Wednesday, March 11, 2009

Mandatory Mediation Available On Request For Indianapolis-Area Homeowners Facing Foreclosure

In Indianapolis, Indiana, The Indianapolis Star reports:
  • Marion Superior Court has passed a new local rule that allows homeowners facing foreclosure in civil court the option of settlement conferences, or mediation, with their financial lenders. The conferences are mandatory for lenders if the borrower responds to a notice from the court. The borrower must reside in the house facing foreclosure. Local housing experts estimate that one in 220 Marion County homes is in some state of foreclosure.

Source: Foreclosure mediation OK'd.

Free Legal Advice Hotline For Birmingham-Area Homeowners Facing Foreclosure

In Birmingham, Alabama, The Birmingham News reports:
  • Homeowners facing foreclosure in the Birmingham area can get free legal advice starting today under a hot line set up by the Alabama State Bar and Legal Services Alabama. The toll-free hot line (1-877-393-2333) will connect homeowners to a legal aid lawyer.

***

  • Legal Services Alabama is a nonprofit organization that provides free legal help on civil-court matters to low-income people. The legal advice and aid campaign already is under way in Huntsville, Montgomery and Mobile. The participating lawyers are being paid under a grant by the Alabama Civil Justice Foundation and the Access to Justice Commission.

For more, see State bar connecting homeowners, lawyers.

California Caretaker Charged With Draining Equity From 84-Year Old Woman's Home, Leaving Her Underwater & Facing Foreclosure

In Huntington Beach, California, the Los Angeles Times reports:
  • The live-in caretaker of an 84-year-old Huntington Beach woman allegedly took out fraudulent loans in her name, bilking the older woman out of about $200,000 and putting the woman's home in danger of foreclosure, authorities said Tuesday. Cindi Dee Powell, 54, has been charged with financial elder abuse, grand theft, identity theft, vehicle theft, fraud and forgery. She remains in custody.

  • According to police, Powell moved in with Constance Wakefield about two years ago to help the woman, who uses a wheelchair, around the house and drive her to appointments. Wakefield hired Powell through a classified ad and was not aware that Powell was on probation in another elder abuse case.

For more, see Live-in caretaker charged with financial elder abuse, fraud and forgery (Police say Cindi Dee Powell bilked an 84-year-old Huntington Beach woman out of about $200,000 and put the woman's house at risk of foreclosure).

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, power of attorney abuse, etc.

Go here, here, here, here, here, and here for other posts on elder financial abuse. FinancialAbuseOfElderlyAlpha DeedGammaTheft

Banking Industry Advocates Pushing Proposed Bill That Could Encourage More Home Equity Thefts Thru Forged POAs

A hearing in the Oregon House Judiciary Committee is scheduled for this Friday, March 13 in which advocates for the banking industry might be quietly attempting to get away with a fast one by forcing through a proposed bill, based on a model uniform act (Uniform Power of Attorney Act), that could lead to an increase in home equity heists in connection with the use (and abuse) of powers of attorney.

Based on how the proposed law reads, it appears to me that victims whose houses are sold or encumbered by fraudulent mortgages using a forged power of attorney will NOT be able to void the transaction unless they can prove that the individual handling the transaction had actual knowledge that the POA was forged.

The relevant provision in the bill, buried in Section 19(3), follows:

  • (3) A person that in good faith accepts a power of attorney without actual knowledge that the signature is not genuine, that the power of attorney is void, invalid or terminated, that the purported agent's authority is void, invalid or terminated or that the agent is exceeding or improperly exercising the agent's authority may rely upon the power of attorney as if the power of attorney were genuine, valid and still in effect, the agent's authority were genuine, valid and still in effect and the agent had not exceeded and had properly exercised the authority. The person is not required to ensure that the assets of the principal that are paid or delivered to the agent are properly applied.

This bill is HB2537; you can obtain a copy via this link.

Inasmuch as the proposed bill is based on a model uniform act, a successful attempt to sneak this legislation through the Oregon legislature by the banking industry will only encourage industry advocates in other states to do the same.

Those of you with any interest in curbing the home equity theft horror stories are encouraged to contact the Oregon House Judiciary Committee and tell them how you feel (Jennifer Ranstrom-Smith, Committee Assistant, 503-986-1513 Jennifer.RanstromSmith@state.or.us). (You might even want to e-mail them the following links that illustrate the rampant nature of deed and equity thefts throughout the country).

Go here for posts on the use of powers of attorney to ripoff the elderly of their home equity.

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, power of attorney abuse, etc. DeedGammaTheft FinancialAbuseOfElderlyAlpha

Homeowner Facing Foreclosure Out $10K, Faces Eviction Despite Hiring Loan Modification Firm & Attorney Accused Of Leaving 2,000 Cases Unattended

In Bakersfield, California, KGET-TV Channel 17 reports:
  • A local family says they are victims of a foreclosure scam. They came to 17News because, they say, the lawyer they paid $10,000 to help them took the money and did nothing.

***

  • ''We had to pay $1,500 a month,'' [homeowner Eddy Herrera] said. The ''lawyer, which is Mitch Roth, would negotiate with the bank and help us lower our payments. He was supposed to modify our loan.” The Herrera family says a representative from attorney Mitchell Roth’s office told them to send monthly payments to a foreclosure relief company called United First. Herrera says the representative told them to ignore all letters from their lender, that everything was being handled. But seven months and $10,000 later, their house went up for auction. [...] The house was sold at the auction. Herrera says the supposed mortgage rescue company had never contacted the lender and he and his family are being evicted.

***

  • A spokesman for the State Bar says it shut down Roth’s law offices after he was hospitalized in January and left 2,000 cases unattended. But in the meantime, the Herrera family says they still feel scammed. In court on Monday they were given two weeks to move out their home.

For the story, see 17News Investigation: Family blames attorney for foreclosure.

Go here for the State Bar press release on their action taken on this business arrangement.

For a related post, see Federal Judge, State Bar Slam Attorney For Stiffing Clients Referred By Loan Modification Firm; Lawyer/Foreclosure Consultant Ties Now Facing Scrutiny. UnauthPractOfLawTheta

Attorney Agrees To Refund Upfront Fees For Failed Loan Modification Attempts Under Threat Of Bad Media Publicity, State Bar Complaints

In Newark, California, KGO-TV Channel 7 reports on the experiences of three local homeowners seeking to have their home loans modified with an area law firm:
  • [Mika] Baba says she's regretted getting into [her home] loan almost from the beginning and has been unable to renegotiate it. Then she heard an ad from Lucas Law Center on the radio. "And that's why I called Lucas Law Center because they made the promise that they can do the modification. If they couldn't you'd get your money back. And at this point, I'm in a corner where I have no choice," said Baba.

  • That's the same reaction Scott Castruita and Steve Ferdin had when they heard the same ad. "I called them up, so they said they could make all the phone calls for me and they knew people and they said they know how to get hold of the people at Indy Mac," said Castruita. Scott and Steve paid $3,200 up front to hire Lucas Law Center to negotiate a loan modification on their home in Antioch. Mika paid $3,700 to hire Lucas, and what do they say they got for their money? "They haven't done anything for me," said Baba.

***

  • Mika, Scott and Steve all requested a refund from the Lucas Law Center. Lucas turned down Mika because she fell under two exemptions to its refund policy. She is in a negatively amortized loan and she had been previously denied for a modification. Those exemptions were stated explicitly in Mika's contract, but she said they were never explained to her.

  • We called Lucas Law Center and it agreed to refund her money 100 percent. Scott and Steve also received a refund, after they threatened to file a formal complaint with the state bar.

For more, see Homeowners dissapointed with loan service.

