to give approval for anyone else besides the bank to clean up the trash.

For the story, see Trash Piles Up Outside Foreclosed Centennial Home.

Orlando-Area HOA Refusing To Rent To Gays, Unmarried Couples?

In Orange County, Florida, WFTV Channel 9 reports:
  • An East Orange County subdivision is facing a dilemma. Several residents say the Homeowner's Association at the Rybolt Reserve subdivision in Orange County is discriminating against renters. "The Homeowner's Association is totally out of control," said Suzane Musashe of Jander Property Management. Musashe leases homes for investors in Rybolts Reserve. She said the association is refusing to rent to gay couples or other adults who are not married.

For more, see HOA Won't Allow Homes To Be Rented To Homosexuals, Unmarried Couples (read story) (watch video).

Wednesday, July 16, 2008

No Bail For Brooklyn Developer Charged In Alleged NYC Condo Scam; Residents Continue Fighting Eviction

In Crown Heights, Brooklyn, the New York Daily News reports:
  • A Brooklyn developer accused of swindling some 40 Crown Heights families out of millions was ordered held without bail Tuesday night after returning from his Israel hideout. Eliyahu Ezagui, 47, pocketed $15 million in mortgages on condos he sold to families living in two buildings he developed in the Brooklyn neighborhood. Authorities said it was the biggest local case of subprime mortgage fraud on record.

***

  • Robert Tolchin, lawyer for 17 tenant families facing eviction, said litigation with mortgage lending banks and Ezagui is continuing in Brooklyn Civil Court. Numerous foreclosure notices have been served, but no tenants have been evicted.

For more, see No bail after fugitive developer busted, charged in massive condo scam.

For earlier media reports on this story, see:

Countrywide Settles Case Accusing It Of Abusive Practices In Almost 300 Mortgage Loans Overseen By Pittsburgh Bankruptcy Court

In Pittsburgh, Pennsylvania, The New York Times reports:

  • Countrywide Home Loans has agreed to pay $325,000 to the Chapter 13 bankruptcy trustee in Pittsburgh, settling a case that accused the lender of abusive practices in almost 300 mortgage loans overseen by the court.

  • The settlement, which has been filed with the court and must be approved by the federal judge overseeing it, arose out of motions filed last October by Ronda J. Winnecour, the chapter 13 trustee for the district of Western Pennsylvania. Saying that the company had lost or destroyed more than $500,000 in checks paid by homeowners in foreclosure from December 2005 to April 2007, Ms. Winnecour asked the bankruptcy court to sanction Countrywide, the nation’s largest loan servicer.

For more, see Countrywide Settles Lending Suit in Pennsylvania.

Go here for other posts on the Countrywide matter in the Pittsburgh federal bankruptcy court.

"Dare To Dream" Investment Program Results In Ghost Town, Leaving Investors Holding The Bag

In Grantsville, Utah, The Salt Lake Tribune reports:

  • The ads said, “Dare to Dream,” and Jeff Denison was among dozens who did. Now his dream is a nightmare. All he had to do to get into Utah's red-hot real estate market in 2006 was sign a contract with Dare to Dream Investments. That signature allowed his good credit to underwrite the purchase of a building lot and construction of a house. He didn't have to lift another finger. Dare to Dream would do it all for him: Find the lot, hire the contractor, sell the house. He would get 55 percent of the profit right off the top. No muss, no fuss. Denison liked the program so much, he signed up for two houses.

  • Now he's left holding the bag on two $300,000 mortgages beyond the one he owes on his actual home. [...] Making matters even worse, the structures have piles of liens against them by subcontractors who didn't get paid. [...] His houses are among 42 built in Grantsville's Silver Fox development by Dare to Dream investors. All but three remain empty, creating a modern-day ghost town.

For more, see Investors: 'Dare to Dream' real-estate deal became a nightmare (They say firm misled them with inflated land appraisals).

More Financially Strapped Americans Hitting Up Their Retirement Plans, Insurance Policies For Quick Cash

The Wall Street Journal reports:
  • A growing number of Americans, maxed out on credit cards and unable to get home-equity loans because of tighter lending standards, have found a new source of emergency cash: retirement plans and insurance policies. While tapping these funds may seem like a convenient way to address an immediate need, such as a looming medical or tuition bill, financial advisers urge caution. They say that consumers should carefully weigh the ramifications -- the possibility of a big tax bill and far less savings in retirement, for example -- before dipping into a 401(k), Individual Retirement Account or life-insurance policy.

For more, see Cashing Out (Retirement plans and insurance policies offer a way to get money quickly. But there are real disadvantages).

Mortgage Lender Erroneously Sends Out 9,000 Default Notices To Customers

In Clarksville, Tennessee, WSMV-TV Channel 4 reports:
  • [A] computer glitch was cited as what caused thousands of certified letters to be sent out alerting US Bank mortgage holders that they were late on their payments and that if it wasn’t current in 30 days, the bank would be inspecting their properties for foreclosure and public sale. [...] US Bank issued a statement that said the accidental mailings stemmed from a computer error and were limited to a group of customers in Tennessee.
For more, see 9,000 Mistakenly Warned Of Mortgage Default (Bank Says Computer Glitch Led To Error).

