North Carolina Developer Accuses Wachovia Of Shakedown, Fraud, Unfair Practices; "Not Us!" Says Lender

In Guilford County, North Carolina, The Business Journal of the Greater Triad Area reports:

• A Mount Airy developer has filed suit against Wachovia Bank, alleging extortion, fraud and unfair and deceptive trade practices. Granite Development LLC filed the suit in Guilford County Superior Court in relation to construction loans the company says it had to build [area] retail centers [...] according to an announcement from the developer. The suit says Wachovia used threats of foreclosure and other predatory practices to try to force Granite to accept unreasonable loan demands on an extension the developer wanted on the construction loans. [... A Wachovia spokesperson] said she could not comment on any specifics of the suit, but she said Wachovia “strongly disagrees” with the allegations it contains.

For more, see Developer sues Wachovia for "predatory" practices.

Hiring A Contractor For Home Improvement Work? Don't Forget Those Lien Waivers

An excerpt in a recent Q & A column appearing in the Daily Herald, Illinois attorney Tom Resnick gives this reminder of the importance obtaining lien waivers anytime a property owner hires others to make home improvements on a home.

• [A]nyone who performs work or furnishes materials that ultimately improve your property obtains certain rights under the mechanics lien act. The most basic of these rights is that the contractor may record and ultimately foreclose his or her lien. In the event the contractor prevails on his or her lien claim, if the contractor is not paid, he or she can force the sale of the property to satisfy the claim.

• Accordingly, it is imperative that anytime a party performs work at your property, upon final payment, you should insist on receiving a Final Waiver of Lien. This document generally states that the contractor waives any lien rights he or she has on the property. A properly drafted and executed Final Waiver of Lien will generally defeat a lien claim that evolved before the execution of the Final Waiver.(1)

For more, including some options applicable to Illinois homeowners when a contractor slaps a lien on their property, see Don't forget a final, important step in dealing with contractors.

(1) Obtaining lien waivers from any subcontractors and suppliers involved in the job may not be a bad idea, either. Buyers of newly-constructed homes are also well-advised to assure themselves that the appropriate lien waivers have been obtained by the title insurance agent handling the closing. For an example of what could happen if the lien waivers are not obtained and the homebuilder or general contractor goes out of business, see Stiffed Sub Sues Contractor For Unpaid Work At New Development; Slaps Liens, Seeks Foreclosure On Residents' Homes. StiffingContractorsTheta

Another Upfront Fee Foreclosure Rescue, Loan Modification Firm Under Fire From Feds

The Federal Trade Commission announced Wednesday:

• In a case that affects consumers throughout the nation, the Federal Trade Commission has charged a mortgage foreclosure “rescue” company with falsely claiming that it will stop foreclosure or fully refund consumers’ money.(1) A federal court ordered a halt to the alleged practices and froze the defendants’ assets pending trial. Many people who paid the company ultimately lost their homes to foreclosure, and others avoided foreclosure only through their own efforts. The FTC seeks to prohibit the deceptive claims and make the company pay consumer redress.

• According to the Commission, the company promotes its “Fresh Start Program” by mailing ads to consumers who are behind on their mortgage payments and facing foreclosure. [...] Consumers who call the company are told that negotiations with lenders will begin once consumers pay a fee ranging from $300 to more than $1,000, which typically is paid before the consumer receives a contract.

For the entire press release, see FTC Sues Mortgage Foreclosure “Rescue” Operation.

For the FTC legal documents filed in this case, see:

• Temporary Restraining Order With Asset Freeze, Appointment of Temporary Receiver and Other Equitable Relief, and Order to Show Cause,
• Complaint for Permanent Injunction and Other Equitable Relief

(1) The defendants are National Foreclosure Relief Inc., David Ealy, Chele Stone, also known as Chele Medina, and Hugo Tapia. The Commission vote to authorize staff to file the complaint was 4-0. The complaint was filed in the U.S. District Court for the Central District of California on February 2, 2009; the court entered a temporary restraining order and asset freeze later that day.

Filmmaker Seeks Volunteers To Help Prove Wall Street Bailout Is "The Biggest Swindle In American History"

Bloomberg News reports:

• Filmmaker Michael Moore, who says the Wall Street bailout is “the biggest swindle in American history,” is asking bankers to help him make a movie proving it. The 55-year-old Michigan native posted an open letter on his Web site yesterday seeking volunteers to “step up as an American and do your duty of shedding some light” on the almost $1.1 trillion in losses and writedowns globally. Moore also sent the letter to people on his e-mail list.

For more, see Michael Moore Asks Bankers to Help Prove Bailout Is ‘Swindle.’

For Moore's letter, see Will You Help Me With My Next Film? (a request from Michael Moore).

Missouri Homebuilder Cops Plea To Bank Fraud; Accused Of Using Straw Buyers To Unload 16 Homes That Ended Up In Foreclosure

In St. Louis, Missouri, the St. Louis Post-Dispatch reports:

• The owner of a Crestwood development company pleaded guilty a federal bank fraud charge this morning and admitted orchestrating a mortgage fraud scheme that netted him hundreds of thousands of dollars and sent 16 area homes into foreclosure. Joseph A. Baumeister, 55, of St. Louis County, admitted that between January 2007 and October 2008, he used straw purchasers and false information on loan documents to buy 16 homes, Assistant U.S. Attorney Jeff Jensen said in court.

For more, see Crestwood developer admits mortgage fraud scheme.

Two Fugitives Nabbed In Alleged Mortgage & Investment Fraud Scam Involving 100s Of Homes, Many Now In Foreclosure; Lender Losses About $100M, Say Feds

In Sacramento, California, The Sacramento Bee reports:

• A second fugitive in what officials describe as one of the nation's largest mortgage and investment fraud cases was captured [...] as he tried to re-enter the U.S. from Canada. Christopher Jared Warren, 26, of Sacramento was arrested at 11:15 [Tuesday] night (EST) at the Canadian border as he attempted to enter the United States in a taxi at the Peace Bridge in Buffalo, N.Y.

***

• Warren is the second of three men who went on the lam in an ongoing federal probe into purchases of hundreds of homes nationwide, many of which are now in foreclosure. The deals have allegedly led to about $100 million in losses by lenders.

• Officials on Tuesday announced that Garret Griffith Gililland III, 27, is in custody in Barcelona, Spain, fighting extradition to the U.S. Still considered a fugitive is Scott Edward Cavell, 25, fled the country last week. U.S. State Department records show Cavell obtained a passport in San Francisco on Jan. 27 under an assumed name -- Adam Kingsbury Curry. Warren, Gililland and Cavell are part of a federal probe that has zeroed in on Roseville-based Loomis Wealth Solutions.

For more, see Sacramento fraud fugitive caught with $70,000 in shoes.

Feds Drop Most Charges Against Cincy Cop/Foreclosure Rescue Operator Accused Of Preying On People Facing Foreclosure

In Cincinnati, Ohio, the Cincinnati Enquirer reports:

• A Cincinnati police officer admitted Wednesday he cheated on his taxes and stole a widow’s life insurance benefits. Officer Adrian Mitchell, who has been suspended without pay since last May, pleaded guilty in U.S. District Court to charges of mail fraud and filing a false tax return. He faces up to three years in prison when he is sentenced later this year.

• Mitchell, 36, had been charged with mail, wire and bank fraud, and federal prosecutors had accused him of preying on people who lost their homes to foreclosure. Most of those charges were dropped Wednesday when Mitchell agreed to the plea deal that slashed his potential prison time from 30 years to three.

***

• Mitchell, the owner of Rich Properties, bought homes on the brink of foreclosure and then offered to rent them back to the original homeowners with promises they could eventually buy back the properties, court records say. Prosecutors said last year that Mitchell sometimes misled banks by using “sham” buyers or other tactics to obtain loans to buy properties.

• When one renter hanged himself, prosecutors say, Mitchell filled out life insurance forms intended for the man’s widow. They say he then cashed checks totaling $188,000 from an account the life insurance company set up for the widow.

For more, see Cincy cop fleeced widow.

