Foreclosed Florida BofA Borrowers Demand Return Of Their Homes, $5M+ In Damages In Lawsuit Seeking Statewide Class Action Status

From a press release from the law firm Forizs and Dogali, P.A.:

• Teresa O’Neal and Marco Delgado, through the law firm of Forizs & Dogali, P.A., have filed a statewide class action against Bank of America alleging improper action during mortgage foreclosures.

• This case is different from other similar lawsuits because it focuses on Bank of America’s current ownership of the foreclosed property. The Plaintiff group includes only borrowers who were improperly foreclosed out of homes which are now, after foreclosure sales, owned by Bank of America. The complaint seeks to restore the borrowers’ rights in their homes, and seeks to establish that Bank of America’s claim of ownership can be invalidated. The number of Florida homes which Bank of America now owns after improper foreclosures is unknown, but the Plaintiffs estimate the number in the thousands.

• The Plaintiffs allege the improper foreclosure practices by which Bank of America obtained ownership of the properties includes false and forged affidavits, certificates of service, and other documents. They also allege that the documents systematically contained inaccurate facts, or were signed by persons who lacked required knowledge, or were forged. The Plaintiffs propose that all prior foreclosure sales which were based upon such documents are subject to being invalidated by the borrowers.

• In addition to seeking a declaration regarding the invalidity of prior foreclosure sales through which Bank of America took ownership of their homes, Ms. O’Neal and Mr. Delgado allege that Bank of America violated Florida’s racketeering laws, and that Bank of America’s use of the court system to deprive them of their homes was in violation of their civil rights, and that Bank of America’s conduct violated the federal Fair Debt Collection Practices Act. The Plaintiffs’ damages are alleged to exceed $5 million.

Source: Homeowner Class Action Filed Against Bank of America, Challenging Ownership of Homes Obtained Through Improper Mortgage Foreclosures.

Mortgage Elimination Racket Using Forged Lien Satisfactions Filed In Public Records Continues To Suck In Desperate Homeowners Facing Foreclosure

In Stanislaus County, California, The Modesto Bee reports:

• New variations on bogus mortgage elimination schemes are claiming victims throughout Stanislaus County, a fraud authority says. Con artists seem to be targeting Latino homeowners facing foreclosure, and some real estate professionals are getting sucked in as well, said Glenn Gulley, an investigator with the county district attorney's office.

• "A lot of people are getting tangled up in this," Gulley said. His office has brought no charges yet; he confirmed investigations in hopes of warning other potential victims. In the latest variation, people behind on payments are told they can keep their homes by signing up for a new mortgage, typically at 25 percent of what they owe, with lower premiums, plus a fee that's commonly $1,000 to $3,000.

• Fraudsters then file a reconveyance at the county recorder's office, claiming that the legitimate loan has been paid off. Duped homeowners sometimes pay thousands of dollars toward the "new" loan — and still end up losing their houses when the legitimate lender forecloses.

For more, see Mortgage elimination scams hit Stanislaus (Most recent victims speak little, no English).

State Homestead Law Prevents Lawyer From Recovering Legal Fees From Property Insurance Damage Proceeds After Being Stiffed By Client/Florida Homeowner

The following facts are taken from an April, 2010 court ruling by a Florida appeals court:

• Homeowner, Quiroga, suffered damages to his Florida homestead as a result of two hurricanes.

• Quiroga retained the services of a law firm on a contingency fee basis to help him secure the benefits due him pursuant to a homeowner's insurance policy.

• Upon securing the benefits of the insurance policy through the efforts of the law firm, Quiroga promptly showed his appreciation by firing them and terminating their contingent fee representation of him, stiffing them out of their legal fees in the process.

• In attempting to recover the legal fees, the law firm filed a motion to impress a charging lien on the homeowner's insurance proceeds, at which point Quiroga claimed that said cash proceeds are exempt homestead property, not subject to attachment by means of a charging lien by reason of Art. X, § 4(a), Florida Constitution.

In agreeing with a lower court ruling, the Florida appeals court denied the law firm in its effort to recover its legal fees from the homeowner's insurance proceeds. According to the court:

• The parties do not dispute the hurricane-damaged property is constitutionally exempt homestead property. See Cutler v. Cutler, 994 So. 2d 341, 343 (Fla. 3d DCA 2008) ("To qualify for protection under Article X, section 4 of the Florida Constitution, a parcel of property must meet constitutionally defined size limitations and must be owned by a natural person who is a Florida resident who either makes or intends to make the property that person's residence.").
  
  In the event a homestead is damaged through fire, wind or flood, the proceeds of any insurance recovery are imbued with the same privilege. Orange Brevard Plumbing & Heating Co. v. La Croix, 137 So. 2d 201, 203-04 (Fla. 1962).
  
  Because Quiroga did not and, as a matter of public policy in this State, cannot through an unsecured agreement, such as the contingent fee agreement in this case, enter into an enforceable contract to divest himself from the exemptions afforded him through Article X, section 4(a), see Chames v. DeMayo, 972 So. 2d 850, 853 (Fla. 2007), this Court is compelled to affirm the order under review, the equities of the matter notwithstanding.
  
  See Pub. Health Trust of Dade County v. Lopez, 531 So. 2d 946, 951 (Fla. 1990) ("The homestead protection has never been based upon principles of equity.") (citing Bigelow v. Dunphe, 143 Fla. 603, 197 So. 328, 330 (Fla. 1940)); Pierrepont v. Humphreys (In re Newman's Estate), 413 So. 2d 140, 142 (Fla. 5th DCA 1982) ("The homestead character of a piece of property . . . arises and attaches from the mere existence of certain facts in combination in place and time.").

For the ruling, see Quiroga v. Citizens Prop. Ins. Corp., 34 So. 3d 101 (Fla. App. 3d DCA, 2010).

Probe Continues Into Suspected Philly Rent-To-Own Racket; Unsophisticated Would-Be Buyers Duped Into Fixing Up Decrepit Homes & Ended In Foreclosure

In Philadelphia, Pennsylvania, the Philadelphia Daily News reports:

• TWO-AND-A-HALF years have passed since Robert N. Coyle Sr. defaulted on bank loans on nearly 300 Kensington homes that he rented to the city's poorest in search of the American dream.

• Dozens of tenants who had poured money into decrepit homes believing that they'd one day own them found themselves in the eye of a massive foreclosure storm, and one step from homelessness. That's when they dubbed Coyle "a dream killer" and a "slumlord millionaire."

• Since the Daily News chronicled Coyle's shattered empire in October 2009, some tenants still fear they'll be evicted. Many of Coyle's homes sit vacant and boarded, making whole blocks resemble war zones. Meanwhile, a small army of bank executives, judges, attorneys, City Council members and criminal investigators battle to sort out the mess[.]

***

• Coyle's attorney, Alan L. Frank, said that his client was a decent person who intended to meet his loan obligations and honor any rent-to-own agreements, but that Coyle - and the banks - were overly "optimistic" about the real-estate market. "I really do believe that this mess is not his fault," Frank said. "The banks were literally lining up. They were all pitching their money at [Coyle's real-estate] entities."

• But Stefanie Seldin, a managing attorney at Philadelphia Volunteers for the Indigent Program (VIP), calls Frank's argument "laughable." "I just don't buy it," she said. "There was such corruption involved in all of his deals."

• "Granted, the banks' lack of due diligence is striking, but, nevertheless, he put people in homes that were not livable and he promised them that no matter what happened, they'd become homeowners. He preyed on folks who wanted to buy into the American Dream."

For more, see 'Slumlord' vs. the American Dream: Their homes, their hopes ... gone?

State Court Of Appeals Slams Shut Rogue S. Indiana 'Debtors Prison', Limits Asset "Fishing Expeditions" In Attempts To 'Squeeze' Delinquent Borrowers

Valparaiso University School of Law Associate Professor Alan White recently wrote in Public Citizen's Consumer Law & Policy Blog:

• A while back I reported on the revival of debtor's prison in a southern Indiana county court.(1) The Indiana Court of Appeals has now struck down the local county court rule that imposed contempt sanctions, including imprisonment, for debtors who failed to pay small claims judgments on ordinary civil debts. The county court rule provided for a "personal order of garnishment," which, unlike ordinary garnishment orders directed at third parties like banks and employers, would order the debtor herself to turn over any non-exempt funds in the debtor's possession, regardless of whether such funds actually existed.

