Homeowner Attorney Describing Mortgage Servicers' Loan Modification Practices: "It Was Like They Had The Fax Machine Hooked Up To A Shredder"

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

• Financially strapped homeowners struggling to obtain mortgage modifications are taking their frustrations to court, accusing banks and loan servicers of misleading them or breaking promises to help them hold on to their homes. The lawsuits go to what U.S. Housing and Urban Development Secretary Shaun Donovan has described as the heart of the government's anti-foreclosure efforts: ensuring that banks work in good faith from the start to help borrowers.

***

• A theme of the lawsuits filed by homeowners is that banks have denied permanent modifications to borrowers who make their payments on time and otherwise hold up their end of the agreements. [...] "It was just 'extend and pretend,'" said [one homeowner's] lawyer, Anthony Lanza of Irvine. "And it was like they had the fax machine hooked up to a shredder."

• Anaheim lawyer Damian Nassiri said his firm had filed about 100 lawsuits against mortgage lenders since 2007. Earlier suits alleged that lenders misrepresented terms of mortgages or engaged in other shady practices to foist abusive loans on borrowers. Most of his firm's suits now accuse lenders of dealing in bad faith with borrowers(1) who have become delinquent on loans. Worse, Nassiri said, in cases where foreclosure was inevitable, banks misled borrowers into accepting trial loan modifications. The intent, he claimed, was "to get some kind of money out of them" while stalling actions to seize the homes.

***

• Boston consumer lawyer Gary Klein, a longtime antagonist of mortgage lenders, has filed suits seeking class-action status against the top three loan servicers — Bank of America Corp., Wells Fargo & Co. and JPMorgan Chase & Co. — and others. A multidistrict panel of federal judges on Oct. 8 consolidated eight such suits, including two from California, for pretrial proceedings in federal court in Boston.

For more, see Lawsuits accuse lenders of sabotaging mortgage modifications (More borrowers are taking banks and loan servicers to court, alleging they were misled when they tried to renegotiate the terms of their loans).

(1) A California appeals court recently ruled that a foreclosing lender can be held to its loan modification promises in certain cases, even absent a contractual obligation to do so. See Court: "Promissory Estoppel" Could Make Lender’s Verbal Agreement To Halt F'closure Sale Enforceable, Even Absent Consideration For Promise To Stall.

Cops: Home Health Aide, 4 Others Kidnapped 80-Year Old Dementia Victim In Effort To Strong-Arm Him Into Signing Over $500K Home, Cash

In New York City, the New York Post reports

• A home-health aide and four relatives kidnapped and nearly killed an 80-year-old Brooklyn widower in an effort to trick him into handing over his legal rights, his money and his $500,000 home, authorities said [].

• Cops on Thursday rescued decorated Army veteran Frank Maiorana, of Borough Park, from the Queens home of Saint Michael "Stacy" McKenzie, 26, sources said. "When we got to him, he was in pretty frail shape," a source said. "We don't know how much longer he'd have lived."

• Cops believe the crew persuaded Maiorana, who suffers from dementia, to sign over his power of attorney and fleeced him of up to $100,000 in cash. Borough Park neighbors said they saw Maiorana, who earned a Bronze star in Korea for saving the lives of five men, walking with McKenzie over the summer. After a suspicious relative called cops Thursday morning, a neighbor told investigators they had not seen Maiorana for a week, sources said.

• Cops found him dazed at McKenzie's 135th Street home. He was treated at Long Island Jewish Hospital for dehydration. The victim's former daughter-in-law, Virginia Maiorana, said some of the Borough Park neighbors called to say they were concerned about a parade of people entering and leaving the home. One neighbor said Frank "thought they were drugging him" and begged for help. But when Virginia checked in on him, he insisted "everything is fine," she said.

• McKenzie, Carlina Lino, 17, Carmelo Lino, 22, Diane Lino, 42, and Cheryl Richard, 29, are charged with felony kidnapping, grand larceny and unlawful imprisonment.

Source: Widower rescued from aide 'kidnap'.

MD Lawmaker Takes 1-Year R/E License Loss To Resolve Claims Arising From Running Sale Leaseback Racket; Victims Seek Recovery From State Guaranty Fund

In Anne Arundel County, Maryland, WBAL-TV Channel 11 reports:

• A Maryland state delegate on Monday struck a deal instead of fighting a state commission challenging his license to sell real estate. Under the settlement, the state will not revoke Delegate Tony McConkey's real estate license, but the license is suspended for a year.

• McConkey, R-Anne Arundel County, said he made mistakes, but a four-year battle is finally behind him. He called the settlement with the Maryland Real Estate Commission a victory.

***

• McConkey admitted he had a practice of contacting homeowners on the verge of losing their homes, offered to save them from foreclosure and willfully violated the Protection of Homeowners in Foreclosure Act -- a law he voted for in 2005 and 2008.

• He also admitted to engaging in conduct that demonstrates incompetency and improper dealings. McConkey's license will be suspended for a year. To get it back, he'll have to reapply -- but there is no guarantee it will be reinstated.(1)

• "Mr. McConkey will no longer be able to victimize people. This could have drug out for two years in appeals, and the state's obligation was to Maryland citizens, not just my clients," said former homeowners' attorney Mike Morin.

For more, see Md. Delegate's Real Estate License Suspended (Tony McConkey Admits To Engaging In Bad Practices).

For earlier stories reporting on McConkey's foreclosure rescue 'handiwork', see:

• August 19, 2009: Lawmaker must pay $109K judgment: Judge increases damages, tacks on attorney fees for McConkey (judgment includes $75K in attorney fees for the homeowner's attorney).
• April 30, 2009: Jury Decides Against Delegate In Mortgage Case,
• November 18, 2008: Delegate Facing Lawsuit Files For Bankruptcy.

(1) Reportedly, three of the victims that lawmaker McConkey allegedly screwed over are each seeking $25,000 from the Maryland Real Estate Commission's Guaranty Fund, which covers qualified claims up to $25,000 for losses due to screw-ups by Maryland-licensed real estate agents, or unlicensed employees of Maryland real estate licensees.

Texas AG Subpoenas Servicers In Ongoing State Robosigner Probe

Bloomberg News reports:

• Bank of America Corp., JPMorgan Chase & Co. and seven other banks or loan servicers were subpoenaed by Texas Attorney General Greg Abbott for information about their foreclosure practices, a spokesman said.

• “The state is subpoenaing information and documents,” Jerry Strickland, the spokesman, said yesterday in an interview. He didn’t elaborate. The state also subpoenaed Ally Financial Inc., CitiMortgage Inc. and Wells Fargo & Co.

***

• The Texas subpoenas followed letters sent by Abbott’s office to 30 loan servicers on Oct. 4, asking them to halt foreclosures in the state pending a review of their practices.

For more, see Bank of America, JPMorgan Get Texas Subpoenas on Foreclosures.

Fannie, Freddie Slam Brakes On All Cases Handled By South Florida Foreclosure Mill

The Wall Street Journal reports:

• Fannie Mae and Freddie Mac said on Monday that the mortgage giants had suspended all activity on foreclosure cases that had been referred to a Florida attorney under investigation by state officials.

• Fannie and Freddie had previously stopped referring new cases to the Law Offices of David J. Stern, of Plantation, Fla., earlier this month. On Monday, Fannie said its latest move would affect all cases that "are not already subject to a foreclosure pause" by banks and other firms that service mortgages owned by Fannie, said a company spokeswoman. Freddie Mac said late Monday it had also suspended new referrals and current activity.

For more, see Fannie Mae Halts Law Firm's Foreclosure Work.

Massachusetts Foreclosure Mill Attorney Resigns Post With Outfit Linked To South Florida Mill's David Stern

Buried in a recent story in The Boston Globe is the following excerpt on the connection between a Massachusetts foreclosure mill law firm and a notorious foreclosure mill in South Florida:

• DJSP Enterprises Inc., a troubled firm that provides foreclosure-related services nationwide, said Mark P. Harmon, president of Harmon Law, has resigned from its board of directors.

• DJSP Enterprises, which is registered in the British Virgin Islands but headquartered in Florida, is one of the largest mortgage-servicing companies in the United States, according to documents filed with the Securities and Exchange Commission. Its president, David J. Stern, owns one of four law firms that are widely known as “foreclosure mills’’ and are being investigated by Florida’s attorney general for allegedly fabricating documents to speed up foreclosures and evict tenants.

