Tuesday, November 09, 2010

Nationwide Title Clearing Robosigners On Parade

The Examiner reports:
  • As more and more banks, title companies, and financial institutions become exposed to the foreclosure fraud that has clogged our courts and put more than 19 million people out of their homes, insiders are coming out and providing information that shows how deep the rabbit hole goes in Foreclosuregate.

  • On November 4th, attorney Christopher Forrest of The Forrest Law Firm took a deposition from Crystal Moore of Nationwide Title Clearing. In this deposition Crystal lays out the extent of how the robo-signing of mortgage documents were handled and pushed through with little or no due diligence of the accuracy of said documents.

For more, see Legal depositions beginning around the country on foreclosure fraud.

To watch the video deposition on YouTube, see Crystal Moore Deposition Part 1, Part 2, Part 3, Part 4.

For other YouTube video depositions of Nationwide Title Clearing robosigners, see:

For more on Bryan Bly, see the St. Petersburg Times:

Loan Modification Duo Cops 'Delayed' Guilty Pleas To Illegally Pocketing Fees; Convictions To Be Dismissed Upon Payment Of $40K, Probation Completion

In Livingston County, Michigan, WHMI Radio 93.5 reports:
  • Two employees of a local mortgage company have pleaded guilty to violating foreclosure rescue regulations but would have no criminal record if they successfully complete probation.

  • Michelle Garbuschewski of Howell, also known as Michelle Justice, and Lisa Joboulian of Northville both entered guilty pleas to one count each of violating the Credit Services Protection Act. In exchange for their pleas, a second count of the same against each was dropped. Garbuschewski also pleaded guilty to two separate charges of violating the act as she was President of Hartland-based Elite Mortgage.

  • The plea deal stipulates that both women must pay a total of $40,000 in restitution to the victims involved. $25,000 of that must be paid this week, with the remainder paid within 30 days. Both women will also receive an 11-month delayed sentence on November 30th and if they successfully complete probation during that time, the convictions will be dismissed. They will also be allowed to keep their real estate licenses.

  • Garbuschewski previously admitted to WHMI that she and Joboulian had taken money up front from customers facing foreclosure, but said she thought the law applied only to mortgage companies, not loan-modification companies like Elite Mortgage, which has since closed its doors. The Attorney General’s office says they received eight complaints against Garbuschewski, Joboulian and Elite Mortgage, although only two complaints are included in the current charges.

Source: Women Charged In Local Foreclosure Rescue Scam Plead Guilty.

Prosecutor: "Slow Learner ... To Get Free Rent" As Career Scammer Gets 6 Yrs In Title-Snatching, Home-Hijacking Racket; Used Homes As Bail Collateral

In Hamilton County, Ohio, The Cincinnati Enquirer reports:
  • Do not rent a house or take a check from David Halsell. Halsell has been to Ohio prisons three times for financial chicanery, including renting out houses he didn't own. Now, he's going back to prison - this time for six years - for trying to get placed in his name other houses he never owned.

  • "He's a slow learner," Assistant Hamilton County Prosecutor Bill Anderson said. Halsell, 44, pleaded guilty Friday to five counts of tampering with records in exchange for six other charges being dropped and a promise to cooperate with authorities to unravel all of his crimes. [...] "He's going to get free rent for a while," Anderson said.(1)

***

  • Despite Halsell's extensive criminal history, Anderson allowed him a plea deal even though authorities could have pressed dozens more similar charges against him. "Let's put it this way. We only indicted him on 11 counts. We were aware of 45 others," Anderson said.

  • That's because Halsell's "home ownership" impacts other parts of the government. "He was using some of this property to bail people out [of jail]," Anderson said. When someone is jailed and a bond is set, property can sometimes be used to fund the bond - and get that person released from jail. That investigation continues.

For more, see Man rented out homes he didn't own.

(1) According to the story, Hamilton County Auditor employees grew suspicious when they noticed several Halsell-owned companies -- American Assets & Property Management, Inc., Cincinnati H&H Real Estate Services and Adam Investments -- were filing large amounts of ownership transfer requests in that office. Auditor Dusty Rhodes said there were so many transactions coming in that it looked funny, at which point prosecutors were called in to begin an investigation, the story states. Reportedly, some of the property was in foreclosure and some had deceased owners, according to Assistant Hamilton County Prosecutor Bill Anderson.

Colorado "Rule 120" Hearings Likened To A Mirage Offering Borrowers Facing Foreclosure Hope That Disappears The Closer They Come To It

The Denver Post reports:
  • Borrowers facing foreclosure in Colorado have a right to a hearing before a county judge. But consumer advocates argue the proceeding, called a Rule 120 hearing, is so narrow in scope it doesn't provide much protection or relief.

  • Public trustees or county treasurers handle foreclosures in Colorado, and they can't sell a home at auction without a judge's approval. The hearings, however, usually deal with only two issues — are borrowers delinquent on their mortgage payments or are they active-duty members of the military, which provides special consideration. That contrasts with the 23 states where judges handle foreclosures in civil courts and borrowers obtain more robust legal protections.

  • Zachary Urban, director of housing counseling with the Adams County Housing Authority, estimates that fewer than 15 percent of borrowers he works with attend their Rule 120 hearings. [...] Urban likens the hearings to a mirage offering borrowers hope that disappears the closer they come to it. "You can't go before the judge to explain how you got to that point," Urban said. "It doesn't answer a whole lot of questions, and it doesn't give them a chance to plead on a whole lot of points."

  • Borrowers who raise arguments that the Rule 120 hearing won't address can file a separate civil case. But those who go that route are quickly hamstrung by a requirement to post a "supersedeas" bond in the amount of the mortgage debt, said Mike Robinson, a Castle Rock attorney who has contested several Rule 120 hearings.

  • Finding someone to back that bond is nearly impossible, given the high risk a home in foreclosure represents, he said. And if borrowers had that much money available to them, they could fix their foreclosures in the first place, Urban added. Removing that bonding requirement via state statute would provide a big step to ensuring that Colorado borrowers get a fairer hearing in the courts, Robinson said. Absent that, Robinson said about the only other way to buy time is for a borrower to file for bankruptcy protection.

For more, see Foreclosure hearings, called Rule 120, may be too limited to help borrowers.

Monday, November 08, 2010

Despite Robosigner Scandal, Loan Servicers Still Offering Low-Pay, Low-Qualification, Lofty-Titled "Foreclosure Jobs"

ProPublica reports:
  • Prompted by a Financial Times article about banks hiring foreclosure experts, we went on a few job sites to browse the [job] listings ourselves, just to see if the qualifications for new hires have changed since the foreclosure-document scandal first surfaced.

***

  • One legal staffing agency advertised a number of foreclosure openings, including a “Supervisor of Foreclosure Department.” The listed base pay? “$10.00-$12.00/Hour.” High-school education required. When I called this agency, the Legal Group, I was told that the agency deals primarily with law firms or the legal departments of corporations.

***

  • Another staffing agency seeks college grads for “IMMEDIATE ENTRY LEVEL Foreclosure Processing opportunities with an outstanding company in the Baltimore region,” promising $12 to $13 an hour. The position requires no experience, but:

    Extraordinarily FAST and ACCURATE typing is a MUST! Ability to be WILDLY PRODUCTIVE in a fast paced DYNAMIC envionment [sic] is a MUST! Outstanding MULTI-TASKING ability is a must!

