Tuesday, November 10, 2009

Florida AG Says Alleged Forclosure Rescue Racket Divides Upfront Fee Into Five Payments, Each Check Associated To A Specific Step In Loan Mod Process

From the Office of the Florida Attorney General:
  • Attorney General Bill McCollum [...] announced that his office has filed a lawsuit against two Central Florida companies and their owner over allegations they charged up-front fees for foreclosure rescue-related services. National Payment Modification Company and The Bostonian Group, LLC, which conducts business under the name People’s First, allegedly charge up to $2,500 in up-front fees to homeowners trying to rescue their homes from foreclosure.(1)

***

  • An investigation conducted by members of the Attorney General’s Economic Crimes Division, working as part of the Attorney General’s Mortgage Fraud Task Force, determined that both companies charge the up-front fee and divide it into five equal payments secured by post dated checks. Each check, according to the lawsuit, is associated with a separate “sub-contract” or step in the loan modification process. Consumers complained that both companies cash the post-dated checks even though the companies have not begun negotiations or even contacted the consumers’ lenders.

For the entire press release, see McCollum Files Lawsuit Against Central Florida Companies for Loan Modification Scams.

(1) Also named in the lawsuit is William Rodriguez, the owner of both companies, who was a founding owner of Wineberg, Lopez, & Rodriguez Company. The Attorney General’s Office sued Wineberg, Lopez, & Rodriguez Company in March and obtained an emergency injunction barring the company from charging homeowners any fee in advance for providing foreclosure-related rescue services. That case is still pending in Orange County Circuit Court.

Federal Appeals Court Reinstates Homebuyers' Class Action Suit Alleging PMI Kickback Racket Between Countrywide & Reinsurance Company

A Federal appellate court recently reinstated a homebuyers' class action lawsuit against Countrywide Home Loans, Inc. and Balboa Reinsurance Company alleging violations of the Real Estate Settlement Procedures Act ("RESPA"). The court described the plaintiffs allegations as follows:
  • Plaintiffs alleged that their private mortgage insurance premiums were channeled into an unlawful “captive reinsurance arrangement”—essentially, a kickback scheme—operated by their mortgage lender, Countrywide Home Loans (“Countrywide”), and its affiliated reinsurer, Balboa Reinsurance Co. (“Balboa”), in violation of RESPA section 8(a) and section 8(b), 12 U.S.C. § 2607(a)-(b). The thrust of their complaint was that, in enacting and amending section 8, Congress bestowed upon the consumer the right to a real estate settlement free from unlawful kickbacks and unearned fees, and Countrywide’s invasion of that statutory right, even without a resultant overcharge, was an injury-in-fact for purposes of Article III standing.

A lower court disagreed and dismissed the complaint without prejudice for lack of jurisdiction. The 3rd Circuit Court of Appeals concluded differently, reversed the lower court, and reinstated the lawsuit.(1)

For the ruling, see Alston v. Countrywide Financial Corporation, et al., No. 08-4334, 2009 U.S. App. LEXIS 23822 (3rd Cir., October 28, 2009).

Thanks to nationally recognized mortgage servicing fraud watchdog Mike Dillon at GetDShirtz.com for the heads-up on the court ruling.

Go here for Mr. Dillon's commentary on a variety of mortgage servicing fraud issues.

(1) The U.S. Department of Justice - Civil Division intervened in this matter, siding with the homebuyers' position.

Struggling Florida Condo Associations Continue Requesting Court Orders For Blanket Receiverships In Effort To Stay Financially Afloat

In Palm Beach County, Florida, the Palm Beach Post reports:
  • With 50 percent of its owners owing a total of more than half-a-million dollars in overdue maintenance fees, a suburban West Palm Beach condo association wants to seize control of delinquent units, bypass owners when it comes to rent collection and possibly even rent units through a third party. The move by the Palm Beach Grande Condominium Association(1) is a desperation measure as coffers dwindle to amounts unable to support the association through the end of the year, according to a petition filed in Palm Beach County Circuit Court.

***

  • Since 2007, nearly 160 of Palm Beach Grande's 304 units have faced a foreclosure filing, according to Condo Vultures, a Miami-based consulting company. About $675,000 is owed Palm Beach Grande's association.

***

  • Now, faced with hundreds of delinquent units, "blanket receiverships" are becoming more common. Recent court decisions in Miami-Dade and Broward counties have granted blanket receiverships, allowing a court-appointed representative to directly collect rents to pay off maintenance fees. [...] The new legal tool appears to be moving north with one Palm Beach County property management company saying it expects about five condo boards it represents to file receivership requests within the next 30 days.

For the story, see Condo association says half its owners are behind on a total of $675,000 in fees.

(1) Reportedly, Palm Beach Grande was a rental apartment complex until 2006 when it converted into a condo.

Lender Foiled In Attempt To Push Tenant Out Of Recently-Foreclosed Home; Renter Forced Into Court To Assert New Legal Rights To Dodge Eviction

In Sandy Springs, Georgia, The Atlanta Journal Constitution reports:
  • Crystal Johnson had no idea her landlord had financial trouble until police taped an eviction notice to the door of her Sandy Springs condominium in June. About a year into her two-year lease, Johnson faced the prospect of being forced out of her home because a bank had foreclosed on the landlord, who was in default on a loan. “They treated me like I was in default,” Johnson, a music producer and songwriter, said. “But I wasn’t in default.” [...] A federal law enacted in late May, however, has eased the pain for renters such as Johnson, a single mother raising her high school aged daughter and a nephew.(1)

***

  • Johnson and EMC Mortgage Corp., which owned the mortgage to her landlord’s condo and took possession of the home, finally settled the case in housing court on Oct. 20. EMC, which initially wanted her out of the property, agreed to honor the remainder of her lease. [...] Prior to the law, tenants had few rights in landlord foreclosures, said Tamara Serwer Caldas, managing attorney for the Atlanta Volunteer Lawyers Foundation. Caldas represented Johnson in her eviction fight.

***

  • Johnson said she learned about the law from her beautician, who saw a television news broadcast about it. It was part of broader legislation dealing with foreclosure mitigation. Even then, she said, only two of 15 lawyers she called for advice knew about it. “I really had to fight; I didn’t understand how this was happening,” Johnson said. “I knew I had my rights but they weren’t being enforced. I didn’t know if the marshals were going to be coming to my door. It was a very frightening time for me.” [...] Johnson said she was offered $700 by the bank that foreclosed on her landlord to leave the condo immediately. She refused and wound up going to court.

For the story, see Law helps renters forced out when landlord defaults.

(1) Among other things, this new federal law requires lenders taking title to foreclosed homes honor any existing tenant leases, and provide at least 90 days notice when vacating month-to-month renters. See Section 702(a)(2) of the Protecting Tenants at Foreclosure Act of 2009.

