South Florida Homeowners Seek Class Action Status In Lawsuit Tagging Loan Servicer Over Dubious, Force-Placed Insurance 'Gravy Train'

American Banker reports:

• The first time Luis Juarez heard of force-placed insurance was when he received a $25,000 bill for it in the mail. A Florida doctor and homeowner, Juarez had been dropped by his previous insurer over a roofing issue. Though that lapse violated his obligation under the mortgage to maintain coverage on the property, he was current on his loan payments and heard nothing from the servicer Wells Fargo & Co. for more than a year.
• Then on May 10, 2010, Juarez got a note from QBE Specialty Insurance, a partner of Wells. It said that QBE was retroactively charging him $25,000 for a policy that had expired two months earlier, according to court filings. Neither the price tag — nearly quadruple his original policy's rate, according to court papers — nor the expired status of the QBE policy were a mistake.
• The use of carriers like QBE adds another public wrinkle to the controversy over banks' imposition of homeowners coverage, because the carriers are unregulated in major states such as Florida. Wells Fargo, SunTrust Banks Inc. and others are buying what is called "surplus-line" insurance, which is neither governed by state premium caps nor guaranteed by state funds. That leaves the insurer free to charge whatever rates it pleases — and to share some of the proceeds with banks through payments to their affiliates.
• Force-placed insurance is already under fire from a coalition of state attorneys general because it burdens troubled borrowers with expensive premiums, provides inferior coverage and often dumps the cost on mortgage investors at the time of foreclosure if borrowers failed to pay the premiums. In the process, banks reap lucrative commissions from insurers.

***

• QBE is "more aggressive in placement, and their pricing is worse," said Jeffrey Golant, a Florida attorney who recently filed a lawsuit on behalf of Juarez and others alleging that Wells Fargo and QBE engaged in self-dealing and charged unreasonable premiums. "There is no regulation of their rates at all, and they appear to believe that being surplus lines allows them to do anything they want."
• According to the lawsuit, which seeks class-action status, the premiums were nearly four times those for the policy Juarez had bought through a state-run company that normally charges Florida's maximum legal rate. Wells Fargo said that the Juarez case was "unique" in that the lapse in voluntary coverage was not detected for well over a year.

***

• Force-placed insurance is lucrative for mortgage servicers. An American Banker story published in November found that banks often collect sizable force-placed commissions from insurers — even when servicers do not perform significant work in the production of the policy.(1) Mortgage bond analysts and borrower advocates have flagged this relationship as a potential conflict of interest.

For more, see New Questions about Banks' Force-Placed Insurance Deals (QBE, carrier used by Wells Fargo and SunTrust, avoids oversight through 'surplus lines' structure).

For the lawsuit, see Williams, et al. v. Wells Fargo Financial Inc., et al.

(1) See Ties to Insurers Could Land Mortgage Servicers in More Trouble (Force-placed policies impose costs on both homeowner, investor):

• "There's no arm's-length transaction here, and that creates all sorts of incentives for the servicer to force-place excessive insurance and overcharge consumers for policies that provide minimal benefit," said Diane Thompson, of counsel for the National Consumer Law Center. "Servicers and insurers have turned this into a gravy train." [...] State court filings show alleged abuse in which banks charged borrowers for unnecessary insurance and backdated policies providing coverage retroactively.

Maryland Foreclosure Mill, Six Attorneys Tagged With Federal Robosigner Suit Seeking Class Action Status

ConsumerAffairs.com reports:

• A federal class action claims that thousands of Maryland homeowners lost their homes because of the illegal robo-signing operation of the Shapiro & Burson law firm, with offices in Baltimore, Md., and Fairfax, Va., and six of its attorneys.(1) The suit also charges the firm charged excessive fees.
• The suit notes that the State's Attorney in Prince George's County, Md., has opened a criminal inquiry into the firm's practices and has received statements from a former employee who said he was told to sign thousands of affidavits without seeing any evidence that the statements in the affidavits were true.
• The plaintiffs, Charles Smalley and Pamela Ball, lost their homes in foreclosure actions involving the Shapiro & Burson firm, even though the firm allegedly did not have possession of the documents necessary to justify the actions.

***

• Jose Portillo, an employee of the law firm, signed the affidavits that resulted in the foreclosure and Ball's subsequent eviction. Portillo later exposed practices he said he was forced to undertake and described "an elaborate robo-signing operation whereby each Defendant financially benefitted from fees and commission in carrying out foreclosures tainted by fraud," the suit alleges.
• Portillo also stated that he witnessed attorneys forging other attorneys' signatures to foreclosure documents.

***

• The lawsuit is filed on behalf of all Maryland residents whose residential property was foreclosed by Sharpiro & Burson during the last four years. It estimates there are at least 250 members of the class and "potentially thousands," based on Portillo's statements. It seeks an award of triple damages for each class member.

For more, see Law Firm's Robo-Signers Defrauded Thousands, Class Action Charges (Suit says Virginia law firm illegally foreclosed on "potentially thousands" of Maryland homes).

For the lawsuit, see Smalley, et al. v. Shapiro and Burson, LLC.

(1) The individual attorneys named as defendants in this alleged robosigner racket are:

• John S. Burson, William M. Savage, Gregory N. Britto, Jason Murphy, Kristine D. Brown, and Erik W. Yoder.

$2.2M In Condos, Cash, Other Assets Surrendered By Operators Of South Florida-Based Loan Modification Racket To Settle Civil Charges With Feds

The Federal Trade Commission recently announced:

• Under a settlement with the Federal Trade Commission, two companies and three individuals are banned from the mortgage relief services business and must relinquish $2.2 million in assets for consumer refunds. The action is part of the FTC’s ongoing effort to stop scams that target financially strapped homeowners seeking mortgage relief.
• In November 2009, the FTC alleged that Kirkland Young LLC and its manager, David Botton, misrepresented themselves as consumer mortgage lenders, servicers, or their affiliates, and falsely promised they would modify consumers’ loans and make their mortgage payments more affordable. The court halted the operations and froze the defendants’ assets pending resolution of the case. The following month, the FTC added Botton’s sister, April Botton Krawiecki; their father, Samy Botton; and Attorney Aid LLC as defendants.

For the FTC press release, see FTC Settlement Collects $2.2 Million, Bans Marketers From Mortgage Relief Business (Company Targeted Consumers Facing Foreclosure).

Go here for links to some of the available court documents in this lawsuit.

(1) According to the Commission, in addition to banning the defendants from selling mortgage relief services, the settlement permanently prohibits them from misleading consumers about financial-related goods and services, such as misrepresenting loan or refund terms, affiliation with any person or government entity, and the ability to improve someone’s credit history. The settlement bars the defendants from selling or otherwise disclosing customers’ personal information, enforcing contracts with mortgage relief clients, and violating the Telemarketing Sales Rule. The settlement imposes a $6.1 million judgment that will be suspended when Samy Botton has paid $300,000; David Botton has surrendered certain assets, including a condo, a car, and a boat; April Botton Krawiecki has surrendered a condo; and Kirkland Young LLC and Attorney Aid LLC have surrendered all of their assets, worth $2.2 million.

Washington State Regulator Hits Suspected Out-Of-State Loan Modification, Forensic Audit Review Racket With C&D Order

From the Washington State Department of Financial Institutions:

• The Washington State Department of Financial Institutions (DFI) has taken swift action to stop an unlicensed mortgage loan modification company from continuing to harm Washington consumers.
• DFI issued a Temporary Cease and Desist Order against Home Credit Law Center, its President, attorney Brian R. Linnekens, and an employee, Derek Thomas. The Department ordered the Respondents, all of Los Angeles, to immediately cease and desist unlicensed activity, misrepresenting that Mr. Linnekens was licensed to practice law in Washington, and taking advance fees for loan modification services.