For more, see Want to Earn $10-12 an Hour? Be a ‘Foreclosure Department Supervisor’

"Fair Debt" Violations Among Allegations Facing BofA, Trustee-Affiliate, Others In Utah Suit Seeking Class Action Status

In Salt Lake City, Utah, KCSG-TV reports:
  • ReconTrust and Bank of America, along with Mortgage Electronic Registration Systems ("MERS"), Countrywide Home Loans, HSBC Bank, Wells Fargo Bank, U.S. Bank, Bank of New York/Mellon, KeyBank, and others that may have used ReconTrust as a trustee, have been named in a class action lawsuit filed in Utah federal court Friday alleging violations of the Fair Debt Collections Practices Act (FDCPA), Utah Pattern of Unlawful Activity Act, Unlawful Foreclosures, and Intentional Infliction of Emotional Distress.

***

  • The action filed in Utah District federal court by attorneys E. Craig Smay and John Christian Barlow says ReconTrust has violated the FDCPA by proceeding with non-judicial foreclosure sales. Because ReconTrust lacks the power of sale, its actions are within the definition of debt collection.

For more, see ReconTrust and Bank of America Named in Class Action Violation of Fair Debt Collection.

For the lawsuit, see Coleman, et al. v. ReconTrust Company, N.A., et al.

Homeowner Recovers House Lost In Foreclosure Sale After "Missing POA" Issue Raised In Subsequent Lawsuit Leads To Settlement With Lender

In Salem, Virginia, The Roanoke Times reports:
  • The day his house was sold at an auction on the steps of the Salem courthouse, M.T. Warden said he didn't even know he was facing foreclosure. He knew he was several months behind on his mortgage. When he called American Home Mortgage Servicing to make a payment, Warden recalled recently, "they said my home had been sold, and I didn't live there."

  • That was news to Warden, 30, who, at the time, was sitting in the kitchen of his Valleydale Road home. The next week, he found an eviction notice taped to his front door. Rather than move, Warden filed a lawsuit challenging the foreclosure.

  • After his attorneys found flaws in the paperwork leading up to the Dec. 2, 2008, auction, the case was settled last year and Warden was allowed to keep his house.

***

  • It's unknown just how many forced home sales in Virginia might have been affected [by the filings of fraudulent documents], and to what degree. Tom Domonoske, a Harrisonburg attorney who represented Warden in the disputed Salem foreclosure, said he believes the flaws uncovered in that case are common.

  • After Warden fell behind in his payments in fall of 2008, an official with Dallas-based American Home Mortgage Servicing signed a document initiating the foreclosure, asserting she had power of attorney to act for the lender, U.S. Bank. The foreclosure fell apart when the mortgage company could not produce the power of attorney -- a document that Warden's lawsuit claimed never existed. "It was just part of a shortcut they were taking," Domonoske said of the missing document.

For more, see Foreclosure system ripe for errors in Virginia (The state has one of the fastest-moving systems in the country, and one lawyer said flaws are likely common).

Some Foreclosure Defense Attorneys Begin Going Into Mortgage Lending Business?

The New York Times reports:
  • For some Florida residents, the price of getting out of foreclosure will include taking on a second mortgage — payable this time to their lawyers. The new mortgage, which takes effect only if the foreclosure is dismissed and the homeowner’s debt to the bank is reduced, is controversial among defense lawyers, some of whom call it “creepy” and “crass.” Yet even they acknowledge it offers a solution to a vexing question: How do they get paid?

  • After recent revelations that banks were sloppy in processing many foreclosures and in some cases lack standing to seize a house, potential clients seeking to challenge their lenders are flocking to lawyers. But while these distressed homeowners might have a case, they generally lack the resources to pay legal fees. Being in foreclosure usually means being broke.

For more, see Taking 2nd Mortgage to Pay the Foreclosure Lawyer.

(1) To the extent foreclosure defense attorneys in Florida are not seeking court orders directing lenders and loan servicers to pay the homeowners' "prevailing party" attorneys fees in a successfully defended case, they may be leaving themselves open to future malpractice claims from their "grateful" clients for failing to pursue their rights in recovering, from the losing lender, any attorney fees they may have paid for their legal representation.

Said prevailing party attorney fees is calculated simply by taking the number of reasonable hours the attorney puts into the case (subject to court approval), and then multiplied first by the attorneys hourly billing rate as approved by the court, and second - in contingency fee cases -multiplied again by any contingency fee "risk multiplier" granted by the court. For two Florida cases that illustrate the calculation of attorneys fee awards in this manner, and the subsequent application of a "risk multiplier", see:

By this way, this is the way experienced plaintiffs' counsel have been getting paid for years in cases brought under the Florida's Deceptive and Unfair Trade Practices Act. See The Florida Bar Journal: Entitlement to Attorney's Fees Under FDUTPA. Consumer law litigators likewise get paid in the same manner in bankruptcy cases, and cases involving the Fair Debt Collection Practices Act and Federal Truth In Lending Act, to name just a couple.

Under Florida law, where an agreement allows for an attorney fee award to one of the contracting parties (mortgage loan agreements typically allow a foreclosing lender to tack on its attorney fee to the amount owed on a loan when suing a homeowner to enforce the mortgage terms), state statute mandates an award of prevailing party attorney's fees to the other party under the reciprocity provisions of section 57.105(7), Florida Statutes; Landry v. Countrywide Home Loans, Inc., 731 So. 2d 137 (Fla. 1st DCA 1999).

Not only might the lender and servicer be court-ordered to cough up fees to the homeowners' attorneys, it's possible that the foreclosure mill law firms representing the lenders/servicers (at least in Florida) may also be ordered to foot part of the tab as well by reason of section 57.105(1), Florida Statutes (bold text is my emphasis, not in the original text):

  • Upon the court’s initiative or motion of any party, the court shall award a reasonable attorney’s fee, including prejudgment interest, to be paid to the prevailing party in equal amounts by the losing party and the losing party’s attorney on any claim or defense at any time during a civil proceeding or action in which the court finds that the losing party or the losing party’s attorney knew or should have known that a claim or defense when initially presented to the court or at any time before trial:

    (a) Was not supported by the material facts necessary to establish the claim or defense; or

    (b) Would not be supported by the application of then-existing law to those material facts.

For an old (July/August, 2000) article in The Florida Bar Journal that may be of some value in providing guidance to lawyers in requesting court-ordered, prevailing party attorneys fees from losing defendants (ie. lenders, servicers, etc.), see Pleading Requirements for a Claim for Attorneys' Fees.

Sunday, November 07, 2010

St. Louis Feds Squeeze Guilty Plea From Alleged Rent Skimming, Sale Leaseback, Foreclosure Rescue Peddler Accused Of Causing $439K In Losses

In St. Louis, Missouri, the St. Louis Post Dispatch reports:
  • Jeremy Beadle, president of Network Ventures, a real estate and mortgage company in St. Charles, pleaded guilty Wednesday of defrauding lenders and homeowners who were facing foreclosure.

  • Beadle, 37, of St. Charles, admitted to one felony count of wire fraud before U.S. District Judge Rodney W. Sippel, who set sentencing for Jan. 21. Beadle faces a maximum penalty of 20 years in prison and a fine of up to $250,000. Prosecutors said the case involved 10 properties with a total loss of $439,352.(1)

  • Beadle also was manager of Premier Mortgage Funding, owned by Network Ventures, prosecutors said. In September, Rebecca J. Domecillo, an officer with Network Ventures, was sentenced to 27 months in prison for mail fraud in the schemes. Domecillo, 48, is from Lake Saint Louis. She and Beadle were indicted together in February.