The following are documents from the National Housing Law Project and the National Low Income Housing Coalition that can be used to help keep tenants from being illegally forced out of foreclosed homes in violation of the new law:

  • Sample Notice for Tenants to be Used by Successors in Interest - click here,
  • NLIHC's One-page Explanation of the New Tenant Protection Provisions - click here,
  • Questions and Answers For Tenants Of Buildings At Foreclosure After May 20 - click here,
  • NHLP Cover Memo, Tenant Protections - click here,
  • Letter from a Section 8 Tenant to Landlord - click here,
  • Letter from a Non-Section 8 Tenant to Landlord - click here,
  • Sample Notice for all Tenants - click here,
  • Sample Notice for Section 8 Voucher Holders that a PHA Could Send - click here,
  • Sample Letter to Send to Judges who handle Landlord Tenant Cases - click here,
  • Sample letter to Send to Public Housing and Section 8 HCV Administrators - click here,
  • HUD Notice on tenant protection provisions - click here,
  • Protecting Tenants at Foreclosure Act Statute - click here,
  • Tenants in Foreclosure - Webinar.

Effort To Harass Tenants Out Of Recently Foreclosed Homes In Violation Of Federal Law Continues

In West Haven, Connecticut, the New Haven Register reports on another incident involving a lender and its attorneys allegedly attempting to bully tenants out of their rented, foreclosed homes through the use of deceptively written letters designed to mislead the tenants of their legal rights under the federal Protecting Tenants At Foreclosure Act,(1) as well as under Connecticut state law, and the work of a local legal aid office in assisting the tenants in asserting their legal rights to stay put until their leases expire.
  • The East Greenwich, R.I., law firm of Marinosci, Ceritto and Shapiro is handling the property for Deutsche Bank. A July 13 letter to the tenants gave them two days to get in touch to discuss possible monetary help in relocating or the firm would initiate legal action to evict them. Subsequent legal filings consistently misspelled the street name and cited Virginia law for the basis of their actions; one tenant was given six days to leave, while the Boyds got three months, and it was unclear what communication took place with Ramon Ayala, who lives in a basement apartment.

  • Buried within the legal “notice to quit” document sent later is a reference to leases. If the tenants in fact have them, they are entitled to stay until they expire. [New Haven Legal Assistance Association housing lawyer Amy] Marx said all three have leases, but the importance of those arrangements was not explained to tenants and all were preparing to leave. Also, the $1,600 “cash for keys” offer to the Boyds was $400 less than the minimum required by state law. [...] Marx said the July 13 letter, which was signed by “evictions team lead” Daniel J. Lailer of the Rhode Island firm, “is an outright violation of the tenant act.”(2)

For the story, see Federal law gives rights to renters.

(1) Among other things, this new federal law requires lenders taking title to foreclosed homes respect any existing tenant leases, and provide at least 90 days notice when vacating month-to-month renters. See Section 702(a)(2) of the Protecting Tenants at Foreclosure Act of 2009.

(2) It wouldn't surprise me if these deceptively written communications from attorneys, real estate agents, and others creates legal causes of action in favor of the tenant, the state attorney general's office, or both as violations of applicable state deceptive and unfair trade practices statutes.

Monday, November 09, 2009

Closing Agent's Use Of Rubber Checks To Pay Off $1.6M In Existing Mortgages Leaves Refinancing Homeowners Mired In Legal Mess, Facing Foreclosure

In Will County, Illinois, the Chicago Tribune reports:
  • In early April, Jeff Franson refinanced his mortgage, switching it from Chase to SecurityNational Mortgage Co. On a sunny Saturday in early October, as he was mowing the front lawn of his Mokena home, a process server drove up and handed Franson papers that showed Chase was planning to foreclose on his home. Franson was current on his mortgage with SecurityNational. But the $93,702.51 check cut by Counselors' Title Co. to pay off the Chase loan bounced. After months of phone calls and letters between Franson, his attorney and the companies involved, Chase filed foreclosure papers in Will County Circuit Court.

***

  • Franson and at least seven other Midwestern homeowners who did business with Counselors are wondering what's in store for their homes and what happened to the $1.6 million that was supposed to pay off their loans. [...] The crux of the problem for Franson and other homeowners who closed their transactions at Counselors' offices is that Ticor Title Insurance Co., a national title insurance underwriter, says it terminated its underwriting agreement with Counselors before those closings occurred.

***

  • In early May, less than a week after Chase notified Franson of the bounced check, Ticor filed suit in federal court in Cincinnati against Counselors, [and its three principals, James Erwin and Shari Erwin of Chicago and Damian Sichak of Homer Glen], claiming they had committed breach of contract and fiduciary duty, fraud and negligence, among other allegations. Ticor's suit states that it terminated its contract with Counselors on March 13, but that Counselors continued to "issue purported Ticor title insurance 'commitments' " and "is representing to its customers that Ticor remains its title insurance underwriter." In the filing, Ticor said it was aware of eight affected borrowers in Illinois, Indiana and Ohio, including Franson, and loans totaling almost $1.6 million. The suit also stated that Counselors told Ticor a fire destroyed many of its records at its Crestwood office in January and, as a result, it was unsure how many other checks it issued would bounce. Ticor's suit also claims the Erwins and Sichak are personally liable for Counselors' failure to comply with its agency agreement.(1)

For more, see Homeowners left in a lurch after mortgage refinancing checks bounce (Borrowers face foreclosure after title company fails to pay off original mortgages).

(1) Separately, in July, Landmark American Insurance Co., which provided Counselors with professional liability insurance, filed suit in Cook County Circuit Court against Counselors, the Erwins, Sichak and Ticor, the story states. Landmark claims it is not responsible for covering any claims if there is a court finding of dishonest, fraudulent, criminal or intentional activity, if the principals were found to have signed personal guarantees, if the company is insolvent or if the escrow funds were improperly handled, according to the story. title insurance legal issues EscrowRipOffKappa

Negotiating Deed In Lieu Of Foreclosure Without Obtaining A Release Of Deficiency Liability Leaves Homeowner In Hot Water

Attorney Jonathan Alper from the Florida Asset Protection Blog offers this caution to financially strapped homeowners when negotiating the transfer of their property to the foreclosing mortgage lender by a deed in lieu of foreclosure:
  • A deed in lieu of foreclosure is supposed to be a final settlement between owner and mortgage lender. The lender accepts a deed to the property in consideration for releasing the borrower of any further liability under the loan or mortgage. When my clients tell me they want to offer a deed in lieu they intend for the deed to the lender will end their liability under the mortgage loan.

  • When I looked at [one] client’s "deed in lieu" I found that the lender did not include a release of liability, and in fact the document referred to the borrower’s continued liability for a deficiency. This client had negotiated a deed in lieu of foreclosure but not a deed in lieu of deficiency liability. Also, by surrendering title to the property without the bank having to foreclose, the client gave up all the defenses available in a foreclosure action which he could use as leverage to negotiate a complete release. If your mortgage lenders offers you a deed in lieu make sure it’s the real deal. You give them the property back and they release you from any further liability. Anything less may be a trap.

Source: Deeds In Lieu Of Foreclosure : Make Sure Lender Is Offering The Real Thing.

