Ohio Appeals Court Boots Promissory Note-Lacking Lender As State AG, Six Non-Profits Jump Into (Apparently) High-Stakes Fray In Support Of Homeowner

A recent decision ruling by an Ohio Court of Appeals affirmed a lower court's ruling:

• striking the affidavit of an employee of a loan servicer (identified as a manager of trial preparation and discovery for Ocwen Loan Servicing) acting as servicing agent of the purported lender (HSBC Bank, as Trustee for ..., etc., etc.) that brought a foreclosure action because of defects in the affidavit;

• refusing to consider the Ocwen employee's restated affidavit, in the course of deciding objections to the magistrate's decision, because HSBC failed to indicate why it could not have properly submitted the evidence, with reasonable diligence, before the magistrate had rendered a decision in the matter; and

• rendering summary judgment against HSBC, and dismissing the foreclosure action for lack of standing because HSBC failed to establish that it was (a) the real party in interest to bring the suit, and (b) the holder of the promissory note secured by the mortgage being foreclosed.

The stakes in this case, which by all appearances involved nothing more than your standard, run-of-the-mill "lack of standing" and "real party in interest" claims, were apparently somehow ratcheted up significantly along the way as it attracted enough interest from the Ohio Attorney General's office to cause it to jump into the fray and file a "friend of the court" brief supporting the homeowner's position.

Further, a second amicus brief, also supporting the homeowner's position, was filed on behalf of six Ohio non-profit legal and consumer advocates, who apparently also wanted to get in on the action.(1)(2)

Among the points the appeals court had problems with, and that sunk the lender in this case were:

• In the original affidavit filed on behalf of HSBC, the Ocwen employee averred "[t]hat he had executed it in Palm Beach, Florida. However, the notation at the top of the first page of the affidavit and the jurat both state that the affidavit was sworn to and subscribed to in New Jersey, before a notary public." (see paragraph 11 of the ruling);

• With respect to the restated affidavit, "The affidavit was identical to what was previously submitted, except that the first page indicated that the affidavit was being signed in Palm Beach County, Florida. The jurat is signed by a notary who appears to be from Florida, although the notary seals on the original and copy that were submitted are not very clear. HSBC did not offer any explanation for the mistake in the original affidavit." (see paragraph 15 of the ruling);

• Regarding copies of a pair of purported, undated "allonges" submitted as loose papers to the court by the servicer accompanying a purported copy of the promissory note, there was no evidence that the allonges were ever affixed to the note as required under Ohio law; and further, the order in which the purported allonges were submitted did not support HSBC's claim that it was the holder of the promissory note.(3)

For the entire ruling, see HSBC Bank USA v. Thompson, 2010 Ohio 4158 (2nd App. Dist., Montgomery County, September 3, 2010).

(1) The Ohio non-profit heavyweights who chimed in with their support of the homeowner's position were:

• Advocates for Basic Legal Equality;
• Equal Justice Foundation;
• Legal Aid Society of Southwest Ohio;
• Northeast Ohio Legal Aid Services;
• Ohio Poverty Law Center; and
• Pro Seniors, Inc.

(2) Not to be outdone, in addition to being represented by local counsel, the foreclosing lender also called in the Washington, D.C. office of some national, big-shot, white shoe law firm for additional artillery (apparently to no avail).

(3) In this regard, the appellate court stated (at pargraphs 67-70):

• {¶ 67} In contrast to Watson, no evidence was presented in the case before us to indicate that the allonges were ever attached or affixed to the promissory note. Instead, the allonges have been presented as separate, loose sheets of paper, with no explanation as to how they may have been attached. Compare In re Weisband, (Bkrtcy. D. Ariz., 2010), 427 B.R. 13, 19 (concluding that GMAC was not a "holder" and did not have ability to enforce a note, where GMAC failed to demonstrate that an allonge endorsement to GMAC was affixed to a note. The bankruptcy court noted that the endorsement in question "is on a separate sheet of paper; there was no evidence that it was stapled or otherwise attached to the rest of the Note.")

• {¶ 68} It is possible that the allonges in the case before us were stapled to the note at one time and were separated for photocopying. But unlike the alleged creditor in Watson, HSBC offered no evidence to that effect. Furthermore, assuming for the sake of argument that the allonges were properly "affixed," the order of the allonges does not permit HSBC to claim that it is the possessor of a note made payable to bearer or endorsed in blank.

• {¶ 69} The first allonge is endorsed from Delta to "blank," and the second allonge is endorsed from Fidelity to Delta. If the endorsement in blank were intended to be effective, the endorsement from Fidelity to Delta should have preceded the endorsement from Delta to "blank," because the original promissory note is made payable to Fidelity, not to Delta. Delta would have had no power to endorse the note before receiving the note and an endorsement from Fidelity.

• {¶ 70} HSBC contends that the order of the allonges is immaterial, while Thompson claims that the order is critical.

Court Hammers Alleged Loan Modification Racket With $100K Judgment; 2nd Score Against Foreclosure Rescue Operators In Recent Weeks For Wisconsin AG

In Dane County, Wisconsin, the Milwaukee Journal Sentinel reports:

• A Dane County circuit judge has ordered the California-based Federal Loan Modification Center LLP to pay $105,754 and to stop doing business illegally in Wisconsin, Attorney General J.B. Van Hollen said [].

• Van Hollen said in a statement that the company falsely presented itself as part of a federal program offering to help distressed homeowners modify their loans and stave off foreclosure. The firm collected as much as $3,500 in fees from Wisconsin homeowners, then failed to provide promised services or refunds, Van Hollen said.

***

• The state Justice Department last week won a $111,861 judgment against another California company, Relief Law Center Inc. for violating consumer protection laws in soliciting homeowners for purported loan modification services.(1) In that case, the solicitations were designed to appear as though the firm was a loan auditor investigating the homeowner's lender, Van Hollen said.

Source: Loan firm told to pay $105,754.

(1) See Van Hollen Announces Judgment Against USA Loan Auditors.

State Regulator Orders Two Suspected Loan Modification Outfits To Cease & Desist As Sheriff's Deputies Execute Search Warrants On Companies' Records

In Northern Florida, The Florida Times Union reports:

• The Florida Office of Financial Regulation ["OFR"] and Clay County Sheriff's Office [] ordered two Clay County mortgage loan modification companies to cease business and served search warrants on their records, the two agencies announced.

• The two companies closed were Global Equity Solutions, [...] in Middleburg, and Hope Financial Services, [...] in Orange Park. The OFR served immediate cease and desist orders barring the companies from doing business as the sheriff's office executed the search warrants. Names were not released because charges are pending further investigation, the agencies said.

***

• OFR investigators found the two companies marketed their services throughout the country via websites, mass mailings and a telephone call center. The companies have about 250 open contracts, where they received between about $1,200 and $1,800 up front first. Those who perform loan modifications in Florida without an active license are subject to being slapped with felony charges punishable by up to five years in prison and a fine as much as $5,000 per offense, [OFR communications director Flora] Beal said.

