Monday, August 10, 2009

Monkees' Wife Cops Plea In NYC Rent Subsidy Ripoff; Pays 137,000 "Bananas" For "Get Out Of Jail Free Card" After Initially Hit w/ Grand Larceny Charge

In New York City, the New York Post reports:
  • Hey, hey, I'm a housing cheat! The wife of Monkees drummer Micky Dolenz was arrested [Thursday] on charges she ripped off an affordable housing program. Investigators said Donna Quinter, 54, had illegally gotten her paws on $136,866 in government rental subsidies aimed at providing affordable housing for the middle class over a five-year period.

***

  • The deal Quinter had been getting for the two bedroom in the Ruppert Yorkville Towers on the Upper East Side would have flabbergasted even a daydream believer -- she was paying $817 a month for the spacious pad, which had a market value of $3,600 a month. The former flight attendant was able to snag the deal by filing an affidavit in 2001 saying she lived there alone and earned less than $33,120.

***

  • Quinter was charged with grand larceny, which could have landed her behind bars for 15 years. [...] But Quinter doesn't have to worry about taking the last train to Otisville(1) for a prison stint -- she pleaded guilty yesterday to a reduced charge after turning herself in at the Manhattan District Attorney's office. As part of her no-jail deal, she repaid the entire $136,866, plus a $200 court surcharge, and agreed to do five days of community service.

For the story, see WIFE MAKES MONKEE OUT OF CITY (DOLENZ GAL GUILTY IN RENT $CAM).

(1) Otisville, New York is the home of the fine Federal Correctional Institution - Otisville, as well as the equally fine state prison, Otisville Correctional Facility, both located in Orange County, New York.

Maryland Homeowner Accuses Wells Of "Unclean Hands" In Federal Suit Seeking To Undo Toxic Mortgage Loan

In Greenbelt, Maryland, The Business Gazette reports:
  • A Bowie couple is suing Wells Fargo bank, alleging the bank should have known they could not afford the second mortgage they agreed to for their home. [...] According to court documents, the Bahs have asked for "legal and equitable relief as may be appropriate," though lawyers hope that will include a chance to renegotiate with the lender. The lawsuit is the latest of hundreds in the region that homeowners have filed in the past year to put off losing their homes, legal aid lawyers said.

***

  • In court papers, the couple's lawyer, Mary Goulet, argues that Wells Fargo knowingly approved the second loan knowing it would push them over their ability to pay and lead them to foreclosure. "It's clear to me and it would be clear to any bank that's underwriting a loan that the Bahs did not win the lottery in 2000. They didn't suddenly have this extra money to take out a second mortgage."

  • The argument is known in legal circles as the "unclean hands" doctrine. Under Maryland law, contracts can be changed or nullified if one group negotiated a deal in bad faith, which Goulet is alleging. "If you, as a bank, create a situation where you have pushed their finances into foreclosure, then you have unclean hands," said Goulet, who is representing the couple for free. Goulet said her office took on the pro bono case at the request of state officials, who have been urging lawyers to take on clients facing foreclosure for the last two years.

  • The argument has been used frequently by pro-bono attorneys in the region since foreclosures began to increase in 2006. The lawsuits generally are filed in local district courts, but in the case of the Bahs, the lawsuit was filed in federal court because Wells Fargo's headquarters is not located in Maryland. In most cases, it has led banks to renegotiate with homeowners, said Vicki Taitano, a lawyer for the Riverdale office of the Maryland Legal Aid Bureau in Prince George's County. "We've filed several in Prince George's County, but they've never gotten before a judge," said Taitano, who said banks usually choose to renegotiate with owners before a case goes to court and avoid foreclosure.

  • Legal experts said the lawsuits are being used to get people to the table because often homeowners and banks cannot seem to get together. [...] In papers filed July 16, Wells Fargo attorney Elizabeth Finberg said the complaint by Goulet "lack[s] factual and legal support and was filed in bad faith for the purpose of harassment." Finberg asked the court to fine Goulet $5,000.

For the story, see Struggling homeowners take banks to court (Residents facing foreclosure allege lenders have ‘unclean hands').

For the lawsuit, see Bah v. Wells Fargo Bank, N.A., et al. UndoMortgageLoans TILAdelta

Fannie Backs Down On Plans To Use Online Auction To Dump $29M Mortgage Portfolio Secured By Rundown Bronx Bldgs; Will Search For Responsible Landlord

In The Bronx, New York, Crain's New York Business reports:
  • In the face of pressure from Sen. Charles Schumer, city housing officials and tenant advocates, Fannie Mae decided to cancel an online auction of 19 Bronx apartment buildings that had fallen into foreclosure. Ocelot Capital had bought the buildings in 2007 for a hefty $36 million, and officials worried that the auction would attract another owner who would overpay. The buildings have fallen into disrepair, racking up code violations, and forcing the city to spend nearly $1 million on repairs.

***

  • Fannie Mae had bought the $29 million mortgage portfolio from Deutsche Bank Berkshire Mortgage in 2007 and had proposed auctioning it off through a website called DebtX. The buildings, located in the Crotona section of the Bronx, are rundown, including 10 which have made the city’s list of worst-maintained buildings. The buildings are home to 520 families.(1)

For more, see Fannie Mae backs off auction of Bronx apartments (Public officials had worried that the sale of 19 buildings would attract speculators and raise rents).

(1) "Fannie Mae is committed to selling the Ocelot notes to a responsible buyer who will deal fairly and appropriately with tenants," said Ken Bacon, executive vice president of housing and community development at Fannie Mae. Overleveraged NYC Buildings

Florida Suit Claiming Homeowner Facing Foreclosure Paid Inflated Fees To Reinstate Mortgage Certified As Class Action

In West Palm Beach, Florida, the Palm Beach Post reports:
  • Circuit Judge Thomas Barkdull [Thursday] certified as a class action a lawsuit against an attorney, along with his law firm, who collected foreclosure-related fees from Wells Fargo mortgage holders. The suit was filed by Loren Banner, an electrician from Palm Springs, who claims Plantation attorney David J. Stern charged fees for services he did not perform or that were excessive after Wells Fargo foreclosed on his property and Banner sought to pay what he owed the bank and get his mortgage reinstated.

  • With the case certified as a class action, potentially 2,500 Wells Fargo mortgage holders around Florida who received mortgage reinstatement letters between Jan. 18, 2003 and February 19, 2009, could qualify to be part of the class. Those letters set forth money due to Wells Fargo, including various fees. The ruling was a victory for West Palm Beach attorney Louis Silber, who launched the effort on behalf of Banner in 2007. Silber's lawsuit claims that Banner paid too much to get his mortgage reinstated. [...] Banner paid a host of fees to be able to reinstate his mortgage, which ultimately was reinstated. Those fees included charges for title searches, property inspections, filing fees and Stern's attorney fees.

For more, see Lawsuit against Wells Fargo and Broward attorney certified as class action.

Failure To Establish Chain Of Title, Prove Debt Sinks Creditor As Consumer Challenges Credit Card Claim In Collection Lawsuit

In Philadelphia, Pennsylvania, The Philadelphia Inquirer reports:
  • Jenny Vo of South Philadelphia ekes by as a manicurist and single mother raising two sons. So when a debt collector told her in February 2008 she owed $14,237.38 on her credit card, she was stunned. he knew she had charged purchases of food, clothing, and household supplies, and she knew she was behind in payments. But Vo, 37, thought she owed just a "couple of thousand dollars" on the card.

  • So she got a lawyer to challenge Unifund CCR Partners' claim in Philadelphia's Court of Common Pleas - and the company could not provide credit card bills itemizing her purchases. The most it was able to document was $5,738.33.

  • Frustrated with a lack of evidence presented by Unifund, Judge Idee Fox dismissed the case Feb. 17, which stripped Unifund of the right to demand payment from Vo. Vo's case reflects a problem in the credit card industry as defaults rise during hard economic times. The increasing complexity of lending in recent years has made it more difficult for creditors to document what they say they are owed.

***

  • Citigroup Inc. and Unifund did not respond to requests for comment. Philadelphia lawyer Frederic Weinberg, representing Unifund, said he had provided 34 pages of documents. But Judge Fox ruled that Unifund failed to establish the chain of ownership, as well as the amount owed. If Vo had not asked for proof, Unifund might have automatically won the right to take a lien against her house. [... W]hen borrowers [...] get legal help, the collectors typically withdraw cases, said Vo's attorney, Peter Schneider of Community Legal Services, adding, "They don't have the proof."(1)

For the story, see Creditors face documentation woes.