• The disabled and indigent defendant in the case at issue was found in contempt and ordered to serve 30 days in jail for failing to pay $10 monthly on a $445 judgment, despite not having any non-exempt assets or income.

• The Court of Appeals cited the Indiana Constitution's provision that "there shall be no imprisonment for debt, except in case of fraud," and voided the local court procedures.(2) Congratulations to John Brengle and Katherine Rybak of Indiana Legal Services on achieving simple justice in this case.(3)

Source: Indiana closes debtors' prison.

For the court ruling, see Carter v. Grace Whitney Properties, ___ N.E.2d ___, 2010 Ind. App. LEXIS 2172 (November 23, 2010) (approved for publication).

For more on the attempted comeback of debtors' prisons, see Incarceration Over Unpaid Debts On The Upswing? De Facto 'Debtors' Prisons' May Be Making A Comeback As Market For 'Zombie Debt' Zooms.

(1) This is not the first time the Indiana Court of Appeals found itself compelled to reverse a ruling of a rogue trial judge in a situation similar to this one. See Button v. James, 909 N.E.2d 1007 (Ind. Ct. App., 2009), where a trial court improperly threatened an indigent debtor with imprisonment for his failure to propose a plan to pay a money judgment.

(2) Creditors' use of asset "fishing expeditions" in the form of continuous debtors' reexaminations in ongoing proceedings supplemental hearings as a "club" to hammer, harass, and otherwise squeeze a debtor was addressed by the appeals court in this excerpt:

• Carter argues that the small claims court erred when it denied her request to limit future proceedings supplemental against her by Grace Whitney Properties. Carter requested that the small claims court issue an order that Grace Whitney Properties not be allowed to seek enforcement of the judgment in the absence of a good faith belief that Carter has property or income subject to court process, but the small claims court denied her request.
  
  We noted in Kirk, 585 N.E.2d at 1369, that a creditor cannot require a debtor to attend ongoing proceedings supplemental hearings and be reexamined continuously as to whether the debtor has acquired any new assets or income. "A second order or examination of the debtor requires a showing by the creditor that new facts justifying a new order or examination have come to the knowledge of the creditor." Kirk, 585 N.E.2d at 1369 (citing 33 C.J.S Executions § 365(3)(g) (1942)).
  
  
  If several examinations within a short time of one another have recently taken place, then facts should be shown from which it may be inferred that the judgment creditor will obtain useful information, and the examination is not being used as a club to enforce settlement of claims which the debtor is without property to pay.
  
  
  Id. (quoting 33 C.J.S Executions § 365(3)(g) (1942), and citing Federal Loan Corp. v. Harris, 308 N.E.2d 125, 127 (Ill. Ct. App. 1974) (holding that a general "fishing expedition" for assets may be conducted on initial citation for supplementary proceeding; but thereafter, the judgment creditor must show existence of facts giving rise to belief the judgment debtor has property or income to satisfy the judgment)). Again, the judgment creditor has the burden of showing that the debtor has property or income that is subject to execution. Id.
  
  Having been made aware repeatedly that Carter is disabled and has no income or property that can be used to satisfy the judgment, Grace Whitney Properties must make a showing that new facts justifying a new order or examination have come to its knowledge in order to justify future proceedings supplemental. Future "fishing expeditions" are improper. Carter has made a prima facie showing that the small claims court erred when it denied her motion on this issue.

(3) Indiana Legal Services is a a nonprofit law firm that provides free civil legal assistance to eligible low-income people throughout the state of Indiana.

Failing To Name MERS In Utah Quiet Title Suits Leads To Default Judgments, Mortgage-Free Title For Homeowners; Lawyers Say MERS Not Entitled To Notice

In Salt Lake City, Utah, The Salt Lake Tribune reports:

• A Utah court case in which the owner of a Draper townhouse got clear title to the property, even though he still owed $132,000 on it, raises new legal and financial questions about a property-records database created by mortgage bankers.

• The award of a title free of liens means that whoever owns the promissory note on the Draper property — likely a group of faraway investors — no longer has the right to foreclose to collect on a delinquent loan. Indeed, the townhouse owner has sold the property and kept the money. Those who own the promissory note probably don’t even know what occurred.

***

• Last year, the owner of the Draper property contacted attorney Walter T. Keane to help him deal with lenders, though Keane won’t say what the problem was and the owner declined an interview request. Keane filed what’s called a “quiet title action,” a lawsuit in which the owner seeks clear title to a property free of liens by lenders or others.

***

• The lawsuit over the title to the townhouse named Garbett Mortgage and Citibank FSB as the holders of promissory notes as recorded on trust deeds filed with the recorder’s office. Integrated Title Services was listed as trustee of the Garbett Mortgage trust deed, while First American Title was the trustee of the CitiBank trust deed. But there also was another entity listed on the trust deeds called the Mortgage Electronic Registration Systems (MERS).

***

• Under the state’s quiet title laws, Keane said he did not have to name MERS or serve it legal papers in the lawsuit because it was not the legal owner of title to the property. Those were title companies. In addition, attorneys contend, MERS cannot be the “beneficiary” or holder of the promissory note because it readily has admitted it has no financial interest in any notes or mortgages.

• Normally, a trustee named in a trust deed has a legal duty in Utah to the entity that holds the promissory note and for fair dealing with the homeowner. But in the townhouse case, First American Title filed a response to the quiet title action saying that it had no idea who had the right to collect payments on the promissory note, nor did it admit to knowing any other basic information about the property.

• “The fact of the matter is First American Title doesn’t know who the beneficiary of the trust deed is and basically they disavow any interest in it,” Keane said. “It’s an acknowledgement [the recording system on this property is] a fiction, that they don’t have any real interest in it.”

• Garbett Mortgage also told the court it no longer held an interest in the property. Integrated Title never filed a response to the lawsuit but did withdraw as a trustee with the Salt Lake County Recorder’s Office. “Considering the owner of the property [the title companies who were trustees] failed to dispute the matter, and further considering that the original lender claims no further interest, the court nullified the trust deeds prior to setting any type of trial date,” Keane said.

• So in the four months that the process took, the owner was able to gain title and deny the owners of his loan the ability to foreclose on the property for nonpayment. That means the promissory note owned by investors may be worth far less than they paid for it because it is no longer backed by an asset. [...] Keane said he’s been able to obtain quiet title in the same manner in two other cases.

• Another attorney, Abraham Bates, said he recently also won a quiet title action in a similar case in Salt Lake County. [...] Bates said under Utah laws, it was not necessary to serve MERS legal papers, as it was not in the Draper townhouse case.

***

• Bates said he has more than 100 lawsuits pending over MERS-related questions and has hired more attorneys for his firm to handle the increasing load.

For the story, see How accurate are property records?

Florida Bar Maintains 100% 'Success' Rate When Clearing Foreclosure Mill Attorneys Accused Of Ethical Misconduct

The Sarasota Herald Tribune reports:

• Florida courthouses are rife with evidence of errors and fabrications made by attorneys handling foreclosure cases, and yet so far no lawyers have been disciplined. With pressure mounting to police its own members, the Florida Bar established a special category of complaints listed as "foreclosure fraud."

• But in 20 complaints investigated in that category, the Bar has not found cause to discipline anyone -- even lawyers who admitted to breaking ethical rules. Some observers say that early track record of ignoring misdeeds by its members raises questions about whether the system of self-policing for lawyers can handle the depth of wrongdoing in the foreclosure crisis.

• The complaints have been filed by judges, lawyers, homeowners and the Florida Bar itself, and reflect the issues seen in courtrooms almost daily for the past two years, including forged signatures and backdated documents used to improperly seize homes in foreclosures. In addition, attorneys for lenders have filed false motions, left out important information that would hurt their case, or skipped mandatory mediations and court hearings.

***

• The convoluted way foreclosure cases are handled by attorneys makes placing blame difficult. At the largest foreclosure firms, dubbed "foreclosure mills," several lawyers work on different parts of a case and other non-lawyers prepare many of the documents.

• Some complaints against lawyers in foreclosure cases were closed without discipline because a homeowner complained about the wrong lawyer in a case where several did work. Even judges have trouble figuring out which attorney is responsible for the bad behavior.