For the story, see State regulators shut down loan modification companies in Clay County.

Servicing Handbook Issued By Treasury Department Sets Forth New Rules For HAMP-Participating Loan Servicers When Evaluating Loan Modifications

Lexology reports:

• There is a new manual governing HAMP loan modification practices, and the changes, often subtle but important, are worth noting. The United States Department of Treasury created the Home Affordable Modification Program (“HAMP”) to assist homeowners in default (or at risk of default) on their mortgages.

***

• Although participation in the program is voluntary, HAMP imposes a number of requirements on participating servicers, including notice and reporting requirements. Until now, such requirements could be found only in what some perceived to be confusing and contradictory “Supplemental Directive” letters available on the HAMP website for servicers, www.HMPadmin.com.

• The Treasury Department has now released a Servicing Handbook that combines the former Supplemental Directives while also amending or revising prior guidelines. [...] The new Servicer Handbook does not merely collect prior guidelines — it establishes entirely new rules, in some cases clarifying or superseding prior Supplemental Directives.

For more, including an overview of the major new guidelines or clarifications, see The Home Affordable Modification Program: new handbook, revised guidelines (subscription required; if no subscription, TRY HERE; or GO HERE, then click link for the story).

For a copy of the new Servicer Handbook, see Making Home Affordable Program: Handbook for Servicers of Non-GSE Mortgages (Version 1.0 - 77 pages).

San Diego DA Bags Pair In Alleged Forged Deed, Bogus Bankruptcy Filing, Rent Skimming Ripoff Affecting 300+ Victims Throughout Five Counties

In San Diego, California, KGTV-TV Channel 10 reports:

• Two brothers were charged Tuesday in a $1.5 million foreclosure fraud scheme in which they allegedly stole the identity of several notaries and forged hundreds of deeds across five counties, including San Diego.

• David Zepeda, 57, and John Zepeda, 59, are each charged with 104 felony counts, including identity theft, forgery, grand theft and rent-skimming. The "brazen" conspiracy involved more than 300 victims, said San Diego County District Attorney Bonnie Dumanis.

***

• In San Diego, more than 40 alleged victims have been identified, with losses totaling approximately $100,000, Dumanis said. Victims were also located in Santa Barbara, Ventura and Los Angeles counties, as well as Clark County in Nevada, said Deputy District Attorney Valerie Tanney.

***

• Authorities said the Zepeda brothers identified properties in foreclosure and acquired title either by forging a quitclaim deed, which transfers the property into a trust, or convincing homeowners to transfer the property to them by promising the homeowner they would help avoid foreclosure.

• Once they had acquired the title, the Zepedas would rent out the property, according to authorities. In order to forestall the foreclosure process and to extend the period over which they collected rent, the brothers also filed bankruptcy petitions, prosecutors said.

For more, see Brothers Charged In $1.5M Foreclosure Fraud Scheme (David And John Zepeda Each Face 104 Felony Counts).

Ex-TV News Anchor Says Loan Mod Racket Ruined His Reputation, Stiffed Him On Infomercial Fee After Promises To Homeowners In Foreclosure Were Broken

In Houston, Texas, KRIV-TV Channel 26 reports:

• [H]omeowners Legal Assistance, also known as Delgado and Associates, was featured on infomercials on Spanish television. The advertisements featured Antonio Hernandez, a veteran Houston news anchor, as well as a money back guarantee. "It looked very credible on the surface and it wasn't," said attorney J.C.Castillo. [Homeowner Jose] Valladares paid the business $3,000.

***

• When Valladares and other unhappy customers returned to the southwest side office building, the business was gone. "When all these complaints started coming in from everywhere, that's when they decided boom, it disappeared," said Castillo.

• If losing their money and or their homes wasn't enough, some customers had bankruptcy filings they say they knew nothing about. Those filings were apparently done to stop their foreclosures. "That's obviously fraud on the bankruptcy court and fraud on the homeowners when that was being done," said Castillo. Court documents state one of the business' employees filed numerous bankruptcy cases for customers and in the process violated several provisions of the bankruptcy code. "Everything fell apart and everybody started pointing fingers at each other," said Castillo.

• Business owner Arnold Gonzales and hundreds of thousands of dollars are nowhere to be found, according to court testimony. The bankruptcy court tried six times to serve Gonzales with a subpoena to testify. "We know that Arnold Gonzales disappeared and nobody seems to know where he's at," said Castillo.

• Former television news anchor Antonio Hernandez told FOX 26 Investigates Gonzales owes him money for appearing in the commercials. He also accuses the business of ruining his reputation and plans to sue. Castillo estimates a thousand or more homeowners may have been ripped off by the business. [...] A criminal investigation is now underway.

For the story, see Unkept Promises For Homeowners Facing Foreclosure.

Ex-Real Estate Agent Cops Plea For Role In Mortgage Fraud Scam Where Builder Kicked Backed Cash To Buyers, Salespeople To Help Unload Unsold Inventory

In Charlotte, North Carolina, The Charlotte Observer reports:

• A Mint Hill man has pleaded guilty in connection with a mortgage fraud scheme that involved kickbacks [by] a homebuilder, according to documents filed Wednesday in federal court in Charlotte. Mike Foley, a former real estate agent, pleaded guilty to one count of mortgage fraud conspiracy and one count of making false statements. He will be sentenced later.

• The mortgage fraud scheme, according to court records, involved an unnamed builder who agreed to pay hidden kickbacks to buyers - and to promoters who would find buyers - in order to sell houses. [...] Foley was accused of serving as a real estate agent in the deals and facilitating the kickbacks. [...] Overall, the conspiracy involved about $5 million in kickbacks and about $42 million in fraudulent loans, court records say.

For the story, see Guilty plea entered in mortgage fraud case.

Fla. Rocket Dockets' Use Of Retired Judges To Steamroll Homeowners In Foreclosure Leaves Advocates Crying Foul As "Standing" Issues Are Often Ignored

The New York Times reports:

• No one disputes that foreclosures dominate Florida’s dockets and that something needs to be done to streamline a complex and emotionally wrenching process. But lawyers representing troubled borrowers contend that many of the retired judges called in from the sidelines to oversee these matters are so focused on cutting the caseload that they are unfairly favoring financial institutions at the expense of homeowners.

• Lawyers say judges are simply ignoring problematic or contradictory evidence and awarding the right to foreclose to institutions that have yet to prove they own the properties in question. “Now you show up and you get whatever judge is on the schedule and they have not looked at the file — they don’t even look at the motions,” says April Charney, a lawyer who represents imperiled borrowers at Jacksonville Area Legal Aid. “You get a five-minute hearing. It’s a factory.”