(1) According to the story, the Municipal Court of Philadelphia in late February tightened the procedure for filing credit cards claims against consumers. For example, a collection firm can no longer win its claim just because a cardholder fails to show up for a hearing. It still must have adequate proof to support its claim. And in Western Pennsylvania, Blair County formed a Credit Card Court in January that encourages conferences before trial, similar to Philadelphia's mortgage-foreclosure program, created last year during the housing crisis. In the seven months since then, 75 percent of the cases in which the borrowers showed up have been resolved in conference. EpsilonMissingDocsMtg

Sunday, August 09, 2009

Minnesota Suit Seeks To Slam Brakes On Foreclosures Until Feds Implement Better Procedures In Program Borrowers Claim Violates Due Process Rights

In Minneapolis, Minnesota, the Minneapolis Star Tribune reports:
  • Across the state and the nation, struggling homeowners [...] are growing frustrated with a $75 billion federal program that was supposed to ease the housing crisis by preventing so-called "avoidable foreclosures" by cutting borrowers' monthly mortgage payments. But, according to a U.S. Treasury report released Tuesday, only a very small percentage of people who qualify for relief under the program are actually getting it. In many cases, borrowers have been strung along for months, only to be told in the end that they don't qualify. And when borrowers are denied, they often are not told why.

***

  • Last week, the Foreclosure Relief Law Project, a nonprofit law firm in St. Paul, filed a lawsuit on behalf of [Brooklyn Park homeowner Nichole] Williams and Johnson Sendolo, a Woodbury homeowner, who both claim they qualify for federal relief but were turned down by lenders without being given a reason. The lawsuit, which seeks to stop the lenders from foreclosing on more homes until better procedures are put in place, accuses the U.S. Treasury of violating borrowers' due process rights by denying them access to a federal program without proper notice or explanation.

  • "The smart thing to do for everyone is to press the pause button, to stop the foreclosure factory, and figure out what's wrong," said Mark Ireland, supervising attorney for the Foreclosure Relief Law Project.

For the story, see Federal mortgage program defaulting on a pledge? (A federal program that promised relief to millions of struggling homeowners has fallen far short of expectations).

See also, Homeowners File Lawsuit To Stop Foreclosures In Minnesota (Alleges Federal Modification Program Violates Constitutional Protections).

For the lawsuit, see Williams, et al. v. Geithner, et al.

For more information on this lawsuit or to read the filed documents, click here.

Mortgage Servicer Forecloses On Home Despite On-Time Payments On Loan Mod Agreement, Says Texas Woman In Suit

In Galveston, Texas, The Southeast Texas Record reports:
  • A Kemah woman alleges a mortgage processing and servicing company foreclosed her residence even though she was on time with her payments, recent court documents say. Christina Melinder accuses Ocwen Loan Servicing of breaching a loan modification agreement she entered with the Florida-based business back in February. Melinder explains in her lawsuit that Ocwen neglected to properly apply and account for her loan payments [...] and assessed improper charges and default-related fees which were not authorized by the loan's terms prior to formalizing the deal in question.

***

  • [The suit] insists that Melinder strictly complied with the terms of acceptance set forth in the Ocwen's offer, but the defendant - through the Brown & Shapiro law firm in Pasadena - improperly and illegally initiated legal proceedings for foreclosure because of alleged non-payment. [...] Ocwen is ultimately faulted for violating state law while Brown & Shapiro was named a co-defendant.

For the story, see Kemah woman says mortgage company foreclosed despite payments. QuestionableServicingTacticsSigma

Plea-Copping Suspect Agrees To Testify Against Confederates In Criminal Fraud Prosecution Of Alleged Loan Modification Scammers

In Monterey County, California, The Monterey Herald reports:
  • A preliminary hearing began Friday for a Gonzales woman and her nephew who are charged with fraud. They were arrested in August 2008 on suspicion of taking money from 55 people with empty promises of renegotiating their mortgages to avoid foreclosure.

  • Defense attorneys for Maria de Lourdes Ponce, 51, and Fabian Olivarez Casillas, age unknown, said prosecutors are basing their case on the word of the real culprit in the case, a cocaine-addicted co-defendant who pleaded guilty and agreed to testify against her alleged co-conspirators.

  • Melissa Dawn Garcia, 28, of Watsonville is serving a four-year prison sentence for similar offenses in Santa Cruz County. Her sentencing in the Monterey County case has been delayed until after she testifies against Ponce and Casillas.

For more, see Investigator testifies in fraud case (Two accused in mortgage renegotiation scheme).

Go here for other posts on this alleged scam.

California Men Sentenced For Using Others' I.D. To Obtain Loans, Cars; Victimized Owners Had Home Of 30+ Years Sold Out From Under Them

From the Office of the San Bernardino County, California District Attorney:
  • Howard Edwards and John Foster were sentenced to prison for real estate fraud related crimes. Howard Edwards was sentenced to 20 years, four months and John Foster was sentenced to 10 years, four months. The two defendants were found guilty on felony counts ranging from forgery, grand theft, filing of false instruments, identity theft, conspiracy, and money laundering.

  • In 2005/06, the two defendants, formerly of Rancho Cucamonga, befriended unsuspecting victims on an Internet chat line. Their personal information was used to obtain loans on luxury cars and real estate in Fontana. The victims were then liable for these loans. The loan proceeds were transferred to a phony escrow company. The defendants falsified several real estate deeds and forged the signatures and stamps of several notary publics. The false deeds were later recorded at the San Bernardino County Recorder's Office.

  • In July 2007, the defendants sold a house in the city of Gardena, Ca. for an additional $560,000. The house was sold without the owner's permission and knowledge. The victims first found out about it when a lending institution attempted to foreclose on the property. The rightful owners had been living at the residence since 1971. The defendants utilized the personal information of a man living in Massachusetts to obtain the loans. $538,000 was transferred to the phony escrow company and later dispersed to the defendants other bank accounts.

For the DA's press release, see Two Men Sentenced for Real Estate Fraud. DeedContraTheft

Attorney Suspended For Taking, Failing To Return $308K In Client Trust Funds After Failed Foreclosure Sale Bid

In Tampa, Florida, The Tampa Tribune reports on some of the local attorneys recently sanctioned by the Florida Supreme Court for their bad behavior, including:
  • Andrew Stuart Forman of Tampa was suspended until further order. An emergency suspension order states that Forman took $308,000 in trust to be used to bid at a foreclosure sale. The client was not the successful bidder, but Forman removed the money from the trust account and failed to return the funds.

For more, see 4 Bay area lawyers disciplined by high court (Four Tampa Bay area lawyers were among the 47 attorneys disciplined recently by the Florida Supreme Court).

For the most recent issue of The Florida Bar's "gossip sheet," see Supreme Court Disciplines 47 Attorneys (a significant number of whom were hammered for screwing around with trust/escrow funds belonging to their clients). EscrowRipOffKappa

Saturday, August 08, 2009

Michigan Bride Settles For Outdoor Tented Wedding Reception After Being Bounced Twice By Country Clubs In Foreclosure

In Holland, Michigan, The Holland Sentinel reports:
  • After twice relocating their wedding reception when both venues they chose went into foreclosure earlier this year, Rachel Selle joked that maybe her marriage wasn’t meant to be. The Hudsonville couple had to change venues after their reception plans at Holland Country Club and then Raleigh Woods were thwarted when both businesses closed. [...] The couple then approached Laketown Golf and Conference Center, [...] where the inside of the building was already booked for a reception. The center was able to accommodate them by creating a tented reception in the courtyard today.

For more, see Closures give bride wedding bell blues (Couple changes venue three times due to foreclosures).

Stumbling Onto Hand Grenade The Latest Surprise For Real Estate Pair As Hazards Increase For Those Selling Foreclosed Homes

In Clarke County, Georgia, the Athens Banner Herald reports:
  • Foreclosure specialists Mike Seger and Jackie Quig never know what they'll find when they check on a house that a bank plans to put on the market. They've come across dynamite, a pipe bomb and marijuana grow houses, but Thursday was the first time they'd stumbled onto a hand grenade. They found the explosive about 11:30 a.m. while inspecting a foreclosed home [...] in Northern Clarke County.