• Circuit Judge Lee Haworth, chief judge of the judicial district that includes Sarasota and Manatee counties, says he only reports lawyers after he sees a pattern of egregious violations in cases. "I think one of the problems we have is identifying exactly who it is at fault here," Haworth said. "Lawyer A will file the pleadings, but Lawyer B will show up."

• Law firms from across the state also hire local lawyers to represent them at hearings. "The judges are not always face to face with the people who are causing the most problems," Haworth said.

For more, see Foreclosure lawyers' misdeeds ignored in Florida? (Despite complaints, ethics breaches slip past discipline system).

Lawsuit: BofA Attempted Foreclosure On 'Ike-Ravaged' Home Over Unpaid $107K Loan Despite Sitting On $196K Pile Of Cash From Insurance Proceeds

In Harris County, Texas, Ultimate Clear Lake (a product of the Houston Chronicle and Chron.com) reports:

• A woman is suing Bank of America after her home, located in Clear Lake, was damaged by Hurricane Ike. Marie Holmes filed a lawsuit on Jan. 13 in the Harris County District Court against BAC Home Loans and Bank of America, alleging breach of contract and breach of duty.

• Holmes says that the defendant continues to hold onto $196,000 in insurance funds, distributed to repair the damage caused to her Clear Lake home by Hurricane Ike. According to the brief, Holmes, whose current principal balance on the home is $106,985.35, repeatedly asked the defendants to use the insurance funds to pay off her mortgage.

• To date, the defendants have failed to honor her request, have charged her over $28,000 in interest and late fees, and have posted her home for foreclosure on numerous occasions, Holmes says.

• Holmes is seeking actual and exemplary damages, as well as attorney’s fees and court costs. She is being represented in the case by Austin attorney Molly Rogers. Harris County District Court Case No. 2010-02490.

Source: Clear Lake resident sues Bank of America over insurance funds, foreclosure postings.

BofA Gearing Up For Major PR Damage Control Effort In Light Of WikiLeaks Promised Document Dump?

AlterNet reports:

• WikiLeaks founder Julian Assange is promising to unleash a cache of secret documents from the hard drive of a U.S. megabank executive. In 2009, he told Computer World that the bank was Bank of America (BofA). In 2010, he told Forbes that the information was significant enough to "take down a bank or two," but that he needed time to lay out the information in a more user-friendly format.

• Recent new reports suggest that BofA is now moving into high gear on damage control, creating a "war room" and buying up hundreds of derogatory Internet domain names including BankofAmericaSucks.com and BrianMoynihanBlows.com (BofA's CEO).

• Before the big banks start calling for Assange's internment at Guantanamo, the question worth considering is what does Wikileaks have on America's largest bank?

For more, see What Does Wikileaks Have on Bank of America? (Reports suggest that BofA is now moving into high gear on damage control, creating a "war room" to fight off an upcoming release of WikiLeak documents).

Lawsuit Forces Chase To Admit Improperly Clipping 1000s Of Military Families, F'closing On 14 Homes In Violation Of SCRA; Agrees To Cough Up About $2M

NBC News reports:

• One of the nation's biggest banks — JP Morgan Chase — admits it has overcharged several thousand military families for their mortgages, including families of troops fighting in Afghanistan. The bank also tells NBC News that it improperly foreclosed on more than a dozen military families.

• The admissions are an outgrowth of a lawsuit filed by Marine Capt. Jonathan Rowles. Rowles is the backseat pilot of an F/A 18 Delta fighter jet and has served the nation as a Marine for five years. He and his wife, Julia, say they’ve been battling Chase almost that long.

• The dispute apparently caused the bank to review its handling of all mortgages involving active-duty military personnel. Under a law known as the Servicemembers Civil Relief Act (SCRA), active-duty troops generally get their mortgage interest rates lowered to 6 percent and are protected from foreclosure. Chase now appears to have repeatedly violated that law, which is designed to protect troops and their families from financial stress while they’re in harm's way.

• A Chase official told NBC News that some 4,000 troops may have been overcharged. What’s more, the bank discovered it improperly foreclosed on the homes of 14 military families.

***

• [In a statement to NBC News, a Chase spokesperson] said that beginning this week Chase will be mailing a total of about $2 million in refunds to families that may have been overcharged. She says most of the families improperly foreclosed on have gotten or will get their homes back. A bank official described what happened here as “grim,” but emphasized the mistakes were inadvertent, not malicious.

For more, see No. 2 bank overcharged troops on mortgages (NBC News exclusive: JPMorgan Chase also improperly foreclosed on homes).

Go here for a statement to NBC News from a JP Morgan Chase & Co. representative in response to a report about foreclosing on the homes of military families.

Media Report Features Notorious Robosigner With "Impressive Résumé"

In West Palm Beach, Florida, The Palm Beach Post reports:

• Somewhere, presumably Georgia, lives a woman named Linda Green. According to investigators, her signature - and variations of it - appears on hundreds of thousands of questionable mortgage documents.

• Linda Green has an impressive résumé. She has been a vice president of at least 14 banks and mortgage companies, including Wells Fargo and Bank of America. The documents with her signature are called mortgage assignments. By signing, she attests to the true owner of a mortgage, which proves that a bank has the right to foreclose on a home.

• One of those homes belongs to Lynn Szymoniak, a Palm Beach Gardens lawyer who specializes in white-collar crime. Szymoniak, 61, has ferreted out economic crimes for years and federal prosecutors have called her as an expert witness in four trials. In July 2008, after negotiations with her lender over an increase to her ­adjustable-rate mortgage failed, she received foreclosure papers on her home. What she saw "made no sense."

For more, see Tracing the signs of foreclosure traps. multiple corporate hat-wearing vice president

More Attorneys Seek Class Action Status When Defending Forclosures Involving Sloppy Lender Paperwork; Seen As Way To Make Most Of Scant Resources

In St. Paul, Minnesota, the Minneapolis Star Tribune reports:

• Jane Bowman has to turn away many Minnesotans who desperately need a lawyer to guide them through foreclosure hell. But if the court grants class-action status to one of her current cases involving jumbled foreclosure paperwork, Bowman could potentially help thousands of people nationwide.

• Bowman, 31, has spent nearly three years working for the Foreclosure Relief Law Project, a St. Paul-based nonprofit formed by the Housing Preservation Project in 2007 after the foreclosure crisis showed signs of deepening.(1)

• The project's staff currently includes Bowman and fellow attorney Kari Rudd. Mark Ireland, the project's founding attorney, recently resigned to become a Ramsey County District Court Judge. The group's small stature means they must be very selective about which cases to take, focusing on the ones that are most likely to influence the legal landscape and help the greatest number of people.

• Take the case of St. Cloud homeowners Steven and Tamara Gewecke, who have been fighting their foreclosure for three years. They assert that U.S. Bank doesn't have the right to foreclose because the legal authority to do so was not properly transferred to the bank. Bowman alleges that when the bank couldn't show the proper paperwork that should have accompanied the mortgage when it changed hands four times, it fabricated some. "They skipped over these middle steps," said Bowman, which is an issue "because you don't want somebody to show up with your mortgage and say 'You owe me the money.' You have to have proof.''

***

• Bowman goes to court this month to request class-action status for her case. To this layperson, a class-action suit seems particularly appropriate. What homeowner do you know who can make sense of a paperwork puzzle that even the experts can't seem to figure out? And if you're dealing with foreclosure, I can't see how you could pay a lawyer. Very few lawyers can afford not to charge.

For the story, see Tiny law project looking for big case (A local nonprofit is fighting foreclosures one case at a time).

(1) The Housing Preservation Project is a nonprofit public interest advocacy and legal organization whose primary mission is to preserve and expand affordable housing for low income individuals and families, and is based in St. Paul, Minnesota. The Foreclosure Relief Law Project is an effort to identify viable legal and advocacy strategies which can avert foreclosures and keep homeowners in their homes, and which can stabilize neighborhoods by reducing the blighting effects of widespread foreclosures.

Are More Florida Trial Judges Beginning To Hold Lenders Accountable In Foreclosure Actions?

In Marion County, Florida, the Ocala Star Banner reports:

• The facts aren't unusual: In 2008, a couple in Reddick defaulted on a home mortgage and the bank pursued foreclosure. The couple contested the action. But the outcome defies the usual pattern. The defendants prevailed at a non-jury trial and, to date, have been allowed to keep the home.

