Thursday, November 24, 2011

Fiduciary Illegally Doctored Land Docs To Hock 101 Acres Of Fla. Land Held In Trust To Pocket $17M, Say 52 Investor/Beneficiaries Now Facing F'closure

In Cape Coral, Florida, WINK News reports:
  • Investors in the Pine Island 101 Land Trust call for action after finding out their land was mortgaged and is in foreclosure. They say the land was worth millions of dollars and want to know why the trustee of the land, Cape Coral realtor Greg Eagle, mortgaged the land in the first place.


  • The Pine Island 101 Land trust is 101 acres of property near the German American Club on Pine Island Road in Cape Coral. It is owned by 52 investors who bought the property together in the 1990s for 3 million dollars.

***

  • Cape Coral Realtor Greg Eagle arranged the Pine Island 101 deal and is the trustee for the property. Investors told WINK NEWS Eagle's reputation for managing these land trusts made this property attractive.


  • Investors told us they were surprised to receive a letter in April of 2011 telling them the property had been mortgaged and was in foreclosure. In that letter to the 52 investors, Eagle apologizes for using the property as collateral to get a 17 million dollar loan for a project to bring a private homeland security training facility Florida. The bank who issued the loan, First National Bank of Pennsylvania, filed for foreclosure on the property after not receiving payment.


  • Dr. Charles Curtis, one of the investors in the property, said the property wasn't to be mortgaged. "We have a trustee for the property and it had been paid off. So we as a group owned it," said Curtis. The original trust obtained by Wink News shows 52 people with a percentage interest in the property.


  • However, Wink News has uncovered court documents challenging the foreclosure showing Eagle signed and had notorized a document saying he had full ownership of the property and permission to mortgage it. "It's a pretty serious case," said Attorney Michael Whitt, the attorney challenging the foreclosure on behalf of one of the investors, "I mean what we have uncovered the trail of documents and and doctored documents. It's a pretty scary thing what has happened."


  • Whitt says many of the beneficiaries or investors in the trust invested their life savings into the trust. He also says the property is still very valuable. The most recent appraisal done in December of 2008 valued the land at 22 million dollars.


  • CALL FOR ACTION contacted Greg Eagle. He declined our request to go on camera saying he is currently out of town. However, over the phone he told us as trustee he feels he did have the right to mortgage the property. He told WINK NEWS that he signed that affidavit to simplify the process of getting the loan.

For more, see Investors say land trust wrongfully mortgaged.

California High Court Passes On Hearing Attorney Gripe That State Bar Illegally Shut Down 'Mass Joinder' Lawsuit-Peddling Operation

The San Diego Union Tribune reports:
  • The California Supreme Court on Tuesday said it will not hear the case of a Calabasas-based attorney who says the State Bar of California illegally shut down his law practice in August in connection to mortgage fraud.


  • Authorities from the State Bar and the California Department of Justice sued Philip Kramer, other attorneys, and their marketers for allegedly defrauding thousands of U.S. homeowners who thought they were getting mortgage relief but instead lost money, and in some cases, their homes. Among the "non-attorney defendants" in the lawsuit is Clarence John Butt, a 44-year-old Oceanside man.


  • Kramer, whose firm was placed into receivership in August, had his petition refused on Tuesday. "This decision reinforces the State Bar’s determination to aggressively pursue attorneys who mean to take advantage of vulnerable consumers in foreclosure distress," said State Bar Assistant General Counsel Mark Torres-Gil, in a statement.


  • State Bar officials said Kramer’s practice was taken over for "abdicating his professional responsibilities with false advertising and by using non-lawyers to bring in clients, set fees, provide legal advice and evaluate cases."


  • The lawsuit against Kramer and others says the defendants mailed what looked like official materials to homeowners facing foreclosure in California and other states that said they could take part in a mass joinder lawsuit against mortgage lenders or loan servicers. Troubled borrowers paid $3,500 to $10,000 to take part in the lawsuits, State Bar officials said, but they ultimately received no mortgage relief.

Source: Calif. Supreme Court won't hear case of attorney tied to mortgage-fraud lawsuit.

Reports Of Bailiff Blockades, Proceedings Conducted In Locked Rooms Suggest Public Still Faces Obstacles When Seeking Access To F'closure Proceedings

In Tampa, Florida, the St. Petersburg Times reports:
  • Hillsborough County's chief judge is taking extra steps to allow the public into foreclosure proceedings after watchdog groups raised concerns about hearings taking place in locked rooms.


  • "There is no policy in place to exclude people," Judge Manuel Menendez said. "Anybody who wants to be in there can be in there."


  • The Florida Press Association, the First Amendment Foundation, the American Civil Liberties Union and the Florida Society of News Editors complained in a letter to Menendez last week that bailiffs blocked people twice from "hearing rooms" to witness foreclosure cases. The groups said the practice violates Florida law, and they welcomed Menendez's pledge to make the hearings more accessible.


  • "For a homeowner, a foreclosure case carries incredibly high stakes, and all parties deserve an open hearing," said Larry Schwartztol, an ACLU attorney in New York City.


  • Hearing rooms are smaller offices near judges' chambers. Because of a large backlog of foreclosure cases, the rooms are used for convenience when routine paperwork is done on cases, the judge said.


  • Court administrators have questioned bailiffs and other court workers and believe the incidents were isolated, Menendez said. He plans to schedule the hearings in courtrooms when space is available. Signs will also be posted directing people to call court officials if they are blocked from entering any public hearing. "It should not have happened," the judge said.

Source: Hillsborough County takes extra steps to keep court hearings open.

Wednesday, November 23, 2011

F'closure Mill A Subtle Surplus Snatcher? Suits Say Outfit Failed To Cough Up Overage From Forced Sales; Agrees To Fork Over Loot After Media Inquiry

In Brooklyn, New York, the New York Post reports:
  • What’s in this law firm’s wallet? New York state’s beleaguered, largest foreclosure law firm -- which [] announced plans to shut down in the face of a firestorm of legal action -- has allegedly failed to turn over about $130,000 owed to three people whose co-ops were foreclosed on, and could be sitting on millions of dollars of hundreds of other people's money without those people knowing, The Post has learned.


  • Steven J. Baum P.C.'s move to shutter came a week after it was made ineligible to get new referrals on any Fannie Mae or Freddie Mac mortgages -- essentially a death knell for the controversial firm. The two federally backed mortgage giants moved in the face of numerous complaints about questionable legal filings by Baum.


