Thursday, September 01, 2011

Nevada AG Expands Pending BofA Suit To Include Dubious Lending, Foreclosure Practices; Joins NY AG In Upping Heat On Notorious Bankster

Paul Kiel at ProPublica reports:
  • The state of Nevada dramatically expanded its lawsuit against Bank of America today, turning the narrow case it filed late last year into a broadside that targets virtually all aspects of the bank's mortgage operations. Bank of America has previously denied wrongdoing.


  • The sweeping new suit could have repercussions far beyond Nevada's borders. It further jeopardizes a possible nationwide settlement with the five largest U.S. banks over their foreclosure practices, especially given concerns voiced by other attorneys general, New York's foremost among them. (You can read the suit here).

***

  • According to the suit, borrowers were duped into unaffordable loans and then victimized again through a misleading mortgage modification program that homeowners tried to use to avoid foreclosure. Finally, the suit alleges, the bank filed fraudulent documents to move forward with the foreclosures.

***

  • The state's suit had previously been confined to the modification issue. At that time, Bank of America also said homeowners would be best served not through litigation but through reaching a multistate settlement that would "broaden programs for homeowners who need assistance."


  • By expanding the suit, Nevada's Catherine Cortez Masto joins New York Attorney General Eric Schneiderman in stepping up investigations of the bank. In addition to initiating a broad investigation of banks' securitization practices, he recently filed a suit charging that Bank of America had fraudulently foreclosed on homeowners.

For more, see Nevada Wallops Bank of America With Sweeping Suit; Nationwide Foreclosure Settlement in Peril.

Go here for links to other articles by Paul Kiel on the rackets involving bank foreclosures and loan modifications.

Cops: Scam Used Title Searches To Find 'High-Equity' Homes For Rent, Tenant 'Posers,' I.D. Theft To Rip Off Landlords' Equity In Rental Homes

In Southern California, The Orange County Record reports:
  • Authorities have arrested seven people, including some in the United States illegally, on suspicion of posing as owners of at least 20 homes they were renting, taking out $5.9 million in home-equity loans and pocketing the cash.


  • The suspects,(1) some of whom are Korean and Chinese nationals, reportedly stole the homeowners’ identities to conduct the transactions, authorities said. One of the suspects is believed to be a resident of Garden Grove, Los Angeles County Sheriff’s Detective Christopher Derry said.


  • Two of the targeted homes were in Orange County: a five-bedroom house on Spartan Street in Mission Viejo and a four-bedroom house on Threewoods Lane in Fullerton, he said.


  • A loan for $200,000 was taken out on the Mission Viejo home and one for $250,000 was taken out on the Fullerton home, Derry said. The rest of the homes are in Los Angeles and San Bernardino counties. Individual law enforcement agencies had been working on their respective cases for a while and had recently begun cooperating, Derry said.

***

  • Derry said the case was especially hard to crack because the suspects used prepaid cell phones and web-based email addresses, the homes were spread across several law enforcement jurisdictions, and the homeowners learned of the fraud months after the loan transactions, when lenders started the foreclosure process.

***

  • In a scheme that lasted at least two years, Derry said, the suspects used title searches to find homes for rent that had small or no mortgages on them. Using fake identities and documents, they signed leases and paid security deposits and first month’s rent to gain access to the homes.


  • Then, using “really good” fake IDs, Derry said, the suspects took on the homeowners’ identities, applied for home-equity loans and ordered appraisals. They typically sought loans from “hard-money” lenders who lend for shorter periods and at higher interest rates than commercial financial institutions. Hard-money lenders base funding decisions on property value, equity and salability rather than creditworthiness and income of a borrower.


  • When the loans were funded, escrow companies were directed to transfer the money into several bank accounts opened by the suspects in the real homeowners’ names. From there the money was withdrawn in small amounts as cash or checks.

***

  • Title companies – which insured the mortgage liens against invalidity or unenforceability – have been paying out millions of dollars to reimburse the lenders for their losses, and homeowners are spending thousands of dollars in court to clear their homes’ titles, Derry said.

For the story, see Police: Renters pose as owners, steal home-equity cash.

(1) According to the story, Federal magistrate John E. McDermott has ordered all seven suspects held without bail. According to McDermott’s order, the suspects are considered flight risks because:

  • Joon Hwan Kim, 24, is a Korean national with no legal status. Kim declined to be interviewed by pretrial services staff.
  • Guang Chen Jin, 37, is a Chinese national and has been unemployed for eight months.
  • Hyung Kyu Lim, 48, is in the U.S. illegally. His mother and four siblings live in Korea.
  • Suhua Lin, 54, is a Chinese national, has recently traveled to China and has family there.
  • Kyounghoon Kim was using multiple identities at the time of arrest, unknown bail resources, family ties to Korea and immigration status issues.
  • Andrew Byun Yoo, 56, has been unemployed for 10 years, has no relevant bail resources and has lived in four other states.
  • Ju Young Chung, 36, has a prior failure to appear and an outstanding warrant.

Pair Pinched, Accused Of Clipping Homeowners For Upfront Fees In Mortgage Elimination Racket, Then Forging & Recording Phony Lien Satisfactions

In San Bernardino, California, The San Bernardino Sun reports:
  • Two men suspected of scamming homeowners struggling to avoid foreclosure will be arraigned [] in San Bernardino Superior Court on a 45-count criminal complaint. Prosecutors say Stephen Andrew Easterly, 47, and Emanuel Percival, 36, defrauded at least 25 people with their Fontana business and affected more than $17 million in home loans. "Basically, they were getting people to try to redo their loans," Deputy District Attorney Michael Fermin said.


  • The people were on the verge of foreclosure or wanted a lower payment, he said. The alleged victims reportedly paid between $3,500 and $7,000 to participate in a process they believed would pay off their home loans and save them from foreclosure, according to a news release Monday from the San Bernardino County District Attorney's Office. In the end, they would end up with two outstanding home loans and the houses went into foreclosure, prosecutors said.

***

  • The search warrant was the result of an investigation into fraudulent Substitution of Trustee and Full Reconveyance and Release of Lien documents - which are usually recorded by a bank when a mortgage is paid in full - with the county Recorder's Office.


  • In this case, Easterly and Percival signed documents as "authorized representatives" of various banks, according to prosecutors. Between the pair, more than 70 fraudulent documents are alleged to have been recorded.


  • Prosecutors said Easterly also created fictitious checks, mailed them to banking institutions and told victims he was paying off their loans.


  • Easterly faces 21 counts of forgery and 16 counts of procuring or offering a false or forged document from Oct. 25, 2010, to June 29, according to the criminal complaint. Percival faces four counts each of forgery and procuring or offering a false or forged document between March 23, 2010, and Nov. 24.(1)

For the story, see Two men accused of scamming struggling homeowners.

For the San Bernardino County DA press release, see Pair Arrested For Real Estate Fraud.

(1) According to the story, both men were being held Monday at West Valley Detention Center in Rancho Cucamonga. Bail for Easterly was set at $1 million, and Percival's bail was set at $500,000, prosecutors reportedly said.

Trio To 'Enjoy' Federal Prison Time For Scheme Designed To Steal Home Equity Out From Under Two Unwitting Property Owners

From the Office of the U.S. Attorney (Los Angeles, California):
  • A North Hollywood man was sentenced [] to 15 months in federal prison for his role in a mortgage fraud scheme in which the schemers used stolen identities to “purchase” homes that were not for sale.


  • Venedie Roberto Valencia, 27, who worked at Bank of America at the time of the offense, was sentenced by United States District Court Judge Dale S. Fischer. In addition to the prison term, Judge Fischer ordered Valencia to pay $51,688 in restitution.


  • Previously in this investigation, two of the Valencia’s co-conspirators were convicted and sentenced to prison. Felix Pichardo, 29, of Lancaster, was sentenced to eight years in federal prison in 2009 and Latrice Shaunte Borders, 31, of Long Beach, was sentenced to two years in federal prison in 2010 for their part in the scheme (see December 14, 2009 U.S. Attorney Press Release).


  • According to court documents, Pichardo, a licensed real estate agent, and Borders participated in two separate fraudulent real estate sales transactions. Pichardo, using identities appropriated from other people, caused loan applications to be submitted to AmTrust without the property owner’s knowledge for real estate which was not for sale.

For the U.S. Attorney press release, see Former Bank Employee Sentenced To 15 Months In Federal Prison For Role In Mortgage Fraud Scheme.

Wednesday, August 31, 2011

Double-Talking Judge To Foreclosure Mill: "Lying Is Unacceptable!" But Then OKs Use Of False Affidavits Anyway, Proceeds To Ratify Forced Sale Of Home

In Baltimore, Maryland, The Daily Record reports:
  • Lawyers at Shapiro & Burson LLP repeatedly lied by signing each other's names to foreclosure affidavits, but their actions did not alter the rights of the lender or the homeowners, a Baltimore County judge has ruled.