Central Florida Woman Loses Home To Foreclosure Despite Paying Thousand$ For Loan Modification

In Orlando, Florida, WFTV Channel 9 reports:

• An Orlando woman hired a foreclosure rescue service. She not only lost thousands of dollars, she's also losing her home. "I'm scared every day every minute," said Michelle Campbell. The bank has already foreclosed on her home in west Orlando--so she faces eviction any day. Michelle says her daughter's sudden death from a rare seizure -- left her scrambling to make mortgage payments. That's when the realtor she hoped could sell her house ---- instead told her to hire a foreclosure rescue company.

***

• Michelle says he recommended U.S. Loss Mitigation and the American Housing Authority. Both out-of-state firms promised to negotiate with her bank to lower the payments and save her house ... But first she had to pay the rescue companies 3 thousand dollars up front.(1) According to Michelle, both failed to even contact her lender---her home was sold by the bank last month.

For more, see Woman Loses Home After Paying Thousands To Home Rescue Companies.

(1) Upfront fees for these services is now against Florida law. See Florida AG Shuts Down Tampa-Area Foreclosure Rescue Operator; Accused Of Taking Upfront Fees In Violation Of New Law.

Arrest Warrants Issued For Suspects Accused Of "Hijacking" Vacant, Foreclosed Home In Gated Community

In Sacramento, California, News10 reports:

• The neighbors were suspicious but the tenants showed police a lease to prove they belonged. But now, the case of mystery tenants moving into a vacant upscale Natomas house in the Westlake subdivision last week has brought arrest warrants for those tenants and their real estate broker.(1)

• After a one-week investigation, Sacramento Police Department detectives confirmed the couple who moved into 3700 Clubside Lane in the exclusive neighborhood had no legal right to be there. The suspicion is that with help from a friend who's a real estate broker, the couple moved in and may have planned to get money from the legal owner in return for moving out later without going through the long eviction process, according to police Sgt. Norm Leong.

For more, see Natomas Rental Fraud Brings Arrest Warrants.

(1) Arrest warrants have been issued for real estate broker Phillis Powers, 52. Also sought under the warrants are Carver Barney, 57, and his wife Sandra Barney, 54, the couple who had moved into the house. A fourth suspect is Dennis Eugene, 49, who Powers or the tenants allegedly hired to clean up the house. The warrants are all for a charge of criminal trespass. The legal owner of the house is Aurora Loan Services of Colorado which purchased the house at auction on Jan. 29. PhonyLandlordScamZeta

Middle Tennessee Foreclosure Rescue Operator Faces Civil Suits; Accused Of Selling Houses Out From Under Homeowners

In Donelson, Tennessee, Newschannel 5 reports:

• [N]ewsChannel 5 investigated one company that promised homeowners it would help save their homes. Charles Jones is behind dont4close.com and the man who claimed he could help homeowners who were facing foreclosure keep their home.

• "I thought he was going to be my savior and help me out," said Kelly Reynolds. Reynolds was two months behind in her house payments for her home in Donelson. She said Jones claimed his company would cover her mortgage for a year, and then she could start paying him back. "He was very reassuring, and he said ‘I promise that you will not lose your home,'" Reynolds said. The Reynolds now face eviction because, it turns out, Jones sold their home right out from under them.

***

• The amazing thing is that Jones actually bought the Reynolds' house a year ago. The Reynolds, who have lived at their home the entire time, had absolutely no idea until Jones stopped paying the mortgage. Now, his bank is telling the Reynolds they have to get out. NewsChannel 5 found at least three others in Middle Tennessee who are now suing Jones and his company, claiming he did the same thing to them.(1)

• "The fact that all of these people feel like they were taken for a ride, believe they were defrauded out of their houses - I believe that says something," said attorney Sharmila Murthy. Murthy was involved with one of those lawsuits, which accuses Jones and his company of fraud. The Reynolds now fear they have not only lost their house, but also the $100,000 they had in equity.

For more, see Company Claimed It Could Save Homes From Foreclosure (read text) (watch video).

For additional coverage from Newschannel 5, see Dont4close.com Accused of Fraud, Misrepresentation.

(1) Whether the financially strapped homeowners can successfully void the title transfers (and any mortgage liens created incident thereto) to subsequent purchasers and encumbrancers could turn on whether the subsequent purchasers and encumbrancers can be charged with inquiry notice of the alleged fraud and/or any other unrecorded rights (ie. equitable mortgage - see Perry v. Queen, (M.D. Tn. Civil No. 3:05-0599) 2006 U.S. Dist. LEXIS 17120, February 27, 2006 (unpublished); Hensley v. Britt, 1996 Tenn. App. LEXIS 793, No. 01A01-9607-CH-00296, 1996 WL 709375 (Tenn. Ct. App. Dec. 11, 1996)) the scammed homeowners can establish that they had at the time of the relevant conveyances. Lack of participation in the scam, and lack of any actual knowledge thereof, by the subsequent purchasers / encumbrancers is not enough to sustain a claim of bona fide purchaser. See Aslinger v. Price, No. E2006-00029-COA-R3-CV, 2006 Tenn. App. LEXIS 584, (Ct. App. at Knoxville; September 1, 2006), in which a Tennessee appeals court, quoting from earlier Tennessee cases, stated that a subsequent purchaser is:

• "(c)hargeable with notice, by implication, of every fact affecting the title which would be discovered by an examination…of every fact as to which the purchaser, with reasonable prudence or diligence, ought to become acquainted."

The court also points out that "whatever is sufficient to put a person upon inquiry, is notice of all the facts to which that inquiry will lead, when prosecuted with reasonable diligence and good faith." See also: Wash. Mut. Bank v. N.K.T. Land Acquisitions Inc., No. M2007-02040-COA-R3-CV, 2008 Tenn. App. LEXIS 414 (Tenn. Ct. App. at Nashville; July 23, 2008) for a discussion of actual notice, constructive notice, and inquiry notice under Tennessee law, and their interplay with the Tennessee recording statutes.

Inasmuch as the scammed homeowners continued in possession of their homes after being duped by the foreclosure rescue operator, such possession, arguably, could end up creating notice of the fraud which might be imputed to the subsequent purchasers / encumbrancers. Being chargeable, by imputation, with notice of the fraud could then defeat any claim that they are bona fide purchasers / encumbrancers. For cases that support the proposition that possession of real estate by one other than the seller is enough to trigger this imposition of the duty to inquire as to possible unrecorded rights of the possessor, see Bona Fide Purchaser Doctrine, Possession Of Property By Occupants Other Than The Vendor & The Duty To Inquire.

Connecticut Courts On Legal Standing

The stories abound on foreclosure actions where the foreclosing lender was said not to have legal standing to bring the lawsuit.

What follows below are excerpts from decisions of the Connecticut Supreme Court and the Connecticut Appellate Court that describes what standing is, and the importance of having it before walking into a courthouse to initiate a lawsuit. It also addresses the connection, under Connecticut law, between standing, which a plaintiff must have before bringing a lawsuit, and subject matter jurisdiction, which is what a judge must have before rendering judgment in a particular case.(1)

From Webster Bank v. Zak, 259 Conn. 766, 774, 792 A.2d 66 (2002):

• We begin our analysis by underscoring that a party must have standing to assert a claim in order for the court to have subject matter jurisdiction over the claim. Ramos v. Vernon, 254 Conn. 799, 808, 761 A.2d 705 (2000). ‘‘Standing is the legal right to set judicial machinery in motion. One cannot rightfully invoke the jurisdiction of the court unless he has, in an individual or representative capacity, some real interest in the cause of action, or a legal or equitable right, title or interest in the subject matter of the controversy.’’ (Internal quotation marks omitted.) Ganim v. Smith & Wesson Corp., 258 Conn. 313, 347, 780 A.2d 98 (2001).

• ‘‘This court has often stated that the question of subject matter jurisdiction, because it addresses the basic competency of the court, can be raised by any of the parties, or by the court sua sponte, at any time.’’ Daley v. Hartford, 215 Conn. 14, 27–28, 574 A.2d 194, cert. denied, 498 U.S. 982, 111 S. Ct. 513, 112 L. Ed. 2d 525 (1990). ‘‘[T]he court has a duty to dismiss, even on its own initiative, any appeal that it lacks jurisdiction to hear.’’ Sasso v. Aleshin, 197 Conn. 87, 89, 495 A.2d 1066 (1985). Moreover, ‘‘[t]he parties cannot confer subject matter jurisdiction on the court, either by waiver or by consent.’’ Sadloski v. Manchester, 228 Conn. 79, 83, 634 A.2d 888 (1993), on appeal after remand, 235 Conn. 637, 668 A.2d 1314 (1995).