***

  • The men called 911, and Athens-Clarke police and firefighters raced to the house, along with the bomb squad. [...] Technicians with the University of Georgia police Bomb Disposal Unit sent in a robot, which took the grenade from the house and placed it in a pit that officers dug in the back yard. Officers then used an explosive counter-charge to blow up the grenade. UGA police Chief Jimmy Williamson didn't know if the grenade was real, but the bomb experts who examined it found no evidence that it was fake.

***

  • A year and a half ago [Seger and Quig] were inspecting a home in Gwinnett County when they found a stick of dynamite that was so old and unstable, officials said it could have gone off at any time, Seger said. Quig was going through the attic of a foreclosed home in Monroe last month when he saw a section of PVC pipe, capped on both ends. "I saw that it had a fuse, so I knew it was a pipe bomb," he said. "When we reported it, everyone came - the FBI, Homeland Security, the GBI - it was wild."

  • The men have inspected six homes during the past year, three in Jackson County, where they found the trappings of abandoned marijuana grow houses. "They'd run heavy PVC pipes under the ground and into the house for irrigation," Seger said. "They seemed to have been very elaborate operations."

  • The foreclosure specialists know they now work in a more dangerous environment. "We not nearly as confident going into a home as we used to be," Seger said. "You can't walk into a place blindly anymore."

For the story, see Inspection of foreclosed house turns up grenade (Realty specialists note job dangers). DeputyEvictionTheta

Tear Gas Triggers Gun Battle Between Detroit Cops & 78-Year Old Man Distraught Over Eviction Proceedings

In Detroit, Michigan, the Detroit Free Press reports:
  • A standoff involving a 78-year-old gunman distraught over being evicted from his Detroit apartment ended in a hail of gunfire [last week]. The man, who was not identified, was shot multiple times after firing at police, according to Detroit Police spokeswoman Sgt. Eren Stephens Bell. The man was taken to Detroit Receiving Hospital, where he was listed in critical condition.

  • The 5-hour standoff began about 4:40 p.m. at River Towers, a 14-story senior housing complex [...] that overlooks the Detroit River. Shooting began after police launched tear gas at the man, who then fired once inside the building, Stephens Bell said. Police fired more tear gas, and the gunman started shooting at police, who returned fire, hitting the man. Some residents coming home late were told to park their cars outside the gate of the complex and weren’t allowed inside the building during the standoff.

Source: Shooting ends hours-long Detroit apartment standoff.

See also: Elderly man resisting eviction shot by Detroit police. DeputyEvictionTheta

Virginia Couple Facing Foreclosure Discover Their Home Listed For Rent On Craigslist By Nigerian Scammer

In Lake Jackson, Virginia, InsideNova.com reports:
  • A Lake Jackson couple was shocked to see their house for rent on Craiglist this week. [... T]hey are losing it to foreclosure, and now it appears a scam artist is trying to make a buck by fraudulently listing it for rent. [Ashley] Pollard bought the home when “the market was crazy” in 2006. Now, because of hard times, they’ve been forced to put it back on the market for “short sale,” meaning the bank will sell it for the best price they can get.

***

  • [L]ike so many who have been hit by the economic recession, the family is forced to leave. So they turned to the internet to look for a new place to live. On Sunday night, Pollard was shocked to see her house listed on the popular Web site, Craigslist. [... B]efore she [called police], Pollard curiously e-mailed the person who listed her home on Craigslist, stating that she was interested in the house and asked when she could move in. In a reply, she said a man — who claimed to live in Nigeria — told her that she could move in within a few days if she sent him an $800 deposit. Once he received the money he would then send her the house keys. The man went on to write that he and his wife went to Nigeria to do missionary work for a church, but “fell in love with it so much that they decided to stay” and live there, said Pollard.

For the story, see Scammer posts Lake Jackson family’s home for rent on Craigslist.

Ex-Florida Appeals Court Judge Cops Plea To Falsifying Mortgage Application In Alleged Attempt To Help Stripper Cover Up Her Assets

In Tampa, Florida, the Palm Beach Post reports:
  • A former Florida appeals court judge who resigned amid controversy over his financial and personal relationship with a stripper has pleaded guilty to bank fraud. Thomas E. Stringer appeared in Tampa federal court Thursday morning. He is expected to be sentenced in two to three months. It's unlikely he'll get jail time. Prosecutors say Stringer falsified his mortgage application for a home in Hawaii.

  • Stringer resigned from the 2nd District Court of Appeal in February, months after a stripper came forward claiming he helped her hide from creditors by letting her put money into his bank accounts. The Judicial Qualifications Commission also found probable cause that Stringer listed himself as the sole owner of a home in Hawaii for the woman. The panel dropped its ethics complaint after Stringer resigned.

Source: Former Fla. judge linked to stripper pleads guilty.

NY AG Files Criminal Charges Against Judge For Allegedly Swiping Bail Money, Fees From Court Bank Account To Save Home From Foreclosure

From the Office of the New York Attorney General:
  • Attorney General Andrew M. Cuomo [Tuesday] announced criminal charges against a former town judge for using $27,000 in fees and bail money from a court bank account for personal use. According to the complaint, James Funk, 47, of Hudson, while sitting as a judge of the Stockport Town Court in Columbia County, withdrew funds from the court’s bank account on four occasions in order to pay the taxes and utility bill on the Diamond Street Diner, his Hudson restaurant, and to stave off the foreclosure of his personal residence.

***

  • An audit conducted by the Unified Court System’s Internal Audit Unit found that the money withdrawn by Funk was mostly attributable to bail money held by the Court for pending cases. As judge, Funk was the sole authorized signatory for the court bank account, and was also responsible for collecting, recording, depositing, and distributing fines and fees that are paid to the court.

For the entire press release, see Attorney General Cuomo Announces Arrest Of Former Town Judge For Charges Including Grand Larceny And Official Misconduct.

Outfit Accused Of Online "Astroturfing" As Part Of Facelift Peddling Program To Cough Up $300K Settlement In Lawsuit Brought By NY AG

From the Office of the New York Attorney General:
  • Attorney General Andrew M. Cuomo [...] announced a settlement with cosmetic surgery outfit Lifestyle Lift over the publishing of fake consumer reviews on the Internet. Under the settlement, Lifestyle Lift will stop publishing anonymous positive reviews about the company to Internet message boards and other Web sites, and will pay $300,000 in penalties and costs to the State of New York. The case is believed to be the first in the nation aimed at combating "astroturfing," a growing problem on the Internet.

  • Lifestyle Lift employees published positive reviews and comments about the company to trick Web-browsing consumers into believing that satisfied customers were posting their own stories. These tactics constitute deceptive commercial practices, false advertising, and fraudulent and illegal conduct under New York and federal consumer protection law. The settlement marks a strike against the growing practice of “astroturfing,” in which employees pose as independent consumers to post positive reviews and commentary to Web sites and Internet message boards about their own company.(1)

For the NY AG press release, see Attorney General Cuomo Secures Settlement With Plastic Surgery Franchise That Flooded Internet With False Positive Reviews.

(1) I wonder how common "astroturfing" is among those running the myriad of online loan modification rackets?

High Interest In Low Sticker-Priced SW Florida Homes With Chinese Drywall?

In Cape Coral, Florida, WINK News reports:
  • For the first time, we're starting to see homes that are known to have toxic Chinese drywall put up for sale. A never-lived-in, four bedroom, two bath home in Northwest Cape Coral is selling for a steal -- just $19,800. But buyer beware: the low sticker price is because the home is infected with Chinese drywall. Still, people are interested. "We are probably experiencing anywhere between 10-15 calls a day in addition to email leads inquiring about property with Chinese drywall," Realtor Jennifer Pentico says.

For more, see Buyer beware: Chinese drywall showing up in foreclosed homes now for sale.

In a related story, see Sarasota Herald Tribune: U.S. Senators press for action on Chinese drywall (TAINTED PRODUCT: Letters are sent requesting more federal intervention).

