Wednesday, January 12, 2011

Recent Massachusetts High Court Ruling Triggers Resumption Of Statewide Class Action Alleging Faulty Foreclosures, 'Fair Debt' Violations

In Boston, Massachusetts, Bloomberg reports:
  • A statewide class action in which Massachusetts homeowners accuse U.S. Bancorp and Ally Financial Inc. of faulty foreclosures will resume now that the state’s high court ruled in a similar case last week.(1),

  • The litigation was on hold while the Supreme Judicial Court decided whether state law required foreclosures to be conducted by the mortgage owner. The high court ruled Jan. 7 in U.S. Bank v. Ibanez that an industry practice allowing post-foreclosure assignments violated state law. “This is a statewide class action and it’s going to bring relief to all of the people who are dispossessed homeowners in many instances,” Kevin Costello, a lawyer for the borrowers, said in a telephone interview today. Costello [] filed a motion to restart evidence gathering in the case. [...] In July, U.S. District Judge Richard G. Stearns in Boston granted the defendants’ request to halt the class action until the high court ruled in Ibanez.

  • Banks and law firms had been conducting foreclosures in the state before mortgages were transferred to them under a 1995 “title standard” by the Real Estate Bar Association for Massachusetts, a group of closing attorneys, that condoned the practice.

  • It was basically created by the real-estate bar without adequate foundation,” said Costello of Roddy Klein & Ryan in Boston. “It became an enabler for people who wanted to do business the way they wanted to do business.”

  • The homeowners in the class-action, or group, lawsuit said their foreclosures were also brought by the wrong party, often because of the process of securitization -- bundling mortgages into trusts that issue bonds. The Ibanez ruling “pretty clearly establishes that our theory of the case is correct,” Costello said. “The securitization machinery didn’t allow for individualized treatment of these kinds of loans and so the sort of standard industry practice was foreclose first and assign later.”

  • The case has two classes of borrowers, he said: those whose foreclosures were started though not completed and those with completed foreclosures. The homeowners sued Ally unit GMAC Mortgage and U.S. Bancorp unit U.S. Bank. Other defendants include EMC Mortgage, now owned by JPMorgan Chase & Co., and two foreclosure law firms, Harmon Law Offices PC in Newton and Ablitt Scofield PC in Woburn.

For the story, see Massachusetts Foreclosure Class Action to Resume.

For the Massachusetts class action lawsuit, see Manson v. GMAC Mortgage LLC.

(1) According to the Amended Consolidated Complaint (paragraphs 6-7), the Plaintiffs seek relief for the Defendants’ wrongful foreclosure practices. Plaintiffs seek declaratory and injunctive relief concerning the validity of foreclosures conducted by entities who do not hold a power of sale at the time of the sale, injunction of eviction actions pending procedures to verify the validity of the underlying sales, injunction of upcoming sales where there is no proof of assignment, cancellation of fees and costs for invalid sale processes, and damages.

In addition , the lawsuit also seeks recovery for alleged violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq. and Massachusetts General Law c. 93A., the state's consumer protection statute.

Sticky-Fingered Closing Agent Gets 12 Yrs, Agrees To Indemnify Title Insurer Left Holding Bag In $3.8M+ Escrow Account Ripoff Affecting 11 Home Buyers

From the Office of the New Jersey Attorney General:
  • Attorney General Paula T. Dow and Criminal Justice Director Stephen J. Taylor announced that the owner of a title company in Red Bank was sentenced to prison [last week] for stealing $3.8 million in loan proceeds intended for payment of mortgage balances and other closing costs.

  • According to Director Taylor, Ronald P. Mas Jr., 35, of Red Bank, a mortgage broker, settlement agent and owner of Olde Gotham Title and Settlement Services LLC in Red Bank, was sentenced to 12 years in state prison. [...] He executed a consent judgment to pay full restitution of $3,841,616 to the title company that insured the mortgages. [...] Mas pleaded guilty on Aug. 26, 2010 to an accusation charging him with second-degree money laundering and second-degree theft by failure to make required disposition of property received.(1)

  • He admitted that between April 2009 and February 2010, he stole $3,841,616 that he received from various mortgage lenders for real estate closings on behalf of 11 home buyers across New Jersey.

***

  • The state investigation revealed that Mas diverted loan proceeds into his Ameritrade account. Instead of paying off the client’s old mortgage, Mas would make monthly mortgage payments and invest the balance of the loan proceeds into the Ameritrade account. Mas made monthly payments on some mortgages using funds from new loans provided for clients. At the end of February 2010, Mas had a total loss of over $3.4 million in his Ameritrade account. As a result, 11 mortgages were not paid.

For the NJ AG press release, see Red Bank Title Company Owner Sentenced to State Prison for Stealing $3.8 Million in Closing Funds to Play Stock Market.

(1)Home buyers, lenders and title insurers must be able to rely on title agents, who are routinely entrusted with hundreds of thousands of dollars in closing funds,” said Attorney General Dow. “When such agents violate their fiduciary duty and steal from clients, as this defendant did, they should face a stiff sentence.”

Closing Attorney Gets 18 Months For Pocketing $500K+ In Clients' Refinancing Proceeds Intended To Pay Off Existing Mortgages

From the Office of the U.S. Attorney (Buffalo, New York):
  • U.S. Attorney William J. Hochul, Jr. announced [] that Robert R. Goods, 49, of Snyder, N.Y., who was convicted of bank fraud, was sentenced to 18 months in prison and ordered to pay $521,800 restitution by Chief U.S. District Court William P. Skretny.

  • Assistant U.S. Attorney Trini E. Ross, who handled the case, stated that Goods, a mortgage settlement attorney, misused money wired into his business account to pay off mortgages on properties which had been refinanced at SunTrust Bank.

  • For example, in February 2010, SunTrust Bank wired $423,531 into the defendant's business account to pay off a preexisting mortgage, however, Goods instead used that money for other matters.

  • In another instance, in March 2010, SunTrust Bank wired $128,000 into the defendant's business account to pay off the pre-existing mortgage, but once again, he used the money for other things. As a result of the defendant's actions, SunTrust Bank suffered a loss of $521, 872. 84.

For the U.S. Attorney press release, see Ex-Attorney Sentenced In Mortgage Fraud Scheme.

Thanks to Bill Collins of Frontier Abstract, Rochester, NY for the heads-up on this story.

Judge Says Deportation Constitutes 'Good Cause' For F'closure Rescue Scammer's Failure To Appear At Sentencing 'Buydown' Hearing; Grants 2-Month Delay

In Santa Maria, California, the Santa Maria Times reports:
  • A Superior Court judge has postponed a ruling on whether the former manager of a Los Angeles-based foreclosure consultation business with an office in Santa Maria will have her felony convictions reduced to misdemeanors for committing prohibited foreclosure practices.

  • Irma Gonzalez Diaz, 42, was set to be sentenced Thursday by Judge Edward Bullard in Santa Maria on the three felony counts, which he had indicated he would consider reducing to misdemeanors if she followed his terms, including paying restitution to the victims.