***

• The [Rodney] Waters case offers an example of how wrong things can go in complex foreclosure cases. While AmTrust, a failed Ohio bank that is now a division of New York Community Bank, said it owned the note and could foreclose, Mr. Waters’s lawyer produced documents showing that Fannie Mae, the taxpayer-owned mortgage finance giant, was really the owner. In spite of the conflicting evidence, Aaron Bowden, the retired judge overseeing the case, made a summary judgment on Aug. 3, ruling that the property should go back to AmTrust. Mr. Bowden did not return phone calls seeking comment.

• Chip Parker, managing partner at Parker & DuFresne in Jacksonville, which represents Mr. Waters, said: “The threshold issue in any foreclosure case is who has the right to foreclose. We presented evidence to the judge that Fannie Mae owns the note and mortgage, and yet the judge ignored this crucial evidence.”

• Mr. Parker is concerned that some homeowners are victimized by the system. “What we are talking about is railroading homeowners through the rocket docket,” he added. When contacted by a reporter on Thursday, a spokeswoman for Fannie Mae confirmed that it owned the note. David Tong, the lawyer representing AmTrust in the case, declined to comment on the matter. But on Friday, he did an about-face, filing papers with the court acknowledging that Fannie Mae owns the note.

***

• Setting up discrete foreclosure courts statewide was seen as a way to help deal with the issue; consumer law experts say they aren’t aware of any other state that has set up a temporary court to work down such a backlog.

• But it is paradoxical, say lawyers representing homeowners in the cases, that Florida’s attorney general acknowledges problems in the cases while retired judges, intent on reducing caseloads, seem unconcerned about those same problems — like flaws in the banks’ documentation of ownership.

For more, see Florida’s High-Speed Answer to a Foreclosure Mess.

Convicted Foreclosure Rescue Scammer Could Face Life Sentence On New Charges In Alleged Sale Leaseback, Equity Stripping Ripoff That Fleeced 5 Victims

In Los Angeles, California, The Los Angeles Times reports:

• Timothy Barnett spent nearly five years in state prison for a 1990s foreclosure rescue scam in which he conned homeowners out of tens of thousands of dollars. Now, prosecutors say, he has been at it again, targeting residents in the same South Los Angeles neighborhood he fleeced before.

• But this time, the state is unleashing one of its more powerful weapons against him. The Los Angeles County district attorney's office has charged Barnett under California's much-debated three-strikes law. Usually aimed at offenders with a history of violent crime, it is rarely used for white-collar offenses such as fraud.

• Arrested in April, the 47-year-old Barnett is charged with 23 felonies — including theft from the elderly, identity theft and real estate fraud — for allegedly tricking five people into unknowingly granting him title to their homes.(1) He has pleaded not guilty. Some experts said the case would be one of the first times a person charged with a white-collar crime was prosecuted under the state's three-strikes law. If convicted, Barnett could face life in prison.

***

• He is charged with tricking victims — who said they thought they were refinancing their delinquent mortgages — into selling him their homes for a fraction of their value.(2) By the time prosecutors began looking at Barnett again, he had bought a $3.1-million home in Orange County and three Mercedes-Benz vehicles.

***

• In addition to the five cases that are the subject of the criminal case, several others are described in civil lawsuits filed against Barnett. [...] "He'd look for homes that had a lot of equity and people that were vulnerable," said Patrick Dunlevy of the Los Angeles-based Public Counsel Law Center,(3) which has filed lawsuits on behalf of several people who said they had lost their homes to Barnett. "He would bill himself as a Christian, say he was doing God's work. That resonated very well with the people he was approaching.... It was all a con, just a way to get them to trust him."

For more, see Man accused of fraud may get life in prison under California's three-strikes law (The stiff penalty is rarely used against white-collar criminals. Timothy Barnett is charged with 23 felonies for allegedly tricking five people into unknowingly granting him title to their homes).

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

(1) According to the story, prosecutors also charged him with burglary because he met with his victims in their homes. Under California law, a person can be convicted of residential burglary for entering someone's house with the intent to commit a felony, even if he or she enters with the homeowner's permission, the story states.

(2) California case law appears to clearly support the proposition that, at least in the context of a criminal prosecution, tricking people into unknowingly signing over the title to their homes constitutes the crime of forgery. See:

Buck v. Superior Court, (1965) 232 Cal.App.2d 153 (case law links may require free registration at Findlaw.com):

• Where a person who has no intention of selling or encumbering his property is induced by some trick or device to sign a paper having such effect, believing that paper to be a substantially different instrument, the paper so signed is just as much a forgery as it would have been had the signature been forged. (Conklin v. Benson, 159 Cal. 785, 791 [116 P. 34, 36 L.R.A. N.S. 537]; Wright v. Rogers, 172 Cal.App.2d 349, 362 [342 P.2d 447].) An encumbrance may be the subject of forgery. (Conklin v. Benson, supra, page 792.) The crime of forgery is complete when one makes or passes an incorrectly named instrument with intent to defraud, prejudice, or damage, and proof of loss or detriment is immaterial. (People v. McAffery, 182 Cal.App.2d 486, 493 [6 Cal.Rptr. 333]; People v. Morgan, 140 Cal.App.2d 796, 800 [296 P.2d 75].) Whether the instrument forged has independent value is unimportant; the crime is complete when the act is done with the requisite intent.

People v. Martinez, (2008) 161 Cal. App. 4th 754; 74 Cal. Rptr. 3d 409:

• [A] a forgery conviction can be based on a document with a genuine signature.

See More On Property Owners Being Tricked Or Deceived By Scammers Into Signing Documents for a sampling of additional California case law in this regard.

Further, California case law has clearly addressed the notion some scammers appear to operate under in that they can insulate themselves from criminal prosecution when targeting their victims simply by entering into legitimate-looking business contracts to screw them over. See (bold text is my emphasis, not in the original text; case law links are found at Findlaw.com - may require free registration):

People v. Frankfort, (1952) 114 Cal.App.2d 680, 700; 251 P.2d 401:

• The simple answer to this argument is that "The People prosecuting for a crime committed in relation to a contract are not parties to the contract and are not bound by it. They are at liberty in such a prosecution to show the true nature of the transaction." (People v. Chait, 69 Cal.App.2d 503, 519 [159 P.2d 445]; People v. McEntyre, 32 Cal.App.2d Supp. 752, 760 [84 P.2d 560]; People v. Jones, 61 Cal.App.2d 608, 620 [143 P.2d 726]; People v. Pierce, supra, p. 605.)

People v. Jones, 61 Cal.App.2d 608, 620 [143 P.2d 726]:

• Defendant argues that the deal with each "seller" was a civil transaction; [...] Cloaked in the draperies of his corporation and pretending to act in its behalf, he boldly approached his unsuspecting victims.

***

• Although each deal in its incipiency bore the color and trappings of a normal, civil contract, yet when subjected to a postmortem it exhaled the stench and disclosed the carcass of a fraud. (People v. Epstein, 118 Cal.App. 7, 10 [4 P.2d 555].) There appears no sign of good faith at any turn. Each taking and appropriation was a grand theft.