Friday, August 07, 2009

Judge Orders Wells To Turn Over Evidence, Execs To Appear At Depositions In City Of Baltimore "Ghetto Loans" Case

In Baltimore, Maryland, WJZ-TV Channel 13 reports:
  • Baltimore has won an early battle in its lawsuit against Wells Fargo. A federal judge ruled Thursday that the lender must turn over data on its Baltimore loans and make company officials available for depositions. The city sued Wells Fargo early last year, arguing that it targeted minorities for bad loans that led to widespread foreclosures and cost the city millions of dollars. Wells Fargo denies that race was a factor in its loan rates. The case moved into the discovery phase only recently. Wells Fargo attorneys sought to narrow discovery at Thursday's hearing, but U.S. District Judge J. Frederick Motz went along with the plaintiffs' request. Motz replaced U.S. District Chief Judge Benson Everett Legg, who recused himself after discovering what he called "a potential conflict of interest."

Source: City Wins Round In Wells Fargo Lawsuit.

Go here for other posts on Baltimore City's "ghetto loans" case.

Feds Sought 400 Years, Get 100 In Sentencing Of Owner Of 1031 Exchange Intermediary Accused Of Using Clients' Escrow Cash As "Personal Piggy Bank"

In Richmond, Virginia, Bloomberg News reports:
  • Edward Okun, the Miami businessman convicted of stealing from customers of his tax-deferral firm, 1031 Tax Group LLC, was sentenced to 100 years in prison for running a $126 million fraud scheme. U.S. District Judge Robert Payne handed down the sentence [Tuseday] in Richmond, Virginia, where Okun’s company was based. Prosecutors sought a sentence of 400 years, or a similar term amounting to life in prison. Jurors in March found Okun, 58, guilty of conspiracy, wire fraud, money laundering, smuggling and perjury following a three-week trial.

***

  • Assistant U.S. Attorney Michael Dry argued Okun’s fraud was worse than others, because his victims thought they were using a risk-free service, as opposed to investing. The tax-deferral industry temporarily holds real-estate sale proceeds for a fee under section 1031 of the U.S. tax code, allowing customers to defer taxes when similar properties are bought within 180 days. Instead of holding the money in banks, Okun used it as a “personal piggy bank” for expenses that included financing a divorce and buying jewelry for his new wife, prosecutors said. [...] Okun expanded the company in 2006 and 2007 by buying competitors and gaining access to their customers’ real-estate sale deposits.

For more, see Con Man Edward Okun Gets 100 Years for Fraud Scheme.

Go here for more on Edward Okun. EscrowRipOffKappa 1031 exchange

Boston Homeowner Dodges Possible Loan Modification Scam As Ex-Employee Warns That Firm Was "Just Flat Out Stealing"

In Boston, Massachusetts, WCVB-TV Channel 5 reports:
  • On the verge of foreclosure, Nancy Coxall of Boston was ecstatic when she received a flier from Nation's Housing Modification Center, promising to lower her interest rate and erase bad credit. [...] All she had to do was make a one-time payment of less than $3,000. "I'm saying, 'Wow, I can't do any better than that.' I'm thinking this is wonderful," said Coxall.

  • But Coxall was lucky. She canceled her deal after a call from former Nations Housing employee Tom Fatica. He realized what was going on and called potential clients to say there were actually no calls to lenders, and no loan modifications. "We are talking about a lot of money that they are just flat out stealing," said Fatica, "and they are stealing it from people can least afford to lose it."

***

  • Our sister station, KGTV in San Diego, tried to speak with Nation's Housing president Mike Trap at his office in San Marcos, Calif. An investigation shows he has a criminal record. In 2003, he admitted to lying to a federal grand jury in connection with a $100 million real estate scheme. But Nation's Housing is still taking calls and people's money. [...] Nation's Housing Modification Center is under investigation by the San Diego District Attorney's office [...].

For the story, see Home Loan Co. Accused Of Fraud ('Nation's Housing Modification Center' Accused Of Fraud).

Feds Move In On South Florida Loan Modification Peddler; Seize Luxury Cars, Boat In Criminal Probe As State Court Judge Upholds Temporary Injunction

In West Palm Beach, Florida, the Palm Beach Post reports:
  • Jason Vitulano reached out to troubled homeowners with the promise that he could save them for foreclosure, an investigator for the Florida Attorney General said in Palm Beach County Circuit Court [Wednesday]. But when Vitulano of Boca Raton received their checks for up to $5,000, he cashed them at a check cashing store, investigator Arnold Sherman said. He paid his telemarketers in cash.

  • Nearly 500 people have complained to the Attorney General that Vitulano's companies took their fees up front but did nothing in return, Sherman said, and the Boca Raton man has had his luxury cars and boat seized as part of a federal criminal investigation into his businesses. At [Wednesday's] hearing, Palm Beach County Circuit Judge Jack Cox decided to uphold a temporary injunction that prohibits Vitulano and his companies - FHAAllDay.com, Safety Financial Services Inc., Housing Assistance Law Center and Housing Assistance Now - from doing business. He also appointed a receiver to take over whatever is left of the business.

For more, see Judge continues block on Boca Raton man's foreclosure rescue operations.

Major Bay Area Landlord Hit w/ Numerous Foreclosure Actions Now Accused Of Stiffing Former Tenants On Security Deposit Refunds, Lease Buy-Out Payments

In San Francisco, California, the San Francisco Examiner reports:
  • Rental security deposits held by one of The City’s largest residential landlords were funneled into an array of bank accounts and plundered, potentially affecting thousands of tenants, according to lawsuits. Several lawsuits, including a class action, have been filed in recent weeks against CitiApartments or associated companies by former tenants who claim security deposits were not returned. “What we suspect is that the money has made it into somebody’s pocket,” said attorney Brian Devine, who is representing former tenants in the class-action lawsuit.(1)

  • CitiApartments is already the target of a city-backed lawsuit that alleges the firm harassed tenants to persuade them to move out of rent-controlled units so prices could be increased to market rate. In court, they have denied those charges. CitiApartments and associated companies, including the Lembi Group, Skyline Realty, Trophy Properties and Ritz Apartments, amassed a portfolio of properties in San Francisco that was estimated as of last year to include 307 buildings.

  • The company appears to have overborrowed from banks by overestimating or overstating the number of tenants it could convince to vacate rent-controlled units, according to Scott Weaver, an attorney representing a group of tenants who allege CitiApartments companies withheld payments offered to vacate their units. Of the properties owned by CitiApartments and associated companies, 51 were foreclosed upon by the international bank UBS and more than 60 additional buildings are currently in foreclosure proceedings, San Francisco Superior Court filings show.

For more, see Lawsuit alleges CitiApartments drained tenant deposit accounts.

(1) In addition, the story states that roughly 5,500 units remain in the control of CitiApartments companies, according to attorneys, and the average security deposit appears to be between $2,000 and $2,500. That means more than $10 million in deposits belonging to San Francisco tenants could be in jeopardy.

El Paso Woman Facing Foreclosure Allegedly Tricked Into Signing Away Home; Investor Rented Out Premises After Taking Possession

In El Paso, Texas, KFOX-TV Channel 14 reports:
  • A former El Paso woman says people are living in her Lower Valley home that she never sold. Tammy Diaz asked a real estate investor to help her sell this home more than two years ago. Diaz moved to Corpus Christi, and almost never heard from him again. Diaz in 2007 faced a separation from her husband and impending foreclosure on her home. So she reached out for help. "He made it seem like everything was real perfect, he was going to be able to sell our house for us," said Diaz.

  • Diaz is talking about Lorenzo Trujillo. Diaz was under the impression that Trujillo was going to sell her home in 45 days, but two years later, she said she had gotten no news from Trujillo. "About a month ago my daughter went to El Paso and she told me, 'Somebody is living in the house mom.' And I was like, 'What?'" she said.

For more, see Woman Shocked To Find People Living In Her El Paso Home.

Victims Accuse Colorado Man Of Tricking Owner Into Signing Over Home, Then Pocketing Rent From Unwitting Tenant While Allowing House To Be Foreclosed

In Colorado Springs, Colorado, KKTV reports:
  • Imagine you and your children being kicked to the curb with all your belongings left in the front yard in an undignified, but very legal way. That's the situation facing this tenant who decided to rent a property in foreclosure. Now Tara Proctor who's 8 months pregnant is trying to find a place to live. Tara says, "It was horrible. My kids... they just... they threw everything in bags, they wouldn't even let me pack. It was just... It's horrible, it's embarrassing." Tara moved into this northeast Colorado Springs neighborhood in March after signing a lease with this man known as Chevy or Dwayne Zehnder. She says she knew the home was in foreclosure, but never understood her rights. She found out the hard way that Zehnder whose arrest record shows he was accused of forgery and filing false documents ... was the ultimate winner ... collecting rent from her for months even though his only tie to the home was a document called a Quit Claim Deed.

