Thursday, December 30, 2010

Real Estate Investor Agrees To Pay $47K+ To Settle Civil Charges Of Foreclosure Auction Bid Rigging Brought By NC AG

From the Office of the North Carolina Attorney General:
  • A Virginia man and his company are barred from rigging bids on public auctions and must pay civil penalties and consumer refunds for trying to fix foreclosure sales of properties in Durham and Mecklenburg counties, Attorney General Roy Cooper announced [].

***

  • The Attorney General alleges that Bruce Olvin McBarnette of Sterling, Virginia and his company, Summit Connection LLC, entered into agreements to rig bids on four foreclosed properties being auctioned in Durham County in 2009 and 2010:

    McBarnette told a local pastor that he would continue bidding against her for property her church wanted to purchase unless she paid him $1,200.

    A man trying to purchase a home for his mother paid McBarnette $800 after McBarnette told him he would lose the auction unless he paid the money.

    A pastor who wanted to help revitalize his church’s neighborhood paid McBarnette a total of $2,900 so that his company wouldn’t keep bidding on two properties
    .

  • In seven other property auctions, Cooper contends that McBarnette attempted to get competing bidders to pay him not to bid against them but the bidders turned him down. Four of those auctions involved Durham County properties, and three involved Mecklenburg County properties.

  • Wake County Superior Court Judge Donald Stephens [] approved Cooper’s request for a consent judgment against McBarnette and Summit Connection. Under the judgment, McBarnette and Summit Connection must pay $47,400.(1)

For the NC AG press release, see Attorney General stops scheme to rig bids on foreclosure auctions (Company sought to illegally manipulate sales of Durham, Mecklenburg properties).

(1) This guy appears to have gotten off pretty easy. Compare this case with another North Carolina case where the Feds brought criminal charges against a foreclosure auction bid rigging racket, as reported in a recent U.S. Department of Justice press release: North Carolina Real Estate Speculator Pleads Guilty to Bid Rigging in Real Estate Foreclosure Auctions ("Anyone with information concerning bid rigging or fraud related to real estate foreclosure auctions should contact the Antitrust Division’s Atlanta Field Office at 404-331-7100 or visit www.justice.gov/atr/contact/newcase.htm").

Go here for other posts & links on bid rigging at foreclosure and tax sale auctions.

Attorneys Face Elder Abuse, Negligence Suit For Alleged 'Involvement' In POA Abuse Leading To Fleecing Of Cancer Victim's Home, Estate

In Multnomah County, Oregon, Willamette Week reports:
  • Two Portland lawyers are being sued for elder abuse and negligence after allegedly helping two women steal from an ailing relative in her 80s. According to the suit filed Dec. 17 in Multnomah County Circuit Court, lawyers Stacy Fletcher and James Dodge were hired in 2008 to prepare a power of attorney for Evelyn Roth, who was 81 at the time and had recently been diagnosed with esophageal cancer.

  • According to the lawsuit filed on behalf of Roth, the people who hired the lawyers were Kathleen Jingling and Virginia Kuehn, Roth’s niece and cousin respectively. Roth believed they needed power of attorney simply to pay routine bills while Roth underwent medical treatment, the suit says.

  • Jingling and Kuehn were later each sentenced to one year in jail for placing Roth’s house up for sale, selling off her belongings and stealing from her estate.(1)

  • The lawsuit claims Fletcher and Dodge should have known elder abuse was taking place. The suit, filed by Portland lawyer Sibylle Baer, seeks three times the amount of the money stolen—$682,974 total. Dodge says Fletcher was involved in the Roth case and that he himself was not. Fletcher has not yet responded to a request for comment.

Source: Going After the Lawyers for Allegedly Aiding Elder Abuse.

See Cousin, Niece Get Year & A Day After Copping Pleas To Abusing POA To Loot Accounts, Sell Home Out From Under Senior Thought To Be On Deathbed.

Duo Face Felony Charges In Theft From Now-Deceased, Dementia-Stricken Man; One Suspect Scored POA & Had Herself Inheriting Victim's House, Assets: DA

In Lake County, California, Lake County News reports:
  • Two local women have been charged with grand theft and theft from an elder. Karen Lee Allen, 51, and Wendie Christine McRae, 46, both of Lower Lake, were arrested by a District Attorney's Office investigator on Dec. 15. Both women are charged with felony theft from an elder and grand theft exceeding $400 for activities alleged to have taken place in November 2008, according to court records.

***

  • Senior Deputy District Attorney Rachel Abelson said the two women are alleged to have been involved with accessing the estate of an elderly man with dementia. McRae was a certified nursing assistant at the hospital where the man was receiving care. Abelson alleged that McRae was getting money from the man while he was still alive.

  • Within a month of meeting him, McRae is alleged to have gotten power of attorney and within two months was inheriting from his estate, Abelson said. Abelson said McRae was set to get stocks and a house as part of the inheritance, and between $10,000 and $35,000 in cash.

For more, see Women face charges in case alleging theft from elder.

Wednesday, December 29, 2010

BofA Tagged With Suit Alleging That Countrywide Misrepresented Risks On $700M+ In Crappy Mortgage Securities It Unloaded On Insurance Company

Reuters reports:
  • Allstate Corp has sued Bank of America Corp, its Countrywide lending unit and 17 other defendants for allegedly misrepresenting the risks on more than $700 million of mortgage securities it bought from Countrywide.

  • Allstate, the largest publicly traded U.S. home and auto insurer, alleged it suffered "significant losses" after Countrywide misled it into believing the securities were safe, and the quality of home loans backing them was high. The lawsuit also names several former Countrywide officials as defendants, including longtime Chief Executive Angelo Mozilo.

For more, see Allstate sues BofA, Mozilo over Countrywide losses.