  • She was not in court for the hearing, however, because she has been deported due to her illegal immigration status, and she has not made any restitution. [...] The sentencing hearing was postponed to March 17.

***

  • Investigators said Diaz took part in a scam whereby victims whose homes were in or nearing default paid her money to refinance their homes, but she didn’t complete the process. Diaz has been deported to Mexico, according to her attorney, Catherine Swysen. “I do find good cause for her not appearing today,” Bullard replied to that information.

For the story, see Sentencing postponed in mortgage scam case.

Tuesday, January 11, 2011

Fla. Continues "Burying Its Head In Its Sandy Beaches" In F'closure Mess Despite Recent Actions In Other States; Critics Attack 'Delusional Behavior'

The Palm Beach Post reports:
  • Fed up with the foreclosure chaos, the New Jersey courts demanded that banks prove the integrity of their home repossession systems or face shutdown. To demonstrate the need for the Dec. 20 order, New Jersey cited flaws in six Florida foreclosure cases, including three in Palm Beach County, as examples.(1)

  • In Nevada and Arizona, attorneys general last month sued Bank of America for a dual-track foreclosure system that offers homeowners hope with a loan modification, while at the same time taking away the home in court.(2) Called deceptive and labeled consumer fraud in the lawsuits, the practice is also prevalent in the Sunshine State.

  • And on Friday, the Massachusetts Supreme [Judicial] Court issued a bombshell ruling against banks' ability to foreclose on homes - a decision could reverberate nationwide.(3)

  • The moves by other states to address the foreclosure morass has Florida homeowner advocates and defense attorneys asking why more isn't being done here. [...] But as hundreds of homes continue to sell at auction each day and the variations of alleged malpractice mount, critics charge that Florida is burying its head in its sandy beaches, waiting for an ocean breeze to blow the whole thing over.

For more, see State guilty of 'delusional behavior' in slow response to foreclosure chaos, critics say.

(1) See Legal Services of New Jersey Report and Recommendations to the New Jersey Supreme Court Concerning False Statements and Swearing in Foreclosure Proceedings, November 4th, 2010.

(2) For the lawsuits, see:

(3) See Mass. High Court Ruling "A Train Wreck For F'closure Industry" As Banks Slammed In Bay State Beat Down; 'Clouds' Over Title To Homes Darken Statewide.

Municipal Group Of Pension Funds Tell Major Mortgage Servicers To Clean Up Flawed Foreclosure Process

Bloomberg reports:
  • A group of seven public-sector pension fund systems called on the boards of the four largest U.S. banks, including Bank of America Corp., to review foreclosure practices, saying there’s a “fundamental” flaw in the companies’ methods. The lenders, which also include Wells Fargo & Co., JPMorgan Chase & Co. and Citigroup Inc., should report their findings on annual proxy statements to shareholders in coming months, the pension group said.

  • The group represents more than $430 billion in pension fund investments, including $5.7 billion invested in the four banks, according to a statement from New York City Comptroller John C. Liu. “The banks’ boards cannot continue to pretend the foreclosure mess is the result of technical glitches and paperwork errors,” Liu said. “There is a fundamental problem in their procedures that endangers not just homeowners, but shareholders, and local economies.”

  • The group includes the New York City Pension Funds, the Connecticut Retirement Plans and Trust Funds, the Illinois State Board of Investments, the Illinois State Universities Retirement System, the New York State Common Retirement Fund, the North Carolina Retirement Systems, and the Oregon Public Employees’ Retirement Fund.

For more, see Pension Funds Ask Banks to Review Mortgage Practices.

Bond Insurer: 'Goldman Tricked Us Into Buying $30M In Worthless CDOs!' Firm Seeks To Recover Investment & Impose $90M In Punishment

The Wall Street Journal reports:
  • ACA Financial Guaranty Corp. said it is suing Goldman Sachs Group Inc. for "fraud and unjust enrichment" in connection with a soured mortgage-backed investment that led the bank to pay $550 million to settle government charges last year.

  • The monoline bond insurer alleged in its lawsuit that Goldman designed the investment, named Abacus, to fail so that a hedge-fund client, Paulson & Co., could take big profits by shorting the portfolio and so that Goldman could take in fat investment banking fees. ACA bought millions of dollars in Abacus notes and insured the super-senior parts of the underlying portfolio for $909 million, it said in its lawsuit.

  • ACA said in a statement Thursday that the Abacus 2007-AC1 collateralized debt obligation "was worthless" at the time Goldman marketed it to ACA.

For more, see ACA Financial Sues Goldman For Alleged Abacus-Related Fraud (requires subscription; if no subscription, TRY HERE, then click appropriate link for the story).

For the lawsuit, see ACA Financial Guaranty Corp. v. Goldman Sachs & Co.

Thanks to Mike Dillon at GetDShirtz.com for the heads-up on the story.

"My Dream Is Done Now" Laments Steel City Man After Losing Recently Repaired Home To Demolition, Despite Removal From City's 'Tear Down' List

In Pittsburgh, Pennsylvania, the Pittsburgh Tribune Review reports:
  • When Andre Hall bought a house in the West End, he thought he "finally had a piece of Pittsburgh." On Monday, Hall, 40, returned to do repair work on the house at 3224 Motor St. to find workers demolishing it.

  • "I don't come for a week over the holiday, and as soon as I come back, I see a backhoe on top of the house," he said. "Why did they demolish the house? They could see I had put in new windows and had slabs of drywall."

  • John Jennings, acting chief of Pittsburgh's Bureau of Building Inspection, said his department notified contractors P.J. Deller Inc. on Nov. 3 that the house no longer was slated for demolition. "A couple things went awry," Jennings said. "The house next door was to be demolished, and the contractor, in error, took this house down as well."

***

  • Hall, who works in home repairs, said he was about three weeks away from being able to move into the home. He planned to live there with his girlfriend, Shawna Jones, and his five children. The couple lives in a one-bedroom apartment in East Liberty. "My dream is done now," he said. "Someone needs to man up and take responsibility for this."

For the story, see West End demolition leaves property, owner empty.

Monday, January 10, 2011

Stiffed Upstate NY Tax Collectors, Indian Nations Continue Lower Court Litigation Over Unpaid Real Estate Taxes, Despite Pending Supreme Court Ruling

In Rochester, New York, The Syracuse Post Standard reports:
  • The Cayuga Indian Nation has asked a federal court in Rochester to stop Seneca County from foreclosing on five nation properties for unpaid back taxes, a lawyer for the Cayugas said [last week].(1)

  • The nation [last week] requested a temporary restraining order and preliminary injunction to halt the county’s foreclosure attempt, attorney Daniel French said. A date for arguments had yet to be scheduled. “This is all litigation folly, a waste of taxpayers’ money,’’ French said.

***

  • The Cayugas claim they have sovereign nation rights to not have to pay taxes on any of the 1,100-plus acres they own in both counties. The counties disagree and the two sides have clashed over the tax issue in court many times.

