Wednesday, November 11, 2009

NYC Legal Aid Files Class Action Alleging Servicer Spuriously Denied Access To HAMP; Feds Named For Failure To Provide Appeals Process For Rejections

The Legal Aid Society in New York City announced:
  • Four homeowners from Queens and Brooklyn, who are at risk of losing their homes to foreclosure, [...] filed a federal class action lawsuit, charging that Aurora Loan Services, their mortgage servicer, has denied them access to the Obama Administration’s Home Affordable Modification Program (HAMP) for spurious reasons, and has failed to provide them with notice so they may contest such denials.(1)

  • The lawsuit, Edwards et al v. Aurora Loan Services, LLC et al filed in the United States District Court for the District of Columbia, is one of the first lawsuits to challenge a mortgage servicer for breach of contract by failing to review mortgage loans of eligible homeowners for HAMP and to provide a procedure to contest denial. As the economic crisis places record numbers of homeowners at risk of losing their homes, the lawsuit contends that the named plaintiffs have been denied their rights under the program.

***

  • The lawsuit, [...] seeks class action status and requests a preliminary and permanent injunction, preventing Aurora from engaging in all unjust and unreasonable practices. It also requests that the Court order Aurora to provide a meaningful notice of HAMP denial, the specific grounds for denial and a process to challenge such denials.(2)

For the entire press release, see Civil Practice Files Law Suit to Help Homeowners At Risk of Losing Homes to Foreclosure.

(1) The lawsuit also names federal officials including The United States Treasury and the Federal National Mortgage Association because of their failure to ensure that homeowners are afforded their full due process rights. The four homeowners are represented by The Legal Aid Society in New York City. Lawyers handling the case include Oda Friedheim, Scott Rosenberg and Judith Goldiner.

(2) A lawsuit filed in July [see Williams, et al. v. Geithner, et al.] by the Foreclosure Relief Law Project, a program of the Housing Preservation Project, alleging a failure to create an appeals process when loan servicers deny access to HAMP loan modifications was recently dismissed by a Minnesota Federal Court. See:

For an earlier post on the Minnesota suit, see Minnesota Suit Seeks To Slam Brakes On Foreclosures Until Feds Implement Better Procedures In Program Borrowers Claim Violates Due Process Rights.

Minnesota Federal Judge Dismisses Suit Seeking To Block Foreclosures Alleging Due Process Violations In HAMP Program

In Minneapolis, Minnesota, The Wall Street Journal reports:
  • Borrowers don’t have a legal entitlement to loan modifications. That was the conclusion of a federal judge who this week dismissed a lawsuit filed by Minnesota homeowners seeking to block foreclosures.(1) The decision was a setback to struggling borrowers who have turned to the courts in an effort to get help under the Obama administration’s housing rescue plan.

***

  • The lawsuit, which was filed in U.S. District Court in Minnesota and sought class action status, alleged that the Obama administration’s foreclosure prevention plan violated borrowers’ constitutional rights because homeowners who were denied help under the program weren’t given a written denial and an opportunity to appeal. The action sought to halt foreclosures on homeowners eligible for the Obama plan until the government put in place certain procedural safeguards, such as creating a formal appeals process. In a decision Monday, U.S. District Court Judge Ann Montgomery said that Congress did not make loan modifications an entitlement. In addition, the Treasury Department gave mortgage companies some discretion in evaluating borrowers for help, the decision said.(2)

For more, see Minnesota Judge Delivers Setback to Struggling Homeowners.

(1) See Williams, et al. v. Geithner, et al.: Order denying Plaintiffs' Motion for Preliminary Injunction. For more information on the Minnesota lawsuit or to read the filed documents, click here.

(2) According to the story, Mr. Ireland, an attorney with the Housing Preservation Project, said that the administration has taken several steps to improve the process since the lawsuit was filed. In October, for instance, the Treasury Department issued guidelines that require mortgage companies to provide borrowers a written notice of denial within 10 days. Earlier this month, it required that mortgage companies stop foreclosures when a borrower challenges the denial and provides specific denial information, including some of the data used to evaluate the borrower for help.

Homeowners Furious After Another Maintenance Fee Hike By Financially Struggling HOA; 50%+ Of Units Either Delinquent Or In Foreclosure

In Orange County, Florida, WOFL-TV Channel 35 reports:
  • When Tom Beard learned that the Tivoli Village homeowners association wanted to increase his fees for the second time in as many years, he organized a petition signed by residents who refused to pay the increase. "It really angers me. I'm very frustrated. I'm in the same financial situation as a lot of other people in this subdivision and my wife and I have sucked it up. We don't drive nice cars, we don't go on vacation," Beard said.
    Residents here currently pay nearly $2,500 dollars a year in homeowners fees. The increase would add another $375.