Tuesday, July 15, 2008

The Secret's Out: Foreclosing Lenders Around The Country Continue To Get Hammered Over Missing, Inconsistent Mortgage Docs

The National Law Journal reports:
  • Alarmed by the dramatic rise in housing foreclosures across the nation, judges have taken a variety of actions to slow the pace, ranging from outright dismissals for incomplete work to mandated mediation to threatening attorneys with sanctions.

***

  • A number of suits have accused banks of allegedly taking shortcuts to rush foreclosures through, often using so-called "foreclosure mills" — law firms that handle a high volume of foreclosure actions — to handle the cases, according to foreclosure defense lawyers, bankruptcy lawyers and consumer rights groups.

***

  • In Ohio, which has been particularly hard hit by foreclosures, a consortium of plaintiffs' attorneys last month filed a class action against Deutsche Bank A.G. on behalf of Ohio homeowners facing foreclosure. The suit alleges that the bank lacks standing to bring foreclosures throughout Ohio and is missing key mortgage documents. Whittiker v. Deutsche Bank National Trust Co., No. 1:08cv00300 (N.D. Ohio).(1)

One Brooklyn, New York trial judge's approach to the apparent sloppy paperwork being filed by foreclosing lenders and their attorneys is described in these excerpts:

  • "I deny more foreclosures than I approve," said Justice Arthur Schack(2) of Kings County, N.Y., Supreme Court, in Brooklyn. "I want to see the servicing agent's power of attorney, I want to see all the paperwork before I approve it. If the paperwork is garbage, I deny it. If you're going to take away someone's home, it should be done properly."

***

  • In a blistering opinion in June, Schack, the Brooklyn judge, threatened Mary McLoughlin, an attorney at Rosicki, Rosicki & Associates of Carle Place, N.Y., with sanctions for filing a foreclosure on behalf of Wells Fargo. After doing his own research in the [computer-accessible New York City public records], Schack discovered that Wells Fargo never owned the mortgage. Schack denied the foreclosure and further set a hearing for Aug. 1 to afford her a chance to explain why she should not be sanctioned for "frivolous conduct." Wells Fargo Bank v. Reyes, No. 5516/08 (Kings Co., N.Y., Sup. Ct.) [2008 NY Slip Op 51211(U) [20 Misc 3d 1104(A)]; Decided June 19, 2008].(3)

For the whole story, see Judges, attorneys work to stanch foreclosures (As actions surge, so do dismissals, mediation orders) (no subscription required).

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.

(1) The suit alleges that, because Deutsche Bank lacked standing to bring foreclosure actions, its attempt to do so constituted violations of the Federal Fair Debt Collection Practices Act, as well as Ohio RICO, R.C. 2923.32 Engaging in pattern of corrupt activity, both on its part as well as on the part of its attorneys filing the foreclosure actions. In addition to damages and other relief, the homeowners seek the return of their homes lost to foreclosure, and request that the attorneys representing Deutshce Bank fork over all the fees they collected on the foreclosure actions.

(2) Ina recent case, Deutsche Bank Natl. Trust Co. v Maraj 2008 NY Slip Op 50176 (U); [18 Misc 3d 1123(A)]; January 31, 2008; Justice Schack, in denying a foreclosure, wondered if he was the target of a corporate "Kansas City Shuffle" (a reference to the 2006 film, Lucky Number Slevin, in which the term is explained by a hitman played by Bruce Willis) in that the paperwork filed by the foreclosing mortgage lender raised questions in his mind the answers to which weren't readily apparent to him, and which created the appearance of possible fraudulent activity, according to his written opinion. See earlier post, Brooklyn Judge Presides Over A Corporate "Kansas City Shuffle" In Foreclosure Action?

(3) In other gems by Justice Schack in which he denies foreclosure to other foreclosing mortgage lenders for submitting questionable paperwork, see HSBC Bank USA v Perboo, 2008 NY Slip Op 51385(U); Decided last Friday - July 11, 2008; and also a 2007 decision, Deutsche Bank Natl. Trust Co. v Castellanos, 2007 NY Slip Op 50978(U) [15 Misc 3d 1134(A)]; Decided on May 11, 2007, a foreclosure action in which he subsequently again denied foreclosure in the opinion in Deutsche Bank Natl. Trust Co. v Castellanos, 2008 NY Slip Op 50033(U) [18 Misc 3d 1115(A)]; Decided January 14, 2008. missing mortgage foreclosure docs beta missing mortgage foreclosure docs gamma Arthur M. Schack ForeclosureMillAttorneysAlpha SloppyForeclosuresAlpha

Brooklyn Judiciary To Establish Mandatory Settlement Conferences In Certain Foreclosure Actions; Law Students To Participate In Process

In Brooklyn, New York, the Brooklyn Daily Eagle reports:
  • In the Brooklyn Supreme Court’s continued effort to fight the foreclosure crisis that is wreaking havoc across the country and ripping homes away from thousands of families, Administrative Judge Abraham Gerges met with community-board leaders last week to discuss the court’s role.