• ‘‘Standing [however] is not a technical rule intended to keep aggrieved parties out of court; nor is it a test of substantive rights. Rather it is a practical concept designed to ensure that courts and parties are not vexed by suits brought to vindicate nonjusticable interests and that judicial decisions which may affect the rights of others are forged in hot controversy, with each view fairly and vigorously represented.’’ (Internal quotation marks omitted.) Harris v. New Milford, 259 Conn. 402, 409–10, 788 A.2d 1239 (2002).

****************

From Seguro v. Cummiskey, 82 Conn. App. 186, 199, 844 A.2d 224 (2004):

• A party must be aggrieved to have standing to invoke the jurisdiction of the court. In re Shawn S., 262 Conn. 155, 164–65, 810 A.2d 799 (2002). ‘‘The fundamental test for determining aggrievement encompasses a well settled twofold determination: first, the party claiming aggrievement must successfully demonstrate a specific, personal and legal interest in [the subject matter of the challenged action] . . . . Second, the party claiming aggrievement must successfully establish that this specific personal and legal interest has been specially and injuriously affected by the [challenged action].’’ (Internal quotation marks omitted.) Cardi Materials v. Connecticut Landscaping Bruzzi Corp., 77 Conn. App. 578, 581, 823 A.2d 1271 (2003).

****************

Inasmuch as the state high court makes the observation that a court in Connecticut has no subject matter jurisdiction over a case when the plaintiff lacks standing, trial court judges may want to consider their judicial obligation to determine whether a foreclosing lender has any business appearing in their courtroom by carefully scrutinizing its court filings before granting a judgment in the case, even when the defendant/homeowner does not make an appearance in court. After all, a foreclosure judgment from a court that has no jurisdiction over the subject matter is vulnerable to being subsequently voided;(2) and if voided after a foreclosure sale has already taken place, leaves the foreclosure sale (as well as any and all subsequent sales of the subject property to innocent purchasers) also potentially vulnerable to being voided.

In states where a plaintiff's lack of standing to bring a foreclosure action leaves a court without subject matter jurisdiction to hear such an action, it should become the preferred practice for lower court judges to carefully scrutinize the plaintiff's right to bring the action from the outset.(3) Taking this approach will avoid creating the problem of unwinding a potentialy big mess down the road, when an attorney representing the homeowner files a motion (months, if not years, down the road) to declare void the foreclosure judgment, the foreclosure sale, and any title transfers subsequent to the foreclosure sale to innocent purchasers.

Those outside the state of Connecticut may wish to review their applicable laws to determine if a plaintiff's lack of standing leaves a court without subject matter jurisdiction.

****************

(1) The issue of standing was also recently addressed by a Connecticut lower court in which it stopped a foreclosing lender from proceeding with a sale because of its lack of standing at the time the foreclosure action was filed. See Aurora Loan Servs., LLC v. Nuzzo, NNHCV075011888S Superior Court of Connecticut, Judicial District of New Haven at New Haven, 2008 Conn. Super. LEXIS 3002 (November 13, 2008) (access may require free registration at LexisOne Free Case Law).

(2) In Bicio v. Brewer, AC 25462 , 92 Conn. App. 158; 884 A.2d 12; 2005 Conn. App. LEXIS 458, (Ct. App. Ct. 2005), the Connecticut Appellate Court quoted from its earlier decision in General Motors Acceptance Corp. v. Pumphrey, 13 Conn. App. 223, 229, 535 A.2d 396 (1988), in which it indicated that "no principle is more universal than that the judgment of a court without jurisdiction is a nullity . . . . Such a judgment, whenever and wherever declared upon as a source of right, may always be challenged. . . . If a court has never acquired jurisdiction over a defendant or the subject matter . . . any judgment ultimately entered is void and subject to vacation or collateral attack." (Citation omitted; internal quotation marks omitted.)

(3) For an example of one Brooklyn, New York judge who has shown no reluctance in booting "standing-lacking" lenders and their attorneys from his courtroom, see Brooklyn Trial Judge Nixes "Rubber Stamp Method" Of Adjudicating Foreclosures; Lenders, Lawyers Lacking Legal Standing To Bring Actions Get Bounced.

For a related post on this issue, see Thousands Of Foreclosures Are Void, Says Massachusetts Class Action Demanding Lenders & Their Lawyers Prove Note Ownership. KappaMtgDocsMissing SloppyForeclosuresAlpha

Sarasota Attorney Cops Plea In Mortgage Fraud Scheme Involving $82M+ In Fraudulent Loan Activity

From the U.S. Attorney's Office (Tampa, Florida):

• United States Attorney A. Brian Albritton [last week] announced that defendant JOHN A. YANCHEK, age 49, a resident of Sarasota, Florida, and a practicing attorney licensed by the State of Florida, pleaded guilty [...] to three counts of a 47-count Indictment charging four individuals with conspiracy, making false statements in connection with bank loans, scheming to defraud several FDIC - insured banks, and money laundering. [...] The total face amount of the commercial loans fraudulently obtained from seven banks was $82.7 million.

For more, see Sarasota Attorney Pleads Guilty In $82.8 Million Mortgage Loan Fraud.

Central Florida Chief Judge Revokes "Phone Privileges" For Foreclosure Attorneys Due To Actions Of Sloppy "Foreclosure Mills"

In Bradenton, Florida, the Bradenton Herald reports:

• The area’s top judge has lost patience with so-called foreclosure mills so he’s ordering them to appear in court. Non-local law firms that specialize in mass foreclosure filings have ignored local court procedures, filed incomplete or inaccurate court documents and “widely abused” the privilege of appearing at court hearings by telephone, 12th Judicial Circuit Chief Judge Lee Haworth said. He’s cracking down, requiring lawyers in foreclosure cases filed in Manatee, Sarasota and DeSoto counties to attend all foreclosure-related hearings in person.

***

• While the order affects all lawyers in foreclosure cases within the district, it’s pointed directly at so-called foreclosure mills that file the bulk of local cases. Those firms’ heavy workloads often result in incomplete court files and missed court hearings, causing delays and wasting court resources, Haworth said.(1)

***

• He declined to name the firms that have drawn his ire. But court records show the biggest filers of foreclosure actions in Manatee include Florida Default Law Group in Tampa; the David J. Stern law firm in Plantation; and the Marshall C. Watson law firm in Fort Lauderdale.

For more, see Area's top judge cracks down on foreclosure mills.

See also, Sarasota Herald Tribune: Judge requires lawyers to show up for foreclosure hearings.

For an earlier report on this story and links to the local court procedures established for foreclosure actions filed in Florida's 12th Judicial Circuit, see The Sloppiness Continues For Attorneys Representing Foreclosing Lenders; "They Are Totally Disorganized!" Says Florida's 12th Judicial Circuit Chief.

Go here for other posts on the foreclosure mediation program in Florida's 12th Judicial Circuit (Manatee, Sarasota, and Desoto Counties).

(1) For posts that reference the failure of mortgage lenders and their attorneys to file the proper paperwork when bringing foreclosure actions, Go Here, Go Here, Go Here, Go Here, and Go Here. KappaMtgDocsMissing

Florida AG Shuts Down Tampa-Area Foreclosure Rescue Operator; Accused Of Taking Upfront Fees In Violation Of New Law

From the Florida Attorney General's Office:

• Attorney General Bill McCollum [Tuesday] announced that his Economic Crimes Division has reached a settlement with a Tampa business engaged in foreclosure rescue services over allegations the conduct violated the newly enacted Foreclosure Fraud Protection Act.(1) Attorney Debt Services, LLC, which conducted business under the name HomeKeeper USA, will cease its operations until it is able to fully comply with the law. Additionally, it will pay $10,000 to the Attorney General's Seniors vs. Crime program.

• A four-week investigation by the Economic Crimes Division revealed Attorney Debt Services was allegedly providing foreclosure rescue services to homeowners who were in various stages of the foreclosure process. The company allegedly offered, for an advance fee, to assist consumers in arranging an alternative payment plan with the homeowners' lender for the purpose of avoiding foreclosure.