Four Attorneys Get The Boot From Legal Profession In Florida For Alleged Real Estate, Trust/Escrow Account-Related Mischief

The Florida Bar, the state's guardian for the integrity of the legal profession, recently issued its periodic "scandal/gossip sheet" in which it announced that the Florida Supreme Court in recent court orders disciplined 19 attorneys, disbarring eight, suspending six and placing two on probation.

Among the 19 disciplined were the following four attorneys who allegedly engaged in certain real estate and trust/escrow account-related hanky panky which got them booted from the legal profession in Florida:

  • Jay Charles Floyd, disbarred for five years. Floyd was further ordered to pay restitution totaling more than $76,000 to four clients. Floyd misappropriated client settlement funds and used the money to satisfy his personal financial obligations.

  • Daniel Henry Fox, disbarred. Fox issued trust account checks, which were returned due to insufficient funds; he failed to maintain his trust account and he abandoned his representation of clients in connection with residential real estate loan modifications.

  • Richard C. Koskey, disbarred. Koskey was the subject of two Bar disciplinary investigations. In one case, Koskey failed to disburse $105,000 to pay off a mortgage and remit $91,000 to his client. In another case, Koskey caused to have a payoff letter prepared which falsely stated the amount due on a mortgage. As a result, he improperly received additional funds from the proceeds of a refinance transaction, causing the first lender to subsequently file a foreclosure action.

  • Jorge Enrique Rodriguez, disbarred. Rodriguez failed to preserve and apply funds in connection with real estate transactions.

Source: Supreme Court Disciplines 19 Attotrneys - 10/29/09.

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

If a Florida attorney, in the process of giving legal representation, screws you out of money or property through dishonest conduct, go to The Florida Bar's Clients' Security Fund for information on how to put in a claim to get possible reimbursement.

For other states and Canada, see:

Fannie Left Holding The Bag On Dilapidated Bronx Apartment Buildings - Now Asked To Fork Over $320K+ To Repair Structurally Unsafe Conditions

In New York City, Crain's New York Business reports:
  • A Bronx judge has ordered Fannie Mae to answer charges that it is neglecting three dilapidated rental buildings for which it holds the mortgages as they wind through the foreclosure process. The order, [...] comes in response to a charge by the court-appointed receiver that the mortgage giant reneged on a promise to pay for $20,000 in repairs needed to correct city housing violations in the buildings.(1)

  • As a result of this, I have no confidence that [Fannie Mae] will pay for the major capital improvements which are required to protect the lives and safety of the tenants and to preserve the value of the asset without a specific order from this court,” wrote the receiver, attorney Marc Landis, in a court filing.

  • Mr. Landis wants the court to order Fannie Mae to fork over the $324,475 that he estimates is needed to conduct basic repairs at the three five-story residential buildings. He says he has only about $4,000 in an operating account and nearly $20,000 in outstanding bills on the properties, which have hundreds of outstanding citations from the city. Two of them are on the city's list of worst-kept properties. “We have buildings that have structurally unsafe conditions,” he said. “I'm not going to turn these properties into luxury residences, but I do need to make sure they're safe.”

For more, see Court pulls Fannie Mae deeper into housing fracas (Mortgage guarantor, stuck with 14 foreclosed properties, must answer charges that it is allowing apartment buildings to fall apart).

(1) The judge's order is the latest twist in an ongoing drama that involves the three buildings being managed under receivership by Mr. Landis and at least 11 other properties also in foreclosure, all of which were purchased at the height of the boom by real estate investment firm Ocelot Capital for $36 million, the story states. Fannie Mae reportedly purchased the $29 million mortgage from Deutsche Bank and then discovered the loan didn't meet its underwriting standards. The buildings were subsequently abandoned by Ocelot, and the loans—still held by Fannie Mae—went into foreclosure in March.

Sunday, November 08, 2009

California Woman Ordered To Stand Trial For Burglary, Grand Theft In Alleged Upfront Fee Loan Modification Racket

In Monterey County, California, The Herald reports:
  • A judge Friday ordered a Gonzales woman to stand trial in connection with an allegedly fraudulent real estate scheme, but cleared her nephew, saying there was insufficient evidence that he was involved in the conspiracy. Maria de Lourdes Ponce, 51, will be arraigned Dec. 8 on charges of burglary, conspiracy and five counts of grand theft. She faces up to nine years in prison if convicted.(1)

  • According to testimony at her prolonged preliminary hearing, Ponce took advance fees from homeowners who were facing foreclosure, promising that she could negotiate with the banks to give them new or modified loans.

***

  • The burglary charge — which alleges that Ponce entered the home of her landlord to collect a $2,800 advance fee knowing that she would never deliver on the promised loan — is the most serious of the felony charges, carrying a maximum sentence of six years in prison.

For more, see Judge orders aunt to court in fraud scheme, burglary; clears nephew.

(1) Her associate, Melissa Garcia, of Watsonville, is serving a four-year prison sentence in connection with an unrelated case in Santa Cruz County, the story states. She reportedly pleaded guilty in the Monterey County case and has agreed to testify against Ponce.

Man To Serve 1 To 3 For Using Forged Docs To Swipe Common Law Wife's Share Of Home, Then Pocketing Mortgage Refi Proceeds; House Now Faces Foreclosure

In Monsey, New York, the Mid-Hudson News reports:
  • Egon Linzenberg of Hillburn is going to serve one to three years in state prison for stealing the house he shared with his estranged and long time common law wife and one of their three sons. Linzenberg forged several documents, illegally and secretly removing his wife’s name from the deed to the home, leaving title to the shared house in only his name. He then fraudulently refinanced the house, again using forged documents, and took and sent all of the proceeds from the refinance. The house, at 82 Regina Road in Monsey, is currently in foreclosure. The forged documents included a power of attorney and several real estate and mortgage documents.

  • Linzenberg must also pay $226,000 in restitution; he has already paid back $200,000, which was turned over to the victim. He had been convicted last January of grand larceny in the second degree, two counts of criminal possession of a forged instrument in the second degree and four counts of forgery in the second degree. The jury trial lasted eight days.

Source: Rockland man goes to prison for stealing house he shared with his estranged, common law wife. DeedContraTheft

Scammer Dupes 80-Year Old Woman Out Of $450K In Phony Investment Scheme; Victim Took Out Three Loans On Previously Mortgage Free Home To Invest

In Santa Rosa, California, The Press Democrat reports:
  • A Windsor plumber pleaded no-contest Thursday to 19 felony counts of real estate fraud in a scam that cost investors more than $1 million. Juan Carlos Alcala, 32, will receive up to seven years in prison at his March 24 sentencing under an agreement that avoids trial, Deputy District Attorney Robin Hammond said.

***

  • [In addition to other defrauded victims, f]urther investigation revealed he had also defrauded an 80-year-old Sebastopol woman out of $450,0000 over three years [...]. The woman initially hired him for plumbing work. Alcala told the woman he needed money to invest in property he was fixing and persuaded her to give him $200,000 in cash and take out three mortgages on a home she owned outright, Hammond said.

For the story, see Real estate fraud could bring Windsor plumber 7 years in prison.