• Harmon declined to comment on his relationship with DJSP.

Source: AG seeks data on evictions (Newton law firm faces query over rules protecting tenants).

Go here for more on Harmon Law Offices from GetDShirtz.com.

Massachusetts AG Initiates Probe Into F'closure Mill Suspected Of Possible Illegal Practices In Booting Tenants When Carrying Out F'closure Evictions

In Boston, Massachusetts, The Boston Globe reports:

• Harmon Law Offices, a Newton firm that specializes in foreclosures, is being investigated by the state attorney general’s office for allegedly unlawfully sending eviction notices to residents of bank-owned properties. State officials want to determine whether Harmon Law failed to comply with a new Massachusetts law that protects tenants living in foreclosed homes from eviction, a spokesman for Attorney General Martha Coakley said yesterday.

• Coakley said her office also is looking into allegations that Harmon Law disregarded a court order requiring it to notify the state before foreclosing on homes with mortgages originated by subprime lender Fremont Investment & Loan.

***

• Paul Collier, a Cambridge lawyer who represents many clients facing foreclosure, said a group of local lawyers has been monitoring the procedures Harmon Law uses to evict tenants living in foreclosed homes.

• The new state law is intended to keep tenants from being forced out of a property regardless of when a foreclosure occurred, Collier said. “The purpose of the provisions of this statute is to protect anyone who is still in their homes,’’ he said.

For the story, see AG seeks data on evictions (Newton law firm faces query over rules protecting tenants).

Central Florida Homeowner Fights Off Two Banks Foreclosing On Same Loan; Notorious Law Mill Representing Lender In One Suit Fails To Return Calls

In Central Florida, CNN's AC 360 reports:

• Tony Louzado is facing foreclosure. He's not alone -- in central Florida, where Louzado lives and works, one in every 56 homes is in foreclosure. That simple number, from foreclosure data firm RealtyTrac, doesn't tell the whole story, especially in Louzado's case.

• Two different law firms are pushing the foreclosure -- on the same mortgage. "I see now that there's two people that are coming after me, that maybe [the bank] hired in this way," he said. "I don't know all the specifics, but there's two people that are coming after me on the same loan number."

***

• "In my opinion, these are hired guns. Banks want these non-performing loans off their bottom line. And what do they do? They go out and hire a foreclosure mill who's trying to push it through as fast as possible," said Louzado's attorney, Jose Funica. [...] Funica's Palm Beach law firm, Ice Legal, has taken numerous depositions where banking officials have admitted under oath they signed thousands of foreclosure-related documents every month without personally verifying them.

***

• One of the firms foreclosing on Louzado is the law office of David Stern in Plantation, Florida. Florida's attorney general says Stern's foreclosure business is the largest in the state and accuses the firm of submitting false documents, even making some up, just to speed up the foreclosure process. The state has opened a civil investigation against several firms, including Stern's. Repeated calls to Stern's office have not been returned.

For more, see Are some law firms cutting corners on foreclosures?

Newlyweds Need Media Intervention To Dodge Foreclosure Despite No Missed House Payments; Inquiries Lead To Discovery Of Chase Bank Payment Screw Up

In San Francisco, California, KGO-TV Channel 7 reports:

• Mark and Brooke Barnum were married last year, bought their first home this year, and recently made their very first home mortgage payment. "I was exceptionally careful about making sure I had the account number right, the P.O. box number right," said Mark. Things were going along smoothly -- or so it seemed -- until a few weeks later. Mark received a shocking call from the collections department of his mortgage lender, Wells Fargo Bank. "That we hadn't made our first payment and they were concerned," said Mark.

• But how could that be? Mark did pay, using his Chase Bank online bill-pay account. So right away Mark printed out a "proof of payment" sheet and marched down to Wells Fargo, but the bank insisted it never received that payment. So Mark went to Chase, and Chase said indeed, the payment was sent to Wells Fargo. "'What do you mean?' Chase doesn't have the money, they can't even draw back the funds because they say 'you've got it,' and Wells Fargo says 'nope,'" said Mark.

• Mark's money had disappeared and neither bank could say where it went. Even worse, Wells Fargo said the Barnums in default on their loan and the bank could foreclose on their new home, if they didn't pay up. "I was receiving text messages from collections, phone calls from collections at first they were talking about big late fees, and of course ultimately there's you know taking back the house," said Mark.

• This all happened on the very first payment of his very first home, which didn't make a very good impression on Mark's new in-laws. His father-in-law had co-signed on the loan and he was getting collection calls too.

• "So here I am thinking OK, I've just married his daughter, I'm the one at this point who's supposed to be taking care of this mortgage payment and obviously it looks like I can't do it," said Mark.

• Mark couldn't get answers and another payment was due. That's when he called 7 On Your Side. We contacted the two banks. Within hours, Chase tracked down Mark's missing payment. It turns out, it was sent to the wrong company. An insurance firm called Agia, which has nothing to do with Barnums. "From that point on, all the notices and everything stopped," said Mark.

• Immediately, Wells Fargo Bank stopped all proceedings against the Barnums. Chase bank put $2,400 into Mark's account and he used it to pay his mortgage. Chase said the loan payment was sent to the wrong company because Mark had entered incorrect information on his bill pay account. However Chase would not say what he had typed in error. Mark says he checked his payment many times and still can't find any mistake, but for now he is relieved his house is safe.(1)

For the story, see Computer mishap shoves newlyweds into foreclosure.

(1) And hopefully Mark's father-in-law is off his back.

Pennsylvania Couple Falls Victim In Unwitting Purchase Of Home Once Used As Meth Lab

In Bristol, Pennsylvania, Wallet Pop reports:

• A few days after moving into a 109-year-old twin home in the blue collar Philadelphia suburb of Bristol. Pa., Robert Quigley got the shock of his life when he finally met one of his next-door neighbors when he was taking out the trash. The neighbor was happy to learn that Quigley and his girlfriend, Jennifer Friberg, were in the house instead of the previous resident -- a known hoodlum who had been arrested for making crystal methamphetamine.

• Suddenly, the $190,000, 4-bedroom home with the nice hardwood floors that the young couple had wanted to fix up and one day start a family in, had become an an albatross around their necks that still weighs them down. It still leaves the 31-year-old graphics designer dumbfounded, but did explain some strange things he experienced.

• "As soon as we moved in, we started to get headaches immediately," he told WalletPop in an interview, adding that he and Friberg attributed their health issues to the stress of moving into their first house. "Our symptoms kept getting worse the longer we stayed there."

For more, see Young couple's dream house turns into a meth nightmare.

For other stories relating to the unwitting purchase of homes once used as meth labs, see:

• Meth Lab Residue in Homes Triggers Litigation (Lawsuits over contaminated homes focus on failure to disclose issue) (requires subscription; if no subscription TRY HERE),

• Lawyer Successfully Squeezes Settlement From Insurer For Client's Damage Claim From Unknown Meth Lab,

• Unwitting Buyer Of Home Used As Meth Lab Wins Lawsuit Against Broker, Seller; Court Orders Rescission, Damages, Attorney Fees,

• Wave Of Meth Lab Home Contamination Litigation On The Horizon?

• Ohio Woman Unwittingly Buys Home Once Used As Meth Lab; Sues Former Owner While Fighting Foreclosure; Fears Connection To Kids' Chronic Illnesses,

• Minnesota Couple Duped Into Buying Home Once Used As Meth Lab; Arbitration Award A "Pyrrhic" Victory, Lender May Wind Up Holding The Bag.

NJ Class Action: "Many Thousands Of Foreclosures Are Plainly Void!" Under State Law; Homeowners Seek Note, Mortgage Cancellations, Money Damages

In Newark, New Jersey, the New Jersey Law Journal reports:

• Bank of America has been hit with a class action on behalf of homeowners seeking damages for alleged disregard of foreclosure process rules. The suit, filed Wednesday in federal court in Newark, N.J., accuses Bank of America and two subsidiaries, LaSalle Bank and BAC Home Loans Servicing, of "an undisciplined rush to seize homes" through "pervasive and willful disregard of knowledge, facts and statutes."(1)

• Bank of America has filed foreclosure proceedings on many mortgages in New Jersey without holding the necessary rights as the mortgagee or assignee at the time of foreclosure, the suit says.