  • On Friday, a Brooklyn lawyer sued Baum claiming that the firm repeatedly ignored his attempts to obtain about $130,000 for three people whose co-ops were foreclosed on and later sold off in Baum-supervised auctions.


  • The lawyer, Andrew Tilem, said that given Baum's vast foreclosure business there could actually be “millions of dollars” more being withheld from hundreds of others. “I think this is the tip of the iceberg,” said Tilem, who filed the three suits in Brooklyn Supreme Court on behalf of the three former co-op owners Friday after his phone calls and letters to Baum went unanswered for months.


  • Tilem insisted that he already knows of about a dozen other people who are each owed between $2,000 and $100,000 by Baum’s firm, which handled the sales of their foreclosed co-ops on behalf of lenders. The money was left over after payments to the mortgage holder, maintenance fees and other costs. Baum already is under investigation by the New York Attorney General's Office for foreclosure work unrelated to the money allegedly being withheld from foreclosed co-op owners.


  • There’s nobody you can trust anymore. It’s disappointing,” said retiree Richard Adler, 69, one of Tilem’s clients who is suing. Richard Adler said he is owed about $80,000 from Baum for the February 2010 sale of his foreclosed Queens apartment. “I could use the money because I have a lot of expenses. My wife has liver cancer. You know how much that costs, all the medicines and everything?” he said.


  • Another Tilem client, guitar-store worker Eugene Glebas, 63, of Manhattan said he is suing Baum to reclaim the $45,000 he’s allegedly owed from the 2007 sale of his foreclosed co-op. “I don’t understand how somebody lets [Baum] hold my money,” he said.


  • Last month, the firm, without admitting wrongdoing, agreed to pay $2 million to the federal government to settle the Manhattan US Attorney’s investigation into its alleged misleading documentation in foreclosures. The US Justice Dept. put the firm under monitorship and supervision under the settlement.


  • In the past two weeks, federally backed lenders Fannie Mae and Freddie Mac also banned Baum’s firm from getting any new foreclosure or other legal business from banks that service their mortgages.


  • When notified Friday by The Post of Tilem’s claims, Baum within hours agreed to pay his clients, asked him not to file the suits and wrote that they “apologize for the delayed response.”


  • A company spokesman noted that the regulation that controls how co-ops are foreclosed “does not address how surplus monies — money left over after the sale of a unit — should be handled. “The firm places such surplus funds in its [trust account]. Upon appropriate demand, the funds are released,” the company said. “The firm’s operating procedures in these matters are proper.”


  • But when asked how much total money was in such accounts, the company replied,, “We cannot provide a total amount because that account is used for other things such as deposits on contracts and other matters.”


  • A spokesman for state Attorney General Eric Schneiderman — asked of the AG was aware of Baum potentially holding huge amounts of money from foreclosed co-ops — said, "While we cannot comment on ongoing investigations [Schneiderman] will continue to bring accountability to the firms responsible for the mortgage crisis, and put an end to the abusive foreclosure practices that have devastated families across the state."

For the story, see Foreclosure mill law firm Steven J. Baum P.C. shuts down.

Suit: Missouri Foreclosure Mill's Conflict Of Interest In Trustee Role Screwed Financially Strapped Homeowners Challenging Legitimacy Of Sale Process

In St. Louis, Missouri, Courthouse News Service reports:
  • The Millsap & Singer law firm, "one of Missouri's largest foreclosure firms," violates its role as a neutral trustee in foreclosures by serving as attorney-in-fact for lenders, a class action claims in City Court.


  • Lead plaintiff Nurdin Beganovic says that in Missouri no court proceeding is needed for a foreclosure, and the trustee is the only neutral party involved. The trustee must work for the benefit of both parties, but Beganovic said Millsap does not.(1) Millsap, which operates out of Chesterfield, Mo., "is one of Missouri's largest foreclosure firms," the complaint states.


  • Beganovic claims Millsap attorneys, who handle thousands of foreclosures, have or should have knowledge of the increasing evidence of widespread fraud and negligence by lenders. But instead of investigating lenders, Beganovic says, Millsap looks the other way due to the profits it receives from foreclosures and because the firm will get more money from unlawful detainer lawsuits on the same homes it foreclosed on.


  • "Millsap & Singer has an ongoing relationship with many of the parties who bid on the properties at the foreclosure sale including, in many cases, an ongoing attorney-client relationship," the complaint states.


  • "Millsap & Singer has appeared as an advocate against debtors who contest the validity of foreclosures while simultaneously and purportedly serving as the trustee regarding those exact same properties. "In addition, upon information and belief, Millsap has actual knowledge of complete files of debtors, the irregularities that exist in said files, the widespread problems with fraud and negligence by mortgage industry actors, evidence suggesting the non-validity of purported note transfers, the non-existence of notes, and the lack of right to initiate foreclosures it has handled."


  • The class consists of all people who have been foreclosed upon in Missouri in which Millsap served as the trustee while it was also the attorney in fact for the party who initiated the foreclosure.

For the story, see Class Blows Whistle on Foreclosure Firm.

For the lawsuit, see Beganovic v. Millsap & Singer, P.C.

(1) In support of the allegations that the law firm has violated its duties as a trustee, the plaintiff cites Citizens Bank v. West Quincy Auto Auction, 742 SW 2d 161 (Mo. 1987), which describes the nature of the trustee's obligations to both the debtor and the creditor:


  • In Goode v. Comfort, 39 Mo. 314, 325 (1866), the Court noted:Trustees are considered as agents of both parties—debtors and creditors—and their action in performing the duties of their trust should be conducted with the strongest impartiality and integrity. They are entrusted with the important function of transferring one man's property to another, and therefore both reason and justice will exact of them the most scrupulous fidelity.


  • Six years later the Court, speaking through the same author, Wagner, J., in Graham v. King, 50 Mo. 22 (1872), struck down as void a foreclosure sale under a deed of trust where the named trustee was not at the sale and the sale had been conducted by the trustee's son. In so doing, the Court laid down the rule which has been followed in Missouri throughout the years:

    The office and duties of a trustee are matters of personal confidence, and he must exercise a just and fair discretion in doing whatever is right for the best interests of the debtor. He must in person supervise and watch over the sale, and adjourn it if necessary, to prevent a sacrifice of the property and no one can do it in his stead unless empowered thereto in the instrument conferring the trust. A trustee cannot delegate the trust or power of sale to a third person, and a sale executed by such delegated
    agent is void. (Perry Trusts, Section 779 and notes) Id. at 24. (Emphasis added.)


