Victim Of Sale Leaseback Equity Stripping Racket Gets Reprieve As NJ Appeals Court Nixes Note-Lacking Lender's Foreclosure Action, Vacates Sale

The Star Ledger reports:

• A New Jersey foreclosure by Deutsche Bank was overturned by a state appellate court panel yesterday because the bank could not show it possessed a debt note for the house when it moved to foreclose in 2008.



• The case could impact the prospects of many state foreclosure cases, according to Peggy Jurow, a senior attorney for Legal Service[s] of New Jersey(1) who deals with foreclosure and predatory lending cases. "What today’s case does is say that the lender has to have had the assignment of mortgage and possession of the (loan) note before it files a foreclosure action," Jurow said yesterday. "They can’t fix up that sort of paperwork problem afterwards. They have to dismiss the case and start again."



• In the case, Jacqueline Bethea said her two-family home in Plainfield was bought out by Elite Financial Services(1) with the promise that she could remain in her home.



• Elite Financial Services sold Bethea’s property to a third party who got a new mortgage from Long Beach Mortgage Company. Eventually, the debt note and the mortgage backing it was transferred to Deutsche Bank.



• The immediate result of the decision is Deutsche Bank must go back to court and prove it has the note for the debt before it can foreclose again, Jurow said. But she said the appellate court’s decision could have implications for other foreclosure cases in the state. As of May, the number of foreclosures filed in state Superior Court had reached about 62,000.



• "Bethea could have been any homeowner," Jurow said. "In the vast majority of cases, stuff like this goes on. The paperwork is sort of an afterthought, and that’s what I think you see in this."

Source: Deutsche Bank foreclosure sale overturned by N.J. appellate court.

For the ruling, see Deutsche Bank National Trust v. Mitchell, Docket No. A-4925-09T3 (App. Div. August 9, 2011) (approved for publication) (if link expires, TRY HERE).

(1) Legal Services of New Jersey coordinates the statewide Legal Services system, which provides free legal assistance to low-income New Jerseyans for their civil legal problems.

(2) Elite Financial Services was a notorious, Northern New Jersey equity stripping foreclosure rescue racket until it found itself in criminal hot water with the Newark Feds. See:

• Former Employee Of Phony Mortgage Rescue Company Sentenced To Prison For Role In Fraud Scheme:
  
  "[Steve] French, [Michael] Martino, and others at Elite targeted New Jersey homeowners who couldn’t make mortgage payments and were facing foreclosure. They would promise the homeowners that Elite would help them keep their homes and repair their damaged credit. The homeowners would be instructed to permit title to their homes to be put in the names of straw buyers for one or two years. French promised to improve their credit ratings during that time, help them obtain more favorable mortgages, and ultimately return title to their homes."



• 'Straw Buyer' Recruiter In Northern New Jersey Sale Leaseback, Equity Stripping Racket Gets 12 Months, 3 Years Probation, $275K Restitution Order.

The New Jersey appeals court, in the first entence of its ruling, describes homeowner defendant Jacqueline Bethea as "a victim of a buy-lease-back "mortgage rescue scam[.]"

Gulf War Vet Kicked Out Of Home & Living In His Car After Foreclosure Told To Move Back In After Discovery Of Robosigned Paperwork

In Dayton, Ohio, WDTN-TV Channel 2 reports:

• Eddie Miller fought for his country in the Gulf War, but now he's battling just to keep his home. "When you're in a position that you're losing everything, you have a feeling that it's your fault, that you've done something wrong," Miller says. Miller was kicked out of his home and lived out of his car for a month until those at Miami Valley Fair Housing discovered that his foreclosure case involved a practice known as robo-signing.



• Robo-signing is when a someone signs off on a foreclosure without reviewing it first, or when someone forges a signature to approve a foreclosure.



• Miami Valley Fair Housing has since helped Miller move back into his home. "It's a wonderful feeling to have your house again and to know someone is there to help you with it," Miller says.

***

• Miller may be back in his home, but he's not sure if he'll be able to keep it. He's still trying to work out a deal with the bank.

For more, see Robo-signing their lives away.

Confidential Relationships, Statute Of Limitations & Sale Leaseback Peddler's Effort To Snatch Financially Strapped Couple's Home Equity

The following facts have been extracted from a recent ruling by the Kentucky Court of Appeals:

1. Homeowners, hubby and wife, found themselves facing foreclosure.



2. An evangelical preacher and his wife approach homeowners and talk them into a sale leaseback (the parties actually used a land sale contract (ie. contract/agreement for deed) rather than an actual leaseback) deal to save the home from foreclosure, with preacher's wife buying the home.



