Goldman Sachs Added To Credit Union Regulator's Hit List Of MBS Peddlers That Unloaded Crappy Paper On Now-Defunct, Federally-Backed Institutions

From a press release from the National Credit Union Administration:

• The National Credit Union Administration filed suit [Tuesday] in California against New York firm Goldman Sachs & Co. alleging violations of federal and state securities laws, as well as misrepresentations in the sale of securities to now-failed U.S. Central and Western Corporate federal credit unions.

***

• This action seeks damages in excess of $491 million from Goldman Sachs, bringing the total sought in the four lawsuits filed to date to nearly $2 billion. NCUA’s new suit against Goldman Sachs claims the sellers and underwriters of the questionable securities made numerous material misrepresentations in the offering documents. These misrepresentations caused the corporate credit unions to believe the risk of loss associated with the investment was minimal, when in fact the risk was substantial.



• The mortgage-backed securities experienced dramatic, unprecedented declines in value, effectively rendering five corporates insolvent. The combined suits are the culmination of lengthy investigations into the circumstances surrounding the purchases of these securities.



• This law suit follows three similar legal proceedings, two filed in the Federal District Court of Kansas June 20 against J.P. Morgan Securities, LLC, and RBS Securities, and one in the Federal District Court in Central California also against RBS July 18. Anticipating a total of five to 10 actions, additional lawsuits may follow in order to recover losses from the purchase of securities that caused the failures of five, large wholesale credit unions.(1)

For the press release, see NCUA Files Fourth Suit in String Against Securities Firms to Recover Billions (Recoveries Will Benefit All Federally Insured Credit Unions).

For the lawsuit, see National Credit Union Administration v. Goldman, Sachs & Co. et al.:

• Part 1,
• Part 2,
• Part 3.

(1) Lawsuits by federal regulators against MBS-peddling banksters accusing them of knowingly unloading crappy mortgage-backed investments on federal agencies (e.g. credit unions, Fannie Mae, Freddie Mac) appear to be picking up steam. See:

• Feds: 'Crappy-MBS' Peddler Unloaded $4.5B In Smelly Paper On Unwitting Fannie, Freddie; Suit Seeks $900M+ Loss Recovery; More Actions Planned,
• Feds' Campaign Tagging Banksters With Allegations Over Crappy Mortgage-Backed Paper That Led To Credit Union Failures Continues; More Lawsuits Planned,
• Feds Tag Banksters w/ Suits On Behalf Of Now-Collapsed Credit Unions Left Holding Bag On Crappy Securitized Mtgs; Regulator: More Complaints To Come.

St. Louis Feds Pinch Local Woman For Allegedly Running Loan Modification Foreclosure Rescue Ripoff Targeting Hawaiian Homeowners

In St. Louis, Missouri, KMOX NewsRadio 1120 AM reports:

• The United States Attorney’s Office announced [] that Marien Brown allegedly falsely represented that she operated a “mortgage rescue” or “foreclosure rescue” service. According to the indictment, Marien Brown, a/k/a Marien White, owned and operated both 1st Financial Resource, LLC, (First Financial) and 1st Federal Resource, LLC, (First Federal). [...] She registered the business as 1939 Wentzville Parkway, Suite 178,Wentzville, Missouri, which is actually a UPS store which provides commercial mailbox services. She actually allegedly conducted the business from her residence on Ivy Brook Court in Wentzville.



• The indictment alleges that she researched and identified groups of homeowners in the state of Hawaii that were one or more mortgage payments behind, or were in imminent risk of home foreclosure then targeted that group of vulnerable home owners, and sent out a large number of unsolicited mailings to prospective clients representing that she operated a “mortgage rescue” or foreclosure rescue” service.



• More than eighty clients responded to her mailings and wired funds to First Financial and to First Federal. Marien Brown converted these funds to her own use. None of the client funds were ever sent to lenders.

For more, see Wentzville Woman Indicted For Credit Repair Scam.

Boston Feds Pinch Four Floridians Accused Of Ripping Off Homeowners Through Upfront Fee Loan Modification Racket

In Boston, Massachusetts, The Palm Beach Post reports:

• Four Palm Beach County men were arrested [] after federal investigators said their loan modification company - called HOPE - took $3 million from thousands of homeowners facing foreclosure. The men are Christopher S. Godfrey, 42, of Delray Beach, Dennis Fischer, 40, of Highland Beach, Vernell Burris Jr., 51 of Boynton Beach and Brian M. Kelly, 34 of Boca Raton.



• A 20-count indictment unsealed [] in federal court in Boston alleges that between January 2009 and May 2011, the company contacted struggling borrowers and falsely stated they had a 98 percent success rate in obtaining loan modifications. According to the indictment, an upfront fee of between $400 and $900 was charged for the company's services.



• But in exchange for the fee, the company would send homeowners an application package nearly identical to what is available for free online from the federal Home Affordable Modification Program. The HOPE acronym is also widely used by the federal program and the indictment says the company wrongly used the government seal to mislead homeowners.

For more, see Four Palm Beach County men indicted in Mass. in alleged loan modification scheme.

State Regulator Fines Miami Loan Modification Outfit $60K For Operating Without License

The South Florida Business Journal reports:

• The owner of the Foreclosure Center in Miami agreed to pay a $60,000 fine after state regulators caught her performing loan modifications without a license. The Florida Office of Financial Regulation issued the order to “cease and desist with sanctions” against Yusmila Castellanos and the Foreclosure Center on Tuesday. It stems from an administrative complaint the OFR filed against them in February.



• Even though Castellanos did not have a mortgage broker license, an OFR examination of her business in August 2010 found that it originated 51 loan modification files that year and two in 2009. The company collected about $57,000 from its clients. The Foreclosure Center has since closed.

Source: Foreclosure Center owner fined for unlicensed loan modification.

Another High-Ranking Florida AG Official Flees To Join Foreclosure Mill; Joins Ex-Broward County Chief Judge As Recent Sweatshop Hires

The Palm Beach Post reports:

• The former Economic Crimes Division director for the Florida Attorney General's office was hired this summer by a Fort Lauderdale law firm previously under investigation by the office for its foreclosure practices.



• Mary Leontakianakos resigned from the attorney general's office in December with a Jan. 3 effective date. She joined the Law Offices of Marshall C. Watson in June. Marshall C. Watson was one of the original firms to be investigated in an inquiry started in August by former attorney general Bill McCollum. The firm, admitting no wrongdoing, settled with the state in March for $2 million.



• The move by Leontakianakos was pointed out in a 16-page memo written by Andrew Bennett Spark, an assistant attorney general in the Tampa office of economic crimes.



• Spark's memo, which he emailed to media outlets Tuesday, lists several concerns he has with the attorney general's office. He said he was motivated to write the memo by the publicity surrounding the forced resignations of former state foreclosure investigators Theresa Edwards and June Clarkson. He also mentions the June hiring of former deputy attorney general Joe Jacquot by Lender Processing Services, which is also under state investigation.



• "The people of the State of Florida are entitled to fair and honest government, independent of personal connections and powerful interests," wrote Spark, who has worked for the attorney general for about seven years and is the subject of an internal investigation regarding possible misuse of office equipment to conduct personal business.



• In May, former Broward County Chief Judge Victor Tobin announced he was resigning from the bench to work for the Law Offices of Marshall C. Watson. Tobin said his role at the firm was to be mostly supervisory, making sure appropriate practices are followed.(1)

For more, see Former state investigator takes job at foreclosure firm under office's investigation.

In a related story, see Sunshine State News: Bill Aims to Close Revolving Door Between AG, Probed Companies.

(1) Could it be that the generosity recently shown to those in (or running for) government positions by foreclosure mills/sweatshops is nothing more than payoffs masquerading as:

• Political contributions?
• Future lucrative employment opportunities?

Title Agent Among Trio Copping Guilty Pleas In Refinance Racket That Illegally Diverted Mortgage Proceeds, Leaving Borrowers' Existing Loans Unpaid

From the Office of the U.S. Attorney (Miami, Florida):

• Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, [and a gang of other law enforcement notables] announce [] guilty pleas by defendants Louis Gendason, 42, of Delray Beach, FL; Kimberly Mackey, 46, of Pittsburgh, PA; and John Incandela, 24, Palm Beach, FL.