Postscript:

When hiring an attorney in connection with a loan modification, a homeowner should ask upfront whether the attorney will engage in actual litigation in court, either defending against a foreclosure action, or initiating a lawsuit, either for:

  • violations of applicable lending, consumer protection, and other laws; or

  • in a non-judicial foreclosure state, asking a state court to intervene in a foreclosure attempt by obtaining a temporary restraining order in order to demand that a lender to produce the promissory and the associated legal documents proving that the lender has the legal right to conduct the foreclosure.

If an attorney holding him/herself out as doing loan modifications pockets thousands of dollars in upfront, or periodic fees without any intention of representing a homeowner in the actual litigation described above, the homeowner should seriously consider the possiblity of filing a complaint against the attorney with the state bar association for charging excessive fees(1) and for taking the client's case and failing to do what was in the client's best interest (as well as considering any possible malpractice claim against the attorney).

In California, complaints can be filed with the The State Bar of California. To file a complaint against a California attorney (or a loan modification firm for engaging in the unauthorized practice of law), see Overview Of Attorney Discipline System (go here for a Complaint Form).

In addition, consumers generally can avail themselves of the California State Bar's Mandatory Fee Arbitration Program (MFA), which is an informal, low cost forum for resolving fee disputes between lawyers and their clients. MFA arbitration is mandatory for the lawyer if the client requests arbitration.

(1) The Florida Supreme Court, in The Florida Bar v. Richardson, 574 So.2d 60 (Fla. 1990), quoted from one of its earlier decisions on the harm caused by attorneys charging excessive fees:

  • Lawyers are officers of the court. The court is an instrument of society for the administration of justice. Justice should be administered economically, efficiently, and expeditiously. The attorney's fee is, therefore, a very important factor in the administration of justice, and if it is not determined with proper relation to that fact it results in a species of social malpractice that undermines the confidence of the public in the bench and bar. It does more than that; it brings the court into disrepute and destroys its power to perform adequately the function of its creation. Baruch v. Giblin, 122 Fla. 59, 63, 164 So. 831, 833 (1935).

The court in Richardson, in finding that the attorney fees charged in the case before it were clearly excessive, went on:

  • Mr. Richardson is an officer of the court, subject to its orders. We find that these were clearly excessive fees and that the amounts he charged did in fact constitute a"social malpractice." Ethical Consideration 2-17 of the Model Code of Professional Responsibility explains that a lawyer must charge clients reasonable fees because the "excessive cost of legal service would deter laymen from utilizing the legal system in protection of their rights." This Court recognizes that a lawyer's fee will vary in accordance with many factors; however,we fully concur with the expert witness's statement in this case that all of the time a lawyer spends on a case is not necessarily the amount of time for which he can properly charge his client. As explained by the expert witness, "[I]t's the time that reasonably should be devoted to accomplish a particular task." This statement is consistent with the principles we set forth in Standard Guaranty Insurance Co. v. Quanstrom, 555 So.2d 828 (Fla. 1990), and Florida Patient's Compensation Fund v. Rowe, 472 So.2d 1145 (Fla. 1985), neither of which allows billing clients solely on billable hours or charging clients without determining what is the reasonable time to accomplish a particular task. Further, absolutely no justification exists to bill for twenty minutes for every phone call or for a minimum of forty-five minutes to prepare a page of a document without regard to the amount of time actually spent. UnauthPractOfLawTheta

Burden On Homeowner To Initiate Lawsuit To Employ "Produce The Note" Strategy In Non-Judicial Foreclosure States

In Atlanta, Georgia, WXIA-TV Channel 11 reports:
  • With foreclosures all over the country reaching record levels, more and more people are beginning to fight back with three words that hit lenders like a fist: "Produce the note." "If a lender cannot produce the note," said bankruptcy attorney Howard Rothbloom, "it's no different than a person going to the bank trying to cash a lost check. If you don't have the note you can't prove that you don't have the mortgage."(1)

***

  • But to be used here in Georgia, the three words have to be uttered by an attorney, not by you. That's because Georgia is a non-judicial foreclosure state, and for the court to intervene an attorney has to ask for a temporary restraining order. "So in order to demand that a lender to produce a note outside of bankruptcy court a borrower is going to have to sue the lender in state court and demand that the lender produce the note," noted Rothbloom.

For more, see Fight Foreclosure With Three Simple Words?

(1) And just like the lost check, even if the foreclosing lender or its agent can produce the note, it has the burden of proving that it has the legal right (ie. the legal standing) to enforce it (ie. endorsements, assignments, affidavits, powers of attorney, and any other required legal paperwork must all be in proper order). Copyright 2009 The Home Equity Theft Reporter (http:/HomeEquityTheft.blogspot.com) ThetaMissingDocsMtg

Florida Supreme Court Forms Statewide Task Force To Relieve Foreclosure Backlog

The Miami Herald reports:
  • To sandbag the flood of foreclosures pouring into the state's underfunded court system, the Florida Supreme Court announced the formation of a statewide task force on Monday that will look for solutions to the docket backlog while ensuring borrowers and lenders are treated fairly.

  • ''This is a hurricane that has hit our state,'' said Miami Circuit Court Judge Jennifer Bailey, who was appointed to lead the 15-member task force. "Over 75 percent of the incoming cases are mortgage foreclosures. Our dockets have exploded.'' The task force will take specific aim at integrating the growing patchwork of judicial rules that have been established by the state's circuit court judges as they seek to manage the influx of cases.

***

  • Statewide, the time needed to complete a foreclosure has increased from roughly 150 days to around 300, leaving homes vacant longer and condo associations hurting from unpaid maintenance fees.

For more, see Task force to seek answer to foreclosure court backlog (The Florida Supreme Court is looking for ways to cope with the overwhelming volume of foreclosure cases coming into the system, including a mediation requirement).

Developer Accused Of Renting Out Long Island Mansion In Foreclosure To Unwitting Tenant; Renter Out $70K, Left Holding The Bag

In Bridgehampton, New York, the New York Post reports:
  • The forecast calls for a summer bummer for a Florida woman who claims her dream Hamptons vacation plans have become a nightmare. Carole Via says a rich developer took her $56,000 deposit for a Bridgehampton mansion although it was to be auctioned off before the season began. As a result, Via, of Boca Raton, has filed a breach-of-contract suit against developer Michael Burns and the real-estate agent, Town and County Real Estate of East Hampton.

***

  • Via said that in October, she signed a $140,000 personal lease with Burns for the summer of 2009 for his eight-bedroom mansion at 15 Bridge Hill Lane. The sumptuous 6,300-square-foot dwelling has a heated pool. She said she wrote a $56,000 deposit check to him and a $14,000 commission check to Town and Country.

  • In the lease, Burns, 58, said he owned the property and had the right to rent it. But on Jan. 28, she said, Town and Country informed her there was a problem. Via said she learned that the mansion was actually owned by Burns' company, Brick Hill One Realty, a firm that he had placed in bankruptcy in August. The home was to be auctioned off before the summer began.

For more, see RENTER DEPOSIT-IVE SHE GOT RIPPED OFF.

For other posts involving tenants renting homes in foreclosure, go here, go here, go here, go here, go here, go here, and go here. Copyright 2009 The Home Equity Theft Reporter http:// HomeEquityTheft.blogspot.com SkimmingKappaRent

Tuesday, March 10, 2009

Landlord With Arizona Buildings In Foreclosure Faces Same Problem In Georgia; Tenants Face Water Shutoffs, Accumulating Trash

In Norcross, Georgia, WXIA-TV Channel 11 reports:
  • Dozens of residents at a Norcross apartment complex are on edge, even though mounds of garbage piled at their front door have been hauled away. Plenty of problems remain at the Steeplechase Apartments on Singleton Road, now that the complex is a target for foreclosure.

***

  • The California management company that owns this complex and four others in Metro Atlanta hasn't been paying the bills -- not for sanitation -- which is why the garbage piled up, and a community improvement group had to step in to pay for the cleanup. The management company didn't pay the power bill, so, no more electricity at the front office. [... Employee Tainia Haywood] says the management company e-mailed her to say the complex and others run by the Bethany Group are on their way to foreclosure. Eventually, it will come under new management -- no one's sure when.