***

• As the mortgage crisis continues in Washington, more homeowners are facing the prospect of foreclosure. Some, in a desperate search for relief, cling to any offer of help. Home Credit Law Center employees call Washington homeowners offering that relief for a $3,000 advance fee.

For the press release, see DFI Orders Unlicensed California Law Firm - Home Credit Law Center - To Stop Offering Unlawful Mortgage Loan Modifications (Brian R. Linnekens and his law firm charged with taking property from Washington residents by fraud or misrepresentation).

Go here to view a recent KING5-TV report on Home Credit Law Center.

Florida Appeals Court Reverses Foreclosure Judgment, Boots Case Back To Lower Court As 'Senior' Judge Gets 'Nabbed' For Empty-Headed, Rubber-Stamping

In a straightforward, two-paragraph ruling, a three-judge panel of Florida's Fifth District Court of Appeal recently reversed a foreclosure judgment from an Orange County Circuit Court issued by Senior Judge Emerson R. Thompson, Jr.

The dearth of extensive legal analysis in a case a court needed only two paragraphs to dispose of,(1) coupled with the fact that no attorney bothered to appear on appeal on behalf of the foreclosing bankster, is an indicator that the foreclosure judgment was so obviously flawed on its face that it shouldn't have required the effort and expense to seek an appeals court correction to arrive at the proper result in the first place.

In my view, this foreclosure judgment is an example of garbage cranked out by an out-of-control 'rocket docket' fueled by rubber stamping, senior trial judges called out of retirement to keep the court's foreclosure 'assembly line' moving along (and to pocket an additional retirement check), and it took the filing of an appeal by the victimized homeowner to obtain vindication.(2)

Representing the homeowner was Kaufman, Englett & Lynd, PLLC, of Orlando, Florida.

For the ruling, see Khan v. Bank of America, 5D10-3288 (Fla. 5th DCA, April 8, 2011).

(1) The court's analysis follows:

• In its amended complaint to foreclose a mortgage on the Khans' home, Bank of America alleged that it was the owner and holder of the note and mortgage. However, the copy of the note attached to the amended complaint bears an endorsement from Bank of America to Wells Fargo Bank, N.A. as trustee for the holders of Banc of America Mortgage Securities, Inc. Mortgage Pass-Through Certificates, Series 2006-B. The Khans correctly raised the issue of Bank of America's standing to prosecute the foreclosure based on the assignment of the note to Wells Fargo Bank.

  The proper party with standing to foreclose a note and mortgage is the holder of the note and mortgage or the holder's representative. See Taylor v. Deutsche Bank Nat. Trust. Co., 44 So.3d 618, 622 (Fla. 5th DCA 2010); BAC Funding Consortium Inc. ISAOA/ATIMA v. Jean-Jacques, 28 So.3d 936, 938 (Fla. 2d DCA 2010). While Bank of America alleged in its unverified complaint that it was the holder of the note and mortgage, the copy of the note attached to the amended complaint contradicts that allegation. When exhibits are attached to a complaint, the contents of the exhibits control over the allegations of the complaint. See Hunt Ridge at Tall Pines, Inc. v. Hall, 766 So.2d 399, 401 (Fla. 2d DCA 2000). Because the exhibit to Bank of America's amended complaint conflicts with its allegations concerning standing, Bank of America did not establish that it had standing to foreclose the mortgage as a matter of law. As a result, the trial court acted prematurely in entering the final summary judgment of foreclosure in favor of Bank of America. We, therefore, reverse the final summary judgment of foreclosure and remand for further proceedings.

(2) In a related story, see Housing Wire: Florida foreclosure defense attorneys allege 'rocket docket' abuses:

• [A]ffidavits filed last week by ACLU attorneys representing homeowners, suggest Florida's attempt to speed up the process has been a detriment to homeowners challenging their foreclosures.
• The ACLU filed its petition with a Florida appellate court last week in an attempt to block the court from rushing foreclosures through this "rocket docket." In its filing, defense attorneys from across the state complained of judges' actions.

For more from the American Civil Liberties Union in their recent efforts to curb the crap created by Florida 'rocket dockets', see:

• Merrigan v. Bank of New York - Petition Challenging Constitutionality Of Lee County, FL Foreclosure Court,
• Appendix to Petition,
• Press Release: ACLU Charges High-Speed Florida Foreclosure Courts Deprive Homeowners Of Chance To Defend Homes (“Mass Foreclosure Docket” In Lee County Ignores Procedural Safeguards In Rush To Clear Cases).

Sacramento Feds Bag 4th Conviction In Mtg. Fraud, Flipping, Rent To Own Racket That Screwed Over Investors, Would-Be Buyers w/ Crappy Credit

From the Office of the U.S. Attorney (Sacramento, California):

• United States Attorney Benjamin B. Wagner announced [] that Gabriel Richard Viramontes, 48, of Elk Grove, was convicted [] of six counts of bank fraud and seven counts of mail fraud. The guilty verdict was returned by a federal court jury in Sacramento after a seven-day trial [...].
• According to testimony presented at trial, Viramontes and three co-defendants (who had already pleaded guilty to related charges(1)) engaged in a mortgage fraud scheme in the Sacramento area that involved at least 19 homes with loans of more than $8 million.
• From June 2006 through October 2006, the defendants through VFM Investment Group, Esnian Mortgage Realty, and Freedom Capital Mortgage, engaged in a mortgage fraud scheme by asking investors to purchase with no money down single family homes on behalf of others with bad credit who wished to purchase homes. The investors were told they would benefit financially from the transactions.
• The defendants then defrauded lenders such as Washington Mutual Bank, Long Beach Mortgage, and Fremont Investment and Loan by submitting fraudulent loan applications that inflated the buyers' income, falsely stated that a buyer was employed at a specific job, and falsely stated that the properties would be owner-occupied.
• The purpose of the scheme was to ensure that the home purchase transactions closed, so that the defendants would receive substantial loan broker commissions and illegal kickbacks from real estate sales commissions.

For the U.S. Attorney press release, see Jury Convicts Elk Grove Man in Sacramento Area Mortgage Fraud Scheme.

Thanks to Tim McDonald for the heads-up on the story.

(1) James Roy Martin, 40, pleaded guilty to making false statements on a loan application and money laundering on March 26, 2010. Mario Fellini III, 42, pleaded guilty to making false statements on a loan application on March 12, 2010. Joseph Salvatore Gallo, 38, pleaded guilty to misprision of felony on February 18, 2011. All are from the Sacramento area.

Lender Gives Up On Foreclosure, Discharges Mortgage, Cancels Debt, Hands Florida Man Free & Clear Title To Home

In Jacksonvile, Florida, The Florida Times Union reports:

• Perry Laspina was in the middle of foreclosure with the possibility of losing the house he owned in Jacksonville. Then the mail came one day in late January telling him that the house was his. Despite the $72,000 mortgage that he barely paid anything on, despite the foreclosure ... the house was his.
• In the middle of foreclosures gone wild, of a system overloaded by sheer volume, judicial investigations and allegations of corners cut, Laspina ended up with the house. Despite the fact that he didn't have an attorney in the foreclosure proceedings, the mortgage holder simply gave up and walked away. "I've never seen anything like this in my life," he said.
• It's a tale populated with many of the major players in the national foreclosure drama: The law firm of David Stern, the Mortgage Electronic Registration Systems (better known as MERS) and a mortgage packaged with others and sold into a securitized trust.

For how it happened, see Bank gives man foreclosed house for free.

Loan Servicer Response To Recent CBS' '60 Minutes' Expose On Foreclosure Fraud

American Home Mortgage Servicing issued what some might describe as a six-page 'not guilty' plea in connection with questions it was presented by "CBS' 60 Minutes" prior to the latter's recent national broadcast of their expose on foreclosure fraud (see CBS' '60 Minutes' On Foreclosure Fraud - 'The Many Faces (& Signatures) Of Linda Green').

For the 'not guilty' plea, see Responses to Questions from Dan Ruetenik, 60 Minutes.