  • Cynthia Glen owned the home. She says Zehnder told her he would sell the house. Instead ... she says he put out a "for rent" sign and started collecting rent from Tara. Cynthia says, "I didn't realize I was signing over the property to him at all. It makes me sick to my stomach to find out that you know... he's getting all of this money off of this property when it should be going to the mortgage lender." Now the house is owned by U.S. Bank which will try to sell it.

Source: Foreclosure Follow-Up. RentSigmaSkimming

Thursday, August 06, 2009

NJ Feds Bag Brooklyn-Based "Home Savers" Equity Stripping Foreclosure Rescue Racket; High Equity Homeowners Allegedly Conned w/ Bogus Sale Leasebacks

From the Newark, New Jersey Office of the FBI:
  • It’s the type of story that is becoming increasingly more common: FBI Special Agent In Charge Weysan Dun announced [Wednesday] the arrests of GARTH CELESTINE, age 44, of [...] Brooklyn, New York; and PHIL A. SIMON, age, 34, of Brooklyn – both better known collectively as “Home Savers Consulting Corporation”. Both were arrested this morning at their residences without incident and charged with attempt and conspiracy to commit wire fraud in connection with a home foreclosure scheme.

  • Celestine and Simon owned and operated Home Savers, which held itself out as a foreclosure rescue company, [...]. The company conducted business in both New York and New Jersey. According to the complaint, Celestine and Simon allegedly conspired with each other to defraud both homeowners facing foreclosure and mortgage lenders by making materially false representations and promises and causing wire transfers to perpetuate the scheme. A key aspect of the scheme was the targeted victims: homeowners with substantial equity in their homes who were facing foreclosure because of an inability to make the monthly payments.

***

  • [Another] victim-group consisted of the straw-buyers. Celestine and Simon allegedly recruited individuals with good credit scores to act as “buyers” of the homes facing foreclosure. This was accomplished by misrepresenting to the straw-buyers that they were helping the true owners to “save” their homes. [...] Celestine and Simon also allegedly applied to different lenders for multiple mortgages on the same properties at the same time to extract the maximum available equity from each property.

***

  • [T]he complaint charges that Celestine and Simon eventually failed to make the mortgage payments in nearly every case and caused the loans to default. In the end, Celestine and Simon caused lenders to fund more than $10 million worth of fraudulent loans and stole $1.5 million worth of equity from the properties.

For the entire FBI press release, see “Home Savers” and Misbehaviors! FBI Arrests Two in Foreclosure Scheme.

Go here for more on Brooklyn-based Home Savers Consulting Corp. shotgunning

Two Lenders Targeted In Mass. Class Actions Over Toxic "Payment Option, Pick-A-Payment" Loans; Could Slam Brakes On In-State Wells, BofA Foreclosures

In Boston, Massachusetts, The Boston Globe reports:
  • A Boston attorney has filed lawsuits against two major lenders claiming they knew - or should have known - their mortgage loans that can grow bigger over time were unaffordable to borrowers.(1) The suits are being watched locally and nationally because, if successful, they would provide strength to advocates and litigators struggling to make lenders accountable for “toxic’’ mortgage loans that have pushed millions of Americans into foreclosure. “If this case goes forward, it will be a model throughout the country,’’ said Suffolk University law professor Kathleen C. Engel.

  • Gary Klein,(2) of the law firm Roddy, Klein and Ryan, sought class-action status for his suits this summer against Bank of America Home Mortgage and Wells Fargo Home Mortgage, saying that hundreds of Massachusetts borrowers ultimately will be unable to afford their mortgages. A decision on class- action status is pending. “The lending community created these toxic products and masked their effect with complicated loan provisions that borrowers had no chance of understanding,’’ Klein said. “I find that appalling.’’ Bank of America officials said in a statement that “the lawsuit is without merit.’’

***

  • The suits are grounded in a landmark 2008 state Supreme Judicial Court decision(3) that lenders were violating state law by writing loans that were almost certain to lead to default and foreclosure. The decision, Engel said, was the first in the country to hold lenders accountable for unfair practices, even when the terms of a mortgage are considered legal. The court decision upheld arguments by Attorney General Martha Coakley that the California-based lender Fremont Investment & Loan was selling risky products it knew would fail. In June, Coakley settled with the lender for $10 million to help struggling homeowners and cover legal costs [go here for Fremont Consent Judgment].

For more, see Attorney sues lenders, says they created ‘toxic’ products.

For the lawsuits, see:

(1) According to the story, Klein filed the lawsuits in US District Court in June and July focusing on so-called “payment option’’ mortgages, which allow borrowers to make minimum monthly payments on home loans. From the day the paperwork is signed, any unpaid interest is added to the balance. Eventually, the day of reckoning comes - usually after five years - and a borrower is required to make payments that cover the full mortgage interest and swelling principal. “Pick-a-payment’’ loans became popular in 2005 and 2006 as borrowers strained to afford skyrocketing home prices, or sought money to make investments or home improvements.

(2) Last year, Klein filed a class action lawsuit that could stop hundreds of foreclosures and reverse thousands of others where it challenged lenders' right to foreclose where they couldn't prove ownership of the promissory notes. See Thousands Of Foreclosures Are Void, Says Massachusetts Class Action Demanding Lenders & Their Lawyers Prove Note Ownership.

(3) For the Massachusetts Supreme Judicial Court decision ruling that subprime loans that lenders knew or should have known were unsustainable are illegal (ie. as unfair and deceptive business practices in violation of M.G.L. c. 93A, §2 of the Massachusetts statutes), see Commonwealth of Massachusetts v. Fremont Investment & Loan, 452 Mass. 733; 897 N.E.2d 548; 2008 Mass. LEXIS 797 (Ma. 2008) (for a possibly easier to read version, try here). UndoMortgageLoans TILAdelta

The Loan Servicing Horror Stories Continue For Homeowners

A recent story by The Associated Press gives an "honorable mention" on the fine work of mortgage servicers Bayview Loan Servicing, Select Portfolio Servicing, and Ocwen Financial Corp. in their dealings with the average consumer homeowner. With respect to Bayview:
  • In February 2005, Janet Simmons was more than $30,000 behind on her mortgage. Bayview Loan Servicing began foreclosure proceedings on her home, located on 3.1 acres in rural Rockingham County, Va., between Washington and Charlottesville. But Bayview — which stands to receive up to $44.3 million from Treasury's loan-modification program — foreclosed without providing required written notice, the Virginia State Supreme Court found. Bayview never sent Simmons a letter by certified mail, as required under her loan. Unbeknownst to Simmons, the home was sold at auction in July 2005. She didn't find out she had lost the house until the new buyer asked why she was doing yard work on a home she no longer owned, said her lawyer, Kevin Rose. The courts awarded Simmons $156,809 — the difference between what her home was worth and what it had received in a foreclosure sale.

In connection with Select Portfolio (formerly known as Fairbanks Capital Corporation):

  • For six years, Jerry Turner made payments to Select Portfolio for a Charleston, W.Va., house he no longer owned. In 2000, Turner was promised a loan modification in a court settlement. His mortgage belonged to a bank-owned pool of loans eventually serviced by Select Portfolio. Instead of lowering Turner's payments as the court had ordered, the bank foreclosed on Turner's home, court documents show. The bank then bought the house at auction.

  • Select Portfolio never told Turner his house had been sold. Instead, it continued sending him monthly invoices and cashing his checks. He didn't find out he had lost the house until it was sold a second time, at auction — because Select Portfolio hadn't paid property taxes on the home. "I had excellent credit at one time," Turner said. "Now, I can't borrow money on the house, I can't leave it, and it's been tied up so much I don't know what to do." Turner's case against Select Portfolio is pending in West Virginia state court.

Ocwen, which was reportedly found in 2004 by government regulators to be engaged in illegal, unsafe and unsound collection practices in the course of their mortgage servicing activities, hasn't fared much better:

  • Ocwen, which is in line to receive up to $553.4 million from the Treasury, faces a federal class-action complaint for harassing homeowners with excessive phone calls, charging illegal fees and adding unnecessary insurance premiums to borrowers' bills. Ocwen engaged in "a nationwide scheme of illegal, unfair, unlawful, and deceptive business practices," the complaint contends.(1)

For the AP story, see Gov't mortgage partners sued for abuses (if link expires, try here).