***

  • According to Gerges, he and other members of the judiciary will be meeting with various community boards throughout the borough, as well as the mortgage lenders. A system to have certain plaintiffs and defendants meet for mandatory settlement-conferences will be established, and students from Brooklyn Law School across the street are being enlisted to help in the legal process.

For more, see Foreclosure Talks Continue at (not in) Court (Brooklyn Supreme ‘One of the More Progressive Courts Across Country’).

NFL Punter Among Many Who Are Out $60K+ As 21 Story Charlotte Luxury Tower Goes Into Foreclosure

In Charlotte, North Carolina, WCNC-TV reports:
  • The Park [condominium tower] first started pre-selling units in 2004. By early 2008, a source close to the development confirms more than 80 units were under contract. But court documents show problems with financing led to bills not being paid, and now the main lender trying to foreclose. Where does this leave buyers? That’s a question Carolina Panther’s punter Jason Baker asked. He bought into the project last October, putting $62,500 down on a unit on the 18th floor.

***

  • Baker isn’t alone. WCNC has been contacted by numerous buyers, many of whom are also out more than $60,000 and fear their money is gone.

For more, see Lawsuit, foreclosures haunt Uptown condo project.

For story updates, see:

For other posts on homeowners left in the lurch due to actions by builders/contractors, go here, go here, and go here. contractors stiff subs customers yelbow

Cops Nab Two Suspects In "Phony Landlord" Rent Scam Using Vacant Foreclosures, Craigslist Ads To Pocket Cash From Unwitting Tenants

In Carlsbad, California, the San Diego Union Tribune reports:
  • Police unraveled an elaborate scheme Friday involving two men who allegedly posed as landlords and then collected up to thousands of dollars in payments from unsuspecting renters, authorities said. According to police, the men entered at least two vacant Carlsbad homes that were in foreclosure and then listed them for rent on the Web site Craigslist.

  • They collected possibly thousands of dollars in security deposits and rent from several people, according to paperwork that officers found on the men.

For more on how the scam fell apart, see 2 men arrested in scam with foreclosed homes.

See also, Police arrest two in connection with Internet rental scam.

Go here and go here for other posts on tenant victims of rent hoaxes. unwitting tenant rent scam yacht

Monday, July 14, 2008

FDIC Halts IndyMac Mortgage Foreclosures; Aggressive Pursuit Of Loan Modification Strategies To Follow, Says Agency Chairman

In Washington, D.C., Reuters reports:
  • The Federal Deposit Insurance Corp has temporarily halted any foreclosures on the $15 billion of bank-owned mortgage loans found in IndyMac's portfolio, FDIC Chairman Sheila Bair said on Monday. Bair has scolded mortgage lenders for being too slow to help distressed borrowers restructure their home loans. "Modified loans will be worth more than foreclosed loans," she said in an interview on CNBC television. IndyMac, which the FDIC took over after it failed on Friday, had a $200 billion mortgage servicing portfolio.

For more, see FDIC halts foreclosure on IndyMac mortgages.

See also, The Wall Street Journal: IndyMac Reopens, Halts Foreclosures on Its Loans:

  • [F]ederal Deposit Insurance Corp. Chairman Sheila Bair, who has been one of the most outspoken officials calling for banks to ease up on struggling homeowners, said that the agency is "really focused" on keeping borrowers in their homes for both their sakes and to maximize IndyMac's value for taxpayers. "We will very aggressively pursue loan-modification strategies for unaffordable loans to make them affordable on a long-term, sustainable basis," Ms. Bair said in an interview Monday.

Discounted Mortgage Notes The Key To Addressing Foreclosure Crisis?

In a column on Bloomberg News, commentator John F. Wasik writes:
  • [W]here politicians and bankers see vexing liabilities in defaulted mortgages and foreclosures, Robert Lee sees opportunities as he picks up the pieces of the housing bust. [...] Buying defaulted mortgages at a discount, Lee encourages and enables owners to stay in their properties and avoid foreclosure. His company buys the loans, not the homes, then employs a "work- out, not kick-out" approach in working with homeowners.

  • Unless a comprehensive federal bailout reduces foreclosures, areas with the highest defaults will continue to show dramatic price declines as more properties fall into the hands of lenders and courts. The idea of discounting notes to reflect realistic market values may be the key to getting the market on its feet.

For more, see Discounted Mortgage Notes Can Stop Foreclosures.