Source: Mortgage broker admits fraud.

(1) According to the following excerpt from a February, 2010 FBI press release announcing the indictment, the alleged real estate fraud included bogus sale leaseback arrangements:

  • Beadle also purchased properties from homeowners who were in financial difficulty and in danger of foreclosure. He falsely represented to these sellers that they could rent the property and remain in their homes, and that the mortgage would be paid using the rent payments made by the residents of the property. [...] However, he did not apply all the rent payments to the mortgage. Beadle failed to make the mortgage payments as agreed, and these properties were foreclosed, resulting in losses to the mortgage lenders.

NY AG Squeezes Guilty Pleas From 4 For Roles In Alleged Sale Leaseback, Equity Stripping Foreclosure Rescue Racket; 1 Awaits Trial On 23 Felony Counts

In Albany, New York, the Times Herald Record reports:
  • Members of an Albany-based company who ran a lease buyback program that cost several local homeowners their homes have admitted their roles in a mortgage-looting scheme in a deal with the state Attorney General's Office.

  • Four employees of Rivertown Financial pleaded guilty in Albany County Court last month to felony charges that included grand larceny, scheme to defraud and falsifying business records, after the Attorney General's Office filed criminal complaints. The company's lawyer, Kevin Wheatley, awaits trial after being indicted by an Albany County grand jury on 23 felony charges, including first-degree grand larceny and scheme to defraud.

  • Rivertown bought more than 100 properties, including several in Orange and Ulster counties, from homeowners threatened with foreclosure, offering to pay off their mortgages and let them remain in the homes as tenants until their credit improved. The company then took out new mortgages on the properties.

  • Most of the properties, which were in the names of Rivertown employees or other straw buyers, ended up in foreclosure and the company went bust in 2008. Here's what the four employees told investigators, according to court records:

    Rivertown CEO Geoffrey Goldman admitted he faked mortgage information, including using company money as assets for his straw buyers. His brother, company Vice President Jonathan Goldman, admitted the brothers used mortgage money for personal expenses, including cruises, casino gambling and personal trainers.

    Rivertown's sales director, Jessica Peryea, admitted she acted as a straw buyer.The company's loan officer, Jordan Laccetti, admitted he received the mortgage information from Geoffrey Goldman and knew the mortgages would never be repaid.

  • The four will have to pay restitution as part of their plea agreements, but sentencing dates haven't been set.

Source: Four guilty in scheme to profit from shaky mortgages.

Florida AG In Search Of Evidence Of Foreclosure Mill Kickbacks To Loan Servicers

The South Florida Sun Sentinel reports:
  • Follow the money. Florida Attorney General Bill McCollum's office is looking for it, in its investigation of the foreclosure law firm of David J. Stern. What's at the bottom of the AG's investigation was almost a throw-away line in a recent hearing in Fort Lauderdale. Assistant Attorney General Theresa Edwards, in her very last response to a question from Judge Eileen M. O'Conner, says that yes, the AG's office did receive thousands of documents from Stern's firm but not the documents it wanted.

  • The documents it wanted "may involve kick backs (sic) to the servicers who are hiring them, which surprisingly weren't included in the documents. So that's why we want to keep looking." Thanks to attorney Matt Weidner, who posted the transcript on his blog []. Here's a link to it.

Source: Foreclosure investigation: AG is looking for evidence of kickbacks.

Wells Fargo OKs Repo On Fully Paid Car; Cops Tell Complaining Victim To "Take A Hike"; Owner Regains Possession Only After Media Intervention

In Tacoma, Washington, KING-TV Channel 5 reports:
  • "I don't know what's going on. I thought they couldn't take my car, but it's gone!" Yes, Adlantus Newton's car is gone. Long gone. It was repossessed. Now she and her kids are parked on the porch, with no ride in sight. "This was my only car," Newton said. "We're missing out on a lot of stuff, I can't take them to choir practice."

  • This sad song gets worse. Adlantus thought she had made every payment on the car. "I paid $299 monthly, by money order every month." Even though she has a clear title to the 1999 Chrysler LHS, Wells Fargo bank still took the car and dropped it off in a Kent auction yard. "I called the police, showed them my title, and they still let them take my car," Newton said.

  • That's right, the bank was moving towards selling the ride without having the title. "And they are telling me to make a payment, no!" So Adlantus called [KING-TV Channel 5 Investigative Reporter Jesse Jones].

***

  • Wells Fargo did resolve this situation quickly once we reached out to them. Remember, the Department of Licensing may be able to sort out any title trouble. If that doesn't work, call me. We've been hearing of similar cases in the area.

For the story, see She owns the car but the bank repossessed it.

Indiana Appeals Court OKs Jury Trial For Homeowner In Foreclosure Case; Says Counterclaims Under Federal, State Statutes Are Distinct, Severable

Lexology reports:
  • The Indiana Court of Appeals recently held that a borrower is entitled to have claims based on consumer protection statutes and common law causes of action tried to a jury, even when those claims are asserted as counterclaims to a mortgage foreclosure action. Lucas v. U.S. Bank, N.A., 932 N.E.2d 239 (Ind. Ct. App. 2010).

  • In that case, the mortgage holder filed a complaint to foreclose on a mortgage executed by Mary Beth and Perry Lucas. In response, the Lucases filed an answer and counterclaims, alleging that the mortgage holder violated the Truth in Lending Act, the Real Estate Settlement and Procedures Act, and committed conversion and deception. The Lucases also filed a third-party complaint against the loan servicer alleging that it breached its contract with the Lucases, committed conversion, and violated Fair Debt Collection Practices Act and the Real Estate Settlement and Procedures Act.

  • The Lucases asked for a jury trial, but the trial court denied their request. On interlocutory appeal, the Court of Appeals reversed this decision, concluding that the Lucases had asserted legal causes of action distinct and severable from the equitable mortgage foreclosure action.

***

  • The court [] concluded that while foreclosure actions are essentially equitable, the Lucases were nonetheless entitled to a jury trial because the claims “grounded in federal and state statutory law and state common law . . . are legal causes of action.” Further, the majority of the relief the Lucases sought consisted of damages, a legal remedy.

Representing the homeowner was Christine M. Jackson, of Chris Jackson Law LLC, Indianapolis, Indiana.

For more, see Indiana Court of Appeals allows jury trial for counterclaims in foreclosure proceedings (requires subscription; if no subscription, GO HERE, then click appropriate link for story).

Saturday, November 06, 2010

Convicted Ex-Car Mogul's Girlfriend Using Foreclosure Eviction Protection Law In Attempt To "Dodge The Boot" From $1.8M Home 'Rented' From Boyfriend?

In Medina, Minnesota, the Star Tribune reports:
  • As disgraced businessman Denny Hecker sat in federal custody awaiting sentencing,(1) his girlfriend, Christi Rowan, fought eviction Thursday from the $1.8 million Medina home the two shared with her children. Palladium Holdings LLC claims that Rowan's lease deal with Hecker on the property is a sham.

***

  • [Rowan's attorney] also said Rowan is entitled to a 90-day eviction notice under her lease. [Housing Court referee Mark] Labine said, "It has to be a bona fide lease."(2)

For the story, see Hecker's girlfriend fighting eviction from Medina home (Christi Rowan claims she has a valid lease on the house; a holding company wants her out).

(1) Until he filed for bankruptcy in June 2009, listing $767 million in debt, Hecker ran an ubiquitous auto empire, the story states. Reportedly, he is now in the Sherburne County jail, facing up to 10 years in prison for fraud and conspiracy and Rowan pleaded guilty earlier this year to bank and bankruptcy fraud.