For more, see Foreclosure Rescue Company Shut Down for Fraud (First company closed under Attorney General's new foreclosure rescue fraud prevention law).

Go here for the the settlement agreement between the Florida AG and Attorney Debt Services, LLC, dba HomeKeeper USA and James T. Pappas.

(1) Florida Statute Sec. 501.1377.

County Quashed In Attempt To Take 8-Acre Property From Owner Over Failure To Include $24 Interest With Delinquent Tax Payment, Rules NY Appeals Court

In Canandaigua, New York, the Daily Messenger reports:

• A Monks Road property owner has won his court case against Ontario County. The state Appellate Division’s Fourth Department ruled Friday that Bruce Middlebrook should be allowed to keep his 8-acre wooded parcel the county had scheduled to be auctioned off last May for unpaid property taxes.

• “The record establishes” Middlebrook “in fact paid his property taxes by the deadline provided ... in order to avoid losing his property,” stated the court decision. Even assuming the property owner received notice he owed roughly $24 in interest on the delinquent property taxes, “that minor amount of interest would result in a disproportionately harsh result,” concluded the court.

• “We are pretty happy,” said Middlebrook’s attorney, David Whitcomb with Muehe and Newton, LLP in Canandaigua. He said the panel of seven judges ruled unanimously, recognizing his client shouldn’t lose his property over $24.

For more, see Canandaigua landowner wins county foreclosure case.

For the court decision, see Matter of County of Ontario, 2009 NY Slip Op 00912 (NYS Sup. Ct. App. Div., 4th Dept., February 6, 2009).

For an earlier report on this story, see County, homeowner battle over auction.

Fannie, Freddie Trash Requirement That Homeowners Sign Away Their Rights To Sue In Order To Obtain Loan Modifications

The Washington Independent reports:

• [C]onsumer groups and Rep. Barney Frank (D-Mass), the chairman of the House Financial Services Committee, were not aware that the waivers [requiring homeowners to sign away their rights to sue, in order to get their loan payments restructured on more affordable terms by Fannie Mae and Freddie Mac] were included in the loan modification agreements until after TWI’s story ran on Jan. 15. The story was brought to Frank’s attention during an on-camera interview with Talking Points Memo reporter Elana Schor.

• “I did not know until you just told me that Fannie and Freddie were [requiring mortgage holders to sign waivers],” Frank said in the interview. “And I can pretty much guarantee you that we will have put an end to that within a few days.

• Since then, the waivers have been eliminated, said Brad German, a spokesman for Freddie Mac. Fannie Mae spokesperson Amy Bonitatibus also confirmed the waivers have been removed. New sample modification agreements - without the waivers - were posted on Freddie Mac’s website during the last week of January, German said. Both Fannie and Freddie use the same agreements.

For more, see Borrowers to Keep Legal Rights Under Foreclosure Plan (Fannie, Freddie Requirement That Forced Mortgage Holders to Sign Legal Waivers Eliminated).

Title Company Owner, Appraiser, Straw Buyer Recruiter Sentenced In Mortgage Scam Involving 55 Condos Netting $18.5M

In Miami, Florida, WTVJ-TV Channel 6 reports:

• Authorities say the owner of a West Palm Beach real estate title company has been sentenced to five years in prison for her part in a a mortgage fraud scheme. Federal prosecutors say Evelyn Rivera, a licensed title agent and owner of Asset Title LLC, received her sentence on Friday.

• Rivera had previously pleaded guilty to participating in a scheme to net $18.5 million from fraudulent mortgages on 55 Fort Lauderdale condominium units. Authorities discovered the fraud after about $690,000 in fraudulent mortgage loans had been issued on two units.

• Mike Acosta, a licensed property appraiser, and William Louisma, a recruiter of straw buyers, were also convicted for their roles in the scheme. Acosta was sentenced to 41 months in prison, and Louisma was sentenced to 46 months.

Source: Title Company Owner Sentenced For Mortgage Fraud.

For the U.S. Attorney's press release, see West Palm Beach Title Agent Sentenced On Mortgage Fraud Charges.

Colorado Regulators Seek License Surrender From Two Brokers Implicated In Alleged Mortgage Scam; Case Referral To Criminal Prosecutors A Possibility

In Colorado Springs, Colorado, The Gazette reports:

• A mortgage meltdown on a Colorado Springs street where five houses went into foreclosure amid allegations of fraud has resulted in disciplinary action against two Colorado Springs real estate agents. The Colorado Real Estate Commission voted to ask Stephen Teegardin, of Teegardin Realty & Investments, to surrender his license and pay a $25,000 fine for his "dishonest dealings" and "unworthiness or incompetency" in the Balsam Street sales, state regulators said Monday. The commission also asked for the license of his son, Robert B. Teegardin, and fined him $20,000.

• The Teegardins are accused of being key players in a mortgage fraud scam in which straw buyers were recruited and paid a kickback to buy houses at inflated prices that they never intended to live in. [... Agency investigations and compliance director Marcia] Waters said the case could be referred to the Fourth Judicial District Attorney's Office for consideration of criminal complaints once her agency's case is further along.

For more, see Two Springs real estate agents disciplined in fraud case.

Straw Buyer Cops Plea In Alleged DC-Area Mortgage Fraud Scam Involving 25 Homes; Two Others Face Charges

The D.C. Examiner reports:

• Federal authorities say they’ve broken a nearly $5 million real estate scheme in which several suspects allegedly filed false mortgage documents so they could buy about 25 properties in the Washington area, only to let many slip into foreclosure.

• So far, at least one member of the scheme, Sabrina Weinberg of Bethesda, has pleaded guilty to mail fraud for buying seven properties between February and October 2006. Weinberg bought the homes using $4.6 million in mortgage loans obtained by filing fraudulent loan applications, court documents filed in Maryland’s federal court said.

• At least two other suspects, Terrence White and Timothy Reed, have been charged with mail fraud for their alleged roles. Four other suspects are alluded to in charging documents, but their names are not included. According to prosecutors, Reed and White would entice straw buyers such as Weinberg by offering them $10,000 per property purchase to lie on loan applications.

For more, see 1 convicted, 2 charged in $5 million false mortgage document scheme.

For story update, see U.S. Attorney's press release: A Beltsville Leader In Mortgage Fraud Scheme Pleads Guilty (Paid Over 15 Straw Purchasers and Used False Documents to Buy 25 Properties; Received Over $3.8 Million in Fraud Proceeds).

Legal Services Firm Files Housing Discrimination Suits Alleging Bias Against Families With Kids; Landlords Accused Of Failure To De-Lead Apartments

In Worcester, Massachusetts, the nonprofit legal services firm Legal Assistance Corporation of Central Massachusetts (LACCM) last month filed two housing discrimination lawsuits on behalf of tenants alleging unlawful housing practices by steering parents of minor children away from apartments, or refusing to show them apartments in an attempt to avoid the cost of remediating potential lead-based paint issues in the apartments.

• [L]egal Assistance Corp. [...] stated that according to the 2000 Census, nearly 85 percent of the houses in Worcester were built before 1978, and most likely contain lead paint. A landlord is required to make an apartment safe from lead paint if the tenant family has a child six years or younger living in the apartment, Legal Assistance Corp. said.

• Some landlords may decide not to rent to families with young children in an attempt to avoid the cost of deleading, the plaintiff stated. It is illegal under state and federal fair housing laws for an owner or realty agent to refuse to rent to someone because of their familial status, Legal Assistance added.

For more, see:

• Realty firm facing suit over rentals (Families allegedly told children not allowed),
• Legal Assistance Corporation sues Worcester landlords for illegal housing discrimination.

Sample Foreclosure Defense Legal Documents

For those who want some idea of what the legal documents in a foreclosure action look like, Broken Credit Blog has made available some of the documents filed in a Duval County, Florida case involving foreclosure defense attorney April Charney from Jacksonville Area Legal Aid. Among the documents that were filed on behalf of the homeowner facing a foreclosure action are:

• Motion to Enlarge Time,
• Motion to Dismiss Complaint,
• Defendant’s Motion to Enlarge Time to Respond to Amended Complaint,
• Defendant’s Answer to Amended Complaint; Motion to Dismiss; Affirmative Defenses; Counterclaims; and Demand for Jury Trial,
• Defendant’s Memorandum in Opposition to Plaintiff’s Motion to Strike.