For more, see Management Company Deliquent On Rent, Power.

Go here for other posts on Bethany Group buildings in foreclosure.

For more on the problems faced by the Arizona tenants of this landlord facing foreclosure, see:

3 Sentenced In Upfront Fee Loan Modification Scam; Prosecution Of 2 More Pending, 3 Others On The Lam

In Southern California, the San Diego Union Tribune reports:
  • After pleading guilty to loan-modification fraud, three people connected with a company that scammed hundreds of distressed homeowners in Southern California have received sentences ranging from probation to six years in prison.(1)There are a lot of these scam artists roaming around California looking for vulnerable people, so it's important to catch them and convict them and imprison them,” state Attorney General Edmund G. Brown Jr. yesterday. “It is also important to send up a flare for people in foreclosure to watch out.”

  • In November, Brown announced the breakup of First Gov, a company based in San Bernardino. The firm took payments from troubled borrowers but did nothing to prevent foreclosures, officials said. First Gov offered to renegotiate loans and reduce mortgage payments. It charged upfront fees that ranged from $1,500 to $5,000, Brown said. Homeowners were told to stop making mortgage payments and end communications with their lenders.

For more, see 3 sentenced in scam over foreclosures.

For more on this case from the California Attorney General:

(1) Rosa Conrado, 51, of San Bernardino was sentenced yesterday to six years, four months in prison for six counts of grand theft in connection with the scam, officials said. Alejandrina Maldonado, 33, of St. Lucie, Fla., was sentenced Feb. 26 to a three-year prison term for one count of grand theft. Martin Jesus Flores, 33, of Baldwin Park was given three years of probation yesterday, based on limited participation in the scheme. David Giron, 44, of Ontario, and Saul Amador, 23, of West Covina are scheduled for a preliminary hearing March 19 on charges of theft, money laundering and conspiracy. Three other alleged members of the group – Juan Jose Perez, 48, Isuara Hernandez, 33, of La Habra, and Antonia Gonzalez, 66, of San Bernardino – are believed to have fled the jurisdiction and may be outside the country, officials said. foreclosure rescue

New York Foreclosure Rescue Operator Back In The News

In Brooklyn, New York, The New York Times reports:
  • In 2005, [Waver Brickhouse] fell behind on her mortgage payments and turned to a so-called rescue firm, which, court papers allege, tricked her into signing away the deed to her Brooklyn home. She says the company, Home Savers Consulting, secretly sold her home, with the help of a mortgage from IndyMac Federal Bank, and ran up huge new debts.

  • Now broke, deeply embarrassed and facing the loss of her small row house in the Brownsville neighborhood, Ms. Brickhouse, 69, faces a new problem. She must convince the Federal Deposit Insurance Corporation, which last year took control of IndyMac, now insolvent, that her mortgage payments should not include at least $150,000 tacked on by fraud.

***

  • Ms. Brickhouse has sued Home Savers,(1) and her case underscores the conundrum facing the F.D.I.C. as it wades through thousands of troubled mortgages it has inherited from failed banks, 40,000 from IndyMac alone.

***

  • F.D.I.C. officials asked Ms. Brickhouse to forward financial information so they could work out arrangements for her to pay some portion of the $380,000 mortgage. Ms. Brickhouse acknowledges that she is responsible for the $213,000 on her original mortgage. But she refuses to pay any part of the mortgage that she said was obtained through fraud.

For more, see Mortgage Fraud Case Poses Federal Quandary.

For some of the legal documents filed in this case, see:

Go here for other posts on New York City-area foreclosure rescue operator, Home Savers Consulting Corp.

For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.).

(1) According to the story, Ms. Brickhouse’s case has a persuasive ring to it, not least because one of those engaged in the alleged fraud, straw buyer Yolanda Millett, returned her deed and swore out an affidavit describing the scheme. In it, Ms. Millett accused Home Savers of misleading Ms. Brickhouse at every turn. “She did not at any time believe that ownership of the subject property passed to me,” Ms. Millett stated in the affidavit, “and her intent was never to relinquish ownership.”

Reportedly, Home Savers Consulting has been sued by homeowners in Brooklyn, Queens and Staten Island, and nearly every case alleges a similar pattern of deception: An owner behind on a mortgage turns in desperation to Home Savers, which secretly transfers the deed to a “straw buyer” with good credit who qualifies for a cash-out refinancing. Then, it is alleged, Home Savers drains the homes of equity. Jessica Attie, co-director of the South Brooklyn Legal Services Foreclosure Prevention Project, estimates that Home Savers extracted at least $5 million in equity from the homes of people in a handful of her cases. Legal services lawyers have frequently forwarded information on Home Savers to prosecutors, but no criminal cases have been brought.

Brooklyn DA's Office Joins Other Prosecutors With New Unit Specializing In Real Estate Crimes

In Brooklyn, New York, The New York Times reports:
  • With an array of real estate crimes, ranging from deed forgery to mortgage fraud schemes, adding to foreclosure rates in Brooklyn neighborhoods, the borough’s district attorney, Charles J. Hynes, says the time has come for a specialized unit to investigate and prosecute them.

***

  • Mr. Hynes said the new 12-member unit would be financed for two years with $875,000 in federal money and would help people like Levi Latham, 75, a Brooklyn retiree whose house was, in effect, stolen by a woman who took Mr. Latham’s personal information, a prosecutor said. After executing and recording a false deed, the woman is now listed as the owner of the house.

***

  • Similar units have been created by prosecutors in other regions with high foreclosure rates, providing a sketch of how the housing crisis has unfolded around the country. An eight-member unit in the office of the Suffolk County district attorney, Thomas J. Spota, recently arrested more than two dozen people in a $9 million mortgage fraud scheme. In Prince George’s County, Md., a two-member unit in the office of the county state’s attorney, Glenn F. Ivey, is handling dozens of cases in the aftermath of a housing boom that resulted in hasty and often dubious mortgages. In Cuyahoga County, Ohio, one of the centers of the national foreclosure crisis, the authorities have prosecuted 219 people since January 2007, said Ryan Miday, a spokesman for the county prosecutor, Bill Mason.

For more, see Brooklyn Establishes Real Estate Crime Unit. DeedGammaTheft

Businessman Comes Clean In Court In Attempt To Swipe 141 Acres Of Farmland By Forging Dying Man's Will

In County Wexford, Ireland, Independent.ie reports:
  • A WEALTHY businessman-turned-whistleblower cried [Friday] as he told a court how he and two other men forged the will of a bachelor farmer as he lay dying in hospital. Charlie O'Leary (50), of The Haggard, Ramsgrange, Co Wexford, whose conscience eventually got the better of him, pleaded guilty to forging a document purporting to be the will of Matthew Hayes [...].

  • Sergeant Mick Troy told Wexford Circuit Court that two other people are also implicated in the crime, the beneficiary, referred to as Mr X, and a third person, referred to as Mr Y. Mr X was O'Leary's best friend at the time and Mr Y is a close relative of O'Leary's. Sgt Troy said no genuine will was ever found in the name of the late Mr Hayes. When he died, he left £99,000 in a bank account and 141 acres of farmland, then valued at £350,000.

For more, see Man forged dying farmer's will (Businessman gets suspended sentence after 'conscience gets the better of him'). DeedGammaTheft

Lender Unwilling To Foreclose Offers To Cancel Delinquent Home Mortgage To Dodge Prosecution In Upstate NY Building Code Case

In Lockport, New York, the Lockport Union-Sun & Journal reports:
  • [I]n another ongoing case, an attorney for M&T Bank said the bank is willing to forgive its mortgage on 34 Pound St., in order to avoid prosecution on seven code charges there. Attorney Thomas Frederick said the bank is still owed $34,000 by David and Andrea Woods, the former occupants, but it willing [sic] to wipe out the mortgage and let the house be transferred to anyone who’s willing to make needed repairs on the roof and exterior.