  • Circuit Court Judge Susan Souder wrote in her Aug. 11 opinion that she did not believe monetary sanctions were appropriate, and that she would leave any punishment levied against the plaintiffs -- all lawyers -- to bar counsel at the Attorney Grievance Commission.


  • Souder dismissed an order requiring the plaintiffs to show cause why the case should not be dismissed and why they should not be sanctioned and ratified the sale of the home.


  • Anthony DePastina, director of litigation for Civil Justice Inc., a Maryland-based public interest legal association, said he understands that these homeowners and others in the foreclosure process have not paid their mortgages and that if another attorney had signed the documents correctly, the whole process would be "copacetic," but, he said, that's not what happened here.


  • "The reality is we're lawyers. We're supposed to play by the rules and know what the rules are," said DePastina, who is not involved in this case. "When we don't, we compromise the integrity of the entire game. And it's not a game."


  • Souder said she could not comment on the case or whether it was the first decision in the county regarding signatures on foreclosure affidavits, many of which have been questioned with show-cause orders.

***

  • Souder wrote that the "most disturbing" revelation in this case (John S. Burson, et al. v. Grosso) was that Murphy falsely signed Yoder's name to affidavits regarding military status for Frank and Patricia Grosso, the notice of intent to foreclose and the appointment of substitution of trustees.


  • She found it "very disturbing" that the plaintiffs argued that their lies were proper under Maryland rules. "No case, no statute, and no rule cited by Plaintiffs supports the argument that it is proper for a person to sign another person's name to an Affidavit. That Plaintiffs are attorneys who concluded that such lies are 'entirely proper' is astounding .... It is a lie. And lying is unacceptable," she wrote.


  • Despite her shock at the lawyers' behavior, Souder agreed with the plaintiffs that the false affidavits "did not alter the rights of the parties."

For more, see Home sale ratified despite faulty affidavits (requires paid subscription; if no subscription, GO HERE).

Two Notorious Players In Nationwide Foreclosure Robosigning 'Phenomenon' Receive Appeals Court Recognition For Their 'Contributions' To The Effort

A recent federal appeals ruling from the 3rd Circuit Court of Appeals reinstating a bankruptcy judge's hammering of a foreclosure mill for its use of robosigned documents.(1)

While not directly involved in the litigation of the appeal, two notorious players in the foreclosure robosigning 'phenomenon' that's swept the nation nevertheless received recognition by the court for their apparently 'less-than-meritorious' contibutions to this once fast-growing industry.

Although the court 'buried' the recognition of these 'fine' outfits in two footnotes, the court's observations with regard to this pair arguably deserve some highlighting here.

In footnote 2 of the ruling, the court gives a foreclosure mill law firm its due (alterations in the original):
  • Moss Codilis is not involved in the present appeal. However, it is worth noting that the firm has come under serious judicial criticism for its lax practices in bankruptcy proceedings. "In total, [the court knows] of 23 instances in which [Moss Codilis] has violated [court rules] in this District alone." In re Greco, 405 B.R. 393, 394 (Bankr. S.D. Fla. 2009)(2); see also In re Waring, 401 B.R. 906 (Bankr. N.D. Ohio 2009).

In footnote 5 of the ruling, a notorious foreclosure document sweatshop gets its due:

  • LPS is also not involved in the present appeal, as the bankruptcy court found that it had not engaged in wrongdoing in this case. However, both the accuracy of its data and the ethics of its practices have been repeatedly called into question elsewhere. See, e.g., In re Wilson, 2011 WL 1337240 at *9 (Bankr. E.D.La. Apr. 7, 2011) (imposing sanctions after finding that LPS had issued "sham" affidavits and perpetrated fraud on the court); In re Thorne [and try here for more on In re: Thorne], 2011 WL 2470114 (Bankr. N.D. Miss. June 16, 2011); In re Doble, 2011 WL 1465559 (Bankr. S.D. Cal. Apr. 14, 2011).

For the court ruling, see In Re Taylor, No. 10-2154 (3d Cir. August 24, 2011).

(1) See Federal Appeals Court Reinstates Reversed Ruling Hammering Foreclosure Mill For Littering Courtroom With Robosigned Docs; Bankruptcy Judge Vindicated.

(2) See In re Greco, footnote 1, where U.S. Bankruptcy Judge John K. Olson lists the following nine cases filed in the Southern District of Florida which he ties to Moss Codilis 'handiwork:'

  • (1) In re Kearse, 07-21486-BKC-JKO; (2) In re Nicholson, 08-11474-BKC-JKO; (3) In re Greco, 08-13051-BKC-JKO; (4) In re Kassar, 08-13077-JKO; (5) In re Morton, 08-18853-BKC-JKO; (6) In re Studer, 08-19300-BKC-JKO; (7) In re Buhagiar, 08-19610-BKC-JKO; (8) In re Vargas, 08-20302-BKC-JKO; and (9) In re Imburgia, 08-17153-BKC-JKO.

In footnote 2 of the same case, Judge Olson lists the following additional fourteen cases filed in the Southern District of Florida which he connects to Moss Codilis:

  • (1) In re Cecil, 08-10925-BKC-RBR; (2) In re Bertke, 08-16351-BKC-RBR; (3) In re Woods, 08-11231-BKC-PGH; (4) In re Salandy, 08-12866-BKC-PGH; (5) In re Lissandrello, 08-13372-BKC-PGH; (6) In re Biggers, 08-13780-BKC-PGH; (7) In re Colon, 08-14903-BKC-PGH; (8) In re Noble, 08-15675-BKC-PGH; (9) In re Sao, 08-16549-BKC-PGH; (10) In re Shank, 08-18596-BKC-PGH; (11) In re Vega, 08-16381-BKC-AJC; (12) In re Espinoza, 08-21253-BKC-AJC; (13) In re Hargis, 08-21366-BKC-EPK; and (14) In re Brown, 08-23103-BKC-EPK.

Fla. AG, State Bar Begin Probe Into Alleged Rackets Purportedly Peddling Participations In Mass Joinder Suits Offering F'closure, Home Mortgage Relief

The Palm Beach Post reports:
  • The Florida attorney general's office is investigating the use of mass joinder lawsuits marketed to homeowners facing foreclosure, a new practice that got a California lawyer with ties to a prominent Tallahassee lobbyist shut down earlier this month.


  • Homeowners in 17 states, including Florida, received mailers from companies connected to California attorney Philip Kramer telling them they could join in lawsuits against banks for a retainer fee of between $5,000 and $10,000, according to a complaint filed earlier this month by California Attorney General Kamala Harris.(1)

***

  • Kramer was featured as "of counsel" on the website of the Tallahassee-based Ramba Law Group, which is led by David Ramba. The website also touted the use of mass joinder lawsuits and linked to several of the court filings. Ramba is a lobbyist for Callery-Judge Grove LP and the Loxahatchee Groves Water Control District. Neither Ramba nor his law group is named in the California complaint.


  • Although Ramba previously defended the mass joinder suits, on Monday he said Kramer's firm unlawfully used his name and created the website without his permission. "I have hired an attorney to unwind whatever this guy was doing," Ramba said Monday.

  • He also said he was unaware until last month that offices in Boca Raton and Pinellas Park had been opened with his name on them to speak with homeowners about joining the lawsuits.


  • A person claiming to be an employee in the Pinellas Park office filed a complaint in June with the attorney general's office claiming that homeowners are falsely told a team of attorneys will review their case to see if it qualifies for the mass joinder lawsuit.


  • "No one reviews their information, especially attorneys, and we are instructed to call these people back the next day and tell them attorneys will accept the case but you must pay $5,000 to join," the complaint says. "The whole thing is a scam."


  • The Florida Bar confirmed it has an open investigation into Ramba's involvement with the mass joinder lawsuits and the Florida attorney general's office said it is looking into whether Florida law was violated.

For the story, see Attorney general investigating lawsuits pitched to distressed homeowners.

(1) For the California AG civil lawsuit, see People v. The Law Offices of Kramer and Kaslow, et al.

See also, Cal. AG Tags Alleged Nat'l 'Mass Joinder Lawsuit' Racket With Civil Suit, Shuts Down Operation That Attempts To Circumvent Upfront Fee Bans, Some Say.

Plot Owners Remain Lingering In Limbo After Cancellation Of Cemetary Foreclosure Sale; Ripoff By Now-Convicted Prior Owner Plays Role In Turmoil

In Calvert County, Maryland, the Maryland Independent reports:
  • The foreclosure auction on the lawn of the Calvert County Circuit Court for Southern Memorial Gardens was canceled [last week] and some upset plot owners could not get answers as to what will happen next.