Caution Urged When Signing Up For Prominent Foreclosure Listing Service

In Los Angeles, California, the Los Angeles Times reports:
  • Maria Casanova, an assistant professor of economics at UCLA, toyed with the idea earlier this year of buying a foreclosed property near the Westwood campus. She signed up for a prominent listing service called RealtyTrac. Casanova, 31, canceled her subscription not long after. Yet a few days ago she discovered that some other real estate company she'd never heard of has been billing her almost $45 a month for the last eight months.

  • Consumer advocates say it's an all-too-common problem: People signing up for one thing online and inadvertently signing up for something else that comes with recurring monthly charges. [...] In RealtyTrac's case, the enrollment process for access to the site's foreclosure listings includes a marketing pitch for another company, a Utah business called Real Estate Promoter.

***

  • Unless you read the fine print, which consists of gray letters on a gray background, you won't know that clicking continue will in fact sign you up for Real Estate Promoter's service at a recurring cost of $44.95 a month. [...] Casanova, for one, believes it's a deliberate attempt to deceive people. "I was completely unaware that I was signing up for this other company," she told me. "I thought the whole sign-up process was for RealtyTrac."

***

  • A Google search turns up numerous complaints [or try here for Ripoff Report] from people who were similarly surprised to find $44.95 charges for Real Estate Promoter on their credit card statements -- in virtually all cases, as a result of signing up for RealtyTrac.

For the story, see Real estate company's pitch leads to unexpected bill.

Saturday, November 07, 2009

Increase In Housing Discrimination Against Families With Children Attributed To Growing Use Of Internet To Advertise Rentals

In Grand Rapids, Michigan, The Grand Rapids Press reports:
  • When a landlord told a young Grand Rapids mother interested in renting a duplex that she would have to pay twice the regular security deposit because she had three children, the woman was shocked. “I know I have kids, but I don’t have animals for children,” said the 24-year-old, whose children are 5, 2 and 2 months. “I don’t know what kind of damage they would do that would take two months’ security deposit.” The mother, who asked not to be identified, eventually learned the requirement was illegal: The Fair Housing Act bans discrimination on the basis of “familial status.”

***

  • Nationwide, familial status complaints rose from 3,500 in 2006 to 5,300 last year, according to the National Fair Housing Alliance. The increase is attributed to the growing role of Internet advertising. Newspapers are held liable under the Fair Housing Act for their advertising content, but Web sites such as Craigslist.com or rentgr.com are held to a different standard: The burden is on the poster, not the site owner.

For mrore, see More renters claiming landlords are unlawfully discriminating against families.

Mass. Landlords Get Hammered For Failing To Lease To Renters w/ Kids To Avoid Lead Paint Abatement Requirements, Tenants w/ "Section 8" Subsidies

The Office of the Massachusetts Attorney General has taken recent action in connection with enforcing housing discrimination laws involving the alleged refusal by landlords to rent to families with children & tenants receiving housing subsidies, as well as the refusal of landlords to remediate lead based paint hazards in rental units and common areas:
  • Coakley Obtains Consent Judgment Against Quincy Landlords for Discriminating Against Section 8 Recipients: Attorney General Martha Coakley’s Office obtained a consent judgment against Inna Bogina, the owner of a three-bedroom rental property in Quincy, and her daughter Tatiana Bogina, the rental agent for the property, resolving allegations that they violated state anti-discrimination laws by refusing to rent to recipients of housing subsidies and a family with children. The consent judgment, entered yesterday by Judge Barbara A. Dortch-Okara in Norfolk Superior Court, orders Inna and Tatiana Bogina to pay $5,000 to the victims, bars the Boginas from discriminating in the future, and requires Tatiana Bogina to attend a training on fair housing laws.

  • Coakley Reaches Settlement with East Boston Landlord Resolving Allegations of Housing Discrimination: Attorney General Martha Coakley’s Office reached a settlement with an East Boston landlord, resolving allegations that he unfairly discriminated against prospective tenants, denying them the opportunity to rent an apartment. The Assurance of Discontinuance, filed [...] against Russell Tremaine, the landlord, alleges that he violated state anti-discrimination and lead paint laws by denying a couple with a young child the right to rent an apartment in East Boston because of the presence of lead paint. "It is against the law to deny a family the opportunity to rent an apartment because the family has a child under six, which would require the landlord to abate or remove any lead paint from the unit and common areas. Those who choose to be landlords and participate in the rental market must play by the rules and abide by the laws meant to ensure people’s health and safety,” said Attorney General Martha Coakley.

  • Coakley Reaches Statewide Settlement with 20 Landlords and Real Estate Agents for Discriminatory Advertisements on Craigslist and Files Suit Against Six Others: Attorney General Martha Coakley’s Office reached settlements in 20 cases against landlords and real estate agents across the Commonwealth accused of violating state anti-discrimination laws by making discriminatory statements in rental advertisements posted on the popular classified advertising website Craigslist.org (“Craigslist”). The Attorney General’s Office also filed lawsuits against six other defendants based on similar allegations. The settlements and lawsuits are a result of a statewide investigation into reports of widespread discriminatory Internet advertising, [...]. Under Massachusetts law, it is illegal to discriminate against someone because the presence of children might trigger a property owner’s duties under the lead paint laws or because someone receives a housing subsidy, such as a Section 8 voucher, to pay for some or all of their rent. The advertisements in question in this investigation include such language as “no children” or “no Section 8,” in blatant violation of the law. The settlements, [...] require the property owners and real estate agents to pay the Commonwealth $18,250, ($8,750 of which is suspended pending compliance with the agreements), attend trainings on state and federal fair housing laws, remove lead paint hazards from the rental units, and prohibit the defendants from placing discriminatory advertisements or otherwise discriminating against any person who seeks or applies for housing because they are a member of a protected class.

  • Coakley Settles with Cambridge Real Estate Company That Discriminated Against Family with Young Child: Attorney General Martha Coakley’s office obtained a consent judgment against ABG Residential, a Cambridge-based realty company, and its agent, Georgina Zala, resolving claims that the company refused to rent an apartment to a couple because they had a nine-month old child whose presence would require abatement of lead paint hazards under state law. The consent judgment, [...] orders the defendants to pay $3,500 to the couple and bars the defendants from future acts of discrimination.

Ex-HOA President Gets 18 Months House Arrest For Swiping $87K By Dipping Into Association's Funds; Lien Placed On Home To Secure Restitution Payments

In Dayton, Ohio, the Dayton Daily News reports:
  • The former president of the Gander Road Homeowner’s Association, who admitted to embezzling $87,000 from the group, was sentenced [...] to five years probation. Rose Griffin, 69, of Dayton, appeared before U.S. District Senior Judge Walter H. Rice, who ordered her to pay full restitution to the association. Griffin will spend the first 18 months of her probation on home confinement, under Rice’s sentence. Griffin pleaded guilty [...] to one count of honest services mail fraud.

***

  • Griffin must repay the restitution at the rate of $1,000 per month and receive counseling for gambling addiction. Rice also ordered that a lien be placed on Griffin’s home.

For the story, see Homeowner association president sentenced for embezzling $87,000.