3. On August 30, 2001, the parties consummate the deal, with the transaction yielding net cash proceeds for homeowners, which represented their equity in the property, of $22,581.



4. As part of the deal, the check for said amount was endorsed by homeowner back to the preacher, with the understanding that the preacher would credit homeowner with said amount upon the repurchase of the premises.



5. In November of 2001, homeowner-wife passes away.



6. Subsequent thereto, preacher provided grief counseling sessions to homeowner-hubby after the loss of his wife.



7. On November 7, 2002, after making installment payments to preacher throughout the next year in accordance with the land sale contract, homeowner-hubby repurchased the home with a mortgage brokered by preacher and preacher's wife.



8. In consummating the buyback of the home, somebody apparently 'forgot' to credit the probably still-grieving homeowner-hubby for the $22,581 equity check that he endorsed back to preacher and his wife upon the closing of the initial deal on August 30, 2001.



9. This oversight went undetected by homeowner-hubby at the November 7, 2002 closing.



10. In October 2007, almost five years later, homeowner-hubby was attempting to refinance the home when he discovered that the $22,581 equity check he had endorsed back to preacher and wife had never been credited toward his repurchase of the home.



11. Homeowner-hubby thereafter retained counsel and, on October 29, 2007, sued preacher, his wife and their company, alleging fraud.



12. Rather than giving back the money rightfully belonging to homeowner-hubby, preacher and wife decided it would be better for them to simply keep the cash, and file a motion to dismiss the lawsuit, arguing that homeowner-hubby waited too long to ask for his money back, and asserting his claim was barred by the applicable Kentucky statute of limitations, which requires an action for relief or damages on the ground of fraud or mistake to be commenced within five years after the cause of action accrued, which, as far as preacher & wife were concerned, was August 30, 2001, the date of the initial deal.


13. Because homeowner-hubby's suit was not filed until October 29, 2007 (over 6 years after the date of the initial deal) the applicable 5-year statute of limitations had expired as far as preacher & wife were concerned.

Question: Was preacher and wife entitled to keep the $22,581 that rightfully belonged to homeowner-hubby on the grounds of an expired statute of limitations?

Answer: No.

In reaching this conclusion (and affirming a lower court ruling reaching this result), the Kentucky Court of Appeals appears to take a 'belt and suspenders' approach in ruling favorably for homeowner-hubby.

1. First, the appeals court agreed with the trial court's ruling that found that there existed a confidential relationship between homeowner-hubby and preacher, and accordingly (and pursuant to Kentucky state law), the statute of limitations did not begin to run until the date homeowner-hubby actually discovered the fraud (generally, the limitations period begins to run on the date the fraud took place ).(1)
   
   Regarding this point, the court made the following observation (bold text is my emphasis):
   
   "In this case, it was the Emersons who first approached Robertson about helping him and his wife to avoid foreclosure.
   
   Further, during the course of the transactions between the parties, Mr. Emerson, who was an evangelical preacher, provided grief counseling sessions to Robertson after the loss of his wife.
   
   As such, we are of the opinion that sufficient evidence was presented that a confidential relationship existed between the parties, and therefore, actual notice rather than constructive notice of the fraud was necessary.
   
   Consequently, the trial court properly found that the statute of limitations was tolled until Robertson's actual discovery of the fraud in 2007."



2. After agreeing with the trial court that the statute of limitations was properly tolled, the appeals court then went on to say that the actual date of the fraud suffered by homeowner-hubby was not the date of the initial deal (August 31, 2001), but was the date of the second deal (November 7, 2002), the date the 'oversight' in properly crediting homeowner-hubby with the $22,581 took place). Therefore, the filing date of the lawsuit (October 29, 2007) beat the expiring statute of limitations by nine days (November 7, 2007). Accordigly, the appeals court found that the lawsuit was filed before the expiration of the statute of limitations.

(It seems to me that either of these two rationales, standing alone, would have been sufficient to sustain the lower court ruling.)

For the ruling, see First Fidelity Mortgage, Inc. v. Robertson, No. 2010-CA-000990-MR (Ky. App. August 5, 2011).

(1) The appeals court discussed the applicable Kentucky law on the commencement of the applicable state statute of limitations below (bold text is my emphasis):

• KRS 413.120(12) provides, "The following actions shall be commenced within five (5) years after the cause of action accrued: . . . (12) an action for relief or damages on the ground of fraud or mistake."
  
  The general rule is that an action "accrues" on the date of injury, and the limitations period begins to toll from that date. Caudill v. Arnett, 481 S.W.2d 668, 696 (Ky. App. 1972).
  