• "Many thousands of foreclosures are plainly void under statute and settled New Jersey case law. Many borrowers never obtain statutorily required notices, and many foreclosure suits are filed entirely based in inaccurate recitations concerning ownership of the mortgage, the note, or the assignment," the suit says.

• The putative class in the suit, Beals v. Bank of America, N.A., 10-cv-05427, consists of all named defendants in pending New Jersey foreclosure actions initiated by Bank of America or its affiliates. The complaint includes counts of common-law fraud, breach of the covenant of good faith and fair dealing and violations of the New Jersey Fair Foreclosure Act and Consumer Fraud Act.

***

• The plaintiffs claim they are entitled to compensation for emotional distress, damage to their credit scores and time lost from work for attorney meetings and foreclosure proceedings.

• They also seek punitive damages and attorney fees as well as declaratory and injunctive relief dismissing the foreclosures of class members, with prejudice, declaring the mortgages and promissory notes of class members void and unenforceable` and rescinding or reforming the mortgages and promissory notes to conform to plaintiffs' reasonable expectations.

• The suit was brought by Lawrence Friscia, head of a Newark firm that counsels distressed homeowners, and his associate, Jonathan Minkove, who say they’ve found that Bank of America regularly negotiates binding agreements to modify mortgage terms and then fails to honor the terms.

• "There's a difference in the fact pattern [among individual cases] but there's pattern and a practice of blatant disregard for process," says Minkove. "Any lawyer who's worth his salt will tell you process matters."

• And when judges call them to case management conferences in their foreclosure cases, outside counsel for Bank of America regularly fail to show up, says Friscia. Worse still, New Jersey's judges don't seem to be bothered by such behavior, he says. "There's a shocking deference given to Bank of America on the part of the judicial system," Friscia says.

For more, see Bank of America Sued in Class Action Over Flouting of Foreclosure Rules.

For the lawsuit, see Beals v. Bank of America, N.A., et al.

(1) According to the story, the plaintiffs cite a recent, well-publicized admission by a Bank of America official in a Massachusetts foreclosure case that she signed thousands of foreclosure complaints without reviewing them. That Bank of America official, Renee Hertzler, said in a deposition that she robosigned as many as 8,000 foreclosure documents a month without reviewing them, according to the lawsuit (at paragraph 29).

Indiana Class Action Quotes Brooklyn Jurist's Description Of Robosigner As "A Milliner's Delight By Virtue Of The Number Of Hats She Wears"

A class action lawsuit filed last week in Indianapolis, Indiana alleges that Countrywide Home Loans/Bank of America's use of robosigners resulted in violations of the Federal RICO statute as well as the Federal Fair Debt Collection Practices Act.

One of the robosigners described in the lawsuit is the notorious Keri Selman, described as "a nationally known robosigner" and a "robosigner extraordinaire" - (at paragraph 55), and who is further described in the following excerpt (at paragraph 58):

• Selman's prolific career signing affidavits as a supposed vice president for so many entities led Judge Arthur M. Schack of the Supreme Court of the State of New York to remark in a court order that "Ms. Selman is a milliner's delight by the virtue of the number of hats she wears." Judge Selman [sic] noted that "Plaintiff's application is the third application for an order of reference received by me in the past several days that contain an affidavit from Keri Selman ... ." Judge Schack said he was concerned that Ms. Selman might be engaged in a subterfuge, wearing various corporate hats, and ordered that, before he would grant an application for an order of reference, Selman would be required to submit another affidavit describing her employment for the last three years. Selman never submitted such an affidavit.(1)

For the lawsuit, see Davis v. Countrywide Home Loans, Inc., et al.

(1) For Justice Schack's referenced court order, see Bank of NY v Myers, 22 Misc 3d 1117, 2009 NY Slip Op 50159 (2009).

In another of his court rulings (HSBC Bank USA, N.A. v Charlevagne, 20 Misc 3d 1128, 2008 NY Slip Op 51652 (2008)), Justice Schack makes an equally interesting observation in describing Ocwen Loan Servicing multiple corporate hat-wearing robosigner Margery Rotundo, whose affidavits also littered his courtroom and which, in my view, is equally applicable to describe Keri Selman, and which I will 'borrow' below:

• The late gossip columnist Hedda Hopper and the late United States Representative Bella Abzug were famous for wearing many colorful hats. With all the corporate hats Ms. [Selmon] has recently worn, she might become the contemporary millinery rival to both Ms. Hopper and Ms. Abzug.

See also Foreclosure Halted As Questions Surround Court Filings; Brooklyn Judge Calls Multiple Corporate Hat-Wearing Bank Exec "A Milliner's Delight".

Ex-Homeowner Sues To Void Foreclosure Sale, Recover Home Allegedly Lost In Court Proceeding Tainted By Robosigner Scandal; Also Seeks $50K+ In Damages

In Erie County, Ohio, the Sandusky Register reports:

• [A] Sandusky woman filed a lawsuit Wednesday claiming the foreclosure of her North Larchmont Drive home was spurred on by "robo-signing," where bank employees signed affidavits without bothering to review documents.

• Rhonda D. McLaughlin filed her lawsuit against Bank of America, N.A., and Rhonda Weston, a vice president of Bank of America.(1) [...] Sandusky attorney Dan McGookey, a foreclosure specialist, is McLaughlin's attorney. It may be the first lawsuit filed in the U.S. by a private citizen seeking to undo an already completed foreclosure on grounds that a robo-signer was used, McGookey said.(2)

***

• McLaughlin's lawsuit asks for Fannie Mae, now the owner of the North Larchmont Drive home, to give the home back to McLaughlin. [...] Fannie Mae is [also] named in the suit because it [now] owns the home.

For more, see Sandusky woman sues bank over "robo-" foreclosure.

For the lawsuit, see McLaughlin v. Bank of America, et al.

(1) Rhonda Weston is the robosigner in question in this case, and is alleged to be one of 10,000 Bank of America vice presidents, according to the BofA website (see lawsuit, paragraph 3).

(2) The lawsuit also seeks in excess of $25,000 in compensatory damages, in excess of $25,000 in punitive damages, and other costs and fees. The lawsuit alleges violations of the Ohio Consumer Sales Practices Act, O.R.C. Sec 1345; the Federal Fair Debt Collection Practices Act, 15 USC 1692; Ohio's "Baby RICO" statute, O.R.C. 2923.32, and the common law.

Homeowners In "Non-Judicial" States Face Additional Hurdles In Dealing With Foreclosing Lender-Created Robosigner Scandal

An excerpt from a recent story in The Dallas Morning News serves as a reminder as to how much more difficult it is to deal with the foreclosing lenders' "robosigner" scandal in Texas and other so-called "non-judicial" states, where the onus is on the screwed-over homeowner to initiate legal action against the lender in order to obtain their faulty and/or fraudulent foreclosure documents:

• It is virtually impossible for average homeowners to determine if they're victims of robo-signers. "It will be difficult for a borrower on his or her own to spot this particular problem," said Karen L. Kellett, a bankruptcy attorney at Armstrong Kellett Bartholow. "It has been the very falseness of the documents that could not be detected because such documents were constructed, on their face value, to look normal and thus feed the foreclosure machine." Their falseness wasn't detected until lawsuits were filed challenging affidavits and depositions, she said.

• Texas and other states without judicial oversight may be particularly potent breeding grounds for such fraud, legal experts said. "I think that's absolutely right," said [Kellett law partner Theodore] Bartholow. A judicial-foreclosure state requires lenders to "put the documents they're relying on in front of the court and in front of the borrower," he said.

• "In a non-judicial foreclosure, the borrower likely would never see the documents that the lender is relying on to establish its right to foreclose," Bartholow said. "The likelihood of being caught for it is substantially diminished in a non-judicial foreclosure because you don't see the documents. There's no judge to review those documents."(1)

For the story, see Facing foreclosure? With document scandal, it's vital to act.

(1) The story points out that, in Texas, exceptions exist when a foreclosure stems from a home equity loan or a reverse mortgage, which reportedly must go through the courts. Except for those cases, the foreclosure process in Texas has a short timeline, the story states.