GMAC To Pay $462M To Avoid Fannie Buyback Demand On $292B In Crappy Loans

Reuters reports:
  • Ally Financial Inc, the lender formerly known as GMAC, on Monday said it agreed to pay $462 million to Fannie Mae to avoid having to repurchase poorly underwritten mortgages sold to the housing finance giant.

  • Ally, which is majority-owned by U.S. taxpayers, said the agreement releases its Residential Capital LLC mortgage unit from any liability related to bad underwriting on $292 billion worth of loans sold to Fannie Mae, itself about 80 percent owned by the government. Residential Capital owns GMAC Mortgage and Ditech Funding.

For more, see Ally Financial in $462 million settlement with Fannie.

Indiana Homeowner Caught In Middle Of Tug-Of-War Between Two Banks Both Claiming To Own Same Mortgage

In Bloomington, Indiana, WRTV-TV Channel 6 reports:
  • Bickering between banks over who owns the mortgage to a Bloomington home could force the family living there into foreclosure. Jonathan Partlow said he was trying to modify his family's loan with Washington Mutual when he received a notice from La Salle Bank seeking to foreclose on his property, 6News' Rafael Sanchez reported. “We never received a notice, not even a 'You owe us money. Pay us,'" said Partlow, who claims the family has never done business with La Salle Bank.

  • But both banks maintain they own the home and each claim they're owed more than $1.5 million. JP Morgan Chase also believes it has a stake in the home because it is seeking to buy bankrupt Washington Mutual and its assets, a deal that's at the center of a separate legal battle. The Partlows have filed a lawsuit in Monroe County Circuit Court against the banks seeking to stop the foreclosure.

  • "As a matter of common sense, two banks can't have rights to a single debt,” said the family's attorney, Joe Williams. He said he's upset his family, including their three children, are being dragged into the middle of the banks' dispute. "We wake up every day and we are afraid to leave because people are coming to their homes and the locks are changed,” Partlow said. “I hate to call them banksters, (like gangsters) but that's what they are. Somebody has take a stand and say enough is enough." The Partlows resume their legal fight on Jan. 14.

Source: Mortgage Mix-Up Could Cost Family Their Home (2 Banks Say They Own Same Home).

Media Probe Reveals Illegal Evictions At Indiana Nursing Homes; Weak Rules Enforcement Leads To Booting As Cheap, Easy Way To Unload Unwanted Patients

In Indianapolis, Indiana, The Indianapolis Star reports:
  • Nursing homes are allowed to evict residents, but only for certain reasons. And only after telling the residents they have a right to appeal. And only if the nursing home has found another suitable home for the residents. That's the law. But the law isn't always reality.

  • An investigation by The Indianapolis Star found numerous examples of what the state's ombudsman for long-term care calls "a major problem": nursing homes evicting patients without regard for their rights.

  • In one case, an Auburn facility dumped a resident at an emergency room and refused to take him back, leaving him stranded at the hospital for three weeks until he could find another home. In another case, a Bedford home tried to evict a brain-damaged teenager who had no safe place to go.(1)

  • The Star also found that the state almost never punishes nursing homes, even after it has been made aware that a facility is violating state and federal laws. "I think if we had a better enforcement system or a more punitive enforcement system, people would quit" wrongly evicting residents, said long-term care ombudsman Arlene Franklin of the state's Family and Social Services Administration. "If there were a harsher penalty for that, they wouldn't do so many inappropriate discharges."

  • The eviction rules, based on two-decade-old federal legislation, aim to protect residents from being capriciously tossed out or threatened with eviction. Instead, said Franklin -- the top state official charged with representing the interests of nursing home residents -- a lack of state enforcement has made eviction a cheap and easy way for understaffed Indiana nursing homes to get rid of patients who are too expensive, too troublesome or too likely to report problems to health inspectors.(2)

For more, see Nursing homes breaking the law (Residents' rights ignored in evictions; penalties are rare).

(1) Reportedly, a nursing home attempted to evict Jacob Householder, a brain-damaged teenager who needed round-the-clock care -- without ever finding a place to put him. The home did list another facility on Jacob's discharge notice, but it was a nursing home that already had said it would not take the teen. When the Householder family appealed to the state, Garden Villa denied that it had a duty to make sure Jacob had a place to go where he would be cared for, the story states. The state eventually ruled that the discharge was unsound, but only after the teen's mother, Angela Householder, fought through nearly a year of appeals hearings, during which she -- unable to afford a lawyer -- devoted several hours a day to learning the law. The issue was finally resolved when the home changed administrators, and Jacob was allowed to stay. The home was never cited, according to the story.

(2) According to the story, some states already provide greater protections for residents, but advocates say Indiana homes can easily circumvent their legal obligation to receive approval from a resident's doctor when a home says it can't meet the resident's needs. Florida, however, requires the doctor to actually sign the discharge notice, and Michigan requires nursing homes to give residents counseling before an eviction and provides for the state to offer counseling afterward, the story states.

Tuesday, December 28, 2010

Florida Trial Judges Continue Sloppy Work In Foreclosure Actions; Rubber-Stamped Judgments Tainted By Sewer Service Reversed By State Appellate Courts

The Palm Beach Post reports:
  • Improperly served foreclosure notices may be the mortgage industry's next roadblock to repossessing homes. The Florida attorney general's office is investigating two of the state's largest companies that serve court summonses on homeowners, while at the same time [appellate court] judges are throwing out rulings based on faulty deliveries. This month, appeals courts in Miami and Palm Beach County sided with homeowners in foreclosures where judges agreed their summonses were not appropriately served.(1)

  • In the Miami case, the homeowner said she was recovering at her mother's home after surgery when the person serving her the summons swore he personally handed it to her at her residence. But the server's own notes on the file showed he left the documents at the door after seeing curtains move and assuming someone was home. The homeowner later said she had no knowledge of the foreclosure until a final judgment was entered against her.(2)

***

  • An attorney for one of the firms under investigation [by the state], Miami-based Gissen & Zawyer Process Service Inc., said the company plans to cooperate with the attorney general, which launched its inquiry Dec. 10. He acknowledged that in the tens of thousands of summonses served, there have likely been mistakes.