***

  • I don’t know the answer to that,” the bank trustee said to several people who asked what will happen to their plots, who now owns the cemetery and if someone dies now can they be buried on their plot. The 50 or so people were varied in dress from business suits to shorts; many of the plot owners say they are in limbo and do not know where to find answers.


  • Eileen Wilson, who said she paid $47,000 for 16 plots, was upset that she could not get answers and was worried that the bank or someone who bought the cemetery would resell her plots. “There’ll be a war down here,” she said, if that happens. “The Office of Cemetery Oversight did not do their job in the first place,” said Wilson, whose husband is buried in the cemetery.

***

  • Peggy Bekavac of Dunkirk, whose husband is buried at the cemetery and owns a plot next to him, said that she has been so upset. “People are scared to die. A lot of people are worried,” she said. Bekavac said she bought the plots 17 years ago and wants someone to purchase the property so she can be assured that she will be buried next to her husband. "These people just want what they paid for,” she said.


  • The foreclosed cemetery owner Danny Martin, who was at the auction, blamed the OCO for the foreclosure, saying, “They forced us into foreclosure.” Martin said that he had an agreement with the bank to continue to own the cemetery, but the board would not allow him to do so. Martin said they have had a difficult time due to the economy, but have seen a 67 percent increase in revenue over the last year. If the OCO would give Martin back his license, he said that he could work out a deal with the bank.


  • Martin has also had to contend with services that were not rendered but with fees collected by past cemetery owner Larry Deffenbaugh, who was convicted of theft for a case that had more than 550 victims who were defrauded. Deffenbaugh stole about $2 million, but only had to pay the cemetery $1 million, which was court ordered restitution, he said.


  • Martin said he himself now has 35 criminal charges against him assessed by the OCO, and other employees who worked for Southern Memorial Gardens also have charges against them. “We are not authorized to do business. We can’t even cut the grass,” Martin said.

For the story, see Dunkirk cemetery auction canceled.

Tuesday, August 30, 2011

'Biggest Case In Ohio F'closure Law In A Century' Takes Unusual Turn; Homeowner's Mtg. Debt Mysteriously Disappears; Banksters, Lawyers: 'No Comment!'

In Cleveland, Ohio, Ohio Public Radio reports:
  • The Ohio Supreme Court is getting ready to take on what some are calling the biggest issue in state foreclosure law in a century. The question before the justices is what paperwork does a lender need to force an owner out of his home? For Ohio Public Radio, WCPN’s Mhari Saito reports that what the state's justices decide could have huge implications for the financial services industry.


  • Antoine Duvall and his wife and young son waited until after Christmas to move into their freshly renovated two-story house in Cleveland’s Collinwood neighborhood. It was 2006 and Duvall, a salesperson for a legal document services company, had just happily signed a mortgage and a promissory note to get his loan from Wells Fargo. But soon, he started to get letters about his loan.

***

  • The Duvall case seemed like a good one for the state Supreme Court to rule on to settle the issue but it has taken an unusual twist. You might even call it another bank snafu. The homeowner, Duvall, now owes nothing on his mortgage because - in an action unrelated to the Supreme Court case - the loan servicer cleared his debt completely in June.


  • Duvall doesn’t know why it happened and neither his loan servicer nor US Bank’s attorneys are commenting. It’s not clear what the state Supreme Court will do, but attorneys for both sides say the legal question is not going away. The court could still take up the Duvall case or it could address several other cases on the same issue, waiting in the wings.(1)

For more, see Who owns the deed? (The Ohio Supreme Court is taking up the question of what a bank needs to prove to force someone from his home).

(1) The use of '11th hour' legal maneuvers to dodge a potentially adverse court ruling in the foreclosure context by the sleazy banksters is not unheard of. In a recent Florida foreclosure case involving the use of dubious documents to obtain a foreclosure judgment, the banksters and their foreclosure mill avoided having the Florida Supreme Court hear an appeal of a case by reaching a settlement with the screwed over homeowner shortly before the case was presented to the Florida high court (keep in mind that this was a case the banksters had won decisively at the intermediate appeals level). See:

More Observations On Proposed 50-State AG Foreclosure Fraud Settlement, The Booting Of NY AG From Probe Committee & The Buying Off Of Tom Miller

From a recent column in The Huffington Post:
  • John O'Brien, Registry of Deeds for Southern Essex County in Massachusetts is asking that Tom Miller, Iowa Attorney General, step down. Miller is the lead AG in the controversial settlement with the big banks on mortgage servicing fraud.


  • In his most recent obscene act Miller kicked Attorney General Eric Schneiderman off of the 50-state task force probing foreclosure abuses and negotiating a possible settlement agreement with the mortgage firms.

***

  • Schneidernan getting kicked off the committee should come as no surprise to anyone following the foreclosure negotiations and is sickeningly similar to Pam Bondi, Florida's Attorney General firing Theresa Edwards and June Clarkson, who were heading up investigations on a series of mortgage related crimes for over a year. While Bondi insists that the firings were a result of poor job performance, Miller points more towards attitude and that Schneiderman is somehow not a team player.

***

  • Schneiderman's removal will likely make it easier for state and federal officials to reach an accord with the five banks. However, the potential amount of money they'll be able to extract will likely decrease. American Banker posted the 27 term sheet of the negotiations presented to the banks with major servicing operations by the AGs and Federal Banking Regulators.


  • The deal completely handcuffs state attorneys general whose constituents are suffering serious economic damage as a result of the foreclosure fiasco and fraud by the banks and servicers.


  • When the investigation into robo-signing and fraud, Tom Miller had a brief moment of righteous advocacy until he received $261,445 in campaign contributions from out-of-state law firms and donors from the finance, insurance, and real estate sector shortly after he announced he was seeking criminal charges and retribution from the banks for mortgage fraud -- that's 88 times what he has received in the past decade.

For more, see John O'Brien MA Registry of Deeds: AG Tom Miller Should Step Down.

Convicted Real Estate, Check Scammer Now Faces Charges Of Ripping Off His Sister In Dubious Home Deal, Leaving Her & Kids Facing The Boot

In Peyton, Colorado, KRDO-TV Channel 13 reports:
  • Target 13 Investigates has warned you about him before, and now a former mortgage broker convicted of theft and forgery has been arrested again. Michael Hoskisson is accused of pocketing over $25,000 from his sister who said she thought she was making mortgage payments to him.(1)


  • Kammie Hoskisson-LaRose said she was stunned when she learned her Peyton home was in foreclosure, after she had been making payments to Hoskisson since 2009. "I'm overwhelmed," said LaRose. "I've put everything I have into re-doing the home."


  • LaRose said she had always been close to her older brother and trusted him when he said he could help her own her dream home. LaRose said her credit score wasn't high enough to get her own mortgage, so Hoskisson told her that his mortgage company would buy the home from its owner, then LaRose would make payments to him and eventually apply for her own mortgage.


  • According to Hoskisson's arrest affidavit, both LaRose and the home's owner, Michael Hill, believed Hoskisson had finalized the sale of the home. The Fourth Judicial District Attorney's Office said that never happened, and the last mortgage payment on the house was made by Hill in 2008. Hill's name is on the foreclosure documents.


  • The D.A.'s office said the mortgage payments LaRose thought she was making had gone into her brother's personal bank account. [...] LaRose said she's trying to work something out with the bank, but it's not looking promising.


  • "My name's not on anything, so I really don't have a say," she said. "They could tell me I'll be evicted in 30 days."

For more, see Springs Man Accused Of Stealing 25K From Sister (Woman May Lose Her Home).

(1) According to the report, Hoskisson is due in court for a hearing on September 16, and is facing charges of theft, identity theft and forgery. Reportedly, Hoskisson lost his mortgage broker license after pleading guilty to theft with a real estate transaction in 2009, and in 2011, he was convicted of forging over $73,000 in checks from an at-risk adult he befriended. Hoskisson was sentenced to five years probation and ordered to pay over $92,000 in restitution to the man's family, the story states.

Virginia AG Cites Another Loan Modification Outfit For Allegedly Pocketing Illegal Upfront Fees, Failing To Deliver Promised Services

From the Office of the Virginia Attorney General:
  • Attorney General Ken Cuccinelli announced today that he has filed a lawsuit against R.L. Brad Street, LLC, a mortgage loan modification company based in Chesapeake, for allegedly charging illegal advance fees of up to $3,000 before performing "foreclosure rescue" services for its customers.