  • In case after case this settled principle of law affecting title to real estate has been considered by the courts of this state. The decisions have recognized that the named trustee in a deed of trust is a fiduciary—of the debtor and the creditor; that the trustee is vested not only with the power to sell the property but must exercise his discretion in so doing for the benefit of both parties. The power of sale given to the trustee is personal and cannot be transferred or delegated.

Yahoo, Microsoft's Bing Come Under Scrutiny In Ongoing Criminal Probe Into Online Foreclosure Rescue, Loan Modification Rackets

The Associated Press reports:
  • A criminal investigation into mortgage swindlers has expanded beyond deceptive advertising on Google's Internet search engine to root out con artists who were luring their victims on Bing and Yahoo, too.


  • Monday's news of the widening probe confirmed that the Internet's three largest search engines had been turned into tools of prey for crooks looking to bilk homeowners scrambling to avoid foreclosure. The scams involved online ads making bogus promises of help people hold onto their homes under a government-backed program to modify mortgage payments.


  • After finding their victims using ads triggered by phrases such as "stop foreclosure," the swindlers extracted upfront fees or arranged to have the mortgage payments sent them without providing any assistance. The ruses had become increasingly common.

***

  • The identities of the alleged swindlers haven't been disclosed, partly because the criminal investigation is still open. A spokesman for agency steering the investigation declined to provide any further details Monday.

For more, see Criminal probe into online mortgage scams widens.

Tuesday, November 22, 2011

NY Foreclosure Mill To Shut Down; Loss Of Fannie, Freddie Business Over Dubious Practices Dooms Controversial Sweatshop

In Buffalo, New York, Buffalo Business First reports:
  • The embattled Steven J. Baum P.C. law firm is the closing its doors after a series of missteps that included mortgage industry giants Freddie Mac and Fannie Mae cutting off business with the Amherst-based firm.


  • Baum has filed a Worker Adjustment and Retraining Notification notice with several government agencies, saying it plans on shutting its doors. The firm has 67 full- and part-time employees at its Northpointe Parkway offices and another 22 full- and part-time workers at its Long Island office.


  • We will fulfill all of our obligations under WARN and during this process we will also fulfill our remaining work on behalf of our clients,” Baum said in a prepared release. "Disrupting the livelihoods of so many dedicated and hardworking people is extremely painful, but the loss of so much business left us no choice but to file these notices.”


  • The Baum agency focused on real estate foreclosure transactions. The firm has been under fire from federal agencies and the public, including members of the local “Occupy” movement, for its alleged business practices.


  • Last month, the Baum firm settled a federal claim relating to alleged mishandling mortgage filings on behalf of his clients. Baum agreed that the firm would pay $2 million in fines and promised to change business practices at the firm.


  • The Baum agency was also working under a cloud of suspicion concerning allegedly misleading pleadings and affidavits, some of which led to people having their homes foreclosed under what was deemed unfair circumstances.


  • The New York Times also ran a photo of Baum employees dressed and apparently mocking homeless people during a company-sponsored Halloween party.(1) The photo attracted national attention, drawing criticism.


  • But, the largest blow came on Nov. 10 when Freddie Mac and Fannie Mae cut off all business with the Baum firm because of its business practices.

Source: Baum law firm to close.

(1) See Joe Nocera: What the Costumes Reveal (October 29, 2011).

Rumble Over Crappy Home Mortgage Loan Buyback Demands Escalates As Bank Of America Tells Fannie To Take A Hike!

Bloomberg reports:
  • Bank of America Corp. told Fannie Mae it refuses to cooperate with the U.S. mortgage firm’s new stance on loan buybacks, setting the lender up for a potential surge in claims and penalties.


  • The bank is disputing Fannie Mae’s demand that lenders repurchase mortgages or cover any losses themselves if an insurer drops coverage, Bank of America said this month in a regulatory filing. The lender, ranked second by assets among U.S. banks, said it “does not intend to repurchase loans” under what it deems to be new rules, and the refusal may trigger penalties or other sanctions.


  • At stake is Bank of America’s ability to contain costs from faulty mortgages, which have reached about $40 billion for refunds, lawsuits and foreclosures. The company set aside $278 million for loan buybacks in the third quarter, the least since Chief Executive Officer Brian T. Moynihan took over almost two years ago. Those expenses may rebound if Fannie Mae’s rules stand, the bank said.


  • Fannie Mae didn’t enforce this policy before because “it was a different economic time,” said David Felt, a former deputy general counsel at the Federal Housing Finance Agency, the regulator for Fannie Mae. Defaults were fewer and the firm didn’t want to harm relations with lenders by being too picky, he said.


  • They’d overlook the small things. Well, they’re no longer small things, and they’re no longer the old Fannie Mae.”

***

  • According to Fannie Mae, lenders were always contractually required to ensure that mortgage insurance was maintained. A guide dated June 30 requires lenders to alert the Washington- based mortgage financing firm of coverage withdrawals within a month of the event and gives them 90 days to appeal a repurchase demand. After June 2012, banks have just one month for appeals.


  • Our contracts are clear that when a mortgage insurance company rescinds the required mortgage insurance, the loan is subject to repurchase by the lender,” said Amy Bonitatibus, a spokeswoman for Fannie Mae.

For more, see BofA Clash With Fannie Mae Escalates Over Loan Buyback Stance.

Unwitting Denver Couple Left Holding The Bag On Recent REO Buy As Foreclosing Lender Unloads Meth-Infected Time Bomb On Young Family

In Denver, Colorado, KMGH-TV Channel 7 reports:
  • Josh and Areli LeFevre have spent tens of thousands of dollars renovating a house in the south side of Denver as a new home for their growing family. But they didn’t know the previous tenants cooked methamphetamine in the house until a neighbor brought it up. “We were just outside talking about what we were going to do to the house, and he came up to us and just told us it was a meth lab,” Areli LeFevre said.


  • The couple called their Realtor who told them the house had been cleaned up and had a certificate of the cleanup filed with the Denver Department of Environmental Health. But CALL7 Investigators retested the house, finding it still tested positive for the drugs. The attic was 10 times over what the state regulations say are acceptable.


  • The LeFevres are at a loss for what to do. "We’re just concerned about it because we have a baby,” Areli said. "We live here. I’m trying to get pregnant again so we’re just mad about it."