Thanks to Deontos for a copy of the letter.

The Case Against MERS In Foreclosure Actions

The latest attack made against the ability of Mortgage Electronic Registration Systems to bring foreclosure actions appears in an article in the recent edition of the Cardozo Law Review.

For the summary of the article, and link to the entire work, see Nolan Robinson: The Case Against Allowing Mortgage Electronic Registration Systems, Inc. (MERS) to Initiate Foreclosure Proceedings, Cardozo Law Review, Vol. 32, No. 4, p. 101, 2011.

'Ibanez' Issue Compels Bay State Bankruptcy Court To Vacate Unfavorable Earlier Ruling Against Homeowner Fighting Foreclosure

The latest episode of the seemingly never-ending saga of Bay State resident Sima Schwartz(1) in a U.S. Bankruptcy Court in Worcester, Massachusetts came down last week.

After conducting a trial on March 16, 2011 in an adversary proceeding fighting a foreclosure against HomEq Servicing and Deutsche Bank National Trust Company, Judge Melvin S. Hoffman dismissed Schwartz' lawsuit on all seven counts raised in the litigation.

Refusing to accept defeat, Ms. Schwartz moved for a new trial, claiming error in the judgment, said claim involving an 'Ibanez' issue.

After reviewing the evidence, Judge Hoffman found that Ms. Schwartz presented sufficient evidence of the existence of an 'Ibanez' issue and accordingly, vacated his earlier ruling and opened the judgment with respect to this count only, and announced that he will schedule a half-day trial for the banksters to make their case.(2) Judge Hoffman left the remainder of his earlier ruling in tact.

For the most recent ruling, see Schwartz v. HomEq Servicing (In re Schwartz), Case No. 06-42476-MSH, Adv. Pro. No. 07-04098 (Bankr. D. Mass., Central Div. April 7, 2011).

(1) The first episode of Ms Schwartz' marathon saga in the bankruptcy court was the subject of Judge Hoffman's predecessor, Judge Joel B. Rosenthal's, landmark decision, In re Schwartz, 366 B.R. 265 (Bankr. D. Mass. 2007). At that time, Deutsche Bank had bid-in its mortgage debt and purchased Ms. Schwartz' home, a 3-family house in Worcester, at a foreclosure sale. Unsuccessful since that time in its attempts to boot her out onto the streets of Worcester, it remains the record owner of the home in which Ms. Schwartz continues to reside. Schwartz v. HomEq Servicing, footnote 2.

(2) Judge Hoffman's ruling on the 'Ibanez' issue follows (bold text is my emphasis):

• A central question at trial was whether defendant Deutsche was the owner of the mortgage on the plaintiff's home during the foreclosure process which resulted in the foreclosure sale of the home on May 24, 2006.

  The plaintiff introduced into evidence a document entitled "Assignment of Mortgage" dated May 23, 2006, which reflected the assignment of the plaintiff's mortgage from the original mortgagee, Mortgage Electronic Registration Systems, Inc., as nominee for First NCL Financial Services, LLC, to defendant Deutsche. During the plaintiff's case, all parties agreed that this assignment was dated prior to the date of the foreclosure sale. No party disputed its authenticity or validity.

  Because the assignment was executed prior to the foreclosure sale and its validity was not questioned, I ruled at trial that the plaintiff had failed to carry her burden of proving that Deutsche was not the owner of the mortgage when it foreclosed.

  In her motion for a new trial, the plaintiff argues that I misconstrued Massachusetts law, pointing out that the Massachusetts Supreme Judicial Court in U.S. Bank Nat’l Ass’n v. Ibanez, 458 Mass. 673, 941 N.E.2d 40 (2011) recently held that in order for a foreclosure sale to be valid the mortgage must have been assigned to the foreclosing entity not merely before the sale, but prior to the first publication of notice of that sale required by Mass. Gen. Laws. ch. 244, § 14. Ibanez, 458 Mass. at 647-48.

  I agree with the plaintiff's interpretation of Ibanez and since the May 23, 2006 assignment was executed after the foreclosure notices had been published, I could not rely on the assignment exclusively in granting the defendants judgment on partial findings. In light of the foregoing I must determine whether and to what extent to open the March 6, 2011 judgment for the defendants.

  In Count I of the complaint, the plaintiff seeks a ruling that the foreclosure sale was invalid. Not only does the March 23, 2006 assignment fail to establish the validity of the foreclosure sale, it constitutes the only evidence presented that at the time Deutsche began publishing notice of the sale, Deutsche was not the holder of the mortgage.

  The defendants argue that the pooling and servicing agreement dated November 1, 2005 which is listed in the joint pretrial memorandum as a trial exhibit provides evidence that the mortgage on the plaintiff's property was assigned to Deutsche well before the foreclosure process had begun.

  The excerpt of the pooling and servicing agreement that was admitted during the plaintiff's case in chief, however, provides no such evidence. The excerpt indicates that an entity defined as the "Depositor" assigned the "Trust Fund", which I presume included mortgages listed on a mortgage loan schedule not provided, to Deutsche, as Trustee for the benefit of the certificateholders of the Morgan Stanley Home Equity Loan Trust 2005-4.

  In Ibanez, the Supreme Judicial Court held that where, as here, a recordable assignment was not executed prior to the first publication of a notice of a foreclosure sale, the foreclosing entity may nevertheless prove that it was the mortgagee at the relevant time. The Court observed:

  [w]here a pool of mortgages is assigned to a securitized trust, the executed agreement that assigns the pool of mortgages, with a schedule of the pooled mortgage loans that clearly and specifically identifies the mortgage at issue as among those assigned, may suffice to establish the trustee as the mortgage holder. However, there must be proof that the assignment was made by a party that itself held the mortgage. Ibanez, 458 Mass. at 651 (emphasis added).
  

  None of the evidence thus far presented at trial indicated that the plaintiff's mortgage was part of the Trust Fund, or how the Depositor acquired the Trust Fund.

  I find that the plaintiff has presented sufficient evidence of the chain of title of the mortgage on her property to carry her burden of persuasion that the mortgage was not owned by Deutsche before the first publication of the notice of foreclosure sale. I must, therefore, vacate and open the judgment for the defendants on Count I of the complaint.

Escrow Agent Arrested, Charged With Failing To Forward To Mortgage Lender House Payments Collected From Unwitting Homeowner Now Facing Foreclosure

In El Paso, Texas, KTSM-TV Channel 9 reports:

• There are major developments on a Trouble Shooters story. The County Attorney's Office has arrested Laura Knight, the owner of First Knight Escrow. Our Trouble Shooters team got several complains from people who did business with her. One woman, Yadira Castro, was facing foreclosure but didn't understand how, since she had been making her mortgage payments through her escrow company, First Knight Escrow.(1)
• We had previously talked to Knight, who told us it was all a misunderstanding. But [Friday] afternoon she was arrested on a theft by check charge.

Source: Business Owner In Trouble Shooters Report Arrested.

For story update, see Update on El Paso Woman Facing Foreclosure:

• Richard Roman is Castro's attorney. “I've filed a lawsuit. there is a restraining order, potentially pertaining as well, to hold off on any foreclosure sales until we get this matter resolved."
• Roman said he's also representing another person, who also claims to have been defrauded by Knight. He says her arrest will affect his case in court. “If the money was misappropriated... it definitely plays into how I feel my client has been affected by the funds not reaching the appropriate place."
• And, Laura Knight's legal entanglements don't seem to end there. The reason for her arrest last week, was “theft by check”, in relation to Leonor Armendariz's case. That woman claims Knight had stolen over $100,000 from her.

(1) For earlier story, see Unwitting Homeowner Suspects Monthly House Payments To Escrow Company Are Mysteriously Disappearing, Leaving Her Facing Imminent Foreclosure.

Banksters On Verge Of Wiggling Themselves Off The Hook As Feds Sell Out Foreclosure Fraud Victims?