(2) 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, but applies only to bona fide tenants under any bona fide lease entered into before the notice of foreclosure. With regard to its applicability, the law make no distinction between expensive, luxury mansions and lower-cost 'non-mansions' that have been foreclosed upon.

Probe Into Alleged Atlanta-Area Loan Modification Scammer Expands Into Missouri As St. Louis Pastor Loses Church, Day Care, Home To Foreclosure

In St. Louis, Missouri, KMOV-TV Channel 4 reports:
  • A businessman who offers customers help with their mortgages, but fails to get the job done is under investigation by police in Dekalb County Georgia - and officials there say the investigation is expanding to more states, including Missouri.

  • Rev. Glen Allen of North County called Fred Lee in early 2010 looking to rework the loan on his church, home, and daycare. Allen says he paid Lee's company nearly $9,000, but still lost everything to foreclosure on September 8th. "Fred Lee has cost me my life," said Allen. Allen says he met Lee at a large African American church in St. Louis, but declined to name the church. He says Allen was offering loan modifications to church members. Allen also said he should not pay his mortgage while the loan was being reworked.

  • In Georgia DeKalb County, police say they are investigating up to 150 similiar stories, and so far they haven't located one customer who's had a successful loan modificiation with Fred Lee.(1) Lee's offices were raided by Dekalb County Police in early October. [...] If you have have dealth with Fred Lee let us know about your experience. Email Investigative Reporter Chris Nagus at cnagus@kmov.com.

For the story, see Businessman offers help with mortgages, fails to get job done.

(1) See DeKalb Cops, Feds Raid Suspected Loan Modification Scam Operation; Walk Off With Four Car Loads Of Records, Dozens Of Computers for more on Fred Lee.

Lee County Cops Probe Tenant's Rent Skimming Allegation Against Landlord In Foreclosure; Renter Booted Prematurely, Left $5K Poorer

In Lee County, Florida, The News Press reports:
  • The Lee County Sheriff’s Office is investigating a complaint a landlord collected $5,000 in rent from a tenant despite knowing the home being rented was in foreclosure and the tenant would be evicted. Joseph Harp, 56, and Karen Adams, 61, told investigators Harp leased the residence [...] in Cape Coral in July for six months.

  • Harp told investigators the rent was paid in advance in three installments of $2,800, $1,400 and $3,300. Harp and Adams were forced to leave the residence on Oct. 18, because the house was foreclosed on, according to a Lee County Sheriff’s Office report.

  • Harp told investigators he learned the landlord knew of foreclosure proceedings on June 20 but never disclosed that information to Harp. Harp said he has tried to recoup $5,000 for four months he paid for but didn’t get to reside in the home but to no avail.(1)

Source: Man accused of collecting rent from Cape tenant while house was in foreclosure.

(1) In what sounds like a similar case, DeKalb County, Georgia police this summer arrested a property owner on a charge of theft by deception for pocketing upfront rent from an unwitting tenant for renting a home two weeks before the owner lost the home to a foreclosure sale. See Arrest Warrant - State of Georgia v. Harrison. For the media report, see WXIA-TV Channel 11: Dangers of Renting a Foreclosed House.

Nevada AG: Indicted Trio Ran Upfront Fee Loan Modification Foreclosure Rescue Ripoff

From the Office of the Nevada Attorney General:
  • Three people, including a local attorney, were indicted today for allegedly operating a foreclosure rescue scam in Las Vegas during 2008 and 2009. The indictment alleges that Nevada attorney Ramon Dy-Ragos, along with his partners Jesus Baca a.k.a Jesse Baca, and Luis O. Baca operated a foreclosure rescue scam under the business name of "Save Your House."(1)

  • Save Your House is alleged to have lured customers to pay large up-front fees - ranging from $1000.00 to $3995.00. The defendants informed the victims they could prevent foreclosure by having customers stop paying their mortgage and ceasing all contact with the bank holding their mortgage. The defendants falsely claimed they would modify mortgages through negotiation with the mortgage holders or suing the mortgage holders.

For the Nevada Attorney General press release, see Nevada Attorney And Two Others Indicted In Foreclosure Scam.

(1) According to the press release, Attorney Dy-Ragos and Jesus Baca are indicted on two (2) B felony counts of Theft – Obtaining Money in Excess of $2,500 by material misrepresentation in violation of NRS 205.832(1)(c) and NRS 205.0835; (2) C felony counts of Theft – Obtaining Money of $250.00 to $2,500.00 by material misrepresentation in violation of NRS 205.832(1)(c) and NRS 205.0835 and one (1) Gross Misdemeanor count of Conspiracy in violation of NRS 199.480. Luis O. Baca is indicted on one (1) Gross Misdemeanor count of Conspiracy in violation of NRS 199.480.

Vegas "Sewer Service" Allegations Raise Concerns That Upwards Of 20,000 Court Cases May Be At Risk

In Las Vegas, Nevada, KLAS-TV Channel 8 reports:
  • There are new developments and a new arrest in the ongoing investigation into a process serving company and the court system. That company, On Scene Mediation, now has two employees under suspicion of falsifying court documents and putting upwards of 20,000 cases at risk. It could cost $150,000 in taxpayer money to sort through the cases involved.(1)

***

  • "This is a fraud of a wide-scale proportion," said Barbara Buckley who helps run the Legal Aid Center.(2) She says her hotline has been busy with calls from people saying they have been done wrong. She says the alleged tactics are disappointing. "Throwing the complaints down the sewer. That's what the lawyers call it -- sewer service."

For more, see I-Team: New Developments in Process Server Investigation.

(1) Reportedly, the company owner and employee are accused of saying they served papers but didn't. Maurice Carroll, a former Metro police officer, was running the company out of his North Las Vegas home, and now faces 35 felonies, the story states. Visalia Coleman, one of Carroll's employees, is also facing eight charges. Reportedly, Metro and the courts say the two and other workers at On Scene Mediation lied on court documents about serving papers.

(2) According to their website, Legal Aid Center of Southern Nevada is a private, non-profit 501 (c)(3) corporation which is a charitable organization and has been dedicated to providing free community legal services for Clark County, Nevada's low income residents since 1958.

Victim Of Sale Leaseback Foreclosure Rescue Scam Still Waiting For Installment Restitution Payments As County Falls Short In Enforcing Court Order

In Sacramento, California, The Sacramento Bee reports:
  • When he walked out of the Sacramento County courthouse nearly a year ago, Telesfor Lucero Jr. thought he'd won the battle. Three years after Lucero lost his North Highlands home through mortgage fraud, the man who defrauded him had entered a no-contest plea. Superior Court Judge Louis Mauro had ordered Timothy Hogue to pay Lucero $30,000 in restitution through the court's installment process, plus 10 percent annually in interest. "I thought, 'Wow, this is great!'" Lucero recalled.

  • But a year later, he says he is more victim than victor. "I thought that in a short time I would at least start receiving some sort of payments," Lucero said. To date, he has received only one payment, in March, for $53.12.

  • Although he has reason to believe that Hogue, who was under house arrest and on five years' probation, is gainfully employed, Lucero said county employees charged with enforcing the court order have told him their efforts are hampered by staff shortages and budget cuts.(1)

***

  • Hogue contacted him in 2006, and Lucero agreed to sign his house over to a woman, Kim Roth, who was to assume the payments and lease the house to Lucero with the understanding that he would buy it back when he received his workers' compensation. But Roth didn't make the mortgage payments and sold the title to someone else. The next thing Lucero knew, the three-bedroom house he had owned for 15 years was in foreclosure.(2)

For the story, see Three years after losing home, fraud victim waits for payment.