  • The attorney general alleges that R.L. Brad Street violated the Virginia Foreclosure Rescue Law by charging advance fees in connection with services to avoid or prevent foreclosure. Section 59.1-200.1 of the foreclosure rescue law prohibits a supplier of foreclosure avoidance or prevention services from "charging or receiving a fee prior to the full and complete performance of the services it has agreed to perform, if the transaction does not involve the sale or transfer of residential real property."


  • R.L. Brad Street allegedly collected fees of up to $3,000 in the form of checks made payable to Rhonda Wyland, the company's member/manager, from consumers before performing any services for them.


  • Cuccinelli also alleges that R.L. Brad Street violated the Virginia Consumer Protection Act (VCPA) by failing to deliver on promises to assist consumers in obtaining mortgage loan modifications. The Virginia Consumer Protection Act generally prohibits suppliers from using any deception, fraud, false pretense, false promise, or misrepresentation in connection with a consumer transaction.

For the Virginia AG press release, see Attorney General Cuccinelli sues Chesapeake-based mortgage modification company (Company allegedly charged illegal advance fees for "foreclosure rescue" services).

Monday, August 29, 2011

Federal Appeals Court Reinstates Reversed Ruling Hammering Foreclosure Mill For Littering Courtroom With Robosigned Docs; Bankruptcy Judge Vindicated

In Philadelphia, Pennsylvania, Dow Jones Daily Bankruptcy Review reports:
  • A federal appeals court has reinstated sanctions against a New Jersey law firm and attorney for attempting to foreclose on a suburban Philadelphia couple using "robo-produced" mortgage data that was fraught with errors.(1)


  • In a case that was one of the first to expose trouble in the high-tech, high-volume mortgage foreclosure industry, the Third U.S. Circuit Court of Appeals sided with a bankruptcy judge who punished the Udren law firm and attorney Lorraine Doyle for showing up in court with unverified, computer-generated mortgage data that was wrong.

***

  • The Udren case highlights the role of foreclosure law firms, whose lawyers walk the robo-produced mortgage data into court, without checking whether it is correct or not. The law firm said it was not able to verify the data under the system established by client HSBC, using technology from Lender Processing Services Inc.

***

  • The appeals court and the bankruptcy judge found the flawed high-volume system that handles mortgage data does not excuse an attorney's failure to verify information before presenting it to a court.


  • "Where a lawyer systematically fails to take any responsibility for seeking adequate information from her client, makes representations without any factual basis because they are included in a 'form pleading' she has been trained to fill out, and ignores obvious indications that her information may be incorrect, she cannot be said to have made reasonable inquiry," the court of appeals wrote.

***

  • The case began in January 2008, when the Urden firm presented a bankruptcy judge with the wrong mortgage note, wrong monthly payment information and wrong value for the home of Niles and Angela Taylor, and sought permission to foreclose.

***

  • The decision is a vindication for Judge Diane Weiss Sigmund, a veteran bankruptcy judge who became irritated when a young attorney sent to court by the Udren firm couldn't answer basic questions about the Taylor's Loan and couldn't get an answer from the client.


  • She summoned the firm and others to answer for falsehoods about the status of the Taylors' mortgage and wrote a detailed opinion about the technology-heavy system that made it impossible to pin down and correct errors.


  • A district court judge overturned her ruling, saying Sigmund was more concerned about "sending a message" to the foreclosure firms than seeing justice done in the Taylor case.(2) The appeals court disagreed, finding her detailed conclusions were supported by the evidence.


  • It's also a victory for the U.S. trustee's office, an arm of the Department of Justice that monitors the bankruptcy courts. The bankruptcy watchdogs appealed the district court decision overturning the sanctions, noting that the sanctions imposed were "lenient," and educational in nature. The Udren firm and Doyle were not fined.

For the story, see Appeals Court Restores Sanctions Against Foreclosure Law Firm (may require paid subscription; if no subscription, TRY HERE).

For the ruling of the 3rd Circuit Court of Appeals, see In Re Taylor, No. 10-2154 (3d Cir. August 24, 2011).

(1) It should be noted that the appeals court did, in fact, sustain the reversal of the sanctions originally imposed on one of the attorneys involved, Mark J. Udren.

(2) For Judge Sigmund's original 58-page ruling, see In re Taylor, 407 B.R. 618 (Bankr. E.D. Pa. 2009).

See also, Data Management Firm, Assembly Line Law Firm Scorched By Scathing Court Ruling That Shines Light On Filing Screw-Ups In Consumer Foreclosure Cases.

Wisconsin Attorney Pinched In Alleged Foreclosure Surplus Snatching Scam; Illicitly Scored $542K In Unclaimed Net Proceeds On 43 Sales: Investigators

In Milwaukee, Wisconsin, the Wausau Daily Herald reports:
  • A Brookfield attorney is accused of stealing $542,000 in unclaimed foreclosure funds by falsely claiming that he represented the rightful owners, prosecutors in Milwaukee County said Wednesday.


  • Thomas E. Bielinski, 52, was charged Tuesday with theft of at least $10,000 by fraud. The charge carries a maximum sentence of five years in prison and a $25,000 fine. He is scheduled to make an initial court appearance on Wednesday.


  • According to the criminal complaint, Bielinski targeted mortgage-foreclosure cases in which the owners of surplus funds had failed to file claims for the money. Prosecutors said he claimed that he represented the owners, filed claims on their behalf and kept the money.


  • In a five-year period, he filed 47 fraudulent claims and got paid out on 43, according to the complaint.

***

  • Prosecutors said Bielinski had crafted what amounted to an elaborate identity-theft scheme. They accused him of forging claimants' signatures and notary stamps, and then covering his tracks by removing the subsequent court documents from official files.


  • Authorities executed a search warrant on Bielinski's home last month. They said they found a list of civil cases in Milwaukee County Court that included the dollar amount of unclaimed funds and handwritten notes identifying people who were dead.


  • Investigators contacted the people in whose names Bielinski had collected money. Although some were dead, others weren't and generally said they did not know they were owed any surplus funds. None of them knew Bielinski or had hired him to represent them.

For the story, see Brookfield attorney charged with stealing $542,000.

Clerk Of Court Issues Plea To Foreclosed Cook County Property Owners To Come Forward, Claim Their Cash; Says $16M In Sale Surplus Sits Unclaimed

In Chicago, Illinois, the Chicago Sun-Times reports:
  • About $16 million is sitting in a Cook County court fund, just waiting for the rightful owners — namely home and business owners who lost their property to foreclosure, officials said Thursday.


  • The money is part of a mortgage foreclosure surplus fund — profits generated when foreclosed property is sold for more than what the original owner owed the bank.


  • Nearly 2,000 property owners have an average of $2,000 coming to them from foreclosures that date back to the 1990s. Amounts range from 13 cents to $460,000 owed to a business, Brown said.


  • For two years, Clerk of the Circuit Court Dorothy Brown has been trying to get the word out to former property owners to call her office or go to her website and use the search engine to see if they have money coming to them.


  • By state law, her office maintains the account. But having had only marginal success in finding those to whom money is due, she announced Thursday that a task force of city, county and state officials is working on a better marketing strategy. “We need to find a better way, even a more effective way to get the word out,” Brown said Thursday at a news conference with other elected leaders.

***

  • A lot of people just don’t look back” once they lose a property, she said. “They don’t leave a forwarding address because they have creditors” seeking payment.


  • To see if you are owed mortgage surplus funds, call Brown’s office at (312) 603-5030 or go to [Cook County Mortgage Foreclosure Surplus Search].

For more, see Property foreclosed? Cook Co. hold $16M in fund waiting to be claimed.

See also, Chicago Tribune: Cook Co. reaching out to those due money after property foreclosure ("Brown noted that her office contacted one homeowner who was owed a $200,000 surplus. The homeowner never returned the call.").

Law "Was Designed To Be A Noble Profession," Says Cal. AG In Announcing Civil Action Against 3 Firms Bringing 'Mass Joinder' Foreclosure Relief Suits

In San Francisco, California, The Bay Citizen reports:
  • California Attorney General Kamala Harris stood before a bank of news cameras [one recent] morning and declared war on unscrupulous lawyers. The occasion: a new lawsuit against three Southern California law firms, who stand accused of taking millions of dollars from homeowners who expected the lawyers to help them get mortgage relief. But the attorneys simply pocketed the money, Harris said.


  • Law "was designed to be a noble profession," Harris told reporters. Instead, she said, the accused attorney, Philip Kramer, and lawyers at two other firms took advantage of borrowers who were already "deeply disappointed, frustrated and hurt."


  • According to officials, the defendants extracted retainer fees of up to $10,000 from each of 2,500 homeowners to participate in lawsuits that actually hurt their chance of staying in their homes. Because these homeowners gave their meager savings to Kramer and his associates, they were less able to make their mortgage payments and more likely to lose their home to foreclosure.