(1) For a story on a Texas woman who reportedly alleges in a recent lawsuit that Ocwen foreclosed her residence even though she was on time with her payments, see The Southeast Texas Record: Kemah woman says mortgage company foreclosed despite payments. QuestionableServicingTacticsSigma

Recession Drives Increase In Those Representing Themselves In Court; Trend Alarms Observers

In Chicago, Illinois, the Chicago Tribune reports:
  • Legal service has never come cheap, but lawyers, judges and other experts say that for many people the recession has made it a nearly impossible expense. That has created a surge of litigants who must navigate the often-bewildering justice system by themselves. Advocates and court officials have responded with expanded advice desks, instructional Web sites, even plans to connect litigants with law students by computer. But the trend still alarms many observers, who say courtrooms weren't made for amateurs. "In a complex domestic relations dispute or commercial dispute, it's kind of like trying to do surgery on yourself," said Bob Glaves of the Chicago Bar Foundation, which funds numerous legal assistance programs. "If you're not trained in these things, you have no chance."

***

  • Cook County Associate Judge Thomas More Donnelly, who until recently ran a courtroom for those fighting wage garnishments and frozen bank accounts, said such contests are often glaring mismatches. He recalled cases in which defendants didn't know about a state law that allows debtors to keep up to $4,000 safe from creditors. He would tell them about it, but if they didn't understand what he was saying, he would have to drop the matter lest he cross the line separating impartial judge from advocate. "It would be so distressing to me," he said. "There are things that are known to everyone in the courtroom except the debtor."

For more, see Recession forces more to act as own lawyer (Observers warn that courtrooms aren't made for amateurs).

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

On a related point, a recent story involving an unrepresented Texas homeowner fighting lender U.S. Bank and loan servicer Select Portfolio Servicing, Inc. (formerly known as Fairbanks Capital Corp.) in a post-foreclosure eviction matter serves as a reminder that judges have an obligation to cut the litigant acting without the benefit of legal counsel some slack when appearing in court proceedings, and a recent court ruling by a Texas appeals court also says as much.(1) For more, see:

(1) In this regard, the Federal courts have also expressed their view on the liberal construction of court filings of pro se litigants. For example, see Bivings v. Wakefield, 316 Fed. Appx. 177 (3rd Cir. 2009):

  • We construe pro se filings liberally, and hold them "to less stringent standards than formal pleadings drafted by lawyers," Haines v. Kerner, 404 U.S. 519, 520, 92 S. Ct. 594, 30 L. Ed. 2d 652 (1972). See also United States v. Miller, 197 F.3d 644 (3d Cir. 1999) (discussing the "time-honored practice of construing pro se plaintiffs' pleadings liberally.")

and Zilich v. Lucht, 981 F.2d 694 (3d Cir. 1992):

  • When, as in this case, the plaintiff is a pro se litigant, we have a special obligation to construe his complaint liberally. Haines v. Kerner, 404 U.S. 519, 520, 92 S.Ct. 594, 595, 30 L.Ed.2d 652 (1972).

Florida AG Probes Central Florida "Charity" For Allegedly Clipping Homeowners For Upfront "Donations" For Loan Modifications

In Oviedo, Florida, WFTV-TV Channel 9 reports:
  • An Action 9 investigation has exposed a local charity that collects thousands in donations to help people avoid foreclosure. Some clients and a former employee claim it's really charging advance fees for loan modifications many homeowners never get.

***

  • The Helpful Hands Foundation says it's "helping" people get back on their feet. Christine McGinley, a former employee, claims the charity really charges homeowners nearly $2,000 to avoid foreclosure. She says that "donation" is really an upfront fee for a loan modification that most of the clients she saw never got. "Taking money from people already in a bad way---you might as well kick them when their down." According to Christine clients told her the charity's manager guaranteed them lower mortgage payments. [...] The state attorney general is now investigating several complaints against the Oviedo based charity and it it's president George Raisler.

For the story, see Action 9 Exposes Charity Offering Loan Modifications.

The link to the Florida Attorney General's webpage for information on the The Helpful Hands Foundation civil investigation is: Case #L09-3-1104.

Lenders Begin Bypassing Foreclosure On Large Projects, Using Receiverships To Unload Collateral Securing Bad Loans While Avoiding Builder Liability

The Wall Street Journal reports:
  • Some banks are starting to bypass foreclosure on large, troubled real-estate developments and instead are throwing the properties into receivership, a move intended to reduce some of the headaches associated with taking over problem assets. When banks foreclose on delinquent borrowers, they often plan to sell the property to new owners. But while holding the properties, banks are required to maintain them and pay all fees and taxes associated with the real estate. In some towns, banks that hold foreclosed residential property may be fined as much as $1,000 a day for code violations or even be subject to arrest.

  • To avoid those hassles, some banks are asking courts to appoint receivers for large projects, especially residential developments in California, Arizona, Colorado and other Western states. The aim is to have the receiver, not the bank, eventually sell the property. By keeping the bank's name off the title of the property, the bank hopes to stay out of trouble with the law. "The fact is we are seeing a number of banks that don't want to get in the chain of title," says Douglas Wilson, a receiver in San Diego. [... B]y taking the title on the building, [a lender] could be liable for any construction defects for a decade in California or for any injuries on unsecured construction sites.

***

  • Some [of a receiver's] tasks are mundane, like making sure fire alarms and security systems have power connected. Otherwise, [says one receiver], "on Friday they strip the copper, and Monday it's a meth lab."

For more, see Receivers' Catch: Foreclosures (Banks Pass Wind-Down Work to Court-Appointed Pros) (requires subscription; if no subscription, try here, then click link for the story).

Wednesday, August 05, 2009

Feds Begin Releasing Monthly "Hall Of Shame" List Of Foot-Dragging Mortgage Servicers Failing In Effort To Modify Home Loans

The New York Post reports:
  • Uncle Sam yesterday released its "hall of shame" for banks that haven't lifted a finger to help struggling homeowners prevent foreclosures -- with Bank of America as one of the worst offenders. Even after taking tens of billions in bailout aid from Uncle Sam, BofA and dozens of other banks have helped just a tiny fraction -- just 9 percent -- of the desperate 2.7 million homeowners who are eligible for federal help but still face being tossed into the street.

  • The government offered $50 billion to dozens of big banks to modify onerous mortgages, but a lot of banks have ignored the effort, the Treasury Department said yesterday. "I think it's safe to say we're disappointed in the performance of some of the servicers," said Michael Barr, the Assistant Treasury Secretary in charge of financial institutions, referring to the divisions within banks that collect mortgage payments and which would be the first responders should a borrower get in trouble. [...] Treasury said it will continue to publicize its "hall of shame" with a monthly list of servicers' performance.

For more, see HALL OF SHAME (Treasury Rips Banks For Not Helping Homeowners).

Go here for the Treasury Department's first monthly progress report of loan modification activity by servicer.

Calif. State Bar Gets Serious About Loan Modification Scams; Forms 10-Person Task Force To Work With Law Enforcement In Statewide Eradication Effort

The August 2009 issue of the California Bar Journal reports:
  • The State Bar has taken action to lift the law licenses of three California attorneys(1) allegedly engaged in loan modification fraud and is investigating nearly 140 more. One of the three resigned with charges pending, another faces involuntary inactive status and the third has been formally charged with seven counts of professional misconduct.

  • A 10-person task force, consisting of four lawyers and six investigators, also is working with federal, state and local law enforcement as part of a statewide crackdown on foreclosure fraud. Attorney General Edmund G. (Jerry) Brown Jr. sued four more lawyers, as well as 14 companies and their executives, last month for bilking homeowners seeking mortgage relief. The lawsuits were part of “Operation Loan Lies,” a nationwide sweep of sham loan modification consultants.