Lawyer Convicted In Scam Involving 85-Year Old Client Beat Out Of $160K In Phony Morgtage Deal

In Barrie, Ontario, the Barrie Advance reports:
  • A former Barrie and Innisfil lawyer was convicted of fraud and forgery in Barrie Superior Court in connection with a false mortgage scheme. Myles McLellan, 56, has had a continuing trial in Barrie since January this year. He was charged in 2006, following an extensive investigation by South Simcoe Police in relation to a mortgage fraud involving an elderly victim.(1)

Source: Lawyer convicted in scheme.

For earlier post on this story, see Attorney On Trial For Forgery, Criminal Breach Of Trust For Allegedly Duping 85-Year Old Man Out Of $160K In Bogus Mortgage Investment Deal.

(1) For those in Canada, if a Canadian attorney, in the course of representing you, screws you out of money or property through dishonest conduct, click on your province on the Canada Client Protection Funds Map to contact the appropriate Law Society Client Compensation Fund about filing a claim to seek some reimbursement for your losses.

For those in the United States, see:

Illinois Man Accused Of Ripping Off $225K From Now-Deceased Mother-In-Law Asserts "Promissory Note" Defense In Attempt To Beat Charges

In McHenry County, Illinois, the Daily Herald reports:
  • The defense for a Lake in the Hills man accused of stealing $225,000 from his mother-in-law asked a judge to throw out the charges Tuesday, claiming authorities misled the grand jury that indicted him and ignored evidence proving his innocence. Michael W. Greer, 46, faces felony charges of financial exploitation of an elderly person and forgery stemming from an investigation into allegations he used a position of authority over his now-deceased mother-in-law to gain control of substantial assets.

  • But defense lawyer Thomas Loizzo argued in court [...] that Greer received the money as a loan to his business and that there are documents - including a promissory note signed by Greer's brother and business partner - supporting that claim. "If the grand jury had known that fact, if they had known it was a loan for $225,000, they would have known this was a civil matter that doesn't rise to the level of criminality," he said.

***

  • Addressing the promissory note, [Assistant McHenry County State's Attorney Ryan] Blackney said authorities believe Greer forged it in order to cover his tracks once his financial transactions began drawing scrutiny.

For the story, see Defense claims grand jury misled in theft case.

Caregiver Charged In Alleged Ripoff Of Elderly Couple; Increased Victims' Reverse Mortgage Payments To Hide Effects Of Illicit Spending, Say Cops

In Fairfax, California, the Marin Independent Journal reports:
  • An in-home caregiver wanted on suspicion of stealing $100,000 from a retired Fairfax couple was arrested in Marin Superior Court after showing up for her scheduled arraignment. Jane Macam McClellan, also known as Jane Macam Deleon, pleaded not guilty during her initial court appearance [...], said her defense attorney, Anthony Lowenstein. McClellan, a 46-year-old Brentwood resident, was then booked into jail on allegations of embezzlement from an elder or dependent adult, forgery, possession of stolen property, burglary and theft. Her bail is set at $100,000.

  • McClellan worked for the Fairfax couple, a 98-year-old woman and her 92-year-old husband, for about six months. She was fired in August when the couple's family discovered financial irregularities, police said. McClellan allegedly used the couple's credit cards and also spent their money to hire her own family members for housekeeping work, according to the Fairfax Police Department. In addition, McClellan allegedly increased the couple's reverse-mortgage payments to help disguise the effects of her spending.

For the story, see Caregiver sought in Fairfax theft case shows up for court, gets booked.

Friday, November 06, 2009

Sheriff's Alleged Failure To Follow Proper Procedure Raised As Issue In Proposed Class Action Suit In Attempt To Set Aside Detroit-Area Foreclosures

In Detroit, Michigan, The Detroit News reports:
  • Tens of thousands of Wayne County foreclosures -- and potentially hundreds of thousands across the state -- are unlawful because sheriffs did not follow state law when they conducted foreclosure auctions, an attorney said Wednesday. On Tuesday, Bloomfield Hills attorney Paul Nicoletti filed a proposed class-action suit in federal court seeking to set aside the Wayne County foreclosures of 46 plaintiffs and potentially hundreds of thousands of others in similar circumstances.

  • The main issue relates to the sheriff's deeds issued to buyers of properties sold by the court order to satisfy debts. The complaint alleges that former Sheriff Warren Evans did not sign the appointment of the sheriff's deputy who executed the deeds, as required by the letter of the law. Instead, as in most Michigan counties, the undersheriff made the appointment, Nicoletti said. "It's a hyper-technical argument, but it's due process," said Nicoletti, who points to a handful of rulings he says support his position.(1)

For more, see Lawsuit claims Wayne County foreclosures were illegal.

(1) According to the story, Nicoletti points to an August ruling by a U.S. bankruptcy judge that set aside a foreclosure based on a similar technical argument -- the time period for which the deputy who handled the sale was appointed. The bankruptcy judge ruled evidence suggested the deputy was appointed for 2008, but not for 2007, when the sale took place. The judge set aside the foreclosure but reinstated the mortgage, meaning the plaintiff still had the debt to deal with.

Ohio AG, Loan Servicer Trade Lawsuits Over Legality Of Firm's Business Practices

In Cleveland, Ohio, Reuters reports:
  • American Home Mortgage Servicing and Ohio's Attorney General on Thursday filed lawsuits against one other marking the latest battle between a U.S. state and firms charged with easing payments for troubled home owners. American Home, owned by billionaire investor Wilbur Ross, said its lawsuit disputes the state's allegations of unfair practices, which were affirmed later as Attorney General Richard Cordray announced he had sued the Coppell, Texas-based mortgage servicing company.

  • It is the second offensive by Cordray against mortgage servicing companies that are on the front lines of state and federal efforts to stop foreclosures plaguing the economy. Among complaints, Cordray said American Home forced consumers to pay excessive fees and waive rights in order to get help, and that contracts to ease terms on loans were "unconscionably one-sided" in favor of the company.

For more, see American Home, Ohio AG sue each other over mortgages.

For the Ohio AG press release, see Cordray Files Second Suit Against Mortgage Servicers:

  • The lawsuit alleges numerous violations of the Ohio Consumer Sales Practices Act including but not limited to: incompetent and inadequate customer service, failure to respond to requests for assistance, failure to offer timely or affordable loss mitigation options to borrowers and unfair and deceptive loan modification terms.

The Ohio AG warns consumers to watch for the following red flags when entering into a loan modification with a loan servicer:

  • Agreements in which you waive your right to take legal action against the servicer or to challenge the foreclosure process. Look for words like “borrower has no right of set-off or counterclaim” or “no defense related to the loan or the property,”
  • Demands for advance payment of extra fees not included in the agreement, such as taxes, attorney fees and insurance costs,
  • Failure to return your calls or respond to inquiries in a timely matter,
  • Failure to respond to you entirely,
  • Lost documents.