  • An expert, who testified about meth contamination and clean up at the General Assembly when lawmakers passed the regulations in 2006, said the state certification process does not ensure a house is safe to inhabit. The owner of a meth house must have it cleaned and then that company certifies that the property is safe for people to inhabit. A certificate of the cleanup is filed with the county. But the county never verifies the house was properly cleaned up because the legislature never provided funding to check the houses. And the seller doesn’t have to notify a buyer that there was a meth lab in the house because it is certified as cleaned up.


  • The LeFevres’ house wasn’t the only one meth testing consultant Caoimhín Connell found was certified cleaned but still had high levels of meth residue.

***

  • The LeFevres’ house was a foreclosure they bought from a bank, and Connell said the banks often have an incentive to get the affidavit and sell the house whether it’s safe or not.


  • "My experience is that if (it's) a foreclosure and banks want to move that along, they’re hoping to get someone to issue a letter and say it’s OK even when it’s not OK," Connell said. (Sellers) "hold up that affidavit and say we’re off the hook, we did our best and (the affidavit) may never be seen again."(1)

For more, see Meth May Remain In Homes After Certified Cleaning (CALL7 Investigators Find Meth In Home Despite Certificate With City Saying It's Clean).

(1) For other stories relating to the unwitting purchase of homes infected with methamphetamine residue, see:

Monday, November 21, 2011

Rent-To-Own Ripoffs, Short Sale 'Flopping', Rent Skimming, Deceptive Trade Practices Among Charges Flying At Suspected Foreclosure Rescue Racket

In West Palm Beach, Florida, The Palm Beach Post reports:
  • The Nationwide Investment Firm peddles foreclosure rescue to South Florida's most desperate homeowners, offering to beat the banks while maintaining dignity and peace of mind.


  • Amid the wreckage of this once vibrant real estate market, the 3-year-old Boca Raton company persuades struggling borrowers to quit claim-deed their properties to Nationwide. In return, the for-profit firm promises to streamline a short sale and negotiate a debt-free ending for the homeowner.


  • Instead, homeowners say in at least five lawsuits filed this year in Palm Beach and Broward counties, they've been pulled into a game of real estate musical chairs in a short sale ruse that has grown to involve dozens of homes in Palm Beach, Broward and St. Lucie counties. The lawsuits describe variations of alleged real estate wrongdoing, but mostly revolve around one business model.


  • While Nationwide negotiates a short sale, often with the intent to buy the property itself at the cheapest possible price, the homeowner is shuffled into another Nationwide property where he or she puts 20 percent down to enter into a rent-to-own style contract.

***

  • [A]ttorneys who filed the suits against the firm and its president, Guilfort Dieuvil, say the company, in truth, is violating arm's-length short sale rules meant to prevent the type of house flipping partly responsible for the economy's epic failure.

    Affidavit aims to prevent abuses


  • Most major lenders require an " arm's-length" affidavit be signed at closing. While the affidavit may differ by lender or servicer, it must generally include language that says the short sale transaction has been negotiated by unrelated parties, who do not share business or familial relationships, and that there have been no prior agreements for the owner to remain in the property as a tenant or to regain property at any time after the sale.


  • According to national mortgage backer Freddie Mac, the short sale addendum is to prevent "common schemes where the borrowers sell their property to a prearranged straw buyer or family member who allows them to stay in the home after the short sale, with a greatly reduced mortgage obligation."


  • Two of the recently filed lawsuits include charges of "flopping" ­­- defined as when the company negotiating the short sale tells the bank it is getting less for the property than what the buyer is actually paying, thus the company pockets the difference.


  • Other specific charges in the lawsuits include violations of Florida's Deceptive and Unfair Trade Practices Act, statutory disclosure requirements that apply when buyers assume fee obligations to homeowners associations, and the state's equity skimming statute that is supposed to prevent people from applying rents from foreclosed dwellings for the person's own use, according to one lawsuit.

For more, see Investment firm offers salvation to distressed homeowners, but some say they were misled.

Florida Lawyer Cops Plea To Ripping Off At Least $2.4M In Client Cash From Trust Account

From the Office of the U.S. Attorney (Fort Myers, Florida):
  • United States Attorney Robert E. O'Neill announces that Joseph A. Troiano, (63, Fort Myers) pleaded guilty last week to six counts of wire fraud and one count of mail fraud. Troiano faces a maximum penalty of twenty years in federal prison for each count of wire and mail fraud.


  • According to the plea agreement, Joseph A. Troiano was a licensed lawyer in Florida. From in or about late 2005, through in or about January of 2010, Troiano, without his client's authority, or consent, used funds belonging to his clients and their beneficiaries for his own purposes, including investing money in various real estate projects. In all, Troiano misappropriated at least $2.4 million for his own use.(1)

For the U.S. Attorney press release, see Fort Myers Attorney Pleads Guilty To Fraud.

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

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

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

NYC Cops Pinch Flipper For Pocketing $200K Selling Same Home Twice Before Deal Documents Were Recorded

In Staten Island, New York, the New York Post reports:
  • A scam artist twice sold the same property in Woodrow, and profited $200,000 from the sales before the transactions were recorded by the County Clerk’s Office, authorities said.


  • Dariusz Mruczynski, 44, first sold the home at 263 Edgegrove Ave. on Dec. 16 before flipping it on Dec. 30, according to court records. He pulled off the scheme by fraudulently obtaining two mortgages, cops said. He failed to pay $29,527 in taxes for 2008 and 2009, records show. He was busted Tuesday for grand larceny and tax fraud, said a spokesman for DA Dan Donovan.

Source: NYPD Blotter (Staten Island).

Attempt To Peddle Recently Tax-Foreclosed Home Squleched By Cops; Unlicensed Sales Agent Says She Had No Idea Of Change In Property's Ownership Status

In St. Paul, Minnesota, the Pioneer Press reports:
  • The sign said the home at 806 Edmund Ave. in St. Paul was for sale and the buyer could get it "cheap" - at a 50 percent discount. Cash only.


  • But there's a catch: The seller doesn't own the house. The state of Minnesota does. The state took ownership of the home Aug. 2 after the owner failed to pay taxes, said Kris Kujala, a supervisor for tax-forfeited land in Ramsey County, which manages the state-owned property.


  • County employees were tipped off Nov. 1 when they drove by the home and saw the for-sale sign. "We just came to a screeching halt and thought, 'What is going on here?' " Kujala said.


  • City police were called, and a meeting was set up with the seller, she said. The woman, who said she was working on behalf of the owner, apparently didn't know the state had acquired the home.

For more, see St. Paul house's sale price a steal - but seller didn't own it.