• According to the attorney handling the homeowners' case, this didn't happen because of some ground breaking ruling or unexpected turn of events during litigation. Rather, it's a sign that judges are starting to hold more plaintiffs accountable in foreclosure actions.

***

• Since May 2008, the Reddick couple has owed $482,170 on their home. Chase Home Finance, LLC filed a foreclosure lawsuit in August 2008. The case went all the way to a bench trial before Circuit Judge Brian Lambert in August 2010. [...] This past December, Lambert issued a final judgment in favor of the homeowners, saying that the plaintiff had failed to meet its burden of proof of showing that Chase — the previous lender and plaintiff — had standing to bring the lawsuit. He also ruled that U.S. Bank failed to meet its burden of proof re-establishing the [purportedly lost] mortgage note or that it was the owner of the note at the time of trial.

For more, see Judge rules bank failed to prove ownership of couple’s mortgage.

10,000 GMAC Foreclosure Cases Get The Boot In Maryland Over 'Stephan'-Robosigned Affidavits

Firedoglake reports:

• In a major ruling Friday, a coalition of nonprofit defense lawyers and consumer protection advocates in Maryland successfully got over 10,000 foreclosure cases managed by GMAC Mortgage tossed out, because affidavits in the cases were signed by Jeffrey Stephan, the infamous GMAC “robo-signer” who attested to the authenticity of foreclosure documents without any knowledge about them, as well as signing other false statements.

• The University of Maryland Consumer Protection Clinic and Civil Justice, Inc., a nonprofit, filed the class action lawsuit, arguing that any case using Jeffrey Stephan as a signer was illegitimate and must be dismissed.

• In court Friday, GMAC agreed to dismiss every case in Maryland relying on a Stephan affidavit. They can refile foreclosure actions on the close to 10,000 homes, but only at their own expense, and subject to new Maryland regulations which require mandatory mediation between borrower and lender before moving to foreclosure.

• Civil Justice and the Consumer Protection Clinic also want any cases with affidavits from Xee Moua of Wells Fargo, who has also admitted to robo-signing, thrown out, but that case has not yet been settled.

For more, see 10,000 GMAC Foreclosures Stopped in Maryland.

Foreclosure Industry Begins Spinning Meaning Of Recent 'Ibanez' Ruling

AOL Daily Finance columnist Abigail Field writes:

• Last week, the top court in Massachusetts handed down a ruling chastising banks for their "carelessness" during the securitization of Massachusetts mortgages. That carelessness has clouded the title of thousands of already-foreclosed properties and creates major problems for future foreclosures.

• Not surprisingly, the interests on the banks' side have put out messages trying to minimize the significance of the decision, messages that Adam Levitin, associate professor of law at Georgetown University, dismantles in the blog Credit Slips. More recently, the law firm K&L Gates, a major, sophisticated firm that did securitization deals, sent out a reassuring newsletter that clients should look at skeptically.

• K&L's basic pro-bank spin is this:
  
  Completed Massachusetts foreclosures aren't a big problem because they're not "automatically" invalidated.
  
  A complete set of securitization documents successfully transfers mortgages, and perhaps blank assignments can just be filled in, so there's no fundamental problem foreclosing in the future.(1)

• Those claims are misleading and wrong.

For more, see Fixing Massachusetts Foreclosures Won't Be So Easy.

See also, Credit Slips: Ibanez and Securitization Fail.

(1) See The Reports of My Death are Greatly Exaggerated Foreclosures in Massachusetts Following the Supreme Judicial Court Decision in Ibanez for the entire text of the foreclosure industry 'spin sheet.'

Long Island Judge Slams Lender, Attorney For Careless Filings In Foreclosure Action

In Suffolk County, New York, State Supreme Court Justice Jeffrey Arlen Spinner recently slammed a foreclosing lender and its legal counsel for wasting his time for filing crappy paperwork in an attempt to take the home of a purportedly delinquent borrower. He denied the lender's request to move forward with the foreclosure, and set a date for a hearing to detemine what sanctions, if any, the alleged culprits will be hammered with.

An excerpt from his ruling (bold text is my emphasis, not in the original text):

• Curiously and in direct derogation of the mandatory provisions of 22 NYCRR § 202.7, Plaintiff has failed to specify or insert a return date for the application and has apparently served its papers with no return date. Not surprisingly, counsel for Defendants has neither answered nor responded thereto, presumably due to the lack of both a stated return date and appropriate notice.

***

• This Court must question how, under the circumstances presented here, Plaintiff can, with unbridled temerity, demand enforcement of the Loan Agreement against Defendant STEPHEN STEELE, who has not executed that instrument and against Defendant SUSAN STEELE, who is not even a party to that agreement. The most cursory reading of these instruments reveal the obvious facts as set forth above. This posture by Plainitff strains credulity and causes the Court to seriously question Plaintiff's good faith in commencing this action.
  
  Distilled to its essence, a mortgage is a conveyance of an interest in land that is expressly intended to constitute security for some obligation, most commonly an indebtedness, Burnett v. Wright 135 NY 543, 32 NE 253 (1895). It follows logically then that in order for a mortgage to be valid and subsisting, there must be an underlying obligation that is to be secured by an interest in the real property, owed by the obligor to the obligee, which contains both the right of the obligee to foreclose and the right of the obligor to redeem, Baird v. Baird 145 NY 659, 40 NE 222 (1895), R.H. Macy & Co. v. Bates 280 AD 292, 114 NYS 2d 143 (3rd Dept. 1952). Absent these essential elements, a valid mortgage cannot exist because it is the underlying obligation which gives rise to the validity of the mortgage as a lien upon the real property. Here, the Loan Agreement that has been presented to the Court facially appears to run counter to New York's Statute of Frauds, G.O. L. § 5-701. Since there has been presented to this Court no valid underlying obligation and no further explanation, the mortgage appears to fail as a matter of law.
  
  This situation is all the more disturbing when it is considered that the sworn statements contained in the both the Complaint and the Affidavit in Support Of the Motion for Summary Judgment expressly and falsely assert that Defendant SUSAN STEELE executed the Loan Agreement. This is compounded by the sworn statement of Shana Richmond, Plaintiff's foreclosure specialist, which is dated April 28, 2010 and which contains the same painfully obvious mis-statements of fact.
  
  Going further, Plaintiff's counsel has submitted an Affirmation dated December 2, 2010 which purports to comply with Administrative Order no. AO548/10 in which he ratifies and confirms, in essence, the incorrect assertions in the Complaint and the Summary Judgment application. Aside from the papers themselves, it appears that counsel's affirmation runs afoul of the provisions of 22 NYCRR § 130-1.1.

***

• Here, it is irrefutable that Defendant SUSAN STEELE was not a party to the Loan Agreement and certainly did not execute the same. It is equally indubitable that Defendant STEPHEN STEELE did not execute the Loan Agreement that has been presented on this application. Nonetheless, Plaintiff has vigorously prosecuted this action, demanding foreclosure of the mortgage as well as money damages against both named Defendants. Under these circumstances, the Court is compelled to conduct a hearing to determine whether or not Plaintiff has proceeded in good faith and what sanction, if any should be imposed should the Court find a lack of good faith.(1)

For the ruling, see Beneficial Homeowner Serv. Corp. v Steele, 2011 NY Slip Op 50015(U) (NY Sup. Ct. Suffolk Cty., January 7, 2011).

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

(1) Based on the points made by Justice Spinner, don't be surprised if the shameless lender's attorney shows up to court, hat in hand, prepared to invoke what has been referred to as the "pure heart and empty head" defense.

See, e.g.:

• In re Rivera, 342 B.R. 435, 460 (Bankr. D. N.J. 2006), stating that this defense was unavailable to a law firm facing Rule 11 sanctions in a bankruptcy case that resulted in the imposition of a $125,000 fine on the firm in connection with the chronic filing of unreviewed paperwork in foreclosure actions.
• Warner v. Hillcrest Medical Center, 914 P.2d 1060 (Okla. Ct. Civ. App. 1995), stating:
  
  `There is no room for a pure heart, empty head defense under [§ 2011].'" First National Bank and Trust Company of Vinita v. Kissee, 859 P.2d 502, 512 (Okla. 1993) (emphasis in original) (footnotes omitted). "Rule 11 requires lawyers to think first and file later, on pain of personal liability." Stewart v. RCA Corp., 790 F.2d 624, 633 (7th Cir. 1986).