***

  • French said he does not understand why the counties are taking the foreclosure action now since the U.S. Supreme Court is expected to rule this summer on a similar case involving Madison County’s attempt to foreclose on Oneida Indian Nation properties that are in tax arrears. “This is all rather silly since the Supreme Court is going to decide on this in a couple months,’’ French said.(2)

For more, see Cayuga, Seneca counties start foreclosure action against Cayuga Nation; tribe seeks injunction.

See also The Oneida Daily Dispatch: Madison County, Oneida County, Oneida Indian Nation prepare for Supreme Court land foreclosure case.

(1) According to the story, the Cayugas owe $5,506.70 for unpaid 2008 taxes on the five properties, three of which are in the town of Seneca Falls and two in the town of Varick, county attorney Frank Fisher said. In addition, neighboring Cayuga County has started foreclosing on five nation properties where the nation owes $124,131.08 in back taxes on three properties in the village of Union Springs and two in the town of Springport, county attorney Fred Westphal said.

(2) The ruling currently on appeal to the U.S. Supreme Court is Oneida Indian Nation of N.Y. v. Madison County, 605 F.3d 149 (2d Cir. 2010). Noteworthy in the 2nd Circuit ruling are the words of Circuit Judge Jose A. Cabranes who, in a concurring opinion with whom Circuit Judge Peter W. Hall joined, stated (bold text is my emphasis, not in the original text):

  • The holding in this case comes down to this: an Indian tribe can purchase land (including land that was never part of a reservation); refuse to pay lawfully-owed taxes; and suffer no consequences because the taxing authority cannot sue to collect the taxes owed.

    This rule of decision defies common sense. But absent action by our highest Court, or by Congress, it is the law. In the last twenty years, the Supreme Court has twice held that, although states may have a right to demand compliance with state laws by Indian tribes, they lack the legal means to enforce that right. See Kiowa Tribe of Okla. v. Mfg. Tech., Inc., 523 U.S. 751, 755 (1998) (“There is a difference between the right to demand compliance with state laws and the means available to enforce them.”); Okla. Tax Comm’n v. Citizen Band Potawatomi Indian Tribe of Okla., 498 U.S. 505, 514 (1991) (holding that states have a right to collect taxes on certain cigarette sales on an Indian reservation, but the tribe is immune from suit seeking to enforce that right). In light of this unambiguous guidance from the Supreme Court, I am bound to concur with the conclusion that, although the Counties may tax the property at issue here, see City of Sherrill, N.Y. v. Oneida Indian Nation of N.Y., 544 U.S. 197 (2005), they may not foreclose on those properties because the tribe is immune from suit.

    This result, however, is so anomalous that it calls out for the Supreme Court to revisit Kiowa and Potawatomi. I wish that we were empowered to revisit those decisions, but, alas, that is not a privilege extended to intermediate appellate courts. If law and logic are to be reunited in this area of the law, it will have to be done by our highest Court, or by Congress. Accordingly, I concur in the judgment of the Court and in the careful and comprehensive opinion of Judge Sack.

Ostensibly Time-Barred 'Fair Debt' Violations In Sewer Service Suit May Remain Viable Where 'Equitable Tolling' Suspends Running Of 1-Year Statute

In denying a motion to dismiss a lawsuit alleging, among other things, violations of the Federal Fair Debt Collection Practices Act ("FDCPA"), a Federal court in Brooklyn, New York ruled that consumer/plaintiffs may have viable claims under the ("FDCPA") against the defendants despite the expiration of the 1-year statute of limitations set forth in that statute, where the limitations period was 'equitably tolled' (where the existence of "extraordinary circumstances" require that the running of the statute of limitations be suspended; such a suspension will be made only in "rare and exceptional" circumstances(1)).

The FDCPA statute of limitations issue was one of several issues raised in the lawsuit, which involves allegations of a massive sewer service racket in connection with the obtaining of default judgments by the defendant, a nationwide 'zombie debt' buyer, and which also named a law firm, a process serving outfit, and others as defendants.

In making his ruling, United States Circuit Judge Denny Chin, sitting by designation in the U.S. District Court, addressed the issue of the statute of limitations in the following excerpt (at pages 10-13, court footnotes omitted; bold text is my emphasis, not in the original text):
  • Defendants argue that some or all of the FDCPA claims are time-barred. To be timely, an FDCPA claim must be brought "within one year from the date on which the violation occurs." 15 U.S.C. 5 1692k(d). Plaintiffs counter that the equitable tolling doctrine preserves their claims.

  • The first FDCPA violations allegedly occurred when the Leucadia and Mel Harris defendants filed the state debt collection actions. Defendants plausibly violated the FDCPA again when they subsequently applied for default judgments against plaintiffs. Even using the default judgment application dates, the claims of Sykes, Graham, and Perez would be time-barred because those dates were more than a year before December 28, 2009, when the class action allegations were asserted. Thus, it appears that absent equitable tolling, their claims would be untimely.

  • The Complaint plausibly alleges that equitable tolling applies, as to most of the plaintiffs' FDCPA claims. A statute of limitations may be tolled in extraordinary circumstances, if a plaintiff establishes that: (1) the defendant concealed from him the existence of his cause of action; (2) he remained in ignorance of that cause of action until some length of time within the statutory period before commencement of his action; and (3) his continuing ignorance was not attributable to lack of diligence on his part. State of N.Y. v. Hendrickson Bros., Inc., 840 F.2d 1065, 1083 (2d Cir. 1988); see also Bailey v. Glover, 88 U.S. (21 Wall.) 342, 349-50 (1874). FDCPA claims are subject to equitable tolling. Somin v. Total Cmty. Mgmt. Corp., 494 F. Supp. 2d 153, 158 (E.D.N.Y. 2007) (citing Johnson v. Nyack Hosp., 86 F.3d 8, 12 (2d Cir. 1996)).

  • Sykes and Perez have sufficiently alleged that defendants fraudulently deprived them of notice of their debt collection action. Because sewer service purposefully ensures that a party is never served, it is plausible that defendants' acts were "of such character as to conceal [themselves]" to warrant equitable tolling. Bailey, 88 U.S. at 349-50. The present class action commenced on December 28, 2009. Because Sykes and Perez allege that they discovered the default judgments entered against them after December 28, 2008, their claims would be timely under equitable tolling. The Complaint alleges, however, that Graham did receive a copy of the summons and complaint by mail from Mel Harris, LLC sometime before a default judgment was entered against her, and thus it fails to allege exercise of due diligence on her part. Thus, this prong of defendants' motion is granted with respect to Graham, but denied as to all other plaintiffs.

For the entire ruling (37 pages), see Sykes v. Mel Harris and Associates LLC.