• The use of the corporate name and the promises made in accomplishing his purpose were a camouflage of such common variety that no excess of genius was required to discern the fraud. Parol evidence of all that occurred was admissible to show the intention of defendant. (People v. Robinson, 107 Cal.App. 211, 221 [290 P. 470].)

(3) Public Counsel is a Los Angeles-based, pro bono public interest law firm that, according to their website, delivers free legal and social services to the most vulnerable members of the community, including abused and abandoned children, homeless families and veterans, senior citizens, victims of consumer fraud and nonprofit organizations serving low-income communities. They are the public interest law office of the Los Angeles County and Beverly Hills Bar Associations and the Southern California affiliate of the Lawyers' Committee for Civil Rights Under Law.

F'closure Rescue Operator At It Again As DC AG Slams Sale Leaseback Peddler w/ Suit Seeking To Void Title Transfers Violating Consumer Protection Law

From the Office of the District of Columbia Attorney General:

• Attorney General Peter Nickles announced [] that the District has filed a Superior Court enforcement action against Vincent L. Abell, charging that he engaged in foreclosure rescue transactions that violated the District’s consumer protection law. The District’s complaint asks the Court to rescind the unlawful transactions.

• According to the District’s complaint, Abell misled homeowners into believing that they were being offered loans that would prevent them from losing their homes to foreclosure. Instead, Abell had the homeowners sign documents that transferred the homes’ titles to him and converted the homeowners into Abell’s tenants.

• Through these transactions, Abell obtained all of the equity in the homes for only a small fraction of its value. The homeowners victimized by Abell’s practices have typically been financially unsophisticated and desperate to save their homes from foreclosure. “We will not allow District homeowners to be preyed upon in this way,” Attorney General Nickles said.(1)(2)(3)

• The District has also alleged that Abell sold condominium apartments in DC without posting the bonds or letters of credit required by District law.

For the DC AG press release, see Attorney General’s Office Files Action Against Foreclosure Rescue Scam.

For the DC AG's lawsuit, see District of Columbia v. Abell.

See also WTTG-TV Channel 5: DC Files Enforcement Action Against Foreclosure Rescue Scam, which also includes the story of DC resident Maria-Theresa Wilson, who was screwed over by Abell a couple of years back. She ended up suing him and scored a $3.3 million judgment against him, his company and a confederate named Calvin Baltimore. The judgment was upheld on appeal in a recent ruling. See Modern Mgmt Co. v. Wilson, 997 A.2d 37; 2010 D.C. App. LEXIS 283 (D.C. June 3, 2010).

(1) A 1988 ruling of the District of Columbia Court of Appeals supports the proposition that a home equity ripoff involving a sale of real estate with a contemporaneous leaseback of the premises to the seller, coupled with a right to buy back the property may be nothing more than a disguised usurious equitable mortgage masquerading as a true sale. See Browner v. Dist. of Columbia, 549 A.2d 1107 (D.C. 1988) (bold text is my emphasis and [alterations added], neither of which appear in the original text):

• Moreover, if the transactions were in fact sales, as [the foreclosure rescue operators] contend, they were surely most extraordinary ones. When a homeowner sells his home, which is usually his most valuable possession, one would expect at least some measure of bargaining over the sales price. Here, there was none. In each instance, what the [foreclosure rescue operators] characterize as the "sales" price bore no relation whatever to the value of the equity. It is absurd to suggest that Mrs. Carroll would knowingly sell her home, in which she had an equity of more than $36,500.00, for $8,100.00. None of the "sellers" had placed his or her home on the market or expressed the slightest interest in selling it. Each "seller" remained in possession after the purported sale, and [the foreclosure rescue operators] were indeed depicting their service as one that would enable their clients to "save" their homes from foreclosure. Although the transaction also lacked one of the common characteristics of a loan -- an evaluation of the borrower's credit -- no such investigation was needed because the home itself, which in each case was worth far more than the amount expended by the [foreclosure rescue operators], served as their security.

• It was therefore altogether reasonable for the trial judge to find that the depiction of each of these transactions as a sale and lease back was a transparent sham which masked an unlawful loan.

(2) For other stories on Vincent Abell and his foreclosure rescue racket, see:

• DC High Court Affirms Punitive Damages Award Slamming Sale Leaseback Peddlers For $3.3M In Equity Stripping Foreclosure Rescue Ripoff,
• Hogan & Hartson Wins $3.3 Million Verdict in Pre-Foreclosure Scam Case,
• Md. couple wins $1M in rescue-scam lawsuit (homeowners awarded $350,000 for their mental anguish, which was then tripled after a finding the defendants "willfully and knowingly violated" Maryland's Protection of Homeowners in Foreclosure Act),
• Prince George's County Circuit Court awards $500K to victim of foreclosure scam (for the related court order, see Smith v. Abell, (Prince George's County Cir. Ct., Feb. 7, 2006),
• Loan Scam Targets Seniors' Homes (Washington Con Artists Preyed On Elderly People In Financial Trouble) (go here to watch related CBS News' video),
• From Foreclosure to the Cleaners (Indebted Homeowners Say 'Rescue' Services Bilked Them),
• Foreclosure Rescue Scam, Businessman Vincent Abell pays five homeowners $120,000 settlement,
• Testimony of Mr. Walter Malone [foreclosure rescue victim] Before Senate Aging Committee (U.S. Senate, Feb. 13, 2008),
• Wilson v. Modern Management Co. (homeowner's brief in an appeal of a lower court eviction order),
• Bilaal v. Abell, et al., 983 A.2d 349; 2009 D.C. App. LEXIS 573 (2009),
• Media Coverage Not New For D.C.-Area Foreclosure Rescue Operator,
• Anatomy Of An Equity Stripping, Sale Leaseback Foreclosure Rescue Scam.

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

Sentencing Postponed For Head Of Southern California Land Patent Foreclosure Rescue Scam

In San Diego, California, KGTV-TV Channel 10 reports:

• Sentencing was delayed Thursday for a man convicted of defrauding homeowners by falsely telling them that for a price, he could provide them with "land patents" that would protect their properties from foreclosure. Larry Smith, 62, was found guilty in June of 21 felony counts, including grand theft and unlawful practices by a foreclosure consultant.

• After the trial, Smith fired his attorney and hired another to consider seeking a new trial, according to Deputy District Attorney Marlene Coyne. [...] Smith -- who has prior convictions for second-degree murder, robbery and burglary -- faces a "very lengthy" prison term when he is ultimately sentenced, the prosecutor said. Smith and others tricked homeowners into paying them thousands of dollars for land patents that in fact did not stop their homes from being foreclosed on.

Source: Sentencing Delayed For Foreclosure Protection Scammer (Larry Smith Was Convicted Of 21 Felony Counts).