***

  • Suzan Anderson, who oversees the State Bar task force, said her office receives between 15 and 40 new complaints each week. As of late July, it was investigating 391 complaints against 140 attorneys, compared to a total of nine investigations relating to loan modifications 2008. [...] The State Bar issued an ethics alert in February, offering guidance to lawyers thinking of signing on with a foreclosure consultant. It can be found at calbar.ca.gov/calbar/pdfs/ethics/Ethics-Alert-Foreclosure.pdf. The alert warns of seven violations in particular that can land a lawyer in hot water, including splitting fees and partnering with non-lawyers, aiding someone in the unauthorized practice of law and accepting fees but doing little or no work. “We’ve got lots and lots and lots of (ethical violations),” Anderson said.

For more, see Foreclosure attorneys face discipline charges.

(1) According to the story, the bar obtained the resignation of Mitchell Roth in May, after shutting down his Sherman Oaks, Riverside and San Diego offices in February.

Also, the bar reportedly moved to place Irvine lawyer Nabile Anz on involuntary inactive status last month after receiving 39 complaints. Anz has a hearing before the State Bar Court Aug. 18. The Bar's Suzan Anderson said that in late 2008 Anz set up the Federal Loan Modification Law Center (FLM), operating out of several offices, complete with telemarketers, and signed up 8,300 clients in six months. The bar accuses Anz of more than a half-dozen ethical violations. According to bar prosecutors:

  • FLM was set up to preclude the involvement of lawyers in determining whether to accept a client,
  • Case evaluators were trained to accept virtually every client,
  • There was no legal analysis of clients’ cases,
  • Anz’s system of paying case evaluators guaranteed they would lie to potential clients in order to receive their commissions.

In the case of the third attorney, the bar charged Irvine attorney Sean Rutledge with seven counts of misconduct in handling a loan modification for Michael Robinson, who paid an advance $3,500 fee. Rutledge never took any action to negotiate with Robinson’s mortgage lender, the bar charges. Robinson eventually fired Rutledge, who agreed to refund his fee only if Robinson signed a release of professional liability. Rutledge did not refund the fee for several months. The bar is seeking Rutledge’s disbarment; he has a hearing before the State Bar Court Aug. 11. UnauthPractOfLawTheta

Impatience Grows Among Lawmakers With Lenders, Mortgage Servicers On Lack Of Progress On Loan Modifications

The Washington Independent reports:
  • A top Democrat on Monday warned the nation’s banks that, unless they get more aggressive in modifying mortgages to prevent foreclosure, Congress will renew previous efforts to empower families to keep their homes through bankruptcy. But Sen. Richard Durbin (Ill.), the upper-chamber’s second ranking Democrat, also gave the banks three months to comply with his ultimatum — a span over which roughly 1 million new homeowners are projected to enter foreclosure. [...] “I want to put the banks and mortgage servicers on notice today,” said Durbin, who sent letters Monday to each of the 34 banks that have already signed on to participate in the administration’s modification program.

  • The comments arrive just days after another powerful Democrat, House Financial Services Committee Chairman Barney Frank (D-Mass.), issued a similar threat to revisit cramdown. The statements are evidence of a growing impatience among some lawmakers with the banking industry’s efforts to stabilize the still-volatile housing market.

For more, see Durbin Gives Bailed Out Banks ‘Cramdown’ Ultimatum (Senate Democrat Threatens to Bring Back Bankruptcy Law Change).

Alleged Florida Fraudster Nabbed In Costa Rica; Accused Of Running Lease To Own, Rent Skimming Scam That Left Would-Be Homeowners Out On The Street

In Lee County, Florida, WINK News reports:
  • One of the alleged ring leaders of a major mortgage fraud scheme in Southwest Florida has been tracked down in Costa Rica. Erich Heckler allegedly fled Ft. Myers leaving behind 61 felony charges and a host of victims homeless and broke. Heckler is one of several suspects accused in a scheme that netted 3.8 million dollars in two years.

  • Here's how it allegedly worked: Hopeful homeowners were leased properties to repair their credit scores and then offered the option to buy the properties at the end of a twelve month period. The only problem - the leasing company kept the rent for themselves, did not make the mortgage payments, sending the homes into foreclosure leaving victims without roofs over their heads. Heckler, the alleged ring leader, was arrested in the fall of 2007 in Lee County on 61 charges. He bonded out in December, and then vanished - failing to appear at a May 2008 court hearing. That's when he's believed to have moved to Costa Rica. Local authorities are working with law enforcement in Costa Rica where's Heckler is now in custody. He is awaiting extradition to the Lee County Jail.

Source: Lee County Fugitive Found.

For follow-up story, see Private investigator who caught Lee County fugitive talks to WINK News (Eric Heckler was on the run for over one year).

For original post on this story, see Florida Cops Arrest Alleged Ringleader In Mortgage Scam That Duped "Rent To Own" Tenants, Straw Buyers, Lenders. rent to own lease purchase option scams yellowstone

"It's Almost Like A Scary Movie" Says Unit Owner As Weak Sales Leave Family With 32-Story, 200-Unit Florida Condo Tower All To Themselves

In Fort Myers, Florida, CBS News reports:
  • The Vangelakos' southwest Florida condominium has marble floors, a large pool overlooking a river and modern furnishings that speak of affluence and luxury. What they don't have in the 32-story building is a single neighbor. The New Jersey family of five purchased their unit four years ago, when Fort Myers was in the midst of a housing boom and any hints of an impending financial crisis were buried in lofty dreams of expansion and development.

***

  • Most of the other tenants in the 200-unit condo didn't close on their contracts, and the few that did have transferred to an adjacent building owned by the same company because more people live there. The Vangelakos' mortgage lender will not allow them to do the same. That leaves them as the sole residents of the Oasis Tower One.

  • "It's a beautiful building," said their attorney, John Ewing, who is representing 27 others who made deposits on units. "The problem is, it's a very lonely building." When the Vangelakos' travel from Weehawken, N.J., to spend a week or a few days in their Florida home, they have exclusive use of the pool, game room and gym, but they miss having a few tenants around. "Being from the city, it's very eerie," Vangelakos said. "It's almost like a scary movie."

For more, see 1 Family Sole Occupants of 32-Story Tower (Residents of Florida Highrise Find Every Other Prospective Condo Owner Has Bailed, and Now Want Out).

For CBS News' raw video footage on this story, see Lonely Tenant In Highrise.

Tuesday, August 04, 2009

Queens Homeowner Fights To Hold Onto Home Stolen In Deed Theft Scheme; May Lose House Anyway Despite Successful Forgery Prosecution Against Scammers

In Queens County, New York, The Black Star News reports on the story of Sun-Ming Sheu, a local resident and immigrant from Taiwan who had his home ripped off from out from under by scammers in 2001 in a straw buyer scam which utilized a forged power of attorney to complete a fraudulent trandfer of the title to the house. The scammers then obtained a mortgage against the home, failed to make the mortage payments, and Sheu has been fighting off a foreclosure ever since.

To add insult to injury, the scammers were actually busted by the New York City police, and they ultimately copped pleas to forgery. However, the mortgage lender that was duped into financing the fraudulent sale and the title insurer that issued the lender's title insurance policy have ignored the successful criminal prosecution and all the evidence produced demonstrating that the signatures on the documents in the fraudulent sale were forged, and have continued to move forward on the foreclosure of Sheu's home, acting as if the fraudulent closing was authentic. A reportedly accomodating judge, Queens Supreme Court Justice Joseph Golia, has allowed the foreclosure to proceed.

Most recently, Sheu reportedly met twice with a criminal investigator at the U.S. Attorney’s Office in Manhattan in June, 2009 for a total of about four hours and discussed his case and submitted documentation. “We cannot confirm or deny that we are investigating this case,” the investigator told The Black Star News, when contacted by phone.

For the story (which is part one of a series), see Alleges: "Junk Justice" System And Mortgage Fraud.

For the follow-up stories, see:

Use Of "Deadbeat Lists" Gaining In Popularity With Florida Condo Associations Seeking To Boost Unpaid Maintenance Collections From Delinquent Owners?