***

  • It was Gissen & Zawyer that served the foreclosure summons to a Palm Beach County homeowner who won an argument Dec. 15 in the Fourth District Court of Appeal. The Royal Palm Beach law firm Ice Legal defended the homeowner, showing in its arguments scribbled notes that included one illegible grouping of numbers — either the server's identification number or the time of service. Both are required by state statute.(3)

  • While the omission may seem like a technicality, it's a violation of law, said attorney Tom Ice. "Those rules are designed to stop the 'sewer service' so rampant in foreclosures," said Ice, referring to the slang term given bad process service.(4) "Once we accept the notion that some laws don't need to be enforced, where do we draw the line?"

For more, see Problems with foreclosure notices loom as next flaw in process.

(1) It should be noted that in both of the rulings, Florida appeals courts reversed rulings of lower courts which had earlier OK'd the patently obvious defective work of sloppy process servers. The guilty trial judges whose screw-ups were reversed: Miami-Dade County Circuit Court Judge Ronald M. Friedman, and Palm Beach County Circuit Court Judge Meenu Sasser.

(2) In Bennett v. Christiana Bank & Trust Co., No. 3D09-2653, (Fla. App. 3d DCA, December 1, 2010), Miami-Dade County Circuit Court Judge Friedman entered an order finding that the service was “questionable,” but that there was no meritorious defense to the foreclosure. He then denied the motion to vacate the foreclosure judgment. In reversing Friedman's ruling, the three-judge appeals court panel made the following statements of Florida law (bold text is my emphasis, not in the original text):

  • Strict construction of, and compliance with, statutes governing service of process is required. Shurman v. Atl. Mortgage & Inv. Corp., 795 So. 2d 952, 954 (Fla. 2001). Without proper service, a court may not proceed in the matter. Re-Employment Servs., Ltd. v. Nat’l Loan Acquisitions Co., 969 So. 2d 467, 471 (Fla. 5th DCA 2007) (citing Henry P. Trawick, Jr., Florida Practice and Procedure §8:20 (2007 ed.)). “A summons properly issued and served is the method by which a court acquires jurisdiction over a defendant.” Seymour v. Panchita Inv., Inc., 28 So. 3d 194, 196 (Fla. 3d DCA 2010). In analyzing whether service is proper, the return of service is the point of departure.

    A process server’s return which is regular on its face is presumed valid absent clear and convincing evidence to the contrary. Bank of Am. v. Bornstein, 39 So. 3d 500 (Fla. 4th DCA 2010); TelfCorp. v. Gomez, 671 So. 2d 818, 818 (Fla. 3d DCA 1996). Moreover, a simple denial is insufficient to impeach the validity of service. Telfcorp. However, in this case, Ms. Bennett raised more than her own sworn denial. The process server’s own notes, an admission against the interest of his principal, see § 90.803(18)(d), Fla. Stat. (2009), prove the insufficiency of service. The process server’s last entry reflects that he “Saw Curtains Move, Read Aloud Docs, SVP Docs at Door.”

    Christiana Bank argues that there is no testimony to explain what “SVP” means, but “Docs at Door” is quite self-explanatory. Curtains may move because of the wind or curious cats, and not just because some prospective defendant is attempting to avoid service.

***

  • Far more troubling is the fact that Christiana Bank and its attorneys ignored this discrepancy in the return of service. In its motion for summary judgment Christiana Bank lleges that the “Defendant(s) were duly and regularly served with process.” The Bank’s proposed Final Judgment of Foreclosure, prepared by its attorneys, stated: “Service of process having been duly and regularly obtained over DEBBIE BENNETT . . . .”

    Once a defect in the return of service is shown, the burden of demonstrating regular service is on the party seeking to invoke the court’s jurisdiction. Bornstein, 39 So. 3d at 503; BoatFloat, LLC v. Cen. Transp. Int’l, Inc., 941 So. 2d 1271 (Fla. 4th DCA 2006). That burden was not met here. Christiana Bank, its trial court attorneys, and Christopher P. Mas of the process serving entity Pro-Vest LLC offered no testimony or other competent evidence to address the deficiency in service identified by Ms. Bennett’s counsel. Nor did Christiana Bank examine the process server’s notes after they were specifically called to its attention by Ms. Bennett’s newly-retained counsel, confess error by stipulating to the vacation of the final judgment, and allow Ms. Bennett to file and serve a responsive pleading.

    Where no in personam jurisdiction is obtained over a defendant, the defendant is not required to demonstrate a meritorious defense to set aside the default. Ubilla v. L&W Supply, 637 So. 2d 994 (Fla. 3d DCA 1994); Gamboa v. Jones, 455 So. 2d 613 (Fla. 3d DCA 1984). The trial court should not have required Ms. Bennett to demonstrate a meritorious defense to the action once it became clear that the summons and complaint were never properly served.

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

It should be noted that there might have been some evidence of illegal, inflated billings by the foreclosing lender in this case, as highlighted by this excerpt from the appeals court ruling:

  • Finally, an examination of the final judgment and supporting affidavit reveals an array of fees and charges that merit attention on remand. Charges for over $6,400 of force-placed insurance, “forbearance interestof over $11,300 (above and beyond $14,817.73 in accrued interest from alleged default to the date of judgment), and unitemized, conflicting foreclosure expenses” were contained in Christiana Bank’s affidavit and the final judgment without reference to the applicable provisions of the loan documents.

    While we express no opinion regarding the validity or invalidity of these charges, we call them to the parties’ and trial court’s attention so that they can be addressed.

Representing the homeowner in this case was Joseph J. Pappacoda, Fort Lauderdale, FL.