"Dine & Dash" Banksters Now Caught In The Middle Of Two-Front War With Homeowners, Bond Investors Over Faulty Foreclosures, Crappy Mortgage Loans

Bloomberg News reports:

• Shoddy mortgage lending has led bankers into a two-front war, pitting them against U.S. homeowners challenging the right to foreclose and mortgage-bond investors demanding refunds that could approach $200 billion.

• While federal regulators and state attorneys general have focused on flawed foreclosures, a bigger threat may be the cost to buy back faulty loans that banks bundled into securities. JPMorgan Chase & Co., Bank of America Corp., Wells Fargo & Co. and Citigroup Inc. have set aside just $10 billion in reserves to cover future buybacks. Bank of America alone said this week that pending claims jumped 71 percent from a year ago to $12.9 billion of loans.

***

• “It’s going to be trench warfare with years of lawyering,” Christopher Whalen, managing director of Institutional Risk Analytics, said in a telephone interview from White Plains, New York. “The banks can’t afford to lose.”

***

• “It’s troubling that the people who caused the problem have walked away and left everybody else to fight over who gets stuck with the tab,” [Chapman University law professor Kurt] Eggert said in a telephone interview. “It’s like a massive game of dine and dash.”

For more, see Banks Face Two-Front War on Bad Mortgages, Flawed Foreclosures.

In a related column, see The New York Times: One Mess That Can’t Be Papered Over:

• When investors — like the New York Fed — contend that strict rules governing [complex Real Estate Mortgage Investment Conduit, or REMIC] structures aren’t met, they can try to force a company like Bank of America to buy them back.

• Which brings us back to the sloppy paperwork that lawyers for delinquent borrowers have uncovered: some of the dubious documentation may undermine the security into which the loans were bundled. For example, the common practice of transferring a promissory note underlying a property to a trust without identifying it, known as an assignment in blank, may run afoul of rules governing the structure of the security.

City of Baltimore v. Alleged "Ghetto Loans" Peddler - Round 3 In Reverse Redlining Suit Begins

In Baltimore, Maryland, The Baltimore Sun reports:

• After two previous dismissals, the city made a third attempt [last] week to sue Wells Fargo Bank, accusing the company of causing increased foreclosures in Baltimore through racist, predatory lending.

• The latest complaint, filed Thursday in U.S. District Court, contains 14 new paragraphs that purport to address concerns that led Judge J. Frederick Motz to twice before dismiss the case — namely a lack of evidence that the mortgage lender was responsible for housing vacancies and millions of dollars in associated damages.

For more, see City sues Wells Fargo a third time (Two other lawsuits were dismissed as inadequate).

Go here for earlier alleged ghetto loans peddler posts.

NY Law Sticking Banks w/ Homeowners Legal Fee Tab In Successful F'closure Defense To Level Playing Field, Prod More Pro Bono Lawyers To Jump Into Fray

The New York Law Journal reports:

• Going against state bankers, New York Gov. David A. Paterson has signed into law a measure that will allow prevailing homeowners in many foreclosure actions to claim attorney fees from lenders.

• The Access to Justice in Lending Act, A1239/S2614, will put defendants in foreclosure proceedings on the same footing as lenders, who often include in mortgage documents the right to recoup reasonable attorney fees if they bring a successful action.(1)

• Supporters of the new requirement say that it will encourage attorneys to volunteer their services to homeowners facing foreclosure, many of them who cannot afford to hire their own lawyers.(2) At the same time, they say the measure will give the homeowners leverage to negotiate concessions from lenders seeking to avoid the potential costs of litigation.

• "At a time when not-for-profits and counselors are flooded with these cases, this is an important step in bringing parity for homeowners," the governor's office said in an e-mailed statement.

• The new law, Real Property Law §282, provides that all mortgage agreements giving prevailing lenders the right to attorney fees, must be read to grant that right to borrowers as well. Although it goes into effect 60 days after its signing, it applies to all mortgages in effect on or after Oct. 20 and all proceedings begun on or after that date.(3)

For more, see New York Grants Right to Claim Attorney Fees to Prevailing Homeowners in Foreclosures.

(1) According to the story, the new law is modeled after Real Property Law §234, a 1966 law that gave prevailing tenants the right to recoup attorney's fees whenever landlords include a fee provision in the lease. A 1995 Court of Appeals decision upheld the application of the law to leases signed before it became effective, Duell v. Condon, 84 NY 2d 773, which describes the purpose of the earlier fees provision as "to level the playing field between landlords and residential tenants, creating a mutual obligation that provides an incentive to resolve disputes quickly and without undue expense" the story states. Moreover, it said that the law tended to discourage landlords from engaging in frivolous litigation aimed at harassing tenants, the story states.

(2) For those attorneys, law students, paralegals and other fans of the law who find something counterintuitive about being able to score attorney fees in pro bono cases, there's really nothing new about it, believe me. See Another Law Firm Seeks Big Fees From Lawsuit Loser In Pro Bono Case. See also this legal fee 'rate sheet', appearing on the website of one non-profit law firm, which discloses the hourly fees charged in connection with some of their pro bono cases (unadjusted, of course, for any applicable "contingency fee risk multiplier" - see The Yale Law Jounal: The Contingency Factor In Attorney Fee Awards).

(3) Florida has a similar statute, except that the mandating of an award of prevailing party attorney's fees to the winning party under the reciprocity provisions of section 57.105(7), Florida Statutes applies to all contracts containing one-sided, legal fee provisions, not merely to mortgage loan agreements containing the one-sided, legal fee clauses. See also Landry v. Countrywide Home Loans, Inc., 731 So. 2d 137 (Fla. 1st DCA 1999).

Those in states that don't have similar statutes and want to recover attorney fees for successful foreclosure defenses may need to continue to rely on bringing suits/counterclaims under the federal Truth in Lending Act, 15 USC §1640, and the federal Fair Debt Collection Practices Act, 15 USC §1692k, which already allow for the recovery of attorney's fees to a prevailing claimant, as was ably pointed out in this memorandum filed on behalf of the New York Bankers Association arguing against the passage of the recently-enacted New York law.

Given all the unfair and deceptive conduct engaged in by foreclosing lenders in the robosigning scandal, I suppose lawsuits and counterclaims could possibly also be brought/raised under state consumer protection laws that may be applicable, which typically also provide for the granting of court-ordered attorney fee awards to a prevailing party. For a survey of state consumer protection laws, see National Consumer Law Center: CONSUMER PROTECTION IN THE STATES: A 50-State Report on Unfair and Deceptive Acts and Practices Statutes.

Insurance Underwriter Demands "Crappy Title" Warranties From Banks When Issuing Title Policies On Sales Of REOs Acquired Thru Faulty Foreclosures

The Washington Post reports:

• The title insurance industry is maneuvering to protect itself from losses if courts rule that banks have played fast and loose with the foreclosure process. But people who buy foreclosed properties from banks may face some degree of loss despite having a title policy.

• Fidelity National Financial, the largest title insurance company, is leading the industry in demanding that lenders warrant that they have followed all legal procedures in the handling of foreclosures and indemnify the title insurers if a court decides otherwise.(1)

***

• The plans and concerns of the other major providers of title insurance - First American Financial Corp., Stewart Title and Old Republic International - will be disclosed this week. [...] Along with Fidelity, they account for 90 percent of the title insurance market.

For more, see Title insurers seek insulation from foreclosures.

(1) Doesn't Fidelity National, through its connection with LPS and DOCX, have some link to the cause of much of this "crappy title" problem in the first place? (Or did Fidelity National already spin off its LPS/DOCX connection before the alleged robosigning took place? If one didn't know any better, one might think that this outfit is scrambling to cover its ass [buttocks] [seeking protection] from problems it may have played some role in creating in the first place.) See:

• Florida AG Tags LPS, Docx With Subpoenas Ordering Firms To Fork Over Foreclosure Documents, Vendor Contracts As State Robosigner Probe Expands,
• Florida AG's subpoena (in the investigation of Fidelity National Financial, Lender Processing Services (LPS), and DOCX),
• DOCX document "fabrication" rate sheet for a variety of foreclosure documents.

Indiana Couple File Federal Robosigner Suit Seeking Class Action Status; Allege Violations Of RICO, Debt Collection Statutes

In Indianapolis, Indiana, The Indianapolis Star reports:

• An Indianapolis law firm has filed one of the first suits in the nation seeking class-action status in its case against mortgage lenders and servicers who used questionable tactics in thousands of home foreclosures. The federal lawsuit was filed Tuesday by Cohen and Malad, which specializes in class-action cases. The case comes as the smoldering foreclosure issue threatens to erupt into a national crisis for the mortgage industry.