Sunday, November 20, 2011

Shameless Head Of Embattled NY F'closure Mill Sweatshop Acknowledges Being On Road To Ruin; Responds To Recent Revelations By 'Shooting The Messenger'

Author and columnist Joe Nocera writes in The New York Times:
  • Mr. Nocera — You have destroyed everything and everyone related to Steven J. Baum PC. It took 40 years to build this firm and three weeks to tear down.”


  • Thus began a lengthy e-mail that I received, on Thursday evening, from Steven J. Baum, the owner of his eponymous law firm, the largest “foreclosure mill” in New York State. Foreclosure mills, of course, are firms that represent banks and servicers trying to foreclose on the millions of homeowners who have defaulted since the housing bubble burst.


  • Baum was referring to a column I had written in late October after a former employee had sent me some photographs of the firm’s 2010 Halloween party.(1) They showed employees wearing costumes that mocked people who had lost their homes; the ex-employee who forwarded the pictures had described them as “appalling.”


  • A lot of people agreed. Representative Elijah Cummings, a Maryland Democrat, wrote the firm a letter demanding documents and records. In New York, the attorney general’s office ratcheted up its investigation of the firm; I heard that investigators were looking for more photographs of Baum Halloween parties.


  • Occupy Buffalo protesters picketed Baum’s offices in nearby Amherst, N.Y. And, not least, Fannie Mae and Freddie Mac, which own or guarantee half the country’s mortgages, issued new rules forbidding servicers of their mortgages from using Steven J. Baum.


  • None of which was why I had contacted Baum’s press spokesman earlier this week. What had caught my eye was an article in The Buffalo News headlined, “Foreclosure law firm is battling rule on accuracy.”


  • The article described a court hearing a few weeks ago during which the Baum firm asked the judge to reject — as unconstitutional! — a year-old rule that foreclosure lawyers must attest to the validity of the mortgage documents held by their bank and servicer clients.


  • You would think that any lawyer worth his salt would be happy to affirm that his client was using valid documents to toss someone out of a house. But not, apparently, Steven J. Baum.


  • In fact, this case matters a lot more than a creepy Halloween party. In October 2010, reacting to the robo-signing scandal, the judge overseeing the New York State court system had issued an order commanding that lawyers representing banks and servicers sign a document “affirming” that their clients had reviewed the accuracy of the documents and records — and that the documents were, indeed, accurate.

***

  • There is blood on your hands for this one, Joe,” he wrote at the end of that second e-mail. “I will never, ever forgive you for this.”


  • I think that’s what they call shooting the messenger.

For the column, see Baum Weighs In After Uproar.

(1) Joe Nocera: What the Costumes Reveal (October 29, 2011).

Google Gets Hammered By Negative Publicity For Role In Loan Modification, Other Internet Scams As Feds Shut Down Dozens Of Rackets

The Associated Press reports:
  • The federal government has shut down dozens of Internet scam artists who had been paying Google to run ads making bogus promises to help desperate homeowners scrambling to avoid foreclosures.


  • The crackdown announced Wednesday renews questions about the role that Google’s massive advertising network plays in enabling online misconduct. It may also increase the pressure on the company to be more vigilant about screening the marketing pitches that appear alongside its Internet search results and other Web content.


  • The criminal investigation into alleged mortgage swindlers comes three months after Google agreed to pay $500 million to avoid prosecution in Rhode Island for profiting from online ads from Canadian pharmacies that illegally sold drugs in the U.S.


  • A spokesman for the U.S. Treasury Department division overseeing the probe into online mortgage scams declined to comment on its scope other to say it’s still ongoing. Google Inc. also declined to comment Wednesday.


  • No company wants to be tainted by a criminal investigation, but the prospect is even more nettlesome for Google because it has embraced “don’t be evil” as its corporate motto. That commitment may make it difficult for Google to fend off a call by Consumer Watchdog to donate the revenue from fraudulent mortgage ads to legitimate organizations that help people ease their credit problems. Consumer Watchdog is an activist group that released a report in February asserting that Google was profiting from ads bought by mortgage swindlers.(1)


  • Google should never have published these ads, but its executives turned a blind eye to these fraudsters for far too long because of the substantial revenue such advertising generates,” said Consumer Watchdog’s John M. Simpson, a frequent critic of the company.


  • To fight future abuse, Google has suspended its business ties with more than 500 advertiser and agencies connected to the alleged scams, according to the U.S. Treasury Department’s Office of the Special Inspector General for the Troubled Asset Relief Program.


  • The evidence collected in the current investigation led to the government’s closure of 85 alleged mortgage scams. The identities of the businesses and people involved in the scams weren’t disclosed Wednesday.


  • The con artists are accused of duping people into believing they could help lower their home loan payments under a government-backed mortgage modification program created to reduce the foreclosures that have made it more difficult for the slumping real estate market to recover. The alleged rip-offs typically relied on collecting upfront fees or getting victims to transfer their monthly mortgage payments to the scam artists, according to the Office of the Special Inspector General for the Troubled Asset Relief Program. In some cases, the swindlers passed themselves off as being affiliated with the government.


  • Google’s name popped up because the scam artists relied on the company’s vast advertising network to bait their victims. About two out of every three Internet search requests are made through Google, making its ad network a prime outlet for finding people hoping to save their homes, according to Christy Romero, deputy special Inspector General for the Troubled Asset Relief Program.


  • The first place many homeowners turn for help in lowering their mortgage is the Internet through online search engines, and that’s precisely where they are being taken advantage of and targeted,” she said.

For the story, see Government regulators shut down alleged mortgage swindlers who baited victims with Google ads.

(1) See Consumer Watchdog: Liars and Loans: How Deceptive Advertisers Use Google.

See also The Wall Street Journal: Mortgage Fraud Underscores Online Ad Challenge for Consumers:

  • Last February the group produced a report that said that Google was profiting from deceptive advertising to homeowners. The report, entitled “Liars and Loans: How Deceptive Advertisers Use Google,” counted 20 foreclosure rescue or mortgage modification companies advertising on Google search results pages between September 10 and September 30, 2010. “Google’s practice
 of
 selling
 prime
 advertising
 space
 to
 dubious
loan‐modification 
marketers 
is 
extensive,” said the report.

California AG Hits Fannie, Freddie w/ Subpoenas; Demands Information About Conduct Towards Renters In F'closed Homes, Involvement With Toxic Mortgages

In Los Angeles, California, the Los Angeles Times reports:
  • Investigators with the California attorney general's office have subpoenaed information from mortgage titans Fannie Mae and Freddie Mac as part of a wide-ranging inquiry into lending and foreclosure practices in the state.