(1) See Somin v. Total Cmty. Mgmt. Corp., 494 F. Supp. 2d 153, 158 (E.D.N.Y. 2007):

  • As with any a statute of limitations, the FDCPA is subject to equitable tolling in appropriate circumstances. The doctrine of equitable tolling applies only in "rare and exceptional" circumstances. Bertin v. United States, 478 F.3d 489, 494 n. 3 (2d Cir.2007); Smith v. McGinnis, 208 F.3d 13, 17 (2d Cir.2000) (per curiam). To invoke this doctrine, a plaintiff must allege that extraordinary circumstances prevented him from acting in a timely manner. See Johnson v. Nyack Hosp., 86 F.3d 8, 12 (2d Cir.1996). Generally, equitable tolling applies only where defendant has engaged in conduct to conceal wrongdoing and, as a result, plaintiff fails to discover facts giving rise to the claim, despite the exercise of reasonable diligence. Coveal v. Consumer Home Mtge., Inc., 2005 WL 704835 *4 (E.D.N.Y.2005); see Chapman v. ChoiceCare Long Island Term Disability Plan, 288 F.3d 506, 512 (2d Cir.2002).

Federal Court: Servicer's Conduct Stiffing Homeowner Seeking Loan Modification May Be Unfair, Deceptive Practice; Allows Lawsuit To Continue

In San Francisco, California, Courthouse News Service reports:
  • Homeowners who say Wells Fargo Bank duped them into loan-modification programs to stave off foreclosure survived a legal challenge to their case in San Francisco federal court.

  • U.S. District Judge Joseph Spero pared the class's suit [last week], rejecting claims for breach of contract but upholding allegations that the bank's debt-collection practices were unfair, deceptive and fraudulent. He also permitted the plaintiffs to seek restitution for an installment payment they made in March 2010, since the bank had already foreclosed upon them by that point.

  • Lead plaintiffs Gustavo Reyes and Maria Teresa Guerrero claimed that, after they defaulted on their mortgage payments, Wells Fargo offered to freeze foreclosure proceedings against them if they signed a modified loan agreement. But after they signed the loan and made payments over four consecutive months, the bank still foreclosed on their home.

***

  • Spero [] found that the homeowners may be entitled to damages under California's Rosenthal Act, which protects consumers from improper debt-collection practices.(1)

For more, see Wells Fargo Loses Bid to Dismiss Fraud Claims.

For Judge Spero's ruling, see Reyes v. Wells Fargo Bank, N.A.

(1) In denying Wells Fargo's motion to dismiss the homeowner's claims that the bank used unfair and deceptive practices to dupe them into an allegedly phony loan modification arrangement, Judge Spero made this observation:

  • The court cannot say, as a matter of law, that the statements made in the offer letter would not have been misleading to the least sophisticated buyer in light of: the words 'good news' at the beginning of the letter; the language in the letter indicating that the agreement was being offered based on a review of the recipient's financial information; the statement that foreclosure counsel would be instructed to delay foreclosure proceedings as long as the recipients made timely payments under the agreement; and the use of the words 'trial period' to describe the agreement.

Judge Spero also found that the homeowner had standing to bring an unfair competition claim under Cal. Bus. & Prof. Code §§17200 et seq., according to the ruling.

HAMP Suits Targeting BofA Roll On As SW Ohio Non-Profit Law Firm Files Action On Behalf Of Local Homeowner

In Cincinnati, Ohio, The Enquirer reports:
  • A West Price Hill man on Wednesday filed a federal lawsuit against Bank of America and the U.S. Department of Housing and Urban Development alleging that his home was unlawfully forced into foreclosure.

  • The Legal Aid Society of Southwest Ohio(1) filed the suit in U.S. District Court for the Southern District of Ohio on behalf of John Sinclair, who purchase his home in the 4000 block of Fawnhill Lane in 2000 using a Federal Housing Administration loan.

  • In 2008, Sinclair fell behind on his mortgage, but attempted to work out a plan with BofA to avoid foreclosure, according to court papers. The suit claims that Bank of America ignored his request - a direct violation of federal law considering the FHA program requires lenders to take steps to avoid unnecessary foreclosures.

For more, see BofA, FHA sued over W. Price Hill foreclosure.

For the lawsuit, see Sinclair v. Donovan, et al.

(1) Legal Aid Society of Southwest Ohio provides legal representation, information, advice and referral for lower-income residents of Brown, Butler, Clermont, Clinton, Hamilton, Highland, and Warren Counties. It is affiliated with the Legal Aid Society of Greater Cincinnati and also coordinates services with the Volunteer Lawyers Project (VLP).

Sunday, January 09, 2011

Mass. High Court Ruling "A Train Wreck For F'closure Industry" As Banks Slammed In Bay State Beat Down; 'Clouds' Over Title To Homes Darken Statewide

In Boston Massachusetts, The Boston Globe reports:
  • The state’s highest court [Friday] upheld a controversial Land Court ruling that calls into question the ownership of hundreds, possibly thousands, of foreclosed properties in Massachusetts and could affect how foreclosures nationwide are conducted.

  • In a 6-to-0 decision, the Massachusetts Supreme Judicial Court rebuffed the way lenders in recent years have conducted foreclosures — without having all the documentation in place at the time a property is seized. The justices affirmed a 2009 ruling that invalidated foreclosure proceedings involving two Springfield houses because the lenders did not hold clear titles to the properties.(1)

  • We agree with the [Land Court] judge that the plaintiffs . . . failed to make the required showing that they were the holders of the mortgages at the time of foreclosure,’’ Justice Ralph Gants wrote in the decision.

  • Housing attorneys and state officials said the SJC’s ruling will increase pressure on major US lenders to prove they own mortgages before foreclosing, give homeowners seeking to fight foreclosures additional fodder for legal action, and further stall foreclosures in other states where similar litigation is pending. In cases where there is doubt about whether property was improperly taken, banks might even have to return homes to former owners.

***

  • Boston lawyer Gary Klein, who represents many clients dealing with home foreclosure, called the ruling “a train wreck for the foreclosure industry.’’ [...] The court said yesterday that its ruling applies to all foreclosures in Massachusetts — no matter when they took place — because laws governing proper foreclosure procedures have remained constant over time. “All that has changed is the plaintiffs’ apparent failure to abide by those principles and requirements in the rush to sell mortgage-backed securities,’’ Gants wrote in the decision.(2)

***

  • Officials from the Real Estate Bar Association for Massachusetts said that by not placing a time limit on its ruling, the court has guaranteed a legal traffic jam. “There is a mess of titles out there,’’ said Edward Bloom, president of the association. “There will be a lot more litigation which could have been avoided.’’

For the story, see SJC upends rules on foreclosed properties (Ruling against lenders may have US impact).

See also:

For the ruling of the Massachusetts Supreme Judicial Court, see U.S. Bank Nat’l Ass’n v. Ibanez, No. SJC-10694 (January 7, 2011).

(1) For the 2009 rulings of Massachusetts Land Court Judge Keith C. Long in this matter, see:

(2) Justice Gants' full statement on the retroactive application of this ruling follows:

  • Finally, we reject the plaintiffs' request that our ruling be prospective in its application. A prospective ruling is only appropriate, in limited circumstances, when we make a significant change in the common law. See Papadopoulos v. Target Corp., 457 Mass. 368, 384 (2010) (noting "normal rule of retroactivity"); Payton v. Abbott Labs, 386 Mass. 540, 565 (1982). We have not done so here. The legal principles and requirements we set forth are well established in our case law and our statutes. All that has changed is the plaintiffs' apparent failure to abide by those principles and requirements in the rush to sell mortgage-backed securities.