Labor Day "Greetings" To The Clerks Toiling In Anonymity At The Various Document-Manufacturing, Foreclosure Mill Factories

Sarasota Herald Tribune's Tom Lyons sends a "friendly" Labor Day greeting to all the overworked clerks at Florida's foreclosure mills in a column this weekend. He also comments on the mill bosses, and highlights his column with observations on one recent case where a judge hammered a law mill with a $49,000 fine with a promise to tack on an additional $7,000/day if the law firm/paperwork factory doesn't come up with a plan to clean up its sloppy practices.

For the column, see Lyons: Overworked clerks of foreclosure mills.

Minnesota Lawmakers Create Notice Requirements In Effort To Reduce Rescue Scams, Foreclosure Sale Surplus Swindles, Redemption Rights Ripoffs

Lexology reports:

• The Minnesota Legislature has implemented new notice requirements to ensure that owners or borrowers of properties subject to foreclosure are properly informed of their rights. These requirements apply to properties with one to four dwelling units, one of which is owner occupied at the beginning of a foreclosure.

• Foreclosure Advice Notice. Whenever a property is to be foreclosed, Minnesota law requires a foreclosure advice notice to be included with a notice of foreclosure. The template for the foreclosure advice notice has been modified to include the contact information for the U.S. Department of Housing and Urban Development. A template of the foreclosure advice notice can be found in Minn. Stat. §580.041(2).

• Notice of Redemption Rights. In addition to the foreclosure advice notice, Minnesota law now requires a notice of redemption rights to be delivered with a notice of foreclosure. The purpose of this new law is to avoid abuse based on ignorance of redemption rights. Specific requirements for typeface and printing, as well as a template of the notice of redemption rights, are provided in Minn. Stat. §580.041.

• Notice of Results of Sale. Minnesota law now requires a notice of results of sale to be provided to an owner or borrower of a property subject to foreclosure. The law applies to any party attempting to purchase the property after it has been auctioned at a foreclosure sale, but before the end of the redemption period. Minn. Stat. §580.06(2). This notice is required for all foreclosure sales conducted between August 1, 2010, and December 31, 2012.

For more, see Notice requirements (subscription required; if no subscription, TRY HERE - then click for the story).

California Lawmakers Move To Squelch Deed Service Ripoff; Bill Awaits Schwarzenegger Sign Off

In Los Angeles, California, KABC-TV Channel 7 reports:

• A few weeks ago Eyewitness News warned you about a new scam. That report caught the eye of one [California] state legislator who introduced a bill to stop the scam. That bill is now about to be signed into law.

***

• "We had homeowners being scammed out of hundreds of dollars for getting a document that they really don't need, because they probably already have it in their files, and two, that they can get it for about $10 instead of paying $200 for it," said [California State Assemblyman Ted] Lieu.

• The letter from the Title Compliance Office, which doesn't exist officially, is trying to get you to use their services to get a grant deed for your home. The letter makes it sound like your home could go into foreclosure without the deed. But by signing up you'll have to pay $157 or more, and they want you to act right away.

***

• The bill is expected to be signed into law by Governor Arnold Schwarzenegger in the next week or two. If you think you need a copy of your grant deed, you can get one through one your county's website.

For more, see Avoid deed scams - go straight to county site.

Wells Fargo Cancels Suit, Modifies Military-Related Mortgage Loan For Strapped Navy Vet After Failing To Follow Gov't Rules On VA Foreclosures

In Jacksonville, Florida, First Coast News reports:

• [Nancy] Gemmill lived in the home 17 years and never missed a single payment. She owed $49,000 on the home when she lost her job because of health problems. Gemmill used her 401(k) at first to keep up the house but then that ran out, then she called Wells Fargo, asking for help to restructure her payments.

• "I did everything they said by the book. You need to fill this out, fill that out. I was getting absolutely no response from them. I was at my wits end, didn't know what to do."

• She fell behind in her mortgage at the end of last year and then without warning came a notice of foreclosure. "They were giving her a hard time," said attorney Sean Cronin, who stepped in free of charge.

• Gemmill is a retired Navy veteran whose home was purchased with a military loan, which is set up differently than regular loans. "There's special protection put in place to protect the veteran. There's specific rules a mortgage company must follow before they can foreclose on that loan and they didn't follow those rules," said Cronin.

• So Gemmill and her attorney started to fight back. Recently, a letter came in the mail for Gemmill from Wells Fargo, which notified her it was volunteering to dismiss the case. Gemmill was in shock and was also relieved. She said Wells Fargo also has restructured her payments so she can get back on track. "There will be another 17 years in that house," said Gemmill. Who is already unpacking boxes and settling back in to her home.

For the story, see Jacksonville Woman Fights Wells Fargo on Foreclosure - and Wins.

Foreclosing Lender Agrees To Last Minute Sale Cancellation As Media Exposure Leads To Questions Regarding Bank's Lack Of Standing To Bring Suit

In Norfolk, Virginia, The Virginian-Pilot reports:

• Hope was beginning to fade last week that Michele McBeth could save her Bayview home from foreclosure. The Norfolk elementary school teacher had been working for weeks with a foreclosure-prevention counselor, and spent hours going through financial documents, filling out paperwork and pleading with her mortgage company to cancel the auction. But Wells Fargo Home Mortgage offered no help, and the Aug. 27 sale date loomed.

***

• McBeth contacted Newport News attorney and state Del. Robin Abbott, who had offered to help for no charge after reading [about her story in an Aug. 16 Virginian-Pilot] article. Abbott, who specializes in consumer and mortgage law, scheduled an emergency hearing with a judge to stop the foreclosure. She also called the Richmond attorney hired to handle the foreclosure to point out what Abbott believed were several missteps in the process.

• "We had some conversations - that I didn't believe he had standing to bring the foreclosure," Abbott said. Among the problems, she said, was that the attorneys had not been hired by McBeth's current mortgage company, Wells Fargo. The attorneys, instead, had been hired by EverHome Mortgage Co., which had transferred the servicing of the loan to Wells Fargo before foreclosure proceedings began.

• On Aug. 25, the attorney handling the foreclosure agreed to postpone the sale. A new date has not been set. In the meantime, Abbott is preparing to file a lawsuit alleging mishandling of McBeth's case.

For the story, see Norfolk homeowner narrowly averts foreclosure.

Novice Homebuyers Left Facing Foreclosure Despite Having Made All Their Payments As Builder Allegedly Fails To Pay Off Construction Loan

In Brownsville, Texas, KGBT-TV Channel 4 reports:

• Nearly 30 families in Brownsville may soon be homeless. Their entire subdivision will be auctioned off is less than two weeks. Residents at the Northeast Estates subdivision in Brownsville received a letter letting them know their properties will be auctioned off by Cameron County [...].

• "Out of 180 about 80 one going to be auctioned off it appears," Francisco Gonzales told Action 4 News. "This section was never notified of any type of pending land issues or anything of that sort we found out by mere chance."

• According to court documents, developer Landmark Valley Homes did not pay Inter National Bank in McAllen for dozens of lots at the subdivision and in total they owe a little more than $4 million dollars.(1)

For the story, see Nearly 30 Brownsville families to lose their homes.