  • M&T started foreclosure proceedings against the Woodses but never completed them, [prosecutor Matt] Brooks said, meaning the property remains in the Woodses’ name. They only found that out recently, although they were evicted from the premises by the bank in 2007. The city went after M&T in light of the eviction, which Brooks said is akin to asserting ownership interest in the property.

For the story, see Housing Court orders ‘hazardous’ garage closed off.

Go here for other posts on code violation & other problems associated with homes in legal limbo. responsibility code violations foreclosure

Monday, March 09, 2009

Fannie Mae Extends Eviction Suspension Through March 31

Fannie Mae announces:
  • Fannie Mae [Friday] announced it is extending the suspension of all eviction proceedings through March 31, 2009 as the company implements the Home Affordable Refinance and Home Affordable Modification initiatives as part of the Obama Administration's Making Home Affordable program.

  • The company has also issued special foreclosure sale requirements in response to the Making Home Affordable program. A foreclosure sale may not occur on any Fannie Mae loan until the loan servicer verifies that the borrower is ineligible for a Home Affordable Modification and all other foreclosure prevention alternatives have been exhausted.

Source: Fannie Mae Extends Eviction Suspension Through March 31.

400 Sale Leasebacks Are Disguised Equitable Mortgages, Says AZ AG In Invoking State Consumer Fraud Act, TILA In Suit Against Foreclosure Rescue Firm

From the Office of Arizona Attorney General Terry Goddard:
  • Attorney General Terry Goddard [Thursday] announced that he has filed a lawsuit against an alleged foreclosure rescue operation believed to have defrauded approximately 400 Arizonans of their homes.(1) This action comes as part of Goddard’s crackdown on con artists who prey upon vulnerable homeowners struggling to avoid foreclosure. "Instead of offering legitimate help to homeowners, this operation misled and exploited them to turn a handsome profit," Goddard said. "The housing crisis has given rise to a number of rescue scams, and we are going after them aggressively."

***

Among the allegations made in the lawsuit are:

  • Falsely and deceptively representing to homeowners that they would save their homes when, in fact, the defendants structured the transactions to take ownership and equity away from homeowners for the benefit and profit of defendants,(2)

  • Misleading homeowners and circumventing and concealing from them the defendants’ obligations and homeowners’ rights and remedies under a mortgage loan agreement,

  • Evading the protections of the Federal Truth in Lending Act (TILA) which required defendants to disclose the annual percentage rate of the mortgage and the homeowner’s right to rescind the transaction within three days of receiving notification of the right.(3)

For more, see Terry Goddard Files Lawsuit to Stop Foreclosure Rescue Operation.

For the lawsuit, including details of how the alleged foreclosure rescue scheme operated, see State of Arizona v. Winer, et al.(4)

(1) The state AG alleged violations of the following Arizona laws:

In addition, the Arizona AG asserts that the sale leasebacks are loans/equitable mortgages pursuant to A.R.S. §33-702(A), A.R.S. §6-901, A.R.S. §6-941, and Merryweather v. Pendleton, 91 Ariz. 334, 372 P.2d 335 (1962). In the Merryweather case, the Arizona Supreme Court cited English common law dating back over 500 years when making the following observation, "The ruse of an absolute deed or deed with an option to repurchase has long been used in attempts to cut off a mortgagor's equity of redemption. Equity courts created the concept of equitable mortgages to avoid such abuses". Y.B. 9 Edw. IV 25, 34 (1470).

(2) In a 2006 Washington, D.C. case, the court rejected a foreclosure rescue operator's claim that the D.C. consumer protection statute was inapplicable. Specifically, the operator attempted to characterize the relationship between himself and a homeowner facing foreclosure as "a purchaser-seller relationship in which the [homeowner], in an arm's length transaction, sold her house to him in circumstances admittedly unfavorable to her but not of his making." The court found that, by presenting himself to the homeowner as a "foreclosure specialist" who would aid her in keeping her home -- and not as a prospective buyer, a merchant-consumer relationship was created, thereby making the D.C. consumer protection statute applicable. Byrd v. Jackson, No. 04-CV-940, 902 A.2d 778; 2006 D.C. App. LEXIS 362 (2006).

It appears that any attempt by the foreclosure rescue operator targeted in the Arizona AG's lawsuit to claim that the state Consumer Fraud Act is inapplicable in this case could very well meet with the same outcome as in the D.C. case.

(3) The sale leaseback arrangements in this case apparently did not violate any applicable state usury statute, since the complaint contains no allegation thereof. In Arizona, contractual arrangements that are found by a court to be nothing more than disguised loans masquerading as sale leasebacks (and other buyback arrangements) are subject to any applicable state usury statute. See SAL Leasing v. State ex rel. Napolitano, 198 Ariz. 434; 10 P.3d 1221 (Ariz. Ct. App. 2000).

(4) Last year, the Massachusetts Attorney General's office took a similar approach in the pursuit of a foreclosure rescue operator accused of scamming 26 homeowners out of the equity in their homes. Like the Arizona AG, the Massachusetts AG also invoked its state's consumer protection statutes and the equitable mortgage doctrine; and it alleged violations of the Federal Truth In Lending Act, among other state law violations. It was also alleged in that case that the sale-leaseback arrangements were usurious equitable mortgages (See Complaint - Commonwealth of Massachusetts v. Sohmer, paragraphs 68-70 and paragraphs 123-126). The Massachusetts AG ultimately reached a satisfactory settlement with the foreclosure rescue operator and the mortgage lenders involved in, and providing the financing for, the associated equity stripping transactions. See Massachusetts AG press release: Bankruptcy Court Approves Settlement Between Attorney General’s Office and Ten Mortgage Lenders and Servicers Involved in Foreclosure Rescue Transactions. Go here for the earlier posts on the Massachusetts equity stripping case.

Appeals Court Reverses $3M+ Jury Award To Equity Stripping Victims; Homeowners Forced To "Settle" For Triple Damages Under State Consumer Fraud Act

In a 2004 case, the Colorado Court of Appeals reversed a $3+ million jury verdict (which included $1.5 million in punitive damages) in favor of a Colorado couple who were victimized in a foreclosure rescue scam. In its ruling, the appellate court found that the damages awarded by the jury on six separate claims were duplicative. Accordingly, the court let stand only one of the awards and disallowed the remainder. That award, in the amount of $247,000 representing actual damages against those participating in the foreclosure rescue scam for violation of the Colorado Consumer Protection Act (CCPA), §6-1-101, et seq., was then tripled (for clear and convincing evidence of the existence of bad faith conduct on the part of the scammers) pursuant to §6-1-113 of the CCPA. Accordingly, the final award to the aggrieved homeowners was limited to $741,000.(1)

Source: Martinez v. Affordable Hous. Network, Inc., 109 P.3d 983, 2004 Colo. App. LEXIS 867 (Colo. Ct. App. 2004), rev'd on other grounds by Martinez v. Affordable Hous. Network, Inc., 123 P.3d 1201; 2005 Colo. LEXIS 1075 (Colo. 2005).

(1) 6-1-113(2)(b) entitles the winning homeowners to an additional award to cover their legal fees and court costs.

Prosecutors Looking Into Conduct Of Colorado Man In Alleged Foreclosure Rescue Scam

In Colorado Springs, Colorado, KKTV Channel 11 reports on a local homeowner facing foreclosure who claims that, based on false representations, she unwittingly signed her home over to an area foreclosure rescue operator. The operator allegedly has since rented out the home, is pocketing the rent, and is stiffing the mortgage lender out of its loan payments. The matter has gotten the attention of a Colorado regulator and a local District Attorney's office:
  • Erin Toll, the director of the Colorado Division of Real Estate says, "It just frankly sickens me that people would take advantage of someone who's in a situation like this both financially and emotionally." She warns homeowners to be careful, adding, "You have a giant target painted on your back and hunters will come out and prey on you."