Oregon Cops Seek Suspect In Alleged "Mortgage Watchdog" Scam

In White City, Oregon, the Mail Tribune reports:

  • Police are asking the public to be aware of a man involved in a mortgage scam that has cost at least one White City resident $300 and opened her up to identity theft. A White City woman was approached recently by a man claiming to work for a mortgage "watchdog" group. The suspect said he could look over mortgage paperwork to spot potential errors that could save the buyer thousands of dollars, Jackson County Detective Sgt. Colin Fagan said. "He charges a $300 fee for this bogus service," Fagan said. "Also, he takes the paperwork with him and does not return."

***

  • Mortgage paperwork gives a criminal a wealth of financial information that could be used to drain a bank account or open credit cards in the victim's name, Fagan said. "Mortgage papers contain your social security number, full name and date of birth," Fagan said. "That's all an identity thief needs to get started. People under foreclosure are vulnerable to begin with and this is the last thing they need." Police believe the suspect is Bart Arthur Blahosky, 50, who has a long history of fraud spread over Utah, Nevada and Idaho. "Our victim said he was dressed very nicely and sounded like a lawyer," Fagan said.

For more, see Mortgage scam is front for identity theft (Medford police believe they have an identified suspect, but he remains at large).

For story update, see: More victims surface in 'mortgage watchdog' scam (Suspect poses as a mortgage watchdog, then acquires information for identity theft, sheriff's deputies say).

Mezuzah Not Protected Under Fair Housing Act, Federal Appeals Court Rules

In Chicago, Illinois, the ABA Journal reports:
  • A federal appeals court has ruled that the Fair Housing Act does not protect the right of condominium owners to display mezuzot on their doorframes. The Chicago-based 7th U.S. Circuit Court of Appeals said the federal law requires accommodation for the handicapped but not for religion, the New York Sun reports. Content-neutral regulations that have the effect of banning religious displays are permitted, the court said in a 2-1 opinion (PDF).

***

  • The majority opinion by Judge Frank Easterbrook said the regulation was content-neutral. "It bans photos of family vacations, political placards, for-sale notices and Chicago Bears pennants."

  • Dissenting Judge Diane Wood said the rule operated as a constructive eviction of observant Jewish residents.

Source: Housing Law Doesn’t Protect Right to Mezuzah, Appeals Court Rules.

For the decision, see Bloch v. Frischolz (7th Cir., July 10, 2008).

Go here for other posts on condo association problems with mezuzot.

Postscript:

In disagreeing with her colleagues in the majority, Circuit Judge Wood made her feelings known by issuing a 17-page dissenting opinion in response to the 6-page majority opinion. A few of her comments are included in this excerpt from the New York Sun article:

  • In dissent, Judge Diane Wood said enforcement of the rule amounted to a "constructive eviction" of observant Jewish residents, as well as an effective bar on Jews moving into the housing complex. "Hallway Rule 1 operates exactly as a redlining rule does with respect to the ability of the owner to sell to observant Jews. No such person could buy a unit at Shoreline Towers," she wrote. "The Association might as well hang a sign outside saying 'No observant Jews allowed.'"

Landlord Hit With $24K+ In Fines For Failure To Maintain Rentals; Believed Foreclosure Actions On Homes Would Force Court To Dismiss Code Violations

In Winnebago County, Wisconsin, the Oshkosh Northwestern reports:
  • A Winnebago County Circuit Court judge fined an Oshkosh landlord more than $24,000 for building code violations he did not address over a two-year period. Judge William Carver fined Kelly Burnett a total of $24,325 [June 30] for city building code violations that went largely unattended to since January, when Burnett pleaded no contest to the charges and was given six months to make progress on the violations. Carver on Monday said he saw little improvement to dangerous situations that included unsafe electrical conditions, failure to maintain units to minimum building code regulations, failure to provide adequate heating and failure to obtain building permits.

***

  • He [...] said he pleaded no contest in January because he believed pending mortgage foreclosures on the majority of his properties — 30 foreclosure actions are either in progress or complete — would force the court to dismiss the code violations.
For more, see Landlord fined $24,000 for code violations.

Go here for other posts on code violation problems associated with homes in legal limbo; when a foreclosing lender fails to complete a foreclosure action or fails to record its deed after foreclosure sale. responsibility code violations foreclosure

Sunday, July 13, 2008

IndyMac Seized By Federal Regulators

Bloomberg News reports:
  • IndyMac Bancorp Inc. became the second- biggest federally insured financial company to be seized by U.S. regulators after a run by depositors left the California mortgage lender short on cash. The Federal Deposit Insurance Corp. will run a successor institution, IndyMac Federal Bank FSB, starting [Monday], the Office of Thrift Supervision said in an e-mail yesterday. The regulator blamed U.S. Senator Charles Schumer for creating a "liquidity crisis'' after a letter on June 26, in which he expressed concern that the bank may fail. The Pasadena, California-based lender specialized in so-called Alt-A mortgages, which didn't require borrowers to provide documentation on their incomes.