• The defendants were charged in a Criminal Information with one count of conspiracy to commit wire fraud, in violation of Title 18, United States Code, Section 1349, for their participation in a $2.5 million Home Equity Conversion Mortgage (a.k.a. reverse mortgage) fraud scheme. The remaining defendant, Marcos Echeverria, is scheduled to appear in court on August 10, 2011.

***

• As a [] part of the conspiracy, defendant Kimberly Mackey, a licensed title agent and proprietor of Real Estate One Land Services, Inc. (REO), located in Pittsburgh, Pennsylvania, fraudulently closed the Genworth loans, failing to pay off the borrowers’ existing mortgage loans.



• Genworth wired the loan proceeds to Mackey as the designated closing agent for 1st Continental. Mackey attempted to conceal the fraudulent loan closings by preparing false HUD-1 settlement documents that showed that the existing mortgages had, in fact, been paid off. Between May 2009 and November 2010, Mackey received loan proceeds from Genworth totaling $2,572,813.19.



• Mackey fraudulently diverted at least $988,086.33 to a bank account controlled by Incandela and Gendason, who used this money for their personal benefit.

For the U.S. Attorney press release, see Two Loan Officers And A Title Agent Charged In $2.5 Million Reverse Mortgage And Loan Modification Scheme Plead Guilt.

Million$ In Political Payoff$ Passed Around In Effort To Paralyze Probe Into Banksters' Polluted Foreclosure Paperwork

The Center for Public Integrity's iWatch News reports:

• As the financial markets roil, one of the critical factors weighing down the U.S. economy is the flood of home foreclosures. Thursday's crash underscores how difficult it will be for the economy to make significant strides while the housing market is still in tatters.



• The pace of the housing market recovery may depend in part on the outcome of intense negotiations underway among state and federal authorities and the nation’s five largest mortgage servicers.



• Government officials are negotiating with the firms — Bank of America, JP Morgan Chase & Co., Citigroup, Wells Fargo & Co. and Ally Financial Inc. — over allegations of widespread abuses in the foreclosure process. State attorneys general around the country have been investigating evidence that the big banks used falsified documentation to process foreclosures.



• Four of the five companies under scrutiny—Bank of America, JP Morgan, Wells Fargo and Citigroup — are major donors for state and federal political campaigns. Between them, they have donated at least $8 million since the start of 2009 to candidates, party committees and other political action committees, according to an iWatch News analysis of campaign finance data.

For more, see As housing crisis festers, mortgage servicers spend $8 million on political contributions.

Washington AG: BofA Affililiate Conducted Foreclosure Auctions In Non-Public Places, Used Mechanically-Reproduced Robo-Signatures, Notarizations, Etc.

Among the recent charges in a 'faulty foreclosure' lawsuit recently brought by the Washington State Attorney General against foreclosure trustee and Bank of America affiliate, ReconTrust, are (at paragraph 5.7 of the lawsuit):

• a) Failing to maintain a physical presence with telephone service at that address,
  
  b) Failing to identify the actual owner of the Promissory Note in the Notice of Default,
  
  c) Failing to obtain proof that the beneficiary is the owner of the promissory note secured by the deed of trust,
  
  d) Failing to clearly and conspicuously identify in the Notice of Trustee's Sale the defaults, other than non-payments, that entitle the beneficiary to foreclose and which may be cured by the borrower. Instead, ReconTrust Notices identify every possible default and demand those defaults be cured whether those defaults have actually occurred or not,
  
  e) Conducting foreclosure sales in non-public places such as the garage of a private office building and a hotel ballroom;
  
  f) Creating or using documents essential to a valid trustee's sale, or to a reconveyance of the deed of trust, that are improperly executed, notarized or sworn to, including:
  
  i) documents that were not signed in front of a notary,
  
  ii) documents that had both the signature and notarization applied mechanically while claiming that the signatory personally appeared before the notary,
  
  iii) using signatories who simultaneously claim to be officers of the beneficiary, of MERS, and of a servicer, all while actuallybeing employees of ReconTrust [ie. multiple corporate hat-wearing officers], and
  
  iv) executing documents without direct knowledge of the facts contained therein.
  
  g) Conducting joint prosecution and/or defense of legal claims with the beneficiary or its agent on matters related to its duty of good faith to the borrower.

For the lawsuit, see State of Washington v. ReconTrust Company, N.A. (King County Superior Court No. 11-2-26867-5).

NJ AG Seeks Cash, Issues C&D Order Against Seven Loan Modification Outfits Over Unlicensed Activity

From the Office of the New Jersey Attorney General:

• Continuing the State’s on-going efforts to thwart fraudulent “mortgage loan modification” enterprises, Attorney General Paula T. Dow and the State Division of Consumer Affairs filed administrative actions against seven businesses(1) for illegally offering mortgage modification services to homeowners in dire financial straits. State law requires that anyone providing these services in New Jersey be licensed as a Debt Adjuster by the Department of Banking and Insurance, or be otherwise authorized.



• The Division of Consumer Affairs filed Notices of Violation against the illegitimate businesses, which offered mortgage loan modification services even though they were not licensed to do so in New Jersey. The State is seeking $35,000 in civil penalties and $49,434 in consumer restitution from the companies. The amounts sought in consumer restitution represent the fees paid by approximately 10 consumers for mortgage loan modification services.



• The Notices of Violation also provide that the companies, cited for violating the state’s Consumer Fraud Act and Debt Adjustment and Credit Counseling Act, must cease and desist from offering debt adjustment services. The companies have the option of contesting the Notice of Violation and requesting a hearing.

For the NJ AG press release, see New Jersey Division of Consumer Affairs Takes Action Against Seven Illegal “Mortgage Loan Modification” Providers and Seek Restitution for Consumers.

(1) The seven companies served with a Notice of Violation are:

• Dunwell Financial Services, LLC - Jersey City,
• Home Mitigation Group - Matawan,
• Loss Mitigation Consultant Services - Paulsboro,
• Rose MM, LLC - Newark,
• Save Americas Mortgages Corp. - Fort Lee,
• TWI Corp. - Winter Garden, Fla.
• Continental Associates, Ltd. - Commack, N.Y.

Title Agent: Some Lenders Cough Up Cash To Clear Title To Foreclosed Homes 'Slandered' By Self-Proclaimed Sovereign Citizen's Recorded 'Wild Deeds'

In Central Florida, the Sarasota Herald Tribune reports:

• There is an air of mystery surrounding the eight "wild deeds" filed by self-proclaimed sovereign citizen Jacob-Franz Dyck in Sarasota and Manatee counties. All of the deeds, which claim ownership to properties in the name of trusts Dyck controls, were filed after banks already had won foreclosure judgments against the former owners.



• An Orlando title agent familiar with Dyck's filings across the state suggested the deeds were Dyck's attempts to cloud the title to the properties and force banks to pay him to remove his claim.



• "Within 90 days of a Certificate of Title(1) being recorded, Mr. Dyck and his 'army' of accomplices create a Warranty Deed transferring title to the property from himself to one of many trusts in which he is the trustee," David Heine, vice president of Orlando-based PCS Title, wrote in a warning letter to clients.



• "Costs him 70 cents to record, then he waits for someone from a title company, who is trying to close a sale on this same property and issue a title insurance, to send him a letter requesting he sign a quit claim deed to clear title. He agrees. However, it will cost the selling bank $1,500 to $2,000, even though he has no legal right to the property," Heine wrote.



• The worst part, Heine said, is that banks often pay the money because its cheaper and quicker than having to take Dyck to court for "slandering title."

For more, see Unanswered questions left by Dyck's 'wild deeds'.

(1) 'Certificate of Title' is the term used in the State of Florida to refer to the deed issued by the Clerk of the Court to convey title to property sold pursuant to a court-ordered foreclosure sale.