(3) The appeals court in Kwong v. Countrywide Home Loans Servicing, L.P., No. 4D10-1129 (Fla. App. 4th DCA, December 15, 2010), kept its ruling short and sweet, as evidenced by its one-paragraph reversal:

  • James Kwong and Lifen Li Kwong appeal from a non-final order denying their motion to quash service of process. They claim that service was defective because the process servicer failed to note, among other things, the time of service on the copy of the complaint served. Because strict compliance with statutory requirements of service is mandated, we conclude that failure to make the obligatory notations renders the service defective. We therefore reverse and remand for further proceedings. See Vidal v. Suntrust Bank, 41 So. 3d 401 (Fla. 4th DCA 2010).

    Reversed and remanded.

(4) Go here for more posts on sewer service.

Northern NJ Couple's Suit Says Loan Servicer Duped Them Into Making Temporary Loan Mod Payments w/ Bogus Assurances That Deal Would Be Made Permanent

In New Milford, New Jersey, The Bergen Record reports:
  • Luis and Maria Valenzuela of New Milford struggled to pay their mortgage after a cascade of setbacks — including illness, a car accident, their daughter's layoff, and a granddaughter's autism diagnosis. The family's mortgage company agreed to a temporary loan modification, which lowered their monthly payments (including property taxes) from $3,250 to $2,156. But the Valenzuelas say that although they paid faithfully, their mortgage company refused to make the modification permanent.

***

  • The Valenzuelas have filed suit in Superior Court in Bergen County, accusing their mortgage servicer, Wells Fargo, of violating a contract — as well as consumer protection laws(1) — by refusing to grant them a permanent loan modification.(2)

***

  • Mario Blanch, the Valenzuelas' lawyer, acknowledges that there was no written agreement to make the temporary loan modification permanent. But he said Wells Fargo employees told the family they were on track for a permanent lowering of their monthly charges.

  • Moreover, he said, by accepting the family's modified mortgage payment for 11 months, the lender led the family to believe the deal would become permanent. As a result, he said, the family did not pursue other possible solutions, such as declaring bankruptcy. "They were given a promise, and that promise was breached," Blanch said.(3)

For more, see Family says lender did not deliver the mortgage relief it promised.

(1) A ruling by a New Jersey appellate court earlier this year held that unfair or deceptive practices by a lender or loan servicer in connection with the negotiation of an agreement to cure a default in a mortgage following the entry of the judgment of foreclosure is subject to the provisions of the New Jersey Consumer Fraud Act. Gonzalez v. Wilshire Credit Corp., 411 N.J. Super. 582, 988 A.2d 567; 2010 N.J. Super. LEXIS 16 (N.J. Sup. Ct. App. Div. 2010). See also Unfair, Deceptive Practices In Connection With Post-Foreclosure Judgment Loan Workout Negotiations Subject To NJ Consumer Fraud Act.

(2) For similar HAMP-related lawsuits brought against lenders & loan servicers for allegedly stringing borrowers along with empty loan modification promises, see:

(3) By giving the family assurances that the temporary loan modification would become permanent, causing them to abandon the pursuit of other possible solutions, the lender could open itself up to a defense of promissory estoppel which, if a court agrees, could make a lender's oral promises enforceable, even absent consideration given by the borrower in exchange for those assurances.

A California appeals court made the following observations with regard to the defense of promissory estoppel in a foreclosure action earlier this year in Garcia v. World Savings FSB, 183 Cal. App. 4th 1031 (2010) (bold text is my emphasis, not in the original text; all case law links may require free registration at Findlaw.com):

  • As a general rule, a gratuitous oral promise to postpone a foreclosure sale or to allow a borrower to delay monthly mortgage payments is unenforceable. (Raedeke, supra, 10 Cal.3d at p. 673; California Securities Co. v. Grosse (1935) 3 Cal.2d 732, 733; Secrest v. Security National Mortgage Loan Trust 2002-2 (2008) 167 Cal.App.4th 544, 547; Sutherland v. Barclays American/Mortgage Corp. (1997) 53 Cal.App.4th 299, 312; Karlsen v. American Sav. & Loan Assn. (1971) 15 Cal.App.3d 112, 121; Stafford v. Clinard (1948) 87 Cal.App.2d 480, 481.) fn. 9

***

  • The absence of consideration or benefit to the promisor does not, however, defeat a claim based on promissory estoppel. fn. 10 The doctrine of promissory estoppel "make[s] a promise binding under certain circumstances, without consideration in the usual sense of something bargained for and given in exchange." (Youngman v. Nevada Irrigation Dist. (1969) 70 Cal.2d 240, 249; accord, Raedeke, supra, 10 Cal.3d at p. 672.)

  • "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, Wrongful foreclosure – verbal assurance that foreclosure sale will be postponed may be enforceable (requires paid subscription; if no subscription TRY HERE, or TRY HERE, then click link for the story).

Parade Of Homeowners Bringing HAMP Lawsuits Continues; Missouri Class Action Says BofA Refuses To Follow Loan Mod Rules Despite $25B TARP Cash Grab

In St. Louis, Missouri, Courthouse News Service reports:
  • The seemingly endless string of class actions against Bank of America's foreclosure policies continued here in Federal Court. The class claims that BofA and BAC Home Loans Servicing refuse to participate in foreclosure prevention programs despite taking $25 billion in Troubled Asset Relief Program money.(1)

  • Lead plaintiff Susan Fraser says Bank of America, by accepting the TARP money, agreed to participate in at least one TARP-authorized program to minimize foreclosures. The complaint echoes similar complaints filed last week by the attorneys general of Arizona and Nevada.(2) BAC Home Loans Servicing is also named as a defendant in the St. Louis complaint.

***

  • The class consists of all eligible homeowners who have been serviced by one or both defendants who have not received a permanent modified loan. The class seeks an injunction and damages. It is represented by Michael Flannery with Carey Danis & Lowe.

For more, see Bank Slammed With Another Class Action.

For the lawsuit, see Fraser v. Bank of America, N.A., et ano.