From an editorial in The New York Times:

• Americans know that banks have mistreated borrowers in many ways in foreclosure cases. Among other things, they habitually filed false court documents. There were investigations. We’ve been waiting for federal and state regulators to crack down.
• Prepare for a disappointment. As early as this week, federal bank regulators and the nation’s big banks are expected to close a deal that is supposed to address and correct the scandalous abuses. If these agreements are anything like the draft agreement recently published by the American Banker — and we believe they will be — they will be a wrist slap, at best. At worst, they are an attempt to preclude other efforts to hold banks accountable. They are unlikely to ease the foreclosure crisis.

For more, see Banks Are Off the Hook Again.

Arizona Upfront Fee Loan Modification Racket Hit With $29M Default Judgment In Civil Lawsuit Brought By State AG, Regulator

In Phoenix, Arizona, Phoenix New Times reports:

• Bryan Prehoda and Luis Belevan were running a pretty unsuccessful Scottsdale-based mortgage-relief service -- so unsuccessful, in fact, as to constitute fraud and a judgment against them for almost $29 million.
• A Maricopa County Superior Court judge entered the default judgment this week, ordering Prehoda and Belevan to reimburse fees and a civil award to 2,495 people who went to the men's company -- Guardian Group -- to reduce the principal amount of their mortgage loan.
• Guardian Group claimed it would negotiate with lenders to buy a homeowner's mortgage note way below face value, and then turn around and sell it to a third-party investor.

For more, see Scottsdale Mortgage-Relief Firm Hit with $29 Million Judgment in Loan-Modification Scam.

For the Arizona Attorney General press release, see Attorney General Horne And Financial Institutions Supt. Kingry Announce Victories Against Scottsdale Mortgage Company.

NY AG Expressing Doubts On Progress In Nat'l Fraud Probe? Issues Subpoenas On Major State Foreclosure Mill & Related Document Preparation Sweatshop

The New York Times reports:

• Eric T. Schneiderman, the New York attorney general, has issued subpoenas to the state’s largest foreclosure law firm and a related company, indicating that his office has some doubts about the effort by state attorneys general to resolve questionable foreclosure practices among the nation’s top banks.
• The New York investigation appears to center on two of the state’s foreclosure industry giants: the Steven J. Baum firm, headquartered in Amherst, N.Y., and Pillar Processing, a default servicing firm set up by Mr. Baum that was spun off in 2007. Representing JPMorgan Chase, Wells Fargo and other large banks, the Baum firm has handled an estimated 40 percent of foreclosure cases in the state. Pillar Processing provides extensive services to the firm.(1)

***

• Attorneys general across the country have been working on ways to rectify foreclosure improprieties by the nation’s biggest banks and have entered into negotiations in recent weeks with these institutions about a national settlement. Tom Miller of Iowa is leading that effort. While Mr. Schneiderman has been participating, his new investigation points to the possibility that he will take a different path.

***

• Along with the attorney general, federal prosecutors in Manhattan have requested information about the Baum firm’s practices, according to a lawyer who has represented borrowers against the firm. The lawyer spoke on condition of anonymity because the communications with the prosecutors were private. A spokesman for the Department of Justice declined to comment.

For more, see New York Subpoenas 2 Foreclosure-Related Firms.

(1) In one case, according to the story, Judge Scott Fairgrieve in Nassau County district court imposed sanctions of $5,000 on the Baum firm in a foreclosure case and required it to pay more than $14,000 in fees to the borrower’s lawyers last November. When awarding the sanctions, the judge wrote: “Bringing legal proceedings when there is no legal right to do so, due to lack of standing, stalls the efficient administration of justice in the system.” Federal Home Loan Mtge. Corp. v Raia, 29 Misc 3d 1226, 2010 NY Slip Op 52003 (Dist. Ct. Nassau Cty, 1st Dist., November 23, 2010).

For more on Baum, see:

• Long Island Judge Smacks Upstate NY Foreclosure Mill w/ $5K In Fines, Order To Pay $15K+ Legal Fees To Lawyer For Foreclosed-Upon Homeowner,
• NY Trial Judge: Buffalo-Based Foreclosure Mill Law Firm's Actions "A Dereliction Of Professional Responsibility!"

The Parade Continues: Northern California Homeowner Jumps On Ever-Growing Bandwagon Of Class Action Status-Seeking HAMP Homeowners Suing Servicers

In San Francisco, California, BusinessWeek reports:

• A California homeowner is suing the mortgage servicing unit of Morgan Stanley, claiming the company had no intention of permanently modifying her home loan payments to an affordable amount despite having her make a slew of trial payments under a federal program designed to help homeowners avoid foreclosure.
• The complaint, which was filed Thursday in U.S. District Court for the Northern District of California, accuses Saxon Mortgage Services Inc. of breach of contract and deceptive debt collection, among other claims, and seeks class-action status.

For more, see Homeowner sues mortgage servicer over HAMP denial.

Go here for earlier posts on the ever-growing 'HAMP Parade.'

Georgia Soldier Scores $20M+ Jury Award For Getting Mortgage Company Jerk-Around From Loan Servicer

In Columbus, Georgia, the Ledger-Enquirer reports:

• A federal jury awarded a Fort Benning soldier more than $20 million [last month] in a case against Coldwell Banker Mortgage -- an amount the plaintiff’s attorney called necessary to get the company’s attention.
• Jurors in the case of David Brash v. PHH Mortgage Corp., doing business as Coldwell Banker, deliberated for about six hours before ruling in Brash’s favor. During the six-day trial, jurors heard that Coldwell Banker improperly reported Brash, 29, to credit bureaus which led to a “serious delinquency” on his credit report, that it refused to answer his questions or correct his account and damaged him emotionally, physically and financially, his attorneys and court documents say.
• “The jury was aggravated as to how he was treated,” said Charlie Gower, an attorney who represents Brash. “I think the jury was just very mad because they were attacking David Brash the soldier and basically calling him a liar.”

For more, see Jury awards Fort Benning Sergeant $20 million (Federal jury penalizes mortgage firm that falsely pursued loan delinquency).

See also, The Huffington Post: Jury Awards Homeowner $21 Million In Mortgage Lawsuit.

For the original lawsuit, see Brash v. PHH Mortgage Corporation.

Texas Consumer Sues Bill Collector For Allegedly Making Multiple Calls Each Day Over Fully Paid Off Debt; Represented By 'Volume Filer' Of FDCPA Suits

In Beaumont, Texas, The Southeast Texas Record reports:

• A bill collector is being sued after repeatedly calling an Orange County man in an attempt to collect on an account which he claims has already been paid off. Russell Fuller filed suit against I.C. Systems Inc. on March 22 in the Eastern District of Texas, Beaumont Division.
• According to the lawsuit, defendant began placing collection calls to Fuller in January in an attempt to collect on two medical bills. Fuller states he receives approximately five collection calls each day from the defendant. He told the collectors that his insurance company was handling the accounts and the accounts were already paid.
• In February, Fuller claims he informed the defendant that original account holder confirmed there was no balance on either account but the defendant continued to place collection calls.
• The defendant is accused of violating the Fair Debt Collection Practices Act ["FDCPA"] by engaging in conduct that is abusive and harassing to Fuller and for calling Fuller repeatedly and continuously with the intent to annoy, abuse, and harass. The plaintiff is asking for an award of statutory damages, costs and attorney's fees.
• Fuller is represented by Michael S. Agruss of Krohn & Moss Ltd. of Los Angeles, Calif.(1)

Source: Bill collector is sued after calling individual five times each day.

(1) Adam Krohn of Krohn & Moss Ltd. recently received mention in a recent Minneapolis Star Tribune story (see Debtors in court -- suing collectors) as reportedly being the founder of this law firm that "files 15 percent of all FDCPA lawsuits in U.S. courts, according to WebRecon."