Infirm Elderly Iowa Homeowner Scores Win In Effort To Undo Home Equity Ripoff Perpetrated By Daughter's POA Abuse

A recent ruling from the Iowa Court of Appeals may provide some guidance (and ammunition, possibly) for those seeking to undo a fraudulent home equity ripoff involving an elderly victim whose mental stability is questionable, and particularly where the ripoff was perpetrated by a close family member purportedly acting under authority of a power of attorney.

The three issues addressed in this case were:

1. The competency of the elderly victim to execute the documents that began her nightmare, and any right that the business community may have to rely on the legal capacity of adult persons who have not been adjudged incompetent without any further investigation;



2. The applicability of the Iowa homestead exemption, whether any waiver of rights pursuant thereto was executed, whether the homestead could be deemed abandoned where an infirm victim needs to vacate because he or she needs care not available in his or her home, and what effect the timing of any abandonment can have on an earlier-executed mortgage; and



3. The use of a Power of Attorney by an unscrupulous perpetrator to effecuate the ripoff.

The bottom line here was that a ripoff perpetrated by the sole adult daughter of an elderly, infirm homeowner was partially undone, and remanded back to the trial court to further develop the facts that could ultimately lead to the dubious deal being undone completely.

Regrettably, this case also serves as one more reminder that, winning and losing in court often depends, not only on the merits, but also on the skill and tenacity of counsel advocating on behalf of his or her client, including counsel's willingness to challenge an adverse trial court ruling by filing an appeal. The elderly victim here had earlier lost her battle in the trial court, and it took the filing of an appeal (and all the additional litigation that entails) to afford an appellate court an opportunity to review and reverse a lower court ruling on the above-referenced legal issues. Without the filing of the appeal, the elderly victim would have improperly gotten the boot from her home.

For the ruling, see Citizens State Bank v. Ruebel, No. 1-090/10-1028 (Iowa App. July 27, 2011).

Representing the homeowner was Jerrold Wanek of Garten & Wanek and Robert Gainer, Des Moines, Iowa.

Bankster Stiffs Another Victim: Uses Loan Mod Lure To Get Struggling Homeowner To Empty Bank Account, Then Denies Permanent Payment Workout Anyway

In Rush City, Minnesota, the Minneapolis Star Tribune reports:

• When Mardee Jerde's bank threatened to foreclose on her house if she didn't immediately make up nearly $50,000 in overdue mortgage payments last year, she paid up -- even though it left her virtually penniless.



• Two days after J.P. Morgan Chase acknowledged receipt of Jerde's $49,825 money order, however, the bank told her she didn't qualify for the one thing that would have made it possible for Jerde to remain in her home in Rush City, Minn.: a permanent loan modification.



• Jerde said she feels betrayed by the banking giant. She said she did everything demanded by Chase, including making partial mortgage payments for 11 months after a car accident left her unable to work. To satisfy the bank, she wound up using the entire settlement she won from her lawsuit over the crash.



• "If I had known that [the bank would foreclose anyway], I never would have sent that money," said Jerde, 68. "I would have been out of my mind. That was given to me to live on. Now I have nothing."

For more, see $49,825 didn't satisfy lender (Homeowner emptied bank account for her house, but it wasn't enough to stop Chase from foreclosing).

Bailed-Out Banksters Nix Giving Homeowners Foreclosure Assistance; Prefer Directing Sneaky Efforts, Loot To More Profitable Tax Lien Investing Instead

In Pima County, Arizona, the Arizona Daily Star reports:

• Banks that took bailout money were supposed to use part of the taxpayer-provided cash infusion to help customers avoid foreclosure, but instead, many of them are buying up struggling homeowners' tax debt.



• The tax liens earn banks up to 16 percent interest, and if homeowners don't repay their debt within three years the banks can foreclose on their homes. Since the bailout in 2008, major banks have bought nearly 6,000 tax liens in Pima County that total at least $15.8 million.

***

• Many banks dabbled in delinquent tax liens before the bailout, but they have ramped up their purchases many-fold since the housing market collapse and bailout money became available.



• In the two years before the bailout, banks bought about $3.9 million in tax liens at Pima County's annual tax auction. At the last two auctions they bought $10.3 million. Additionally, they bought $4.1 million in liens outside the auction since the bailout.

***

• Trusts and limited liability corporations owned by three banks - JPMorgan Chase, Bank of America and BankAtlantic Bancorp - have been the most active in buying tax-lien certificates in Pima County since the bailouts. Together they bought nearly $11 million of tax-lien certificates in the three years since the bailout.



• In addition, Wells Fargo and US Bank set up private trusts for clients - likely institutional clients such as hedge funds - to buy another $5 million in tax liens here since 2009.



• BankAtlantic, Bank of America and JPMorgan Chase would not comment for this story. Wells Fargo and US Bank said they bought the liens through a trust set up with money from a third party - so they didn't actually buy the liens, don't own them, didn't make the investment decisions to purchase them and don't profit from them.



• They do, however, get a fee for managing the trust, which allows their clients to securitize and sell the tax liens to other investors, similar to how banks securitized and sold mortgages during the housing boom.

***

• Bank purchases of tax liens have ramped up quietly. Other bidders know banks are involved but don't know exactly who they all are, said Bill Schumacher, who has bought nearly $1 million in tax liens in Pima County since 2009.



• Most of the liens are purchased through trusts or LLCs that have to be traced through paperwork to banks. Bidders at the auction don't identify who they represent. Schumacher suspects banks really don't want people to know they are buying tax liens. If customer knew they were buying up tax liens after they took bailout money, banks could suffer a public relations hit, he said.

***

• Because of the secrecy surrounding bank purchases, bank liens may exceed the nearly $16 million the Star has verified as coming from banks - either from direct purchases or trusts set up for clients.

For more, see Bailed-out banks snap up tax liens (Banks were bailed out by taxpayers, but instead of helping homeowners avoid foreclosure, banks have instead bought up tax liens, sometimes on the same street where they foreclosed on homes).

AIG To Tag BofA, Affiliates With $10B+ Suit Over Losses On Crappy MBS Deals; Similar Suits Targeting Other Banksters Expected

The New York Times reports:

• The American International Group is planning to sue Bank of America over hundreds of mortgage-backed securities, adding to the surge of investors seeking compensation for the troubled mortgages that led to the financial crisis.



• The suit seeks to recover more than $10 billion in losses on $28 billion of investments, in possibly the largest mortgage-security-related action filed by a single investor. It claims that Bank of America and its Merrill Lynch and Countrywide Financial units misrepresented the quality of the mortgages placed in securities and sold to investors, according to three people with knowledge of the complaint.



• A.I.G., still largely taxpayer-owned as a result of its 2008 government bailout, is among a growing group of investors pursuing private lawsuits because they believe banks misled them into buying risky securities during the housing boom. At least 90 suits related to mortgage bonds have been filed, demanding at least $197 billion, according to McCarthy Lawyer Links, a legal consulting firm.



• A.I.G. is preparing similar suits against other large financial institutions including Goldman Sachs, JPMorgan Chase and Deutsche Bank, said the people with knowledge of the complaint, as part of a litigation strategy aimed at recovering some of the billions in losses the insurer sustained during the financial crisis.



• The private actions stand in stark contrast to the few credit crisis cases brought by the Justice Department, which is wrapping up many of its inquiries into big banks without filing any charges. The lack of prosecutions — the Justice Department has brought three cases against employees at large financial companies and none against executives at large banks — has left private litigants, mainly investors and consumers, standing more or less alone in trying to hold financial parties accountable.



• “When federal authorities don’t fulfill their obligation to enforce the law, they essentially give an imprimatur to the financial entities to do whatever they want and disregard the law,” said Kathleen C. Engel, a professor at Suffolk University Law School in Boston. “To the extent there are places where shareholders and borrowers can pursue claims, they are really serving the function of the government. They are our private attorneys general.”



• Though many in the public have called for more accountability for parties involved in the financial crisis, criminal charges on complex financial matters can be difficult to prosecute.

For more, see A.I.G. to Sue Bank of America Over Mortgage Bonds.

Washington State AG Tags 'Rogue' Trustee In Faulty F'closure Suit Saying 1000s Of State Homeowners Were Victimized By Allegedly Illegal Sale Procedure

From the Office of the Washington State Attorney General:

• Washington Attorney General Rob McKenna [] announced that his office is suing ReconTrust Company, a subsidiary of Bank of America, for conducting illegal foreclosures on thousands of Washington homeowners.