Federal Appeals Court Reinstates 85-Year Old Widow's 'Fair Debt' Suit Alleging Illegal Fee Gouging After Missing Final Payment On 30-Year Mortgage

In Philadelphia, Pennsylvania, The Washington Post reports:

• An elderly New Jersey widow billed $5,800 after missing the final payment on her 30-year mortgage can pursue her lawsuit against the debt collectors, a U.S. appeals court ruled.(1) Lawyers for Dorothy Rhue Allen call the fees charged by two banks and a law firm "unfair or unconscionable" and say they violate state and federal consumer-protection laws.

• Allen, now 85, had borrowed $40,000 to buy the Deptford, N.J., home in 1976. She failed to make the final $432 payment in 2006 because she was in the hospital, her lawyer said. "She's just a wonderful little old lady that got sick," lawyer Lewis Adler told The Associated Press on Friday.

***

• In Allen's case, LaSalle Bank and Cenlar Federal Savings Bank, both of Trenton, N.J., filed court foreclosure papers in 2007. Adler's firm asked how much it would take to resolve the problem. The banks, along with a law firm,(2) outlined $5,797 in charges, including nearly $2,400 in legal fees.

• According to Allen's lawsuit, those charges are far higher than allowed under federal and state laws, including the [Fair] Debt Collection Practices Act. For example, court rules limit attorney fees to $15, not the $910 charged; document searches to $75, not $335; and process serving to $175, not $475, the suit said. "The lenders are sloppy and aggressive, trying to collect every penny," Adler said.

For more, see Widow, 85, missed last house payment; fights fees.

For the ruling, see Allen v. LaSalle Bank, N.A., No. 09-1466 (3rd Cir. January 12, 2011).

(1) According to the ruling, the lawsuit requested class action status.

(2) According to the ruling, the law firm was Fein, Such, Kahn & Shepard, PC.

Las Vegas Man Gets 9 Months In Jail, Five Years Probation For Ripping Off Homeowners Out Of $36K+ In Foreclosure Rescue Racket

In Las Vegas, Nevada, KVVU-TV Channel 5 reports:

• A man who pleaded guilty to scamming homeowners facing foreclosure has been sentenced to nine months in jail and probation for five years. Doninador Palalay ran a foreclosure rescue scam under the name PDM Financial Inc., according to the Nevada Attorney General’s office.

• He pleaded guilty to a charge of theft. In addition to jail and probation, Palalay must pay back more than $36,000 in restitution. Palalay’s wife, Marie Tejada Medina, also pleaded guilty to a charge of theft and will be sentenced Feb. 22. A third person connected to the scam is on the run, officials said. Anyone with information about Benjamin Aquino Moreleda III should contact the attorney general’s office at 702 486-3777.

Source: Vegas Man Sentenced In Foreclosure Scam (Defendant's Wife To Be Sentenced In February). loan modification

Disbarred Lawyer Sentenced In $2.37M Client 'Refi' Theft; Cash Meant For Lien Payoffs; Attny Ripoff Reimbursement Fund Expected To Step In, Cough Up

In Saratoga County, New York, The Glens Falls Post Star reports:

• A Wilton lawyer who prosecutors say was running a "mini-Madoff" scheme to help bankroll a lavish lifestyle that included a home on a Caribbean island was sentenced to up to 15 years in state prison on Friday in Saratoga County Court.

• Patrick M. Reidy, 48, was arrested in August 2009 after several real estate clients of his began discovering that mortgage payments - given to Reidy to forward on their behalf - had not been received by the mortgage holders. Reidy was re-directing foreclosure payments after forging documents that gave him power of attorney, a move that kept homeowners from learning their payments had not been made until they went to get new loans, according to court papers.

• Reidy ultimately bilked 19 area residents out of $2.37 million - money prosecutors said was used to buy property in the Caribbean, at least two nice cars and a nearly $600,000 home in Wilton.

***

• When and how Reidy will make restitution remains unclear. A restitution hearing is scheduled for March 18 to determine the amount owed and to whom the money should be paid.

• If Reidy is unable to make restitution immediately, the state's Lawyers' Fund for Client Protection is expected to step in and make payments on his behalf. The fund is supported through lawyer fees and is intended to compensate those who have been victimized by [New York State] lawyers. Attorneys for the fund will pursue compensation from Reidy if and when the fund makes payments on his behalf.(1)

***

• A father of three who was recently divorced, Reidy has already spent 14 months in county jail. He will be eligible for parole in a little less than four years, though he could ultimately spend up to 15 years in prison. Reidy has also been banned from ever practicing as an attorney in New York again.

For the story, see Lawyer sentenced in mortgage fraud case.

(1) For similar "attorney ripoff reimbursement funds" that cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:

• Directory Of Lawyers' Funds For Client Protection (now includes listing of Canadian client compensation funds, by province, courtesy of the American Bar Association);
• Check the USA Client Protection Funds Map;
• Check the Canada Client Protection Funds Map.

Maps available courtesy of The National Client Protection Organization, Inc.

89-Year Old Widow Dodges Foreclosure, Gets Mortgage-Free Home After Being Tricked Into Signing For $400K+ Loan; Scammer Believed To Have Fled Country

In San Mateo County, California, The Oakland Tribune reports:

• An 89-year-old Pacifica woman who was conned out of $600,000 by a contractor and faced foreclosure has won a lawsuit that prevents her eviction, an attorney said. As part of the settlement worked out Thursday in San Mateo County Superior Court, the lien on Pauline Reade's house was lifted and she won't have to repay a $420,000 loan that had been taken out on her property without her knowledge, said the woman's attorney, Niki Okcu, who took the case pro bono. Reade also won some compensation, though Okcu declined to provide details, saying the settlement was confidential.

• Reade sued Fetuu Tupoufutuna, a handyman who became her caretaker, as well as Deutsche Bank National Trust Co. and GMAC Mortgage, after she learned her home was going to be auctioned to repay a loan of which she had no knowledge. She later learned that Tupoufutuna had tricked her into signing the loan papers by telling her he needed her signature to get a permit to repair a backyard shed, attorneys said.(1)

• Okcu said Reade met Tupoufutuna sometime before 2006 when he was circulating in her neighborhood offering handyman services. He did some work on her house and then began to get involved in her finances. Reade is a widow, has no children and no family in the area. Tupoufutuna took out what was initially a $312,000 home equity loan on Reade's home in September 2006, attorneys said. He made some payments, but eventually stopped reimbursing the bank, attorneys said.

• During the same time, he had also stolen hundreds of thousands of dollars from the woman, Okcu said. Reade's first knowledge of the loan came in March 2009, when she got a letter saying that her home was to be sold at public auction.

• Reade told a neighbor what had happened and then the police. Okcu and Hope Nakamura of the Legal Aid Society of San Mateo County(2) filed suit to stop the foreclosure in April. San Mateo County prosecutors in March filed criminal charges against Tupoufutuna, but he is believed to have fled the country, Okcu said.

• "She is in her house," Okcu said. "Hopefully, she will be able to pick up the pieces of her life and move on."

Source: Pacifica woman wins lawsuit, keeps house after being conned.

(1) California has some pretty handy case law to support a case to void deeds, mortgages, and other land documents when unwitting property owners get tricked into signing paperwork that jeopardizes the title to their home through some type of equity refinancing ripoff where the victim seeks to establish that a purported conveyance is actually wholly void (ie. void ab initio, a legal nullity, etc.), and not merely voidable (ie. valid until successfully challenged), the distinctions being:

• the effect of such a challenge on the rights of 3rd party bona fide purchasers and encumbrancers/lenders, and
• the time frame within which such a challenge can be brought.