(1) In at least some jurisdictions, a convicted scammer out of jail on probation is typically required to make court-ordered restitution payments to his/her victim as a condition of probation. Any stiffing of the victim out of these payments should subject the convicted scammer to a revocation of his probation, and should be enough to get him thrown back into jail and face the prospect of spending the rest of his sentence in the can.

(2) Reportedly, Roth, under court order, coughed up $26,500 to the victim for her role in the ripoff.

Trump Yanks Name From Defunct Beach Tower In F'closure; Says He's Not The Developer - He Only Licensed Out His Name As Stiffed Buyers Demand Deposits

In Fort Lauderdale, Florida, the South Florida Sun Sentinel reports:
  • Real estate mogul Donald J. Trump said he's no longer affiliated with the unfinished luxury condo-hotel tower on Fort Lauderdale beach that was to carry his name and now faces foreclosure.

  • "We have nothing to do with the building. We had a licensing deal, and we terminated the licensing deal a long time ago," Trump told the Sun Sentinel late Tuesday. "We're not involved with the foreclosure."

  • The statement comes nearly eight months after the new loan holder filed to foreclose on what was to be the Trump International Hotel & Tower, a $200 million project that was supposed to bring cachet to Fort Lauderdale as one of the area's most glamorous addresses.

  • More than 100 people plunked down 20 percent deposits to buy condos in the 24-story tower, with studios and one- and two-bedroom units priced from about $500,000 to more than $3 million each. Now, most of those buyers are suing, trying to get their deposits back or place liens on the 298-unit project that was to be finished by 2009.

  • Many buyers charge that developers misrepresented Trump's involvement. Some suits name Trump personally and charge deceptive advertising. They point to promotional literature that states "Trump is committed to personal and direct involvement in everything his name represents" and describe the project as a "signature Trump development."

  • "To come and say now 'I only had a licensing agreement and wasn't the developer' is a fraud on the public," attorney Jo Altschul of Fort Lauderdale, who represents buyers of about 50 condo units, said Wednesday. "That's not what the developers said to potential purchasers to buy units at inflated prices because of Donald Trump being actively engaged in the development."

***

  • The Fort Lauderdale case is not the only headache for Donald Trump and his New York-based Trump Organization. Similar lawsuits are under way over Trump condo projects that stalled in Tampa and Mexico, with Trump claiming he only licensed his name and buyers alleging that sales materials suggested a greater role for Trump in the developments.

For more, see Trump says his name is off Fort Lauderdale condo hotel (Real estate mogul's claim of lessened role called 'fraud on the public').

Friday, November 05, 2010

Four Central Florida Homeowners Seek Class Action Status In Federal Lawsuit Targeting GMAC In Robosigner Scandal

In Tampa, Florida, the St. Petersburg Times reports:
  • Four Tampa Bay area homeowners are suing what used to be GMAC, claiming the company used "robo-signers" to foreclose on their homes illegally. [...] Their $5 million lawsuit was filed Thursday in U.S. District Court in Tampa. It seeks class-action status for "tens of thousands" of Florida homeowners with mortgages serviced by GMAC, now known as Ally Financial.

  • The suit accuses the company of an "abusive, fraudulent, deceptive and unfair scheme" to obtain the plaintiffs' homes "by systematically fabricating evidence in the form of fraudulent affidavits" used in foreclosure cases.

***

  • In two of the foreclosures in question, the lawsuit said the affidavits were signed by GMAC executive Jeffrey Stephan, who has testified in a deposition that he signs 6,000 to 10,000 such statements a month. Stephan testified that he spends five to 10 minutes with each file, but the new lawsuit said that's impossible unless he works days 37 to 50 hours long. Rather, it contends Stephan would have to spend less than a minute on each case to keep that pace.

For more, see Tampa Bay homeowners claim GMAC 'robo-signers' drove their foreclosures.

Notorious S. Florida Foreclosure Mill Gives Hundreds Of Employees The Boot As Storm Clouds Continue To Darken Over Alleged Robosigning Racket

In Plantation, Florida, The Miami Herald reports:
  • The Law Offices of David J. Stern laid off hundreds of employees on Thursday, the latest sign that a state investigation, the loss of major clients amid scandal and the incriminating testimonies of former employees are bringing the foreclosure-processing giant to its knees.

  • Jeffrey Tew, a lawyer for the firm, confirmed the layoffs Thursday. [...] Tew would not say how many employees were let go on Thursday, but said the firm has shrunk to about 400 employees, a decrease of about 50 percent in the past 10 days. Earlier this year, the firm had more than 1,100 employees. An e-mail memo sent out Thursday morning advised the employees of the layoffs.

  • On Thursday afternoon, an employee for a document management and shredding company was unloading hundreds of empty boxes from a truck and carting them into the office complex at 900 S. Pine Island Dr. in Plantation, where Stern's firm occupies four floors.

***

  • On Monday, the stock price for DJSP [Enterprises, the public spinoff firm handling foreclosure document processing launched last year by Stern] closed below $1 for the first time. It had been trading at $13.65 in April. It closed at 77 cents on Thursday.(1)

For more, see Foreclosure law firm cuts staff (Hundreds of employees were laid off at the Law Offices of David J. Stern on Thursday, as the embattled company struggles amid the foreclosure document scandal).

See also, South Florida Sun Sentinel: Mass layoffs at Stern as foreclosure law firm loses top clients (Plantation attorney eliminates 560 jobs —70 percent of staff — citing 'recent turbulence in the mortgage industry').

(1) According to this story, a Chinese-American investment banking firm named Chardan Capital acquired a controlling interest in what is now a DJSP subsidiary on Jan. 15 for $64.8 million in cash and the assumption by the subsidiary of about $3.4 million in DJSP expenses.

Foreclosure Environment "A Total Mess" As Loan Servicers Fail To Address Allegations Of Sloppiness, Fraud

Bankrate.com reports:
  • Revelations of bank errors and allegations of fraud have created a "total mess" surrounding today's foreclosures, says Walter Dees, a housing counselor for ClearPoint Credit Counseling Solutions in Los Angeles. "It's a huge paperwork problem," he says. "Banks are overwhelmed, and so are homeowners."

  • Overwhelmed might be an understatement. Lawyers who work with homeowners to fight foreclosure say there are more questions than answers right now. Problems with foreclosure documents run the gamut from mistakes to outright fraud, according to Chicago attorney Joseph McCaffery.

***

  • Lawyers say there are numerous other recurring issues. Bankrate spoke with nearly a dozen lawyers around the country, and they mentioned errors such as:

    a) Failure of the foreclosing party to show clear title to the note.
    b) Misapplication of funds submitted by homeowners.
    c) Mortgage notes without proper endorsements.
    d) Backdating of paperwork, especially with respect to assignments.
    e) Forging key documents, such as assignments and affidavits of bank officers.
    f) Filing affidavits without signatures.
    g) Inflated legal fees associated with foreclosure.
    h) Lost or missing promissory notes
    .(1)

  • Can you spot them? While some errors are relatively simple to spot, identifying others -- especially technical deficiencies -- will require a lawyer, McCaffery says. Nonetheless, homeowners can do preliminary assessments on their own -- and in many cases, they should be able to spot egregious errors.