***

  • After peaking at $50.11 on May 8, 2006, IndyMac shares lost 87 percent of their value in 2007 and another 95 percent this year. The stock fell 3 cents to 28 cents at 4 p.m. New York time [Friday].
For more, see IndyMac Seized by U.S. Regulators; Schumer Blamed for Failure.

For a recent Center for Responsible Lending investigative report on this lender, see IndyMac: What Went Wrong? (How an "Alt-A" Leader Fueled its Growth with Unsound and Abusive Mortgage Lending).

IndyMac Subprime Related Lawsuits

For those interested in the kinds of allegations being made in subprime-related lawsuits brought by homeowners and others from all over the country involving IndyMac Bank as one of the named defendants, the following links will take you to copies of some of the actual lawsuits filed against this lender. These lawsuits are made available online courtesy of the Center for Responsible Lending ("CRL"), and are all referenced in an investtigative report CRL recently issued on IndyMac.

Alleged Bait & Switch Tactics (among other allegations):

  1. Ferguson v. IndyMac Bank, U.S. District Court for the Eastern District of New York, February 14, 2008;
  2. Howard v. Countrywide Home Loans Inc., U.S. District Court for the District of Columbia, 2008;
  3. Elouise Manuel v. American Residential Financing, Inc., et al, Superior Court of Gwinnett County, Georgia, 2008;
  4. Zurawski v. Mortgage Funding Corp., U.S. District Court for the District of New Jersey, 2008;
  5. Hartman v. Deutsche Bank National Trust Co., U.S. District Court for the Eastern District of Pennsylvania, 2007;
  6. Mitchell v. IndyMac Bank, U.S. District Court for the Eastern District of Virginia, 2008;
  7. Brannan v. IndyMac Bank, U.S. District Court for the District of Colorado, 2006;
  8. Darling v. IndyMac Bancorp, U.S. District Court for the District of Maine, 2006;
  9. Harris v. Vinson Mortgage Services, U.S. District Court for the Eastern District of Missouri, 2008;
  10. George v. IndyMac Bank, U.S. District Court for the Central District of California, 2008;
  11. Thomas v. DCI Mortgage Bankers, U.S. District Court for the District of New Jersey, 2007;
  12. Glover v. Equity Source, U.S. District Court for the District of New Jersey, 2007;

Alleged Racial Discrimination:

  1. Mables v. IndyMac Bank, (seeks class action status) U.S. District Court for the Northern District of Illinois, 2008;

Alleged Inflated Appraisals:

  1. Cedeno v. IndyMac, U.S. District Court for the Southern District of New York, 2006;

Alleged Falsified Paperwork:

  1. George v. IndyMac Bank, U.S. District Court for the Central District of California, 2008;
  2. Ware v. IndyMac Bank, U.S. District Court for the Northern District of Illinois, 2007;

Alleged Funding of Loans For Developer in an Area Known as a Hotbed for Mortgage Fraud Without Proper Due Diligence:

  1. Gaines v. Parisi, U.S. District Court for the Middle District of Pennsylvania, 2006;

Shareholder Class Action Lawsuit citing Alleged Questionable Lending Practices:

  1. Tripp v. IndyMac Bancorp, Inc., U.S. District Court for the Central District of California, 2007.

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

For other posts on homeowners using Federal & state consumer protection statutes to try and undo bad mortgage loans, Go Here, Go Here, and Go Here. undo mortgage loans TILA batallion subprime lawsuits, subprime lender lawsuits

85 Year Old Widow Facing Foreclosure Sues Wachovia / World Savings For Unaffordable "Pick A Payment" Mortgage

In Oakland, California, KPIX-TV Channel 5 reports:
  • [A]dvocate [Maeve Elise] Brown at HERA [Housing and Economic Rights Advocates] has filed a lawsuit on [85 year old widow] Dollie Ross' behalf. In it, Brown says World Savings should have known Mrs. Ross would not have been able to afford the loan. "From the prior loans, World Savings knew the household income and knew that the 2006 refinance was beyond (Ross') ability to pay," the complaint reads. In fact, the complaint alleges that not only could Ross not afford the minimum payment, the regular principal and interest option on the loan was actually "two to three times (Ross') total income."

  • Her daughter Sally said, "When they came to see her, she was alone, she was suffering from pneumonia, she had vision problems and hearing problems, and she really was in no condition to understand what they were talking about."

For more, see Wachovia Sued Over 'Pick-A-Payment' Loans (read story) (watch video).

For other posts on homeowners using Federal & state consumer protection statutes to try and undo bad mortgage loans, Go Here, Go Here, and Go Here. undo mortgage loans TILA batallion

Ex-World Savings Loan Originator Sues Company For Retaliation For Reporting Alleged Improper Lending Practices

In Oakland, California, a story originally aired by KPIX-TV Channel 5 in May reports:
  • A former employee of Oakland's World Savings is suing the company (now owned by Wachovia) and its former principals, saying he was fired in retaliation for his reporting of improper practices and violations of state and federal laws [...] by World in selling loans in San Francisco and the Bay Area.