For links to all of the 14 documents currently available on Broken Credit Blog, see Anatomy of a Florida Foreclosure Defense.

See also: Foreclosure defense a popular subject at Bar convention:

April Charney's foreclosure defenses, many based on Florida court rulings, as outlined in her materials, include:

• Failure to produce original note and mortgage or to re-establish.
• Fraud, including misrepresentation or omission of material fact made with intent to deceive.
• Duress, or unjustified pressure to sign a mortgage, particularly in a home improvement or solicitation setting or upon a refinancing.
• Unconscionability, when the mortgage terms are unreasonably favorable to the lender (must be proven procedurally and substantively).
• Unfair and unacceptable loan servicing, failure to follow HUD requirements for residential single-family mortgage lending and servicing.
• Scrutinizing foreclosure attempts under debt collection laws.

********************

Additional legal documents that can be helpful in fighting off foreclosure are available online courtesy of the Consumer Warning Network:

Forms that can be used when a foreclosure lawsuit has already been filed against a homeowner:

• Request for Production of Document, a fill-in-the-blank legal request to the foreclosing lender asking that the original note be produced, before it can proceed with the foreclosure,
• Motion to Compel to be filed with the court and request that the court set a hearing on your motion if the lender’s attorney does not respond within 30 days to the Request for Production of Document. That, in effect, asks the judge to order the lender to produce the documents.

If a foreclosure action has not yet been filed:

• Letter to the Lender, a fill-in-the-blank form which also requests they produce the original note, before taking foreclosure action against you.

For more, including informational videos, see Produce The Note “How-To."

For those in states that do not require a lender to initiate foreclosure proceedings in court to carry out a foreclosure sale, see How to use "Produce the Note” in Non-judicial Foreclosure States.

*******************

Disenfranchised Homeowners Blog offers the following foreclosure legal document which may be helpful:

• Complaint For Recission Of Mortgage And Damages.

**************

From the Legal Advocacy Center of Central Florida, Inc. and the Volunteer Lawyers Project of Community Legal Services of MidFlorida, Inc.:

• Basic Foreclosure Litigation Defense Manual.

Alleged 1031 Exchange Scam Leaves Real Estate Investors With Big Tax Bill & No Money To Pay It With

The New York Post reports:

• Federal authorities are investigating a Virginia-based finance company that went belly-up last year, sticking hundreds of real-estate investors with millions of dollars in losses, The Post has learned. The 440 investors had parked the proceeds from their real-estate sales with LandAmerica 1031 Exchange Services Inc. in hopes of delaying capital gains taxes - only to find their entire investment nest egg missing.

***

• And worse, the Internal Revenue Service wants those burned in the failure of LandAmerica and other so-called "qualified intermediaries" to pay taxes on the profits they no longer have. [...] The LandAmerica failure and FBI probe highlight a growing issue for 1031 accounts. When Congress created these so-called "Starker exchanges," they forgot to regulate the companies that run the 1031 accounts.

For more, see Helter Shelter (Feds Probing Tax Haven 'Ponzi Scheme').

Go here for other posts on problems with 1031 exchange intermediaries. EscrowRipOffAlpha

Title Insurance: What Risks Does It Protect A Property Owner Against?

A recent article by the Kaua‘i, Hawaii Board of Realtors (appearing in TheGardenIsland.com) gives a basic explanation of what risks a title insurance policy actually insures a real estate buyer against.

• [A]lmost every parcel of land has had many owners. What they did or did not do can affect title to the land. Have assessments and taxes been paid? Were there lawsuits or judgments against former owners? Does a contractor or a spouse or utility company have any rights?

• Title losses arise from three principal sources: (1) Errors in searching the records, (2) errors in interpreting the legal effect of those records, (3) facts outside the records, known as “off-record risks.”(1)

• The title insurance company protects itself and the policyholder in the case of the first two sources of risks set out above by employing trained, competent searchers and examiners who are qualified to search and interpret records.

• There are, however, many sources of title defects outside the record, any one of which may also involve loss of title. The owner must assume these hidden defects if the owner does not possess a title insurance policy. Some of these off-record risks are: fraud, forgery, false impersonation, alteration, copyists’ errors, acts of minors, insanity, rights of unrevealed spouses and children, and void judgments(2) and decrees.

For more, see Title insurance: Do you need it?

Go here for other posts involving legal issues related to title insurance.

(1) A list of 35 off-record risks, or "hidden hazards," that a title insurance policy protects a homeowner and mortgage lender against are (1) false personation of the true owner of the land, (2) forged deeds, releases, etc., (3) instruments executed under fabricated or expired power of attorney, (4) deeds delivered after death of grantor or grantee, or without consent of grantor, (5) deeds to or from defunct corporations, (6) undisclosed or missing heirs, (7) misinterpretation of wills, (8) deeds by persons of unsound mind, (9) deeds by minors, (10) deeds by aliens, (11) deeds by persons supposedly single but secretly married, (12) birth or adoption of children after date of a will, (13) surviving children omitted from a will, (14) mistakes in recording legal documents, (15) want of jurisdiction of persons in judicial proceedings (ie. where a court lacks subject matter jurisdiction over a case, or where it lacks personal jurisdiction over a defendant, for example, failure to properly serve a defendant with legal process), thereby leading to judgments that are either void or voidable, (16) discovery of will of apparent intestate, (17) errors in indexing, (18) falsification of records, (19) capacity of foreign fiduciaries, (20) claims of creditors against property sold by heirs or devisees, (21) deeds in lieu of foreclosure given under duress, (22) ultra vires deed given under false corporate resolution, (23) easements by prescription not discovered by a survey, (24) deed of community property recited to be separate property, (25) errors in tax records (ie. listing payment against wrong property), (26) deed from a bigamous couple, (27) defective acknowledgements (ie. notary public screw-ups when notarizing legal documents, (28) federal condemnation without filing notice, (29) descriptions apparently, but not actually, adequate, (30) corporation franchise taxes, a lien on all corporate assets, (31) erroneous reports furnished by tax officials, (32) administration of estates of persons absent but not deceased, (33) undisclosed divorce of spouse who conveys as consort's heir, (34) marital rights of spouse purportedly, but not legally, divorced, (35) duress in execution of instruments.

(2) With all the foreclosure sales that have already taken place where the foreclosing lender lacked standing to bring the action (which, depending on the law of the particular state in which the property is located, may mean that the court granting the judgment might have lacked jurisdiction over the subject matter of the case, which would consequently make the judgment void - see #15 in footnote 1, above), there are plenty of void foreclosure judgments flotaing around out there. I suspect that the issue of void foreclosure judgments and the complications relating to the legal title to the foreclosed real estate will begin rearing its ugly head as foreclosure defense attorneys begin bringing motions to void these judgments on behalf of their clients. See Thousands Of Foreclosures Are Void, Says Massachusetts Class Action Demanding Lenders & Their Lawyers Prove Note Ownership. title insurance legal issues

NACA's "Predators Tour" Targets Financial Giants As Activists Protest At CEOs' Homes; Dump Furniture On Front Lawn

In Greenwich, Connecticut, the Stamford Times reports:

• Between 350 and 400 people, most of them members, staff or volunteers for the [Neighborhood Assistance Corporation of America], converged outside the Greenwich home of William Frey, manager of Greenwich Financial Services, at around 1 p.m. [Sunday].

• Wearing bright yellow hats and t-shirts with pictures of sharks and the words "Stop Loan Sharks," protesters had already targeted the home of John Mack, CEO of Morgan Stanley, at 6 Club Road, Rye, N.Y. earlier in the day.

• At Frey's house, 10 Glenville Road, Greenwich, they chanted slogans such as "Fix our loans, save our homes." They placed furniture on the lawn to symbolize the dislocation felt by people who have had their homes foreclosed upon and been evicted, their belongings tossed outside by state marshals.(1)

For more, see Mortgage Madness: Protest targets 'predator.'

(1) Called the "Predators Tour" these actions were the start of NACA's "accountability campaign," an aggressive, confrontational protest aimed at several top executives of companies that refuse to allow NACA to renegotiate the terms of loans on behalf of members, according to NACA CEO Bruce Marks.