  • Toll says since Zehnder is not a licensed realtor she's turning over [the homoewner's] complaint to the Colorado Attorney General's office. Toll says, "It appears from things I've found on the website that this person has done this before to other people and the Attorney General's office is very interested in this case."

***

  • The El Paso County District Attorney's office [reportedly said] Zehnder was arrested [in the past] for two felonies ... forgery and the filing of false documents ... and received deferred sentences for each. Now the Economic Crimes Division is investigating him again based on [the homoewner's] complaint.(1)

For the story, see Beware of Foreclosure Deals.

(1) If, in fact, it can be proved that the homeowner was tricked into unwittingly signing away the deed to her home by the foreclosure rescue operator, the deed might be considered a forged document triggering the application of the Colorado forgery statute against the operator, despite the fact that the signature on the deed is genuine. See Forgery, 18-5-102(1)(c), Colorado Revised Statutes.

Further, if the homeowner were to prove, in a civil lawsuit, that she was fraudulently deceived about the nature of the document she signed that purportedly conveyed her title to the foreclosure rescue operator, so that she was excusably ignorant about what she signed, there is Colorado law that indicates that the deed she signed could be declared void from the time she signed it ("void ab initio") and, consequently, the home would still belong to her. For Colorado cases addressing the distinction between a deed that is void and a deed that is voidable, in the context of deeds procured by fraud, see:

Delsas v. Centex Home Equity Co., 186 P.3d 141; 2008 Colo. App. LEXIS 674(Colo. App. 2008):

  • If a grantor is aware that the instrument he is executing is a deed and that it will convey his title, but is induced to sign and deliver by fraudulent misrepresentations or undue influence, the deed is voidable and can be relied upon and enforced by a bona fide purchaser. Fallon v. Triangle Management Services, Inc., 169 Cal. App. 3d 1103, 1106, 215 Cal. Rptr. 748, 749-50 (1985) (citation omitted).
  • However, a deed procured by a particular kind of fraud, called fraud in the factum, is void. If a person has been fraudulently deceived about the nature of a document, so that he or she is excusably ignorant about what has been signed, courts recognize "fraud in the factum." Unlike other types of fraud, fraud in the factum yields an instrument that is void, and not merely voidable. Svanidze, 169 P.3d at 266 (citation omitted); see also Upson, 823 P.2d at 706; Dan B. Dobbs, Handbook on the Law of Remedies § 9.6, at 645-46 (2d ed. 1993).

Svanidze v. Kirkendall, 169 P.3d 262; 2007 Colo. App. LEXIS 1515 (Colo. App. 2007):

  • [I]f a person has been fraudulently deceived about the nature of a document, so that he or she is excusably ignorant about what has been signed, courts recognize "fraud in the factum." See Meyers v. Johanningmeier, 735 P.2d 206, 207 (Colo. App. 1987) (explaining relationship between statutory defense against holders in due course of negotiable instruments and the common law defense of fraud in the factum).
  • Unlike other types of fraud, fraud in the factum yields an instrument that is void, and not merely voidable. Akins v. Vermast, 150 Ore. App. 236, 945 P.2d 640, 643 n.7 (Or. Ct. App.), adhered to on reconsideration, 151 Ore. App. 430, 950 P.2d 907 (Or. Ct. App. 1997); Bennion Ins. Co. v. 1st OK Corp., 571 P.2d 1339, 1341-42 (Utah 1977).

Go here for other posts on forgery & forged documents involving genuine signatures. ForgeryGenuineSignatureKappa

Probe Continues Into Pennsylavania Title Company's Failure To Apply Escrow Funds Towards Unpaid Mortgages In Real Estate Closings

In Luzerne County, Pennsylvania, The Times Leader reports:
  • Kerry and John Foose are among the latest victims of Priority Search Inc., a Kingston title search company under investigation by the U.S. Secret Service for keeping money owed to property sellers. The Fooses say their credit is now shot because Priority Search failed to use $78,000 from the buyer of their Wilkes-Barre property to pay off the outstanding mortgage on the property. Priority Search also kept another $9,000 that the couple turned over at the June 2008 closing to pay off the remainder of their old mortgage, Kerry Foose said.(1)

***

  • Since the Secret Service investigation became public in November, dozens of victims have contacted the agency to report claims against Priority Search, said William Slavoski, the agent in charge of the Secret Service Scranton office. [...] Priority Search, which has since closed, is owned by Robert E. Marsh Jr. and Elizabeth Sichler, who was past vice chairwoman of the county Republican Party organization.

For more, see More victims step forward in Kingston title search case (Priority Search investigated for keeping money owed to property sellers).

Go here, Go here, Go here, and Go here for other stories of trust account / escrow account theft of funds.

(1) According to the story, the couple learned in February that their mortgage servicer had reported the unpaid debt, because their credit score plunged. The low credit score has prevented the couple from refinancing the mortgage on their Susquehanna County farm, where they now live. “Now it’s impossible to refinance. We’ve been denied by three lending institutions,” she said. EscrowRipOffAlpha

Sunday, March 08, 2009

More On Loan Modification Firms Hiring Attorneys To Service Its "Clients"

In Eugene, Oregon, a recent article in The Register Guard contained this excerpt on an out-of-state loan modification firm that reportedly employs attorneys to provide services to homeowner-clients seeking to restructure their home mortgage payments:
  • [C]raig Cooper is the Lane County representative of Choice Loan Consulting, which is headquartered in Arizona. [...] His company interviews homeowners and, if both parties agree to go forward, charges a fee of $3,500. “Once we accept a client, we guarantee at least a 10 percent reduction in payment,” Cooper said. “If a 10 percent reduction is not achieved, every penny is refunded.” Choice Loan Consulting has a staff of house attorneys, who are located in Phoenix, and they do all the negotiating and legal modification for clients, Cooper said.

The type of activity described above is currently under investigation in other states for possible ethics violations on the part of the attorneys involved, and for possible violations of laws prohibiting the unlicensed/unauthorized practice of law by the non-attorneys involved. I wonder if the state bars in Oregon and Arizona have caught wind of the arrangement described in this story.

Source: State warns homeowners about loan modification scams.

Go here and go here for other posts on issues relating to attorneys, loan modifications, and the unlicensed/unauthorized practice of law. UnauthPractOfLawKappa

Marketing Firm Identifies Loan Modification Opportunities For Attorneys, Others

A recent MarketWatch article describes one company's marketing activities designed to drum up loan modification business for its clients:
  • Your lender refuses to grant relief from your costly mortgage, and you're desperate. Should you respond to any of the growing number of television ads, mailings or phone calls touting loan modifications? The marketers producing the ads represent a broad mix of firms seeking business, including mortgage and real-estate brokers and lawyers.

  • One ad running on several television stations highlights the "crisis on Main Street" and offers a loan modification "help line." JCR Enterprises Inc., a Foothill Ranch, Calif., marketing company, produces the infomercial. JCR receives income from licensing the ad and from commissions paid by the stations on which it airs. Licensees get the phone calls.(1)

  • David Riemann, senior vice president for JCR, says he has about 50 loan-modification licensees, mostly attorneys. To handle a loan modification, those attorneys charge consumers fees ranging anywhere from $995 to $5,000.

Source: Double whammy (Can't pay your mortgage? Some modification offers hurt more than help).

Go here and go here for other posts on issues relating to attorneys, loan modifications, professional ethics issues, and the unlicensed/unauthorized practice of law.