***

• Richard E. Shevitz, a Cohen and Malad attorney, said he's fielding calls from dozens of other lawyers and homeowners asking how they might join the lawsuit or file a similar one. The lawsuit, filed this week in U.S. District Court in Indianapolis, must be certified as a class action by a court before it can be opened to other plaintiffs. That could take months or even years. "We'll try to move this case forward as aggressively as we can," Shevitz said.

• The plaintiff in the lawsuit is a Knightstown couple, Dwayne and Melisa Davis, who allege that two affidavits filed by their lender in their foreclosure were signed by "robo-signers" known to have scribbled their signatures on hundreds or thousands of foreclosure documents without personally reading them and sometimes using different titles and employer names.(1)

***

• The two bank officials who signed the affidavits used to foreclose on the Davises' home in 2008 and sell it at a sheriff's sale are women whose names have come up in lawsuits in other states as "robo-signers."(2)

For more, see Indiana foreclosure suit seeks class action (Knightstown couple who lost home allege document 'robo-signers' aided lenders).

For the lawsuit, see Davis v. Countrywide Home Loans, Inc., et al.

See also Cohen & Malad Files National Class Action Lawsuit Against Lenders for Using Perjured Testimony to Obtain Foreclosures.

(1) "The defendants' and their enterprises' activities amounted to a conspiracy to undermine the justice system in foreclosure proceedings," the 25-page lawsuit says. "This foreclosure churning apparatus . . . allowed the defendants to . . . throw families from their homes with callous disregard for the basic protections of the law and established American notions of justice."

(2) The robosigners involved in the foreclosure at issue are the notorious Keri Selman, who gave a title as an assistant vice president for Countrywide Home Loans, and the equally notorious Melissa Viveros, who gave her title as vice president of Countrywide, according to the Davis lawsuit. See paragraph 66 of the lawsuit:

• Like Selman, Melissa Viveros is a known robo-signer. She discloses publicly on her LinkedIn profile that she manages a team of 340 foreclosure specialists for Bank of America, and handles "a portfolio of approzimately 140,000 specialty, subprime, VA FHA accounts ensuring that state foreclosure timelines were met accordingly."

'Sewer Service' Suspicions Linked To S. Florida Foreclosure Mill; Court Filings Of "Lost Summons" Affidavits Skyrocket In Jacksonville Area

In Duval County, Florida, The Florida Times Union reports:

• [E]ven the summons, the simple but important legal notice required to inform homeowners that they are being foreclosed on, has not been immune to the massive problems surrounding what has become known in Florida and across the nation as the foreclosure mess. The Times-Union has reviewed documents where the same name with obviously different signatures was used to certify that papers were served to the homeowner.

• While there is no simple way to know how often every type of irregularity occurs, there is documentation showing a sharp rise in one narrow area of concern. Instances where summonses entrusted to servers have been reported as lost, once fairly rare, have skyrocketed, making it harder to document the fate of important paperwork. From barely more than 100 annually six years ago, more than 2,000 summonses have been lost in Duval County in each of the last two years. Critics attribute the problems to both sloppiness and fraud.

***

• An affidavit of service - the legal document required to verify that the summons was served properly - would be filed when the summons hadn't been served, [ex-paralegal Tammie Lou Kapusta for the foreclosure mill law office of David Stern] said.(1)

***

• The process server in the case of both Jeffs and Browne was ProVest LLC, the Tampa process server that is located in the same building as Stern in Plantation. It was also ProVest that said it served three summonses on a Middleburg foreclosure case. Each return of service was signed by a Julie Parker, certifying that she had served the papers, or had tried to serve them and failed. But each of three signatures was different. Efforts to reach Parker were unsuccessful.

***

• When a summons is served, the server keeps the original and turns it back in with the notice of service that becomes part of the court file. But in recent years, something's happened to a lot of those original summonses: They've been lost. The number of "affidavits of lost summons," the court document that must be filed in such a case, has skyrocketed in recent years.

For more, see Fraud in foreclosure summons a disturbing trend in Duval County (Summonses are being misplaced or forged by servers; critics say sloppiness and fraud leading to sudden spike).

See also David J. Stern Law Office “CASH IN ON FORECLOSURES” With Sewer Service and Bid Rigging on Homes Sold on The Court House Steps, FBI Needs to Investigate for more on "sewer service" allegations against this outfit.

A 2008 report, Justice Disserved, documents the victimization of lawsuit defeandants by improper service of process to those who ultimately had money judgments unknowingly entered against them, often to devastating effect.

Go here for other "sewer service" posts.

(1) Go here for the Deposition of Tammie Lou Kapusta.

Deposition: S. Fla. F'closure Mill Duped Fannie, Freddie During Visits When Conducting On-Site File Inspections; Possible Sewer Service Also A Conern

A recent story in the Jacksonville Business Journal highlights one part of a recent deposition given by Kelly Scott, a former employee with South Florida foreclosure mill, Law Office of David J. Stern, in the following excerpt:

• Scott said Stern would get tipped off that Freddie Mac and Fannie Mae were coming to visit. “If certain files weren’t updated correctly and there was lack of process, they would change the client code in the file,” she said.

• “If it was Countrywide, they would change it into a different client name with a sticker and print it out, and then these files were transferred into a room where they would hide them and keep them behind closed doors until the client would leave.”

• When Freddie Mac officials would leave the office, the staff would change the file codes back again, Scott said. She said she personally did this on five or six occasions, involving more than 500 files.

• Scott said Stern would take care of the expense of bringing clients to the office: hotel, food, rental cars — “whatever the client needed.”

***

• Scott said some managers would look the other way when process servers billed for service on three or more people at one address, even though the case involved only one person.

• If they found files without the proper notice of service documents, they gave them to office manager Cheryl Samons, and the files would reflect the proper paperwork within an hour or two, Scott said.

For the story, see South Florida law firm at center of foreclosure investigation.

Go here for the Deposition of Kelly Scott.

More NH Homeowners In Foreclosure Fight Back With Help Of Long-Time Nationally-Recognized Mortgage Servicing Fraud Watchdog

In Somersworth, New Hampshire, WMUR-TV Channel 9 reports:

• While more [New Hampshire] residents are facing the possibility of foreclosure, a growing number of homeowners are fighting back. One of their allies is [New Hampshire's] Mike Dillon. Dillon is not an expert or a housing official but he has been successfully staving off foreclosure of his Manchester home for 10 years. Every day, often into the wee hours of the morning, he combs through public notices and other legal websites to find foreclosures in New Hampshire that look worthy of a fight. Dillon said that often, stopping a foreclosure is a matter of checking the paperwork.

***

• Porter and Angie Moore, of Sandwich, N.H., took Dillon's advice and took their findings to a judge, who granted them a temporary restraining order that stopped the foreclosure until the lender produces more evidence. The Moores said they don't yet know who owns their promissory note, and multiple lenders have claimed ownership.

For more, see Homeowners Fight Back Against Foreclosures (Tracking Down Paperwork Can Prevent Home Auctions).

See 'Playing the Odds' for the transcript of an ABC News Nighline interview with Mike Dillon of GetDShirtz.com on how some mortgage servicers go about giving homeowners a real screwing over in the handling of their house payments.

5 Bagged In St. Paul-Area Alleged Mtg Scam; Cal. Man's Stolen ID Used In Scoring $1.8M In Loans, Sham Entity Used To Pull Cash From Deals: Prosecutor

In Hennepin County, Minnesota, the Minneapolis Star Tribune reports:

• Hennepin County prosecutors have charged five people with felony racketeering in an alleged mortgage fraud and money laundering scheme centered on a St. Paul-based mortgage brokerage firm.(1)

***

• In several cases, part of the proceeds at closing were paid over to "Cire Building," supposedly for improvements negotiated as part of the sale. The complaint says that Cire was a "sham entity" created by [alleged ripoff artist Eric] Bernard.

• The scheme also involved stealing the identity of a California man, creating a false paper trail to make him appear to be a legitimate buyer, and using that identity to obtain $1.8 million in loans on three properties, according to the complaint.

For the story, see Five charged in mortgage fraud, money laundering scam (Hennepin County prosecutors allege the group conspired to steal millions through phony loans).