(1) "Though Bank of America accepted $25 billion in TARP funds and entered into a contract obligating itself to comply with the HAMP directives and to extend loan modifications for the benefit of distressed homeowners, Bank of America has systematically failed to comply with the terms of the HAMP directives and has regularly and repeatedly violated several of its prohibitions," the complaint states.

(2) See The New York Times: Two States Sue Bank of America Over Mortgages.

For the lawsuits, see:

(3) For a sampling of other similar HAMP-related lawsuits brought against lenders & loan servicers for allegedly stringing borrowers along with empty loan modification promises, see:

Recent Law School Grads Recruited By Foreclosure Mills Attract Cloud Of Suspicion For Roles In Alleged Widespread Document Manufacturing Racket

The Palm Beach Post reports:
  • Recently out of law school and looking for work, scores of young Florida attorneys found steady paychecks in burgeoning firms whose business is based on repossessing the American dream. Today, more than 260 attorneys work at four of Florida's largest foreclosure firms, and 48 percent of them have been practicing law for less than three years, according to Florida Bar records obtained by The Palm Beach Post.

  • Of 156 attorneys who started the year churning out foreclosures at the massive Plantation-based operation of David J. Stern but have since left or been laid off, half had been practicing law for less than four years.

  • With this fall's allegations of forged foreclosure documents, fraudulent notarizations and questionable affidavits submitted in tens of thousands of foreclosure cases, those nascent lawyers are now under a cloud of suspicion.

  • Some may face Florida Bar investigations that could end their careers, while homeowner advocates wonder whether the foreclosure crisis would have reached its state of disorder if it weren't for legions of novice lawyers doing the legwork.

***

  • Lack of experience could have led young lawyers to follow their employer's lead, unaware they may be committing an offense, said Matt Weidner, an outspoken St. Petersburg foreclosure defense attorney, who nonetheless believes lawyers share a large portion of blame in the foreclosure fracas. "The attorneys are the key; they played an essential, critical role in all of this," Weidner said. "But I know the younger attorneys had no idea what they were doing."(1)

For more, see Novice Florida lawyers draw suspicion in foreclosure mess (Nearly half of those working at the state's four largest foreclosure firms have practiced law for less than three years).

(1) Recent law school graduates appear to make for handy, but regrettably vulnerable dupes in perpetuating the alleged rackets by foreclosure mills, particularly if the recent grad is 'ball & chained' with big student loan payments for the debt that financed his/her education and can't otherwise find employment in a more respectable area of the legal profession.

Monday, December 27, 2010

Ex-Chase Mid-Level Exec Files Whistleblower Complaint Alleging Robosigner, Other Illegal Practices Involving Its Credit Card Debt Processes

AOL's Daily Finance reports:
  • Linda Almonte, a former employee of JPMorgan Chase who is suing the bank for wrongful termination, has just upped the ante: She has now also filed a whistleblower complaint with the Securities and Exchange Commission. The core allegations add context to her lawsuit, and they charge Chase with grotesque and illegal practices involving its credit card debt processes, including robo-signing. Chase denies her claims. Almonte's allegations are detailed in the Nov. 30 letter sent to the SEC.

***

  • Concerning robo-signing, Pressly wrote:

    "On numerous occasions, Ms. Almonte witnessed these Affidavit Signers work through at times 3-feet tall stacks of Judgment Affidavits at once during weekly multi-hour long, non-related company meetings. The notaries were not present at these meetings. The Affidavit Signers simply relied on hourly workers to reconcile amounts owed and then treated the actual execution of the affidavits as busy work to be performed while the Affidavit Signers could focus on other matters."

***

For more, see Chase Hit With SEC Whistleblower Complaint Over Credit Card Practices.

Go here for Ms. Almonte's SEC Complaint.

Fla F'closure Mills Now Use 'Robo-Verifiers' As 'End Run' Around New State High Court Rules As Some Trial Judges Continue To Yawn & Snooze

The Daily Business Review reports:
  • Lenders and their law firms are violating new procedures implemented by the Florida Supreme Court intended to address a controversy over botched foreclosure cases, according to attorneys for homeowners.

  • After a national foreclosure scandal that resulted in a moratorium, new procedures implemented by lenders and their law firms are still falling short of requirements set by the state's high court, the defense lawyers say.

  • The attorneys for homeowners claim that so-called robo-signers, who signed off on foreclosure paperwork en masse, have been replaced by "robo-verifiers" in the wake of the new Supreme Court rules. They contend that lenders are still failing to ensure that the foreclosure cases they pursue are accurate and that they own the loan in question.

***

  • In a deposition conducted in early December by an attorney with the Ice Legal firm, a Wells Fargo employee detailed the bank's "verification" process. The employee, Alden Berner, said he and two other "legal process specialists" were in charge of verifying all of Wells Fargo's foreclosure cases filed in Florida. Berner declined to estimate how many cases he verified on a daily basis. "He got the message not to come out sounding like a robo-signer," said foreclosure defense attorney Thomas Ice.

***

  • Berner's role as a verifier differs from that of a robo-signer. Critics say robo-signers sign foreclosure documents without having knowledge of their contents. In Berner's case, he testified that he uses a computer only to verify the name of the lender or loan servicer against the name of the investment entity that owns the loan. That still falls short of the intent of the Supreme Court ruling, critics say.

***

  • Ice said he has encountered several cases in which foreclosure attorneys signed as verifiers of documents to "pretend" they were complying with the rule. "The purpose of this is for the lenders and servicers to check what the attorneys are doing," Ice said. "So in the end they will be responsible for mistakes and won't be able to say, 'I thought my attorney did it right.' " An attorney's signature on a complaint is already considered a verification, according to Florida Bar rules. "This was intended as an extra layer of precaution," he said.