See also, Lawyer's 'Boot Camps' Help Growth In Army Of FDCPA Attorneys; Contingent Fee Deals Drive Increase In Table-Turning Consumers' War On Sleazy Collectors.

Renters In Apartments Facing Foreclosure Report Illnesses, Breathing Problems After Noticing 'Black Stuff' Growing In Their Units

In Fresno, California, KFSN-TV Channel 30 reports:

• A condo complex already facing foreclosure is now dealing with potentially toxic fungus as well. Tuscany Villas is on Fruit just north of Herndon in Northwest Fresno. Action News first reported about foreclosure proceedings in January and a follow-up uncovered the new problems.
• Several residents have reported illnesses and breathing problems after noticing something black growing in their units. They thought it might be toxic black mold, but test results in one apartment show a different problem -- a black fungus that's also potentially toxic.

For more, see Potentially toxic fungus at troubled Fresno condo complex.

Would-Be Buyer Offering $52K For REO Irked By Real Estate Agent's Possible Double-Dealing After Latter Buys Same Property From Bank For $40K

In Spring Hill, Florida, The Tampa Tribune reports:

• Dominick Marchica has sold guns at an indoor flea market for eight years. In January, he thought he'd found the perfect building to expand his business – right around the corner from his Spring Hill home.
• But the real estate agent hired by Lutz' Heritage Bank of Florida to sell the foreclosed property said his offer of $52,000 was too low. "He was adamant that he was on the board of the bank and the bank would not come up short," Marchica said. "We got a letter back … it said the bank would not negotiate any further and they came back at a $62,000 offer."
• So imagine Marchica's reaction when he found out last month that the property sold for $40,000 – to the real estate agent's company, Williams Realty & Investments. "If someone else bought that property and they paid $62,000 for it, I would not be mad," Marchica said. "What makes me annoyed is that this Realtor stone-walled me, refused to take my offer to the bank, played me, and then he bought it for himself."
• The real estate agent, Cary Williams, runs his realty business out of his used car dealership on U.S. 41, near the property Marchica wanted to buy. He said he's not on the board of the bank, and never told Marchica he was. As for undercutting Marchica?
• "The bank turned down (Marchica's) offer in January," Williams said. "In March, things had changed, and they really needed to sell the property."
• Richard Adams, president of Heritage Bank, said Williams is a long-time customer of the bank, and was hired because of his office's proximity to the property. He said he didn't authorize Williams to tell Marchica the bank wouldn't negotiate. "I remember the $52,000 offer," Adams said. "I countered and was waiting on his counter. When I didn't hear back, I thought he had changed his mind and didn't want the property anymore."

***

• By March, Adams said, the FDIC was pressuring the bank to shed bad assets. Regulators cracked down on the bank in late January, telling it to clean up its balance sheet. Heritage Bank agreed to a consent order, which required the bank to boost capital levels and reduce exposure to troubled assets.
• In light of that, Adams said, losing $12,000 on this deal is especially troubling. "No bank wants to lose money on a foreclosed property," Adams said. "Especially not in this economy."

For more, see Agent's foreclosure purchase angers potential buyer.

State Regulators Vote To Revoke Real Estate Agent's License For Alleged Double-Dealing On Listed Property Bought At Foreclosure Sale

In Denver, Colorado, KUSA-TV Channel 9 reports:

• The Colorado Division of Real Estate voted to revoke a Jefferson County real estate agent's license following a 9Wants to Know investigation into a transaction where a Realtor didn't bring an offer to the seller and then turned around and bought the building at a foreclosure auction.(1)
• "Justice was served," Carol Price, who hired Realtor Mark Dyson to sell her dance clothing store before it went into foreclosure, said. "License revocation and maximum fines are as severe as it gets for discipline imposition," said Marcia Waters, Division of Real Estate director.

***

• The Colorado Real Estate commission voted to revoke Dyson's license during a meeting Tuesday morning. The commission investigates complaints made by consumers such as Price, whose daughter filed a complaint after 9Wants to Know started looking into the deal. (Read how to file a complaint)

For more, see Realtor's license revoked after 9Wants to Know investigation.

(1) See Listing R/E Agent Conceals Purchase Offer To Client/Owner Of Bldg In F'closure, Then Buys Property At Auction, Flips It To Original Prospective Buyer.

Bay State Auctioneer Off The Hook When Selling Foreclosed Property With Crappy Title

In Boston, Massachusetts, Massachusetts Lawyers Weekly reports:

• A real estate auctioneer could not be held liable under Chapter 93A for auctioning foreclosed property in which the title was in dispute, a Superior Court judge has ruled. The defendant auctioneer claimed he was not aware of any title issues with the property, [...]

For more, see Auctioneer not liable for unlawful foreclosure sale (requires paid subscription).

Elderly Woman Faces Foreclosure, At Least Two Other Couples Borrowed Against Property To Invest In Alleged Ponzi Scheme

In Seattle, Washington, the Seattle Post Intelligencer reports:

• Securities fraud charges have been filed against two men accused of bilking $3.5 million from several elderly people living in the Seattle area. Filing charges Wednesday, King County prosecutors contend Stephen J. Klos, 84, was running a Ponzi scheme targeting people he met at the Mercer Island Covenant Church.
• "The defendant used his charm and influence to persuade elderly victims to invest with him but instead used the money for his personal benefit and lifestyle," King County Prosecutor Dan Satterberg said in a statement. Robert A. Justice, a 52-year-old Mercer Island man, is accused of helping Klos in the long-running fraud.
• Writing the court, Tyler Letey, staff attorney with the state Department of Financial Institutions, said Klos launched the scheme in February 2004 and ultimately defrauded 23 families of $3.5 million. Among his victims, Letey said, were a recently widowed woman and six elderly people.

***

• Letey contended that Klos went so far as to take the monthly Social Security payments from an 85-year-old woman with whom he was romantically involved. The woman is now facing foreclosure while Klos maintains control of her finances. At least two other couples mortgaged or refinanced property to invest with Klos, according to charging documents.

For more, see Two charged in $3.5 million fraud targeting Seattle-area elderly.

NYC Pols, Tenants, Advocates Urge FDIC To Put Squeeze On Big 'Landlord Lender' In Effort To Preserve 34 Rundown Bronx Buildings Housing 800 Families

In New York City, Crain's New York Business reports:

• Housing advocates, tenants and some of New York's most powerful elected officials Thursday called on the Federal Deposit Insurance Corp. to force New York Community Bank to evaluate the finances and living conditions at 34 rundown Bronx buildings in foreclosure, and then disclose information on building repairs that are needed.
• The move to pressure the FDIC to get involved is the latest salvo in a three-year campaign by officials and advocates to hold banks responsible for loans they made on multi-family properties that ended up falling into a state of disrepair.
• An amendment inserted into last year's Dodd-Frank Wall Street Reform and Consumer Protection Act by two New York politicians, Sen. Charles Schumer and Rep. Nydia Velazquez, gives the FDIC the power to intervene.
• “We're asking the FDIC to investigate the practices and actions of NYCB and force NYCB to make documents public so we can actually see whether there is enough money at the table to make these buildings livable,” said City Council Speaker Christine Quinn. “There are 800 units and 800 families at risk.”

***

• By pressuring the bank to disclose financial and living conditions, officials and advocates hope to create a level of transparency so potential buyers will understand the true value of the buildings and the amount of money needed to make repairs.
• “New York Community Bank is currently the most active provider of multi-family loans in New York City, and this makes their actions important to the health of our city's housing stock,” said Benjamin Dulchin, executive director at the Association for Neighborhood and Housing Development.(1)

For more, see Group asks FDIC to help 34 Bronx buildings (Elected officials, housing advocates and tenants nudge feds to pressure lender to disclose details on badly-needed repairs in properties housing 800 families).