(1) Charged were Eric Bernard (also known as Eric Shirpiro), 31, of Shakopee, Stacey Harrold, 42, of Burnsville, David Schoenhofen, 42, of Prior Lake, Michael Hudalla, 44, of Mendota Heights, and Nicole Marie Schmidt (also known as Nicole Origas), 33, formerly of Lake Crystal.

Indiana AG Tags Ten Outfits In Separate Suits For Running Alleged Loan Modification Rackets

From the Office of the Indiana Attorney General:

• Many homeowners facing foreclosure who are frustrated with their loan servicers turn to for-profit foreclosure consultants whose advertisements often promise any home can be saved from foreclosure and their services are 100% guaranteed. Indiana Attorney General Greg Zoeller [] announced the filing of 10 lawsuits against companies(1) making such claims calling them false and illegal, [...].

For more, see State files lawsuits against 10 foreclosure consultants (Indiana Attorney General Greg Zoeller urges Hoosiers to avoid foreclosure rescue scams).

(1) The ten lawsuits, filed in various counties statewide, target the following outfits:

• Colonial Financial Solutions, of New Jersey,
• Pierce, Taylor, & Budrow, of Florida,
• American Lending Review, of California,
• National Future Mortgage, of New Jersey,
• Oceanview Investment Services, of Florida,
• US Homeowners Relief, of California,
• Integrated Financial Solutions, of New Jersey,
• Meridian Law Center, of California,
• Manhattan Mitigation, of New York,
• Fair Lending Review, of Nevada.

Kansas AG: Loot Pocketed From Suspected Loan Mod, Foreclosure Rescue Scams Doubles State Haul Attributable To Consumer Protection Enforcement Actions

In Topeka, Kansas, KansasReporter.org reports:

• Kansas consumer protection enforcers recovered $17.3 million on behalf of consumers in 2010, more than twice as much as a year earlier, according to reports released Thursday by the state Attorney General's office.

***

• A changed focus of consumer complaints from one year to the next accounts for much of the difference, said Gavin Young, a spokesman for the attorney general's office. Alleged debt collection, debt consolidation and credit repair abuses figured prominently in the division's 2009 case loads.

• Home mortgage modification or repair schemes and foreclosure rescue plans - tending to involve larger sums - became more prominent in 2010.

For more, see Mortgage-scam settlements swell Kansas consumer collections. loan modification

Idaho AG Settles Charges w/ R/E Agent Accused Of Filling In Blanks In Contracts After Obtaining Clients' Signatures, Then Using Phantom Notarizations

In Boise, Idaho, LegalNewsline reports:

• Idaho Attorney General Lawrence Wasden announced on Wednesday that he has settled with a real estate agent who allegedly violated the Idaho Consumer Protection Act. Daniel Myers and his now dissolved company, Paradigm Solutions LLC, allegedly allowed a client to sign an option contract with missing information that was added in later.(1)

***

• Myers allegedly filled in the missing information once the client signed the documents, which made it possible to figure important terms of the contract without the consumer's knowledge or consent. Although the contract was supposed to be signed by a notary, Myers allegedly had his client's signature notarized outside of his client's presence.

• Similar practices were allegedly carried out by Myers with other property owners who also signed contracts that contained blank spaces that were later filled in.

For more, see Wasden settles with real estate agent.

See also: Idaho AG press release: Boise Real Estate Agent Penalized for Alleged Real Estate Contract Violations.

(1) The alleged information included the beginning and ending date of the option, the address and legal description of the property and the purchase price, the story states. Under terms of the settlement, Myers will modify his business practices to comply with state law, respond quickly to any new complaints that arise, pay $1,500 to cover costs associated with the litigation, and agrees to pay a $10,000 civil penalty in the event of further violations, the story states. Myers was also issued a formal reprimand by the Idaho Real Estate Commission and ordered to pay them $6,300 in fines and costs.

County Sells Unwitting Buyer A Home At Tax Auction, City Demolishes It A Week Later

In Farmington Hills, Michigan, NBC Channel 24 reports:

• A Michigan woman is devastated after buying a home and seeing it demolished. Susan Tusk had purchased the home from Oakland County for $1,000 at a foreclosure auction last Wednesday. And she had the paperwork to prove it. When she showed up this weekend to do some work on it, Farmington Hills city workers were bulldozing the home.

• In July, city officials ordered that the owners of four foreclosed houses demolish their properties or the city would move in and do it. Tusk says she had plans to restore the home and live in it.

Source: Mich. woman buys foreclosed home, city then demolishes it.

Minnesota Debt Collector Agrees To Cough Up $1.75M To Settle Federal Allegations Of Illegal Practices

In Minneapolis, Minnesota, the Minneapolis Star Tribune reports:

• Allied Interstate Inc., a large Minnesota debt collection agency with a history of consumer complaints and state fines, has agreed to pay $1.75 million to settle federal allegations that it broke the law by trying to collect debts people didn't owe. The Federal Trade Commission (FTC) said it is the second-largest civil penalty it has obtained against a debt collection firm. It comes amid rising complaints of abusive collection tactics and calls by state and federal legislators for more regulation.(1)

***

• Many debt collectors use software, known as "robo dialers," that automatically call the same people multiple times a day. With Allied, such calls continued even after people insisted the firm was calling the wrong person or that they did not owe the debt, the FTC alleged in a federal lawsuit.

For more, see Local debt collector to pay $1.75 million (Federal officials said they are trying to send a message to other debt collectors to stop harassing people over debts they don't owe).

(1) Go here for:

• Lawsuit - U.S. v. Allied Interstate, Inc. (Complaint for Civil Penalties, Injunctive Relief, and Other Relief),
• Consent Decree,
• Reasons for Settlement,
• FTC News Release.

Banks Turn Up The Heat On Delinquent Borrowers; Begin Employing Methods Normally Reserved To Feds While Billing Victims For Dubious Fees

The Spoof (satirically?) reports:

• Justice Department investigators confirmed today they are considering possible fines and other penalties against several of the United States' largest financial institutions for the murders of hundreds of homeowners delinquent in their mortgage payments.

• The Justice Department responded to complaints from families of recent murder victims claiming to receive billing statements from the deceased's mortgage companies demanding payment for "ammunition services," "break-in and terrorizing administrative charges," and "blood removal and dry cleaning fees," among other charges related to "Mortgage Remediation Services."

• According to a Justice Department spokesman, "The Department is taking these accusations very seriously. While the laws regulating just how aggressive lending companies can act in their efforts to collect a debt are very broad, the actual legality of physically killing individuals behind on their payments is rather vague. Congress and the Courts have consistently ruled that large financial institutions can do whatever they want whenever they want, but, the authority to just kill people for very little reason is a power normally reserved to the federal government."

For more, see Banks Face Hefty Fine for Murdering Delinquent Homeowners.

Disbarment Possible For NY Attorneys Representing Foreclosing Lenders For Violation Of State High Court's New 'Anti-Robosigner' Rule

The New York Post reports:

• While the mortgage industry grapples with a legal morass over millions of flawed foreclosure actions, the chief of New York's courts made a bold move yesterday to ease the crisis -- at least in the Empire State. New York Chief Judge Jonathan Lippman issued a new rule [Wednesday] requiring every lawyer handling foreclosures to sign a document verifying that the paperwork in the case is accurate. Failure to meet the new standard could result in disbarment or other sanctions.

***

• Realtors, banks, buyers and the courts are complaining loudly about foreclosure cases tainted by improper documentation and rubber-stamped without any review.

• Lippman said his rule will for the first time force lawyers to put their careers on the line in foreclosure cases with a binding document that replaces prior "good practices" pledges that had little bite. "We want to make sure that everyone is focusing like a laser on these particular types of proceedings," Lipmann said.

• Some 78,000 homeowners are already caught up in foreclosure cases around the state. To make a case go forward, the new rule requires lawyers to include the name of a bank employee who affirmed the case facts as correct and the date it was done.

For the story, see Hear ye, hear ye! Lawyers' feet held to fire in foreclosure cases.

See also, NY forces lawyers to verify foreclosures, nixes robosigning:

• New York’s presiding justices handed down the new state rules after banks disclosed that an unknown number of homeowners faced foreclosure although their lawyers failed to get proper notarization, relied on “robosigning,” and failed to prove “proper standing.”