  Nevertheless, where it would not have been reasonable for the plaintiff to have discovered the injury on the actual date the fraud was perpetrated, the limitations period does not begin to toll until the date that the fraud was discovered or, through the exercise of reasonable diligence, should have been discovered.
  
  KRS 413.130(3); Hernandez v. Daniel, 471 S.W.2d 25, 26 (Ky. 1971). KRS 413.130(3) is only available where the plaintiff is able to demonstrate why the fraudulent act could not, through reasonable diligence, have been discovered sooner. McCoy v. Arena, 295 Ky. 403, 174 S.W.2d 726, 729 (1943).
  
  While the statute requires a plaintiff to meet a "reasonable diligence" test, Kentucky Courts have interpreted this demonstration rather expansively in certain circumstances. In Shelton v. Clifton, 746 S.W.2d 414, 415 (Ky. App. 1988), a panel of this Court noted:
  
  The courts have been willing to interpret this rule expansively when the "discovery" of fraud involved a fraud between persons in a confidential relationship.
  
  "When a confidential relationship exists between the parties . . . the statute does not begin to run until actual discovery of the fraud or mistake. Constructive notice such as the recordation of the instrument containing the mistake [or fraud] is not sufficient to commence the operation of the statute." Hernandez v. Daniel, 471 S.W.2d 25, 26 (Ky. 1971).
  
  The explanation for the actual notice is that, "[p]ersons in a confidential relationship do not have the reasons or occasions to check upon (sic) each other that would exist if they were dealing at arms length." McMurray v. McMurray, 410 S.W.2d 139, 142 (Ky. 1966).

Indiana AG Lawsuit: Fla. Attorney-Owned Loan Modification Outfit Failed To Register Bond While Stiffing 22 Hoosiers Out Of Loan Modification Refunds

In Hendricks County, Indiana, The Indianapolis Star reports:

• Indiana Attorney General Greg Zoeller on Wednesday filed a lawsuit against a Florida-based mortgage foreclosure assistance company he says operated illegally in 15 counties.(1)



• The lawsuit filed in Hendricks County alleges the company -- which goes by several names, including Legal Home Loan Solutions and Federal Home Loan Solutions -- did not give refunds to 22 Indiana residents after failing to provide services for them.



• The companies collected thousands of dollars from homeowners before any services were provided and did not register a required bond with the attorney general's office before setting up shop in Indiana, the lawsuit alleges.



• Several other laws also were violated, according to the lawsuit, including one that requires foreclosure assistance companies to notify homeowners of various legal rights or the availability of nonprofit credit counseling.



• Florida attorney Thomas C. Matevia is named as the owner of the companies. Phone numbers listed for the companies and for Matevia were not in service Wednesday.

For more, see State attorney general sues foreclosure-aid company (Florida concern violated laws, lawsuit alleges).

(1) See:

• Lawsuit: State of Indiana v. Legal Home Loan Solutions, et. al.,
• Press Release: Attorney General targets illegal Florida-based foreclosure company (Zoeller: Company illegally operated in 15 Indiana counties, failed to pay refunds).

Pair Gets 90 Days For Running Upfront Fee Loan Modification Swindle; Unauthorized Practice Of Law Conviction Tacked On To Ex-Lawyer's Rap Sheet

In Santa Clara County, California, the Morgan Hill Times reports:

• Two real estate foreclosure consultants convicted of defrauding 14 people, including some from Morgan Hill, were sentenced to 90 days in jail, according to the Santa Clara County district attorney's office.



• Cary Jay Silberman, 53 of San Jose, and Robert Francis Childs, 44 of Dublin, were each convicted of one felony count of foreclosure consultant fraud, a press release from the D.A.'s office said. Silberman was additionally convicted on a misdemeanor count of unauthorized practice of law.



• The defendants were sentenced Aug. 5 in Santa Clara County Superior Court, authorities said. In addition to 90 days in Santa Clara County Jail, they were sentenced to three years probation and full restitution to the victims. Silberman paid $16,745 and Childs paid $23,345 to a total of 14 victims.

***

• Silberman operated a business called "Loan Deal," which sold loan modification services, and held himself out as a lawyer despite having resigned from the California State Bar in 1997, the D.A.'s office press release said.

***

• The foreclosure fraud case was investigated by the D.A.'s Office real estate fraud unit and the San Jose Police Department. The D.A.'s Office advises homeowners to never pay an advance fee for loan modifications.



• The Foreclosure Consultants Act makes it a crime for anyone, even an attorney or real estate agent, to collect advance fees to perform loan modification services on a mortgage secured by the borrower's primary residence, the press release said.

For the story, see Consultants sentenced for scamming MH residents.

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.

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• 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.

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• “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.

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• 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.