  • The subpoenas ask the government-controlled finance companies to answer a series of questions about their activities in California, including their roles as landlords who own thousands of foreclosed properties.


  • The attorney general's office is also seeking details of Fannie and Freddie's mortgage-servicing and home-repossession practices, according to a person familiar with the matter.


  • In addition, investigators want to learn more about the companies' purchases and sponsorship of securities holding "toxic mortgages" in the Golden State, said the person, who was not authorized to speak on the matter and requested anonymity.

For more, see California attorney general's office subpoenas Fannie, Freddie (Information is sought on the mortgage giants' roles as landlords who own thousands of foreclosed properties in California. Also sought are details of their mortgage-servicing and home-repossession practices, a source says).

Notary Nabbed In Nevada Criminal Robosigning Probe Cops Guilty Plea

From the Office of the Nevada Attorney General:
  • The Office of the Nevada Attorney General announced [] that Tracy Lawrence, 43, a local notary, has pled guilty to one count of notarizing the signature of an individual not in her presence, a gross misdemeanor in violation of NRS 240.155.


  • Notary fraud carries a potential jail sentence of one year and/or a fine of up to $2,000. "The case against Lawrence was based on an investigation by the Attorney General’s mortgage fraud task force which revealed that between 2005 and 2008, tens of thousands of fraudulent documents were filed with the Clark County Recorder’s office”, said Chief Deputy Attorney General John Kelleher. Lawrence pled guilty on November 14, 2011.

For the Nevada AG press release, see Office Of The Attorney General Announces Notary In Robo-Signing Scheme Pleads Guilty.

For the criminal charges, see State of Nevada v. Lawrence.

Suit: Credit Union Snatched Borrower's Auto In Response To Default On Home Mtg Loan Obtained From Same Lender, Despite Car Note Payments Being Current

In St. Petersburg, Florida, ABC Action News reports:
  • A Tampa Bay teacher is filing a lawsuit against the Suncoast Schools Federal Credit after they repossessed her car, despite her loan payments being up to date. In a statement released Friday, Attorney Charles Gallagher explains that the bank repossessed Angela DiNapoli’s car in response to her defaulting on a separate mortgage loan, also financed through the same bank.


  • DiNapoli discovered that her car was missing after she had returned home from a vacation. She called police thinking that her car had been stolen, but found out that the bank had taken the car.


  • Suncoast Schools Federal Credit Union had not even filed a foreclosure lawsuit with regard to her mortgage or sent any demand for payment on her car loan when it took her car, according to the press release. “This is an new tactic for lenders," DiNapoli’s attorney stated in the release.


  • "There is absolutely no legal justification for taking her car, when she was up to date on her payments." The release goes on to say that after the repossession, Suncoast later filed a foreclosure lawsuit and DiNapoli counter-sued Suncoast for the wrongful repossession and other bank misconduct.

Source: Teacher suing Suncoast Schools Federal Credit Union for wrongful repossession of car.

Saturday, November 19, 2011

Florida Cop Charged With Homestead Exemption Fraud Desperate To Save Career, Pension; Looks For Plea Deal To Dodge Felony Conviction

In Key West, Florida, the Florida Keys Keynoter reports:
  • A suspended Florida Department of Law Enforcement agent accused of homestead-exemption fraud is scheduled for court [...], with a pretrial conference set in anticipation of a Nov. 14 trial.


  • However, Vince Weiner, 47, won't go to trial that day, said Assistant Monroe County State Attorney Mark Wilson. That's because plea talks are ongoing, and Weiner hopes to keep a felony conviction off his record so he can retain his state police certification and not lose his state retirement (convicted government employees forfeit their retirements).


  • On Aug. 17, the FDLE -- his employer -- arrested the Key West-based Weiner on charges of felony grand theft and misdemeanor homestead-exemption fraud. He was immediately put on administrative leave.


  • Wilson said then that Weiner bought a Big Pine Key house in 2005, then got assigned to Fort Myers in 2006. While living in Fort Myers, Weiner rented his Keys house out but claimed the homestead exemption, Wilson said.

For more, see Suspended FDLE agent seeks plea deal.

S. Fla. Mayor Quits Post, Gets Free Pass Out Of Criminal Homestead Exemption Fraud Charges As State Attorney Punts On Moving Forward With Prosecution

In Miami, Florida, The Miami Herald reports:
  • Miami-Dade prosecutors opted not to charge North Bay Village’s former mayor, Corina Esquijarosa, with shirking on property taxes, and activists the tiny town say they are outraged.


  • But prosecutors rarely ever bring “homestead exemption” fraud cases against citizens, instead allowing the county’s property appraiser’s office to go after them with the ultimate goal of repaying the money owed to government coffers.


  • It would be an inconsistent application of our practice in similar cases to treat Ms. Esquijarosa different from other private citizens in similar circumstances,” Assistant State Attorney Tim VanderGiesen wrote in a final memo released Tuesday.(1)


  • Esquijarosa resigned Friday, avoiding prosecution for the homestead exemption fraud, an issue that dogged from her since the start of her troubled one-year tenure as the city’s mayor. A recall election, spurred by the very activists who uncovered the homestead exemption issue, had been imminent.


  • I understand a lot of people do this. I know it’s flagrant,” activist Al Blake, leader of the recall effort, said about homestead exemption fraud. “We understand that. But she’s an elected official and she’s got to be held to a higher standard.”


  • Florida property owners get a $50,000 tax break if they live in the home. More than 400,000 properties in Miami-Dade receive homestead exemptions, Miami-Dade Deputy Property Appraiser Lazaro Solis said Tuesday. The office employs seven full-time investigators and was recently loaned four Miami-Dade economic crimes detectives to ferret out fraud.


  • Giving false information in applying for the exemption is a misdemeanor and most cases — in which criminal intent is difficult to prove, and dollar amounts are not staggering — are handled administratively.


  • With Miami-Dade County facing a massive budget shortfall, homestead exemption cheating has become a hot-button issue in recent months. Earlier this fall, Miami-Dade’s police union — facing $74 million in cuts during contract negotiations — complained that the county wasn’t collecting on “rampant” homestead exemption cheats.


  • Miami-Dade Property Appraiser Pedro J. Garcia shot back, saying enforcement efforts has been stepped up.

***

  • According to VanderGiesen’s memo, prosecutors also took into consideration that the fraud “did not relate to her role as a public official” and occurred “prior to her becoming the mayor of North Bay Village.”