See also KRGV-TV Channel 5: Some Brownsville Families Fighting for Their Homes.

For story follow-up, see KRGV-TV Channel 5: Brownsville Neighborhood Saved:

• Folks who live in a Brownsville neighborhood say a sale to auction off their properties was canceled. Attorney Alex Begum stepped in to help. He spoke with the manager of Inter National Bank in McAllen and came to an agreement. The bank will take over the balances owed by Landmark Valley Homes.

• The home building company put dozens of families in a bind, by not paying a $4 million debt. The majority of homes will be re-financed. About 50 homes in the North East Estate subdivision were set to be auctioned off [...]. However, the foreclosure sale has been stopped. Begum says he represented 26 people free of charge. He worked to get a global agreement that would keep everyone's home safe.

(1) My surmise is that the builder used a land contract/contract for deed arrangement with each of the unwitting homebuyers where they agree to make a downpayment and subsequent monthly payments directly to the builder. The builder, in turn, transfers possession of the homes to each of them subject to his gigantic construction (or possibly, acquisition) mortgage that's owed to the bank and agrees (either explicitly or implicitly) to apply the payments collected from the buyers to said loan until fully paid, at which point each homebuyer gets the home title. They, in all likelihood, were unfamiliar with real estate transactions, presumably failed to obtain a title search and title insurance protection, and were all caught flat-footed when the builder decided to pocket their payments, stiff the bank, and allow the lender to foreclose on the land out from under everyone.

Cops: Man Used Sheriff's F'closure List To Target Homes In Appliance Thefts; May Have Needed Cash To "Buy Down" Jail Time In Prior Escrow Funds Ripoff

According to various Indiana media reports:

• Former I[ndiana] U[university] basketball player Todd Leary was arrested [] for allegedly stealing appliances from foreclosed homes in Hamilton County. [...] Leary, 39, Carmel, is accused of stealing appliances from foreclosed homes with the help of two cohorts and selling the appliances to Big Al's Superstore in Indianapolis, said Jeff Wehmueller, administrative chief deputy for the Hamilton County prosecutor's office. Leary used the sheriff's foreclosure listings to target homes he thought were unoccupied, but on at least one occasion, a home was still occupied, Wehmueller said.

***

• Warrants were issued for Leary and the other two men identified by police. Leary turned himself in on Wednesday. The others, Gregg Campbell, 50, and Eric Campbell, 44, both of Indianapolis, are already incarcerated in the Marion County Jail on unrelated charges.

***

• In July, Leary pleaded guilty to a felony charge of misappropriating title insurance escrow funds in Fort Wayne.

***

• His agreement with Allen County prosecutors [in the title insurance escrow ripoff case] called for him to face up to three years in prison, with that cut in half if he pays nearly $295,000 in restitution before a sentencing hearing in October. Prosecutors said Leary worked for a title insurance broker who pleaded guilty in a $2.7 million fraud case.(1)

• Leary played for Indiana during 1989-94 and was an analyst for IU's radio broadcasts when he was arrested [in the title insurance escrow ripoff case] in February, right before a game against Purdue.

For the stories, see:

• The Indianapolis Star: Todd Leary accused of plundering foreclosed houses;
• WRTV-TV Channel 6: Former IU Basketball Player Faces New Charges (Police: Leary Stole, Sold Appliances From Foreclosed Homes);
• WIBC Radio 93.1 FM: Former IU Player In Trouble Again.

(1) See Judge Unsympathetic To "Poor Business Decisions" Defense As Title Agent Gets 11+ Yrs For Looting Escrow Cash; 15 Refin'cing Homeowners Left w/ 2 Loans.

Southern California Prosecutors Refile Charges In Foreclosed "Monster House" Fixture Stripping Case

In Encinitas, California, North County Times reports:

• Prosecutors have refiled charges against the woman accused of stripping $1 million worth of lavish fixtures from the foreclosed home her Encinitas neighbors dubbed the "monster house," according to a deputy district attorney. Suzy Brown is scheduled to be arraigned on grand theft and felony vandalism charges in Vista on Sept. 23, Deputy District Attorney Robert Eacret said. [...] Authorities said Brown built the 15-bedroom, 16,000-square-foot home in 2004 to be a rehab center. The city nixed the plan and the home fell into foreclosure.

For the story, see Charges refiled in "Monster House" case.

Go here for earlier posts on the "Monster House" fixture stripping case.

Lender's Continued Efforts In Foreclosure Eviction Forces Renter File Lawsuit To Enforce Federal Tenant Protection Law

In Roseville, California, KXTV-TV Channel 10 reports:

• A tenant living in a bank-owned home says the bank is trying to force her family to leave despite a federal law protecting renters in foreclosed homes. Christine Pierce, 29, said OneWest Bank has made multiple attempts through its real estate agent and law firm to get her and her husband and their three-year-old son to move out even though they had a two-year lease with the former owner through July 2011.

***

• Pierce sought help from California Sen. Barbara Boxer, whose staff appeared to have stopped eviction proceedings. Boxer's office forwarded Pierce a letter dated July 8 from the U.S. Treasury's Office of Thrift Supervision. "OneWest advised us that after commencing the eviction proceedings, it obtained a copy of the lease between Ms. Pierce and the former landlord. In compliance with the Protecting Tenants at Foreclosure Act, OneWest will comply with the lease and terminate the current eviction attempts," the letter from OTS said.(1)

• But three weeks later, on July 30, an eviction notice appeared on the front door signed by an attorney from the Endres Law Firm in Davis. News10 attempted to speak to a representative from the law firm by telephone. "We have no comment. Thank you," an unidentified woman said before hanging up.

• A spokeswoman for OneWest Bank told News10 she would research the case. [...] Pierce hired Sacramento attorney Carla Johansen to block the eviction. Johansen said the Pierce case is not uncommon. "Lenders have been actively lying to tenants about what their rights are as far as being evicted after a foreclosure," she said.(2)

For the story, see Roseville tenant: Bank ignoring foreclosure law.

(1) The Federal Protecting Tenants at Foreclosure Act of 2009 provides important federal protections for tenants in foreclosed properties, including the right to receive 90 days' notice before being required to leave the property and, in many cases, the right to remain for the length of the tenant's existing lease term. The law's expiration date has been extended and is now set to expire on December 31, 2014.

See also:

• Staying Home: The Rights of Renters Living in Foreclosed Properties,
• Action Guide for California Tenants in Foreclosure Situations (contains links to sample letters).

(2) Reportedly, Pierce said she was threatened with eviction by the bank's real estate agent unless she accepted a $5,000 "cash for keys" offer to move out after the house was repossessed in May. Pierce said they were given 15 days to move, which she found unacceptable, the story states. Pierce provided News10 with a copy of the agent's email. "As of right now you do not have an eviction on your record. If you agree to move ... then the eviction would be put on hold," the agent said. "It's threatening," Pierce reportedly said. "They wanted us out of the house and that was that. I called them and said I had a lease that was good until next year and they said it didn't matter."