• “ReconTrust ignored our warnings, repeatedly broke the law and refused to provide information requested during our investigation,” McKenna said. “ReconTrust’s illegal practices make it difficult, if not impossible, for borrowers who might have a shot at saving their homes to stop those foreclosures.”



• ReconTrust is a foreclosure trustee that is legally required to act as a neutral party on behalf of both the lender and the borrower while conducting foreclosure proceedings in good faith and in accordance with the law.



• The lawsuit filed in King County Superior Court by McKenna and Assistant Attorney General Jim Sugarman, of the office’s Consumer Protection Division, alleges that “ReconTrust has failed to comply with the Washington Deed of Trust Act, RCW 61.24, in each and every foreclosure it has conducted since at least June 12, 2008.” The company is also accused of violating the state’s Consumer Protection Act.

***

• McKenna said an essential requirement of the Deed of Trust statute is that a trustee maintains an office in the state where homeowners can go to ask questions, make last-minute payments and request a foreclosure be postponed for a legitimate reason. But ReconTrust doesn’t have an office in Washington. “ReconTrust’s claim that the company doesn’t have to follow Washington law and procedures because it is a national bank is wrong,” McKenna added.

***

• The complaint states that homeowners facing foreclosure are “captive to ReconTrust’s services” and that the company’s failures to abide by the law have concealed material information needed by homeowners to assert rights and defenses, negotiate a loan modification, cure defaults, and postpone or stop a foreclosure sale.



• Sugarman said, “It is particularly important right now for trustees to understand and strictly comply with Washington foreclosure law.(1) There have been several changes including a new right for homeowners to request mediation to discuss a possible loan modification or forbearance before the bank pursues foreclosure.”

***

• Private lawsuits against ReconTrust have been filed in Utah, Nevada, California, Oregon and Arizona concerning its role in foreclosures in those states, as well as by private attorneys in Washington. The Attorney General of Utah sent a public letter to Bank of America threatening suit if ReconTrust continued to violate Utah foreclosure law.

For the Washington State AG press release, see Washington Attorney General sues ReconTrust for illegal foreclosures (McKenna raps trustee’s claim that it doesn’t have to abide with state law).

For the lawsuit, see State of Washington v. ReconTrust Company, N.A. (King County Superior Court No. 11-2-26867-5).

(1) 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 intermediate appeals court ruling that suggests that a failure to strictly comply with foreclosure procedure could result in a sale that could later be found to be absolutely void, and that any subsequent purchasers of the foreclosed title acquire nothing, notwithstanding any protected status they may otherwise qualify for as bona fide purchasers.

Albice has been accepted for review by the Washington State Supreme Court. Albice v. Premier Mortgage Services Of Washington, Inc., 170 Wash.2d 1024, 249 P.3d 623 (2011).

For the briefs filed with the state high court, see 85260-0 - Christa Albice, et al. v. Ron Dickinson, et al. Hearing Date - 09/22/2011:

• Answer,
• Appellant Brief,
• Petition for Review,
• Reply to Response,
• Reply,
• Respondent Brief,
• Supplemental Brief of Petitioners,
• Supplemental Brief of Respondents.

For the lower appellate court briefs filed in Albice, see:

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

For rulings by the Washington State Supreme Court that are consistent with the proposition that procedural irregularities (as opposed to substantive irregularities) that defeat a trustee's authority to sell property at a foreclosure sale may render the sale void, see:

• Udall v. TD Escrow Services, Inc., 159 Wn.2d 903, 154 P. 3d 882 (2007),
• Cox v. Helenius, 103 Wn.2d 383, 693 P. 2d 683 (1985).

NYC Firms Team Up, Tag Notorious Buffalo-Based Sweatshop For Failure To Meet Recently Mandated Requirements In State Foreclosure Actions

In New York City, non-profit law firm MFY Legal Services, Inc. has issued the following press release:

• MFY Legal Services, Inc. and Harwood Feffer LLP(1) filed suit on August 4, 2011 against Steven J. Baum PC, a law firm that files 40% of the foreclosure actions in New York State, charging unfair debt collection and deceptive practices in filing thousands of foreclosure lawsuits.



• Justice Deceived, a study of a representative sample of foreclosure filings in Brooklyn and Queens before and after the New York State Court's October 2010 rule requiring foreclosure law firms to attest to the accuracy of every foreclosure summons and complaint (the "Due Diligence Affirmation"), showed that four large law firms filed hundreds of foreclosure cases, but failed to file the documents that cause the case to be assigned to a judge and trigger a state-mandated settlement conference.



• In 82% of foreclosure cases filed in November 2010, lawyers failed to file the required Request for Judicial Intervention (RJI) and Due Diligence Affirmation seven months after the case was filed.



• "This is the biggest scandal since robo-signing," said Elizabeth Lynch, an attorney at MFY Legal Services, a non-profit organization, and author of the new report. "Homeowners are left in limbo while they wait for the bank's law firm to file the documents that will trigger a settlement conference, which is their best chance of saving their home. Instead, the banks reject their mortgage payments and charge additional fees and interest that undercut homeowners' chances for a successful loan modification."

For more, see Law Firm Firm Sued For Undermining New York State's Protections For Homeowners In Foreclosure (New MFY Study Shows that Large Firms Withhold Legal Documents from Judicial Filings, Leaving Cases in Limbo while Fees and Arrears Accumulate for Distressed Homeowners).

For the lawsuit, see Cole v. Steven J. Baum, P.C.

See Justice Deceived: How Large Foreclosure Firms Subvert State Regulations Protecting Homeowners for a study of a representative sample of foreclosure filings in Brooklyn and Queens before and after the New York State Court's October 2010 rule requiring foreclosure law firms to attest to the accuracy of every foreclosure summons and complaint.

(1) MFY Legal Services, Inc. is a non-profit provider of civil legal assistance to New Yorkers who cannot afford attorneys, and is located in New York City. Harwood Feffer LLP is a firm that specializes in complex, multi-party litigation with an emphasis on securities and shareholder class and derivative actions, ERISA and civil rights litigation, antitrust matters and consumer litigation.

'Stagecoach To Hell' Stands Accused Of Ignoring Buy-Out Rights Of Estates, Surviving Spouses Involving Reverse Mortgages; Suit Seeks 'Class' Status

In San Francisco, California, Bloomberg reports:

• Wells Fargo & Co. was accused in a group lawsuit of ignoring federal rules on reverse mortgages and forcing homes into foreclosure instead of giving heirs a chance to buy them.



• Estates and surviving spouses have the right to purchase properties at 95 percent of appraised value after the death of a borrower who took out a federally insured reverse mortgage, lawyers for a California man said in the complaint filed Aug. 3 in federal court in San Francisco.



• Wells Fargo hasn’t been notifying heirs of this right and has been starting foreclosures if demands aren’t met for repayment of the full mortgage balance, according to the complaint filed by the son of a California homeowner. The plaintiff, Robert Chandler, also sued the Federal National Mortgage Association, or Fannie Mae.



• “Wells Fargo’s actions are not just wrong, they are economically irrational,” Michael Ng, Chandler’s attorney, said yesterday in a statement. “Even though elderly borrowers paid for insurance that protects the bank against the downturn in the housing market, Wells Fargo insists on evicting family members from homes that will go unsold and unoccupied.”



• The lawsuit, brought as a class action by Chandler on behalf of himself and other heirs, seeks a court order stopping foreclosures and evictions in affected homes and damages for breach of contract.

For more, see Wells Fargo Suit Says Bank Failing to Obey Federal Reverse Mortgage Rules.

Questions Raised On Cozy Relationship Between Colorado Foreclosure Mill, Local Public Officials Charged With Overseeing 'Forced Sale' Auctions

In Denver, Colorado, The Denver Post reports:

• Colorado's most prolific foreclosure attorney has for years given thousands of dollars to a group representing the public officials charged with impartially overseeing his industry.