Banks Want Court To Scrap Proposal To Halt NJ Foreclosures; Ask Judge To Believe Screw-Ups In Process Can Be Fixed Without Stalling Court Proceedings

In Trenton, New Jersey, Bloomberg reports:
  • Bank of America Corp., JPMorgan Chase & Co. and other U.S. banks told a New Jersey court that defects in their processes for seizing homes in the state can be remedied without halting foreclosures.

  • The banks have taken steps to improve their procedures, making a suspension unnecessary, they said in documents filed [last week] in state court in Trenton, New Jersey, and made public [Thursday].(1) The filings came in response to a proposal to freeze foreclosures in the state by six U.S. banks while their procedures are reviewed. The banks’ practices came under scrutiny after bank employees signed court documents in foreclosure cases without verifying their accuracy, according to court papers.

***

  • Judge Mary Jacobson scheduled a Jan. 19 hearing to consider suspending uncontested foreclosure cases and staying foreclosure sales by the banks: Ally Financial Inc., Bank of America, JPMorgan, Wells Fargo & Co., Citigroup Inc. and OneWest Bank, according to a Dec. 20 order. The move “is necessary to protect the integrity of the judicial foreclosure process in New Jersey and to assure the public that the process going forward will be reliable,” Jacobson said in the order.

For more, see JPMorgan, GMAC Urge New Jersey Court Not to Suspend Home Foreclosures.

(1) For the documents, see:

Iowa AG Pulls U-Turn, Reneges On Vow To "Put People In Jail!" In 50-State AG Robosigner Scandal Probe; Now Calls Matter "Inherently Civil"

Blogger David Dayen writes in Firedoglake:
  • Iowa AG Miller Breaks Promise, Calls AG Investigation “Inherently Civil” and Not Criminal.

For more, see Iowa AG Miller Breaks Promise, Calls AG Investigation “Inherently Civil” and Not Criminal.

See also Attorney General Tom Miller Reneges on Promise to Prosecute Mortgage Fraud.

Judge Gives Go-Ahead To Civil Suit Alleging RICO Claims, Massive Sewer Service & Robosigner Racket Against Zombie Debt Buyer/Law Firm/Process Server

In Brooklyn, New York, AOL Daily Finance columnist Abigail Field reports:

  • Why should other companies in and related to the debt-collection business be so nervous?

For more, see A Lawsuit That Dirty Debt Collectors Should Be Worried About.

(1) For the court ruling, see Opinion - Sykes v. Mel Harris and Associates LLC (denying in part and granting in part defendants motion to dismiss) (the following excerpt appears at pages 5-7 of Judge Chin's ruling; for purposes of ruling on the defendants' motion to dismiss, the following allegations in the lawsuit are assumed to be true; bold text is my emphasis, not in the original text):

  • Plaintiffs allege that the Leucadia and Mel Harris defendants entered into joint ventures to purchase debt portfolios, pursued debt collection litigation en masse against the alleged debtors, and sought to collect millions of dollars in fraudulently obtained default judgments. In 2006, 2007, and 2008, they filed a total of 104,341 debt collection actions in New York City Civil Court. Assuming 260 business days a year, they filed an average of 133 debt collection actions per day.

  • The Leucadia and Mel Harris defendants regularly hired Samserv to serve process. They paid Samserv only for service attempts that were reported as completed and paid nothing for service attempts that were not reported as completed. More than 90% of the individuals they sued did not appear in court; most defaulted because they were not actually served.

  • Sewer service was integral to this scheme. After a consumer failed to appear in court, the Leucadia and Mel Harris defendants applied for a default judgment by providing the court with proof of service; proof of additional mailed notice to the consumer; an affidavit attesting to whether the consumer was in the military; and an "affidavit of merit" attesting to their personal knowledge of facts substantiating their legal claims to the court.

  • Leucadia had limited proof to substantiate its claims because it typically did not purchase documentation of the consumers' indebtedness to the original creditors. Nonetheless, the Mel Harris defendants' "designated custodian of records," Todd Fabacher, signed the vast majority of the approximately 40,000 affidavits of merit they filed each year. Fabacher averred to having personal knowledge of the key facts establishing that the debt in each collection action was due and owing. Assuming 260 business days a year, Fabacher had to have personally (and purportedly knowledgeably) issued an average of twenty affidavits of merit per hour, i.e., one every three minutes, over a continuous eight-hour day.

  • After obtaining the default judgments, the Leucadia and Mel Harris defendants proceeded to restrain plaintiffs' bank accounts, threatened to garnish their wages or seize their property, caused them to incur litigation costs, and impaired their credit, making it difficult for plaintiffs to obtain housing, employment, and loans.

For the first amended complaint filed in this lawsuit, see Complaint - Sykes v. Mel S. Harris and Associates LLC.

Clerical Error On Deed Of Trust Leaves Innocent Homeowner Facing F'closure, Despite Never Missing A Payment; Lacks Cash To Cough Up $5K For TRO Bond

In Boise, Idaho, KBOI-TV Channel 2 reports:
  • The American dream has turned into a nightmare for Donna Lee of West Boise. She pays her mortgage each month but is facing foreclosure anyway. When she bought her home from a developer, there was a clerical error on the deed of trust that shows she should be living in a different unit. The developer has filed for bankruptcy and the bank wants the property.

***

  • Lee lives in the home with her son. Life was good until a year ago, when she found out someone messed up the paperwork in the process of buying the home. "I just can't believe that no one is willing to change the clerical error on the deed of trust. Someone couldn’t read the platt correctly and record it correctly. My big thing here is I want justice, I want it corrected", Lee said.

  • Lee's lawyer, Michael Christian met with the bank the week of December 27, 2010, to try and work out a deal. Christian came out of the meeting with another disappointing decision. In an email, Christian told the Truth Squad: "Our discussion with the developer's lender's attorney was unsuccessful, and the developer's lender (Intermountain Community Bank, which is a DBA of Panhandle State Bank), has indicated it is unwilling to postpone its foreclosure sale to work out a solution to the mistakes that were made."

  • Christian filed a [request for a] restraining order afterward to try and stop the foreclosure process. The judge granted the request but also asked for a 5 thousand dollar bond to enforce it. Lee doesn't have the money and she's running out of time.

***

  • Christian told the Truth Squad the developer’s bank might be interested in swapping units so Lee can stay in her home, but she might have to come up with some money to pay for any differences in the values of the properties.(1)

For more, see Boise woman facing foreclosure: 'It’s a nightmare'.

(1) I wonder if the homeowner or her attorney (or the bank currently holding her mortgage loan used to finance the home purchase) has been in touch with the title insurance company that (presumably) insured the title to the property to submit a claim on the title policy. See generally, Title Insurance: What Risks Does It Protect A Property Owner Against?