For more, see Fighting common foreclosure errors (Homeowners should be able to spot egregious errors; Technical deficiencies, other errors require a lawyer's help; Foreclosure delays cannot solve bigger homeowner problems).

(1) And, at least in Florida, you can add to the list promissory notes intentionally destroyed by the lender after converting them into electronic form, according to this Florida Mortgage Bankers' 'confession' to the Florida Supreme Court (at page 4). See also Naked Capitalism: FUBAR Mortgage Behavior: Florida Banks Destroyed Notes; Others Never Transferred Them.

"Produce The Note" Success Story Featured In Media Report Describing Foreclosure Scandal As "Clash Over Who Gets Stuck With $1.1 Trillion In Loss"

In Boca Raton, Florida, BusinessWeek reports:
  • In 2002, a Boca Raton (Fla.) accountant named Joseph Lents was accused of securities law violations by the Securities and Exchange Commission. Lents, who was chief executive officer of a now-defunct voice-recognition software company, had sold shares in the publicly traded company without filing the proper forms. Facing a little over $100,000 in fines and fees, and with his assets frozen by the SEC, Lents stopped making payments on his $1.5 million mortgage.

  • The loan servicer, Washington Mutual, tried to foreclose on his home in 2003 but was never able to produce Lents' promissory note, so the state circuit court for Palm Beach County dismissed the case. Next, the buyer of the loan, DLJ Mortgage Capital, stepped in with another foreclosure proceeding. DLJ claimed to have lost the promissory note in interoffice mail. Lents was dubious: "When you say you lose a $1.5 million negotiable instrument—that doesn't happen." DLJ claimed that its word was as good as paper. But at least in Palm Beach County, paper still rules. If his mortgage holder couldn't prove it held his mortgage, it couldn't foreclose.

  • Eight years after defaulting, Lents still hasn't made a payment or been forced out of his house. DLJ, whose parent, Credit Suisse, declined to comment for this story, still hasn't proved its ownership to the satisfaction of the court. Lents' debt has grown to about $2.5 million, including unpaid taxes, interest, and penalties. As the stalemate grinds on, Lents has the comfort of knowing he's no longer alone. When he began demanding to see the I.O.U., he says, "I was looked upon like I had leprosy. Now, I have probably 20 to 30 people a month come to me" asking for advice. Lents is irked when people accuse him of exploiting a loophole. "It's not a loophole," he says. "It's the law."(1)

  • The Lents Defense, as it might be called, doesn't work everywhere.(2) Thousands of Floridians have lost their homes in lightning-fast "rocket dockets." In 27 other states, judges don't even review foreclosures, making it harder for homeowners to fight back. Now, though, allegations of carelessness and outright fraud in foreclosures has become so widespread that attorneys general in all 50 states are investigating. So are the feds.

For more, see Mortgage Mess: Shredding the Dream (The foreclosure crisis isn't just about lost documents. It's about trust—and a clash over who gets stuck with $1.1 trillion in losses).

(1) Lents' story has also been reported in a February, 2008 Bloomberg News article. See Banks Lose to Deadbeat Homeowners as Loans Sold in Bonds Vanish.

(2) Not only that, but a "produce the note" victory by another Boca Raton, Florida homeowner in State St. Bank & Trust Co. v. Lord, 851 So. 2d 790 (Fla. App. Ct. 4th Dist., 2003) (litigation in which the losing lender was represented by the foreclosure mill, Law Office of David J. Stern) led to a change in the applicable statute (section 673.3091, Florida Statutes - Enforcement of lost, destroyed, or stolen instrument) (no doubt lobbied for by the financial industry) to make it easier to foreclose in Florida without having physical possession of 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 read - 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.

By the way, the Florida Bankers Association appears to tacitly acknowledge their role in lobbying for the statutory change arising out of the State St. Bank case (at pages 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), when it "confesses" that it is common for lenders to deliberately destroy the promissory notes not long after the real estate closing, after converting them into electronic form. See also Naked Capitalism: FUBAR Mortgage Behavior: Florida Banks Destroyed Notes; Others Never Transferred Them.

Louisiana Couple To Chuck Payment Book, Scores $10K For Sloppy Citi's Harrassment In Attempting To Collect Lost Promissory Note

In Chalmette, Louisiana, The Associated Press reports:
  • CitiMortgage Inc. lost its right to collect from a Chalmette couple who defaulted after Hurricane Katrina because it lost their mortgage - and must pay them $10,000 for years of harassing phone calls, a state district judge has ruled. Company phone logs and the testimony of David Michael Cefalu and Rebekah Anna Cantrell Cefalu "clearly establish a pattern of continued, persistent and excessive phone calls" even after they told CitiMortgage to call their lawyer, Judge Robert Buckley wrote.

***

  • The Cefalus got the $66,462 mortgage in August 2000 from Hibernia National Bank, which transferred servicing rights on the loan to CitiMortgage on March 1, 2005, according to a post-trial memorandum filed by CitiMortgage.

  • Even though the Cefalus acknowledged their debt, CitiMortgage still had to prove its case and didn't have the records needed to do that, Buckley wrote.

  • Its "sloppy record keeping ... seemed to eerily presage" recent allegations about sloppy paperwork and legal procedures nationwide as mortgage lenders foreclosed on millions of homes, the Cefalus' attorney, John Redmann, wrote in an e-mail.

For more, see Judge: $10K for post-Katrina debt harassment.

Fresno Couple Among Many Alleging To Be Screwed Over By Forensic Loan Audit Outfit The Target Of $60M California AG Lawsuit, Separate Class Action

In Fresno, California, The Fresno Bee reports:
  • Patty and Jody Farmer were hooked when a Rancho Cordova-based company offered to help refinance their adjustable-rate mortgage, which was about to become unaffordable. But after paying the company nearly $8,000 -- and following its advice to stop making mortgage payments -- the Farmers didn't get a new mortgage.

  • Instead, their lender foreclosed on their Fresno home of 11 years, and they were forced to move out. Now the state is suing the company that authorities say scammed the Farmers.(1)

For more, see Mortgage fraud strikes Valley homeowners (But state and federal law enforcement agencies fight back with lawsuits).

(1) The company, US Loan Auditors Inc., a loan-auditing company based in Rancho Cordova, is now part of a $60 million lawsuit that the California Attorney General's Office filed Oct. 6 (go here for press release, lawsuit) in Sacramento County Superior Court on behalf of California residents to seek restitution for all victims, including the Farmers, the story states.

In the California AG's lawsuit, the defendants are accused of using non-lawyers without any attorney supervision to prepare these forensic audits, and filing "cookie-cutter" lawsuits for hundreds of clients which "have overwhelmingly been dismissed at the pleading stage, have failed to result in any favorable settlements or adjudications, and would not, in any event, entitle consumers to the sweeping relief promised by Defendants." See lawsuit, at paragraph 2. The AG's office has described the defendants' actions as having "littered both state and federal courts with hundreds of lawsuits that have little or no chance of affording consumers any meaningful relief." See lawsuit, at paragraph 7.

The company also faces a separate class action lawsuit. See Ma, etal. v. U.S. Loan Auditors, LLC, et al.

See also Cal. AG Tags Forensic Loan Audit Firm, Others w/ $60M Suit; Says Litigation Mill "Littered Courts w/ 100s Of Suits That Have Scant Chance Of Success".