In South Florida, the South Florida Sun Sentinel reports:
  • In defiance of state laws, some condo associations are seeking to use all means at their disposal to get condo owners who are behind on fees to pay up, including public humiliation. A few years ago, not many boards would have asked to see a list of condo owners who were behind on association fees, because not many were delinquent. But in the midst of South Florida's foreclosure crisis, some associations have posted "deadbeat lists" in common areas in hope of turning up the heat on slow-to-pay owners — a move many say is illegal, unfair and unethical.(1)

***

  • Tempers are heating up in South Florida as threats are being made against both the association members who try to collect debts and those who feel victimized by the harsh tactics. Board members' cars have been keyed, and amenities such as gyms and pools have been declared off-limits, assistant condo ombudsman Bill Raphan said. "Give me one good reason for putting these lists up. You put their name up, but it can be dangerous," Raphan said. "Boards want to keep [delinquents] out of the pool ... but you just can't do that in a condo."(2)

  • Recently, courts have given better options to associations, particularly in the case of nonpaying landlords who lease out their units. One legal answer includes seeking a court-appointed receiver, or unbiased intermediary, who can bypass the foreclosed or delinquent owner and collect rent directly from the tenant, in place of having the tenant pay rent to the owner.(3) The funds are deposited into a receivership account, where they are then divided up between those to whom the owner owes money. [...] Receiverships are popping up in areas hit hard by the foreclosure crisis, said local receiver Seth Heller of Heller and Company.

For more, see Condo deadbeat lists may be effective, but also illegal.

(1) F.S. 559.72(14) of the Florida Consumer Collection Practices Act specifically prohibits the use of deadbeat lists within the state of Florida when collecting what it defines as a "consumer debt" (see F.S. 559.55(1)), but does not apply to the collection of any debt not falling within the "consumer debt" definition, including debts owed on units owned by business entities (ie. corporations, partnerships, joint ventures, etc. - see F.S. 559.55(2)). Unpaid maintenance fees owed by an owner-occupant (ie. a natural person using the apartment either as a principal residence, or as a part-time second home) appear to fall within the definition of "consumer debt." It is arguable, however, whether or not such unpaid maintenance fees owed by a rent-skimming, non owner-occupant (ie. a natural person owning the unit as an investment or business) leasing the premises out for profit as a landlord would fall within the statutory definition of "consumer debt."

The Florida Commercial Collection Practices Act (F.S. 559.541 et seq.), which regulates the business of collecting "non-consumer debts" within the state of Florida does not contain any specific prohibition against the use of "deadbeat lists" in the debt collection process.

The Federal law regulating debt collection practices throughout the U.S., the Fair Debt Collection Practices Act, applies only to "consumer debt" (which is defined in the same way as in Florida law), which is an obligation to pay money by a natural person (as opposed to a corporation, partnership, joint venture, etc.) arising out of a transaction in which the money, property, insurance or services which are the subject of the transaction are primarily for personal, family, or household purposes. (15 USC 1692a(3), 1692a(5)).

(2) If some condo associations are so intent on spreading the word about delinquent unit owners with "deadbeat lists," simply mailing out copies of the information to all the unit owners (but not tenants), without publicly posting the information on the premises, is a preferable method of doing so. This information, along with copies of any other business record of the association, is something the unit owners are legally entitled to obtain by written request anyway, so mailing the information (preferably after receiving a written request from a unit owner) without an actual public posting of it should dodge the prohibitions of the debt collection statutes.

(3) See South Florida Business Journal: 3rd DCA upholds use of condo receivers.

Builder's Unpaid Bill From Stiffed Sub Leaves New Home Buyer Stuck With Unrecorded $42K Mechanics Lien & Unprotected By Title Insurance

In Fayetteville, Arkansas, the Northwest Arkansas Times reports:
  • Banks aren't the only ones losing money thanks to the developer who built the mostly empty luxury condo development near Dickson Street known as the Legacy Building. A Fayetteville couple faces possible foreclosure of their home because one of troubled developer Brandon Barber's companies did not pay for the materials to build it.(1) Scott and Donna Powers have made more than $15,000 of improvements to their 2,850-square-foot home they purchased in February 2008 in phase two of Deer Path Estate subdivision.

***

  • The Powers moved into the house in December 2007, soon after it was completed. Before closing, they went to National Home Centers to pick out the carpet, some mirrors and a ceiling fan, never knowing Barber's account was past due there, he said. Soon after closing, Powers said that he found out about the materialman's lien. He was surprised to learn that his owner's title insurance policy did not protect him.

  • "We all think we bought a house and we're safe, but the dirty little secret is that title insurance does not protect you from materialman's liens," he said. Powers said no one ever explained to him that you had to pay extra to get coverage against outstanding bills that might not be paid at the time of closing.(2)

***

  • Powers said that he plans to file a criminal complaint and ask authorities to file felony charges against Barber for signing an affidavit saying that all of the bills had been paid.

For more, see Couple could lose house over Barber's unpaid bill (Buyers not protected at closing from unrecorded liens).

(1) They reportedly face a materialman's lien involving more than $42,000 in past due bills owed by the builder.

(2) According to the story, Ed Young, an attorney for Elite Title Company, which handled the closing, explained that a general owner's policy will not protect a buyer against unrecorded liens. He said that subcontractors and suppliers can file a lien against a property within 120 days. That's why title companies and banks always insist on a bills-paid affidavit from the builder at closing. He said that home buyers can get "affirmative lien coverage" for an additional 10 percent fee, but that the two title underwriters that Elite buys coverage through no longer offer this type of coverage on new homes. Young said that he does not believe that the companies were offering this enhanced coverage when Powers closed on the home. The title underwriters are getting away from it because of the added risk. "They all took some big hits last year," he said. title insurance legal issues

California Man Charged With Using Forged Docs To Swipe Estranged Wife's Share Of Home; Notary Stripped Of Commission, Faces Felony For Role In Scam

From the Office of the San Bernardino County, California District Attorney:
  • Investigators from the San Bernardino County District Attorney's Real Estate Fraud Prosecution Unit arrested Omar Paz, 52, of San Bernardino [...]. Co-defendant, Christi Fry, 56, of West Covina was also arrested [...]. The pair was arrested for real estate fraud-related criminal charges.(1)

  • Paz and his former wife had owned a home in the city of Rancho Cucamonga. Paz decided to sell their home after a domestic dispute and filed for divorce. During the real estate transaction, Paz forged his former wife’s signature on the disclosure forms, escrow instructions and grant deed.

  • Fry, also formerly known as Christi Martin, was the escrow officer and public notary for the fraudulent transaction. The property sold for approximately $470,000. The excess proceeds, in the amount of $83,538.66, was wired into the joint account of Paz and his former wife. Approximately 10 days later, Paz transferred $77,054 into his personal money market advantage account for which his former wife did not have access. She discovered her name had been forged on the disclosure forms, escrow instructions, and grant deed during her divorce proceedings.

  • The California Secretary of State's Notary Division conducted a separate administrative investigation and revoked Fry's notary commission due to this fraudulent transaction.

For the San Bernardino DA press release, see Pair Arrested for Real Estate Fraud.

(1) According to the DA's press release, Paz was charged with Conspiracy, Forgery, Grand Theft, Money Laundering and Offering a forged document to be recorded. Fry was charged with (1) Count of Conspiracy. Paz' bail was set at $850,000.00 and Fry's bail was set at $450,000.00. DeedContraTheft

NY Homeowner Tired Of Crappy Conditions Living Next To House In Foreclosure With Failing Septic System

In Putnam Valley, New York, The Journal News reports:
  • Belynda Rella has a really smelly problem and she can't seem to get it fixed. She lives at 17 Oriole St., and her neighbor's septic at 19 Oriole drains into her yard, which is a health hazard and downright unpleasant. [...] Rella and her pre-teen daughter won't go into their yard or jump on a new trampoline without wearing heavy-duty paper face masks. [...] Since April, she has been contacting various officials. The bubbling sludge site in her yard is covered with a blue cloth. Her mother, Darlene Kahrs, who lives there, too, is also upset. "I don't want to see my 10-year-old granddaughter sick from this crap, literally," she said.(1)

  • The offending house looks appealing, with log-cabin siding. But along with a failed septic, it is in foreclosure and is set to be auctioned Aug. 12 by SunTrust Mortgage of Irvine, Calif., which claims it is due $223,344. Attempts to reach the homeowners, Thomas Antonucci and Linda Rosenzweig of Hopewell Junction, were unsuccessful.

For more, see Neighbor's failed septic a noxious problem.

(1) According to the story, failing septics are an increasing issue in Putnam, where exceptionally wet weather has stressed marginal systems and where summer enclaves with small cottages are now year-round homes. "Many of these homes were only meant to be used in July and August. This is a massive problem," said county Legislator Sam Oliverio, D-Putnam Valley, admonishing officials for not having kept a closer watch on changing communities and zoning.