  • HOA members say they are $250,000 in the hole and can't pay their bills. Fifty percent of the units are delinquent in their fees, and another 20 percent are in foreclosure. "The reality of it is, in order for the association to support itself, the dues would have to go up, whether we still own lots in the community or not," said HOA president and developer Kyle Sanders. [...] At Tivoli Village, the developer still acts as the head of the homeowners association. He plans to approve the 15 percent increase and will place a lien on homeowner who don't pay, but residents like Beard say they're ready to fight for their rights.

For the story, see Homeowners furious over fee increase.

Protection From F'closure Eviction No Help For Renters Getting Immediate Boot From Condemned Home Repo'd By Bank; Timing Of Bldg Inspection Questioned

In Enfield, Connecticut, The Hartford Courant reports:
  • George Lombardo of Thompsonville left for work as usual Monday morning only to find a notice posted on the porch of the house he rents on Lincoln Street. The house had been condemned as "unfit for occupancy." It was condemned Thursday, Nov. 5, according to the sign posted at the entrance to both sides of the duplex and signed by housing inspector Richard Metcalf. "I don't have a home now, and I just found out this morning on my way to work," Lombardo, 49, said Monday.

***

  • He called his landlord and found out that the property had been foreclosed about two weeks ago and is now owned by the bank, leading Lombardo to question the timing of a building inspection that determined his home to be uninhabitable. But Peter Bryanton, director of community development, said that the foreclosure and the inspection are unrelated. [...] "There was enough there to say, 'This is a dangerous situation,'" Bryanton said. "If we find it's a danger, a hazard, like we did, then we've got to get [the tenants] out." He said there is no formal process for letting residents know their residence is condemned besides posting the sign. After the signs are posted, tenants are to leave immediately, negating the [...] period a resident would typically have to leave after a foreclosure.

***

  • "[The home's] been in the same shape for eight years," Lombardo said. "There were no vermin, no leaks, no structural damage. There's a tarp on the roof, but that has been there for years."

For the story, see Enfield Tenants Have To Find New Homes After Duplex Is Condemned.

Wave Of Chinese Drywall-Related Homeowners' Insurance Cancellations Begins Hitting Louisiana; Homeowner Could Face Threat Of Foreclosure, Job Loss

In New Orleans, Louisiana, The Times Picayune reports:
  • In August, Tamara Thomas filed a claim with her homeowners insurance company after discovering that her air conditioning and other appliances had failed because her three-year-old home was filled with defective drywall made in China. But before the Hanover Insurance Group even denied the claim, as most insurers have been doing with claims for Chinese drywall damage, it canceled her policy, effective Nov. 19. The Massachusetts company said there had been a "substantial change in risk" because the home was no longer occupied since Thomas and her family had begun staying in the guest room at her parents' house out of concerns over how the drywall was affecting their health.

***

  • So far, most insurance policy cancellations have been taking place in Florida. In Louisiana, insurers were universally denying claims, but it was believed that a state law making it difficult for insurers to drop coverage for homeowners who have been customers for at least three years would largely keep policies in place. But advocates for Chinese drywall victims have reported that in the past few weeks, a wave of cancellations has begun to unfold in Louisiana, even with people like Thomas, who had insurance on her home with Hanover for just over three years.(1)

  • "I'm hearing it every day now," said state Sen. Julie Quinn, R-Metairie, who has been holding town hall meetings about Chinese drywall issues. In canceling policies, insurers often cite the failure to maintain the home in insurable condition, or vacancies, Quinn said.

For more, see Insurers have begun cancelling policies on Louisiana homes with tainted drywall.

(1) Reportedly, while investigations into Chinese-manufactured drywall continue, Thomas now finds herself in a string of no-win situations. Although Thomas' skin problems, her husband's nosebleeds and her daughters' respiratory ailments have improved since they began staying at her parents' house, the insurance cancellation has caused a new set of nightmares, the story states.

When she got the cancellation letter, Thomas immediately called her mortgage lender to tell the company about the situation. Her lender suggested that she contact the bank's force-placement insurance company to get coverage so that she would remain in compliance with the terms of her loan. But the force-placement company said that it couldn't bind coverage since she has an active problem at the house and has made a claim. She has since contacted Louisiana Citizens Property Insurance Corp., the state's insurer of last resort, but an agent with Citizens has advised her that it may not be able to write a policy for the same reason.

Failure to get new coverage in place by Nov. 19 will potentially put her in violation of the terms of her mortgage and at risk of foreclosure. If her loan goes into default, Thomas also risks losing her job, because, as a financial consultant, she is required by her employer to maintain perfect credit. "I have a $270,000 home that's worth zero dollars," Thomas said. "No one's going to insure me. My house could be foreclosed upon. I'm still paying my mortgage on a house I can't live in."

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.

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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