Thursday, November 04, 2010

"Sewer Service" Allegations Earn Process Servers Their Share Of Spotlight In Nationwide Foreclosure Scandal

The South Florida Sun Sentinel reports:
  • The expanding investigation into Florida's foreclosure crisis has turned up a new problem that may involve a number of cases: Individuals hired by law firms to notify struggling homeowners when their foreclosure cases are to be heard in court may have filed faulty or false documents.

  • Foreclosure defense attorneys and consumer advocates say they have documented a number of foreclosure cases where "process servers" filed questionable paperwork. State investigators who are examining foreclosure documentation problems -- involving law firms that employed "robosigners" to rapidly process claims -- are also taking a close look at process servers, court documents show.

  • According to lawsuits filed on behalf of homeowners, some individuals appear to have violated the rules of process serving: the personal delivery of legal papers, required by law, notifying people that a foreclosure action has been filed against them. Like "robo-signing" -- the mass signing of foreclosure documents without review by loan servicers -- it's an alleged practice that is putting lenders, and the foreclosure law firms serving them, under fire.

For more, see New questions being raised about court filings in foreclosure cases (Individuals hired by law firms to notify homeowners of pending foreclosure cases may have filed faulty or false documents).

Go here for more on process servers & "sewer service".

Southern California Homeowner Scores TRO Stalling Foreclosure Sale; Lender Duped Borrower Into Defaulting On House Payments: Judge

In San Diego, California, Courthouse News Service reports:
  • A La Jolla man can keep his home for now, after a federal judge granted his motion for a temporary restraining order blocking Washington Mutual and JP Morgan from foreclosing on his house because the banks misled him into defaulting on his mortgage. Kaveh Khast claimed the banks instructed him to stop making his mortgage payments so he could qualify for a loan modification.(1)

***

  • Because the bank told him to stop making his payments and to default on his loan, [U.S. District Judge Irma] Gonzalez found that Khast was irreparably harmed and entitled to an order temporarily halting foreclosure proceedings. "If the sale of plaintiff's property proceeds as scheduled, plaintiff will lose his home," Gonzalez wrote. "Even if defendants were ultimately to prevail, a temporary restraining order will only force them to delay the sale of the property by a matter of days."

For more, see California Man Gets to Keep His House, for Now.

For the court's ruling, see Khast v. Washington Mutual Ban, et al.

(1) Earlier this year, a California appeals court applied the doctrine of promissory estoppel against a foreclosing lender in a case in which a borrower relied on the verbal promise of a bank's employee to do something he wouldn't otherwise have done in the hope of stalling a foreclosure sale. See Garcia v. World Savings FSB, 183 Cal. App. 4th 1031 (2010):

  • "Under this doctrine a promisor is bound when he should reasonably expect a substantial change of position, either by act or forbearance, in reliance on his promise, if injustice can be avoided only by its enforcement." (Youngman v. Nevada Irrigation Dist., supra, 70 Cal.2d at p. 249.)

  • "'The vital principle is that he who by his language or conduct leads another to do what he would not otherwise have done shall not subject such person to loss or injury by disappointing the expectations upon which he acted.'" (Wilson v. Bailey (1937) 8 Cal.2d 416, 423, quoting Carpy v. Dowdell (1897) 115 Cal. 677, 687.)

  • "'In such a case, although no consideration or benefit accrues to the person making the promise, he is the author or promoter of the very condition of affairs which stands in his way; and when this plainly appears, it is most equitable that the court should say that they shall so stand. [Citations.]'" (Wade v. Markwell & Co. (1953) 118 Cal.App.2d 410, 420.)

See also:

State AG To Missouri Homeowners In Foreclosure: Seek Competent Counsel & Make Loan Servicer Produce The Proper Paperwork

From the Office of the Missouri Attorney General:
  • Missouri law generally allows foreclosures to take place very quickly, relative to other states [Missouri is a non-judicial foreclosure state - no court action is needed to foreclose on a home]. It is important for homeowners to understand their rights concerning foreclosures and to recognize the need for legal representation at the earliest possible time.

  • In some instances, foreclosures may be stopped because lenders have failed to comply with legal requirements. Doing so will require the assistance of competent counsel. Below are some important questions and answers to help consumers understand foreclosures in Missouri.

For more, see The Mortgage Foreclosure Crisis: What You Need To Know.

Go here for more from the Missouri AG:

Foreclosure Mill Hires Fannie Associate GC As General Counsel; Could Be Move To Snag Recently 'Orphaned' Stern's Florida Case Files?

From a recent McCalla Raymer, LLC press release:
  • McCalla Raymer, LLC [] announced the appointment of [ex-Fannie Mae associate general counsel] Susan Reid as General Counsel. [...] Most recently, she concentrated on foreclosure related issues in the state of Florida including mandatory mediation and other legal strategies for managing the residential default loan portfolio in various states.

***

  • [M]cCalla Raymer is Fannie Mae retained counsel in Alabama and Georgia and Freddie Mac designated counsel in Georgia.

For the press release, see Former Fannie Mae Associate General Counsel Joins McCalla Raymer, LLC (Susan Reid Named General Counsel of Mortgage Banking Firm after Fifteen Year Tenure with Fannie Mae).

Wednesday, November 03, 2010

MD High Court Rules Panel: "Use Of Bogus Affidavits" To Support Foreclosures "Constitutes An Assault On The Integrity Of The Judicial Process Itself"

The following gems were reported in a recent story in The Baltimore Sun on the Maryland Court of Appeals' recent action to approved emergency rules authorizing reviews of foreclosure documents througout Maryland (a non-judicial foreclosure state) in response to the national scandal involving the use of robosigner-executed affidavits, and the subsequent use of "corrective affidavits" by foreclosure mill attorneys seeking a "do-over" after being nabbed for their illicit handiwork when processing foreclosures:
  • The false signings so alarmed Maryland's highest court that it passed an emergency rule last [month] authorizing wide-ranging reviews of foreclosure documents. The Court of Appeals' rules committee, which recommended the change, did not mince words.

  • "In the Committee's view, the use of bogus affidavits to support actions to foreclose … constitutes an assault on the integrity of the judicial process itself," committee chairman Alan M. Wilner, a retired judge, wrote in a letter to the court.

  • Mortgage servicers nationally have said repeatedly that the issue is a technicality that distracts from the fact that they're foreclosing on people who really did get behind on their loans. But regulators say that doesn't give firms a pass to circumvent state law.

***

  • After the corrective affidavit [in one case] was brought to [Prince George's County Judge Thomas P.] Smith's attention, the judge went digging. When he found more in other Prince George's foreclosure cases, he called judges elsewhere in the state, who in turn discovered similar affidavits from the two attorneys — hundreds so far. The Court of Appeals quickly approved emergency rules authorizing reviews of foreclosure documents. Some courts have already begun examining cases.

For the story, see Homeowners' cases bring foreclosure irregularities to light (False signatures on foreclosure documents prompt court review).

Court Awards Florida Man Title To Home Lost In BofA Screw-Up; Foreclosure Sale Took Place Despite Homeowner Not Having A Mortgage

In Fort Lauderdale, Florida, the South Florida Sun Sentinel reports:
  • In the second South Florida foreclosure reversal this week, a Broward County court "vacated" the sale of a Fort Lauderdale man's home that had been sold out from under him, even though he bought the house with cash and never had a mortgage. The court order, made at the request of Bank of America, reversed the foreclosure sale of Jason Grodensky's house.

  • Grodensky was the subject of a Sun Sentinel article about wrongful foreclosures last month [see Lauderdale man's home sold out from under him in foreclosure mistake]. He and his father bought the house for cash and didn't owe money to Bank of America, but the lender had continued to pursue a foreclosure case that began with the previous owner. In July, Grodensky learned that his house had been sold in a foreclosure auction.