Class Action Suits Against Major Builder, Lender Accused Of Controlling Apraisal Process To Artificially Inflate Home Values Expand To Florida, NC, SC

From a press release from the law firm of Hagens Berman Sobol Shapiro:
  • A Central Florida homeowner forced into foreclosure filed a class-action lawsuit last week against KB Home, Countrywide Financial and LandSafe Appraisal Services, claiming the three conspired to rig housing prices in Florida, South Carolina and North Carolina, costing home purchasers millions of dollars, and fueling the collapse of the region's housing market.

  • The suit, filed in U.S. District Court in Orlando, Fla. on Friday, October 30, claims the three companies employed a well-planned scheme to control the typically independent appraisal process, jacking up home values, which, in turn, were used to determine the value of other homes sold by KB, affecting thousands of homeowners. This is the third lawsuit Hagens Berman Sobol Shapiro filed against KB Home, Countrywide and LandSafe alleging a widespread and complicated inflation scheme. The other lawsuits represent homeowners in California, Arizona and Nevada.

For the entire press release, see Class-Action Lawsuits Against KB Home Expand to Florida, NorthCarolina and South Carolina (Lawsuit cites similar claims to California and Arizona complaints, alleging price inflation scheme).

For the lawsuit, see Sullivan v. KB Home et al.

Go here for information on the other class action lawsuits filed against KB Homes.

California Couple Ripped Off By Loan Mod Outfit Obtains Triple Damages In Lawsuit Under New State Law Allowing For Punitive Damages Scam Cases

In Victorville, California, the Victorville Daily Press reports:
  • A local couple who say they were scammed by a loan modification company are the first in the country to use a new organization that guided them through the small claims court process and helped win a fight to get their money back. [... Jeff] Lomax said he paid Certified Financial Protection Group, based in Temecula, $1,000 to begin a loan modification but nothing was ever done, so he sued to get their money back. In Civil Court on Monday the couple won a big victory against Certified Financial Protection Group and its agent Mike Wayman after they failed to appear in court for a second time.

  • Judge Bruce Austin awarded the couple more than $7,000, three times the amount they were actually seeking including all court fees and other legal costs the defendant is ordered to pay. A new California law just passed in June allows victims of scammers to receive punitive damages up to three times the amount they paid.

For the story, see Home owners fight back (Awarded $7,000 in court case against reported loan scammer).

Michigan Woman Charged With Stealing Sister's I.D. To Obtain Mortgage & Then Allowing It To Fall Into Foreclosure

From the Office of the Michigan Attorney General:
  • Attorney General Mike Cox [...] announced that his office has filed charges against a Wyoming, MI woman accused of defrauding the Michigan State Housing Development Authority (MSHDA) by fraudulently obtaining a mortgage, defaulting on that mortgage and leaving taxpayers to pick up the tab. Maria Antonia Franks Hernandez is accused of stealing her sister's identity [...] to fraudulently obtain an $83,000 mortgage through MSHDA. She then defaulted on the mortgage, leaving taxpayers with a balance of more that $76,000. Franks Hernandez's sister resides in Mexico.

For the entire press release, see Mortgage Fraud Results in Charges for West Michigan Woman.

Thursday, November 05, 2009

Lower Court Order Upheld Prohibiting Option One/H&R Block Massachusetts Foreclosure Actions Without First Obtaining State AG Or Court Approval

From the Office of the Massachusetts Attorney General:
  • The Massachusetts Appeals Court has affirmed a preliminary injunction obtained by Attorney General Martha Coakley’s Office against Option One Mortgage Corp. (“Option One”) and H&R Block Mortgage Corp. (“H&R Block Mortgage”), subprime lenders that originated thousands of loans in Massachusetts. The preliminary injunction, issued by then Judge Ralph D. Gants in Suffolk Superior Court last November, prohibited Option One and American Home Mortgage Servicing, Inc. (“AHMSI”) from initiating or advancing foreclosures on mortgage loans that the Court found to be “presumptively unfair.”(1) Under the order, which affects up to 9,700 Massachusetts loans originated by Option One, AHMSI must give the Attorney General’s Office advance notice before it intends to foreclose on any such loan, and if the Attorney General objects, obtain approval from the Court before foreclosing on a loan.

  • In a summary order issued late last week, the Appeals Court affirmed the preliminary injunction. The Appeals Court cited the Supreme Judicial Court’s decision in Commonwealth v. Fremont Investment & Loan [452 Mass. 733; 897 N.E.2d 548; 2008 Mass. LEXIS 797 (2008)] and determined the Superior Court’s injunction was proper.

For the Massachusetts Attorney General press release, see Appeals Court Affirms Preliminary Injunction Against Option One and H&R Block Mortgage, Restricting Foreclosures on Unfair Subprime Loans.

For the 11/12/2008 Massachusetts AG press release on this matter, see Coakley Obtains Preliminary Injunction Against Option One and H&R Block, Accused of Deceptive and Discriminatory Lending Practices.

(1) Under the order, a loan is “presumptively unfair” if it possesses the following characteristics:

  • The loan is an adjustable rate mortgage with an introductory period of three years or less;
  • The borrower has a debt-to-income ratio (the ratio between the borrower’s monthly debt payments, including the monthly mortgage payment, and the borrower’s monthly income) that would have exceeded 50% if Option One had measured the debt, not by the debt due under the teaser rate, but by the debt due under the fully-indexed rate, except when the borrower had a student loan in which payment had been deferred at least six months from the date of submission of the mortgage loan application, in which case debt-to-income ratio need exceed only 45 percent;
  • The loan has an introductory or “teaser” rate for the initial period that is at least 2 percent lower than the fully indexed rate, (unless the debt-to-income ratio is 55 percent or above, in which case the difference between the teaser rate and fully indexed rate is not relevant);
  • The loan-to-value ratio of the loan is 97% or the loan carries a substantial prepayment penalty or a prepayment penalty that lasts beyond the introductory period.

Tampa Feds Announce Mortgage Fraud Charges Against 100+ Suspects Involving $400M+ In Fraudulently Obtained Loans Affecting 700+ Properties

In Tampa, Florida, the St. Petersburg Times reports:
  • An intensive, nine-month federal investigation of mortgage fraud that stretched from Jacksonville to Tampa and Fort Myers has resulted in charges against 105 people, authorities said Tuesday. U.S. Attorney A. Brian Albritton called Florida ground zero for mortgage fraud in the nation. He released details of an investigative "surge" in May, saying the goal was to restore confidence in the real estate market and send a message that "mortgage fraud won't be tolerated." "This is by no means the end of vigorous mortgage fraud prosecution in the Middle District of Florida," Albritton said at a news conference Tuesday, where he touted the successful effort.

***

  • The U.S. Attorney's Office said the joint investigation with the FBI and other federal and state agencies involved more than $400 million in loans procured by fraud on more than 700 properties. Those charged in the surge range from multiple borrowers to real estate and title agents, investors and the president and owners of mortgage companies. [...] Seven cases among the 105 charged individuals remain sealed, but Albritton said those should become public soon.

For the story, see Feds announce more than 100 prosecutions in mortgage fraud surge.

Go here to see the list of all the defendants.