See generally, Schiavon v. Arnaudo Bros., 84 Cal. App. 4th 374; Cal.Rptr.2d 801 (Cal. App 6th Dist. 2000) (bold text is my emphasis, not in the original text):

• A deed is void if the grantor's signature is forged or if the grantor is unaware of the nature of what he or she is signing. (Erickson v. Bohne, supra, "130 Cal.App.2d at pp. 555-556.) A voidable deed, on the other hand, is one where the grantor is aware of what he or she is executing, but has been induced to do so through fraudulent misrepresentations. (Fallon v. Triangle Management Services, Inc. (1985) 169 Cal.App.3d 1103, 1106 [215 Cal.Rptr. 748].) The same rules apply to the reconveyance of the property interest under a deed of trust as to the conveyance of property by grant deed. (Wutzke v. Bill Reid Painting Service, Inc. (1984) 151 Cal.App.3d 36, 43 [198 Cal.Rptr. 418] (Wutzke).)

***

• Although the law protects innocent purchasers and encumbrancers, "that protection extends only to those who obtained good legal title. [84 Cal.App.4th 380] [Citations.] ... [A] forged document is void ab initio and constitutes a nullity; as such it cannot provide the basis for a superior title as against the original grantor." (Wutzke, supra, 151 Cal.App.3d at p. 43; see also cases cited ibid.)

See also, Unwinding An Abusive Or Fraudulent Real Estate Transaction? Determining If The Deed Is Void, Or Merely Voidable.

Go here for more on void vs. voidable transactions.

(2) The Legal Aid Society of San Mateo County is a non-profit, public interest law firm that provides free civil legal services to San Mateo County’s low-income residents.

Massachusetts High Court: Mortgage Does Not Follow The Note

One of the key points from the recent Massachusetts Supreme Judicial Court ruling in U.S. Bank Nat’l Ass’n v. Ibanez, was that (unbeknownst to me, the Wall Street securitization wizards, the mortgage industry, and maybe a couple of other people) the long-standing principle of common law that a mortgage or deed of trust is a mere incident to the promissory note and that these security agreements automatically "follow the note" upon assignment of the latter does not hold in Massachusetts,(1) as Justice Gants, writing for a unanimous court, tells us in this excerpt (bold text is my emphasis, not in the original text):

• Second, the plaintiffs contend that, because they held the mortgage note, they had a sufficient financial interest in the mortgage to allow them to foreclose. In Massachusetts, where a note has been assigned but there is no written assignment of the mortgage underlying the note, the assignment of the note does not carry with it the assignment of the mortgage. Barnes v. Boardman, 149 Mass. 106, 114 (1889). Rather, the holder of the mortgage holds the mortgage in trust for the purchaser of the note, who has an equitable right to obtain an assignment of the mortgage, which may be accomplished by filing an action in court and obtaining an equitable order of assignment. Id. ("In some jurisdictions it is held that the mere transfer of the debt, without any assignment or even mention of the mortgage, carries the mortgage with it, so as to enable the assignee to assert his title in an action at law.... This doctrine has not prevailed in Massachusetts, and the tendency of the decisions here has been, that in such cases the mortgagee would hold the legal title in trust for the purchaser of the debt, and that the latter might obtain a conveyance by a bill in equity"). See Young v. Miller, 6 Gray 152, 154 (1856). In the absence of a valid written assignment of a mortgage or a court order of assignment, the mortgage holder remains unchanged. This common-law principle was later incorporated in the statute enacted in 1912 establishing the statutory power of sale, which grants such a power to "the mortgagee or his executors, administrators, successors or assigns," but not to a party that is the equitable beneficiary of a mortgage held by another. G.L. c. 183, § 21, inserted by St.1912, c. 502, § 6.

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

See also Lexology: Massachusetts Supreme Judicial Court foreclosure decisions (requires subscription; if no subscription, TRY HERE):

• The Court did not address the question of whether U.S. Bank and Wells Fargo were the holders and owners of the notes, but held that, under Massachusetts real property law, the mortgage does not automatically follow the note and must also be assigned to the foreclosing lender prior to the foreclosure sale.

(1) Contrast with the laws of:

• Connecticut: The Appellate Court of Connecticut, in LaSalle Bank, N.A. v. Bialobrzeski, AC 30911, 123 Conn. App. 781; 3 A.3d 176 (September 21, 2010), discussing the applicable state statute (bold text is my emphasis, other alterations in the original):
  
  "[Section] § 49-17 permits the holder of a negotiable instrument that is secured by a mortgage to foreclose on the mortgage even when the mortgage has not yet been assigned to him. . . . The statute codifies the common-law principle of long standing that the mortgage follows the note, pursuant to which only the rightful owner of the note has the right to enforce the mortgage. . . . Our legislature, by adopting §49-17, has provide[d] an avenue for the holder of the note to foreclose on the property when the mortgage has not been assigned to him." (Citations omitted; internal quotation marks omitted.) Chase Home Finance, LLC v. Fequiere, 119 Conn. App. 570, 576-77, 989 A.2d 606, cert. denied, 295 Conn. 922, 991 A.2d 564 (2010).

• Arkansas: Leach v. First Cmty. Bank, CA07-05, 2007 Ark. App. LEXIS 671 (Ct. App., Div II, 2007) (unpublished) (bold text is my emphasis):
  
  Arkansas has long followed the rule that, in the absence of an agreement or a plain manifestation of a contrary intention, the security of the original mortgage follows the note or renewal thereof, i.e., instead of there being a presumption of payment or settlement of the original indebtedness by the execution of the renewal note, and thereby a release of the security, the presumption is that, upon the execution of the new note or bond, the same security is available for its payment. Simpson v. Little Rock North Heights Water District No.18, 191 Ark. 451, 86 S.W.2d 423 (1935). This is in keeping with the weight of authority holding that, because the renewal of a note does not change the identity of the debt represented by the obligation, the validity or operation of an assignment as security is not affected by the circumstance that a renewal note is executed to replace the original note. See generally 3 LEE R. RUSS ET AL., COUCH ON INSURANCE § 37.50 (3d ed. 2005).

• Minnesota: Jackson v. Mortg. Elec. Registration Sys., A08-397770 N.W.2d 487 (2009):
  
  We have held that, absent an agreement to the contrary, an assignment of the promissory note operates as an equitable assignment of the underlying security instrument. First Nat'l Bank of Mankato v. Pope, 85 Minn. 433, 434-35, 89 N.W. 318, 318-19 (1902).

• Texas: Nicholson v. Washington Mut., NUMBER 13-00-394-CV, 2001 Tex. App. LEXIS 6119 (Tex. App.-Corpus Christi [13th Dist.], 2001) (bold text is my emphasis).
  
  The mortgage of a property is an incident of the debt; and as long as the debt exists, the security will follow the debt. J.W.D., Inc. v. Federal Ins. Co., 806 S.W.2d 327, 329-30 (Tex. App.-Austin 1991, no writ); Lawson v. Gibbs, 591 S.W.2d 292, 294 (Tex. Civ. App.-Houston [14th Dist.] 1979, writ ref'd n.r.e.). Accordingly, while the deed of trust may never have been assigned to Lehman, it followed the debt. Because the Nicholson note was indorsed in blank by American and delivered into Lehman's constructive possession, Lehman became the holder of both the note and the deed of trust which followed the note.

• Florida: WM Specialty Mortg., LLC v. Salomon, 874 So. 2d 680 (Fla. App. 4th DCA, 2004): A Florida appeals court, quoting from the state Supreme Court ruling in Johns v. Gillian, 134 Fla. 575, 184 So. 140, 143 (Fla. 1938) (bold text is my emphasis):
  
  However, it has frequently been held that a mortgage is but an incident to the debt, the payment of which it secures, and its ownership follows the assignment of the debt. If the note or other debt secured by a mortgage be transferred without any formal assignment of the mortgage, or even a delivery of it, the mortgage in equity passes as an incident to the debt, unless there be some plain and clear agreement to the contrary, if that be the intention of the parties.

Nassau DA: B'klyn Man Used Bogus Mtg. Satisfactions & Title Policy, Prepared His Own Title Report, Forged Dead Lawyer's Name To Pocket $5.3M In Loans

From the Office of the Nassau County, New York District Attorney:

• Nassau County District Attorney Kathleen Rice announced [] that a Brooklyn man has pleaded guilty to obtaining $5.3 million in mortgages from two different Nassau County financial lenders by using fake documents, a dead attorney’s signature and forged mortgage satisfactions that showed previous mortgages were paid off.