Renter In Foreclosed Home Threatened With Eviction Uses Federal Tenant-Protection Law To Stand His Ground & Tell New Owner To Take A Hike

In Lemon Grove, California, KUSI-TV Channel 9 reports:

• When real estate speculators bought a foreclosure and tried to force the tenant to move out, he called KUSI's Michael Turko. Turko says lots of innocent tenants are now becoming victims of the mortgage crisis, because they don't know their rights.(1)

• After a foreclosure, big banks and real estate speculators are famous for telling tenants to get out. What they don't tell you is you have a legal right to stay as long as you have a lease. Here's a case where the tenant turned the tables and stood his ground ... and told the new owners to back off!

For more, see Know Your Rights, Stand Your Ground!

(1) The Federal Protecting Tenants at Foreclosure Act of 2009 provides important federal protections for tenants in foreclosed properties, including the right to receive 90 days' notice before being required to leave the property and, in many cases, the right to remain for the length of the tenant's existing lease term. The law's expiration date has been extended and is now set to expire on December 31, 2014.

See also:

• Staying Home: The Rights of Renters Living in Foreclosed Properties,
• Action Guide for California Tenants in Foreclosure Situations (contains links to sample letters).

"Good Deal" On Recently "Rehabbed" Foreclosure Leaves Novice Homebuying Couple Unpleasantly Surprised, Holding The Bag

In Cincinnati, Ohio, WKRC-TV Channel 12 reports:

• Many of the homes now on the market got there through foreclosure. Some have been rehabbed before going back up for sale. But, if you're looking at such a home, Troubleshooter Howard Ain is here to show why you have to be very careful.

• Some rehabbed homes can come with lots of problems. That's what Erin Bohannon-Chenault of Fairfield learned. She and her husband say they thought they were getting a good deal. "All we know is it was a rehab and they had fixed it up. And from what we knew everything was new. They said they had put in new appliances, new water heater, that's what they had told us."

***

• Erin says she's now contacting an attorney to see if she can get out of the purchase because she says there were so many problems that were not disclosed. And repairs on the house will run into the thousands of dollars.(1)

For a rundown on the unpleasant surprises that Erin and her husband discovered after moving into their home, see Fairfield Couple's Dream Home Purchase Becomes Nightmare.

(1) If the potential title trouble arising from sloppy and fraudulent paperwork-handling during the foreclosure process isn't enough to scare away those homebuyers looking for a good deal by buying recently foreclosed homes, then certaintly the sloppy and fraudulent "facelifts" masquerading as "rehabs" that some real estate investor-flippers (and possibly some lenders and loan servicers as well) are giving to some of these wrecks might.

And, to the extent that the homes being flipped were built before 1978, you can bet that these flippers, lenders and loan servicers are probably not complying with new Federal rules regulating the repair and maintenance of these homes (effective as of April 22, 2010, and which impose certain training, certification and work practice requirements on activities that disturb lead-based painted surfaces). See EPA's New Lead-Based Paint Renovation, Repair and Painting Requirements Take Effect, which provides one law firm's overview of the new Federal rules, which generally apply to those pre-1978 homes where repair or maintenance activities will disturb 6 square feet or more of interior paint per room or 20 square feet or more of exterior paint. Note that the renovation activities subject to this rule could include electrical work, plumbing, carpentry, and other work that disturbs painted surfaces.

Homes In Foreclosure Limbo Create Health, Safety Concerns For Panhandle Town; Banks Reluctant To Take Title To Unwanted, Critter-Infested Collateral

On the Florida Panhandle, WJHG-TV Channel 7 reports:

• Some Springfield residents say they've had it with the owners of an abandoned home in their neighborhood. "From what I understand it's been in foreclosure for years. It's been empty for years,” said next door neighbor Cleveland Drayton. Drayton's well-manicured Springfield home sits directly next to the eyesore at the end of the cul-de-sac that nobody wants to take responsibility for.

***

• Code Enforcement officials have written “Notice of Responsibility” orders to the owners and contacted the bank holding the mortgage. "The bank gives me the excuse, ‘Well it's not totally theirs until that foreclosure is finalized,’ and up to the day that the judge awards their title back to them, or deed back to the bank, that person can come up and get the money. So they're not willing to spend the money to clean it up. So that leaves it on us to go over there and clean it up,” said Lee Penton of Springfield Code Compliance.

• Neighbors say they are worried about their health and safety. “We've been seeing a lot of critters now, snakes, rats. I had to take a dead rat out of my neighbor's yard. I got an exterminator to come out here and he said well your big problem is right here,” Drayton said pointing next door.

• City officials filed another clean up work-order Thursday morning. But officials say they are very short-staffed and it may take a couple weeks before anything gets done. If no one pays the maintenance fee, the city will clean up, and then place a lien on the property. Springfield officials say they have about 30 vacant houses in the same foreclosure limbo.

For the story, see Neighbors Say Abandoned Springfield Home Is Infested With Rats And Snakes (Springfield residents want someone to take responsibility for an abandoned home that is making them worry about their health and safety).

Town To Pursue Criminal Charges Against Developer/Landlord Facing Imminent Foreclosure For Egregious State Sanitary Code Violations At Rental Property

In Framingham, Massachusetts, The MetroWest Daily News reports:

• Investors interested in bidding on pieces of the failed downtown Arcade redevelopment project gathered [] on Frederick Street, but the bank holding the mortgage postponed a planned auction. As part of foreclosure proceedings, Framingham Co-operative Bank has moved to sell five triple-deckers on Frederick Street and a vacant lot at 80 Kendall St.

• The town, meanwhile, is pursuing criminal charges against Wellesley project developer Michael Perry for egregious state sanitary code violations at one of those multi-family homes.

• Inspectors found cockroaches, rodents and safety issues in one apartment Perry has refused to correct, according to an application for a criminal complaint on file in Framingham District Court. The Board of Health said it has found bedbugs and other serious problems in others of Perry's Frederick Street apartments that are on the auction block.

***

• The paperwork Board of Health Director Ethan Mascoop filed in district court on July 27 charges Framingham Acquisition with numerous violations of the state sanitary code at 39 Frederick St., Apt. 3. Among them: shock hazards, the rodent and cockroach infestation, improper installations and maintenance, emergency exit issues, general disrepair, inadequate weathertightness, improper lighting and other problems. "It was particularly egregious," Mascoop said. He said Perry was "recalcitrant in complying with our order" to correct the violations.

Source: Framingham auction postponed; landlord faces criminal charge.

Prospective Tenants Now Entitled To "Bedbug Disclosure" From NYC Landlords

In New York City, the New York Post reports:

• New York City landlords will now have to tell prospective tenants if there's been a history of bedbugs in their building, thanks to a new law that Gov. Paterson signed []. The legislation requires that landlords give all tenant wannabes a disclosure form saying whether or not the building has had any of the bloodsuckers in the last year, said Manhattan Assemblywoman Linda Rosenthal, who sponsored the initial legislation.