(1) The story refected above is a revision of a story originally published March 2. The revised story notes that it clarifies the manner in which JCR Enterprises is compensated as was described in the original. The manner of compensation, as reflected in the original March 2 version of the story, was described as follows:

  • David Riemann, senior vice president, says that consumers who respond are typically referred to a participating attorney in their area. His company may collect a retainer for processing and handling the call. Plus, JCR gets paid commissions for media and production.

I suspect that someone realized that the state bar associations might have had a serious problem with attorneys participating in the arrangement as originally described, thus the backpedalling.

Use Of Power Of Attorney By Non-Lawyer Assisting Homeowner In Foreclosure Actions Does Not Insulate Against UPL Charges

An Ohio court decision of the state Supreme Court addressing the issue of unauthorized practice of law ("UPL") described the activities of a non-attorney doing business as Kennedy, Katz & Rose and its approach in soliciting business with people facing foreclosure and other debt collection actions (case law links require free registration at FindLaw.com):
  • [I]n his business, respondent [a non-attorney] searched a Hamilton County court index for recent filings of foreclosure proceedings and debt collection lawsuits. Respondent then mailed letters to the defendants in these debt related lawsuits requesting that they hire him to settle the cases. The letters contained a statement that Kennedy, Katz & Rose did not include attorneys and that the business could not represent the debtors or advise them in legal proceedings.

  • When a defendant expressed interest in becoming a client, respondent had the defendant sign a power of attorney and a work agreement authorizing the respondent's business to negotiate a settlement in exchange for compensation. Respondent then would send a letter to the attorney representing the plaintiff in the debt-related litigation in an effort to settle the dispute.

In finding that the conduct constituted the unauthorized practice of law, the Ohio Supreme Court said the following:

  • [A]s we recently held, the practice of law includes "making representations to creditors on behalf of third parties, and advising persons of their rights, and the terms and conditions of settlement." Cincinnati Bar Assn. v. Cromwell (1998), 82 Ohio St. 3d 255, 256, 695 N.E.2d 243, 244. Neither respondent's statements in his solicitation letters that he was not an attorney and was not giving legal advice nor the powers of attorney executed by his clients insulated respondent, a non-attorney, from the unauthorized practice of law. See Akron Bar Assn. v. Miller (1997). 80 Ohio St. 3d 6. 8-9, 684 N.E.2d 288, 291; Richland Cty. Bar Assn. v. Clapp (1998), 84 Ohio St. 3d 276, 278, 703 N.E.2d 771, 772.

Source: Cincinnati Bar Ass'n v. Telford, No. 98-2558, 85 Ohio St. 3d 111; 707 N.E.2d 462; 1999 Ohio LEXIS 688 (1999).

Go here and go here for other posts on issues relating to attorneys, loan modifications, professional ethics, and the unlicensed/unauthorized practice of law. UnauthPractOfLawKappa

Lender Compliance With Central Florida Foreclosure Court Mediation Unknown As Understaffing Impedes Effective Monitoring

In Central Florida, the Bradenton Herald reports:
  • Three months after lenders were first required to offer meetings with local borrowers before foreclosing on their primary homes, no one — not even the judge who mandated it — knows how well lenders are complying. That’s because no one is checking, the area’s top judge acknowledged Tuesday. “Ideally, we’d be verifying it, but we and the clerks are so short-handed that we’re not monitoring it to the degree I’d like,” 12th Judicial Circuit Chief Judge Lee Haworth said.(1)

For more, see No one watching circuit judge’s foreclosure mandate.

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

(1) According to the story, since Dec. 1, Haworth has required lenders filing foreclosure suits against homesteaded property in Manatee, Sarasota and DeSoto counties to offer “conciliation conferences” to homeowners. The conferences, which are voluntary and optional for homeowners, are designed to explore possible ways of avoiding foreclosure such as refinancing or modifying the loan.

Saturday, March 07, 2009

NFL Cornerback, Pastor Accused In Alleged San Diego-Area Equity Stripping, Foreclosure Rescue Scam

In San Diego, California, KGTV Channel 10 reports:
  • A professional football player and a pastor are both accused of preying on San Diegans facing foreclosure, 10News reported. According to court records obtained by 10News, the player and pastor ran a foreclosure rescue scam with the player's mother. A civil complaint was filed against Baltimore Ravens cornerback Anwar Phillips, who is accused of playing a role in a local foreclosure scam.

***

  • The complaint said the [homeowners] met one of the foreclosure group's members at a local church who was a pastor. The group promised to be the answer to their financial prayers. "This group promised to save these people's house by temporarily putting someone on the title, and they would be able to get the house back in a couple of months," said [homeowners' attorney Mike] Vallee. However, their prayers were left unanswered, and Vallee said the [homeowners] are victims of an equity draining scam.

  • In the alleged scheme, a troubled homeowner transfers the title of the home to so-called rescuers, who then take out a new mortgage and pocket the equity. "What they ended up doing is stripping out somewhere between $90,000 to $120,000 of equity, quit paying the loan and now the people are facing foreclosure again," said Vallee.(1)

For more, see NFL Player Accused In Local Foreclosure Scam.

(1) If the homeowners who were allegedly defrauded out of their home equity can demonstrate that they were unaware of the nature of what they were signing, this could, under California law, constitute grounds for declaring the deed void from the time it was executed ("void ab initio" - for those who speak Latin), thereby leading to voiding the foreclosing mortgage as well. See Schiavon v. Arnaudo Bros., 84 Cal. App. 4th 374; Cal.Rptr.2d 801 (Cal. App 6th Dist. 2000):

  • "A deed is void if the grantor's signature is forged or if the grantor is unaware of the nature of what he or she is signing. (Erickson v. Bohne, 130 Cal.App.2d [553] at pp. 555-556)."

The Schiavon case goes on to say that "where the grantor is aware of what he or she is executing, but has been induced to do so through fraudulent misrepresentations[,]" then such a deed is not void, but is merely voidable.

In the event the deed is found to be merely voidable, the homeowners victimized by the alleged fraud can still attempt to void or cancel the deed to the purported buyer, and the mortgage obtained by the buyer. However, central to such an effort would be the ability to:

  • prove the buyer and/or lender either participated in, or had actual knowledge of, the fraud, or
  • assuming the buyer and/or the lender neither participated in, nor had actual knowledge of, the fraud, impute upon them notice of the fraud and/or any other unrecorded rights and equities (ie. equitable mortgage) the victimized homeowners may have had at the time of the conveyance.

Lack of participation in the fraud, and lack of any actual knowledge thereof, by subsequent purchasers & encumbrancers is not enough to sustain a claim of bona fide purchaser / encumbrancer. In this case, the homeowners' continued possession of the property after signing away the deed may have triggered a duty to inquire, upon both the buyer, and the buyer's mortgage lender, into the nature of the homeowners' continued occupancy in their home. For support for this proposition under California law, see Pell v. McElroy, 36 Cal. 268, 1868 Cal. LEXIS 186 (Cal. 1868), where the California Supreme Court ruled:

  • The continued exclusive possession of a vendor after his formal conveyance of the legal title is a fact in conflict with the legal effect of his deed, and is presumptive evidence that he still retains an interest in the premises, and is sufficient to put a purchaser upon inquiry, and subject him to the general rule heretofore announced in case of the party in possession being a stranger to the title as of record.

The obligation of a subsequent purchaser to inquire into the rights of the seller when the seller retains exclusive possession after the conveyance also applies to a subsequent encumbrancer/mortgage lender. See J. R. Garrett Co. v. States, 3 Cal.2d 379, 44 P.2d 538 (Cal. 1935):

  • As a general rule, possession of real property is constructive notice to any intending purchaser or encumbrancer of said property. This rule is so well established that citation of authority is hardly necessary.