***

  • In the complaint, [ex-loan consultant Paul] Bishop claims World "preyed upon" desperate borrowers who were "enticed into bad/predatory loans…without being told the complete truth about the loans" and that "borrowers were not told the full story about the terms, assumptions or risks of their loans".

***

  • The complaint says Bishop began working for World in November of 2002 and in 2004 began to observe practices such as World brokers "helping outside brokers to circumvent underwriting guidelines" through classes where "it walked brokers through (World's) loan application and specifically told them to be sure borrowers qualify for loans, even indicating the necessity to overstate income, if need be, to get a borrower qualified."

***

  • The complaint further alleges that "World managers routinely overruled underwriting guidelines that would hae prevented loans from being approved" by using what the filing calls an "exception to policy" to get those loans approved. It says some decisions to deny loans were "overridden" by senior loan originating executives.

For more, see Oakland Bank's Lending Sparks Ex-Employee Lawsuit (read story) (watch video).

For a CBS "60 Minutes" interview with Paul Bishop (aired 2-15-09; 13+ minute video), see World of Trouble (read story) (watch video).

Go here for other posts on whistleblower suits involving alleged fraudulent mortgage lending practices.

Ex-HUD Official Gets Unwittingly Snagged In Real Estate Scam

In Denver, Colorado, the Rocky Mountain News reports:
  • You would be hard-pressed to find someone more knowledgeable about foreclosures than Kevin Marchman. The Denver resident is a former top official at the Department of Housing and Urban Development, led the Denver Housing Authority for four years and heads a Washington, D.C., based nonprofit group, the National Organization of African Americans in Housing.

  • That agency serves as an advocate for affordable housing and for cracking down on "shady lending practices that have burned many of the nations riskiest subprime borrowers." Yet, Marchman, and his wife, Desiree, got caught up in a foreclosure action. "I feel like I have an obligation to talk openly about this," Marchman said. "I want people to read this and think, 'If it can happen to Kevin, it can happen to anybody.' "

To read what happened, see Expert snagged in subprime trap.

California Woman Under Probe For Alleged Foreclosure Rescue Scam Charged In Unrelated Case; Pocketed $66K From Senior In Phony Refi, Says Prosecutor

In Santa Cruz County, California, The Mercury News reports:
  • A Watsonville woman under investigation in Monterey County for allegedly duping dozens of defaulting homeowners out of thousands of dollars has been jailed in Santa Cruz County for unrelated grand theft charges. Melissa Dawn Garcia, 27, has pleaded not guilty to one count of elder financial abuse and one count of forgery in Santa Cruz County Superior Court. Garcia [...] allegedly convinced a 76-year-old Salinas woman to invest tens of thousands of dollars through Garcia, according to prosecutor Bill Atkinson.

  • "Basically this was a loan investment opportunity," Atkinson said. "Allegedly, Garcia said she was going to give it to a homeowner who was doing a remodel. To protect the victim, Garcia said the homeowner would give them a deed of trust to the home. Therein lies the rub. The homeowner was fictitious, the property that supposedly secured the loan was fictitious and the $66,000 never got past Melissa Garcia."

For more, see Watsonville woman suspected in $66K elder abuse scheme, separate loan refinancing scam (no longer available online).

Saturday, July 12, 2008

Termites Gaining Stranglehold In Vacant Florida Homes, Say Local Exterminators

On the west coast of Florida, the Sarasota Herald Tribune reports:
  • If anyone is getting fat from the downturn in the housing market, it might be drywood termites. Exterminators are witnessing larger and more active swarms of the pasty monsters than they have seen in years. The problem is bad enough that some exterminators have waiting lists of up to six weeks for infested homes from Tampa to Charlotte County, the area where swarms seem to be centered.

***

  • The evidence points to the fact that termites have been ignored in homes that are bound for foreclosure or where tight budgets have left no room for home inspections. The life cycle for termite colonies to get big enough to swarm and move on to different houses coincides with what has been happening in the local market, which has been in its current malaise for going on three years.

For more, see We see more empty homes. The termite sees a buffet (Exterminators say the hungry insects are gaining a stronghold in the area's unoccupied houses).

More On The Squeezing Of Homeowner / Condo Associations By Bank Foreclosures

The following links are to recent stories on homeowner & condo associations that are taking big hits in terms of uncollected maintenance payments due to unit owners facing bank foreclosures:

Tenants In 17-Unit Complex Face Foreclosure Eviction; Offered $1,000 To Leave Or Face The Boot

In Grand Rapids, Michigan, The Grand Rapids Press reports:

  • A group of Northeast Side renters were shocked this week when they were given eight days to move out of their homes after a mortgage company foreclosed on their building. Housing advocates say the case, a growing problem, demonstrates what little protection renters have in another side to the national mortgage crisis. Renters in 17 duplex-style apartments [...] received notice Monday to vacate their homes by July 16, the tenants said.