Missing Trust Funds Could Approach $500M In Suspected Ponzi Scheme Allegedly Run By Prominent South Florida Attorney

In Fort Lauderdale, Florida, the Daily Business Review reports:
  • Fort Lauderdale, Fla., attorney Scott Rothstein's meteoric rise in the South Florida legal and political worlds ended over Halloween weekend with the revelation that investors claim he stole in excess of $200 million.(1) The money is tied to a side business started by Rothstein, [...] which converts a lump sum award to installments for tax and cost-of-living reasons.

  • Rothstein Rosenfeldt Adler founding partner and law firm president Stuart Rosenfeldt, in a complaint filed Monday by Coffey Burlington partner Kendall Coffey, asked Broward Circuit Judge Jeffrey Streitfeld to dissolve the law firm and appoint a receiver to take over the firm's finances but not its legal practice.

For more, see Fla. Law Firm Rocked by Fraud Allegations Against Partner.

For the lawsuit, see Rosenfeldt v. Rothstein.

See also, The Miami Herald: Feds probe prominent Broward attorney Scott Rothstein (Federal authorities on Monday were conducting a criminal investigation into high-profile Fort Lauderdale attorney Scott Rothstein, who is suspected of operating a Ponzi scheme by selling tens of millions of dollars in fabricated legal settlements to investors).

(1) According to the story, money was taken "from investor trust accounts that made use of the law firm's name," the lawsuit said. The money was not associated with cases handled by the law firm but from the structured settlement business created and operated by Rothstein, according to the complaint. The business purchased structured legal settlements and sold them to investors. A source told the Daily Business Review the amount allegedly misappropriated by Rothstein was at least $200 million but could be as high as $500 million. EscrowRipOffKappa

Landlord $lapped With $80K Fine In Attempt To Force Rent Controlled Tenant From Home By Refusing To Allow Disability-Related Modification To Bathroom

In Brooklyn, New York, the New York Post reports:
  • A Brooklyn landlord faces $80,000 in penalties, all because he refused to say two words: "I approve." For nearly two years, according to the city's Human Rights Commission, Kong Chae Choi wouldn't give permission for a walk-in shower to be installed in the apartment of an elderly, disabled tenant in hopes she'd move from her home of 40 years, a $250-a-month rent-controlled railroad flat at 192 Nassau Ave. in Greenpoint. The installation would have cost the landlord nothing.(1)

***

  • "He wants me out," Russell, who walks with a cane, told a reporter who visited her cramped third-floor walk-up. "But he's not getting me out until my legs give out." For months, Russell bathed only every other day. Sometimes, she walked several blocks to bathe at a daughter's house. Other times, she'd call one of her children before and after bathing so they could rush to her aid in case of an accident. "What happened here was a nightmare," she recalled. Choi ignored every letter sent to him from Russell and the city.

***

  • On Sept. 25, administrative law Judge Julio Rodriguez slapped Choi with a $50,000 fine, citing his "wanton failure to participate" in any proceeding. He also ordered that he pay Russell $30,000 for mental suffering. Finally, the judge ordered that the shower be installed at Choi's own expense. "Respondent [Choi] is unhappy with the low rent Ms. Russell currently pays and hoping that by not allowing her to properly modify her bathtub, she would vacate her unit," Rodriguez concluded.

For the story, see Horror landlord $oaked.(2)

(1) Since the 77-year-old tenant, Ruth Russell, was suffering from emphysema, heart disease, sciatica and rheumatoid arthritis, United Cerebral Palsy agreed to put it in for free to replace a bathtub she was afraid to use, the story states.

(2) For other "Brooklyn-landlord" horror stories from the New York Post, see:

  • Landlord Duped Old Lady Out Of Apt.: Son (A Brooklyn landlord sneaked into an 84-year-old tenant's nursing-home room and got the ailing widow to give up her rent-stabilized apartment, her outraged relatives are charging in court),
  • Dead Cats In Housing Feud (A Brooklyn landlord who had been harassing his tenants left a bag of dead cats in a vacant first-floor unit in an ongoing effort to force lessees out of the building, City Council Speaker Christine Quinn charged),
  • Deadbeat Slumlord $lapped (A Brooklyn landlord was slapped with a staggering 1,300 violations against his empire of decrepit, rat-infested buildings during a multi-agency sweep that also found his housing group owed more than $8 million in taxes. At one property, tenants were terrorized by a rat so large that they named it "Big Ben").

SC Councilwoman Suspended After Allegations Of Abusing POA To Place Reverse Mortgage On Elderly Mom's Home & Pocketing Loan Proceeds

In Columbia, South Carolina, The Pickens Sentinel reports:
  • Gov. Mark Sanford has suspended Clemson City Councilwoman Elouise James following her indictment on several charges in Pickens County. Sanford signed the suspension order on Thursday, following the Pickens County Grand Jury’s Oct. 20 indictment of James on charges that include exploitation of a vulnerable adult, forgery and obstruction of justice.

***

  • In Pickens County, James is charged with two counts of obtaining goods by false pretenses and one charge of exploitation of a vulnerable adult. According to a Pickens County Sheriff’s Office warrant, James did “improperly and unlawfully use the power of attorney of a vulnerable adult for the profit or advantage of Kirstyn James.” James allegedly used her power of attorney to reverse the mortgage on her 90-year-old mother’s home, warrants state. “The defendant used $15,451.60 from the mortgage to pay the remaining restitution balance for her daughter’s probation,” the warrants allege. James is also charged with obtaining money “with the intent to cheat and defraud,” warrants state. James allegedly “solicited money from the victim to aid in the treatment of Kirstyn James, her daughter, who purportedly suffered from cancer,” warrants state.

For the story, see Governor suspends Clemson City Councilwoman following indictment. DeedContraTheft FinancialAbuseOfElderlyAlpha

Wednesday, November 04, 2009

Nevada Regulator Orders Shutdown Of 26 Loan Modification Outfits For Failure To Comply With Licensing, Bonding Requirements

In Las Vegas, Nevada, the Las Vegas Review Journal reports:
  • The Nevada Mortgage Lending Division said Monday that it is ordering 26 residential mortgage loan modification consultant companies to close and refund unearned payments from customers. Another 18 firms are allowed to continue working while their licenses are processed. Law firm Frederickson, Mazeika & Grant is the only firm that has obtained a license. The division is forcing companies to close if they failed to obtain a $75,000 surety bond required by a new state law.

***

  • The Nevada Legislature this year enacted a law requiring licenses and bonds for loan modification companies. [...] The Legislature required bonds and licensing because of reports that homeowners paid mortgage modification firms upfront for assistance, received no help and were unable to get a refund. "We will not allow those companies who have not met their legal obligations to operate," Commissioner Joseph Waltuch said in a statement Monday. "If consumers are going to pay for loan modification assistance, they must be able to trust that there's recourse if they've been harmed in some way."(1)(2)

For more, see Agency closes alterers of loans (Division calls for shutdown of 26 mortgage modifiers).

For the Nevada Mortgage Lending Division press release, see As bonding deadline passes, State Mortgage Lending Division moves to close down some loan modification providers.

In a related story, see Las Vegas Business Press: State trying to stop the scams (Government agency says complaints about unethical mortgage loan modifications mounting).