• Shortly after the money started flowing to the Public Trustees' Association of Colorado, trustees began awarding lucrative no-bid contracts to a computer software company in which the attorney, Lawrence Castle, holds an interest. That company, Government Technology Systems, has since donated tens of thousands of dollars more to the trustees' association — $20,000 last year alone — funds used in part to pay for dozens of hotel rooms for trustees attending their convention at a Black Hawk casino in June.

***

• Though the trustees say there is no connection between the payments to their association — which last year amounted to four times the money raised through membership dues — and the no-bid contracts given to GTS, some say ethical questions could be raised by the relationship.

***

• "I'm not so sure his involvement with CPTA is a great idea, and the perception of his being a foreclosure attorney working so closely with us could be a bad one," Pueblo County public trustee Nick Gradisar said. "The idea is we're an impartial third party and not in favor of the borrower or the lender."



• The contracts awarded to GTS are to manage a county's entire foreclosure system, a document- driven process worth millions of dollars to the software company that handles it. GTS is paid $45 for every foreclosure case filed in a county, and totals have reached record numbers in recent years. GTS is contracted to run eight of the state's 12 biggest counties, where the bulk of the foreclosures are filed.

For more, see Attorney's ties to county trustees in Colorado raise questions (Board's patron is also a partner).

Score Another For Media; Bankster Backpeddles On 'Land Grab' F'closure Attempt Of Business Owner One Day Late On Mtg. Payment After Published Story

In St. Petersburg, Florida, the St. Petersburg Times reports:

• It looks like Saji Mathew will get to keep his gas station, at least for now. The 41-year-old man faced foreclosure after missing a mortgage payment on the gas station by just one day. He made several attempts to continue paying and made a $50,000 offer in court earlier this week to settle the case that the bank refused.



• On Thursday, a day after the St. Petersburg Times published an article detailing the saga, the bank, BB&T, said it would suspend the foreclosure action and work with Mathew to clear up the case. Mathew was elated to hear the news.

For more, see Bank suspends foreclosure against gas station that tried to pay one day late mortgage.

'Fat Chance!' Says NY AG To BofA On $8.5B 'Crappy MBS' Settlement; Uses Martin Act In Effort To Jam Banksters Over Securitization Screw-Ups

The Huffington Post reports:

• New York Attorney General Eric Schneiderman asked a state judge to reject a proposed $8.5 billion settlement agreement over soured loans between Bank of America and a group of investors, claiming in court documents that a separate bank representing the investors committed fraud for failing to ensure that the mortgage securities were created in accordance with state law and for failing to act in the investors' best interest.



• Bank of New York Mellon, the trustee representing the investors, "knowingly, repeatedly, and consistently" misled investors into thinking that the mortgage bonds were created properly, Schneiderman said in court documents. BNY Mellon also put its own interests before those of the investors it's supposed to represent, he said.



• BNY Mellon, the 11th-largest U.S. bank by assets and one of the nation's largest trustees, stands accused of "repeated fraud and illegality," according to court filings, which alleges that the abuses "were repeated literally hundreds of times."

***

• "If mortgages were not properly transferred in the securitization process, then mortgage-backed securities would in fact not be backed by any mortgages whatsoever," Adam J. Levitin, a bankruptcy expert and professor at Georgetown University Law Center, told a congressional panel last November. Levitin said the problem could "cloud title to nearly every property in the United States" and could lead to trillions of dollars in losses.



• In a New Jersey bankruptcy case last year, a Bank of America executive, Linda DeMartini, testified that Countrywide routinely did not convey crucial documents for loans sold to investors.

***

• In court documents, Schneiderman is demanding that his agency be allowed to further examine loan documents to ensure the securities were properly created. New York's top law enforcement officer is using the Martin Act, a powerful state law that gives prosecutors broad powers to investigate fraud.

For more, see New York Attorney General Accuses Bank Of New York Mellon Of Fraud, Moves To Block Bank Of America's Mortgage Deal.

Go here for the New York AG's Pleading In Intervention.

See NYS Martin Act May Provide Manhattan DA With Noose Feds Lack To Be Fitted Around Banksters' Necks for an earlier post on the potency of the New York State Martin Act.

Thanks to Deontos for a copy of the NY AG's pleading.

California AG Slaps Citi With Subpoena In Probe Into Bankster's MBS-Peddling Activities

The Los Angeles Times reports:

• California Atty. Gen. Kamala D. Harris has subpoenaed Citigroup Inc. and its banking subsidiary, Citibank, ordering the two entities to answer questions regarding the selling and marketing of mortgage-backed securities in the Golden State, a person familiar with the investigation said.



• The person, who was not authorized to speak publicly about the matter and spoke on condition of anonymity, would not further characterize the nature of the investigation. Spokespeople for the attorney general's office and Citi declined to comment.



• In May, Harris announced the creation of a Mortgage Fraud Strike Force that would target mortgage fraud of any size. Harris said then that she would tackle corporate fraud, including instances in which bundled mortgages were sold as securities to the state or its pension funds under false pretenses.



• To prosecute some of the cases, Harris said she would use California's False Claims Act, which makes it a crime to defraud the state.

For more, see California subpoenas Citigroup about mortgage-backed securities (The state attorney general orders the bank to answer questions about how it sold and marketed the securities in the Golden State).

Mass. AG Gets Green Light In Probe Into Rights-Trampling Allegations Against Notorious Bay State Sweatshop By Ex-Owners, Tenants In Foreclosed Homes

The Boston Globe reports:

• State Attorney General Martha Coakley can continue her investigation into the practices of a Newton law firm that specializes in home foreclosures, a Suffolk Superior Court justice has ruled.



• Justice Bonnie H. MacLeod denied a motion by Harmon Law Offices to set aside or alter a request for documents in the state’s investigation into allegations of “unfair and deceptive acts’’ related to the firm’s foreclosure and eviction work.



• Coakley said the decision confirms her authority to investigate law firms of wrongdoing. “We are investigating this case to ensure that tenants were not unlawfully evicted and that Harmon followed proper procedures before foreclosing on certain homeowners,’’ she said.(1)

For more, see Probe of law firm can continue (Judge rules Coakley can investigate office in home foreclosures).

(1) This probe takes on additional significance for Bay State residents in light of a recent ruling of the Massachusetts Supreme Judicial Court ruling allowing post-sale challenges of faulty foreclosures. See Massachusetts Homeowners, Tenants Score Big Win As State High Court OKs Foreclosure Challenge In Post-Sale, Housing Court Eviction Process.

For more on the Harmon foreclosure mill, see The Boston Globe: Building an empire, one home at a time (He operates the largest foreclosure law firm in the state, and these hard times have made Mark P. Harmon a very busy man. Some critics assail his tactics, but Harmon is unapologetic: Lenders, after all, need zealous lawyers, too).

Financially Beleaguered Baseball Club 'Dodges' Threat Of Foreclosure Under Terms Of New $150M Financing Deal With MLB; Arrangement Awaits Court OK

The New York Times reports:

• Under the terms of a $150 million loan agreement submitted to federal bankruptcy court on Friday, Major League Baseball cannot seize control of the Los Angeles Dodgers if the team defaults.



• “The worst that can happen — in the narrow case of default — is they can stop funding,” said Bruce Bennett, one of the Dodgers’ lawyers. “It is not a secured loan, so baseball can’t foreclose on anything.”



• Bennett said that the team’s current cash needs were not dire and that it did not immediately need to ask for any of the $150 million. “They have more than adequate resources to meet all their payables as they come due,” he said, adding, “We don’t need to borrow the maximum amount of the loan.”

***

• At a hearing in bankruptcy court in Delaware last month, the Dodgers insisted they wanted to borrow $150 million from Highbridge Capital, a hedge fund, despite a higher interest rate than baseball offered and the risk of foreclosure in case of a default. Gross rejected the Highbridge loan and told M.L.B. and the Dodgers to negotiate a deal.

For the story, see Terms of Loan From Baseball Ease Dodgers’ Fear of Seizure.

'60 Minutes' To Re-Air Robosigner Segment August 7

The Palm Beach Post reports:

• The CBS news show 60 Minutes will re-air a segment Sunday featuring a Palm Beach County homeowner fighting an allegedly fraudulent foreclosure that exposed the now infamous robo-signer Linda Green.