For mor, see State Cracks Down on Unscrupulous Mortgage Lawyers (Law "was designed to be a noble profession").

Sunday, August 28, 2011

Obama Administration 'All In' With Push To Let Banksters Off The Hook & Bulldoze Through Proposed 50-State AG Settlement In Foreclosure Fraud Probe?

Rolling Stone columnist Matt Taibbi chimes in with his views and observations on the $20 billion proposed foreclosure fraud settlement that appears to let the banksters off the hook for their dirty dealings in creating this mess:
  • The idea behind this federally-guided “settlement” is to concentrate and centralize all the legal exposure accrued by this generation of grotesque banker corruption in one place, put one single price tag on it that everyone can live with, and then stuff the details into a titanium canister before shooting it into deep space.


  • This is all about protecting the banks from future enforcement actions on both the civil and criminal sides. The plan is to provide year-after-year, repeat-offending banks like Bank of America with cost certainty, so that they know exactly how much they’ll have to pay in fines (trust me, it will end up being a tiny fraction of what they made off the fraudulent practices) and will also get to know for sure that there are no more criminal investigations in the pipeline.


  • This deal will also submarine efforts by both defrauded investors in MBS and unfairly foreclosed-upon homeowners and borrowers to obtain any kind of relief in the civil court system. The AGs initially talked about $20 billion as a settlement number, money that would “toward loan modifications and possibly counseling for homeowners,” as Gretchen Morgenson reported the other day. The banks, however, apparently “balked” at paying that sum, and no doubt it will end up being a lesser amount when the deal is finally done.


  • To give you an indication of how absurdly small a number even $20 billion is relative to the sums of money the banks made unloading worthless crap subprime assets on foreigners, pension funds and other unsuspecting suckers around the world, consider this: in 2008 alone, the state pension fund of Florida, all by itself, lost more than three times that amount ($62 billion) thanks in significant part to investments in these deadly MBS.


  • So this deal being cooked up is the ultimate Papal indulgence. By the time that $20 billion (if it even ends up being that high) gets divvied up between all the major players, the broadest and most destructive fraud scheme in American history, one that makes the S&L crisis look like a cheap liquor store holdup, will be safely reduced to a single painful but eminently survivable one-time line item for all the major perpetrators.


  • But Schneiderman, who earlier this year launched an investigation into the securitization practices of Goldman, Morgan Stanley, Bank of America and other companies, is screwing up this whole arrangement. Until he lies down, the banks don’t have a deal. They need the certainty of having all 50 states and the federal government on board, or else it’s not worth paying anybody off.


  • To quote the immortal Tony Montana, “How do I know you’re the last cop I’m gonna have to grease?” They need all the dirty cops on board, or else the whole enterprise is FUBAR.

For more, see Obama Goes All Out For Dirty Banker Deal.

Buffett Sees Buffet In Ever-Rotting BofA Carcass; Opportunistic Financier To Feast Off Recent $5B Investment In Beleagured Bankster?

Fox Business reports:
  • Berkshire Hathaway’s investment of $5 billion in Bank of America comes with a costly price tag for a bank that has a host of real estate problems, as did Berkshire’s $5 billion investment in Goldman Sachs at the height of the financial crisis (even though Berkshire’s warrants in this deal would create losses for Buffett’s company if exercised today).


  • The way the Bank of America deal is structured, Warren Buffett’s Berkshire will get 50,000 preferred shares in a private offering that carries a sweet dividend of 6% a year; Bank of America can buy those shares back at any time by paying Berkshire a 5% premium.


  • Along with that, Berkshire gets warrants to buy 700 million shares in Bank of America at an exercise price of $7.14 each. The warrants may be exercised in whole or in part over a very long 10 years, following the close of the deal.


  • The shares are moving higher on the news, and Berkshire had a $546 million paper profit based on BofA’s share price of $7.92 by late morning. Fully exercised, the warrants would give Berkshire an estimated 7% stake in the company.


  • A 6% dividend is a high price to pay, and along with the 5% premium, is expensive capital on any measure. The deal is a red flag that Bank of America is struggling through a portfolio of mortgage, home equity, and commercial real estate loans it is having difficulty getting out from under.


  • The Bank of America deal is similar to a $5 billion investment Berkshire made in Goldman in September 2008, at the height of the financial crisis. Goldman paid a rich 10% dividend, or interest, on those preferreds to Berkshire. Goldman had to get Federal Reserve approval to buy back Berkshire’s $5 billion in preferreds this past March, and it did so by also paying a $500 million fee.

For more, see Buffett’s Big Bet Comes at a Hefty Price for Bank of America.

(1) In a possibly related story (one I'm sure is pure concidence, right?), it's been recently reported that, according to two Democratic officials not authorized to speak publicly about the event, billionaire Warren Buffett plans to hold a Sept. 30 fundraiser in New York City to help beef up President Barack Obama’s campaign chest (possibly to 'grease the wheels' of communication btween Buffet & the administration? Possibly as an 'insurance policy' on his $5B BofA deal?). See Bloomberg: Buffett to Host Obama Fundraiser in New York.

Michigan AG: Upfront Fee F'closure Rescue Ripoffs Not A 'Civil Matter' As Prosecutors Score Criminal Convictions On False Pretenses, Conspiracy Counts

In Allegan County, Michigan, The Holland Sentinel reports:
  • A Fennville woman was convicted Thursday on nine charges relating to a mortgage fraud rescue scheme, according to the state attorney general’s office.


  • Tonia Raisbeck, 36, was accused of collecting upfront fees of $795 to $1,500 from homeowners with the promise of securing new mortgages with lower interest rates. She never secured the mortgages, however, and several victims lost their money and their homes to foreclosure, authorities said.


  • Raisbeck was found guilty on nine counts Thursday, including false pretenses and conspiracy to commit false pretenses, as well as for violating the Credit Services Protection Act and conspiracy to violate the Credit Services Protection Act.


  • Raisbeck will be sentenced at 9 a.m. Sept. 23 before Circuit Court Judge Marge Baker in Allegan County Circuit Court.

Source: Fennville woman convicted for mortgage scheme.

Miami Outfit Among Three Alleged Upfront Fee Loan Modification Rackets Shut Down By Feds In Civil Lawsuits

In Miami, Florida, the South Florida Sun Sentinel reports:
  • Federal regulators have shut down three mortgage modification operations nationwide, including one in South Florida. The operations took millions in upfront fees while falsely telling homeowners they could get their loans reduced or stop their foreclosures, but then did little or nothing to help them, according to the FTC.


  • Two of the owners of Truman Foreclosure Assistance of Miami were ordered, as part of a settlement with the Federal Trade Commission, to pay $1.8 million toward consumer restitution. They also were banned from marketing, or helping others to market, mortgage modification or foreclosure relief services, the FTC said Thursday. Truman Foreclosure could not be reached for comment despite several attempts by phone.


  • Federal officials allege Truman salespeople took $1,500 to $3,000 in upfront fees, a violation of federal law, and falsely claimed a 90 percent success rate and a full money back guarantee. In most cases, the company either didn't contact the homeowners lenders, refused to tell their clients what was going on with their modifications, or refused to grant refunds, according to court documents.


  • Owners Eli Hertz and Benzion Jack Itzkowitz were prohibited, under the agreement, from sharing or using their customers' personal information and ordered to destroy those records. Richard Zafrani also was named in the action.Truman Foreclosure also did business as Truman Mitigation Servcies and Franklin Financial Group US.


  • The two other settlements reached included: One for multiple companies based in California that marketed debt relief and mortgage modification services under a web site called Fedmortgageloans.com; and another for multiple defendents that federal regulators say set up false web sites that impersonated the government-backed site MakingHomeAffordable.gov, which helps distressed homeowners refinance their properties.

Source: FTC shuts down Miami mortgage loan modifiers.

See also Marketers Falsely Claimed to Be Affiliated with Federal Assistance Programs, Agency Alleges; Operators in One Case Required to Pay $1.8 Million for the Federal Trade Commission press release and links to related court documents.

Virginia AG Cuts Loose Suspected Upfront Fee Loan Modification Racket By Signing Off On $6,500 Civil Suit Settlement

In Virginia Beach, Virginia, The Virginian Pilot reports:
  • A Virginia Beach-based company has agreed to pay more than $6,500 to settle allegations that it charged homeowners facing foreclosure illegal upfront fees to help save their homes, Virginia Attorney General Ken Cuccinelli announced Thursday.


  • Cuccinelli filed a lawsuit in Virginia Beach Circuit Court a little more than a year ago against Real Estate Resolutions LLC. The suit alleged that the company had illegally demanded money upfront for services and, in some cases, never performed. Virginia law prohibits a company that provides foreclosure-prevention services from charging a fee upfront.