(1) According to the story, New York Community Bank has a large portfolio of distressed multi-family loans, including mortgages on 328 buildings—housing more than 6,000 families—with more than three outstanding code violations per unit that pose serious health and safety risks. Of those buildings, 34 are in foreclosure, with a total of 800 apartments. Advocates worry they will be sold to the highest bidder without vetting the buyers' ability or willingness to rehabilitate the deteriorating properties, the story states.

100+ Tenants Ordered Out Of F'closed Complex; New Landlord Says Mold, Plumbing Repairs In Condemned Units Can't Be Fixed Unless Premises Is Vacated

In Lexington, Kentucky, WKYT-TV Channel 27 reports:

• Some of them say it came as a shock. More than 100 people at Sonnet Cove Apartments in Lexington have been told to leave, because many of the units are considered unsafe.
• "I have to start all over..and I haven't even started," said Melinda Clemons, who just moved in to the complex. Clemons didn't expect to be apartment hunting again so soon. "I signed my lease the 25th of February, and on March 29th I was notified the building was condemned," said Clemons.
• A notice from the new complex owners was put on the doors of more than a hundred tenants who live at the complex. Much to Clemons' surprise, Sonnet Cove had been in foreclosure. Nearly a year ago, dozens of units had been condemned because of mold and plumbing problems.
• Last Tuesday, the complex was purchased by a new company, and the residents were given 30 day's to leave. The new owners referred to the buildings as unsafe.
• "I just moved in," said Clemons, "but other residents have just renewed their leases, and from my understanding others were also unaware of the situation."

For more, see Tenants of apartment complex told to find new homes (More than a hundred people living in a large Lexington apartment complex are asked to leave after dozens of units were condemned a year ago).

(1) While the tenants would probably have no protections against this type of eviction if it were local city/county officials ordering the premises vacated for health and safety reasons, it appears that the landlord in this case would be bound by the Federal Protecting Tenants at Foreclosure Act of 2009, which provides important protections for tenants in foreclosed properties, including the right to receive 90 days' notice before being required to leave the property and, in many cases, the right to remain for the length of the tenant's existing lease term. There is no exception in the law allowing for a landlord purchasing an occupied foreclosure property to boot tenants based on health & safety issues.

Tenants In 7-Unit Building Left In The Dark As Landlord In Foreclosure Decides To Cut His Losses & Stiffs Utility Company, Leading To Power Shutoff

In Fort Pierce, Florida, WPTV Channel 5 reports:

• Todi Marinack paid her April rent on Friday. Her studio apartment on South Hutchinson Island in Ft. Pierce costs $600, including utilities. The power went out Monday morning and Marinack tried calling her landlord. When she couldn't get in touch with him, she talked to her neighbors in the small complex of 7 units.
• "He had contacted a couple people in here, I don't know which ones at first," says Marinack. "But he said that he was going to have the electricity turned off."
• Ft. Pierce Utilities shut off the power after several months of late payments or no payments at all. Now the few residents left in the complex are in the dark.

***

• [The landlord] told us over the phone he's cutting his losses. He says months of tenants not paying rent left him broke and though he'd like to pay the power bill, he doesn't have the $1,800 needed to turn the electricity back on.
• [He] told us the building is in foreclosure and should belong to the bank in a couple of weeks. Tenants at the complex wonder how long it will take to get the power restored. "It's either this or I live in my car," says Marinack. "I don't know what to do."(1)

Source: Tenants powerless after landlord doesn't pay bill.

For story update, see Tenants still powerless after landlord doesn't pay bill (Florida Legal Aid is now helping the Marinacks build a case against their landlord).

(1) Presumably, the landlord hasn't paid the water bill, either, so a water shutoff can't be far behind. At that point, the building will be 'ripe' for a local code enforcement 'vacate order' giving all the residents an immediate 'boot' because of the health and safety hazards caused by the utility shutoffs.

Bank Refuses To Talk To Widow In Foreclosure Seeking Loan Modification, Saying Mortgage Was Solely In Late Hubby's Name

In Sonora, California, News10 reports:

• A widow who is losing her home to foreclosure said she's willing and able to make her house payments, but the bank insists on dealing with her dead husband. Jeanette Noble, 66, fell several months behind in her payments following the death of her husband, Norman, in Oct. 2009, because their joint bank account was temporarily frozen.
• Jeanette later contacted Wachovia Mortgage to arrange a repayment plan, but the bank refused to talk to her because the loan was in her husband's name alone.
• "I tell them he expired. He's dead. He's not here. He can't talk to you," Jeanette explained. She faxed a copy of Norman's death certificate, which only complicated the problem. Future mail was addressed to "Estate of Norman Noble," and bank representatives still refused to talk to Jeanette because she wasn't a court-appointed representative of Norman's estate.
• Jeanette said an attorney told her probate would cost $1,000 and could take several months. The home was scheduled for a courthouse auction this week, but for unknown reasons the auction was postponed until May 5.

For more, see Widow: Bank insists on talking to my dead husband.

Ohio Supremes Boot Foreclosure Mills' Challenge To Procedural 'Anti-Robosigner' Rule Implemented By Three State Trial Judges

In Columbus, Ohio, The Columbus Dispatch reports:

• The Ohio Supreme Court has dismissed a complaint against three Franklin County judges who are requiring lawyers to verify the authenticity of the documents they file in home foreclosures.
• Six lawyers challenged the action in December, asking the Supreme Court to prohibit the judges from ordering them to sign "certifications" on behalf of their clients.(1) The Franklin County prosecutor's office filed a motion in January to have the complaint dismissed, which the Supreme Court granted yesterday without comment.

For more, see Justices uphold foreclosure rule (It's fine for judges to require lawyers to verify details, court ruling says).

(1) See Local judges get tough on foreclosure documents.

Washington State AG: Some Of The Largest Foreclosure Trustees Have Failed To Comply With 'In-State Office' Requirements When Conducting Forced Sales

In Seattle, Washington, the Seattle Post Intelligencer reports:

• Mortgage trustees handling many foreclosures in Washington are violating a state law intended to help people get in touch with them, the Washington Attorney General's Office announced Wednesday.
• "Foreclosures run on strict timelines and homeowners need a human who they can talk with face to face when there's a problem. They need an office where they can make last-minute payments or show documents that may prove reasons for stopping forced sales," Attorney General Rob McKenna said in a news release.
• "Washington law requires that foreclosure trustees maintain actual offices in our state and local phone numbers for this reason. But our investigation shows that some of the largest trustees are not in compliance and borrowers who have a legitimate reason to stop a foreclosure are having trouble reaching trustees."(1)

For more, see Troubled homeowners can't reach many mortgage trustees, AG says.

For the Washington AG press release, see Washington Attorney General’s investigation turns up additional foreclosure process problems (Attorney General steps in to ensure homeowners can contact foreclosure trustees):

• [T]he office sent a letter [] to all trustees operating in the state that notifies them of their obligations.

***

• [AG Rob] McKenna sent a letter to 52 trustees in October 2010, announcing its concerns about inaccurate documents, conflicts-of-interest, faulty chains of title and failure to provide disclosures and conduct mediations. The letter called on trustees to suspend any questionable foreclosures. Since then, the office has requested and received documents from several trustees. Attorneys are reviewing the information they have received so far and are waiting for documents from other companies.

(1) The next question to be addressed here, as it is in all these 'technicality' screw-up cases, in connection with those foreclosure/trustees' sales that have already taken place, and where strict compliance with the law was not met, is:

• Does the failure to strictly comply with this requirement make the sale at auction (and any further subsequent sales to 'downstream' 3rd party bona fide purchasers) wholly void (ie. void ab initio, nugatory, without effect, etc.) and subject to attack at any time, or merely voidable (although defective, nevertheless valid as to bona fide purchasers), where any attack thereon is subject to restrictions???