NYC Attorney Found Guilty For Role In Illegal Flipping, Foreclosure Rescue Scam; Acted As Title Agent; Accused Of Keeping Lenders In The Dark

In Brooklyn, New York, the New York Law Journal reports:

• The bogus world of a Brooklyn, N.Y., attorney who built a profitable business on title insurance while earning high fees on real estate closings came crashing down on Friday as a federal jury convicted him in a subprime mortgage scam. Alexander M. Kaplan, 34, of Lerner & Kaplan, sat stoically at the defense table while a jury of 10 women and two men pronounced him guilty on all 18 counts in an indictment charging him with conspiracy and bank, mail and wire fraud.

***

• Kaplan's role, they proved, was to keep lenders in the dark by representing the bank, the buyer and the seller in transactions where mortgage brokers, particularly lead actor Alexander Lipkin, would use the identities of innocent straw buyers to obtain huge loans on properties. Sometimes, they would flip the properties within weeks using even more phony documents.

***

• "He [engaged in a massive fraud] by telling lies to banks over and over again. He lied about who the real purchasers were and he lied about the amount of money he disbursed from the loan proceeds," Weitzman said. "His lies were all intended to protect his criminal partners and to make sure the real estate transactions looked legitimate."

For more, see N.Y. Attorney Convicted of Mortgage Fraud.

For the indictment, see U.S. v. Kaplan, et al.

Sixth Defendant Falls In Maryland-Based Equity Stripping Foreclosure Rescue Scheme; Worked As Loan Processor, Acted As Straw Buyer

From the U.S. Attorney's Office for the District of Maryland:

• Chandra Jones, age 31, of Lanham, Maryland, pleaded guilty today to conspiracy to commit mail and wire fraud in connection with a mortgage fraud scheme that falsely promised to help homeowners facing foreclosure keep their homes and repair their damaged credit, announced United States Attorney for the District of Maryland Rod J. Rosenstein.

***

• As a result of this scheme, the total loss attributable to Chandra Jones, including the estimated losses to the mortgage lenders, is $4,189,283.86. [...] Chandra Jones, the daughter of co-defendants Jennifer and Clifford McCall, is the sixth defendant to plead guilty in the Metropolitan Money Store mortgage fraud scheme.(1)

For the U.S. Attorney's press release, see Vice President Of Financial Services Firm Pleads Guilty In Metropolitan Money Store Fraud Scheme (Responsible for Over $4 Million in Losses Under the Scheme).

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

(1) Jennifer McCall, age 47, of Ft. Washington, Maryland, a chief executive officer of Metropolitan Money Store and owner of JC and JC Investments LLC; Katisha Fordham, age 35, of Washington, D.C.,a loan processor at the Metropolitan Money Store; Richard Allison, age 37, of Camp Springs, Maryland, an attorney and employee of the U.S. Census Bureau; Clifford McCall, age 47, of Lanham, Maryland, president of Burroughs & Smythe Financial Services, Inc., based in Lanham and a director of the Fordham & Fordham Investment Group, Ltd., a foreclosure consulting and credit servicing business based in Lanham and Greenbelt, Maryland and Carlisha Dixon, age 31, of Hyattsville, Maryland, vice president and a director of Burroughs & Smythe Financial Services, Inc.; each pleaded guilty to the conspiracy and are facing a maximum sentencing of 30 years in prison. JoyJackson

NJ Class Action Accuses Closing Agent, Title Insurers Of Clipping Homeowners With Inflated Recording Fees

The Philadelphia Inquirer reports:

• Title insurance companies and their agents charged thousands of New Jersey home buyers more than allowed by law to record deeds and mortgages, according to a lawsuit filed in federal court in New Jersey. Hundreds of thousands of buyers would be reimbursed if the suit, filed last month, succeeds, Esther Berezofsky, a lawyer in the Cherry Hill office of Williams, Cuker, Berezofsky, estimated yesterday.

• "Initially, we thought it was just a single occurrence of overcharging. Then we started investigating, and we discovered it was rampant," said Berezofsky, whose firm worked with O'Conner, Parsons & Lane, of Westfield, N.J.

• The 50-page lawsuit details eight cases of buyers who paid higher fees at settlement than the settlement agents paid to the county recording offices. The lawsuit alleges that settlement agents pocketed the difference. The lawsuit, [...] covers consumers who have bought residential real estate in New Jersey since Jan. 22, 2003.

For more, see Suit alleges title insurance fraud in New Jersey.

New Jersey home buyers who want to know whether they were overcharged fees at closing or who want to provide information can visit www.njtitlelawsuit.com.

Go here for other posts involving legal issues related to title insurance.

Thanks to Bill Collins of Crossroads Abstract, Rochester, NY for the heads-up on this story. title insurance legal issues

Foreclosure Eviction Of Residential Tenants "Almost Always Illegal In New Jersey," Says State Public Advocate

In Trenton, New Jersey, Ronald K. Chen, the Public Advocate for the State of New Jersey reminds state residents of the rights of tenants in foreclosed residential property in New Jersey. He writes in the Asbury Park Press:

• [A]t the Department of the Public Advocate, we have learned that tenants who rent properties that are subject to foreclosure are being kicked out of their homes when the bank takes over the property.

• Make no mistake: This practice is almost always illegal in New Jersey. In 1994, the New Jersey Supreme Court(1) held that the New Jersey Anti-Eviction Act protects most tenants from eviction even when the property where they live is in foreclosure or has been foreclosed. In other words, under New Jersey law, a tenant in good standing comes with the property when the property changes hands because of a foreclosure.

• Moreover, the Unlawful Eviction Act of 2006 makes it an offense under the criminal justice code for a person who has been forewarned by a public official even to attempt to evict a tenant except by lawful court proceedings.

For more, see CHEN: Tenants cannot be forced out in foreclosures.

For more from the New Jersey Department of the Public Advocate, see:

• Tenants in foreclosed properties have rights – cannot be evicted due to foreclosure under NJ law,
• The Rights of Tenants During Foreclosure.

(1) Chase Manhattan Bank v. Josephson, 135 N.J. 209 (1994).

The breadth of the tenant protections in the New Jersey state law was demonstrated in a 2007 decision of the New Jersey Supreme Court. In that case, the state high court, in reversing a ruling of the state appeals court, ruled that a daughter of a deceased Section 8 tenant was entitled to the protections of New Jersey's Anti-Eviction Act, N.J.S.A. §§ 2A:18-61.1 to -61.12, as she was a functional co-tenant, showed continuous residency, and was a substantial contributor toward satisfaction of the tenancy's financial obligations, which the landlord acknowledged and acquiesced. Note that the daughter was not actually named as a tenant on the lease. Maglies v. Estate of Guy, 193 N.J. 108; 936 A.2d 414; 2007 N.J. LEXIS 1436 (2007).

For a discussion of the New Jersey Anti-Eviction Act, see Legal Services of New Jersey's Amicus Brief filed in Maglies v. Estate of Guy. SkimmingKappaRent

Pennsylvania Woman Cops Plea To Pocketing Refinance Proceeds After Forging Legal Documents On Property Owned By Estranged Hubby, Mother In Law

In Norristown, Pennsylvania, The Times Herald reports:

• A 41-year-old Conshohocken woman pleaded guilty to forging her estranged husband and mother-in-law’s names on mortgage applications and other legal documents. Andrea Lamazza took out three separate mortgages worth a total of $446,350 between 2002 and 2005 without the knowledge of her husband, Kenneth Lamazza, and his mother, Sarah Lamazza, according to court papers. The defendant has also added her name to the deed of a house her husband and mother-in-law owned, and illegally executed power of attorney to refinance real estate, according to authorities.

For more, see Woman admits to mortgage fraud.

Go here, Go here, Go here, go here, go here, and go here for other posts related to deed or refinancing scams by forgery, swindle, etc. DeedGammaTheft

Rochester Landlord Accused Of Stiffing City, Tenants

In Rochester, New York, WHEC-TV Channel 10 reports:

• The city of Rochester is facing a $32-million dollar shortfall this year but I-Team 10 has discovered one way the city could shave half a million from that number. If one of the landlords in the city would pay his taxes that money could aid the shortfall.