• Mayer Goldberger, 46, of Sunset Park, Brooklyn, pleaded guilty to two counts of Grand Larceny in the First Degree. He faces up to 25 years in prison on each conviction at his March 9 sentencing and agreed to repay his victims the maximum amount of approximately $5.3 million, which will be by civil judgment.

• Rice said that in 2002 and 2003, Goldberger obtained loans on properties located in Hartford, Connecticut from lenders in New York totaling $1.4 million. Goldberger owned these properties under his company’s name, Hartford LLC. In 2005 and 2006, forged documents were filed stating the $1.4 million had been paid off.

• Goldberger then used those forged documents to obtain a $3 million loan from the New York Community Bank in Jericho in 2007. In reality, Goldberger still owed the entire original $1.4 million.

• Using the same forged mortgage satisfactions he used in 2006 to obtain the New York Community bank loan, Goldberger received another loan for $2.3 million from BRT Realty Trust in Great Neck in 2008. In addition to the forged satisfactions, Goldberger furthered his criminal scheme by preparing his own title report through a company he owned called Speedy Title Services LLC, a conflict of interest BRT had no knowledge of.

• That report failed to disclose the existence of the $3 million loan and omitted mentioning the $1.4 million in mortgages that he knew were not paid off. It did, however, include a bogus 2007 mortgage supposedly issued by Hartford LLC to Hartford & York LLC, another company solely owned by Goldberger. This led BRT Realty Trust to believe that once the Hartford & York LLC loan was paid off, BRT would have the first lien on the Connecticut properties. But this was not the case.

• In addition, Goldberger misrepresented that Speedy Title Services was acting as an authorized agent of First American Title Insurance Company. In doing so he caused a forged certificate of title and policy of title insurance to be delivered to BRT Realty Trust. These documents not only misrepresented that Speedy Title Services was acting on behalf of American Title Insurance Company, but also contained the forged signature of a deceased attorney.

For the Nassau County DA press release, see Brooklyn Man Pleads Guilty to Stealing $5.3M from Nassau Lenders in Multistate Mortgage Fraud Schemes (Goldberger stole mortgage proceeds from Jericho and Great Neck banks; used dead attorney's signature for closing).

New Law Allows Fla. HOAs To Begin Muscle-Flexing Against Non-Paying Unit Owners; Cable TV Shutoff Among 'Extreme' Collection Measures Used

The Palm Beach Post reports:

• Throughout South Florida, where homeowner associations reign over the fading fortunes of gated communities and condominiums, governing boards are using more aggressive - some say guerrilla - tactics to collect late fees.

• Emboldened by a new law that allows boards to ban non-paying homeowners from community common areas, associations also are restricting residents' access to their homes by disabling devices that allow automatic entry into neighborhoods.

• As foreclosures swelled with the real estate collapse, associations begged lawmakers last year for more muscle to recover delinquent home­owner dues, which typically go hand-in-hand with missed mortgage payments.

• They complain banks are slow to foreclose on properties with bulging association fees because they must pay the bills after repossession. The result: homes wallowing in years of association debt.

• The argument behind the law is that the owners who are not paying for the maintenance of facilities, such as pools, clubhouses and tennis courts, should not get to use them. But a wider interpretation is also forcing some debtors to wait in the visitors' line at entrance gates. In condominiums where [electronic] key fobs are used to gain entrance, homeowners with association debt sneak in behind other residents or head to the security desk for permission to enter.

• Residents say blocking access to their homes is just bullying, and in conflict with other language in the law. Attorneys who represent associations say it's one of the most effective ways to collect late fees - along with turning off cable TV.

• "We are beyond the days when you tar and feather people, and I don't think we can put a scarlet letter on someone," said attorney Gary Poliakoff, whose Fort Lauderdale-based firm represents associations. "These are some harsh measures, but they are causing the owner to reflect on the fact that they are forcing others to pick up the burden of maintaining the community."

***

• The Community Advocacy Network, which supported last year's legislation on the common-use-area restrictions, is going back to lawmakers this year asking for clarifications in the law. One request is for stronger language allowing the suspension of cable TV. "You would be surprised how compelling it is when HBO and Showtime may be turned off," [attorney Donna] Berger said. "They seem to find the money then."

For more, see HOAs fight back against homeowner behind on fees (A new law allows homeowners associations to keep people who don’t pay their share out of the pool and other common areas).

Georgia Deputies Stumble Into Home-Based Meth Lab While Serving Foreclosure Notice; Score Big Bust

In Tift County, Georgia, WFXL-TV Channel 31 reports:

• The routine serving of a bank foreclosure notice turns into a big drug bust in Tift County. Tift County Sheriff’s Department Information Officer David Hare tells FOX 31 News that sheriff’s deputies were serving a bank foreclosure notice Wednesday afternoon at 1241 WB Parks Road when they saw signs of a possible meth lab operation.

• Hare says additional law enforcement officials were called to the scene to execute a search warrant of the home. They reported finding chemicals inside the home and on the adjacent property that were being used to manufacture methamphetamine.

• Hare says officers with the Mid-State Narcotics Task Force arrested the homeowner, 43-year-old Michael Willis and charged him with manufacturing methamphetamine, possession of a firearm by a convicted felon, forgery, and manufacturing fake Georgia driver’s licenses.

For the story, see Deputies serving foreclosure notice cash in on meth lab.

Mortgage Servicer Neglect Adds To Blight In Chicago Neighborhoods As Vacant Homes Left Lingering In Legal Limbo

In Chicago, Illinois, the Chicago Tribune reports:

• A new type of property is adding to neighborhood blight: the bank walkaway. Research to be released Thursday, the first of its kind locally, identifies 1,896 "red flag" homes in Chicago — most of them are in distressed African-American neighborhoods — that appear to have been abandoned by mortgage servicers during the foreclosure process, the Woodstock Institute found.

• Abandoned foreclosures are increasing as mortgage investors determine that, at sale, they can't recoup the costs of foreclosing, securing, maintaining and marketing a home, and they sometimes aren't completing foreclosure actions. The property, by then usually vacant, becomes another eyesore in limbo along blocks where faded signs still announce block clubs.

• "The steward relationship between the servicer and the property is broken, particularly in these hard-hit communities," said Geoff Smith, senior vice president of Woodstock, a Chicago-based research and advocacy group. "The role of the servicer is to be the person in charge of that property's disposition. You're seeing situations where servicers are not living up to that standard."

For more, see More banks walking away from homes, adding to housing crisis (Research shows 1,896 red flag homes in Chicago appear to have been abandoned during foreclosure process).

Nassau DA: Long Island Man Facing Foreclosure Used Phony Raffle Racket In Home-Peddling Scam, Clipping Victims Out Of $100K+

In Mineola, New York, WCBS NewsRadio 880 AM reports:

• It was too good to be true. A Long Island man is accused of selling more than $100,000 worth of raffle tickets for a million-dollar waterfront home, then reneging on the drawing and pocketing the cash for luxury vacations.

• The Nassau County District Attorney’s office arrested 32-year-old Scott Cicerone of North Babylon and charged him with scamming thousands of people out of $100,000. Cicerone was facing arraignment Thursday on 21 counts of petit larceny and one count of scheme to defraud. His attorney said Cicerone will plead not guilty.

• Authorities say Cicerone sold raffle tickets in 2009, promising to give the winner a $1 million lien free home in Massapequa.(1) The tickets were only $50 each. [...] But D.A. Kathleen Rice says the house was really in foreclosure and Cicerone instead used the ill-gotten gains to pay for a Mercedes and take trips to Las Vegas, Atlantic City, and California.

For more, see Long Island Man Charged In House Raffle Scam.

For the Nassau County DA press release, see Suffolk Man Charged With Scamming Victims Out of More Than $100K in 2009 Massapequa House Raffle Scam (Cicerone promised ticket-holders the chance to win million-dollar home; instead used cash for vacations).

(1) Cicerone advertised that the winner would receive the property lien free, never mentioning the $1 million lien on the house from the previously defaulted loan, but did qualify the raffle, however, claiming if they did not sell 30,000 tickets, the ticket buyers’ money would be 95% refunded, according to the Nassau County DA press release.