***

  • While some judges have accepted complaints verified by attorneys, at least one judge in Pinellas County recently criticized the practice and dismissed a case because of what he considered to be an unverified foreclosure complaint. "The Supreme Court clearly indicates in its opinion that one of the primary purposes of the rule change is to have the plaintiff appropriately investigate and verify its allegations," according to 6th Circuit Court Judge Anthony Rondolino's ruling. "An attorney should not become a witness substituting for these essential client verifications."

For the story, see Defense lawyers raise new issue: 'Robo-verifiers'.

Private Investors Score Big Profits In Tax Lien Ripoffs As County Process Allows For One Homeowner's $291 Delinquent Tax Bill To Grow To $8,200

In Fulton County, Georgia, The Atlanta Journal Constitution reports:
  • Robin Gordon didn’t know about the tax lien Fulton County placed against her apartment until the county sold the lien to a private company, foreclosed and sold the property at a sheriff’s auction.

  • Now, to keep her property, she must pay $8,200 to satisfy the $291 she initially owed in delinquent taxes and penalties. “It’s just seems too ludicrous to be true,” Gordon said. That’s a profit of 2,700 percent for Vesta Holdings and KOR Holdings, the sister companies that purchased Gordon’s lien, ordered the sheriff’s office to auction her apartment and then bought her property at the auction.

  • While most Georgia counties prohibit this practice, Fulton and Gwinnett counties routinely sell tax liens to private third parties who can pump up the lien value and use foreclosure to collect the debt.

  • Proponents say selling tax liens to private businesses lowers counties’ collection costs. But critics say the tactic is an abdication of a county’s tax collection responsibility, removes due process protections for homeowners and places unnecessary financial burdens on taxpayers. Putting the process in private hands, critics say, flips the creditor’s incentive at the property owner’s expense.

  • County tax collectors are interested in efficient, quick revenue collection, they argue. For-profit businesses make more money by delaying, running up the debt with penalties or foreclosing on the property and selling it at auction.

  • The imposition of taxes is one of the most feared powers of government, and when that power is transferred to a private entity, not only are they not accountable like the government, but their incentives are entirely different,” said Frank Alexander, a law professor at Emory University who specializes in Georgia real estate and foreclosure law. "The investor’s only incentive is to maximize profits.”

  • That is why DeKalb County does not sell tax liens, said Andrew Booth, deputy tax commissioner and director of delinquent collections division. “There’s no accountability to taxpayers and residents by the purchasers of the tax lien,” he said.(1)

For more, see Tax lien sales
shock, dismay.

(1) For similar "tax lien-inflating" rackets reportedly going on elsewhere, see:

Sunday, December 26, 2010

Florida Judiciary Unable To Keep Up With Out-Of-State Counterparts When Forcing Lenders To Comply With The Law In Foreclosure Actions

AOL's Daily Finance reports:
  • In the face of banks' rampant disregard for the law in pursuing foreclosures with false paperwork, the judiciary has started to emerge as the great defender of due process and the rule of law.

  • This list of judges standing up for the system is hardly exhaustive. In each case, the judges made clear they weren't picking sides. They were merely enforcing the rules, making sure the banks didn't get special exceptions unavailable to anyone else.

  • Unfortunately, not all judges are responding to the foreclosure mess this way. Those in Florida have been particularly notorious, and new rulings show at least some members of the Florida judiciary seem more committed to speeding foreclosures through to completion than anything else.

For more, see The Foreclosure Mess: Florida Judges Can Do Better.

SEIU's "Where's The Note" Campaign Meeting With Hostility By Note-Lacking Lenders?

A recent campaign by the Service Employees International Union ("SEIU") encouraging its homeowning members, whether facing foreclosure, having an underwater mortgage, or who are simply concerned over home lenders' rampant inability to account for the whereabouts of the original promissory notes, to contact their bank and demand to see the original note on their mortgage has apparently been met with a bit of hostility by the banks, as evidenced by this excerpt appearing on the SEIU website:

Source: Demand to see your mortgage note.

See also:

Seattle-Area Man Faces Felony Attempted Theft Charge For Allegedly Trying To Sell Foreclosed House After Filing Phony Claim In Home Hijacking Racket

In King County, Washington, the Seattle Post Intelligencer reports:
  • A former real estate agent who landed in the news for assisting squatters who'd taken over a Kirkland mansion(1) may be headed to the big house, after prosecutors filed felony charges against him.

  • Filing attempted-theft charges earlier this month, King County prosecutors contend Edmonds resident James C. McClung tried to use a bogus legal action to sell a home he didn't own to a young couple. Prosecutors claim the move by McClung came to light in October when one of the Shoreline home's new owners stopped by and found McClung's "tenants" around the house.

***

  • In the current case, prosecutors claim McClung acted as an intermediary for the Shoreline home's former owner, who lost the house through foreclosure earlier in the year. McClung, prosecutors claim, filed a false claim to the house and began renting out the residence.

  • Writing the court, Senior Deputy Prosecutor David Seaver noted that McClung has cast himself in public statements as an enemy of the banks and a friend to the little guy. "The defendant has acknowledged to a number of media outlets that he is engaged in a self-proclaimed 'mission' to interfere with financial institutions," Seaver told the court.(2)

***

  • According to [King County Detective Robert Inn's] account, McClung said he was "taking advantage of confusion in the lending industry" and could sell the property. The Edmonds man offered that the foreclosure sale during which Chase bank bought the home was illegal, and suggested he had as much right to sell the house as the bank.(3)

For more, see Charge: Man who helped Kirkland mansion squatter tried to bilk Shoreline couple (Edmonds man claimed to be on a 'mission' to hurt banks, tried to break young couple, prosecutors claim).

(1) According to the story McClung, 42, had caught the attention of Kirkland police in June after they arrested a woman -- Jill Lane -- squatting in a bank-owned $3.2 million mansion. According to charging documents, McClung, a former real estate agent, had signed his name to a bogus claim filed by Lane.