• The segment, which originally aired in April, led officials from Michigan, Massachusetts and North Carolina to pull court documents bearing Green's name and forward them to federal regulators and attorneys general.



• Green was an employee of a defunct subsidiary of Jacksonville-based Lender Processing Services. The 60 Minutes episode interviews other employees of the company who admit to signing Green's name on thousands of foreclosure documents.



• Palm Beach Gardens homeowner Lynn Szymoniak, whose foreclosure is highlighted in the show, said she approaches the re-airing with mixed feelings because she said lenders and politicians have largely ignored the evidence presented.

***

• Of particular concern, Szymoniak said, was the May ouster of two former Florida assistant attorneys general who had been investigating foreclosure fraud and the involvement of Lender Processing Services, or LPS. The former investigators, Theresa Edwards and June Clarkson, were forced to resign May 20 despite positive performance reviews that lauded their foreclosure inquiries.

***

• Szymoniak is still fighting her foreclosure. An update on her case and the issues with Edwards and Clarkson may be included in Sunday's 60 Minutes episode, which airs at 7 p.m. "Before the initial showing, I would have asked 'How can we get judges, prosecutors and legislators to watch this?'" Szymoniak said. "Now I am asking, 'How can we get judges, prosecutors and legislators to care about this?'"

For the story, see '60 Minutes' to re-air show featuring Palm Beach County foreclosure case.

NYC Targets Low-Income Co-Ops For Possible Seizure As Groups Stiff City Out Of Million$ In Real Estate Taxes

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

• Shareholders at a low-income co-op at 1175 Gerard Avenue are furious the city is considering turning it over to a real estate developer. They realized the American Dream two decades ago, becoming homeowners at co-op buildings in the Bronx through a city program. Now, the Bloomberg administration wants to seize their properties and transfer them to a real estate company.



• Three Bronx co-ops created for low-income shareholders have declared bankruptcy in an attempt to keep the city at bay. They owe millions of dollars in unpaid property taxes and are among a slew of low-income co-ops across the city now threatened with tax foreclosure.



• "It feels like a slap in the face," said Luis Reyes, co-op board president at the six-story 1175 Gerard Ave. "We worked hard for this. You can't just take it away."

For more, see Low-income co-op in the Bronx files for bankruptcy, threatened with tax foreclosure.

Sibling Duo Faces Hate Crimes Charges In Home Repair Scam Targeting Elderly NYC Homeowners; Accused Of Threatening Liens On Homes To Squeeze Victims

From the Office of the District Attorney for Queens County, New York:

• Queens District Attorney Richard A. Brown [] announced that two Long Island brothers who are not licensed to operate a chimney contracting business in New York City have been charged under New York State’s Hate Crime Law with stealing more than $30,000 from three elderly Queens homeowners for chimney and roof work that was never done.



• District Attorney Brown said, “This alleged crime is particularly egregious as the defendants are accused of targeting elderly homeowners. It is charged that once they managed to get their foot in the door, they used high pressure sales tactics to steal substantial amounts of additional monies from their victims by telling them that more and more work needed to be done and that if they didn’t pay, a lien would be placed on their properties and they would be forced to move. In two instances, it is alleged that the defendants drove their victims to the bank to collect the money.”

The District Attorney identified the two defendants as Bruce Wimmer, 29, of Holbrook, New York, and his brother Michael Cristiano, 32, of Patchogue, New York. The defendants, allegedly operated either under Reliable Chimney, Inc., a business incorporated by Wimmer and located in Holbrook or under a false name, American Chimney.

The complaining victims included a 94-year female homeowner, a 72-year-old male homeowner, and a 79-year-old female homeowner.

For the Queens County DA press release, see Two Long Island Brothers Charged Under Hate Crimes Statute For Targeting Elderly Homeowners In Chiminey Scam (Allegedly Fleeced Homeowners Out of Over $30,000 For Chimney Work That Was Never Done).

Landlord Pinched For Allegedly Renovating Apartment w/out Permission While Tenant Away On Vacation; Faces Unlawful Eviction, Criminal Mischief Charges

From a recent New York Post Daily NYPD Blotter:

• A landlord illegally renovated a tenant's apartment in Richmond Hill while the man was on vacation for a week, authorities said. The tenant left his 91st Avenue pad near 104th Street on June 28, only to return on July 5 and find that his belongings had been scattered about the front and rear yards and that "new Sheetrock had been placed in his apartment and some walls had been changed," court papers state.



• When confronted about the unauthorized alterations, landlord Ancil Goorahoo, 26, allegedly replied, "I have been doing construction." He was arrested later that day and charged with unlawful eviction(1) and criminal mischief, said a spokeswoman for DA Richard Brown.

Source: Daily NYPD Blotter (Queens).

(1) See NYPD Patrol Guide Procedure No. 117-11 setting forth the law and official Police policy regarding the New York City Illegal Eviction Law (and go here for what to do in New York City when victimized by an illegal lock-out.

NYC Cops Collar Phony Real Estate Agent Accused Of Clipping Unwitting Would-Be Tenants Out Of Thousand$ In Upfront Rent On Home He Didn't Own

From a recent New York Post Daily NYPD Blotter:

• A con man posing as a Realtor duped five people into paying him rent for an apartment in Corona that he didn't own, authorities said.



• On July 18 and 19, José Ramirez, 36, leased a single apartment on 102nd Street near Lewis Avenue to the five victims and collected between $1,200 and $2,400 from each as payment for the first month's rent and security deposits, court documents show. Cops tracked down Ramirez on July 23, said a spokeswoman for DA Richard Brown.

Source: Daily NYPD Blotter (Queens).

Baltimore Feds Score Guilty Plea From Local Landlord Over Improper Lead-Based Paint Abatement At Rentals Throughout City

From the Office of the U.S. Attorney (Baltimore, Maryland):

• Cephus Murrell, age 68, of Catonsville, Maryland, pleaded guilty [] to three misdemeanor counts of violating the Toxic Substances Control Act, in connection with improper lead paint abatement at rental properties owned and managed by Murrell, as well as failure to disclose to tenants the presence of documented lead-based paint hazards. Murrell owns and manages approximately 175 rental housing units throughout Baltimore.

***

• “Cephus Murrell placed Baltimore children at risk of permanent injuries by violating federal law and ignoring repeated orders to comply with lead paint regulations,” said U.S. Attorney Rod J. Rosenstein. “It is unacceptable in 2011 for pregnant women and children to be exposed to lead paint in violation of the law.”

***

• [Among a slew of other things,(1)] Murrell provided [the Maryland Department of the Environment] with a Project Notification Form for this project in which he falsely stated that a particular supervisor would be on site at the particular place and date, when in fact no supervisor was on site, also in violation of the lead-paint abatement regulations.



• Murrell admits that there were several instances in which he falsely certified that workers would be conducting lead abatement work and that a particular supervisor would be on site to supervise the work, when in fact, no supervisor was on site.

For the U.S. Attorney press release, see Baltimore City Landlord Pleads Guilty To Lead Based Paint Violations In Rental Properties He Owns And Manages (Previously Cited by the State for Numerous Lead Paint Violations and Documented Children with Elevated Lead Blood Levels Living in His Properties).

(1) According to the press release, Murrell also admitted that he and his company failed to disclose to tenants the presence of documented lead-based paint hazards when they rented units he owned and managed. Many of these units had a history of lead-based paint problems that had been documented by MDE.

Despite these findings and prior enforcement actions by the State and municipal agencies, Murrell did not provide tenants with the required Lead-Based Paint Notification Disclosure Form and failed to:

• give prospective tenants an EPA-approved information pamphlet on identifying and controlling lead-based paint hazards;
• disclose to prospective tenants any known information concerning lead-based paint or lead-based paint hazards, the location of those hazards, and the condition of the relevant surfaces;
• provide prospective tenants with any records and reports on lead-based paint and/or lead-based paint hazards; and
• include an attachment to the lease (or to insert relevant language in the lease itself) which provides a Lead Warning Statement and confirms that the landlord has complied with all notification requirements.

Banksters Continue Disregard For Tenants' Rights In F'closed Homes; Illegal Constructive Evictions Believed To Be On Upswing As 'Boot' Filings Decline

In Chicago, Illinois, Community Media Workshop reports:

• Banks routinely violate state and federal laws protecting tenants in rental buildings in foreclosure, particularly in a “foreclosure belt” stretching across the South and West Sides, according to a new report.



• Lenders and their agents “willfully ignore” laws that protect tenants in foreclosures(1) and have “institutionalized in their practices the wholesale violation of tenants’ [legal] rights,” according to a report from the Lawyers Committee for Better Housing.



• Banks “generally ignore” federal law requiring them to honor existing leases after foreclosure on a rental building, according to the report.



• Banks seek to vacate properties they’ve acquired – through illegal lockouts and through “misleading, harassing and threatening communications” with tenants – in order to evade legal responsibilities under the city’s tenant landlord ordinance, the report suggests.

***

• Eviction filings have fallen steadily since 2007 – and one reason may be that “a substantial number of evictions are carried out extra-judicially,” according to the report. Tenants who refer to existing leases “are routinely ignored,” and when LCBH lawyers alert banks and their attorneys to illegal practices they too “are often ignored,” according to the report.

***

• “Illegal constructive evictions that lead to building vacancies and boardups have a clear solution: enforce the already existing laws that protect tenants living in foreclosed buildings,” according to the report. It calls for “adding teeth” to existing statutes.

For more, see Foreclosure and renters: banks break the law.

See Banks Avoid Foreclosure Laws, Uproot Renters: A Call for Enforcement of Tenant Protections for the Lawyers Committee for Better Housing report.

Thanks to Deontos for the heads-up.

Editor's Note: Illinois case law suggests that representing poor or otherwise 'cash-lacking' tenants in unlawful eviction cases in the City of Chacago might be somewhat more lucrative than many may think (and, consequently, may pose an unexpected minefield for unscrupulous landlords, banksters, and their henchmen who may find themselves footing the victimized tenant's legal bill in a successful defense of an illegal eviction). See Pitts v. Holt, 304 Ill. App.3d 871, 710 NE 2d 155 (Ill. App. 1st Dist., 6th Div. 1999),(2) a case which, coincidentally, was litigated by the Lawyers Committee for Better Housing.

(1) The Federal Protecting Tenants at Foreclosure Act of 2009 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.

For more on the rights of tenants in homes/apartments in foreclosure, see National Law Center on Homelessness & Poverty: Staying Home: The Rights of Renters Living in Foreclosed Properties.

(2) The Illinois appeals court made these observations regarding the imposition of a tenant's legal fees upon an unscrupulous landlord (and the calculation thereof) in a successful defense in an illegal eviction case (bold text is my emphasis):

• In this case, defendant's attorneys itemized 69.40 hours of work performed to defend their client against an unlawful eviction, ultimately securing the maximum statutory damages provided by the Ordinance.
  
  At the hearing, the court indicated that it had no objection to the amount of work claimed done on behalf of the defendant, with the exception of the fact that she used two attorneys to represent her at the trial when one would have been sufficient. The second attorney's trial work accounted for $3,787.50 of the total $9,368.75 sought by plaintiff.
  
  The court specifically stated that the rates charged by the defendant's attorneys were low, and further stated that, given their experience, higher rates could have been charged if the defendant's attorneys had been in private practice.

***

• Defendant suggests that the trial court discounted the defendant's fee award based upon the fact that her attorneys were employed by a not-for-profit legal services agency. Comments made by the court support this inference. If this is in fact the basis of the court's low award, we simply reject it, pointing out the lack of Illinois precedent supporting consideration of such a factor.
  
  Indeed, at least one Illinois decision has rejected the notion that legal services attorneys should be compensated at lower-than-market rates. See Merchandise National Bank v. Scanlon, 86 Ill.App.3d 719, 728-29, 41 Ill.Dec. 826, 408 N.E.2d 248 (1980).
  
  As the federal courts have recognized, discounting the legal fees awarded to legal aid attorneys would serve only to chill the impulse of attorneys to pursue and continue careers in legal service work since the receipt of such fees promotes the health and continued existence of their employing organizations. See Torres v. Sachs, 538 F.2d 10, 13 (2d Cir., 1976); Rodriguez v. Taylor, 569 F.2d 1231, 1245 (3d Cir., 1977).
  
  We agree with the observation made in Fairley v. Patterson, 493 F.2d 598 (5th Cir., 1974), where the court wrote:
  
  "`Whether or not [the client] agreed to pay a fee and in what amount is not decisive. * * * The criterion for the court is not what the parties agreed but what is reasonable.' [Citation] Whether the attorney charges a fee or has an agreement that the organization that employs him will receive any awarded attorneys' fees are not bases on which to deny or limit attorneys' fees or expenses." Fairley, 493 F.2d at 607, quoting Clark v. American Marine Corp., 320 F.Supp. 709, 711 (E.D.La., 1970), aff'd. 437 F.2d 959 (5th Cir., 1971).
  
  In addition, we note that assessing reasonable fees has the potential added benefit of deterring wrongdoing in the first place. Rodriguez, 569 F.2d at 1245.

Banks' 'Bulldozer' Efforts Used To Alleviate Choking On Unwanted F'closed Collateral, Avoid Accumulating Fines, Full Cost Of Abating Self-Created Mess

Bloomberg reports:

• Bank of America Corp., faced with a glut of foreclosed and abandoned houses it can’t sell, has a new tool to get rid of the most decrepit ones: a bulldozer.



• The biggest U.S. mortgage servicer will donate 100 foreclosed houses in the Cleveland area and in some cases contribute to their demolition in partnership with a local agency that manages blighted property.



• The bank has similar plans in Detroit and Chicago, with more cities to come, and Wells Fargo & Co., Citigroup Inc., JPMorgan Chase & Co. and Fannie Mae are conducting or considering their own programs.(1)

For more, see BofA Donates Then Demolishes Houses to Cut Glut of Foreclosures.

(1) According to the story:

BofA will pay as much as $7,500 for demolition or $3,500 in areas eligible to receive funds through the federal Neighborhood Stabilization Program. Wells Fargo and Fannie Mae already started donating houses and demolition funds in Ohio. San Francisco-based Wells Fargo, the biggest U.S. home lender, gave 26 properties and $127,000 to the Cuyahoga land bank, said Russ Cross, Midwest regional servicing director for Wells Fargo Home Mortgage. Since 2009, Wells Fargo made more than 800 donations, the bank said.

Fannie Mae, the mortgage-finance company operating under U.S. conservatorship, made its first deal with the Cuyahoga land bank in 2009, and sells houses to the organization at a “very nominal value,” or about $1 and an additional $200 in closing costs, said P.J. McCarthy, who heads alternative disposition programs.

JPMorgan, the second-biggest U.S. bank, has donated or sold at a discount almost 1,900 properties valued at more than $100 million in more than 37 states since late 2008, including 22 in Cleveland, said Jim O’Donnell, manager of community revitalization. The majority aren’t demolished, he said.

Citigroup has been donating foreclosures since 2008 through the National Community Stabilization Trust, according to an e- mailed statement from Natalie Abatemarco, managing director for the bank’s office of homeownership preservation.

Abandoned Homes In Foreclosure Called 'Ticking Time Bombs;' Banksters File Actions, Then Sit On Unwanted Collateral As City Bureaucrats Fiddle

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

• The Garcia family lost three family members in an April blaze on Prospect Avenue. Reports say innumerable building code violations in forclosed Bronx buildings could lead to more such catastrophes.



• Bronx foreclosures have racked up hundreds of building code violations of the type that led to a deadly fire on Prospect Ave., according to new report released on Monday. As of July, there were 899 open violations at 273 bank-owned buildings across the borough, including a property less than three blocks away from 2321 Prospect Ave., the site of the April blaze that killed a family of three.



• Banks such as Wells Fargo and Deutsche Bank are ignoring a state law that requires lenders to maintain and secure the foreclosures, said state Sen. Jeff Klein (D-Bronx/Westchester), who issued the damning report. The law took effect in 2010.