***

  • This is the third settlement the attorney general's office has reached with a mortgage loan-modification company related to illegal upfront fees. Last month, Virginia Beach-based Nationwide Loan Modification Bureau LLC agreed to pay a total of $54,200 to settle similar allegations; and in December, Chesapeake-based American Neighborhood Housing Foundation agreed to pay more than $109,000.

For more, see Va. Beach company agrees to repay homeowners.

For the Virginia Attorney General press release, see Attorney General Cuccinelli announces settlement and permanent injunction against third mortgage loan modification company.

Saturday, August 27, 2011

BofA Drags Feet On Undoing Screw-Up After Driving Terminally Ill Senior, Sole-Caregiver Spouse Into Foreclosure For Making House Payment Too Early

In New Port Richey, Florida, the St. Petersburg Times reports:
  • It appears Sharon and James Bullington will have to wait a little longer to learn how Bank of America plans to modify their mortgage. The couple's anxiety hasn't diminished since the bank apologized this week for mistakenly pushing their home into foreclosure despite the couple making their mortgage payment early.


  • Shawn Yesner, the Bullingtons' attorney, said bank officials told him they will call him daily until a resolution is reached. Bank officials told him "they are aggressively working the Bullingtons' file at the highest level … and may not have an answer by week's end."


  • State Sen. Mike Fasano, R-New Port Richey, started calling bank officials about the case Monday. An official told him he'd get an answer Wednesday. No call came. On Thursday, the bank assured Fasano the couple would have details by Friday.


  • "It's concerning and frustrating that it has taken this long to get a simple answer," Fasano said.


  • James Bullington, 78, is terminally ill and bedridden. Sharon, 70, is his sole caregiver.

For more, see Bank of America still working on case of Pasco couple who paid mortgage early.

Suit: Woman Married Dying 87-Year Old Tenant To Inherit Succession Rights In Low-Priced, Rent-Controlled Apt; Landlord To Judge: Give Her The Boot!

In New York City, the New York Post reports:
  • The object of this woman's love was really a rent-controlled apartment, a frustrated West Village landlord says. Sarah Berman wed ailing 87-year-old Stanley Lowell last September and inherited his cheap digs at 302 W. 12th St. when he died just a month later.


  • The landlord is now trying to evict Berman, saying it's not fair for her to take over the apartment after such a brief period of wedlock. And at age 63, Berman could be paying his cheap rent for many years to come.


  • Court papers don't disclose Berman's rent, and neither she nor the landlord could be reached for comment. But a neighbor guessed her monthly payment could be as little as $400, in a building where market rents can run to more than $5,000.


  • The building's owner, Fourth FGP LLC, doesn't believe the grieving newlywed married for love, accusing her of using "gamesmanship, seduction and artifice" to get her man and his bachelor pad.


  • The company wants a Manhattan Supreme Court judge to give Berman the boot, arguing in legal papers that she tricked the vulnerable Lowell into wedded bliss "to wrongfully procure succession rights to the apartment."

***

  • The landlord, which wants "immediate possession" of Lowell's unit, insists in court papers that Lowell would have "lacked the mental capacity to understand the nature, effects and consequences of the purported marriage."

For the story, see Gal got a groom for rent (Landlord's claim in evict bid).

Dozens Of NYC Seniors To Get The Boot After Non-Profit's Insider Pulls Off Lucrative Deal In Nursing Home Buyout

In New York City, the New York Post reports:
  • The oldest-running nursing home on the Lower East Side is shutting its doors for good even as residents protest a pricey property deal struck by one of its board members.


  • About 95 seniors are getting the boot from the Bialystoker Center -- a kosher nursing home that many have lived in for over a decade, including Catherine McDonald, a 107-year-old woman from the neighborhood. She and others like Mildred Mondshein, 88, and Annie Green, 85, have to find new digs at nursing homes elsewhere in the city.


  • But the demise of the Bialystoker Center has been a boon for one of its board members -- real-estate magnate Ira Meister picked up a four-story commercial building owned by the nursing home last year in a no-bid insider deal.(1)


  • Meister is the chairman of the Bialystoker board that's charged with keeping the senior center financially sound. But that didn't stop him from buying the commercial property at 232 East Broadway for $1.5 million in an all-cash deal that never was up for bid on the open market.


  • The insider sale infuriated Bialystoker residents, family members and staffers, who only learned of it last month after being told the home is shutting and the Bialystoker building, at 228 East Broadway, is going up for sale.


  • "I was shocked when I heard about it. It's a dirty thing. We're out, the nursing home building is being sold and he winds up with the property next door," said Denise Perez, who visits her grandmother Miguela Candelaria, 88, daily.


  • The Bialystoker board said Meister's purchase was made as a last-ditch effort to help save the nonprofit nursing home, which is $8.5 million in debt and hemorrhaging $100,000 a month, according to board spokeswoman Virginia Lam.


  • Meister plans to lease it to a community group for two years while renovating it, she said. Then he'll move his private real estate company -- Matthew Adam Properties in Midtown -- to the Lower East Side.


  • That news doesn't sit well with the nursing-home seniors being forced to leave. "If I'm not in the Lower East Side, nobody will be able to come visit me," said Green, who wants to stay in the neighborhood where she grew up.


  • The residents are also miffed no local pols spoke up for the fabled Jewish institution, built in 1928 and later a haven for many Holocaust survivors. "I think all the politicians have forgotten us -- they only remember us when it's time to vote," said Mondshein.

Source: Sale rakes in 'old' money (Real-estate meanie to close senior home).

(1) See The Real Deal: Bialystoker nursing center hits market for residential conversion.

Cops: Foreclosed Owners' Home-Trashing Escapade Leaves Them Facing Five Years In Prison; Couple Declined 'Cash for Keys' Offer: Investor

In Tampa, Florida, ABC Action News reports:
  • When real estate investor Jon Spinks walks into a foreclosure property, he is never sure what he'll find. One month ago, he found a big mess. "The house was totally trashed," he said.


  • Photos show the New Tampa house in a gated community littered with trash when the former owners moved out. Deputies say when the married couple took off, they also stripped $10,000 worth of property and took it with them.


  • "All the cabinet doors were missing. Of course, the refrigerator was gone," said Jon Spinks. The ceilings fans, fixtures, bathroom vanities, water heater and more were also missing, according to Spinks.

***

  • Spinks says he offered the couple cash to leave their keys and the house intact. He also says they refused the offer.


  • Now the couple is dealing with foreclosure and criminal charges. "That was our intent at first, to try to recover the property," said Sergeant Joel Masci with the Hillsborough County Sheriff’s Office. Sergeant Masci says they arrested the couple, who now face five years' prison time if convicted.


  • "If it was something you would normally purchase a house that you expect it to be included with the house, then that's what we look at. If those items were taken, we can actually file grand theft charges," he said.

For the story, see New Tampa couple accused of stealing $10,000 of goods from foreclosed home (Deputies say couple stripped front door, cabinets).

Ex-Homeowner Squats Her Way Into Loan Modification, 18 Months After Losing Home To Foreclosure

In Alameda County, California, The Bay Citizen reports:
  • It's hasn't been easy, but nearly a year and a half after Wells Fargo foreclosed on her home of 27 years, Tanya Dennis has finally convinced the lender to modify her mortgage.


  • "They had to deal with me to pacify me and get me out of their hair," joked Dennis, who made headlines earlier this year by hiring a locksmith and breaking into her South Berkeley home after Alameda County sheriff's deputies evicted her.


  • Since then, Dennis, a short, 63-year-old woman who was once vice principal of Oakland's Castlemont High, has been a thorn in the side of the nation's largest mortgage originator.


  • Wells Fargo spokesman Tom Goyda said the deal — which Dennis said reduces the amount of money she owes on her home from $484,000 to $365,000 — occurred not because of Dennis' persistence, "but because we want to keep homeowners in their homes."

***

Here are some of the steps Dennis took after breaking back into her home in January:

  1. Representing herself, she sued Wells Fargo in federal court. When U.S. District Judge Claudia Wilken dismissed her suit, Dennis appealed her case to the 9th Circuit — all without the help of a lawyer.


  2. On May 3, Dennis was carted away in handcuffs after disrupting Wells Fargo's annual shareholders meeting.


  3. On May 24, she confronted Jim Foley, the bank's regional president for the San Francisco Bay Area, at Wells Fargo's Oakland office. The meeting was arranged by Oakland's teachers' union. (The union's president, Betty Olson Jones, was also among those who disrupted Wells Fargo's shareholders meeting).


  4. In June, three members of the state Legislature — state Sen. Loni Hancock (D-Berkeley) and East Bay assemblymembers Sandré Swanson and Nancy Skinner — wrote to Wells Fargo on Dennis' behalf.