Rogue Bill Collector Contacted, Harassed Friends & Family In Attempt To Illegally Squeeze Cash From Debtor: Federal Lawsuit

In Sherman, Texas, The Southeast Texas Record reports:

• An East Texas man is suing a collection agency after one of its agents contacted and harassed his friends and family. Jimmy Cotten filed suit against Nelson, Hirsch & Associates Inc. on Dec. 15 in the Eastern District of Texas, Sherman Division.Cotten states that the defendant contacted his cell phone several times a day, contacted his cousin and called his friends on more than one occasion in an attempt to collect a debt.

• Cotten argues that these telephone calls were harassing and abusive tactics in violation of the Fair Debt Collection Practices Act and Texas Debt Collection Act. He claims the defendant's actions have caused him to suffer from humiliation, anger, anxiety, emotional distress, fear, frustration and embarrassment. The defendant is also accused of invasion of privacy by intrusion into private affairs and intentional infliction of emotional distress.

For the story, see Debt collector sued for calling debtor's friends, family.

Mass. AG Pinches Landlord For Filing Phony Cerification After Being Nabbed For Failure To Comply w/ Lead Paint Law When Renting To Family w/ Young Kid

From the Office of the Massachusetts Attorney General:

• A Worcester area property owner has been arraigned for fraudulently claiming his property was in compliance with lead laws and endangering children, announced Attorney General Martha Coakley. Jaroslaw Pianka, age 40, of Charlton, was arraigned on charges of Child Endangerment, Larceny by False Pretenses, and Uttering (2 counts).

• Authorities allege that Pianka, the owner of two properties located on Dale Court in Leicester, failed to comply with lead laws by submitting fraudulent certificates of lead compliance and representing that his properties had been properly deleaded. [...] A Worcester County Grand Jury returned indictments against Pianka on December 17, 2010.(1)

For the Massachusetts AG press release, see Property Owner Arraigned on Child Endangerment and Other Charges for Allegedly Failing to Comply with Lead Paint Laws.

(1) In one case according to authorities, a family with two children under the age of six rented one of Pianka'a properties under the verbal assertion that the property had been deleaded in February 2007. Massachusetts Law requires owners of properties containing dangerous levels of lead to abate or contain lead whenever a child under six years of age resides in the property. According to authorities, the family subsequently performed a home lead test which revealed lead in the property, and contacted the Leicester Board of Health to request a lead determination in March 2009.

According to the state AG, Further inspection of the property by the Board of Health found several areas that tested positive for lead and the Board of Health issued an order to Pianka to correct the lead in the property in April 2009. Following the order, in April 2009, Pianka reportedly provided the family with a copy of a letter of full deleading compliance and the Massachusetts Tenant Lead Law Notification and Certification Form, which is required by law to be provided by landlords to tenants prior to renting properties built before 1978, and reportedly also provided the letter of full deleading compliance to the Board of Health. According to authorities, a review of the letter conducted by the Massachusetts Department of Public Health’s Child Lead Poisoning Prevention Program determined the documentation to be fraudulent.

In a second case, Pianka was also cited for lead paint compliance at a second property after the Board of Health learned of additional alleged violations, the state AG said.

Massachusetts Landlord's Refusal To Renew Lease After Long-Time Tenant's New Child Triggered Lead Paint Abatement Obligation Leads To State AG Lawsuit

From the Office of the Massachusetts Attorney General:

• A Boston real estate management company, its agent and property owner have been sued for violating state anti-discrimination law, Attorney General Martha Coakley’s Office announced. The Attorney General’s Office filed a housing discrimination complaint on January 3, 2011, against Mediate Management Company (“Mediate”), its agent Deborah Kooring, and Fenway Buttrick, LLC, in Suffolk Superior Court alleging that the defendants refused to renew the lease of a family because they reside with a young child whose presence required the defendants to comply with state lead paint laws.(1)

***

• According to the complaint, the tenants lived for many years in an apartment unit owned by Fenway Butrick, LLC and managed by Mediate. In May 2010, the tenants submitted a lease renewal to the defendants and informed them that the tenants recently had a child who would be living with them in the apartment unit. Concerned for their child’s well-being, the tenants asked the defendants to inspect the apartment unit for lead paint hazards. The complaint alleges that after learning of the change in the tenants’ familial status, Mediate’s agent notified the tenants that their lease would not be renewed.

• Mediate’s purported basis for the non-renewal included maximum occupancy limitations and square footage limitations, both of which bases later were shown to be incorrect. According to the complaint, in late May 2010, the tenants filed a complaint alleging discrimination with the Boston Fair Housing Commission (“BFHC”). The defendants subsequently submitted to a lead paint inspection which revealed high levels of lead paint and required the defendants to abate the lead hazard under Massachusetts lead paint laws.

For the Massachusetts AG press release, see AG Sues Boston Real Estate Management Company, Agent and Property Owner for Housing Discrimination.

(1) “Anti-discrimination law prohibits landlords and real estate professionals from refusing to rent to prospective tenants because they have children. It further requires them to comply with lead paint laws designed to protect young children from known health hazards,” AG Coakley said. “Massachusetts is facing critical housing needs and residents must be treated fairly.”

California Attorney Admits Breaking Into Foreclosed Clients' Former Homes On Their Behalf At Least A Half Dozen Times In Squatting Protest

In Southern California, the Los Angeles Times reports:

• Jim and Danielle Earl had fallen behind on their mortgage payments after a business reversal. But the six-bedroom house that they shared with their brood had already been sold to an investment company, [Ventura County Superior Court] Judge Barbara A. Lane pointed out. The eviction would stand.

• Incensed, [attorney Michael T.] Pines vowed to hire a locksmith and enter the vacant house illegally. "I'm going back there," Pines declared, gripping the lectern. "And I hope I get arrested." "I certainly hope not," Lane shot back. "That is a blatant disregard of this court's order."

• With Pines, the threat at the October hearing couldn't be written off as courtroom theatrics. The 58-year-old attorney admits to breaking into homes at least half a dozen times, including one before with the Earls, leaving the clients to squat in their homes while he defends their legal right to possession. His unconventional methods have gotten him fined by a judge in San Diego, arrested in Newport Beach and threatened with contempt — and jail — in Ventura.

***

• Pines has yet to wrest a house back. His most high-profile client, baseball legend Lenny Dykstra, took Pines' advice last July to move back into his foreclosed Thousand Oaks mansion against a bankruptcy judge's orders. That move, followed by a victory party at the estate, brought an order barring the former outfielder from the property. Dykstra fired Pines after one month and lost the house in a foreclosure sale in November.

For more, see Lawyer advises foreclosed clients to break back into their homes (Michael Pines, who was baseball legend Lenny Dykstra's attorney, admits to breaking into homes at least half a dozen times, leaving clients to squat while he defends their legal right to possession).

Ventura County DA Charges Four In Alleged Foreclosure Rescue Racket That Targeted Primarily Non-English Speaking Homeowners For Upfront Fee Fleecing

In Ventura County, California , the Ventura County Star reports:

• Ventura County prosecutors have filed a felony complaint against four people alleging they ran a fraudulent home foreclosure rescue program from an Oxnard office. Prosecutors allege that Maria Victoria Santos, 55, of Ventura, along with Felipe Carlos Segovia Castro, 67, of Moreno Valley; Laura Cecilia Carlson, 64, of Hacienda Heights; and Margie Joanna Vargas, 22, of Orange, targeted predominantly monolingual Spanish-speaking clients facing foreclosure on their homes.

• The four defendants collected thousands of dollars in upfront fees from their clients after promising to save their homes from foreclosure. However, prosecutors allege their clients received no actual services and lost thousands of dollars in addition to their homes.

***

• Santos faces 11 counts of foreclosure consultant fraud and seven counts of grand theft. Castro is charged with one count of foreclosure consultant fraud. Carlson, a licensed real estate saleswoman, and Vargas, a licensed notary public, are both charged with two counts of foreclosure consultant fraud.

***

• The charges arise out of what authorities say was a fraudulent home foreclosure rescue business called USA Home Recovery Service, run by Santos out of an office on Fifth Street in Oxnard. Prosecutors said Santos advertised her services on local radio stations broadcasting in Spanish to Spanish-speaking residents in Ventura County.

• Those who suspect they were victimized in this operation are asked to contact the Ventura County District Attorney’s Office Real Estate Fraud Unit at 662-1750 and file a complaint.

Source: 4 accused of foreclosure rescue fraud.

Go here for the Ventura County DA press release.