(2) For earlier reports on this home hijacking racket, see:

(3) Reportedly, Detective Inn found, among other things, a self-titled 'deed of release' taped to a front window of the home McClung was allegedly trying to unload, purporting to identify him as the representative of the lawful owner of the property.

Saturday, December 25, 2010

California Attorney In Hot Water For Advising Foreclosed Homeowners To Break In & Reoccupy Former Homes

In Southern California, the North County Times reports:
  • The real estate attorney who recommended that families break into homes they'd lost to foreclosure will be meeting with investigators from the state bar association in January, the attorney's assistant confirmed.

  • Encinitas lawyer Michael T. Pines made news in October when he advised four Southern California families, including two in Escondido, to hire locksmiths and break into their homes, which banks had repossessed. He argued that their lenders had granted the families mortgage loans under fraudulent conditions and had no right to foreclose.

  • Local legal experts found his theories dubious, and judges agreed. Pines himself is in a complicated bankruptcy liquidation proceeding and may soon lose his office building.

For more, see Bar complaint filed against foreclosure attorney Pines (Attorney advised clients to break into foreclosed houses).

See also: Ventura County Star: DA files complaint against lawyer of family who broke into home.

Virginia AG Squeezes Settlement From Loan Modification Outfit Allegedly Making Bogus Guaranties To Stop Foreclosure In Exchange For Upfront Fees

The Washington Post reports:
  • A mortgage modification company that had been illegally charging customers fees before providing emergency foreclosure help has agreed to refund customers and pay a $5,000 fine, [Virginia] Attorney Gen. Ken Cuccinelli (R) said.

  • In November, Cuccinelli filed suit against the American Neighborhood Housing Foundation, a Chesapeake-based company that also operated a Richmond office for three years, charging that the fees violated the Virginia Foreclosure Rescue and the Virginia Consumer Protection Act, by guaranteeing the company could halt foreclosures.

  • In a statement, Cuccinelli said the company has agreed to refund more than $94,000 to 273 customers nationally, as well as pay the fine and $10,000 to cover attorney fees. The company has also agreed to stop charging $1,500 in advance of providing foreclosure services and to stop guaranteeing that it can save people's homes.

Source: Mortgage company to pay fine for illegal fees, Cuccinelli says.

Mortgage Broker/Real Estate Agent Gets 30 Months For Running Home Equity Refinancing Ripoff; Ordered To Cough Up $200K+ In Victim Restitution

In Greeneville, Tennessee, the Knoxville News Sentinel reports:
  • A Florida man convicted of a nearly two-year mortgage fraud and money laundering scheme in Greene and Cocke counties was sentenced Thursday to more than three years in prison. Thomas Duane Roderick, 44, of Wesley Chapel, Fla., not only received 37 months in prison he was also ordered to pay more than $200,000 in restitution to his victims. Roderick had previously pleaded guilty to charges of wire fraud, mail fraud, bank fraud and money laundering in U.S. District Court in Greeneville.

  • According to an indictment, Roderick, a mortgage loan broker and real estate agent in Greeneville, devised a scheme to defraud clients. He worked with Premier Mortgage from 2005 until 2007 in Greeneville and used various real estate closing agencies in Greene County. At the closings, Roderick would provide fraudulent legal documents for the signature of the clients seeking loans, and the closing agency would disburse funds as required by the lending institution.

  • He set up a sham investment company, entitled MSI Inc., and used a bogus checking account to capture money from clients. Roderick caused one victim to wire $20,000 to MSI, falsely telling her that she would owe taxes on the $20,000 equity she received from the refinancing of her home mortgage. He convinced her that if she turned the funds over to him, he would invest the money to avoid taxes.

  • Roderick never invested the funds and immediately withdrew them after the wire transfer, and spent them for his own benefit.

Source: Florida man gets 3 years in mortgage fraud scheme.

City Of Cleveland, Local Non-Profit Target Lenders, Loan Servicers In Amended Federal Suit Over Blighted Foreclosures

In Cleveland, Ohio, WCPN Radio 90.3 FM reports:
  • A local nonprofit and the city of Cleveland are asking a federal judge to force nearly a dozen financial institutions and loan servicers to take care of the houses they took back in foreclosure or pay to knock them down.

***

  • Two years ago, a nonprofit affiliated with Neighborhood Progress Inc, an umbrella organization for Cleveland’s community development corporations, sued [Deutsche Bank and Wells Fargo] arguing the houses they had taken back in foreclosure were becoming public nuisances.The cases bounced around the courts and Deutsche Bank and Wells Fargo ultimately paid to demolish the properties named in that suit.

  • But, the plantiffs say, the problem continues with yet more properties, and so the nonprofit Cleveland Housing Renewal Project and the city of Cleveland have refiled an amended suit in federal court. The defendants include not just Deutsche Bank, says attorney Thomas C Wagner, but also nine loan servicers including big Wall Street names like JP Morgan Chase.

For more, see Cleveland, Nonprofit Sue Deutsche Bank, Loan Servicers Over Bills for “Dangerously Blighted” Houses.

Friday, December 24, 2010

Florida Appeals Court OKs Property Tax Homestead Exemption For Non-Permanent Resident Alien Couple Where Their Three Minor Children Are U.S. Citizens

Abstract Appeal reports:
  • If two parents are not legal residents of Florida(1) but they own a home in which they and their minor children reside, can the parents claim a homestead exemption for the property under Florida law? Yes they can, said the Third District [Court of Appeal] in this case.

  • The decision quotes portions of the father’s affidavit, in which he explains that he and his wife live on the property and that, for their three children, the property is their permanent residence.

  • The decision then observes: “Although one might wonder whether his assertions are congruent with the laws of nature, we apply in this court the constitution and laws of the State of Florida.”

Source: Third District: Homestead and Legal Residency Status.

For the court's ruling, see De La Mora v. Andonie, No. 3D09-3427 (Fla. App. 3d DCA, December 15, 2010).