  5. On June 17, with another eviction from the sheriff looming, the Alliance of Californians for Community Empowerment, an advocacy group founded by former employees of the now-defunct ACORN, sent an email asking its supporters to contact Foley and Leesa Whitt-Potter, the bank's senior vice president for consumer operations.

For more, see Squatting Homeowner's Persistence Pays Off (Breaking into her own home was just the beginning of Tanya Dennis' campaign to convince Wells Fargo to modify her mortgage).

Law School Clinic Scores 3-Year, State AG Grant To Fund Unit Defending Homeowners Facing Wrongful Foreclosure, Victims Of Mortgage Fraud

From Arizona State University School of Law:
  • Distressed homeowners have a new advocate in their corner as the Homeowner Advocacy Unit in the Civil Justice Clinic at ASU's Sandra Day O'Connor College of Law opens its doors this month.


  • In response to the foreclosure crisis, student attorneys enrolled in the new program will start working with clients who have been victims of mortgage fraud or are facing a wrongful foreclosure. The unit is made possible through a three-year grant from the Arizona Attorney General’s Office.


  • This is an excellent opportunity for the law school to provide a valuable public service while training up to 90 new attorneys over the next three years in the skills needed to become effective advocates on behalf of distressed homeowners,” said Douglas Sylvester, interim dean of the college.


  • We are grateful to the Attorney General’s Office for funding this project. It comes at a time when the community is in desperate need of professionals with training in the complex legal and social issues created by the mortgage crisis."

For more, see Distressed homeowners to receive assistance from ASU law school.

Squatter Movement Begins To Gain Steam In Detroit As Local Laws Leave Complaining Residents Frustrated, Cops With Hands Cuffed

In Detroit, Michigan, The Detroit News reports:
  • The foreclosure crisis has led to a surge of complaints about squatting in Detroit, and city officials acknowledge they're not sure what they can do about the problem.


  • In a city with more than 100,000 vacant properties, city officials and residents say they're increasingly seeing people take over empty houses and call them their own. Once they're in, it's tough to get rid of them: Michigan law places the burden of proof on rightful owners, and the eviction process can take months.

***

  • Squatting isn't new, and its secretive nature makes it tough to track. But city officials say it's spiking as one in every 339 city homes received foreclosure notices last month, according to RealtyTrac, an industry marketer. City ombudsman Durene Brown points to a thick stack of complaints about squatting she's received over the past two years. A few years ago, about 100 people a year called about the issue. Now, 300 do.

***

  • Squatting laws present a major challenge in ridding someone who illegally possesses a home. Legally, only the homeowner or banks can seek remedies to remove squatters. And under a loophole, a squatter can gain possession of a home if he or she openly lives in it uninterrupted for 15 years, according to state law.


  • No real moves have been made to change squatting laws by the state Legislature, but some community groups and city officials said the loopholes need to be closed.

***

  • As the head of the mobile patrol for the nearby Grandmont Association, Muhsin Muhammad said the group has fought against people who have taken over eight homes in the past year. Rosedale-Grandmont, a larger contingent of seven associations, has dealt with about 30 homes, he said.


  • They ranged from a family just finding a place to stay for the children, to a group of about 30 young people who took over a house. At that home, there was gambling on the street, illegal drug use, incidents of the inhabitants urinating on nearby properties and loud music playing until 3 or 4 a.m., Muhammad said.


  • "The homeless and criminals have been wise as to how the system protects them. They go through the neighborhood shopping for nice homes to move into," said Muhammad, the father of the former Michigan State University and professional football star who shares his name.

For the story, see Squatter problem balloons in Detroit (State law makes it hard to evict illegal residents, city claims).

NYC Congressman, Other Queens Pols Could Feel The Squeeze After Indictment Of Suspect Accused Of Falsifying $50M In Home Loan Applications

In New York City, the New York Post reports:
  • The walls may be closing in on Rep. Gregory Meeks with the indictment of a real-estate broker pal who gave him $40,000. Edul Ahmad faces up to 30 years in prison if convicted of mortgage fraud in an indictment Friday.


  • Though the indictment makes no mention of his political ties, the threat of a lengthy sentence could give the feds leverage to question Ahmad about Meeks and other Queens pols.(1)


  • Ahmad, 43, is accused of falsifying $50 million in loan applications for borrowers who lacked the means to pay them back and pocketing "fees and commissions in excess of those permitted by the lenders," the indictment says.


  • His relationship with Meeks has been under intense scrutiny since the Queens Democrat revealed the $40,000 payment last year. Earlier this month, a House ethics panel announced that it would investigate Meeks over the 2007 payment.


  • Meeks has said that the $40,0000 was a loan from Ahmad, but he did not report it on his personal financial disclosure forms until 2010, after the FBI questioned Ahmad about it.

Source: Meeks' mortgage 'lender' indicted.

(1) As has been observed by at least one learned federal judge:

  • "When a conspiracy is exposed by an arrest or execution of search warrants, soon-to-be defendants know that the first one to "belly up" and tell what he knows receives the best deal. The pressure is to bargain and bargain early, even if an indictment has not been filed." United States v. Moody, 206 F.3d 609, 617 (6th Cir. 2000) (Wiseman, J., concurring) (referring to the not-uncommon 'race to the prosecutor's office' that breaks out among participants in an uncovered criminal conspiracy).

Whether Ahmad, if guilty, considers to "belly up" and "sell out" others on whom he may have some 'dirt' remains to be seen.

Friday, August 26, 2011

Sale Leaseback Peddler Throws In Towel, Cops Guilty Plea For Running Foreclosure Rescue, Equity Stripping Racket That Left Victims Without Homes

From the Office of the U.S. Attorney (Norfolk, Virginia):
  • Kathleen Harps, 51, of Chesapeake, VA, pleaded guilty [...] in Norfolk federal court to conspiring to commit mail and wire fraud in connection with a scheme to fraudulently obtain mortgage loans.

***

  • According to court documents, during 2006 Harps operated the New Beginnings Group in Hampton Roads and engaged in the business of “foreclosure rescue.” Harps and another conspirator solicited homeowners in financial distress and facing foreclosure, to sell their homes to Harps or other buyers that she located.


  • To induce participation in the program, Harps promised homeowners that:

    (a) they could remain in their homes and live “mortgage free” for one year;
    (b) during the one year period, they would receive credit repair assistance to put their financial house in order; and
    (c) at the end of the year they could buy back their homes.


  • In furtherance of the conspiracy, then Harps and other straw buyers made assorted false statements to fraudulently obtain mortgage loans. At the real estate closings on these loans, all or most of the homeowners’ equity in their homes was paid out to Harps’ business, the New Beginnings Groups.


  • Harps used these sales proceeds to, among other things, pay kickbacks to straw buyers and a loan officer, to make payments to and for the benefit of her and her companies, and to make mortgage payments for a period of time upon the fraudulently obtained mortgage loans.


  • After one year, when homeowners could not afford to buy back their homes or to pay the rents charged by Harps’ businesses, Harps and the straw buyers defaulted on the loans and they fell into foreclosure, causing the lenders to suffer losses and the homeowners to lose their homes.(1)

For the U.S. Attorney press release, see Chesapeake Woman Pleads Guilty to Committing Foreclosure Rescue Loan Fraud.

(1) Undoing cases like these in an attempt to recover the homeowner's ripped-off equity, particularly if a related criminal prosecution fails to yield any restitution from the scammer (many of these scammers are lowlifes who live from scam to scam, and who commonly wind up broke by the time they're frog-marched off to prison) would require the filing of a civil lawsuit alleging that the lender that financed the equity stripping deal had either actual or constructive knowledge of the underlying fraud.

Virginia case law, like the case law in many other states, appears to have enunciated the rule that a purchase or lender dealing in real property could possibly have a duty to physically inspect the premises prior to purchasing or taking a mortgage to secure a loan and, failing that, it takes its interest subject to any of the rights and equities of the occupants in possession.

See, for example, Brooks v. Lum, Case No. (Chancery) 00-13, 52 Va. Cir. 390; 2000 Va. Cir. LEXIS 301; Circuit Court of the City Of Winchester, Virginia (2000):

  • When the purchaser has actual knowledge that there are persons in possession of the property being purchased who dispute the seller's title, he has a duty to inquire about the circumstances of that possession. Ely v. Johnson, 114 Va. 31, 75 S.E. 748 (1912) (purchaser on notice as to possession and use of land by another).

    As stated in 58 Am. Jur. 2d, Notice, § 21: Possession of land is notice to the world of every legal or equitable right that the possessor has therein. It is a fact putting all persons on inquiry as to the nature of the occupant's claims, as well as the claims under whom he occupies.

    "Under the [recording] statute, only purchasers without notice can take advantage of a failure to record."
    National Mutual Building & Loan Association v. Blair, 98 Va. 490, 498, 36 S.E. 513. "Such a failure cannot affect a purchaser who has actual notice." Chavis v. Gibbs, 198 Va. 379, 383, 94 S.E.2d 195 (1956).

    In
    Chavis v. Gibbs, 198 Va. 379, 385, 94 S.E.2d 195 (1956), the Supreme Court stated "whatever fairly puts a person on inquiry is sufficient notice where the means of knowledge are at hand; and if he omits to inquire, he is then chargeable with all the facts which, by a proper inquiry, he might have ascertained."

For other states, see Bona Fide Purchaser Doctrine, Possession Of Property By Occupants Other Than The Vendor & The Duty To Inquire.

Michigan Deed Recording Official Tags Banksters w/ Suit Alleging Improper Exemption Claims To Dodge Local Taxes On F'closure-Related Realty Transfers

In Coldwater, Michigan, WTVB Radio 1590 AM reports:
  • The County of Branch and Branch County Register of Deeds Nancy Hutchins have filed suit in Circuit Court, alleging that nine separate mortgage companies and their business service providers have failed to pay appropriate fees and taxes on property transfers in the County.


  • Hutchins says review of county real estate records has shown a pattern of inappropriate claims for exemptions to state and county transfer taxes, primarily on sheriff’s deeds on foreclosure and the subsequent sale of those foreclosed properties. Hutchins is questioning the validity of claimed exemptions.


  • Transfer taxes are the monies paid when a new deed is recorded in the county’s Register of Deeds office. The taxes apply to the sale price of the property being transferred, unless it falls under $100. Many large-scale banks have used Fannie Mae and Freddie Mac to claim an exemption to pay the taxes by identifying Fannie Mae and Freddie Mac as government entities.


  • Hutchins says the issue has seriously affected the County Revenue stream, jeopardizing services that taxpayers rely on. She says it’s time for some of the banks and mortgage companies responsible for the nation-wide foreclosure mess to pay their fair share, instead of making county’s taxpayers bear all of the burden.

Source: Branch County Register Of Deeds Files Suit.

Westchester DA: Pair Used Escrow Acct. Holding Clients' Home Refi Proceeds As Personal 'Piggy Bank;' Alleged Scammer's Elderly Dad Among Those Screwed

From the Office of the Westchester County, New York District Attorney:
  • From April 2009 to June 2009, operating under the home mortgage closing company Settle One Corporation, with an office located at 428 Main Street in Armonk, New York, the defendants, Loronda Murphy and real estate attorney Scott Forcino, engaged in what amounted to a home mortgage fraud "Ponzi" scheme.(1)


  • The targeted homeowner/victims each took out a new mortgage on their home through Settle One Corporation with the understanding that real estate attorney Scott Forcino would oversee their closing and that money from their new mortgage would pay off their pre-existing mortgage.


  • However, Forcino instead allowed Murphy to fraudulently assume the role of attorney for each closing, and, much to the homeowner's surprise, rather than paying off their pre-existing mortgage, Murphy instead stole portions of their new loan money and left their pre-existing mortgage unpaid.(2)


  • Murphy's theft then left the homeowner with the unsustainable burden of having multiple mortgages on their family home at one time. Over this time period the pair defrauded five victims including Murphy’s father.


  • In addition to skimming money out of the Settle One Corporation bank account for her own personal benefit, Murphy also attempted to conceal her crimes by using money left in the Settle One bank account to make monthly mortgage payments on various unpaid mortgages and, in some cases, Murphy even stole one homeowner's new mortgage loan money and used it to pay off another homeowner's previously unpaid mortgage.


  • In the three months, beginning in April of 2009 and ending in June of 2009, Murphy orchestrated the preparation and submission of a series of false mortgage documents in connection with five mortgage loan closings that resulted in her, through the Settle One bank account, receiving over one million dollars from two home mortgage lenders: Wells Fargo Bank and Live Well Financial.


  • In turn, Murphy then stole over fifty thousand dollars in loan money from each of five Westchester County homeowners, including her own elderly father, all for her own personal financial gain and to cover up her continuing criminal activity.

For the Westchester County DA press release, see Former North Castle Republican Chairwoman Indicted For Mortgage Fraud.

(1) According to the press release, a nineteen count indictment against Loronda Murphy charges her with:

  • one count of Residential Mortgage Fraud in the First Degree, a class “B” Felony,
  • one count of Residential Mortgage Fraud in the Second Degree, a class “C” Felony,
  • five counts of Grand Larceny in the Second Degree, class “C” Felonies,
  • ten counts of Falsifying Business Records in the First Degree, class “E” Felonies,
  • one count of Scheme to Defraud in the First Degree, a class “E” Felony,
  • one count of Conspiracy in the Fifth Degree, a class “A” Misdemeanor.

In addition, a three count indictment against Scott Forcino charges him with:

  • one count of Scheme to Defraud in the First Degree, a class “E” Felony,
  • one count of Conspiracy in the Fifth Degree, a class “A” Misdemeanor,
  • one count of Criminal Facilitation in the Fourth Degree, a class “A” Misdemeanor.

(2) To the extent attorney Forcino is found guilty of playing a role in this ripoff and fails to cough up restitution, The Lawyers’ Fund For Client Protection Of the State of New York may find itself being asked by the victims to step up and cover at least some of the losses they suffered. The Fund exists to protect legal consumers from dishonest conduct in the practice of law in the state, to preserve the integrity of the bar, to safeguard the good name of lawyers for their honesty in handling client money, and to promote public confidence in the administration of justice in the Empire State. It attempts to secure these goals by, among other things, reimbursing client money that is misused in the practice of law.

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

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

Questions Surrounding Applicability Of State Consumer Protection Law To Mortgage Servicer Activities To Be Decided By Ohio Supreme Court

From the Supreme Court of the State of Ohio:

MOTION AND PROCEDURAL RULING

Certified Question of State Law, United States District Court, Northern District of Ohio, Western Division, Case Nos. 3:10-cv-02537-JZ and 1:10-cv-02709-JZ. On review of preliminary memoranda pursuant to S.Ct.Prac.R. 18.6. The court will answer the following questions:

1. "Does the servicing of a borrower's residential mortgage loan constitute a `consumer transaction' as defined in the Ohio Consumer Sales Practices Act., R.C. 1345.01(A)?"

2. "Does the prosecution of a foreclosure action by a mortgage servicer constitute a `consumer transaction' as defined in the Ohio Consumer Sales Practices Act., R.C. 1345.01(A)?"

3. "Is an entity that services a residential mortgage loan, and prosecutes a foreclosure action, a `supplier . . . engaged in the business of effecting or soliciting consumer transactions' as defined in the Ohio Consumer Sales Practices Act., R.C. 1345.01(C)?'"

O'Donnell, J., dissents.

Source: 08/24/2011 Case Announcements, 2011-Ohio-4217 (State ex rel. DeWine v. GMAC Mtge. L.L.C.).

Indiana AG Tags Two More Loan Mod Outfits w/ Suits; Says Out-Of-State Operators Failed To Post Surety Bonds, Stiffed Homeowners On Promised Refunds

From the Office of the Indiana Attorney General:
  • Indiana Attorney General Greg Zoeller filed a lawsuit [] against two out-of-state credit services and foreclosure consultant companies that were operating illegally in Indiana.


  • Zoeller said Hoosiers in 13 Indiana counties - including Porter, Kosciusko and St. Joseph - signed contracts with Community One Law Center based in Florida and National Law Partners based in Florida and California. The lawsuit alleges both companies collected money up front and failed to provide refunds to customers after services were not provided.

***

  • Community One Law Center and National Law Partners are accused of violating Indiana's consumer protection laws by not registering $25,000 surety bonds with the Office of the Attorney General. Indiana law requires credit service organizations and foreclosure consultants to register bonds prior to performing any services, including collecting money up front. Zoeller said the bond acts as an insurance policy for consumers in the event a company fails to perform.


  • According the suit, these companies are separate entities, but both worked interchangeably on files and shared employees. Zoeller said deposit amounts illegally collected from Hoosiers range from $499 to $2,699.


  • This lawsuit alleges both organizations violated the Credit Services Organization Act, the Mortgage Rescue Protection Act, the Home Loan Practices Act and Deceptive Consumer Sales Act. Community One and National Law Partners also failed to obtain a certificate of authority from the Indiana Secretary of State's Office to conduct business in Indiana.

For the Indiana AG press release, see Zoeller files suit against out-of-state foreclosure consultants (Two for-profit companies illegally operating in Indiana failed to pay refunds).