  • The county’s property appraiser’s office has filed a lein [sic] on the more than $3,000 she owed in back taxes and penalties, while the county’s ethics commission fined her $500 for not disclosing her rental income and mortgage.


  • The primary purpose of a formal criminal case would be to get her to pay back the money she owes,” VanderGiesen wrote. “Such a resolution is already being accomplished by the Miami-Dade Property Appraiser without the expense of additional criminal litigation.”

For the story, see North Bay Village mayor avoids charges in crime rarely charged in Miami-Dade (Prosecutors say homestead exemption fraud is usually left to the county property appraiser’s office to handle).

Go here and go here for Miami-Dade Inspector General press releases for two examples where alleged homestead exemption fraudsters were criminally charged with grand theft in Miami-Dade County, Florida.

Ohio AG Lawsuit: Rogue Contractor Violated State Law By Stiffing Homeowners Out Of $20K+ In Paving Work

From the Office of the Ohio Attorney General:
  • Ohio Attorney General Mike DeWine announced that his office has filed a lawsuit against Cleveland-based Family Paving & Cement LLC for multiple violations of consumer law, including failure to deliver and shoddy work.


  • Consumers paid this company thousands of dollars for driveway paving or general home improvement work that either was never delivered or was done in a shoddy manner,” Attorney General DeWine said. “Previous attempts to resolve the issues have failed, leaving us no choice but to file this lawsuit.”

***

  • The Ohio Attorney General’s Office has received four consumer complaints against the business since August 2009. In the complaints, consumers report total losses of more than $20,000. One consumer said she paid $16,400 for windows and siding work that was never completed.


  • The Attorney General’s lawsuit charges Family Paving & Cement and its owner with multiple violations of Ohio’s Consumer Sales Practices Act, including failing to deliver, violating the Deposit Rule, performing shoddy work, failing to secure permits, and failing to register as a contractor. The lawsuit seeks injunctive relief, civil penalties, and restitution for consumers.

For the Ohio AG press release, see Attorney General DeWine Files Lawsuit Against Cleveland-Area Paving Company.

For the lawsuit, see State of Ohio v. Family Paving & Cement LLC, et al.

Stiffed Subs' Mechanics Liens, Threat Of F'closure Leave Recent Homebuyer In Pickle Over New Pool; Contractor Claims Bad Economy Left Him Sucking Wind

In Middleburg, Florida, First Coast News reports:
  • Elizabeth Theiss likes her new swimming pool, but she said she can't enjoy it if she has to pay for it twice: She recently received two notice of liens from two separate companies. "I love the pool, it is just the liens," said Theiss.


  • Most recently, a cement company sent Theiss a letter stating that unless the outstanding balance of $2,100 is paid in five days, under Florida's construction lien law, the company will file for foreclosure of her home.


  • "I don't want to lose this house. I just bought it. I don't want to lose it," she said. Theiss paid the pool contractor, Majestic Pools, $2,400. The pool company has a good reputation, helping other consumers and doing quality work. It has an 'A' rating with the Better Business Bureau.


  • Knowing that, Theiss said she was surprised to learn that Majestic Pools failed to pay its cement company. "I checked them out," she said. [...] . When reached by phone, [Majestic Pools'] owner Joe Fitzsimmons said his business is a victim of the economy. "This was not in my plans, I had no plans on sticking her," said Fitzsimmons. "I'm in a bind and can't do anything until I get some work," he said. "I am trying to sell some of my equipment."


  • The cement company told Theiss she has three options:

    Get the company to pay the balance,
    Pay it herself,
    Seek legal advice.


  • Theiss said she would rather pay it than lose her home to a foreclosure lawsuit. A consumer tip: Always get a waiver of lien from any construction related work on your home, before making the last payment, it gives you some protection against the state's construction lien.

Source: Homeowner Afraid she may Lose Home to Foreclosure Lien - all Because of a Pool.

Stiffed Sub To Eat $6K Mechanics' Lien On Adult Care Home After Contractor Files B'kptcy; 6 Elderly Tenants Dodge Displacement From Possible F'closure

In Portland, Michigan, the Lansing State Journal reports:
  • Allen Haskin, owner of HSV Redi-Mix Inc., said Tuesday he'll drop the construction lien from Joe and Lisa Shaltry's adult foster care home in Portland. That's good news for the Shaltrys; not so good for Haskin, who expects to eat the cost of the $6,000 worth of concrete used on the Shaltrys' new driveway.


  • "I have nothing against the Shaltrys," Haskin said. "We're just trying to survive. I guess I'll get (shortchanged) on the deal."


  • [T]he Shaltrys, who run Walnut Grove Assisted Living, hired Leik Foundation of Portland to replace the driveway at the home. They paid Leik $6,000 upfront and the remaining $6,000 when the job was finished.


  • As far as the Shaltrys were concerned, it was a done deal. But then they learned Leik Foundation, on its way to bankruptcy, failed to pay HSV Redi-Mix for the concrete. Exercising an option provided by Michigan law (and not knowing if the Shaltrys had paid Leik) HSV put a lien on the Shaltrys property.

***

  • The Shaltrys, who provide housing for six elderly people, were afraid of foreclosure. They were relieved to hear of Haskin's decision [].

For more, see Adult care home will be free of construction lien.

Friday, November 18, 2011

Nevada AG Scores Indictment Of Robosigner Duo; Charges Allege Massive Fraudulent Foreclosure Document Manufacturing Racket

From the Office of the Nevada Attorney General:
  • The Office of the Nevada Attorney General announced [] that the Clark County grand jury has returned a 606 count indictment against two title officers, Gary Trafford and Gerri Sheppard, who directed and supervised a robo-signing scheme which resulted in the filing of tens of thousands of fraudulent documents with the Clark County Recorder’s Office between 2005 and 2008.


  • According to the indictment, defendant Gary Trafford, a California resident, is charged with 102 counts of offering false instruments for recording (category C felony); false certification on certain instruments (category D felony); and notarization of the signature of a person not in the presence of a notary public (a gross misdemeanor).


  • The indictment charges defendant Gerri Sheppard, also a California resident, with 100 counts of offering false instruments for recording (category C felony); false certification on certain instruments (category D felony); and notarization of the signature of a person not in the presence of a notary public (a gross misdemeanor).


  • The grand jury found probable cause that there was a robo-signing scheme which resulted in the filing of tens of thousands of fraudulent documents with the Clark County Recorder’s Office between 2005 and 2008,” said Chief Deputy Attorney General John Kelleher.