The obligation of a subsequent purchaser or encumbrancer to inquire is summarized by these excerpts from Pell v. McElroy:

  • The fact of open, notorious, and exclusive possession and occupation of lands by a stranger to a vendor's title, as of record, at the time of a purchase from and conveyance by such vendor out of possession, is sufficient to put such purchaser upon inquiry as to the legal and equitable rights of the party so in possession, and such vendee is presumed to have purchased and taken a conveyance from the vendor with full notice of all the legal and equitable rights in the premises of such party in possession and in subordination to these rights; and this presumption is only to be overcome or rebutted by clear and explicit proof on the part of such purchaser, or those claiming under him, of diligent, unavailing effort by the vendee to discover or obtain actual notice of any legal or equitable rights in the premises in behalf of the party in possession. And when the location of the lands is such as to render personal application to and inquiry of the occupant practicable, a purchaser failing to make such application and inquiry is no more entitled to be regarded a purchaser in good faith than if he had so inquired and ascertained the real facts of the case.

In Scheerer v. Cuddy, 85 Cal. 270, 24 P. 713; (Cal. 1890), the California Supreme Court made this statement regarding a purchaser's duty to know who is in possession of the property he/she is purchasing:

  • Whether the respondent knew of the appellant's possession, or not, is immaterial. It was his duty to know who was in possession of the property before making the purchase, and his purchase without ascertaining the fact must be regarded as the strongest evidence of bad faith on his part. The burden of making the proper inquiry was cast upon him by the mere fact of actual possession on the part of the appellant. If it were allowed that by failing to acquaint himself with the fact of possession on the part of another than the vendor the vendee could avoid the effect of the rule above stated, he could purposely avoid any inquiry on the subject, and thereby evade the rule and its consequences entirely.

For a California case applying the bona fide purchaser doctrine and the purchaser's duty to inquire of persons in possession in the context of an equitable mortgage, see Hyde v. Mangan, 88 Cal. 319, 26 P. 180 (1891).

For more on the aforementioned points, see:

Courts Obligated To Address Jurisdictional Issues Before Reaching Merits Of A Case

A 2006 ruling of a New York appellate court serves as a reminder that a trial court's jurisdiction to entertain a dispute is a threshold matter and, accordingly, a trial court has the obligation to address this issue before proceeeding forward to rule on the merits of the case.

The appeals court ruled that it was error for a trial court to grant a judgment in a foreclosure action before first addressing whether the defendant/homeowner was properly served with legal process:
  • [W]ith respect to that branch of the defendant's motion which was to dismiss the complaint on jurisdictional grounds, the defendant's sworn denial of receipt of process was sufficient to rebut the proffered affidavit of service and the plaintiff, therefore, was required to establish personal jurisdiction by a preponderance of the evidence at a hearing (see Schwerner v Sagonas, 28 AD3d 468, 811 NYS2d 595 [2006]; Bankers Trust Co. of Cal. v Tsoukas, 303 AD2d 343, 343-344, 756 NYS2d 92 [2003]; Kingsland Group v Pose, 296 AD2d 440, 744 NYS2d 715 [2002]).

  • It is "axiomatic that the failure to serve process in an action leaves the court without personal jurisdiction over the defendant, and all subsequent proceedings are thereby rendered null and void" (McMullen v Arnone, 79 AD2d 496, 499, 437 NYS2d 373 [1981). Accordingly, the Supreme Court erred in determining the plaintiff's motion before resolving the threshold issue of jurisdiction (see Pena v Mittleman, 179 AD2d 607, 579 NYS2d 359 [1992]).

For the court's ruling, see Elm Mgt. Corp. v. Sprung, 2006 NY Slip Op 7446; 33 A.D.3d 753; 823 N.Y.S.2d 187; 2006 N.Y. App. Div. LEXIS 12494 (App. Div. 2nd Dept. 2006).

Judges Are Human, Too

The following stories support the proposition that judges, like the rest of us, are human and that some of them are quite capable of getting into hot water.
  • Pennsylvania: An unprecedented case of judicial corruption is unfolding in Pennsylvania. Several hundred families have filed a class-action lawsuit against two former judges who have pleaded guilty to taking bribes in return for placing youths in privately owned jails. Judges Mark Ciavarella and Michael Conahan are said to have received $2.6 million for ensuring juvenile suspects were jailed in prisons operated by the companies PA Child Care and a sister company, Western PA Child Care. See Penn. Judges Get Kickbacks for Placing Youths in Privately Owned Jails.

  • New York: Supreme Court Justice Joseph S. Alessandro of the Ninth Judicial District in New York and his brother, Bronx Civil Court Judge Francis M. Alessandro, should be removed from office for failing to repay on time a $250,000 loan made to one of Joseph Alessandro's campaigns and for misstating their financial holdings and obligations on disclosure forms and loan applications, the Commission on Judicial Conduct recommended in two decisions made public in February. See N.Y. Agency Recommends Removal of Two Judges Who Are Brothers (Read the Commission's Findings on Justice Joseph Alessandro and Judge Francis Alessandro).

  • New York: A Long Island judge notoriously dubbed "Senator Road Rage" for his horrifying behavior while he was a politician nearly mowed down a traffic agent in Manhattan and then threatened the officer's job, The Post has learned. Court of Claims Judge James J. Lack and his daughter, Katherine, 37, were "barreling down" West 60th Street near the Mandarin Oriental Hotel at about 5 p.m. when they crossed paths with the unlucky agent, sources said. The robed rage-a-holic - who's been involved in dozens of angry driving incidents over the last 20 years - gunned his engine to swerve around the agent, who struck his hand on the passenger's-side mirror, the sources said. See ROAD-RAGE LI JUDGE IS AT IT AGAIN.

  • Texas: The presiding judge of the highest criminal court in Texas has been charged by the state judicial ethics commission. Judge Sharon Keller has been charged over her refusal to allow Michael Richard, a death row prisoner, to file an after-hours appeal in 2007. Keller, a Republican, could be removed from office or reprimanded if she is convicted. The State Commission on Judicial Conduct, in its charging papers, said Keller's "willful and persistent failure" to follow her court's execution-day procedures on Sept. 25, 2007, constituted "incompetence in the performance of duties of office." See Texas judge charged with judicial misconduct.

  • Arkansas: A lawyer accused of trying to defraud a pawnshop out of a lawn mower has pleaded guilty to a misdemeanor charge and surrendered his law license. Donald Warren Senior of Pine Bluff was serving as a special judge in Jefferson County when he signed an order July 16 for Money Corner to release a Land-Pride Finish Mowing Deck to him. Warren claimed he was the owner, although he had not filed a police report on the theft of the machine. See Ark. lawyer enters guilty plea, surrenders license.

For other posts on judges in hot water, go here and go here. knuckleheaded judges zeta

Friday, March 06, 2009

Foreclosure Defense Self-Help Seminar Upcoming In Downtown Miami

In Miami, Florida, South Florida Caribbean News reports:
  • Homeowners who are in any stage of foreclosure in Miami can now get the help they need during a FREE legal seminar designed to address homeowners’ rights and the types of foreclosure defenses available to them. The Homeowners Legal Assistance Program for the public will be held Saturday, March 14 at the Miami-Dade College Wolfson Campus, located at 245 N.E. 4th Street, Room 3210, Building 3000, from 9 a.m. to 3 p.m. Attendees will have an opportunity to ask questions of attorneys who handle foreclosure cases.(1)

  • Homeowners will be able to meet with an attorney one-on-one after the presentations. They will be seen on a first come, first served basis. Homeowners should bring [their loan and court] documents related to their case[. ... M]ayor Carlos Alvarez’ Mortgage Fraud Task Force [...] will distribute forms for filing criminal complaints involving mortgage fraud.

For more, see Free Homeowners Legal Assistance Program Provides Foreclosure Help To Residents of Miami Dade County.