Saturday, January 08, 2011

Squatting 'Gang' Of 30 Snatches Vacant 10-Bedroom, £10M London Mansion; Pending Eviction Action Of No Concern As Group Has Sights On 'Roomier' Abode

In London, England, the Daily Express reports:
  • A LATVIAN squatter living in a £10 million mansion has offered to “open” houses for others to take over – and is planning to move into a bigger home himself. Jason Ruddick, 21, moved into a four-storey Victorian mansion with a 30-strong gang, many of whom are also from eastern Europe. It is believed he entered the house in Highgate, north London, on Boxing Day.

  • Ruddick, who came to the UK after hearing it was a “soft touch” for squatters, said: “I like it around here and there are empty houses. We are going to keep going.” The house, which belongs to Lebanese businessman Albert Abela, was empty because it was to be renovated. Mr Abela is said to be furious at having to pay for gas, water and electricity as he cannot legally disconnect supplies while the house is occupied.

  • A court hearing to evict the squatters is set for January 19 but the gang has already set its sights on a new home. Yesterday Ruddick – an anglicised version of his Latvian name – said: “We will move to a bigger place. I have found somewhere only 15 minutes away and we want more people to join us.”

  • And, in a post on the Advisory Service for Squatters website, he offers to “open” empty houses for others to live in. He writes: “I have many empty houses… I can open them for anybody who’s interested – but not for free.”

For more, see I Want An Even Bigger House Says Latvian In £10M Squat.

See also BBC News: Squatting in 10-bed Highgate home was 'easy': squatter:

  • [Ruddick] said squatters rights in England means "this is one of the few countries (where) it is so easy to do it". "I would probably get arrested (in Latvia), that would be the end of it", Mr Ruddick added.

  • Occupation of empty properties is a civil, not a criminal, matter in England and Wales, unless entry is forced. Police can act only if the squatters commit offences such as theft or criminal damage.

Orange County DA: Squatting Couple Hired PI To Locate Vacant Foreclosed Homes, Then Drafted Fake Lease To Obtain Utility Service For $2.6M House

In Newport Beach, California, The Associated Press reports:
  • Prosecutors say an Orange County couple squatted in a foreclosed home in a ritzy Newport Beach neighborhood more than three months before they were discovered and arrested. The district attorney's office said Thursday that 42-year-old Chris Wayne Duncan and 36-year-old Robin Ann Duncan face charges of second-degree burglary and other charges.

  • Authorities allege the Duncans hired a private investigator to locate foreclosed and vacant homes in Orange County and then drafted a fake lease so utility companies would put bills in their name as renters. They are also accused of changing the locks after an appraiser tried to enter the property.

Source: DA: Couple squatted in Newport Beach foreclosure.

See also:

MERS Continues Efforts To Allegedly 'Buy Off' Congress By Beefing Up Its Gang Of Lobbyists

The Center for Responsive Politics' OpenSecrets Blog reports:
  • One company embroiled in the nation's property foreclosure crisis is not unprepared for a fight. In Washington, D.C., Merscorp Inc. has retained several well-heeled lobbyists and invested hundreds of thousands of dollars in lobbying efforts since the start of the mortgage crisis and economic meltdown.Merscorp Inc. is the parent company of Virginia-based Mortgage Electronic Registration Systems (MERS), which serves as an electronic registry for 67 million U.S. mortgages -- more than 60 percent of the country's total.

***

  • Rolling Stone reporter Matt Taibbi recently summed up the company's status this way: "In short, the mortgage industry considers MERS owner enough to foreclose on you, but not owner enough to be sued, or reasoned with, or even to provide basic customer service."

***

  • The company has retained several lobbyists with powerful pedigrees. Among them?

    (1) Former House Appropriations Committee Chairman Robert Livingston (R-La.),
    (2) J. Allen Martin, Livingston's former chief of staff,
    (3) Arnold Havens, who formerly served as general counsel at the U.S. Treasury,
    (4) John M. Duncan, who formerly worked in the Treasury Department under President George W. Bush and served as the chief of staff for Sen. William Roth (R-Del.) -- the former Senate Finance Committee Chairman who is the namesake of the Roth IRA investment vehicle.

  • Merscorp has also utilized the lobbying services of two other men who have passed through the "revolving door" between public service and the private sector: William D. Crosby Jr., a long-time lawyer for the House Rules Committee, and Steve Kreseski, the former chief of staff for Rep. Bob Ehrlich (R-Md.).

For more, see Embattled Virtual Mortgage Registry MERS Retains Top Lobbying Talent.

Beware Of Sovereign Citizen Movement Peddling Worthless Service To Homeowners Facing Foreclosure

In Orlando, Florida, WKMG-TV Channel 6 reports:
  • The words are stamped in red across every page of the bank foreclosure notice. Statements such as "United States is a for-profit corporation and is bankrupt," or, "No consent to forced seizure by sale or takings," cover the foreclosure papers without any apparent purpose.

  • Yet, over the past nine months, court clerks in Lake County report they have received a handful of foreclosure documents covered in the same random words and statements.

  • Paul Urmson had some of those statements stamped on his foreclosure notice. He is about to lose his Lake County home to foreclosure. [...] Urmson said a friend guaranteed he would save his home. He claimed the government already had $800,000 set aside in his name. [...] He was told to pay $1,000 for the service and mail the documents to the Lake County Court. He never did.

***

  • Matt Englett, managing partner of the KEL law firm, said his staff has seen a few of those stamped documents from clients who had turned to his firm for help. KEL specializes in mortgage foreclosure cases. "Courts do not recognize this, and any court that sees this will not give it any credibility," Englett said.

  • The veteran attorney said the bigger issue is the sovereign movement's sales pitch. "I don't think the courts waste a lot of time on these things, but I'm more concerned about people spending $1,000, which is probably all the money they have on something that will not work," he said.

For the story, see Lawyers Warn Against Foreclosure Quick Fix (Anti-Tax Group's Propaganda Shows Up In Local Foreclosure Courts).

Go here for other posts on the sovereign citizens racket.

Massachusetts AG: Landlord's Craigslist Ads Discriminating Against Families w/ Young Kids Due To Lead Contamination In Apartments Violates Law

From the Office of the Massachusetts Attorney General:
  • A Melrose-based realty trust and its manager violated Massachusetts law by allegedly posting a discriminatory rental advertisement on the popular classified advertising website Craigslist.org (“Craigslist”), according to a lawsuit filed by AG Coakley’s Office. The complaint, filed in Suffolk Superior Court against Mt. V.M. Realty Trust (“Mt. V.M.”) and Nicholas Keramaris, alleges that they violated state anti-discrimination, lead paint, and consumer protection laws by placing an advertisement on Craigslist which referred to the lead status of an apartment and refused to rent it to families with young children.

***

  • According to the complaint, Keramaris, on behalf of Mt. V.M., posted an advertisement on Craigslist in June 2010 that discriminated against families with young children. The advertisement, for an apartment building in Melrose that Keramaris managed, stated that the unit could not be rented to families with children under six years old as it was not deleaded. Under Massachusetts law, it is illegal to refuse to rent or steer families away from rental properties because they have young children whose presence triggers an owner’s duty to eliminate lead hazards that pose serious health risks.