(1) The homeowners in this case are a married couple who are citizens of Honduras, lawfully residing in the United States pursuant to temporary visas issued by the United States Department of Homeland Security. It was undisputed that the couple themselves (as opposed to their three minor children who are all U.S. citizens) are legally incapable of qualifying as “permanent residents” of Miami-Dade County. See Juarrero v. McNayr, 157 So. 2d 79, 81 (Fla. 1963) (finding that a non-citizen present in the United States under a temporary visa “cannot ‘legally,’ ‘rightfully’ or in ‘good faith’ make or declare [himself]” a “permanent resident” of this state for purposes of Article VII, section 6(a) of the Florida Constitution dealing with the property tax exemption for homesteads (the constitutional provisions dealing with the property tax exemption for homesteads under Florida law is to be distinguished from Article X, Section 4 of the Florida Constitution, which deals with the exemption for homesteads against forced sale by judgment creditors)).

Bay State Homeowners Sans Filed Homestead Declaration Now Entitled To Automatic $125K Home Equity 'Shield' Against Forced Sale By Judgment Creditors

In Boston, Massachusetts, The Patriot Ledger reports:
  • Massachusetts homeowners stand to receive new protections from creditors under a bill that was recently enacted by the state legislature. The bill would automatically protect the first $125,000 of equity on a primary residence from creditors.

  • Currently, only homeowners who file a “declaration of homestead” form with the Registry of Deeds enjoy such protections. A spokesman for the Patrick administration said Gov. Deval Patrick signed the bill into law on Thursday night. “This is really going to protect people who find themselves with their backs to the wall,” said Susan Grossberg, a Boston bankruptcy attorney.

  • The protections would apply both to new transactions and existing homes. Homeowners still would have the option of filing a declaration of homestead, which increases the exemption to $500,000. The legislation is designed to deter creditors from foreclosing on the homes of delinquent debtors, even if they have filed for bankruptcy.

  • Under the current law, if a homeowner does not have a declaration of homestead, a creditor could place a lien on the home and begin foreclosure proceedings. “They could turn around the next day and give you a notice that they’re going to foreclose to satisfy their lien by selling this house,” Grossberg said.

  • Massachusetts is one of a dwindling number of states without an automatic homestead provision, said Kathleen Joyce, director of government relations for the Boston Bar Association. The group lobbied for the expanded protection for several years without success. To file a declaration of homestead, homeowners fill out a signed, notarized one-page document declaring a property as their primary residence and pay a $35 fee to file it with their local Registry of Deeds. These are typically filed at the time of a home’s purchase, but can be done at a later date as well.

Source: New law would protect homeowners’ equity (Designed to deter creditors’ foreclosures). homestead exemption

Missouri AG Obtains $338K+ Judgment In Suit Against Alleged Contract For Deed, Payment Skimming Racket That Left Would-Be Homebuyers In Foreclosure

In Jefferson City, Missouri, Legal Newsline reports:
  • Missouri Attorney General Chris Koster announced [...] that he has obtained a summary judgment against a real estate company and two of its operators for allegedly defrauding consumers.

  • Greenleaf and The Real Estate Company, as well as business operators Scott Dasal and Eric Gagnepain, allegedly defrauded consumers by selling them homes that were already owned by investors that they had solicited. Under terms of the judgment, the defendants are permanently barred from engaging in any home sales or rentals in the state. They must also provide more than $308,000 in restitution to customers. Another $30,000 will be paid to the state.

  • According to the suit, the defendants would allegedly take out mortgages on homes without the consumers purchasing the homes knowing. Koster says while consumers were led to think they were purchasing the homes from Greenleaf and were buying an ownership interest in the home, the money the consumers then paid to Greenleaf, which they were told was for the mortgage, was then allegedly used for the defendants' operating expenses. Consumers learned the truth the hard way, when banks foreclosed on the loans, Koster says.(1)

Source: Koster gets judgment against real estate company.

(1) For earlier posts on this contract for deed, home-flipping racket, see:

WV High Court OKs Use Of Misrepresentations Where Plaintiff Fails To Prove Reliance On Bad Acts In Suits Brought Under State Consumer Protection Law

In Charleston, West Virginia, The West Virginia Record reports:
  • West Virginia consumers looking to sue for misrepresentation under the state's Consumer Credit and Protection Act now must show proof of reliance, according to an opinion released Friday by the state Supreme Court of Appeals. Previously, state consumers only had to prove misrepresentation to seek damages. Following the Court's ruling in White vs. Wyeth, plaintiffs now must show a causal connection between their individual claims of injury and any alleged unfair or deceptive conduct.

***

  • Justice Thomas McHugh, who authored the Court's opinion, wrote that the Court did its own study of other states. Its research revealed that the private cause of action provisions of 28 states contain the "as a result of" language. Eleven states and the District of Columbia, it said, have statutes containing the "whether or not any person has in fact been misled, deceived or damaged" language. Only five states have both statutory provisions, it found.(1)

  • "Our review of the diverse cases and numerous authorities addressing the issue of reliance in the context of private consumer protection causes of action leads us to the conclusion that courts are struggling to arrive at a way to be faithful to the purposes of consumer protection statutes -- promoting fair and honest business practices and protecting consumers -- without inviting nuisance lawsuits which impede commerce," McHugh wrote for the Court.

  • "In determining the meaning of the phrase 'as a result of' in the WVCCPA, we find the decisions from other jurisdictions which are most reasonable, practical and fair to all relevant purposes and interests are those which have concluded that proof of a causal nexus between the deceptive conduct giving rise to the private cause of action and the ascertainable loss may require proof of reliance in some but not all instances."

For more, see Supreme Court tightens control on consumer protection act.

For the ruling, see White vs. Wyeth, No. 35296 (W.Va. December 17, 2010).

(1) See generally, Consumer Protection In The States: A 50-State Report on Unfair and Deceptive Acts and Practices Statutes for a survey on the various state consumer protection statutes throughout the U.S.