***

• But not only does [the landlord] owe the city money, he owes many of the people who rented from him as well. There are more than a dozen judgments in small claims court, many from former tenants who say he has refused to return their security deposits.

For more, see I-Team 10 investigation: Landlord tardy on taxes and tenants' security deposits.

Florida Man Fearing Foreclosure Arrested For Operating Indoor Pot Farm In His Home

Buried at the end of an unrelated story in Florida Today is this blurb about an apparently financially strapped Palm Bay, Florida homeowner:

• [L]ast week, a recently laid-off delivery man was arrested on cultivation charges after police discovered 57 small marijuana plants in his home. The man told police he was refitting his house to grow marijuana to stay out of foreclosure.(1)

Source: Police: Pot plants found in teen's bedroom.

(1) A less risky way to deal with his mortgage lender to avoid losing his home may have simply been to go to court and Fight Foreclosure: Make ‘Em Produce The Note! "Foreclosure mill" attorneys representing lenders appear to be fumbling around with the paperwork required to be filed in court when bringing foreclosure actions in many cases. KappaMtgDocsMissing

Elderly Texas Woman's Home Accidentally Sold Out From Under Her; Bank Admits, Straightens Out Error

In North Texas, WFAA-TV reports on an 88-year old woman behind on her mortgage payments and threatened with foreclosure. With the help of her son, she was able to obtain a payment plan with the lender, Wahington Mutual/Chase, back in December. Despite the arrangement, the lender allowed the home to be sold at a foreclosure sale anyway, albeit accidentally. The woman found out about the sale when the new buyer appeared at her front door and introduced himself. Reportedly, the bank's attorney advised the homeowner that the sale proceeded in error, that he sent the new buyer his money back, and that she'll get to keep her house.(1)

For the report, see Home of woman, 88, mistakenly sold at foreclosure auction.

Go here for other posts on lender screw ups.

(1) This story serves as a reminder that, even if a homeowner facing foreclosure is lucky enough to reach a payment arrangement with a lender, the homeowner still has to assure him/herself, through the court system and by obtaining confirmation from the lender's local foreclosure attorney, that the foreclosure action has either been cancelled, or at least been placed in abeyance pending the successful completion of the payment arrangement. At 88 years of age, this lady could have literally been "buried" by a surprise like this. ForeclosureLockOuts

Beware Of Finacially Shaky Auto Dealers Failing To Pay Off Car Loans On Trade-Ins

The Associated Press reports:

• The national wave of auto dealership closures has come crashing down on thousands of people who are on the hook for used-car loans that dealers were supposed to absolve.

• When a car buyer still owes money on a vehicle he is trading in, the dealer promises to pay off the outstanding loan, then resells the vehicle. But as more dealers go out of business, some are sticking consumers with the bill. Lenders can then go after the previous owner who thought the debt was paid, or repossess the car from the new owner who assumed it came with clear title.

***

• "It's becoming a serious problem because the consumer, through no fault of their own, may be facing financial ruin just because they purchased a car," [California state Senator Ellen] Corbett said.

For more, see Folding dealers shock car buyers with unpaid liens.

Real Estate Agent Discovers "Bomb-Like" Device In Foreclosed Home

In Macon County, North Carolina, WLOS -TV Channel 13 reports:

• A real estate agent makes a startling discovery inside a foreclosed Macon County home. Dave Rowland with Prudential Realty found a bomb-like device and a box labeled "High Explosives" in the home on Silver Spruce Lane. A bomb squad was called in to take a look but didn't find anything illegal. However, authorities still have questions like what the owner planned to do with the device.

For more, see Bomb-Like Device Discovered in Foreclosed Home.

Miami Community Activist Continues "Vacant Home-Finding" Service For Homeless

In Miami, Florida, WTVJ-TV Channel 6 reports:

• With the number of foreclosures continuing to rise in South Florida, squatting has become a growing trend among the area's homeless. "I had to squat because nobody gave a squat," said 'Mary.' We're calling her 'Mary' and concealing her identity because she's a squatter. She lost her job and took up residence in this vacant foreclosed house.

***

• Community activist Max Rameau placed Mary in the home through his organization, Take Back the Land. "Our role is to identify these places and make them available for people who need places to stay, and that's what we do," said Rameau. He's placed seven such families in foreclosed homes.

For more, see With Growing Number Of Foreclosures, Homeless Turning to Squatting (read text) (watch video). squatter foreclosure zebra

Ohio Town Stuck Holding $11K Demolition Bill After Tearing Down Arson-Damaged Home Currently In Foreclosure

In Sylvania Township, Ohio, The Toledo Blade reports:

• More than two years after it partially burned in a suspicious fire, a derelict and decaying house [...] was torn down last week — to neighbors’ delight. [Township trustees] reiterated that the path to demolition was a tortuous one, complicated by the arson investigation, an insurance company’s resulting refusal to pay for repairs, and a federal lien placed on the property that wasn’t released until last spring.

***

• Yet another complication involved the mortgage on the property. The institution that held it failed and Deutsche Bank National Trust Co., which assumed the mortgage, filed a foreclosure complaint three months ago in Lucas County Common Pleas Court.

***

• The township is paying the demolition’s $11,000 bill, which will include removing the foundation, filling in the basement, and seeding the vacated space in the spring, Ms. Liedel said.

For the story, see Decrepit house demolished (Sylvania Township responds to neighbors’ concerns). BetaVacantForeclosure

Vacant Home Unexpectedly Torn Down Without Demolition Permit Four Days Before Foreclosure Sale; Owner Faces $5K Fine

In Monsey, New York, The Journal News reports:

• A heap of wooden shards and the scarred trunks of cedar trees were all that remained of a house at 1 Carlton Road. Two residents of the neighborhood called The Journal News on Monday, concerned that the house had been knocked down at dusk on Sunday without a permit and before natural gas service was terminated.

***

• While no utilities were still being delivered to the house,(1) it was indeed torn down without a demolition permit, the town of Ramapo confirmed after a reporter's call about the incident and the residents' concerns. The demolition occurred four days before the property was to be auctioned after a mortgage default.

For more, see Ramapo house demolished before Thursday auction.

For story updates, see:

• Sale of wrecked Monsey house postponed,
• House demolition a mystery to resident.

(1) According to the story, it appeared that the house had not been occupied for some time. Water service was terminated in 2007, followed by gas and electrical terminations in April 2008, according to the utility companies. Court documents indicated that $588,955.97 was owed on the property.

Hotel In Foreclosure Shuts Down, Putting Possible Kibosh On Couple's Wedding Plans, $5,500 Deposit; 130 Now On Unemployment Line

In Hood River, Oregon, The Oregonian reports:

• Michelle Oleson got engaged in Venice, Italy, found the Columbia Gorge Hotel on the Internet and fell for the romantic getaway when she visited with her fiance. The 28-year-old accountant, a Beaverton native who works in Beverly Hills, Calif., paid a $5,500 deposit for an Aug. 2 wedding at the Hood River hotel. She got her dress. She got her shoes. The happy couple invited more than 150 guests. Then on Sunday, Oleson's mother called with startling news. The financially troubled hotel had closed.

***

• The abrupt demise of the 88-year-old landmark, [...] has snarled nuptials and Valentine's Day plans, infuriated creditors and claimed 130 jobs. The hotel wedding coordinator insists the 18 scheduled ceremonies will he held. But as a judge prepares to name a receiver, legal wrangles loom -- absent a white knight who could buy and reopen the property. Holders of gift certificates and prepaid reservations have a burning question: How can we get our money back?

For more, see Gorge hotel's closure puts lovebirds, creditors in limbo.

Emergency Water Shutoffs By Public Works Officials On Upswing As Bursting Frozen Pipes In Vacant, Abandoned Homes Create Havoc

In Worcester, Massachusetts, the Worcester Telegram & Gazette reports:

• Annoyed public works officials say the winter freeze has them conducting more emergency water shut-offs because of burst pipes at vacant or abandoned homes, many of them in the foreclosure process. The foreclosure piece compounds the problem, officials in Worcester, Southbridge and Fitchburg said this week.