See Albice v. Premier Mortgage Services Of Washington, Inc., 157 Wn. App. 912; 239 P.3d 1148 (Wn. Ct. of App., Div. 2, September 28, 2010) for a recent Washington State case where a three-judge panel of the state Court of Appeals found that a procedural flaw in the foreclosure process rendered the trustees' sale wholly void, and thereby left an unwitting investor at the auction who bought the subject property holding the bag, despite any claim on his part of bona fide purchaser protection.

For the briefs filed in Albice, see:

• Albice - Opening Brief,
• Albice - Respondent's Brief,
• Albice - Reply Brief.

LPS Announces It Has (Finally?) Added 'Integrity' To Software For Use In F'closure Document Management Capabilities; Declines Comment For National TV

The Palm Beach Post reports:

• Lender Processing Services, the subject of a 60 Minutes segment about foreclosure document fraud, has added "new document integrity management capabilities" to the software it markets to loan servicers.

***

• In countless foreclosure cases, attorneys have argued that Docx, a defunct subsidiary of LPS, used so-called robo-signers to sign sworn affidavits claiming they had "personal knowledge" of a foreclosure case, often without reviewing the documents.
• One former employee told a 60 Minutes reporter that he signed the name of a co-worker, Linda Green, as fast as he could on thousands of documents. A notary who formerly worked for LPS said she was told to notarize documents without witnessing the signature.

***

• LPS, which bills itself as the nation's largest provider of mortgage processing services, declined to comment on its software upgrades or the allegations in the 60 Minutes segments.

For more, see Firm says its new software ensures the soundness of foreclosure papers.

Growth Seen In Number Of Clueless Bidders At Court-Ordered, Online Foreclosure Sale Auctions Screwing Themselves Out Of Thousand$

In Southeast Florida, the South Florida Sun Sentinel reports:

• More than a year after courthouse foreclosure auctions moved online in Palm Beach, Broward and Miami-Dade counties, bidders are still making mistakes, some worth tens of thousands of dollars.
• Novice investors who think they're getting great deals ultimately discover they've bought worthless second mortgages or other junior liens.
• "It happens every day," said Luis Valdeon, who publishes detailed reports for investors on homes to be auctioned in Broward and Miami-Dade counties. "People who get into this and don't know what they're doing will lose their [shirt] in 15 minutes."
• The errors could have been prevented had the investors spent roughly $100 each for title searches, auctions officials say. Though figures aren't available, complaints have intensified since online auctions opened bidding to more people, observers say.
• The courthouse auctions typically attracted a small group of about 50 participants, but now anyone with a computer can bid on a foreclosed property. Palm Beach County has more than 5,000 registered bidders worldwide, while Broward has nearly 18,000.

For more, see Novice investors can lose big money in online foreclosure auctions.

Lawsuits: National Natural Gas Company Behind Effort That Bilked 92-Year Old Widow & Many Other Northern Michigan Landowners On Drilling Leases

In Emmet County, Michigan, Interlochen Public Radio reports:

• Last May, oil and gas companies spent of hundreds-of-millions of dollars buying up rights to drill in Michigan. By summer, private landowners in northern Michigan had signed leases promising record payments to drill for their minerals.
• But by the end of the year, the frenzy over the new gas play had fizzled, and hundreds of people were claiming they'd been cheated. Lawsuits now say gas developers didn't just break their word, but they allegedly engaged in fraud and conspiracy to manipulate the market.

  Feeling Bilked

• The first person to file suit against the gas companies in Emmet County is Mildred Lutz. A sturdy 92 years old, she still keeps a garden and cans her own vegetables. Last summer, a man knocked on her door and offered to pay her almost $100,000 dollars for the oil and gas deep underground beneath her farm.
• Mildred had just lost her husband of 69 years, Carl, and she thought the money would come in handy for a whole list of expenses, including funeral costs. [...] After talking it over with her five children, she signed a lease with the man from Western Land Services of Ludington squeezed around her kitchen table with a son and a grandson. Then they took the document to the bank in Alanson to be notarized.
• She never heard another word from the oil and gas developers and she never got paid.

***

• Last summer, land men for a number of oil and gas companies were swarming over northern Michigan signing these leases. It appeared Michigan could be on the verge of a new natural gas boom to rival those in Louisiana and Pennsylvania. But by fall the activity seemed to drop off a cliff and Attorney Bill Rolinski says he heard from a lot of people who ended up in the same boat as Mildred Lutz.
• Many of them showed up at town hall meetings held late last year. "We'd have 200-to-400 people in attendance," he says. "And then I began to understand the scope of how the market was manipulated."
• Rolinski has named six companies in lawsuits. But what he discovered is that they all were working on behalf of Chesapeake Energy, the second largest natural gas company in the country.

For more, see Area Landowners Claim Fraud In Oil & Gas Contracts (Mildred Lutz, 92, is suing over an oil-and-gas lease that brought her nothing).

See also, WPBN-WTOM-TV Channels 7&4: Energy company says they have done no wrong voiding oil and gas leases (Chesapeake Energy says lawsuits are without legal merit).

See NY AG Warns Consumers On Entering Natural Gas Exploration Leases for similar complaints regarding oil & gas drilling outfits operating in other parts of the country.

Pro Se NJ Homeowner Scores Win, Stalls Foreclosure Where State 'Fair Foreclosure Act' Notice Fails To I.D. Lender; Naming Servicer Only Not Enough

In Middlesex County, New Jersey, the New Jersey Law Journal reports:

• Homeowners fighting foreclosure have a new weapon: a published trial court ruling that the notice required by law to be sent to mortgagors by certified mail must identify the lender and not just the loan servicing company.
• Because the foreclosure notice sent to George and Mona Elghossain did not name the Bank of New York Mellon, which owns their debt, Middlesex County Chancery Division Judge Glenn Berman dismissed the suit without prejudice, rejecting the bank’s request to cure the defect by redoing the notice correctly.
• Monday’s ruling, Bank of New York Mellon v. Elghossain, MID-F-13402-10, follows a series of decisions finding would-be foreclosers that did not have possession of the original mortgage note lacked standing and could not go ahead with the process.
• Like the standing cases, the notice issue in Elghossain is the consequence of the widespread securitization of mortgages, with accompanying pooling and servicing agreements that have placed loan servicing companies rather than lenders at the forefront of foreclosure efforts.

***

• The 1995 N.J. Fair Foreclosure Act requires such notice and specifies that it state “the name and address of the lender and the telephone number of a representative of the lender whom the debtor may contact … .” It defines “lender” as “any person, corporation, or other entity which makes or holds a residential mortgage, and any person, corporation or other entity to which such residential mortgage is assigned.”
• Berman found the notice to the Elghossains — mentioning only the servicer, BAC Home Loans, and not Bank of New York — violated the act, which he called “clear, unambiguous, and readily comprehensible, (especially to a sophisticated lender).”

***

• Berman [] said substantial compliance with the law is not enough; that “strict compliance is required.”(1) He would not allow Bank of New York to fix the mistake by serving a corrected notice. “Merely re-serving the [notice] would eviscerate the statute’s plain meaning and effectively reward plaintiff for its neglect, regardless of how benign it may appear,” he wrote.

For more, see Foreclosure Notice Found Deficient for Naming Only Loan Servicer, Not Lender (requires paid subscription; if no subscription, TRY HERE).

For the ruling, see Bank of New York Mellon v. Elghossain (when link expires, GO HERE).

Thanks to Deontos for the heads-up on the story.

(1) This raises the question, in connection with those past foreclosure actions where strict compliance was not met, and where a judgment was obtained anyway and the property subsequently sold at auction:

• Does the failure to strictly comply with this notice requirement make the foreclosure judgment & subsequent sale at auction (and any further sales to 'downstream' 3rd party bona fide purchasers) void ab initio (ie. wholly void, nugatory, without effect, etc.) and subject to attack at any time, or merely voidable (although defective, nevertheless valid as to bona fide purchasers), where any attack thereon is subject to restrictions???

State Bar Hammers Attorneys For 'Sticky Fingers', Real Estate-Related Improprieties

From The Florida Bar's recent quarterly gossip/scandal sheet:

• The Florida Bar, the state's guardian for the integrity of the legal profession, announces that the Florida Supreme Court in recent court orders disciplined 26 attorneys, disbarring four and suspending 20. Some attorneys received more than one form of discipline. One attorney was placed on probation; two attorneys were publicly reprimanded. Two attorneys were ordered to pay restitution.

Among those making this quarter's 'honor roll' for either playing fast & loose with their clients' money or trust funds,(1) improper conduct in real estate matters, or, in one case, fabricating court documents and giving it to a client, are:

• Jacqueline Jeannette Bird, Tallahassee, suspended until further order, effective 30 days from a March 4 court order. (Admitted to practice: 1988) According to a petition for emergency suspension, Bird appeared to be causing great public harm by misappropriating funds and/or diverting funds entrusted to her. Bird's offenses include writing herself checks on numerous occasions from clients' settlements, delaying delivery of client settlements, refusal to fully pay client medical liens and commingling personal and trust funds. (Case No. SC11-339);
• Mark Irwin Blumstein, Weston, permanently disbarred effective immediately following a Feb. 9 court order. (Admitted to practice: 1986) In August 2007, Blumstein was disbarred for five years. Nevertheless, he continued to practice law and subsequently mishandled and/or misappropriated thousands of dollars in client funds. (Case No. SC09-1572);
• Ryan Thomas Dosen, Kennett Square, Pa., permanently disbarred effective immediately, following a Feb. 22 court order. (Admitted to practice: 2004) Dosen pleaded guilty in U.S. District Court to one felony count of conspiracy to commit bank fraud. He acted as a settlement agent in two illegal real estate transactions in South Florida. His actions resulted in losses in excess of $2.5 million. (Case Nos. SC09-1613 & SC10-615);
• Robert W. Frazier, Jr., 507 S.E. 11th Court, Fort Lauderdale, suspended until further order, effective 30 days from a March 2 court order. (Admitted to practice: 1977) According to a petition for emergency suspension, Frazier appeared to be causing great public harm by diverting trust funds as evidenced by a Certified Public Accountant and a Bar auditor. (Case No. SC11-324);
• Shawn Louis Michaelson, Miami Lakes, suspended for three years, effective 30 days from a Feb. 9 court order. (Admitted to practice: 2001) Michaelson made several misrepresentations to his clients and the court: in one instance, he fabricated a court order by cutting and pasting a copy of the presiding judge's signature from a different order. He then gave the order to his clients but later denied having much knowledge about the order. Michaelson also billed clients for work that had not been formed. In another instance, he failed to properly communicate and neglected to explain the true status of a lawsuit to his clients. (Case No. SC10-1496);
• Matthew Glenn Palentchar, Colonia, N.J., suspended for 91 days until further order, following a Feb. 9 court order. (Admitted to practice: 2004) Palentchar is currently suspended, therefore the suspension is effective immediately. Further, Palentchar shall pay restitution of $750 to one client. In several instances, Palentchar was retained to represent clients but he failed to communicate regarding the status of cases. Palentchar failed to properly maintain his trust accounting records, he practiced law while ineligible, due to delinquent Bar fees and he failed to respond to the Bar disciplinary inquiries. (Case No. SC10-1401);
• Pablo Perez, South Miami, suspended until further order, following a Feb. 7 court order. (Admitted to practice: 1988) According to a petition for emergency suspension, Perez appeared to be causing great public harm. The Bar received 11 different complaints against Perez from former clients. They alleged they retained Perez to represent them in various legal matters including foreclosure and loan modification for which they paid legal fees, but he failed to provide services and eventually abandoned their cases. Perez subsequently informed the Bar that due to economic problems, he was forced to close his practice, but he planned to reopen in the near future. Perez then failed to have any further communication with the Bar or respond to any Bar inquiries. (Case No. SC11-201);
• Eric Jefferson Tinsley, 2000 N. Dixie Highway Suite 4, Lake Worth, suspended until further order, following a March 4 court order. (Admitted to practice: 2003) According to a petition for emergency suspension, Tinsley appeared to be causing great public harm. An audit revealed that Tinsley misappropriated nearly $11,000 from his trust account. (Case No. SC11-394).

For the entire gossip sheet, see Supreme Court Disciplines 26 Attorneys.

(1) The Florida Bar's Clients' Security Fund was established to reimburse clients who have suffered a loss due to misappropriation or embezzle­ment by a Florida-licensed attorney.

For similar "attorney ripoff reimbursement funds" that sometimes help 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 Canadian recovery funds, 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.

Attorney Featured On '60 Minutes' Scores Foreclosure Dismissal On Own Home & Is 'Loaded For Bear' If Lender Re-Files Lawsuit

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

• A judge dismissed the foreclosure case against Lynn Szymoniak, the Palm Beach Gardens lawyer featured Sunday on 60 Minutes, but gave the bank 30 days to refile the lawsuit with appropriate, verified documents.

***

• An attorney for Deutche Bank declined to comment on whether the bank would refile the foreclosure case. However, if the bank does so, it will have to comply with new, court-ordered guidelines that require lenders to verify the truthfulness of the documents. Those rules were not in effect in 2008 when Deutsche Bank filed to foreclose on Szymoniak's home.
• Szymoniak's attorney, Mark Cullen, said the ruling is good news, even if the bank refiles . In a new lawsuit the bank would be required to attach the note for the loan. Initially, the bank said it lost the note. Then the bank found the note. However, the date on the newly found document showed that Deutsche Bank did not acquire the loan until several months after it sued Szymoniak.
• Other irregularities appeared as Szymoniak continued reviewing her documents, including an addendum, called an allonge, that appeared to have been cut and pasted together before being copied and a sworn affidavit signed by Linda Green, a prolific robo-signer. One of Green's co-workers appeared on 60 Minutes and said he also signed Green's name to notarized documents.

For the story, see Woman on '60 Minutes' has foreclosure dismissed.

Philly Firm Flags CitiMortgage With 2nd HAMP Suit; Complaints Requesting Class Action Status Filed On Behalf Of Keystone, Garden State Homeowners

In Philadelphia, Pennsylvania, the law firm of Berger & Montague, P.C. recently announced:

• The law firm of Berger & Montague, P.C. has filed a class action complaint in the United States District Court for the Eastern District of Pennsylvania on behalf of all Pennsylvania homeowners whose mortgage loans have been serviced by CitiMortgage, Inc., and who, since April 13, 2009, (1) have entered into a Trial Period Plan (“TPP”) Contract with CitiMortgage and made all payments as required by their TPP Contract and complied with CitiMortgage’s requests for documentation, and (2) have not received or have been denied a permanent Home Affordable Modification Agreement that complied with the U.S. Department of the Treasury’s Home Affordable Modification Program (“HAMP”) rules.

***

• The Complaint alleges that CitiMortgage accepted billions in government bailout money under the Troubled Asset Relief Program (“TARP”) earmarked to help struggling homeowners avoid foreclosure. CitiMortgage, like other TARP-funded financial institutions, is contractually obligated to modify mortgage loans it services for homeowners who qualify under HAMP, a federal program designed to abate the foreclosure crisis by providing mortgage loan modifications to eligible homeowners.

For the press release, see Berger & Montague, P.C. Files Class Action Lawsuit Against CitiMortgage, Inc. on Behalf of Pennsylvania Homeowners.

For the lawsuit, see Whiting v. Citimortgage, Inc. (April 1, 2011).

See also, Silva v. Citimortgage, Inc. (March 11, 2011) for a similar lawsuit filed by this firm on behalf of screwed-over New Jersey homeowners.

See Parade Of HAMP Lawsuits Seeking Class Action Status Continues; Banks Accused Of Stiffing Homeowners On Loan Modifications, Despite Pocketing TARP Ca$h for links to some of the complaints filed in an ever-growing list of HAMP-related, loan modification lawsuits.