(1) The story states that many loan modification consultants have been unable to get or pay for surety bonds because they lack financial strength or have bad credit, according to Cynthia Duffy, part owner and the qualified employee for All Vegas Foreclosure Prevention. Duffy reportedly paid $3,000 for a $75,000 bond but some were quoted $15,000 for bonds.

(2) The Nevada Division of Mortgage Lending recently released this list of companies authorized to work with consumers in modifying home loans.

Home Lending Industry's "Waterfall Of Excuses" & "Abysmal Numbers Of Modifications" Force State AGs Closer To Filing Consumer Fraud Lawsuits

The New York Times reports:
  • Newly empowered by the Supreme Court, the attorneys general of several states hit hard by the housing collapse are exploring consumer fraud suits against major mortgage lenders. Frustrated by the banks’ inability or unwillingness to stop an avalanche of foreclosures, the states are considering lawsuits over the creation and marketing of millions of bad loans as well as the dismal pace of mortgage modifications.

  • Such cases would have been impossible until recently, because federal regulators had exclusive oversight of national banks. But a 5-to-4 Supreme Court decision in June allowed the states to exercise their own supervision, giving them significant leverage.(1)(2)We tried to use the tool to be persuasive with the banks,” Arizona’s attorney general, Terry Goddard, said in an interview. “But their waterfall of excuses, the abysmal numbers of modifications, tells us persuasion is not working.” As a result, he said, “we’re moving much closer to litigation.”

  • While statutes vary, those of every state prohibit fraud in consumer lending. The attorneys general are considering the theory that the banks essentially perpetrated a vast fraud on consumers by marketing exotic loans that would prove impossible to pay back.

For more, see States Are Pondering Fraud Suits Against Banks.

(1) According top the story, the states’ new power to sue banks arose from an effort in 2005 by Eliot Spitzer, then the New York attorney general, to discover whether several banks had violated the state’s fair-lending laws. The banks balked at surrendering any information. The Clearing House Association, a consortium of national banks, and the federal Office of the Comptroller of the Currency filed suit, asserting the states had no authority over national lenders. Mr. Spitzer’s successor, Andrew M. Cuomo, took up the battle. Lower courts agreed with the banks, but the Supreme Court, narrowly, did not. Already, the states’ victory in Cuomo v. Clearing House is beginning to affect the legal landscape. “The handcuffs are off,” said Ann Graham, a professor of banking law at Texas Tech University. “The states can pursue justice now.”

(2) For the U.S. Supreme Court's ruling, see Cuomo v. Clearing House Assn., L.L.C., 129 S. Ct. 2710; 174 L. Ed. 2d 464; 2009 U.S. LEXIS 4944 (June 29, 2009).

Report: Goldman Sachs Peddled $40B+ In Subprime Securities While Betting On Housing Market Crash

In Washington, D.C., McClatchy Newspapers reports:
  • In 2006 and 2007, Goldman Sachs Group peddled more than $40 billion in securities backed by at least 200,000 risky home mortgages, but never told the buyers it was secretly betting that a sharp drop in U.S. housing prices would send the value of those securities plummeting. Goldman's sales and its clandestine wagers, completed at the brink of the housing market meltdown, enabled the nation's premier investment bank to pass most of its potential losses to others before a flood of mortgage defaults staggered the U.S. and global economies.

  • Only later did investors discover that what Goldman had promoted as triple-A rated investments were closer to junk. Now, pension funds, insurance companies, labor unions and foreign financial institutions that bought those dicey mortgage securities are facing large losses, and a five-month McClatchy investigation has found that Goldman's failure to disclose that it made secret, exotic bets on an imminent housing crash may have violated securities laws.(1)

For more, see How Goldman secretly bet on the U.S. housing crash.

Thanks to Mike Dillon at GetDShirtz.com for the heads-up on the stories.

(1) In a related story from McClatchy, see Mystery: Why did Goldman stop scrutinizing loans it bought?

  • Before they bought pools of thousands of mortgages, Goldman and other Wall Street firms hired contractors to comb through sample batches of the loans to weed out unsound or fraudulent applications. Not much weeding occurred, however, several of the contractors said, because the Wall Street firms had agreed to accept mortgage lenders' relaxed credit guidelines. Melissa Toy and Irma Aninger, among scores of contract risk analysts who thumbed through mortgage files for the San Francisco-based Bohan Group from 2004 to 2006, said that supervisors overrode the bulk of their challenges to shaky loans on behalf of Goldman and other firms. They couldn't recall specific examples involving loans bought by Goldman, but they said their supervisors cleared half-million-dollar loans to a gardener, a housekeeper and a hairdresser.

State-Sanctioned Ripoffs Of The Elderly By Government Agencies Running Rampant On Both Sides Of The Atlantic?

In Great Britain, the Daily Mail reports:
  • A secret court that seizes the nest eggs of the elderly and vulnerable has triggered 3,000 complaints in the 18 months since it was set up, it was revealed [last month]. The obscure Court of Protection [of the Office of the Public Guardian] has taken control of £3.2billion in assets from those deemed unable to look after their own financial affairs because they are suffering from dementia or another mental incapacity. It adjudicates on contentious cases handled by the Office of the Public Guardian, a Ministry of Justice department which appoints 'deputies' to act for the mentally impaired when they have not written a living will.
***
  • The OPG often appoints relatives as deputies, but it also gives the role to solicitors or local authority officials if family members are deemed unsuitable. Families of those suffering from dementia complain that they have been treated like criminals and sent bullying letters from the court. The OPG has also charged £23million in fees from the bank accounts of those suffering from dementia to supervise the activities of deputies. The court, which is held in private, also pays just 0.5 per cent interest on savings it has seized, far lower than can be found at many high street banks.(1)
For more, see Anger as court seizes £3.2bn from elderly.
See also:
(1) For similar stories of alleged state-sanctioned ripoffs of the elderly, infirm and others deemed unable to take care of themselves by government agencies from the North American side of the Atlantic, see:

Tenant Charged With Ripping Off Elderly Landlord; Rental House Lost To Foreclosure, Cash Taken From Investment Property Refinancings

In Pekin, Illionois, the Pekin Daily Times reports:
  • A South Pekin woman was arrested [...] for allegedly bilking an elderly man out of cars, loans and his pension money. Gina Y. Robinson, 38, [...] was arrested for financial exploitation of the elderly, forgery and altering titles, according to Pekin Police Public Information Officer Mike Sanders.

  • In August the son of an 83-year-old Pekin man called police saying he feared his elderly father had been the victim of forgery by the father’s power of attorney, Robinson. [...] The victim owned several properties in Pekin and one of the properties had been foreclosed on in May. The elderly man had been renting the house to Robinson, said Sanders.

***

  • During the investigation, police learned that Robinson had also convinced the victim to make her his beneficiary at the time of his death. The victim told police he had been coerced by Robinson to take out loans on the homes he owned to help Robinson open a business, [...] which never opened, said Sanders.

For the story, see Woman allegedly scams elderly man. DeedContraTheft FinancialAbuseOfElderlyAlpha