(1) Presenters include former U.S. Attorney for South Florida Kendall Coffey; Consumer Advocate attorney Leonard Elias of the Miami-Dade Consumer Services Department; attorney Erik Wesoloski, whose law practice concentrates in real estate litigation and real estate transactions; bankruptcy attorney Jordan Bublick; Chief Counsel Glen Theobald of the Miami-Dade Police Department; and Richard Zaretsky, who is a Florida Bar Board certified real estate attorney. Elias will be the moderator, and Tim Ravich, President of the Dade County Bar Association will give the opening remarks.

Freddie Suspends Foreclosures On Mortgages Qualified For Obama Modification Plan; Will Enter Landlord Business; Halts Evictions Thru April 1

In McLean, Virginia, Freddie Mac announced this week:
.
March 4 press release:
  • Freddie Mac [...] announced it is suspending foreclosure sales on mortgages eligible for the Home Affordable Modification Program announced [...] as part of the Obama Administration’s Making Home Affordable plan. [...] Specifically, Freddie Mac will instruct its servicers not to complete a foreclosure sale on a mortgage eligible for the Home Affordable Modification program unless they completed their effort to contact the borrower and either the borrower did not respond or lacked the capacity or willingness to participate in the Home Affordable Modification program or any other Freddie Mac workout program.
March 6 press release:

  • Freddie Mac [...] announced the official launch of its new REO Rental Initiative giving qualified tenants and former owners the option to lease their recently foreclosed properties on a month-to-month basis. The REO Rental Initiative will be managed by HomeSteps®, Freddie Mac's national real estate unit, and implemented through several national property management firms.

  • Freddie Mac also announced it will continue to suspend all eviction actions until April 1, 2009 to ensure there is ample time for current occupants to learn about the options available to them under the new initiative.

Go here for the entire March 4 press release: Freddie Mac Stops Foreclosure Sales on Loans Eligible for New Obama Home Affordable Modification Program.

Go here for the entire March 6 press release: Freddie Mac Officially Launches REO Rental Initiative for Tenants Owner-Occupants After Foreclosure (Freddie Mac Continues Suspension of Evictions Through April 1, 2009).

Current, Former L.I. Local Municipal Officials Accused Of Swiping 4-Acre Parcel; Used Unlawful Tax Deed Scheme, Says Developer In Civil RICO Suit

In Nassau County, Long Island, Newsday reports:
  • A developer has filed a civil racketeering lawsuit against a dozen Freeport Village and former Nassau County officials, accusing them of conspiring to take by unlawful means a 4-acre parcel he owns. The suit claims that Freeport Mayor William Glacken and his brother-in-law, village attorney Harrison J. Edwards, plotted with former Nassau deputy treasurer Keith Sernick and others between 2000 and 2004 to take the property through an unlawful tax deed scheme. The defendants acquired the property, which the owner subsequently retrieved through court action.

For more, see Suit accuses Freeport, Nassau officials of land scheme.

Colorado Regulator: Local Realtor Association Thwarting Attempts To Probe Mortgage Fraud

In Colorado Springs, Colorado, The Gazette reports:
  • The state's top real estate cop subpoenaed the Pikes Peak Association of Realtors for access to its Multiple Listing Service database on Wednesday, accusing the group of hindering her agency's investigations into local cases involving millions in fraudulent loans that left buyers with ruined credit and sent homes into foreclosure. Erin Toll, director of the Colorado Division of Real Estate, said her investigators were forced to use surreptitious means to get access to the MLS, and she is "furious" about it.

***

  • Toll wants her staff of 50 to be able to search the Pikes Peak MLS to search for signs of overappraised properties, pockets of houses going into foreclosure and other indicators of mortgage fraud. She said her investigators should not have to reveal the details of each investigation to the real estate association staff and possibly compromise their probes, and added that they have unfettered access to virtually every other MLS database in the state.

For more, see State sues realty group over access to database.

Homeowners Bombard California State Bar With Complaints Against Attorneys Doing Loan Modifications; Calls Up To 1,000/Month, Says Official

In San Francisco, California, KCBS Radio 740 AM reports:
  • As the Obama Administration kicks off a $75 billion loan modification plan, the California State Bar is reporting a high number of calls regarding lawyers who may be crossing the line when working with loan modification specialists. It's prompted the Bar to take the unusual move of issuing an "ethics alert".(1)

  • California law prohibits foreclosure consultants from taking fees up front. Lawyers, on the other hand can, so often they're asked by foreclosure specialists to work with them and split the fees, but that's against the rules.

  • "It's possible that lawyers have gone to law school and have gone through the ethics portion of their admissions requirements and don't realize that they're not supposed to split fees with non-lawyers. For those lawyers that don't know that, this is helpful," said Russell Weiner, who is deputy trial counsel with the State Bar.

  • He says just a few months ago they started getting calls from people complaining about hiring a lawyer to help with loan modification, only to wind up losing the house. Those calls are now up to a thousand a month. He says if a lawyer does hire a so called mortgage specialist, or non-lawyer to work on a case, he or she must supervise them.

  • The worst offense Weiner says he's seen is lawyers who are letting non-lawyer[s] use their name to get clients in the door. "For a lawyer to basically sell their name to make it look like a lawyer is basically handling their case when they're not, that is pretty significant," said Weiner.

Source: CA Bar Sounds Ethics Siren Over Foreclosures.

For the State Bar's press release, see STATE BAR ISSUES FORECLOSURE ETHICS ALERT.

Go here and go here for other posts on issues relating to attorneys' professional ethics and the unlicensed/unauthorized practice of law in the context of loan modifications and foreclosure rescue.

(1) See ETHICS ALERT: Legal Services to Distressed Homeowners and Foreclosure Consultants on Loan Modifications. UnauthPractOfLawKappa

Orlando Loan Modification, Foreclosure Rescue Firm Shuts Down Amid State AG Probe, Reopens Under A Different Name

In Orlando, Florida, WFTV Channel 9 reports:
  • A foreclosure rescue firm, that Action 9 first exposed last year, is back in business with a new name. Homeowners claim they've been taken for thousands. She was the face of hope---at least many homeowners thought Nanci Hubsch was going to save them from foreclosure. [... One homeowner said] she was told the company ["Fix the Foreclosure"] was HUD government approved to negotiate with lenders to lower monthly payments.---but we found it's not.

***

  • Since Action 9 first exposed the company, the Attorney General has launched a formal investigation of unfair and deceptive trade ... But we found Nancy Hubsch has already changed company names---and she's running new ads. Her company is now called the American Housing Counsel---and it's website is HUD rights.com---even though it's not a federal HUD approved agency. It's business address is a virtual office in a downtown tower.

For more, see Action 9 Exposes Foreclosure Company.

Go here for a summary of the allegations regarding AG's probe into Fix the Foreclosure.

Arizona Landlord In Foreclosure Leaves Tenants In Over A Dozen Buildings Under Threat Of Utilities Shutoffs, Lack Of Maintenance

In Phoenix, Arizona, KTVK-TV Channel 3 reports:

  • A California outfit that's one of the biggest apartment investors in the Valley is facing serious financial difficulties that could leave employees and residents in a major lurch. According to property managers in three cities, lenders are beginning to take over the operations of more than a dozen complexes owned by Bethany Group.

  • Some employees say they have not been paid since January. Residents say repairs and basic maintenance are not being taken care of. In some cases, there's the threat that utilities could be shut off. [...] The 13 complexes owned by Bethany Group reportedly are in receivership, which is one of the beginning stages of foreclosure.

For more, see Apt. investment group's financial troubles bad for Valley tenants.

See also, KNXV-TV Channel 15: Valley company leaves residents, employees scratching heads:

  • [G]reen pools and trash overflowing are common. "It's an issue everyday with trash, with water, with electricity. It just goes on and on," said complex site manager Cheryl Credio.

For story update (3-9-09), see Tenants at risk of losing water get court appointed help.

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For other posts involving the problems tenants face in homes in foreclosure, go here, go here, go here, go here, go here, go here, and go here. SkimmingKappaRent