***

  • Residents on Monday were offered $1,000 reimbursement if they signed before Wednesday a paper agreeing to move by July 16. But some residents said money after the fact would not help those who had no money or ability to move in eight days.

***

  • Some of the residents are young mothers with children and no transportation, others are working single women, some are families and all could be homeless, advocates say, through no fault of their own. "The clients I work with are living paycheck to paycheck. It really puts the tenants in a tough position and makes the working poor struggle that much harder," said Legal Aid of Western Michigan attorney Cavan Berry. The organization is investigating.
For more, see Foreclosure leaves tenants on the street.

For story update, see Evictions on hold at foreclosed apartment units (7-16-08).

For other posts involving the problems tenants face in rented homes in foreclosure, go here, go here, go here, go here, go here, and go here. equity skimming unwittingly digamma

Self Help Guide Available For Massachusetts Tenants Renting From A Landlord In Foreclosure

For Massachusetts tenants who find themselves renting from a landlord facing foreclosure, MassLegalHelp.org provides some self-help legal information that may be helpful. For more, see:

Ohio Lawyer Gets One Year Suspension For Forging Signatures On Deed

In Akron, Ohio, the Akron Beacon Journal reports:
  • Akron defense lawyer Donald L. ''Doc'' Walker was suspended from practicing law for one year for violations of state disciplinary rules, Ohio Supreme Court officials announced Tuesday. [...] According to the justices' decision, Walker's law license was suspended because he forged the signatures of a client's son and two witnesses on a property deed, [...].

One of the mitigating factors in the justices' decision was that "the forgery did not result in personal gain by Walker. He paid all of the money owed to the client's son whose signature he forged, the justices said."

For more, see Lawyer's license suspended for year.

False Expense Reports, Sarcastic & Angry Tones, Crude Remarks Get Judges In Hot Water

This blog's never ending search for media reports on our robed members of the judicial branch of government getting themselves into hot water yields the following two stories:
  • California: Los Angeles Times: Orange County judge is removed from bench (Kelly MacEachern is removed from her duties in Newport Beach after a judicial commission finds that she filed false expense claims for a legal conference. She plans to appeal).

For other posts on the questionable judgment exercised by some of the members of our esteemed judiciary, go here and go here. knuckleheaded judges zeta

Friday, July 11, 2008

"Florida Attorneys Saving Homes" Sets Up Hotline To Place Homeowners Struggling With House Payments With Free Lawyers

The Florida Bar News reports:
  • [A]s of June, an estimated 77,000 Floridians were in foreclosure and a recent report indicated that 11.6 percent of Florida property owners were more than 30 days past due on a mortgage payment or in foreclosure, suggesting more trouble ahead, said Kent Spuhler, executive director of Florida Legal Services, Inc. In response FLASH [Florida Attorneys Saving Homes] has launch a toll-free hotline — (866) 607-2187 — to take calls weekdays from 8 a.m. to 4 p.m. from those who fear they may soon be unable to make their mortgage payments or have already missed payments.

For more, see Hotline to assist Floridians facing foreclosure (Florida lawyers are now available to assist homeowners facing forclosure).

FLASH — Florida Attorneys Saving Homes — is a collaborative effort of The Florida Bar, The Florida Bar Foundation, Florida Legal Services, and the Real Property Probate and Trust Law Section designed to provide pro bono assistance to distressed homeowers.

Go here for some of the materials for volunteer attorneys working on the FLASH program and go here for welcome letter (re: malpractice insurance, training & materials).

Maryland AG Files Civil Suit Against Baltimore/DC-Area Foreclosure Rescue Operators; Seeks Return Of Homes To Victims

In Baltimore, Maryland, the Maryland Attorney General's office announced yesterday:
  • Attorney General Douglas F. Gansler announced [Thursday] that the Consumer Protection Division has filed a complaint in Baltimore City Circuit Court against a group of individuals and companies(1) alleging they took the equity in consumers’ homes under the guise of providing them with assistance to stop foreclosures.

***

  • The complaint alleges the defendants offered to help homeowners avoid foreclosure and repair their credit history and financial situations while remaining in their homes. According to the Complaint, the defendants set up fictitious sales of homeowners’ houses throughout the Baltimore-Washington Metropolitan area to investors who, along with the consultants, obtained large fees for participation in the deal. As a consequence of these transactions, the homeowners lost the equity they built up in these properties.

  • The Attorney General’s Office has asked the court to stop the defendants’ unlawful practices, restore property to the injured homeowners and impose fines for violations of the Protection of Homeowners in Foreclosure Act, the Maryland Credit Services Business Act and the Consumer Protection Act. This is the third lawsuit that Attorney General Gansler has brought against alleged foreclosure rescue scams.

Source: Maryland AG Press Release: Attorney General Gansler Announces Consumer Protection Division Files Complaint Against Operators of Alleged Foreclosure Rescue Scam.

See also: The Baltimore Sun: Nine tied to finance fraud (Md. says scheme targeted distressed homeowners) (no longer available online).