• Even if the apartment that the tenant is going to occupy never had bedbugs, the landlord will be compelled to tell him or her about other infestations in the building, according to the new law. "Nothing is more horrifying than signing a lease after a lengthy apartment search only to discover that your new apartment is bedbug infested," Rosenthal said in a statement.

• The law applies only to New York [City], which the pest-control company Terminix last week named the most bedbug-infested city in the country.

Source: Sweet dreams: Landlords must disclose bedbugs.

NYC Landlord Found Liable In Rent Overcharge Case Involving 1300+ Unit Housing Complex

In New York City, Crain's New York Business reports:

• In yet another victory for tenants, a state Supreme Court judge ruled late Monday against Laurence Gluck declaring that the landlord unlawfully deregulated rents at Independence Plaza North, a big downtown Manhattan residential complex, while receiving tax breaks.

• The decision is the latest blow to the landlord, who has prospered by buying Mitchell-Lama housing projects, which are rent-stabilized properties, in the city and then taking them out of the program and raising rents. Independence Plaza, a 1,331-unit complex in TriBeCa was taken out of the Mitchell-Lama program in 2004. The lawsuit, which was filed five years ago, claims that Mr. Gluck unlawfully turned the building into a market-rate property while still accepting J-51 tax breaks from the city.

• “I am happy about the decision, but it is tempered by the fact it took this long,” said Seth Miller of Collins Dobkin & Miller who represents the tenants in this case. Mr. Miller refused to disclose the amount of rent overcharges that might be due to his clients as a result of the ruling. He also added that he expects Mr. Gluck to appeal the decision.

For the story, see Court rules against big Manhattan landlord (Judge finds Laurence Gluck unlawfully deregulated rents in the 1,331-unit Independence Plaza North complex in TriBeCa; appeal seen as likely).

Oregon AG, State Represntative Squeeze Refund Out Of Loan Modification Racket For Elderly Couple Hoodwinked Into Defaulting On Mortgage

In Medford, Oregon, the Mail Tribune reports:

• A Gold Hill couple may lose their home because of the illegal acts of a Florida-based mortgage consultant now being sanctioned by the Oregon attorney general. 1st Call Consultants, of Boca Raton, Fla., must stop doing business in Oregon and was required to repay $1,500 that Eva and Vern Patterson paid the consulting firm for help modifying their mortgage.

***

• Attorney General John Kroger and [state representative Dennis] Richardson were in Medford [] to present a check from 1st Call reimbursing the Pattersons for the illegally collected fee. [... T]he Pattersons plan to meet with ACCESS Inc., which provides foreclosure prevention help through federally approved programs. Richardson said he plans to contact the Pattersons' lender to help explain that the aging couple was "hoodwinked into defaulting" by 1st Call's bad advice.

For the story, see Retirees might lose home in land scam (Oregon attorney general bars Florida firm from doing business in the state).

Family Gets 1-Day Notice Of Pending Foreclosure Sale After Being Stiffed By Suspected Out-Of-State Loan Modification Racket

In Lewisburg, Tennessee, WSMV-TV Channel 4 reports:

• The Vetter family in Lewisburg first learned their house was being auctioned on the courthouse steps when they read it in the newspaper the day before. They’d paid a home loan modification company to help them avoid foreclosure, but later discovered the company had hundreds of complaints against it for doing nothing to help the consumers who had paid them.

***

• They turned to a company called Premier Legal Advocates and paid it a fee of $998 upfront to negotiate a lower mortgage payment for them. They found out too late it isn't a real law firm.(1) Hundreds of former clients have posted comments on consumer websites claiming they lost their houses to foreclosure because Premier never contacted their mortgage companies.

• [Kathrynne] Vetter said her mortgage company had never heard from Premier Legal Advocates. The company, which is based in California, has an F rating with the Better Business Bureau. The owner is listed as Brian Pascal, a man who the Better Business Bureau said has owned several similar companies in the past.

For the story, see Family Loses Home With 1 Day's Notice (Couple Blames Loan Modification Company).

(1) By using the word "legal" in the name of their business, Premier Legal Advocates arguably misrepresented that consumers would receive professional services associated with legal counsel. The Ohio Attorney General has recently taken this position in an unrelated lawsuit involving an outfit allegedly running a racket targeting the infirm elderly. See Cordray Sues Duo who Targeted Seniors with Medicaid Ploy.

Mortgage, Consumer Fraud Litigation To Skyrocket With Passage Of Wall Street Reform Act?

LegalNewsLine.com reports:

• Homeowners gained leverage for litigation against mortgage lenders through the financial reform law Congress passed this summer. The Dodd-Frank Wall Street Reform and Consumer Protection Act not only tightened mortgage rules, but it also multiplied potential damages against rule breakers.

***

• Along with mortgage litigation, the bill invites consumer fraud litigation. Any state attorney general can enforce the state's consumer fraud law against a national bank or a federal thrift, the authors wrote. "This will subject national banks to state law requirements they otherwise would not be subject to," Taft said. "If they do not comply, there would be penalties under state and possibly federal law." [...] Whether a private citizen can pursue a cause of action for consumer fraud could depend on state or federal law, he said.

For more, see Dodd-Frank reform law invites new litigation opportunities against mortgage lenders.

See also Lexology: Mortgage Reform and Anti-Predatory Lending Act for an overview of this new consumer protection law (requires subscription; if no subscription GO HERE; or TRY HERE - then click link for the story).

BofA's "Deed-In-Lieu" Mail Solicitation After Approving Loan Modification Leaves Couple Confused, Upset; Bank Speechless When Asked To Explain Letter

In Thornton, Colorado, KUSA-TV Channel 9 reports:

• Chris Carpenter says he has paid his mortgage on-time for the nearly seven years he has owned his home. [...] But Friday, Carpenter said his wife brought a letter from the mailbox from his mortgage lender, Bank of America, that baffled the couple. "She was crying," he said. "She was upset."

• The letter was "deed-in-lieu of a foreclosure" solicitation from Bank of America, saying the family needed to take immediate action to prevent foreclosure. If the Carpenters would sign over the deed to their home, the letter stated, Bank of America would give the couple $3,000 relocation assistance, and save them from the credit nightmare of a foreclosure. Carpenter would also lose any equity built up in his home.

• "She couldn't understand why we were being singled out like this," Carpenter said. Carpenter and his wife were approved through a loan modification with Bank of America after her layoff, but he said they paid their mortgage on-time, every month, and sent in all the necessary paperwork the bank required. "We have paid," he said. "We have done exactly what they wanted." Monday, no one at Bank of America could explain why Carpenter received the letter.(1)

For more, see Couple confused about bank's request for deed to home.

(1) Bank of America has stepped up its solicitation for "deed-in-lieus" this year, according to its quarterly impact report, the story states. Citibank also reportedly is doing the same. See Citibank Says If Borrowers Return the Deed of Their Property, They May Stay on For 6 Months.