***

  • Since taking office in January 2007, Attorney General Coakley’s office has obtained judgments in 91 housing discrimination cases brought against landlords, property managers, and/or real estate companies.

For the Massachusetts AG press release, see AG Coakley Sues Melrose Realty Trust And Manager For Posting Discriminatory Housing Ad On Craigslist.

Illinois Law Allowing Active-Duty Servicemembers To Apply For 90-Day Foreclosure Delay Goes Into Effect

The Huffington Post reports:
  • The state of Illinois has faced an especially grim foreclosure picture in the last several years, and the outlook is likely to get bleaker in the first quarter of 2011. [...] But thanks to a new law that went into effect on New Year's Day, one especially vulnerable group of Illinoisans will be allowed a temporary reprieve.

  • House Bill 3762, which passed the House and Senate unanimously in the spring and was signed into law over Memorial Day 2010, will allow active-duty service members to apply for a 90-day delay if facing foreclosure.

For more, see Illinois Foreclosures Law Helps Military Service Members Get Reprieve.

Acquitted Cop Killer Vows "We Will Defend Ourselves!" If Crim'l Defense Lawyer Attempts Eviction After F'closing On Family Farm Over Unpaid Legal Fees

In Kingston, Tennessee, the Knoxville News Sentinel reports:
  • The lawyer who won Leon Houston's freedom holds a prize he can't cash. Not a single bidder showed up Tuesday when former defense lawyer Jim Logan stood on the Roane County courthouse steps and auctioned a little less than 100 acres of the Houston family farm for unpaid legal fees. Logan ended up buying the land back himself. The winning bid came in at $150,000 - far less than the quarter-million-plus Logan said the family still owes him.

***

  • "This is going to get interesting when they come try to evict me by way of fraud," Leon Houston said. "We will defend ourselves."

***

  • Logan sat beside Leon Houston through two double-murder trials over three years in the deaths of Roane County Deputy Bill Jones and ride-along Mike Brown. Jones and Brown died in a shootout with the Houston brothers May 11, 2006, in front of the family farmhouse on Barnard Narrows Road south of the Tennessee River.

  • The brothers argued self-defense, and prosecutors couldn't prove who shot first. Leon Houston's first trial ended in a mistrial, the second in acquittal on all charges in November 2009. [Brother] Rocky Houston's only trial in December 2008 ended in a split verdict, and an appeals court threw out the case last year.

For the story, see No bids made on Houston land (Lawyer buys back farm he owns in lieu of fees).

Friday, January 07, 2011

Massachusetts High Court Ready To Rule On 'Ibanez/LaRace' Case; Validity Of Thousands Of Bay State Foreclosures Hang In Balance

In Boston, Massachusetts, Bloomberg reports:
  • Massachusetts’s highest court is poised to rule on whether foreclosures in the state should be undone because securitization-industry practices violate real estate law governing how mortgages may be transferred.

  • The fight between homeowners and banks before the Supreme Judicial Court in Boston turns on whether a mortgage can be transferred without naming the recipient, a common securitization practice. Also at issue is whether the right to a mortgage follows the promissory note it secures when the note is sold, as the industry argues.

  • A victory for the homeowners may invalidate some foreclosures and force loan originators to buy back mortgages wrongly transferred into loan pools.(1) Such a ruling may also be cited in other state courts handling litigation related to the foreclosure crisis.

***

  • The case is U.S. Bank v. Ibanez, 10694, Supreme Judicial Court of Massachusetts (Boston). The lower-court cases are U.S. Bank National Association v. Ibanez, 08-Misc-384283, and Wells Fargo Bank NA v. LaRace, 08-Misc-386755, Commonwealth of Massachusetts, Trial Court, Land Court Department (Boston).(2)

For the story, see Foreclosures May Be Undone by Massachusetts Ruling on Mortgage Transfers.

For a related post, with links to relevant court documents, see Massachusetts High Court Hears Arguments In 'Ibanez' Case That Threatens To Open The Door To Voiding Thousands Of State Foreclosures.

(1) A homeowner victory could also trigger an additional slew of lawsuits (ie. alleging violations of the Federal Fair Debt Collection Practices Act, state law prohibiting unfair and deceptive acts or practices in violation of G.L. c. 93A, § 2, etc.) against the foreclosure mill law firms who have brought foreclosure actions tainted with flaws similar to those at the center of this case.

(2) For Massachusetts Land Court Judge Keith C. Long's two rulings in this matter, see:

For related earlier posts on this story, see:

Federal Reserve To Support Tougher Rules Regulating Mortgage Servicing Rackets; Reverses Earlier Stance

The Huffington Post reports:
  • The Federal Reserve has reversed its opposition to new rules reining in foreclosure abuses, and will support stronger regulations on the nation's largest banks, according to a source familiar with the matter.

***

  • Problems in the packaging and sale of mortgage bonds helped inflate the housing bubble and facilitated the sale of predatory loans nationwide. Since banks could push mortgages on borrowers and then sell them to investors, critics say that banks lacked serious incentives to ensure those loans could be repaid.

  • The FDIC has been pushing hard to ensure that new regulations on the mortgage bond market include clear instructions for how banks handle mortgages-- and under what circumstances they can evict delinquent borrowers. The bank divisions that collect payments from borrowers and implement the foreclosure process-- known as "mortgage servicers"-- have been plagued by rampant problems with fraudulent documentation. This fraud has resulted in everything from illegal fees charged to borrowers to improper evictions.

For more, see Fed To Back New Rules To Rein In Home Foreclosure Abuses.

BofA's "Pennies On The Dollar" Settlement With Fannie, Freddie Over Sale Of Crappy Mortgages A "Backdoor Bailout" Of Bank By Federal Government?

The New York Post reports:
  • Bank of America is getting blasted with accusations of a "backdoor bailout" for its $2.8 billion settlement with Fannie Mae and Freddie Mac over billions of bad mortgages. Fannie and Freddie, which are wards of the government, accepted pennies on the dollar to settle a dispute over billions of faulty mortgages the bank sold to the pair during the housing bubble.

  • Bank of America breathed a sigh of relief on Monday after the cost was far less than investors feared, sending its shares up as much as 6.4 percent. But detractors on Wall Street and in Washington denounced the deal as another taxpayer buyout for a bank that weathered the financial crisis only with the help of a $45 billion government lifeline.

***

  • Analysts estimate the taxpayer bill for propping up troubled institutions Fannie and Freddie could hit a whopping $150 billion, while the entities' recent settlements with banks over bad mortgages represent a drop in the bucket.

  • "If Fannie and Freddie had really pushed hard on this settlement, it would have really caused problems for BofA," Edward Pinto, resident fellow at conservative Washington think tank American Enterprise Institute, told The Post.

  • The outrage stems from BofA's agreement to pay just $1.28 billion to Fannie and $1.52 billion to Freddie to resolve a dispute over loans purchased between 2005 and 2007 that the pair claims were improperly created. According to critics, the BofA settlement was struck for a mere fraction of the amount the bank should be forking over to Fannie and Freddie.