(1) The complaint names Rodney Spellen, Jemel Lyles, Brian Boyd, Mid Atlantic Consulting Firm LLC, Absoloot Ventures, Inc., Phillip George, Certified Title & Escrow, Inc., First Choice Property Management Firm, Inc., First Choice Property Management Firm, Sahar Begun Ali, Reggie Simmons, Alan Muniu, Jason Ford and Thuy Thu Nguyan as defendants.

One South Florida Homeowner Among Many Fighting Back Against Subprime Lenders

In Broward County, Florida, a story in the Daily Business Review (appearing on Law.com) recently reported on a disabled woman who recently refinanced her home and subsequently discovered, much to her chagrin, that she might have been given a mortgage loan different from the one she thought she was getting.
  • [C]onfined to a wheelchair, she already is struggling to make her monthly payments. So instead of waiting for the sword of Damocles to fall in the form of foreclosure, [homeowner Denise] Bennett is fighting back. She sued her lender, Countrywide Home Loans, on June 26 alleging fraud in a case assigned to U.S. District Judge William Zloch in Fort Lauderdale. Bennett is a plaintiff in one of several suits filed against the troubled lender by the Affirmative Defense Group in Margate, Fla. Her attorney, Frank Ingrassia, said he has filed about 70 such suits against a variety of lenders.

  • "It's an industrywide problem," Ingrassia said. "Some of the clients tried to do workouts and weren't able to do that, and when you are faced with foreclosure it's an issue of striking first or not." He said the litigation is a "new approach for dealing with unprecedented levels of foreclosures."

  • Nearly all of the lawsuits involve adjustable rate subprime mortgages to high-risk customers. Ingrassia said some of his clients were offered "teaser rates" as low as 1.5 percent that adjusted up within 30 days. The lawsuits also allege Calabasas, Calif.-based Countrywide and the other lenders falsified paperwork that exaggerated the income of the customers to qualify for the loan.

***

[Editor's Note: Washington State has also recently taken action against against Countrywide.]

For more, see Saying They Were Tricked, Borrowers Fight Back With Lawsuits.

For other posts on homeowners using Federal & state consumer protection statutes to try and undo bad mortgage loans, Go Here, Go Here, and Go Here. undo mortgage loans TILA batallion

Fannie Cracks Down On Homeowners Buying 2nd Home Before Walking Away From 1st Home

In San Diego County, California, North County Times reports:
  • One of the nation's largest lenders is cracking down on borrowers who let their homes enter foreclosure ---- a phenomenon that has spawned several North County businesses catering to homeowners who want to "walk away."

  • Fannie Mae, a government-chartered lender, instituted guidelines June 25 that limit the loans a homeonwer can secure when purchasing a second home. As home prices plummet in San Diego County, local real estate agents say more homeowners are looking to purchase similar homes for hundreds of thousands less and then let their original home fall into foreclosure.

  • "It's the duck and weave," said Christopher Thornberg, an economist with Beacon Economics. "You're looking at (a similar house) down the block listed at half of what you bought (your house) for, so obviously the best move financially is to move from your house to that one."

***

  • [L]ocal real estate agents say an increasing number of their clients are asking about buying another home for cheap with no intention of keeping the first home. Agents said the homeowners typically do not intend for the first home to enter foreclosure, but instead hope to short sell the home, or sell it for less than the balance on the mortgage with the bank's approval. If the home cannot sell, it will then fall into foreclosure.

For more, see Fannie Mae cracking down on 'walk aways' (New guidelines make it more difficult to purchase a second home).

In a related story on "Buy and Bail" home purchases, see:

Local Cop Helps Northern California Widow Snagged In High Pressure Lending Scheme Dodge Foreclosure

In Redding, California, the Redding Record Searchlight reports:
  • There's nothing like a call or two from a police financial crimes investigator to persuade a mortgage company to rethink a loan that left an ill widow teetering close to foreclosure after she was conned in a high-pressure lending scheme. "I kept imagining, What if they had done that to my mom,'" said Redding police investigator Matt Zalesny. "I'd be so enraged." Zalesny's efforts to help Joyce Atwood, 58, keep her Redding home began this spring.

For more, see Police help woman escape foreclosure after predatory loan.

For story update, see Redding police pounce on case of lending scam.

Cincinnati-Area Group Sues Deutsche Bank; Blames Institution For Abandoned Homes, Spreading Blight

In Cincinnati, Ohio, WKRC-TV Channel 12 reports:

  • Neighbors who live in Price Hill are taking on one of the world's largest banks. Price Hill Will is suing Deutsche Bank, accusing it of not taking care of the homes it has in foreclosure. The group blames the bank for virtually abandoning hundreds of homes, spreading blight in Price Hill. The suit asks the court to force Deutsche Bank to maintain its properties in accordance with local housing and health codes.

Source: Price Hill Group Sues Deutsche Bank.

See also: