South Carolina High Court Temporarily Slams Brakes On Foreclosure Actions Statewide Involving Owner-Occupied Dwellings

In Columbia, South Carolina, The Greenville News reports:

• Thousands of homeowners facing foreclosure across South Carolina are getting a second chance after state Supreme Court Chief Justice Jean Toal ordered all foreclosures halted until after an intervention process can be completed.
• Toal's order is the second in two years on the issue and the result, she said, of breakdowns in the process. She said judges with jurisdiction over foreclosures have told the Supreme Court they're having trouble because of failed or delayed “mitigation efforts” between those making and servicing the loans and those owing the money. That, Toal said, has caused the number of unresolved foreclosure actions to increase.
• Sue Berkowitz, an attorney and director of the Appleseed Legal Justice Center, which assists low-income citizens with legal matters, hailed the order as a victory for the consumer. “The mortgage companies were not doing what they were supposed to be doing,” she said. “They were losing documents. They weren't going through the process in good faith. I think this is an excellent step forward. This is going to help consumers a lot.”

***

• One problem, Berkowitz said, was that especially with large lenders, communication was poor, leading to situations where homeowners pleaded their case to the bank “and the next thing they know their house was up for sale because while they thought they were negotiating in good faith, the bank was going forward with the legal process.”

For more, see S.C. foreclosures put on hold (Chief justice wants intervention process finished to clear up problems) (subscription required; if no subscription, GO HERE, then click appropriate link for the story).

See also, The Post and Courier: Top court halts some foreclosures: Borrowers, lenders given more time to work out deal.

For Justice Toal's order, see Administrative Order re: Mortgage Foreclosure Actions.

Arizona Appeals Court Kiboshes Bank's Attempt To Steamroll Pro Se Renter Out Of F'closed Home w/o Notice In Violation Of Federal Tenant Protection Law

In Phoenix, Arizona, The Bank of New York Mellon is the latest bankster caught trying to throw a tenant in a foreclosed home out on the street without giving her the proper 90-day notice as required under the Protecting Tenants at Foreclosure Act of 2009 ("PTFA").

After successfully duping an apparently rusty Judge Lindsay Best Ellis, another of the many retired trial jurists from around the country who have been asked to interrupt their retirement years to hear foreclosure cases, that the Federal statute did not apply in giving tenant Patricia De Meo the boot, the bankster got a rude surprise in that De Meo, without legal representation,(1) went to the state intermediate appellate court and asked for a review of the lower court ruling, claiming that her rights under the PTFA were ignored.

In a relatively simple, straightforward review, the three-judge Arizona appeals panel agreed with De Meo and reversed the lower court fumble.

For all the details, see Bank of New York Mellon v. De Meo, 1 CA-CV 10-0177 (Ariz. App. Div. 1, May 3, 2011).

(1) Although acting without legal counsel, De Meo received some additional ammunition by way of a 'friend of the court' brief filed by the Phoenix not-for-profit law firm Community Legal Services ("CLS") on behalf of a number of organizations in support of De Meo’s position. CLS provides legal advice, assistance and advocacy to low-income Arizonans in certain civil legal matters throughout their services areas.

Florida AG Tags Alleged Loan Modification Racket With Civil Suit; Court Slaps Operators With Temporary Asset Freeze, Shut Down Order

From the Office of the Florida Attorney General:

• Attorney General Pam Bondi announced that her office filed a lawsuit on Friday against three South Florida companies that allegedly were charging upfront fees for loan modification services to homeowners facing foreclosure. Charging upfront fees for these services is illegal, per F.S. 501.1377.
• Home Owner Protection Economics, Inc., DC Financial Group, Deleverage America, Inc. and owners Dennis Fischer, and Christopher S. Godfrey purportedly collected thousands of dollars monthly in upfront fees for loan modification services that were never provided. As a result of the lawsuit filed by the Attorney General’s Office, the Palm Beach County Circuit Court ordered the defendants’ assets be frozen and that they be forbidden from operating until further order of the court.
• An investigation conducted by the Attorney General’s Economic Crimes Division indicated that these companies, located in Delray Beach, were allegedly charging upfront fees ranging from $495 to $2,000 for foreclosure-related loan modification services that were never rendered.
• Allegedly, the defendants falsely represented to homeowners that they would work with lenders to reduce the homeowners’ debt and prevent foreclosure, when in reality the lender banks were never contacted on the homeowners’ behalf. The companies were allegedly soliciting hundreds of homeowners nationwide via telemarketing, direct mail, e-mail and Internet, print and TV advertising.

For the Florida AG press release, see Attorney General Bondi Files Lawsuit Against Three South Florida Companies for Foreclosure Rescue Fraud.

California Woman Faces New Charges Of Fleecing Home Equity Out From Under Unwitting Seniors Using Forged Documents

In Whittier, California, the Whittier Daily News reports:

• A Whittier woman who allegedly fleeced an elderly couple out of $273,000 was charged this week with stealing $50,000 from another senior. Helen Hinojos, 45, took out a second loan against a house without the permission or knowledge of the owner, according to sheriff's Detective Christopher Derry. The victim, an 85-year-old Whittier woman, is related to Hinojos by marriage.

***

• Two other suspects, Ruth Farias, 69, of Santa Ana, and Esmeralda Garcia, 29, of Ontario were arrested last week. Garcia is out on bond while Farias and Hinojos remain in county jail. The prosecution charged the three women with one count of theft from an elder or dependent adult which happened between Nov. 1 and 17, 2009. Garcia was also charged with forgery after she allegedly notarized the forged signature of the victim on a deed of trust.

***

• Hinojos helped the victim refinance her home in March 2009. Eight months later, she allegedly used the woman's personal information to apply for a second mortgage on the house. Hinojos made monthly payments on the second loan with money orders so it couldn't be traced, according to Derry. But she was late with a payment. He said the lender sent a notice to the victim who asked Hinojos about it. After fees, he said Hinojos got $42,000 of the loan, Garcia $3,700 and Farias $3,500.
• This is the second case where Hinojos, a loan processor, allegedly scammed a senior. She was charged earlier this year of defrauding a Whittier couple in their 70s from 2008 to 2009.
• The couple wanted to refinance their house in order to buy their daughter's Ontario home which was in foreclosure. They turned to Hinojos, who was a friend of their son. Hinojos allegedly convinced them to transfer the refinancing money into another escrow company. The bulk was put into a trust account.
• Derry said Hinojos convinced the escrow agent to release the money to her, her relatives and friends. She also allegedly took a second loan using the couple's name. They didn't know about the loan and only found out their Whittier home had been sold when a deputy arrived with an eviction notice.

For the story, see Whittier woman charged in second fraud case against senior.

(1) In addition, investigators said Farias, a former licensed real estate broker, allegedly used the company name of a licensed broker in Huntington Beach and submitted the false loan documents to the lender for Hinojos, and charged her with identity theft, the story states.

Wells Bends To Negative PR, Voluntarily Refunds $100K To Clueless F'closure Auction Buyer Of Home Subject To $386K Lien w/out First Doing Title Search

In Broward County, Florida, the South Florida Sun Sentinel reports:

• Gus Armenakis of Coconut Creek said he cashed the $102,600 check on Friday. “I feel like I won the lottery,” he said. The 38-year-old doctor did, in a way.
• In January, he logged in to the Broward County foreclosure auction website and spent six figures on what he thought was a bargain-priced four-bedroom home in Parkland. It turned out to be a worthless junior lien.
• The lender, Wells Fargo, still had a first mortgage worth $386,593. Armenakis filed an objection to the sale, which was denied by a Broward judge. Wells Fargo filed to foreclose, and the auction was scheduled for Wednesday. "It might be legal, but ethically it's not right," Armenakis said last month. Wells Fargo apparently agreed because the lender gave him his money back.
• Novice investors routinely make the same mistake Armenakis made and they don't typically get their money back, auction officials say. All it would take to avoid the headache: a $100 title search. Asked if he intends to get back on the foreclosure auction horse, Armenakis said, “I plan to stay as far away from the real estate market as possible.”

Source: Wells Fargo returns $102,600 to foreclosure investor.

Deutsche Bank's A Liar, Say Feds In "False Claims" Suit Alleging Outfit Ran Racket That Scammed FHA Mortgage Insurance Program

In New York City, The Wall Street Journal reports:

• The Justice Department accused Deutsche Bank AG of "recklessly" lying about the quality of loans made by a mortgage unit of the German bank and guaranteed by the U.S. government.
• In a civil lawsuit filed Tuesday in federal court in Manhattan, U.S. Attorney Preet Bharara sought to recover alleged damages and losses on mortgages insured by the Department of Housing and Urban Development, which could total more than $1 billion.
• The 48-page lawsuit detailed what Mr. Bharara said was a decade-long disregard of basic underwriting standards and quality control at mortgage lender MortgageIT Inc., which was acquired by Deutsche Bank in 2007.

***

• Tuesday's lawsuit against Deutsche Bank is the highest-profile case brought by a unit Mr. Bharara set up last year to pursue civil actions in complex financial-fraud cases. It wouldn't be a "fantastical stretch to think we are looking at other financial institutions as well," Mr. Bharara said at a news conference, declining to be more specific.

***

• "While Deutsche Bank and MortgageIT profited from the resale of these government-insured mortgages, thousands of American homeowners have faced default and eviction, and the government has paid hundreds of millions of dollars in insurance claims," the suit against Deutsche Bank alleged.

***

• The lawsuit was filed under the False Claims Act, which allows the government to seek three times the losses suffered by HUD, as well as punitive and other damages.

For more, see U.S. Says Deutsche Bank Lied (Suit Accuses Lender of Misrepresenting Quality of Loans Made by Mortgage Unit) (requires paid subscription; if no subscription, TRY HERE, then click appropriate link for the story).

For the lawsuit, see USA v. Deutsche Bank.

For the U.S Attorney (Manhattan - New York City) press release, see Manhattan U.S. Attorney Sues Deutsche Bank And Subsidiary MortgageIt For Years Of Reckless Lending Practices.

Law Professors To Bay State High Court: "U.S. Bank, N.A., Was No More Capable Of Passing On Good Title To The Rodriguez Property Than A Common Thief"

An amicus brief filed by four law school professors in a case currently under review by the Massachusetts Supreme Judicial Court involving the rights, if any, of an unwitting 3rd party purchaser of an improperly foreclosed upon house by U.S. Bank belonging to homeowner Pablo Rodriguez contains a discussion of what they describe as two of the most fundamental principles of commercial law: the principle of nemo dat quod non habet ("you can't give what you don't have") and the principle of the bona fide purchase (protects parties who take for value in good faith).

In urging the state high court to affirm a lower court ruling(1) finding that the 3rd party purchaser acquired void title as a result of the improperly conducted foreclosure, the four professors argue their position that "U.S. Bank, N.A., was no more capable of passing on good title to the Rodriguez property than a common thief."

For more, see Amicus Brief - Bevilacqua v. Rodriguez (Amicus Brief Of Professors Adam J. Levitin, Christopher L. Peterson, Katherine Porter, John A.E. Pottow).(2)

See also, Credit Slips: For the Servicers: Is It Better to Rob Peter or Paul? (The U.S. mortgage servicing industry is in deep doo-doo).

Thanks to Deontos for the heads-up on the Credit Slips post.

(1) For Massachusetts Land Court Judge Keith C. Long's ruling currently being reviewed by the state's high court, see Bevilacqua v. Rodriguez, MISC 10-427157 (KCL), 2010 WL 3351481 (Mass. Land Ct. Aug. 26, 2010).

(2) For links to all the briefs filed with the Massachusetts Supreme Judicial Court in this case, see Case Docket - Francis J Bevilacqua, III vs. Pablo Rodriguez, SJC-10880.

Prosecutor: Suspect Facing Financial Elder Abuse, Grand Theft, UPL Charges Pocketed $30K From Elderly Couple After Promising Bogus Foreclosure Rescue

In Santa Barbara, California, the Santa Barbara Independent reports:

• Denise D’Sant Angelo—previously convicted of felony grand theft for stealing $2,800 that donors had intended to help three nuns find housing—is finally back in court facing new charges of financial elder abuse and grand theft.
• D’Sant Angelo and the court heard opening remarks from Deputy District Attorney Brian Cota who alleged she told a couple in their seventies—whom she met while going door-to-door for the nuns—that she could save their longtime house that was about to go into foreclosure.
• She allegedly took $30,000 from them over the course of a year and a half for services never rendered, and used the money to pay her rent. She faces seven charges of financial elder abuse and grand theft, and one count of unauthorized practice of law. She faces a total of 11 years in jail.

Source: Nun Scammer on Trial for Elder Abuse.

Sale Leaseback Peddling Scam Among Accusations Facing Florida Couple Pinched With Multiple Fraud, Racketeering Charges

In Holly Hill, Florida, WFTV Channel 9 reports:

• Holly Hill police say they arrested a woman who tried to sell a nursing home that wasn't hers. Investigators say the woman took hundreds of thousands of dollars from several victims. The alleged mastermind, Vidya Bhoolai, is from Trinidad and immigration officials are trying to determine her status in the U.S. They're also investigating her entire family, who officials say played a role in the scheme surrounding a house.

***

• Amber Moore thought Bhoolai could save her home from foreclosure when Bhoolai offered to purchase it with an option for Moore to lease the home after they made a deal. "She knew the story of the home and the sentimental value that it holds to us and just took everything that I had," Moore said.
• Moore says she gave Boohlai $20,000 over the past year. "I hope she gets the worst thing that can happen to her. I hope she has nightmares every night," Moore said.
• Bhoolai was finally caught after the State Attorney's Office received a tip from a victim. Police completed an 11-month long investigation and arrested Bhoolai and [ex-husband Steve] Sahadath. Both suspects face numerous charges of fraud and racketeering.
• The two are in jail, both with a bond of over $100,000. However, they cannot get out of jail until immigration officials determine their status.

For the story, see Cops: Woman Made Thousands Off Properties She Didn't Own.

Bay State High Court Hears 'Ibanez' Follow-Up Case Involving Unwitting 3rd Party Buyer Who Purchased Void Title On Improperly Foreclosed Home

In Boston, Masschusetts, Bloomberg reports:

• A Massachusetts man should be allowed to keep property he bought from U.S. Bancorp even though the bank didn’t have the right to foreclose on the previous owner, a lawyer argued before the state’s highest court.
• The Massachusetts Supreme Judicial Court is hearing oral arguments today [Monday, May 2] in the appeal of a lower-court decision that said the buyer of residential property in Haverhill, Massachusetts, never owned it because U.S. Bancorp foreclosed before it got the mortgage.(1) If that decision is upheld it could have wide implications in the foreclosure crisis in which banks are accused of clouding home titles through sloppy transferring of mortgages.
• The lower court’s “statement that my client received nothing is what we disagree with,” Jeffrey Loeb, a lawyer for so-called third-party buyer Francis J. Bevilacqua III told the panel today.
• The state high court already ruled Jan. 7 in a different case, U.S. Bank v. Ibanez that banks can’t foreclose on a house if they don’t own the mortgage. That case didn’t address the status of those who buy property from someone after an invalid foreclosure.
• “If the decision is upheld, and generally applied, it likely will have adverse implications for hundreds or even thousands of Massachusetts property owners if they find themselves in Bevilacqua’s shoes,” the Mortgage Bankers Association wrote in a friend-of-the-court brief.(2)
• Claims of wrongdoing by banks and loan servicers triggered a 50-state investigation last year into whether thousands of U.S. foreclosures were properly documented during the housing collapse.

Source: Massachusetts Court Hears Pivotal Mortgage-Transfer Case in Foreclosure.

See also:

• Reuters: Mass. high court wades back into foreclosure mess,
• Faulty Foreclosure Case in Massachusetts High Court May Hurt Home Buyers for an earlier Bloomberg story on this case.

For Massachusetts Land Court Judge Keith C. Long's ruling currently being reviewed by the state's high court, see Bevilacqua v. Rodriguez, MISC 10-427157 (KCL), 2010 WL 3351481 (Mass. Land Ct. Aug. 26, 2010).

(1) See Post-'Ibanez' Fallout Begins; Mass. High Court Takes Case Of Unwitting 3rd Party Buyer Left Holding The Bag w/ Void Title On Improperly F'closed Home.

(2) For the briefs filed with the Massachusetts Supreme Judicial Court, see:

• Appellant Bevilacqua Brief,
• Amicus American Land Title Association Brief,
• Amicus WilmerHale Legal Services Center of Harvard Law School Brief,
• Amicus Mortgage Bankers Association Brief,
• Amicus Massachusetts Attorney General Brief,
• Amicus Professor Adam J. Levitin Brief (together with Professors Christopher L. Peterson, Katherine Porter, John A.E. Pottow) ("[U].S. Bank, N.A., was no more capable of passing on good title to the Rodriguez property than a common thief"),
• Amicus Massachusetts Association of Bank Counsel, Inc. Brief.

Media Report Shines Light On Fort Lauderdale-Area Sale Leaseback, Foreclosure Rescue Peddler

In Broward County, Florida, the South Florida Sun Sentinel reports:

• In danger of losing her home, Robin Klein one day found a flier in her mailbox that promised solutions to her loan-default troubles. "It sounded so romantic: 'Home Rescue,'" the Cooper City woman recalled. "It was an impression I got that they were being altruistic and kind, and helping people."
• Thinking they were staving off foreclosure, Klein and her husband signed a stack of documents furnished by Home Rescue Foundation associates. Among them was a deed transferring ownership of their house, valued at $650,000, to a trust controlled by the foundation's founder, Bradley L. Hertz.(1)
• Robin Klein alleged in a lawsuit against Hertz that the true implications of the deal were never explained to her. Hertz says all clients were dealt with fairly and honestly. "Nobody was fooled. Nobody was coerced," Hertz said in an interview. "The only place they were probably fooled was in their mind. We had full disclosure."
• A Sun Sentinel investigation found that after promising to help save people's homes, Hertz gained control of dozens of South Florida properties whose owners had become financially overextended and fallen behind on their mortgage payments. In the process, Hertz left an extensive trail of litigation, foreclosure lawsuits and court judgments against him and one of his companies totaling more than $3.2 million — and many of the homeowners lost their properties in the bargain.
• In the Kleins' case, they managed to regain their house, but to do so, Robin Klein had to declare bankruptcy. Her lawyer alleged Hertz's associates "falsely and fraudulently" convinced the Kleins to sign the documents by telling them the home would stay in their names and that the "purpose of the transaction was to save their home,'' according to the lawsuit. A federal judge voided the new deed, an action Hertz did not contest.
• "People who are scared and desperate, they are taking advantage of them," said Klein, who sought help from the foundation in the fall of 2006. "It's wrong."

***

• In interviews with the Sun Sentinel, a half-dozen homeowners said Hertz and his associates told them that if they signed their homes over to a Hertz company, or put them in a Hertz-controlled trust, they could avoid foreclosure.

***

• From March 2008 through September of last year, the Cooper City-based foundation was the subject of 10 consumer complaints filed with the state. Three lawsuits also have been filed, claiming Home Rescue misrepresented its services.
• The consumer complaints, filed by homeowners or their lawyers, are being investigated by the Florida Office of Financial Regulation. Some complainants said the foundation's mailings were deceptive because they looked like official government or court documents. Four homeowners complained they paid for help in modifying their mortgages, but got nothing in return. Hertz denies that he offered loan modification services.

***

• After taking title to homes, Hertz often got in trouble with the banks himself for not making mortgage payments. Hertz and Y3K have been named as defendants in two dozen foreclosure suits, court records show, resulting in more than $3.2 million in judgments against them for principal and interest on home loans.

***

• As South Florida's housing market continues to struggle, Hertz is trying to fend off several foreclosure actions, court records show. He filed for bankruptcy in August, but the case was dismissed. In September, he canceled the corporate registration of The Home Rescue Foundation. He lost two more homes to foreclosure in March.

For the story, see To keep homes, some South Floridians signed over deeds — and lost their properties anyway (Home Rescue Foundation's founder says disgruntled clients have only themselves, poor real estate market to blame).

(1) According to the story, Hertz earlier ran a home-health agency in the 1990s that participated in Medicare before going into the foreclosure rescue business. Two of his employees in that scam became federal whistleblowers and alleged in a lawsuit, later joined by the government, that Hertz's company was defrauding Medicare.

Reportedly, Hertz, now 57, pleaded guilty to Medicare fraud and was sentenced to a year of imprisonment in February 2001. He and his company reached a settlement with the government for improperly billing Medicare for entertainment, meals and his father's salary for a no-show job, according to court records. He agreed to repay the government $1.6 million.

After his release from prison, Hertz started a new company, Y3K Investments, which assumed ownership of its first home in Broward in May 2002, property records show. Y3K Investments began doing business as The Home Rescue Foundation in December 2003. Homeowners interviewed by the Sun Sentinel said they learned of the foundation through its fliers or advertisements.

Report: Majority Of Bogus, Inflated Recorded Sales Prices At Orlando-Area Foreclosure Auctions Tied To Six Investor Groups

In Orlando, Florida, the Orlando Sentinel reports:

• A small group of private investors has overpaid taxes on more than 100 Orange County real-estate purchases since January 2010, artificially inflating recorded sales prices to show the properties sold for $2.77 million more than the investors paid.
• The pattern of overpayments — by companies with names such as AA Florida Home Buyers LLC and The Seven Secrets Group LLC — emerged in an Orlando Sentinel review of thousands of foreclosure-auction records kept by the Orange County Clerk of Courts. The Sentinel analysis of foreclosure-auction sales in 2010 and the first quarter of 2011 found 101 examples of so-called "grossed up" sale prices.
• Overpayments of documentary-stamp taxes after the foreclosure sales first came to light in mid-April when the paper became aware of 11 cases. The number of confirmed cases grew nearly tenfold with the review of records.
• By overpaying the tax, investors increased the recorded sale prices for their purchases, disguising the eventual profits made when flipping many of the properties to new buyers.

For more, see Most bogus foreclosure auction prices in Orange tied to 6 investor groups.

(1) According to the story, the majority were purchases made by six investor groups: AA Florida Home Buyers LLC, The Seven Secrets Group LLC, CPR Wholesale & Investment Properties LLC, Global Funding & Development Inc., JJJ Family LLLP and UBON LLC. Dozens of other investors paid the proper taxes. Their sale prices appear accurately in public records, the story states.

Approach To Criminally Prosecuting Players In Subprime Scandal; Go After The 'Low-Hanging Fruit' - Leave The Big Guys Alone

A recent story on the PBS TV program Need To Know probes into the state of criminal prosecutions of those involved in the the subprime mortgage fraud scandal, and questions why the "big fish" on Wall Street appear to be swimming away scott free, while the government seems content to go after the "little fish."

Interviewed for the story in New York Times columnists Joe Nocera (he caught some people's attention earlier this year with his column, Biggest Fish Face Little Risk Of Being Caught) and Louise Story (she chimed in with her recent article, A.I.G. to Sue 2 Firms to Recover Some Losses), who gives their observations based on their earlier reporting .

Nocera describes for Need To Know the story of Charlie Engle and the effort the government sank into bagging him for lying on a liar loan, while allowing the likes of Angelo Mozilo (Countrywide) and others with the resources, good lawyers, and willingness to put up a fight to skate free. This story was the subject of a March, 2011 column, In Prison for Taking a Liar Loan.

Story points out that during the savings and loan crisis of the 1980's, government regulators referred criminal cases to the Justice Department on average ov 1700+ per year, while during the current fiasco, they have only referred on average of about 70 per year.

For the Need To Know story (approx. 24 minutes), see Big Fish - Little Fish.

Bay State Regulator Goes Undercover In Effort To Bag Illegal Loan Modification Rackets "Saturating The Airwaves" With Upfront Fee Come-Ons

In Boston, Massachusetts, the Boston Herald reports:

• More than half of “foreclosure-prevention” companies that heavily advertise on local radio or other media allegedly demand upfront fees that Massachusetts law might prohibit, the state Office of Consumer Affairs says. “It’s really outrageous and it’s really despicable,” said Undersecretary of Consumer Affairs Barbara Anthony, whose office recently conducted an undercover probe of such firms.

***

• Consumer Affairs staffer posing as a homeowner seeking a mortgage “modification” contacted 13 foreclosure-prevention firms that ran ads on WBZ-AM (1030), cable TV’s Travel Channel or Google.com. Five firms never responded, but six of eight that did allegedly told the tester he’d have to pay $500 to $750 up front.
• That’s despite a state law that bans soliciting or accepting “an advance fee in connection with offering, arranging or providing foreclosure-related services,” although exceptions exist for some services provided by lawyers, lenders or mortgage brokers.
• Anthony said she plans to refer the six firms — Creative Loan Modification, HomeRecovery.org, Massachusetts Home Loan Modification Center, Mass Home Relief, National Mortgage Help Center and US Mortgage Relief — to Attorney General Martha Coakley for further investigation.
• The consumer-affairs chief said she ordered the undercover tests after getting fed up hearing the ads on her car radio. “I would practically go off the road sometimes listening to this stuff and calling the office to say: ‘Get this (advertiser’s) name down before I forget it,’” she said. “The ads on the radio are frankly terrible, and they’re saturating the airwaves.”

***

• Hub lawyer Richard Ravosa of the Massachusetts Loan Modification Center said he charges up to a $2,500 advance retainer, but said that’s to counsel homeowners about filing for bankruptcy.
• However, Anthony countered that her undercover tester specifically asked all the companies for help modifying a mortgage, not for assistance filing a lawsuit or declaring bankruptcy. “The regulation (does not include) a blanket exemption for attorneys,” said Anthony, a lawyer herself.

For the story, see State raises red flags over ‘foreclosure-prevention’ companies.

Lawsuit: Countrywide, GMAC Duped Investor Out Of Hundreds Of Million$ In Exchange For Crappy Mortgage Securities

In Hennepin County, Minnesota, the Minneaplois Star Tribune reports:

• Thrivent Financial for Lutherans has sued Countrywide Financial Corp. and GMAC Mortgage over what it describes as "massive frauds" in which it says it was duped into buying hundreds of millions of dollars in mortgage-backed securities.
• Thrivent says it wanted conservative, low-risk investments and believed it was buying only those mortgages that carried the highest, AAA investment-grade ratings. But because Countrywide and GMAC failed to follow their underwriting guidelines, Thrivent says, it ended up holding higher-risk mortgages and has suffered huge losses amid the housing market collapse.
• Between 2005 and 2007, the suit says, Minneapolis-based Thrivent and its affiliates paid hundreds of millions of dollars for 20 mortgage-backed securities offerings from Countrywide and for seven offerings from GMAC. The suit says that two firms either knew or recklessly disregarded the fact that the securities failed to meet the criteria for the AAA ratings they carried.

***

• [I]n the rush to increase market share, the suit says, Countrywide disregarded its underwriting guidelines, pressured appraisers to provide inflated valuations, and made more loans to higher-risk borrowers. Thrivent says Countrywide kept the best-quality mortgages for itself and dumped the riskier loans onto Thrivent and others.
• Thrivent made similar allegations against GMAC, citing a number of confidential witnesses who had worked for the company. Thrivent seeks unstated compensatory and/or rescissionary damages, punitive damages and costs.

For more, see Thrivent sues lenders for 'massive frauds' (Countrywide and GMAC both say that Thrivent should have understood the risks of the mortgage-backed securities it bought).

AIG To Begin Firing Off Lawsuits Targeting Banksters Over Insurance Deals Involving Crappy Mortgage Securities

The New York Times reports:

• The American International Group, the giant insurer rescued by the federal government during the financial crisis, on Thursday will file the first of what could be a series of lawsuits against Wall Street firms, contending that it was the victim of fraud.
• The initial suit, against ICP Asset Management and Moore Capital, will claim that A.I.G. suffered losses insuring mortgage securities created by ICP. The suit says ICP manipulated those securities in a way that benefited itself and Moore Capital, which is not accused of fraud, but harmed A.I.G.
• Though the insurer received a hefty bailout, much of that money ultimately flowed to banks. Now, A.I.G. is trying to “recoup potentially billions of dollars from the fraudulent conduct of these defendants and other parties,” according to a copy of the suit obtained by The New York Times. Because A.I.G. is still largely owned by the government [reportedly 92%], taxpayers would share in any recovery.

***

• A.I.G. is preparing several suits against banks, like Bank of America and Goldman Sachs, that created the $40 billion in mortgage bonds, according to the person with knowledge of the litigation, who was not authorized to talk about it publicly. The company says it believes the banks issued misleading statements about the quality of the mortgages within those bonds, the person said.

***

• A.I.G.’s suit against ICP mirrors a lawsuit filed by the Securities and Exchange Commission last summer [story, SEC lawsuit]. The commission cited four mortgage securities, including two deals known as Triaxx, that were insured by A.I.G. ICP caused Triaxx to overpay for mortgage bonds to benefit itself and a favored client, the commission said.

For more, see A.I.G. to Sue 2 Firms to Recover Some Losses.

2nd South Florida Foreclosure Mill Bites Dust; Outfit Cuts Loose Another 146 Employess As State Bar Confirms Pending Probe Into Firm's Partners

In Fort Lauderdale, Florida, The Palm Beach Post reports:

• A second South Florida law firm is shuttering its foreclosure business following a three-month fall from grace marked by a contempt of court charge against the firm's co-founder and loss of major clients. The Fort Lauderdale-based firm of Ben-Ezra & Katz gave layoff notices to 146 employees Thursday, with another eight from its title agency receiving the same news, said a spokesman, Ray Casas.
• Once one of the larger so-called "foreclosure mills" in Florida with nearly 600 employees, Ben-Ezra & Katz has been cutting staff since February when it was fired by federal mortgage backer Fannie Mae. Before Thursday's announcement, the firm had already laid off 280 employees, according to records filed with the state.

***

• A day after the Fannie Mae announcement, a Miami-Dade circuit judge found the firm's founding partner, Marc Ben-Ezra, in contempt of court for a shoddily handled foreclosure case.(1) The judge has yet to release a final written order and the firm has filed affidavits in its defense hoping to soften the blow.
• Kenneth Marvin, director of lawyer regulation for the Florida Bar, said Thursday it has open investigations into both Ben-Ezra and firm partner Marvin Katz.

For more, see Ending foreclosure business, Ben-Ezra lays off 154.

(1) See:

• "The Eleventh Judicial Circuit Does Not Have A Rocket Docket!" Says Judge As She Dismisses Foreclosure Action, Cancels Debt Over Sloppy Paperwork,
• Head Of Florida Foreclosure Mill Ordered Into Court To Explain Dubious Document Filings In Recently-Dismissed Suit.

Ohio Supremes To Decide Whether Foreclosing Party Must Own Both Note, Mortgage At The Time Complaint Is Filed

In connection with foreclosure actions in the State of Ohio, the Ohio Supreme Court has agreed to decide the following question:

• "To have standing as a plaintiff in a mortgage foreclosure action, must a party show that it owned the note and the mortgage when the complaint was filed?"

This issue comes to the state high court upon review of a state intermediate appeals court ruling in U.S. Bank Nat'l. Assn. v. Duvall, 2010 Ohio 6478 (Ohio App. 8th Dist. Cuyahoga County), which held that a lender holding a secured promissory note did not have standing to foreclose a mortgage where the mortgage was in the name of another party.(1)

In deciding to address the issue, the state high court reviewed an order by the 8th District Court of Appeals certifying conflict in the case law from various intermediate appellate districts, and found that a conflict exists.(2)

As it appears that the cases having to address the mess created by the fraudulent conduct of the banksters have sufficiently percolated up the Ohio judicial system, one looks forward to the Ohio Supreme Court putting some order in this area of law both by answering the certified question, and, hopefully and albeit through (authoritative?) dicta, by establishing some guidepost by which the courts can be guided when addressing related bankster-created foreclosure messes not specifically addressed by the certified question here (see, for example, Deutsche Bank Nat'l. Trust Co. v. Greene, 2011 Ohio 1976 (Ohio. App. 6th Dist. April 22, 2011).

For the Ohio Supreme Court's ruling finding the existence of a conflict in the current case law, see U.S. Bank Nat'l. Assn. v. Duvall, 2011 Ohio 1618 (April 6, 2011).

Thanks to Ohio FRAUDClosure for the heads-up on the recent Ohio Supreme Court ruling.

(1) In reaching its conclusion, the 8th District Court of Appeals in Duvall ruled:

• {¶ 13} Ohio law holds that "[a]n action on a note and an action to foreclose a mortgage are two different beasts." Gevedon v. Hotopp, Montgomery App. No. 20673, 2005-Ohio-4597, ¶28. See, also, Third Fed. Savs. Bank v. Cox, Cuyahoga App. No. 93950, 2010-Ohio-4133; Fifth Third Bank v. Hopkins, 177 Ohio App.3d 114, 2008-Ohio-2959, 894 N.E.2d 65.
  
  {¶ 14} In Jordan, supra, this court held that "[t]he owner of rights or interest in property is a necessary party to a foreclosure action. * * * Thus, if plaintiff has offered no evidence that it owned the note and mortgage when the complaint was filed, it would not be entitled to judgment as a matter of law." Id., ¶¶22-23.
  
  {¶ 15} Accordingly, we conclude that plaintiff had no standing to file a foreclosure action against defendants on October 15, 2007, because, at that time, Wells Fargo owned the mortgage. Plaintiff failed in its burden of demonstrating that it was the real party in interest at the time the complaint was filed. Plaintiff's sole assignment of error is overruled.

(2) The conflict cases are:

• U.S. Bank, N.A. v. Bayless, Delaware App. No. 09 CAE 01 004, 2009-Ohio-6115 (5th Dist.),
• U.S. Bank, N.A. v. Marcino, 181 Ohio App.3d 328, 2009-Ohio-1178 (7th Dist.),
• Bank of New York v. Stuart, Lorain App. No. 06CA008953, 2007-Ohio-1483 (9th Dist.), and
• Countrywide Home Loan Servicing, L.P. v. Thomas, Franklin App. No. 09AP-819, 2010-Ohio-3018 (10th Dist.)

An interesting piece of trivia here is that the Bayless, Marcino, and Thomas cases all involved self-represented, pro se homeowners. The Cox and Jordan cases referred to in footnote 1, above, also involved self-represented, pro se homeowners.

Ohio Appeals Court: Sloppy Mortgage Assignments In Foreclosure OK Where Note, Mortgage Contain Interlocking References

A recent ruling by an Ohio appeals court held that an assignee of a mortgage had standing to foreclose, despite the fact that it had not also acquired, by formal assignment, the promissory note secured thereby. In this case, the court concluded:

• that the assignment of the mortgage, in conjunction with interlocking references in the mortgage and the note, transferred the note as well. See Restatement of the Law 3d, Property – Mortgages (1997) 380, Section 5.4(b); Bank of N.Y. v. Dobbs, 5th Dist No. 2009-CA-002, 2009-Ohio-4742, ¶ 17-41, appeal not allowed, 124 Ohio St.3d 1444, 2010-Ohio-188.

For the court ruling, see Deutsche Bank Nat'l. Trust Co. v. Greene, 2011 Ohio 1976 (Ohio. App. 6th Dist. April 22, 2011).

California Bankruptcy Court: Mortgage Assignments Must Be Recorded Before Assignee Exercises Power Of Sale In Deed Of Trust

Lexology reports on the recent In re Salazar case, in which a U.S. Bankruptcy Court in California gave MERS the boot in a foreclosure action:

• MERS was the original named beneficiary in the DOT securing the borrower’s loan and, despite the assignment of the original lender’s interest in the note and DOT, MERS remained the named beneficiary of record on the DOT when the assignee foreclosed. The Bankruptcy Court, in In re Eleazar Salazar, issued on April 11, 2011, held that MERS’ recorded interest did not allow the assignee to bypass the California Civil Code Section 2932.5 requirement that an assignment be recorded before the assignee exercises the power of sale under a DOT.

***

• In rejecting the assignee’s argument that MERS’ recorded interest as beneficiary of the DOT was sufficient to satisfy Section 2932.5, the Court noted that it was joining “the courts in other states that have rejected MERS’ offer of an alternative to the public recording system.” Among such courts was the U.S. Bankruptcy Court for the Eastern District of New York, which held in In re Agard that MERS lacked authority to assign mortgages. (Click here to read an earlier legal alert summarizing Agard.)

For the story, see California bankruptcy court: state foreclosure law trumps MERS (requires paid subscription; if no subscription, GO HERE; or TRY HERE, then click appropriate link for the story).

Title Insurance: Preliminary vs. Full Coverage Reports - What You Need To Know When Buying Real Estate At Foreclosure Auctions

A recent story at FXstreet.com describes the importance of understanding a property profile report(1) when buying real estate, the difference between a preliminary (also known as a non-insured) title report and a "full coverage" title report, and alludes to the practice by real estate investors of relying on the preliminary (non-title insured) report as a basis for purchasing real estate at foreclosure auctions.

From the story:

• There has been litigation in the last few years related to the non-insured often free reports that investors have been given and use when purchasing foreclosure properties. These investors have relied on these reports to document all of the liens against the property.
• What has been happening is that after property has been purchased (often on the courthouse steps), the investor finds out that there are additional liens on the property. The investor is now responsible for those liens.
• Investors have tried suing title companies for misinformation. The cases don't have merit because the title company never provided a guarantee as they do with the "full coverage title search."(2)

For the story, see Property Profile and Title Report: What You Need to Know and Why.

(1) A property profile report will help you determine three things about a prospective real estate purchase:

• Who the legal owner of the property is and do they have the right to sell the property,
• The loans and liens that exist on the property,
• The restrictions related to use of the land.

(2) In a related story, see Lexology: Title information: you get what you pay for (requires paid subscription; if no subscription, GO HERE, or TRY HERE, then click appropriate link for the story), which describes the recent case, Soifer v. Chicago Title Co., 187 Cal. App. 4th 365 (Cal. App. 2nd Dist., Div. 3, 2010), where an experienced investor in distressed real estate who was the winning bidder at a foreclosure sale, and who relied on a preliminary (non-insured) title report, was left holding the bag on a $1 million loss when the report failed to disclose an existing lien.

• In Soifer, a court held that a title insurer could not be held liable for providing free, yet erroneous, email advice about loan seniority to a bidder who relied on the advice when purchasing a property at a foreclosure sale.
• The court reasoned that if, under long-established California law, a title insurer cannot be held liable for mistakes in a preliminary title report, it certainly could not be held liable for more informal advice sent in an email message.
• While consistent with existing statutes and legal precedents, this holding may come as a surprise to many in the real estate industry who, over time, have come to rely heavily on informal opinions of title and preliminary title reports from their local title company.

Another Adverse Possession-Claiming Crackpot Bagged For Changing Locks & Moving Into Vacant Home; Faces Charges Of Grand Theft Of $100K+, Burglary

In Tampa, Florida, The Tampa Tribune reports:

• For the second time in recent months, Yvette Swain moved into a vacant Hillsborough County home without the property owner's permission, authorities said. Deputies arrested Swain, 41, late Tuesday on warrants for grand theft of $100,000 or more and burglary of an unoccupied dwelling.
• In the first instance, Swain moved into a Dover house after a company called Chateau Lan took possession of it, citing Florida's adverse possession law. That law allows a person to take possession of abandoned property if he lives on it and pays taxes on it for seven years. Homeowner Danuta Brown moved back into that four-bedroom, three-bath house property after a costly, four-month ordeal.
• After the legal battle, Swain moved out of Brown's home in December and into an apartment, Hillsborough Sheriff's Office spokeswoman Debbie Carter said.
• Months later, Swain and her family moved into a vacant Valrico house, Carter said. Just one problem, authorities say — Swain did so without permission and without owning the property, investigators say. Carter said Brown moved in and changed the locks after seeing the home for sale.
• A real estate agent had "For Sale" sign in front of the house at 13409 Sydney Road. Neighbors told the agent in April that someone had moved in. The agent went to the property, saw the sign was missing and that the home's locks had been changed. On April 10, he contacted deputies.
• He told authorities the home wasn't being foreclosed upon and was in the process of a short sale. No one was home when deputies responded April 10, but 10 days later deputies spoke to Swain. She said she had lived in the home for three weeks and had been in the process of legally claiming the property under adverse possession, Carter said.
• After deputies spoke with the state attorney's office, a warrant was issued for Swain's arrest. She was charged because the home wasn't in foreclosure, it had a rightful property owner and was in the process of being sold, Carter said.

Source: Move into vacant house results in arrest. home hijacking

Suit: Broker, Agent, Seller Unloaded Home Onto 1st Time Buyer w/o Disclosing Presence Of Contaminated Federal 'Superfund' Site Less Than 100 Feet Away

In Gainsville, Florida, The Gainsville Sun reports:

• In 2004, Carla Melgarejo bought her first property, an 1,100-square-foot home at 444 NW 30th Ave. advertised as a "GREAT INVESTMENT" for a first-time buyer. For five years, her attorneys say, she and her daughter lived there without knowing that less than 100 feet to the east was the northwestern boundary of a federal Superfund site, a designation reserved for some of the most contaminated spots in the country.
• On Tuesday, Melgarejo filed a lawsuit against Bosshardt Realty Services, the real estate agent who worked on the sale and the couple who sold the property, alleging they did not disclose any information about the property's proximity to the Cabot-Koppers Superfund site.(1)

***

• In comments at local meetings in recent years, residents have made accusations of "unscrupulous" real estate agents selling properties in the Stephen Foster neighborhood without disclosing the proximity to the Superfund site, which they say has crippled property values. But Springfield said she thought Melgarejo's suit was the first of its kind to be filed.

For more, see Homebuyer near Koppers sues real estate agency, ex-homeowners.

(1) In addition to Bosshardt Realty, one of its agents, David Ferro, and the previous owners of the property, Robert and Robin Evans, were named in the suit, the story states.

Out-Of-Town Investor Gets Rude Surprise After Getting 'Good Deal' On Tax-Foreclosed Vacant House Purchase

In Syracuse, New York, The Post Standard reports:

• Toronto real estate investor David Ayanoglou thought he found a good deal in Syracuse: a vacant two-family house at 209 Columbus Ave. Ayanoglou visited the boarded-up structure, in a low-income area on the East Side. It needed work, but he decided it had a lot of potential.
• The house was available because the previous owner had not paid the taxes, giving the city of Syracuse the right to foreclose. The city sold that right in 2006 — along with tax liens on hundreds of other properties — to American Tax Funding LLC, a private company in Florida. American Tax Funding foreclosed in 2007 and sold the property in 2008 to Ayanoglou and a partner.
• A few months after Ayanoglou paid $13,000 for the house, his property manager called from Syracuse with bad news. The house had been demolished by the city.

For more, see Tax liens cause disputes for Syracuse, a Florida firm and long-distance homeowners.

Owner Of Vacant House Under Renovation Needs Assist From Local Cops To Extract Brazen Squatter From Premises In Failed Attempt To Hijack Home

In Portland, Oregon, The Oregonian reports:

• When Tyler Combs and a plumber showed up at Combs' Southeast Portland house that's under remodel, they were surprised to find the lockbox on the front door gone and metal shavings on the porch. The plumber jiggled the knob. Suddenly a strange man opened the front door and stuck his head out.
• "Who are you?" Combs asked. "I live here," the stranger replied. "My jaw dropped, and I said, 'No you don't. This is my house.'" The stranger replied, "I live here now. I own this house."
• Thus began a frightening but eye-opening ordeal for Combs, who had bought the foreclosed house in July 2009. He had it under renovation and planned to put it back on the market. But now a stranger had moved in, changed the locks and had even persuaded PGE to put the electricity account in his name.

***

• Combs, 29, expected the man to pack up his belongings and move on, once caught. But the man didn't budge. [...] Combs called the police. When officers arrived, the stranger continued to block the door. After checking with detectives, East Precinct officers arrested Alexis Marie Logsdon that day, April 13. On Friday, Logsdon, 39, pleaded not guilty to second-degree burglary and criminal mischief. During his arraignment, he continued to argue the house was his.

***

• "He took possession of my account for that address, and PGE never notified me," Combs said. "In his mind, he had actually commandeered the house." [...] "He truly believed he had figured out a way to beat the system and literally take this house from me. I just felt so exposed," Combs said. "His confidence is what rattled me."

For the story, see A homeowner startled to find squatter living in the Portland house he bought out of foreclosure.

(1) Reportedly, a local group called Reclaim! Portland Real Estate Listings has a website that details how to illegally occupy a building, with tips to make the place look as "homey" as possible before police arrive, even suggesting the squatter make brownies for the neighbors. There are other websites that do the same, such as Squat2Own.com, which suggests squatters "dare the cops to intervene," the story states.

According to the story, various websites instruct squatters to change utility bills to their names, all a strategy to garner what is legally called adverse possession and has its roots in English common law. Under Oregon law, a squatter must show he has maintained open, exclusive and continuous use of the property for at least 10 years, and to have honestly believed he owned the property, and can't be conferred to people who know they are trespassing or, as in Logsdon's case, breaking and entering, the story states.

1000+ Tenants In 10 Dilapidated Bronx Bldgs Get New Hope As City Squeezes Bank To Sell Sour Loans To Responsible Landlord; Deal To Affect 548 Units

In The Bronx, New York, the New York Daily News reports:

• Mayor Bloomberg's administration pressured banks holding mortgages on foreclosed properties to sell them to responsible landlords, and not let them rot into slums. The Bloomberg administration is finally stepping in to protect New Yorkers in foreclosed apartment buildings that are turning into slums.
• The city pressured the bank that held a $35 million mortgage on 10 Bronx buildings to sell them to a responsible landlord, even if it meant losing money. That new landlord, Steven Finkelstein, stood alongside Mayor Bloomberg and City Council Speaker Christine Quinn Tuesday at one of the buildings getting repairs - as residents cheered wildly.
• "In six to eight weeks, we will have 80% of the violations corrected," said Finkelstein, new windows his crews have already installed clearly visible. "Once I get them up to par, I'm going to be able to provide affordable housing to people and, you know, keep things going in a very positive manner."
• Finkelstein's firm paid $27.75 million for the buildings and expects to spend another $7 million to fix 548 apartments. The buildings seem to have been falling apart after California-based Milbank Real Estate bought them in 2007 at the height of the housing bubble, then lost them when the market crashed.
• Tenants' lives have been hell since LNR Partners of Florida, which ended up with the mortgage, stopped taking care of the properties. The city has written more than 4,000 housing code violations as more than 1,000 people suffered through leaky roofs, backed-up sewers, winters without heat or hot water and prostitutes and drug dealers roaming their halls.
• "It was a state of hopelessness," said Malikah Rasheed, president of the tenants association at one of the rotting buildings. "We had mushrooms growing in people's apartments. That's how bad it was."
• City officials hope to bring the new aggressiveness to thousands more apartments endangered by landlords caught up in the housing crunch - and the banks that hold the mortgages.
• "If you are a bank who held a mortgage and the building is in foreclosure, wake up - you own the building now," Quinn said. "You will be held accountable. That is the message today."

Source: City pressures bank holding mortgage on Bronx buildings to sell to responsible landlord.

See also, The Wall Street Journal: NYC: Deal will fix buildings ailing in foreclosure (More than 1,000 tenants who lived in declining conditions as their buildings fell victim to the foreclosure crisis now have a new landlord who is promising to make millions of dollars in repairs, city officials announced Tuesday).

Pressure On Sour-Loan-Holding Lenders To Cough Up Repair Cash Continues As Code Violations In Multi-Unit Apartment Buildings In Foreclosure Stack Up

In New York City, The Wall Street Journal reports:

• Housing advocacy groups and the Bloomberg administration are asking bank regulators for help in fixing up deteriorating apartment buildings. Advocates say that hundreds of buildings in New York City are falling into disrepair because their owners took on too much debt to buy them in the boom years leading up to the recession.
• With many of these properties now in foreclosure proceedings and building-code violations stacking up, banks and other debtholders will help decide their future.
• Housing advocates, who used to target landlords and opportunistic buyers to fix up aging buildings, have been pressuring lenders in recent months to sell troubled mortgages at discounts so the new owners will be able to afford repairs. They've also been pressuring lenders to fix up properties themselves.

For more, see Tenants Turn to Lenders to Repair Buildings.

Water Shutoffs Major Problem For Miami Renters w/ Landlords In F'closure; County To Vote On Rule Change Allowing Tenants' Payments To Restore Service

In Miami, Florida, The Miami Herald reports:

• Whenever Michel Joseph wants to shower, cook or use the bathroom, he has to leave his Little Haiti apartment and drop in on a neighbor who has running water. Water has not run in Joseph’s derelict apartment since his landlord abandoned the four-unit building to foreclosure, and skipped town in November.
• The landlord’s absence led to a water shutoff, and for the past four months, Joseph has not been able to turn it back on because of a long-standing rule at the Miami-Dade Water & Sewer Department.
• That rule — which restricts renters from re-opening a closed account — has come under increased scrutiny as more landlords have fallen prey to the foreclosure crisis, some leaving tenants without basic utilities.(1)
• “The tenants have become the hidden victims of the foreclosure crisis,” said Purvi Shah, a Florida Legal Services(2) attorney who defends tenants of foreclosed properties. “There are hundreds of tenants in Miami-Dade County living in really serious conditions.”

***

• For Shah’s team at Florida Legal Services, getting to this point has been a long, difficult battle. Her team defends tenants going through foreclosure, and has litigated issues like water and electricity shutoffs, illegal evictions, tenant intimidation and landlord abandonment. Of the various issues that tenants face during foreclosure, water shutoff has been the most problematic, Shah said.

***

• Water service was discontinued at Hilda Bustos’ North Miami-Dade rental last year before Legal Aid lawyers filed suit in order to force the landlord to pay the bill. However, after the property went into foreclosure, the bank repossessed it and shut off the water, sparking another lawsuit from Legal Aid. The water was eventually turned back on, but tenant advocates do not have the resources to litigate against every landlord that abandons a property, Shah said.
• In the past three years, more than 400 multi-family properties have had water service discontinued because a landlord defaulted on payments, county statistics show. Most of these properties have less than 15 units.

For the story, see Collateral damage: Tenants of foreclosed properties (Tenants of properties in foreclosure have to deal with water shutoffs, landlord disappearances and sudden evictions, all side effects of South Florida’s mortgage crisis).

(1) According to the story, the Miami-Dade County Infrastructure and Land Use Committee voted to create a bridge account program that would allow tenants to open a temporary Water & Sewer account earlier this month. The full county commission is set to vote on the bridge account next month. Tenants in the property would have to pay a deposit equal to 2.5 times the average water bill to set up the account and can only keep it open for six months. Broward County does not have a tenant payment program.

(2) Florida Legal Services (FLS) is a nonprofit organization founded in 1973 to provide civil legal assistance to indigent persons who would not otherwise have the means to obtain a lawyer. A statewide support center, FLS fulfills its mission primarily by working with local legal aid and legal service programs to improve their ability to provide legal assistance to those in need in their communities.

Tenant Suffers Service Shutoff As Landlord In F'closure Pockets Rent, Stiffs City On Water Bill; Lack Of Running H2O May Lead To Health Dept. Boot

In West Jordan, Utah, the Deseret News reports:

• If you rent your home and your landlord stops paying the mortgage and the water bill, you just might get a rude surprise, rather than a fair warning. That's the predicament facing renter Annette Bell. "With no funds available, what do I do?" she said.
• The West Jordan woman is discovering the mortgage crisis not only affects homeowners, it also creates crises for renters who may be victims of the cascading financial problems of their landlords.
• She discovered her landlord is headed toward foreclosure. Her water was shut off two weeks ago, and she's scrambling to figure out her rights. "I'm not the homeowner, and the water has already been shut off," she said Friday. "So, they won't make payment arrangements with me."
• A neighbor lets Annette Bell fill water containers so she can manually flush toilets and wash. "As far as moving, that's not an option right now because I don't have the funds to do so," she said.

***

• When the city shut off the water early this month, she found out that her landlord, who lives out of state, had not paid the water bill in nearly a year. [...] West Jordan officials said they only contract with the owners, not renters, on residential water bills.

***

• The health department could also force Bell out of the house any day, because it has no running water, and the department considers that an unsanitary, unlivable situation.

For the story, see West Jordan renter without water and options after landlord stopped paying bill.

Cops: Fla. Man Hijacked Possession Of F'closed Home & Used It As Rooming House; Pocketed Rent From At Least 5 People, Stole Water, Electrical Service

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

• A 47-year-old Air Force veteran faced a judge [...], after being arrested for allegedly stealing utilities and for "acting as the proprietor" of a foreclosed home in the Village of Palm Springs.
• Glenn Garlington Dewey, whose last known address was in Palm Springs, was taken into custody after a Palm Springs Public Safety investigator determined Dewey had been collecting $600 in rent from at least five people, who were living in the spare rooms of 2903 Appalachee Road, according to the arrest report.
• That house, however, was determined to have been foreclosed on in 2010. The investigator also discovered that the last owner of the house, who now lives in Texas, was Cobb Scott - not Dewey, the report stated.
• The investigator noted in the report that Dewey had also replaced the house's water and electrical meters with that of a neighboring home in foreclosure.

For the story, see Palm Springs man charged with bilking renters with foreclosed home.

Early Morning Bronx Fire In Illegally Converted Rooming House Leaves 3 Dead, 8 Injured; Firetrap Lingered In Foreclosure Since 2008

In The Bronx, New York, the Daily News reports:

• A fast-moving fire ripped through an apartment in the Bronx on Monday, killing a mother, father and their 12-year-old son who neighbors say were squatting in the building. While the cause of the blaze was under investigation, residents and city records paint a disturbing picture of conditions that may have contributed to three deaths and eight injuries.


• Residents said the floors of the three-story building had been illegally carved into single-room apartments. Con Ed shut the power off on April 14, prompting some residents to stretch extension cords from another power source.


• Buildings Department records confirm numerous complaints dating to 2009 about jury-rigged electrical wiring, illegal subdivisions and a lack of secondary exits from apartments at the Prospect Ave. building. The records show inspectors tried to gain access to the building many times but were unable to get inside.


• About 3:30 a.m. Monday, the building was a virtual firetrap. "It's all rooms," said Eduardo Sanchez, 25, whose second-story apartment was destroyed. "There's like four rooms to a floor - all separate doors."


• A police source identified the victims as construction worker Juan Lopez, 36; his wife, Christina, 43, and their son Christian Garcia. The parents had two other children who survived the fire after their uncles, who live in the building, pulled them to safety. One of the uncles tried to run back into the building but was repelled by the flames. He then ran to the roof of a neighboring building and tried calling out to his trapped brother but got no response. "He never answered; he never came out," said witness Delsa Martinez. "It happened so fast. They were good people. I can't believe they died in seconds like that."


• Neighbors said the family moved into the apartment just over a year ago. Some described the family as squatters who shouldn't have been in the building.


• The two-story blaze quickly spread from the second floor to the third, where the family lived. It took more than 100 firefighters about an hour to stop the flames.


• Property records show the Belmont building had slipped into foreclosure in [2008] and that ownership had passed through several banks since then. Neighbors said squatters soon began taking over.


• "It's been like that for a year. The place went into foreclosure, and people kept going in there," said neighbor Mike Lopez. "There's been 10 different families that moved in and out of there, easily."


• The last owner of record, Domingo Cedano - who runs a used-car dealership on Park Ave. in the Bronx - said he had spoken to fire officials, but he insisted he had nothing to do with the building. "I feel bad, but I am not the owner anymore," he said. "I don't want to give any information because the building is under investigation."

Source: Early morning Bronx fire leaves 3 dead, including child; Building had history of complaints. subdivided
See also, The New York Times: Bronx House Fire Kills Boy, 12, and His Parents:

• Gayla Marsh, 58, a nurse who owns the home next door, said squatters had moved in and even started charging others rent. [...] Neighbors said they had seen residents use a generator and hastily rigged-up wiring to power the building.

For follow-up stories, see:

• The New York Times: The Mortgage Was Like a Shell Game; So Is Responsibility in 3 Deaths (Here was one of the most confounding legacies of the subprime era: the nearly cosmic invisibility of who owns what),
• New York Daily News: News finds evidence of 2nd firetrap in building owned by same landlord as Bronx firetrap,
• WNYC Radio 93.9 FM: Fatal Bronx Blaze Prompts DA Probe,
• The New York Times: After Fatal Fire, City Vows Crackdown on Illegal Apartments,
• New York Post: Texas subprime link in Bronx firetrap (The family of three that perished in a Bronx blaze lived in an illegally subdivided firetrap that's part of a Texas private-equity firm's multibillion-dollar portfolio of subprime mortgages, records show). subdivided

Appeals Court Kiboshes Fla. AG's Civil Probe Into F'closure Mill Over Deceptive Trade Practices; Says Criminal Investigation May Have Been Appropriate

The Palm Beach Post reports:

• Florida's attorney general has no authority to investigate a Boca Raton-based foreclosure law firm under a civil unfair trade practices statute, an appeals court ruled Wednesday.(1) In siding with the Shapiro & Fishman law firm, the 4th District Court of Appeal likely ended the state's pursuit of subpoenas against other so-called "foreclosure mills," including the Law Offices of David J. Stern in Plantation.
• Judge Spencer D. Levine wrote in Wednesday's ruling that the state's subpoena was not connected to "trade or commerce," a requirement when using Florida's Deceptive and Unfair Trade Practices Act to investigate. Spencer wrote that the attorney general could have proceeded with "a criminal investigative subpoena if other relevant criteria were satisfied."

For more, see Appeals court rules for 'foreclosure mill' firm.

(1) State of Florida, Office of the Attorney General v. Shapiro & Fishman, LLP, No. 4D10-4526 (4th DCA, April 27, 2011).

Recognizing that the court's ruling may not appear to yield a fair, reasonable result, Judge Levine implied that the Florida Deceptive and Unfair Trade Practices Act (FDUTPA), as written, may have left the court's hands tied, giving it no choice but to rule in the way it did. Writing for the 3-judge appellate panel, Judge Levine concluded the ruling with this observation:

• We are compelled to require that the subpoena issued pursuant to a specific statute be connected to that particular statute. As Justice Cardozo once wrote: “We do not pause to consider whether a statute differently conceived and framed would yield results more consonant with fairness and reason. We take the statute as we find it.” Anderson v. Wilson, 289 U.S. 20, 27 (1933). Similarly, we take FDUTPA as we find it, and we affirm the trial court’s order to quash the subpoena.

Orlando-Area Court Clerk Begins Crackdown On F'closure Auction Buyer Doc Stamp Overpayment Scam Designed To Artificially Inflate Recorded Sale Prices

In Orlando, Florida, the Orlando Sentinel reports:

• The Orange County Clerk of Courts office took a definitive step Tuesday in preventing investors buying up foreclosure properties from overpaying documentary stamp taxes on their new properties and artificially inflating the sale prices of the real estate.
• The inflation of foreclosure auction purchase prices appeared to be a common practice among a small group of investors. But the short-term fix seems simple enough: Clerk of Courts Lydia Gardner's office started writing the winning bid amounts on property title certificates Tuesday.
• That action came after the Orlando Sentinel identified dozens of cases in which the clerk's office listed one foreclosure sale price while the Orange County Property Appraiser's Office listed a higher price – often tens of thousands of dollars more than the high bidders actually paid.

For more, see Clerk's Office aims to stop bogus foreclosure sale prices.

County Bar Association Scores TRO In Illinois Lawsuit Accusing 'Land Patent' Foreclosure Rescue Peddler Of Practicing Law Without A License

In Kane County, Illinois, the Daily Herald reports:

• The Kane County Bar Association has succeeded in getting a temporary restraining order against a Carpentersville man who the bar association has accused of practicing law without a license. Judge Robert Mueller issued the order against Robert Sperlazzo in response to a lawsuit filed by the bar association.
• Sperlazzo is accused of acting as an attorney last December while advising two men going through foreclosures while they were at the Recorder’s Office.
• According to the bar association’s complaint, Sperlazzo was advising two men on Dec. 1 about a “land patent process” on how to keep their property even if they were in foreclosure.
• The complaint states that Sperlazzo took payment in cash and told the men to avoid the court system and not to talk to other attorneys because it would ruin the process. Sperlazzo has not returned phone calls from the Daily Herald. He was due in court last week but was a no-show.

For the story, see Carpentersville man a no-show in attorney case.

Kentucky High Court Nixes Attorney Lawsuits Alleging Defamation, Slander Against Those Making Unfounded Claims About Them In Official Bar Complaints

The Associated Press reports:

• Statements made in official complaints about attorneys cannot be used as the basis for a civil suit alleging defamation or slander, a split Kentucky Supreme Court ruled Thursday. The court, in a 4-3 vote, ruled that anything said in an official complaint to the bar association is protected speech and the person filing the complaint cannot be sued for the comments.
• Justice Bill Cunningham, writing for the majority, said protecting such comments creates an atmosphere where people do not have to worry about being sued or attacked for making a complaint.
• “It is the threat and potential for retaliatory litigation — of any kind — that serves as a disincentive to filing a bar complaint,” Cunningham wrote. “We must encourage persons with complaints against attorneys to submit such information to the KBA for proper investigation and examination.”

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• The case arose out of a bar complaint filed by GMAC Mortgage Corp., against attorney Noel Mark Botts. The complaint concerned Botts’ handling of a foreclosure. The opinion doesn’t give details of the complaint. A trial commissioner dismissed the complaint after determining the Kentucky Bar Association failed to prove any misdeeds.
• Botts sued GMAC and the law firm of Morgan & Pottinger, alleging wrongful use of civil proceedings, defamation and slander, abuse of process, fraud and outrageous conduct.
• Cunningham noted that at least 28 states have rules banning civil suits based on the contents of a bar association complaint. The concept is to allow bar associations to be “self-regulating” by protecting complaintants from civil liability, Cunningham wrote.
• “A lesser grant of immunity would have a chilling effect on the reporting of attorney misconduct,” Cunningham wrote.
• The majority sent the case back to Mercer Circuit Court so the judge can determine if any of Botts’ complaints are based on statements made outside the bar complaint process.

For the story, see Lawyers may not sue complaining clients.

For the ruling, see GMAC Mortgage Corporation v. Botts, ___ S.W .3d ___ (Ky. April 21, 2011).

Now-Disbarred Bay State Attorney Charged In Alleged $900K Ripoff Of Elderly, Dead Clients' Cash

From the Office of the Massachusetts Attorney General:

• A now-disbarred attorney has been indicted in connection with allegedly stealing a total of nearly $900,000 dollars from an estate she represented, a beneficiary of that estate whose funds were in a trust she managed, and an elderly client, Attorney General Martha Coakley’s Office announced [].
• Maureen F. Pomeroy, age 44, of Bedford, has been indicted by a Middlesex Grand Jury on the charges of Larceny over $250 from a Person 60 or Older (2 counts), Larceny over $250 and Embezzlement by Fiduciary.

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• After receiving a complaint from Pomeroy’s elderly client,(1) the Massachusetts Office of Bar Counsel began an investigation into Pomeroy’s alleged activities. Following Bar Counsel’s investigation, a justice of the Supreme Judicial Court ordered Pomeroy’s temporary suspension from practice in October 2009. Pomeroy later resigned, and was disbarred in February 2010.
• A Middlesex Grand Jury returned indictments against Pomeroy on March 31, 2011. She will be arraigned in Middlesex Superior Court at a later date.(2)

For the Massachusetts AG press release, see Disbarred Attorney Indicted in Connection with Stealing Nearly $900,000 From Elderly Client, Estate, and Trust.

(1) According to the press release, one of her clients was an 85 year-old man who had retained Pomeroy’s services in order to prepare a will and other estate planning documents for him, and to assist him in obtaining funds from several online bank accounts a relative had set up for him. Authorities allege that Pomeroy stole over $810,000 from this client by securing these funds, but concealing from the client the amount she had received from the accounts, and keeping a portion for herself instead of paying all of the funds to the client.

It is also alleged that she used some of the elderly client’s funds to repay two clients from whom she had earlier misappropriated money. During the investigation, authorities allegedly discovered that Pomeroy had defrauded the estate of a Waltham man and the man’s son.

(2) The Massachusetts Clients' Security Board Of The Supreme Judicial Court was established to manage and distribute the monies in the Fund to members of the public who have sustained a financial loss caused by the dishonest conduct of a member of the bar acting as an attorney or a fiduciary.

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.