  • "This [settlement] is a standing subsidy that has to be worth $10 billion or $15 billion for [BofA]," Christopher Whalen, the founder of Institutional Risk Analytics, told The Post.

For more, see Furor over BofA's $2.8B mortgage settlement.

Colorado AG Scores $181K+ Judgment Against Foreclosure Rescue Operator For Clogging Courts With Frivilous Filings, Clipping Homeowners w/ Upfront Fees

In Denver, Colorado, The Denver Post reports:
  • A man accused of running a company called "America's Foreclosure Defense" and preying on elderly and vulnerable people has been ordered to pay $181,266 in restitution and fines to the state, Colorado Attorney General John Suthers announced Tuesday.

  • Sherron L. Lewis Jr., 54, has been barred from providing foreclosure-relief services. Lewis was accused in a suit filed by the attorney general of filing frivolous lawsuits that clogged the courts. Suthers alleged that Lewis used deceptive and misleading schemes that Lewis claimed would stop the foreclosure process.

  • Suthers said Lewis had no legal experience, had improperly raked in thousands of dollars of upfront fees and had "grossly misused and abused the judicial system." The $181,266 judgment against Lewis was ordered after he failed to respond to the state's lawsuit over his activities.

  • A Jefferson County district court judge ordered Lewis in August to pay more than $76,000 in restitution to victims, including an elderly Illinois woman, Suthers said. The fines ordered against Lewis in August stemmed from his alleged practice of collecting upfront fees and acquiring an interest in his victims' properties as part of his services, both of which violated Colorado law, according to the attorney general.(1)

Source: Man pays fines, restitution to state in case alleging frivolous lawsuits.

(1) For the Colorado AG press release, see Attorney General announces $181,266 judgment against Denver man who provided fraudulent foreclosure-relief services.

For the relevant court documents, see:

Ex-Ohio AG Files Class Action Suit Alleging Lenders' Law Firm Files Frivilous Foreclosures

In Cleveland, Ohio, WKYC-TV Channel 3 reports:
  • Ohio's former embattled attorney general Marc Dann is taking on his first high-profile lawsuit since a sexual harassment scandal forced him to resign from the job in 2008. Dann and co-counsel James Douglass Tuesday filed a class-action lawsuit against a law firm he says files frivolous foreclosures.

  • The lawsuit filed in Cuyahoga County Common Pleas Court claims the debt collection firm-- Lerner, Sampson and Rothfuss -- doesn't have the right to file foreclosures and has created incorrect documentation.(1)

For more, see Ex-AG Dann sues law firm regarding their foreclosure process.

For the lawsuit, see Turner, et al. v. Lerner, Sampson & Rothfuss.

See also attorney Marc Dann's press release: Lawyers for Foreclosing Banks Should be Held Accountable for Telling the Truth:

  • The suit alleges that filing lawsuits on behalf of banks and investors who do not actually hold the notes or mortgages that are the subject of the lawsuit is a violation of the Fair Debt Collection Practices Act, Ohio Consumer Sales Practices Act and constitutes abuse of process. We have also alleged that Lerner Sampson and its staff members created and signed assignments, endorsements and affidavits without having actual knowledge of the facts contained in those documents.

Thanks to deontos.is for the heads up on the story.

(1) According to Dann's press release, the Cuyahoga County County Common Pleas Judges have recently enacted much stricter requirements for proof when lawyers like Lerner Sampson are seeking a judgment in a foreclosure case (Cuyahoga County Affidavit Policy, Attorney Affidavit Forms).

Big Bear Homeowner Scores Small Claims Win Over BofA In Alleged Fraudulent Bait & Switch Loan Modification Scam

In Big Bear City, California, BigBearGrizzly.net reports:
  • Dave Graham got fighting mad. The Big Bear City resident took Bank of America’s mortgage division, BAC Home Loans Servicing LP, to small claims court claiming fraud. Graham won his case Dec. 17. And he doesn’t feel apprehensive about gloating one bit.“I feel real good about this,” Graham says. He sued the mega bank for fraud because he was put into a loan modification program by Bank of America when the bank knew from the start he did not qualify.

***

  • The judge awarded Graham $7,595. This is the first known case where Bank of America has been found guilty by reason of fraud.

For more, see Big Bear bank shot (Local man wins lawsuit against Bank of America).

See also The Huffington Post: Homeowner Beats Bank Of America In Small Claims Court:

  • Graham, who faces reduced income after retiring from his job as a shift foreman at a grocery distribution center, said he never would have bothered with HAMP had the bank not sent him a packet saying he should apply. "I would have found some way to [make my payments] if I had to," he said. "It may even been that we'd have fallen behind a month or two. I certainly wouldn't have been in this sort of shape."

  • It's the classic HAMP bait-and-switch: Homeowners are told they're eligible for the program but eventually discover the foreclosure process, triggered by the reduced payments, moved faster than the modification process.

***

  • Lots of people have sued big banks for their bad faith HAMP efforts, but Graham may be the first to try it in small claims court. It won't save his home, but it gives him some dignity. "Both small claims courts judges and juries often have a refreshing sense of justice that allows these sorts of bellwether decisions," HAMP expert Alan White told HuffPost. "Judges are also less reticent to denounce unfair practices in small stakes individual cases than in government enforcement or class actions."

  • The National Consumer Law Center is involved in several class-action lawsuits against banks and others over broken HAMP promises.(1) (Those lawsuits, if successful, will prevent foreclosures.) The NCLC's Charles Delbaum told HuffPost that Judge John Pacheco's "terrific decision" in Graham's case picked up on the same theme of more than a dozen actions against the likes of Bank of America, JPMorgan Chase, Wells Fargo, and CitiMortgage.

  • "[I]t is unconscionable to string homeowners along far beyond the three month trial periods they and their banks have agreed to," Delbaum emailed, "allowing them to become more and more behind on the payments due under their original loan, making the hole they are in ever deeper and harder to dig out of, and then to tell them they weren't eligibile for the program in the first place -- something the banks are required to determine within the three month trial period."

(1) For some of those lawsuits, see:

Thursday, January 06, 2011

Rubber Stamping Florida Judge Changes Public Position On Exempting F'closing Banks From Complying w/ Procedural Rules, Then Lets 'Em Break Them Anyway

AOL Daily Finance columnist Abigail Field writes:

  • Apparently, the judge merely changed his public position: Rather than admit the fact that foreclosing banks don't have to follow the rules on affidavits and loan documentation, he'll say they do, then fail to make them comply. That smells like a cover-up, not a correction.

***

For more, see Florida Is Still Letting Banks Break the Rules in Foreclosure Cases.

(1) See Florida Trial Judges Continue Sloppy Work In Foreclosure Actions; Rubber-Stamped Judgments Tainted By Sewer Service Reversed By State Appellate Courts for more on the apparent crappy attitude of some Florida judges presiding over foreclosure proceedings.