• The banks and the city Department of Buildings need to better to safeguard the buildings, said Klein, calling the foreclosures "ticking time bombs."



• "The banks are very quick to foreclose on a family and deny them the American Dream, but then do nothing to fix the property," he said, standing in front of the charred shell of 2321 Prospect Ave. "I'm calling on the Buildings Department and the banks to maintain the property."



• The three-family home in Belmont, owned by car dealer Domingo Cedano, had been illegally subdivided into 12 single-room units when it burst into flames. Prior to the blaze, Buildings recorded five complaints of illegal units with faulty wiring and blocked exits, and inspectors visited the site 10 times. But drug dealers operating there wouldn't let the inspectors inside.



• Bank of New York Mellon failed to keep up the property, despite obtaining a foreclosure judgment in 2009, Klein said. Juan Lopez, 36; Christina Garcia, 43; and their son Christian, 12, were trapped as the building burned. "It was so tragic what happened," said neighbor Elba Marrera, 49. "But the bank didn't care. The landlord didn't care."



• Klein's report lists the worst foreclosures in the Bronx, including 1055 Martin Luther King Jr. Blvd. in Highbridge, with 84 open violations. A two-family home near Prospect Ave., 2209 Beaumont Ave., boasts 13 complaints for illegal subdivisions.



• "We have a tough law on the books that allows the Buildings Department to make repairs and send the lender the bill," said Klein. "We can prevent fires, we can prevent dangerous situations and we can save lives."



• In June, Buildings teamed up with the Department of Investigation to file criminal charges against landlords who ignore dangerous violations. Hundreds of owners have been charged. Mayoral spokeswoman Julie Wood said the Bloomberg administration attempts to hold banks accountable, but insisted that Buildings inspectors have no right to force entry.



• Meanwhile, the drug dealers who operated out of 2321 Prospect Ave. have moved to an empty building next door, said neighbor Chancy Marsh, 39. "If you live on Prospect Ave. you live in fear of low-level criminals," he said.

For the story, see Bank-owned Bronx buildings 'Ticking time bombs'; Wells Fargo and Deutsche ignore building codes.

Rat Incident Rate Skyrockets While Quality Of Life Declines In Baltimore As Boarded Up Foreclosed Homes Accumulate, Remain Neglected

In Baltimore, Maryland, The Huffington Post reports:

• Richard Faison didn't mind that a neighbor's home was seized and boarded up until the rats from the vacant house killed one of his dogs. "That's when it hit me," said Faison, a Baltimore retiree. "That home is hurting mine."



• Baltimore's continuing foreclosure epidemic is a particularly poignant example of the continuing national foreclosure crisis. The city has affixed some of the blame on one major lender, Wells Fargo. In a case that has captured headlines, the city sued Wells in 2008, arguing that it targeted African-American communities with subprime loans the bank knew would not be repaid.

***

• But while that action plays out in the courtroom, a daily battle plays out on city streets, as homeowners try to maintain their properties in the face of abandonment and rot in seemingly every direction.

***

• The rise in rats is an example of the declining quality of life in some sections of the city as foreclosures and vacant properties have begun to take their toll. Since 2003, rat incidents in his majority-black city of nearly 621,000 are up more than 300 percent, according to the Baltimore Neighborhood Indicators Alliance-Jacob France Institute at the University of Baltimore. There were more than 37,000 reports of rats in 2009, data show.

For more, see Rats Spread As Baltimore Fights Foreclosures.

Rental Complex Owner/Developer, Architect Settle 'Inaccessibility' Allegations With NYC Feds In Civil Rights/Fair Housing Lawsuit

From the Office of the U.S. Attorney (New York City):

• PREET BHARARA, the United States Attorney for the Southern District of New York, announced [] that the United States has settled a federal civil rights lawsuit alleging that The Melar, a 22-story, 143-unit residential apartment complex in Manhattan, is inaccessible to persons with disabilities and in violation of the federal Fair Housing Act.



• The United States has entered into settlement agreements with L&M 93RD STREET LLC, the developer and owner of The Melar, and COSTAS KONDYLIS & PARTNERS, LLP, the architectural firm that designed the building, in the form of two consent decrees.

***

• The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin, and disability. Since 1991, the Fair Housing Act has required that new multi-family housing complexes with four or more units be built with certain accessible features.

For the entire U.S. Attorney press release, see Manhattan U.S. Attorney Settles Civil Rights Lawsuit Against Developer And Architect Of Manhattan Rental Complex.

Massachusetts Homeowners, Tenants Score Big Win As State High Court OKs Foreclosure Challenge In Post-Sale, Housing Court Eviction Process

In Boston, Massachusetts, The Boston Globe reports:

• The state’s highest court has ruled that people fighting eviction from homes they lost to foreclosure can challenge the validity of a property seizure in housing court after the fact, a decision that housing rights advocates are calling a major victory.



• The Massachusetts Supreme Judicial Court’s unanimous ruling, released yesterday, involved KC Bailey of Mattapan, whose home was taken back by his lender through foreclosure in 2007. Two years later, Bailey, 65, contested his impending eviction during a housing court proceeding, saying the foreclosure process was flawed.



• Bailey claimed he learned of the foreclosure only after finding an eviction notice taped to a fence surrounding his three-bedroom Colonial, which had been in his family since 1979. The Vietnam veteran said he refused to leave because he was not given proper notice of the sale and is still living there.



• Bank of New York, which set out to evict Bailey, argued that the housing court didn’t have the authority to consider a challenge to a foreclosure already finalized, and the judge agreed. Bailey appealed and the Supreme Judicial Court decided to take the case. It now goes back to housing court.



• The decision was hailed by local housing rights advocates, who said it will force lenders to prove they legally own a property before evicting occupants, and will lead to more negotiations with financially-distressed borrowers seeking to save their homes.

***

• Because Massachusetts doesn’t require courts to sign off on foreclosures, the eviction process can be the first opportunity for a former homeowner to contest a property seizure in court.



• The ruling also will provide a new legal tool to tenants fighting evictions from foreclosed homes, housing attorneys said.



• “This decision ensures that if a bank is going to walk into court and try to evict a homeowner, it has to prove there has been a valid foreclosure,’’ said Esme Caramello, deputy director of the Harvard Legal Aid Bureau, a branch of Harvard Law School that provides free representation to low-income clients and represented Bailey.

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• Pamela S. Kogut, an attorney who filed a brief in support of Bailey’s appeal for a group of nonprofits, said yesterday’s ruling will give former homeowners a place to contest the validity of a foreclosure during the eviction process, without having to file an additional lawsuit in state Superior Court. “The burden shifts to the bank to establish that it does have title,’’ she said.

For the story, see SJC expands right to challenge bank seizures (Mattapan man’s objection that he wasn’t told of sale goes back to housing court).

For the ruling, see Bank of New York v. Baliey, SJC-10801 (Mass. August 4, 2011).

Go here for the case docket and links to the various legal briefs filed in this case.

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

Bankster Makes Land Grab When Payment One Day Late; Judge: "There's No Business Sense Any More In The F'closure Industry [...] Totally Blows My Mind!"

In St. Petersburg, Florida, the St. Petersburg Times reports:

• Saji Mathew missed the Oct. 12 mortgage payment on the Mobil gas station he co-owns. On Oct. 13, he took the money to the bank, thinking that would make things right. He tried to make his November and December payments as well. But each time, BB&T kicked back his money. Ten months later, Mathew is still trying to pay.



• In circuit court on Tuesday, he offered BB&T $50,000, the total amount due since October. BB&T didn't want the money. It wants the gas station. "They won't take my money,'' said Mathew. "I want them to take it. I was one day behind paying the mortgage."



• BB&T's stance flabbergasted the judge in the case. "All the people that understand anything about mortgage foreclosures need to know this stuff," Circuit Judge Amy Williams said in court. "This is the idiocrasy of this stuff. This is why we're in a worldwide financial crisis because there's no business sense any more in the foreclosure industry, none. And it blows my mind. Totally blows my mind.''

For more, see One day late with mortgage payment, gas station owner could lose business to foreclosure.