***

• “We cannot allow courts in New York to stand by idly and be party to what we now know is a deeply flawed process, especially when that process involves basic needs – such as a family home – during this period of economic crisis,” Chief Judge Jonathan Lippman said in a statement.

NY Attorneys To Score Court-Awarded Legal Fees From Banks For Sucessfully-Defended Foreclosures On Behalf Of Homeowners

Buried at the end of a recent New York Post article on the nationwide foreclosure robosigning scandal is this gem that I'm sure is welcomed by New York foreclosure defense attorneys statewide:

• [G]ov. [David] Paterson [Wednesday] signed a bill that would enable homeowners who successfully defend themselves against foreclosure proceedings to be awarded lawyer's fees from the lender that sued them. Previously, mortgage holders had no recourse to get lawyers' fees from lenders if foreclosure proceedings were brought against them. Many simply repped themselves or defaulted, said Assemblyman Rory Lancman, a Queens Democrat, who co-sponsored the bill.(1)

Source: Hear ye, hear ye! Lawyers' feet held to fire in foreclosure cases.

See also The New York Times: New Law Allows Homeowners to Recoup Legal Fees in Foreclosure Cases:

• In some other types of litigation, like employment or civil rights, lawyers’ fees have long been awarded to the winning party, [the new law's co-sponsor, state Assemblyman Rory I.] Lancman said. But foreclosure litigation has been an exception.

• “There’s been a major problem as this foreclosure crisis has exploded in getting representation for people who need counsel,” said Andrew Scherer, the former president of Legal Services NYC, an agency that provides counsel to people who cannot afford lawyers in civil cases.

• “This is going to provide a pretty reasonable incentive for private attorneys to take on these cases,” Mr. Scherer added.

(1) For those New York attorneys practicing in the non-profit, Legal Aid/Legal Services sector of the profession who want some idea as to how to approach the issue of how much in legal fees they can belt foreclosing lenders with when successfully representing their pro bono homeowner-clients in foreclosure actions (and possibly other consumer protection litigation as well), check out this legal fee 'rate sheet' appearing on the website of one of your out-of-state 'bretheren' (unadjusted for contingency fee risk multiplier).

Reports Of Judges Sticking Banks w/ Tab For Homeowners' Legal Fees In Robosigner Cases Increase With Growth Of 'Foreclosure Defense' Bar

The Wall Street Journal reports:

• The paperwork mess muddying home foreclosures erupted last month. But the legal strategy behind it traces to a lawyer's gambit in 2006 that has helped keep one couple in their home six years beyond their last mortgage payment.

• Lillian and Robert Jackson stopped paying on their home in Jacksonville, Fla., in 2004 when business dropped off at their cleaning company. Eviction might have seemed inevitable when they faced a foreclosure hearing two years later.

• But their lawyer, James Kowalski, had the idea of taking a deposition from the signer of the mortgage papers. When a document processor for GMAC Mortgage admitted she routinely signed such papers without being familiar with details of the loans, she was tagged as one of a species now known as robo-signers.(1)

• It was a first step in the growth of a legal sub-specialty called foreclosure defense that has sown confusion and turmoil in the housing market.(2) Lawyers in the field now commonly use a technique more identified with corporate litigation: probing depositions, designed to uncover any lapses in judgment, flaws in a process or wrongdoing.

• In the 23 states where foreclosures entail a court hearing, the bank may be ordered to pay the homeowner's legal bill if a lawyer can convince a judge that the bank has submitted false documents, such as affidavits saying employees personally reviewed the details of loans when they didn't.(3)

***

• The big risk to banks and the housing market, indeed, is that more homeowners and lawyers come to see such cases as attractive to fight. Mr. Kowalski in Jacksonville has already filed a suit seeking class-action status, in circuit court in St. Johns County, Fla., naming Deutsche Bank AG and Citigroup Inc. mortgage unit Citi Residential Lending, accusing them of violating Florida laws and seeking nonmonetary relief. On Tuesday, a New Jersey law firm filed a damage suit in federal court in New Jersey accusing Bank of America of breaching contracts with borrowers at settlement.

For more, see Niche Lawyers Spawned Housing Fracas.

(1) Reportedly, GMAC's case against the Jacksons was thrown out in 2006 by Florida state-court Judge Bernard Nachman, and has never been refiled. The Jacksons, still living there, are reportedly seeking a settlement with GMAC.

(2) It should be noted that a "produce the note" foreclosure case originally filed as far back as 1999 coming out of Palm Beach County, Florida (see State St. Bank & Trust Co. v. Lord, Case No.CL 99-006652 AW) resulted in a big defeat for a foreclosing lender who couldn't produce the note. The lower court ruling, which was subsequently affirmed on appeal, see State St. Bank & Trust Co. v. Lord, 851 So. 2d 790; (Fla. App. Ct. 4th Dist., 2003), led to a change in the applicable statute (section 673.3091, Florida Statutes - Enforcement of lost, destroyed, or stolen instrument) that no doubt was lobbied for by the financial industry to make it easier to foreclose without having the promissory note.

The 1999 version of Sec. 673.3091(1)(a), Florida Statutes (the statute at the time State St. Bank was originally filed in a Palm Beach County Circuit Court) read as follows:

• (1) A person not in possession of an instrument is entitled to enforce the instrument if:
  
  (a) The person was in possession of the instrument and entitled to enforce it when loss of possession occurred;

The 2004 version of Sec. 673.3091(1)(a), Florida Statutes (after the change in the statute), read (and now reads - see current section 673.3091, Florida Statutes) as follows:

• (1) A person not in possession of an instrument is entitled to enforce the instrument if:
  
  (a) The person seeking to enforce the instrument was entitled to enforce the instrument when loss of possession occurred, or has directly or indirectly acquired ownership of the instrument from a person who was entitled to enforce the instrument when loss of possession occurred;

The following two points are worth noting here:

• The Florida Bankers Association appears to tacitly acknowledge their guilt in lobbying for (keen awareness of) the statutory change arising out of the State St. Bank case at page 4 thru 6 of their comments to the Florida Supreme Court made in connection with Emergency Rule and Form Proposals of the Supreme Court Task Force on Residential Mortgage Foreclosure Cases,

• The attorney representing the (thwarted) foreclosing lender who got clobbered by the court for failing to "produce the note" in the State St. Bank case was none other than notorious South Florida foreclosure mill, Law Offices of David J. Stern, P.A., Plantation, Florida, who presumably played some role in setting the wheels in motion for the change in the statute.

(3) Reportedly, Florida state-court Judge Bernard Nachman ordered GMAC Mortgage, a unit of Ally Financial Inc., to pay the $8,000 fee of the Jacksons' attorney after finding GMAC had filed false testimony, an affidavit in which a document signer, Margie Kwiatanowski, said she had personal knowledge of the details of loans such as the Jacksons'.

In another recent case, a Maine state court judge, in ruling that robosigned affidavits had been submitted "in bad faith," ordered GMAC to pay pro bono attorney Thomas Cox a $27,000 legal fee, a sum it said he might have earned for his legal work if he hadn't been working pro bono, the story states.

Washington securities lawyer Andrew L. Sandler, who represents banks and firms that service mortgages, noted for the story: "The class-action lawyers are swarming around this issue right now, because they perceive that it can result in significant fees for them. [...]"

Reportedly, Michael Gaier, an attorney in Philadelphia, who recently switched to foreclosure defense last year after years of representing patients in malpractice suits and consumers who said they had purchased faulty products, said his new legal practice "is academically challenging, and I'm hoping it'll be financially rewarding. I'm hoping the banks rewrite the mortgages, cover my fees. That's my end game," said Mr. Gaier.

See also Florida Judge Sticks Standing-Lacking Lender With $30K Tab For Homeowner's Legal Bill After Booting Case.

GMAC's Embarrassment Over Publicity Surrounding "Robosigner" Practices Not Enough To Kibosh Dissemination Of Troubling Maine Deposition Over Internet

GMAC's embarrassment over the recent dissemination of a certain deposition revealing its troubling "robosigner" practices was one of the highlights in Maine state court Judge Keith A. Powers' denial of the company's attempt to cover up the contents therein from the public(1) by requesting a protective order, as he sets forth in the following excerpt from page 3 of his September 24, 2010 ruling:

• Stephan's deposition was taken to advance a legitimate purpose, and the testimony elicited has direct probative value to this dispute. Attorney Cox did not himself take action other than to share the deposition transcript with an attorney in Florida.
  