***

• “Right now, folks are abandoning the house and the last thing they care about is the heat in the house,” Konstantin Eliadi, Worcester director of water and sewer operations, said Tuesday. In some instances, the water practically races out of basement windows. “It’s an issue that we never had before,” Mr. Eliadi said. The only thing the department can do is shut the valves off in the street, he said.

***

• On Monday, water from a burst pipe in a vacant home reached a West Street sidewalk, where a small child slipped on the ice. The child suffered a facial injury and was taken by ambulance to Harrington Memorial Hospital, according to police and DPW officials. “It’s one of those crazy things that you wouldn’t think of,” said Southbridge Police Chief Daniel R. Charette, adding that vacant properties are also susceptible to break-ins and rodents.

For more, see Pipes bursting in vacant homes (Foreclosures leave sites unattended).

Go here for more on frozen pipes in vacant homes. frozenpipetheta

Connection Between Fires & Frozen Pipes

Stories illustrating the connection between fires and water pipes freezing up from the extreme cold weather are coming in from around the country. Here are a few:

• Wheeling, West Virginia: Wheeling firefighters said a man trying to fix frozen pipes ended up setting his home on fire Monday morning in Elm Grove. Fire Chief Larry Helms said the homeowner accidentally caught the wall on fire, which then spread the upper floor of the home. No one was hurt and the homeowner did make it out OK. Frozen Pipe Fix To Blame For Wheeling Fire.

• Winona, Minnesota: A West End home was damaged by fire Thursday evening after plumbers used a torch to thaw pipes earlier in the day. Officials suspect the torch started the fire. No one was injured. Fire crews tore into the exterior wall with chainsaws and axes, searching for flames as smoke seeped from the siding. Frozen pipes lead to fire.

• New Brunswick, New Jersey: A small afternoon fire between the basement and first floor of a city home was quickly extinguished by responding officials a couple of weeks ago. Reportedly, the fire was started when the homeowner attempted to defrost a frozen water pipe on an exterior wall with a heat gun. When the copper piping got hot, some of the wood framing around it caught on fire. Official: New Brunswick homeowner caused fire attempting to fix frozen pipe.

• Kingsley, Pennsylvania: A recent fire that destroyed a house on Main Avenue was caused by attempts to thaw frozen water pipes, according to Red Cross officials at the scene. Frozen-pipe repair leads to house fire.

• Oakwood, Illinois: The family of a local member of the military suffered a blow Saturday when its house burned to the ground. The house is considered a total loss. Fire Chief Tony Frye said the fire was caused by a forced air heater placed in the crawl space underneath the house to warm frozen pipes. He said it’s unknown what was ignited by the heater, although there was some straw in the crawlspace of the home. He said a door left open combined with a hole in the floor of the house from repairs helped the flames spread quickly through the building. “I can’t believe it’s all gone” (Soldier's house a total loss).

• Columbia, Missouri: A malfunctioning heat tape meant to keep pipes from freezing likely caused a trailer fire, according to a news release from the Columbia Fire Department. Investigators said either the heat tape placed on a pipe near the home’s water heater or its extension cord ignited the fire that caused an estimated $50,000 in damages. Batallion Chief Steven Sapp said heating tape is like an electrical blanket for pipes. It is supposed to shut itself off after reaching a certain temperature, but if not installed properly, it can get too hot. Trailer fire caused by electrical malfunction, fire officials say.

• Livonia, Michigan: Livonia fire officials are warning the public about cold weather-related fires after battling six structural fires this week, most of which were caused by people trying to stay warm. One fire started when a resident used a blow torch to heat a frozen pipe. Livonia firefighters battle 6 blazes in 5 days.

• Richmond, Indiana: Preparation is the best way to keep water pipes from freezing when temperatures plunge. But, when they do, open flames are certain no-nos in thawing them: "It sure isn't a blow torch," said Bobby Farris, deputy chief of fire prevention for the Richmond Fire Department. Flames of any kind carry a risk of engulfing a home in minutes -- or even hours later. "You're taking that chance," Farris said. "You might think you have it out, but it could be sitting there smoldering." That's apparently what happened recently at a home being renovated. A fire there was extinguished within minutes after firefighters arrived. It caused about $7,500 in damages. No one was injured. A worker had been trying to thaw pipes with a torch earlier in the day and the radiant heat caught material inside the wall on fire, said Battalion Chief Jerry Purcell. Thaw pipes with care.

• Farmington, Connecticut: A heating element installed to keep pipes from freezing may have been the cause of a morning fire on East Shore Boulevard. Reportedly, fire officials believe the fire resulted from efforts to keep water pipes from freezing, but the Fire Marshal’s Office is investigating the cause. Fire possibly caused by pipe-heating apparatus.

• Kittitas County, Washington: According to Kittitas Valley Fire and Rescue Deputy Fire Chief Rich Elliott, there have been about six structure fires since winter started. There has been one reported fire caused by improper thawing of a pipe. Fire safety tips for local residents in winter weather.

• Murfreesboro, Tennessee: Don’t use open flame butane torches to thaw frozen water pipes. That’s the message from Assistant Fire Marshal Carl Peas of Murfreesboro Fire Department. When Friday’s temperatures dipped to single digits, maintenance workers using butane torches to thaw frozen water pipes at Chelsea Place apartments, the fire department reported. The flames caused a fire resulting in $50,000 damage to four apartments on Bradyville Pike. Also, a resident used a butane torch to thaw pipes at his home. The flame burned insulation and dryer lint under his home. “Never use open flames” to thaw frozen water pipes, Peas said. An open flame used on copper pipes could catch a structure on fire. “Once it gets into the wall, you can’t see it. The fire can run up the wall to the attic.” Butane torch blamed in Chelsea Place fire.

• Madison, Wisconsin: On Jan. 15, a maintenance worker using a torch to thaw frozen pipes ignited insulation in a wall near the pipes, with the subsequent fire causing $50,000 in damages. Torches blamed in 2 structure fires.

• Johnstown, Pennsylvania: A fire marshal determined that the cause of a recent home fire was a space heater. “The heater was used to thaw frozen pipes,” Johnstown fire Chief Tony Kovacic said. “Either the space heater lit materials it was too close to or the space heater had some sort of failure.“Obviously, we’re going to have a lot of pipe issues in the cold weather,” Kovacic said. “Be cautious when you try to thaw (frozen pipes).” City firefighters battle Prospect blaze.

• Petrolia, Ontario: A tenant thawing frozen water pipes with a gas heater in a crawl space was the source of a house fire that caused $130,000 damage to a Petrolia home, the deputy fire chief says. Don Harding, of the Petrolia and North Enniskillen Fire Department, said when he arrived at the home, flames were "shooting out the crawl space" from exposed floor joists that has caught fire. The fire went up the east wall and reached the roof before it was contained. Harding said there was no evidence of pipe wrapping or heater/tracer wire to keep pipes unfrozen at the house. Gas heater caused blaze (DAMAGES ESTIMATED AT MORE THAN $130,000).

Go here for links to other recent stories on frozen pipe problems.

For lenders, mortgage loan servicers and other property owners and managers looking for tips on dealing with frozen pipes, see:

• How To Deal With Frozen Pipes In Extreme Cold Weather,
• More ways to stop frozen pipes and what to do if they burst! frozenpipetheta ForeclosureHomeVacantBeta

Detroit-Area Sheriff To Seek Declaratory Judgment & Stay Of Future Foreclosure Sales; Says Action Is Supported By Federal Law

In a letter to the editor of the Detroit Free Press, Wayne County Sheriff Warren C. Evans responds to an editorial attacking him for calling an immediate halt to all foreclosure sales in Detroit and the rest of Wayne County, Michigan. Among other things, Sheriff Evans states:

• [M]y office will be seeking a declaratory judgment and a stay of future foreclosure sales in the courts based on my conclusion that the Emergency Economic Stabilization Act of 2008, specifically the TARP, preempts state foreclosure laws. We will put this very question to the court, and I will abide by that ruling. In the meantime, I will do my best to protect the rights of my constituents and uphold the law.

• I will continue to hold back on foreclosure sales unless lenders can assure me that the homes they wish to see sold are either exempt from the protections provided under TARP or that qualifying home owners have been provided the opportunity to modify their mortgages until such time as a court rules on my position.

For more, see Wayne County can stop foreclosure sales.

See also, The Detroit News: Evans to seek foreclosure sale ruling.