  • The news comes one day after Bank of America disclosed that the court had also vacated the foreclosure sale of a Miramar homeowner's property — even though the homeowner had secured a mortgage modification.(1)

***

  • Grodensky says he's not planning to go back to court to file a lawsuit against the lender to seek compensation for his four-month ordeal. "I hadn't planned on it," he said. "I'm not out to get anybody. I just want to get it fixed."(2) Grodensky bought the house for cash in December 2009 in a short sale. The seller was in foreclosure. Grodensky said he had no idea that the foreclosure process did not stop at that point.

***

  • Grodensky filed a claim with his title insurance company and was working with that firm to try to resolve the issue. He hasn't yet been notified by the title insurer or Bank of America that the sale was vacated on Monday. "I'm happy it's over, but I am not holding my breath about it," he said. "I'm waiting to see if I actually get contacted."

For more, see Home returned to Fort Lauderdale man who lost property in foreclosure mistake (Wrongful foreclosure case the second in South Florida this week).

Go here for links to other reported Bank of America foreclosure screw-ups.

(1) See:

(2) Earlier media reports reveal that at least one Massachusetts law firm is apparently going around the country taking on these illegal foreclosure & lockout cases on behalf of screwed-over homeowners. See:

For those homeowners who've been screwed over by wrongful lockouts by foreclosing lenders (and their confederates) and seek some possible guidance on how much their cases might be worth if they seek to sue, see:

Zombie Debt-Buying Rackets Also Bear Blame For Flooding Court System With Robosigner Affidavits; Cheap Pens A Complaint For One "Autograph Marathoner"

The New York Times reports:
  • When Michael Gazzarato took a job that required him to sign hundreds of affidavits in a single day, he had one demand for his employer: a much better pen. “They tried to get me to do it with a Bic, and I wasn’t going — I wasn’t having it,” he said. “It was bad when I had to use the plastic Papermate-type pen. It was a nightmare.”

  • The complaint could have come from any of the autograph marathoners in the recent mortgage foreclosure mess. But Mr. Gazzarato was speaking at a deposition in a 2007 lawsuit against Asset Acceptance, a company that buys consumer debts and then tries to collect. His job was to sign affidavits, swearing that he had personally reviewed and verified the records of debtors — a time-consuming task when done correctly. Sound familiar?

  • Banks have been under siege in recent weeks for widespread corner-cutting in the rush to process delinquent mortgages. The accusations have stirred outrage and set off investigations by attorneys general across the country, prompting several leading banks to temporarily cease foreclosures.

  • But lawyers who defend consumers in debt-collection cases say the banks did not invent the headless, assembly-line approach to financial paperwork. Debt buyers, they say, have been doing it for years.

***

  • Nobody knows how many debt-collection affidavits are filed each year, but a report by the nonprofit Legal Aid Society found that in New York City alone more than 450,000 were filed by debt buyers, from January 2006 to July 2008, yielding more than $1.1 billion in judgments and settlements.

***

  • Lawyers for consumers, [...] contend that few debtors ever learn about the legal action until it is too late, often because the process server charged with alerting them never actually delivered a notification [ie. sewer service].

***

  • But what people don’t realize,” said Daniel Edelman, a plaintiff’s lawyer in Chicago, “is that the mortgage issue and debt collections are intimately connected. The millions of default judgments out there — you better believe that’s one reason that homeowners can’t afford their homes.”

For more, see Debt Collectors Face a Hazard: Writer’s Cramp.

PA AG: Outfit Used Notices Hand-Delivered By Faux 'Sheriff Deputies', Fake 'Courtroom' & Mock 'Hearings' To Squeeze Debtors Out Of Cash, Car Titles

In Erie, Pennsylvania, WTAE-TV Channel 4 reports:
  • A sign in the front of a building on West 39th Street tells visitors that it's the Unicredit Debt Resolution Center in Erie. Once debtors got inside, they were fooled into believing they were in a courtroom with a judge, but the whole thing was a fake, according to a lawsuit filed by the Pennsylvania attorney general.

  • Team 4's Jim Parsons reported that Unicredit America is accused in the lawsuit of deceiving, misleading and coercing hundreds of consumers into paying off their debts. Inside the building is a pair of locked oak doors with brass handles resembling a courtroom entrance. The company is accused in the lawsuit of building a mock courtroom complete with a judge's bench and witness stand.(1)

***

  • The Attorney General's Office told Team 4 that Unicredit lured debtors to the building by sending employees who appeared to be sheriff's deputies to their homes, implying that they would be taken into custody if they failed to appear at the phony court hearings.

  • "It really galls me that someone would stoop that low," Erie County Sheriff Robert Merski said. "This certainly seems to be a scam, and it upsets me that they are trying to play on the integrity of this office, the office of sheriff. We've been here since the beginning of the United States."

  • The lawsuit accuses Unicredit of intimidating debtors into revealing their bank account numbers, even turning over the titles to their cars once they got them inside the building.

Source: Team 4: Debt Collectors Accused Of Fake Courtroom, Judge (Pa. Attorney General Sues Unicredit In Erie).

For the Pennsylvania AG press release, see Erie debt collection company sued; accused of using bogus "hearings" and fake "courtroom" to collect from consumers.

Thanks to Bill Roper for the heads-up on the story.

(1) According to the Pennsylvania AG press release, the fake courtroom allegedly contained furniture and decorations similar to those used in actual court offices, including a raised "bench" area where a judge would be seated; two tables and chairs in front of the "bench" for attorneys and defendants; a simulated witness stand; seating for spectators; and legal books on bookshelves. During some proceedings, an individual dressed in black was seated where observers would expect to see a judge. Consumers with complaints or questions related to Unicredit debt collection practices are urged by the Attorney General to call his Consumer Protection Hotline at 1-800-441-2555 or file an online consumer complaint.

Victim Of Chicago-Area Refinance Racket Attributes Loss Of Four Properties To Convicted Deed Scammer

In Chicago, Illinois, myFoxchicago reports:
  • John Hemphill of Chicago is behind bars after a brazen attempt to swindle potential homeowners all over the South Side. Hemphill was caught on undercover cameras in a federal sting, claiming he held the deeds to homes all over the south side, and offering to sell those properties for just three or four thousand dollars apiece.

***

  • Prosecutors say Hemphill falsely claimed to be a federal agent. He even misspelled the word "government" on his phony I.D. badge. But that didn't keep customers, like Sabera Iqbaluddin, from dealing with him. "Because of him, I'm losing everything," she said.

  • Iqbaluddin is a postal worker who saved enough money to purchase several homes and a gas station on the south side. None of those properties were bought from Hemphill. But when times got tough, she said, Hemphill offered to help her refinance, but never passed along her payments to the lender. She lost all four properties. She's now represented by attorney Tony Peraica who says about Hemphill, "He got into their life and essentially ruined them financially."

  • Hemphill hasn't been charged with anything in connection with Iqbaluddin's case. He was eventually caught and convicted, after an alert employee at the Cook County Recorder of Deeds office noticed he was filing dozens of phony deeds to suggest he had taken title to properties that were not really his.

For the story, see Chicago Man Convicted in Mortgage Scheme.

For the U.S. Attorney press release announcing Hemphill's conviction in other deed scams, see Chicago Man Convicted Of Posing As Federal Official In Scheme To Obtain And Sell Area Properties He Did Not Own.