  That the testimony reveals corporate practices that GMAC finds embarrassing is not enough to justify issuance of a protective order. Further, Plaintiff has failed to establish that GMAC has been harmed specifically as a result of the dissemination of the June 7, 2010 transcript, given that similarly embarrassing deposition testimony from Stephan's December 10, 2009 Florida deposition also appears on the Internet, and will remain even were this court to grant Plaintiff's motion.
  
  Accordingly, because Plaintiff has failed to establish its burden of persuasion [...], its Motion of Entry of Protective Order is denied.

For the entire ruling, see Order - FNMA v. Bradbury.

(1) See Mother Jones: Did GMAC Try to Bury Its Foreclosure Smoking Gun? (The deposition the lender really, really doesn't want you to see).

SF Man Gets 16 Months In $100K+ Ripoff Of Homebuyer In Bogus F'closure Rescue Deal; $3K Restitution Offer To Buy Out Jail Time "A Bribe": Prosecutor

In Napa, California, the Napa Valley Register reports:

• A San Francisco man who scammed a Napa homebuyer out of more than $100,000 will serve 16 months in prison for the crime. Eric Kheng Yim, 35, pleaded no contest in August to grand theft and promised to repay the victim in the case.

• In early 2008, Yim and his business partner Eddie Ceballos, who operated SAP Investments, approached a couple who were struggling to keep their home [...] and offered to help them, Deputy District Attorney Jose Rossi said. He then contacted the couple’s neighbor, Antonio Parra, and offered to sell the home to him. Parra knew Ceballos and trusted him, and they negotiated a price of $375,000, Rossi said.

• In April 2008, Parra gave Yim $30,000 that he had saved and took out an additional $70,000 loan, he said. “They never owned the property or had any legal right to the property,” Rossi said. Yim took the money and disappeared, Rossi said. The homeowner lost the home to foreclosure.

***

• At Yim’s sentencing Wednesday, Rossi asked for two years in state prison. He noted that Yim brought a $3,000 check for the victim to the hearing, but called it a “bribe.” “This defendant is the worst type of financial predator,” he said. He took advantage of hard-working people in difficult situations, Rossi said.(1)

For more, see Man gets 16 months for selling home he didn’t own.

(1) Reportedly, Yim’s defense attorney asked Judge Mark Boessenecker to give Yim probation so he could work to pay Parra back. “If he goes to jail, that will be the end of his business and the end of his ability to pay restitution,” he said of Yim’s photography studio. Judge Boessenecker set restitution at $140,479, the story states.

BofA Says "Take A Hike!" In Response To Those Demanding That It Buy Back Crappy Mortgage Loans That Were Allegedly Improperly Made

The Wall Street Journal reports:

• Bank of America Corp. and some of its largest mortgage investors clashed on Tuesday as the bank vowed to fight government-backed demands that it repurchase loans that allegedly didn't meet underwriting guidelines and other promises. The bank acknowledged receiving a Monday letter from investors alleging that a Bank of America unit didn't properly service 115 bond deals.

• The investors include Freddie Mac, the government-owned mortgage company. Freddie Mac and Fannie Mae, its larger sibling, have boosted demands on lenders over the past year to buy back defaulted loans that had been sold to and guaranteed by the mortgage titans.

• But Tuesday's action marks the first step by either company to force banks to buy back mortgage-backed securities that were issued by Wall Street, not by government-backed mortgage giants.

For more, see BofA Resists Rebuying Bad Loans (Bank Posts $7.3 Billion Third-Quarter Loss as Fee Revenue Tumbles; Effects of Regulatory Overhaul) (requires subscription; if no subscription, GO HERE, then click the appropriate link for the story).

Ohio AG On BofA Fixing Bogus Foreclosure Document Problem In A Matter Of Weeks: "We Are Certainly Not Just Going To Take Their Word For It!"

Ohio Attorney General Richard Cordray recently offered the following statement in response to reports that Bank of America plans to restart foreclosures on borrowers in 23 states where issues of possibly fraudulent documentation have been raised:

• “While I would not presume to speak for all 50 state attorneys general, from my own standpoint, we will want to be very careful in reviewing whatever their revised process purports to be. I would caution that they still have significant financial exposure in many, many cases if they are now acknowledging that the evidence that they previously submitted to the courts was fraudulent.
  
  “Those previous submissions remain subject to possible sanctions and penalties by the courts and so Bank of America would be well-advised to consider aggressively pursuing loan modifications as a means of resolving those cases by agreement rather than pushing toward a court order that may involve sanctions and penalties for their prior misconduct.
  
  “You have to remember, these are the same people who have essentially acknowledged that they committed fraud in perhaps tens of thousands of cases. Now they tell us that they have fixed the problem in a matter of weeks. We are certainly not just going to take their word for it.”

For the Ohio AG press release, see Cordray Is “Deeply Concerned” as Bank of America Announces Move to Resume Foreclosures.

(1) Ohio homeowners who have questions about the litigation against GMAC/Ally or investigations into foreclosure fraud by other banks or mortgage servicers can contact the Ohio Attorney General’s office at ForeclosureFraud@OhioAttorneyGeneral.gov. Cordray also urged Ohioans with knowledge of foreclosure fraud to contact his office via the new e-mail address and share what they know. “Investigations are put in place to gather evidence, and that is what we are aiming to do here with the help of the public.”

Mom, Family Face Boot After Son Uses Forged Deed To Score Fraudulent Loan On Fully Paid-Off Home; Victim Fights Back, Seeks To Void Deed, Mortgage

In Miami, Florida, The Miami Herald reports:

• Ten people spanning three generations share a single bathroom in what's left of Annie Edwards' crumbling home in Liberty City. There are holes in the wood floors and trash bags plastered to the leaking ceiling -- and Deutsche Bank is adamant that it wants this 82-year-old structure. It has been fighting to repossess the home since 2006 in an ongoing legal battle that involves allegations of forged signatures, a disbarred property appraiser and a family on the brink of homelessness.

***

• Edwards' predicament represents a confluence of the fraud, document forgery, and suspicious foreclosure practices that have plagued South Florida's housing market from the housing boom after Hurricane Wilma in 2005, through the current "robo-signing'' scandal. In the midst of a new national foreclosure crisis, Edwards' story stands out as a case study of the housing and banking systems' laundry list of problems.

• The 63-year-old retiree says her housing troubles began five years ago when her ex-husband, legally blind and illiterate, was duped into taking out a $102,000 mortgage on the house by his adult son and daughter-in-law. The couple forged Edwards' signature on a document that stripped her possession of the home, and then made off with the money in January 2006, she said.

• "It's really a sad case,'' said Jonathan Heller, a lawyer who volunteered to defend Edwards from foreclosure.(1) "She worked for 30 years, had no mortgage on the property, is in a wheelchair and every night she goes to sleep thinking, `Am I going to have this house when I wake up?'

For more, see House, homeowner caught in a mortgage meltdown (A Liberty City woman is fighting foreclosure, claiming forgery, fraud and bank negligence in a drama that has her family home at stake).

(1) According to the story, using a dishonest property appraiser was only one of many suspicious actions by mortgage lender Argent Mortgage, Heller alleges. The loan approval process was also questionable, he said. The loan application claims Edwards' ex-husband, Kenneth Edwards, was an "owner-occupier,'' of the home, though he hadn't lived there for 10 years and public records shows he bought a separate homesteaded property in 1996. The bank never checked and, according to Kenneth Edwards, never asked. In a sworn affidavit, he states that he never spoke to any bank representatives before the loan was made.

According to Annie Edwards' counterclaim, the lender also relied on a forged quit-claim deed that stripped her of her ownership, the story states. A police report found her signature on that document was a forgery, the counterclaim states. If the forgery defense is accepted in court, that would make the loan, and the foreclosure, legally invalid.

Annie Edwards reportedly puts most of the blame on her stepson and his wife, since they obtained a loan without her knowledge, never paid the mortgage, and hasn't heard from either one of them since. Edwards' attorney Jonathan Heller hopes to take the matter to trial, and eventually have the foreclosure ruled unlawful. He also filed a counterclaim for wrongful foreclosure, the story states.