  • The indictment alleges that both defendants directed the fraudulent notarization and filing of documents which were used to initiate foreclosure on local homeowners. The State alleges that these documents, referred to as Notices of Default, or “NODs”, were prepared locally.


  • The State alleges that the defendants directed employees under their supervision, to forge their names on foreclosure documents, then notarize the signatures they just forged, thereby fraudulently attesting that the defendants actually signed the documents, which was untrue and in violation of State law. The defendants then allegedly directed the employees under their supervision to file the fraudulent documents with the Clark County Recorder’s office, to be used to start foreclosures on homes throughout the County.


  • The indictment alleges that these crimes were done in secret in order to avoid detection. The fraudulent NODs were allegedly forged locally to allow them to be filed at the Clark County Recorder’s office on the same day they were prepared. District Court Judge Jennifer Togliatti has set bail in the amount of $500,000 for Sheppard and $500,000 for Trafford.

For the Nevada AG press release, see Office of the Attorney General Announces Indictment In Massive Clark County Robo-Signing Scheme (Defendants to be Held Criminally Accountable for Filing Tens of Thousands of Fraudulent Foreclosure Documents).

For the criminal indictment, see State of Nevada v. Trafford. et ano. (440 pages).

See LPS Responds to Nevada Attorney General Announcement for Lender Processing Services' response to their two employees being pinched for their alleged involvement in the manufacturing of fraudulent foreclosure documents.

Jacksonville-Area Clerk Of Court Joins Others In Tagging MERS w/ Lawsuit Over Alleged Mortgage Recording Fee-Dodging Racket; Action Seeks Class Status

In Jacksonville, Florida, the Jacksonville Business Journal reports:
  • Duval County Clerk of the Court Jim Fuller has filed a class action suit against the mortgage servicing company Merscorp Inc. and its wholly owned subsidiary Mortgage Electronic Registration Systems Inc.


  • The suit, filed in the Fourth Judicial Circuit in Jacksonville on behalf of all Florida Clerks of Court, claims that the defendants created a private mortgage recording system called MERS to circumvent state law that requires mortgages to be recorded publicly by the clerks of the court.


  • MERS is listed as the ‘mortgagee’ on millions of loans throughout the nation,” the suit states. “However, MERS does not originate any loans, lend any money, or own or hold any promissory notes. MERS instead acts merely as a straw man — a placeholder in the public records — allowing the true, beneficial owner of a loan to remain anonymous and to be changed at will without notice to the public and without recording an assignment in the official records or paying the fees.”


  • The eight-count suit, filed Oct. 31, claims civil conspiracy, unjust enrichment, fraudulent misrepresentation and negligent misrepresentation.

For the story, see Duval County Clerk of Court sues mortgage servicer.

MERS Scores Michigan Win As State High Court Reverses Earlier Unfavorable Appeals Court Ruling On Bankster's Right To Foreclose

In Lansing, Michigan, WILX-TV Channel 10 reports:
  • The Michigan Supreme Court ruled 4-3 in favor of Mortgage Electronic Registration Systems (MERS) Wednesday, allowing thousands of previously halted foreclosures around the state to resume.


  • The decision overturns a lower court ruling from April that had blocked MERS' foreclosures because the company doesn't own or have any interest in the homeowners' debt. MERS isn't a bank or lending institution itself, it acts as a middleman to help speed up transfer of properties.


  • Ingham Co. register of deeds Curtis Hertel Jr. says MERS was responsible for more than a quarter of the county's foreclosures during the last 4 years. "The Supreme Court’s decision affirms MERS' business model and will allow the Michigan real estate industry to get back to business as usual," said Bill Beckmann, MERS’ President and CEO in a statement sent to WILX. "This will allow homeowners to resolve title issues and buyers to move forward with the purchase of foreclosed properties, which is good for neighborhood stability.”


  • In Michigan, companies like MERS don't need a court to foreclose. They can simply post an ad in the paper and post a notice on the door once a homeowner is in default in a process known as foreclosure-by-advertisement.


  • Hertel Jr. says the extra delays the original court ruling added had helped homeowners fighting foreclosure have a fighting chance of staying in their homes. "It gave time for people to work out reasonable modifications and it gave time for people to recover financially," said Hertel Jr., who strongly disagrees with Wednesday's ruling. "This decision takes that time away."

Source: Mi. Supreme Court OK's MERS Foreclosures (The ruling reverses a lower court ruling that halted thousands of foreclosures in the state).

For the ruling, see Residential Funding v Saurman, No. 143178-9 (Mich. November 16, 2011).

Fannie Joins Freddie In Bouncing Baum From Future Foreclosures; Firm That Mocked Homeowners At Halloween Party On Embarrassing Road To Unraveling

In Buffalo, New York, The Buffalo News reports:
  • Steven J. Baum PC has suffered another blow, as Fannie Mae joined Freddie Mac in barring the Amherst law firm from getting any new foreclosure or other legal business from lenders servicing mortgages for the giant federally backed company. According to an updated version of Fannie Mae's "Retained Attorney List," dated Nov. 15, Baum's law firm is "not eligible for new referrals."

***

  • The action by Washington, D.C.-based Fannie Mae, the nation's dominant player in the mortgage industry with a $2.8 trillion book of business, follows on the heels of a similar step late last week by Freddie Mac, the No. 2 player with $2.1 trillion.


  • The impact of being banned by the federal mortgage giants can be devastating for a foreclosure firm. The last time a law firm such as Baum was banned from both Fannie Mae and Freddie Mac involved Florida lawyer David J. Stern. Other major servicers quickly followed suit in withdrawing their business from Stern. That firm is now virtually out of business, with just a skeleton crew wrapping up a few matters and handling lawsuits against its former lender clients.

***

  • "It is not surprising to see Fannie Mae suspend Steven Baum's firm after the announcement from Freddie Mac last week," said Rebecca Case-Grammatico, an attorney at Empire Justice Center in Rochester. "It is interesting to witness the unraveling of such a large player in New York's foreclosure field."


  • "It was expected Fannie and Freddie would dump Mr. Baum," said Susan Chana Lask, a New York City attorney who sued Baum on behalf of a client last year, fought off a defamation suit by Baum and was depicted in photos of Baum employees lampooning foreclosure victims at a company Halloween party last year. Those photos recently emerged into the national spotlight, and may have triggered some of actions against the firm. "How much more embarrassing can he be to the banking industry?," Lask said.

***

  • The firm has been at the center of the foreclosure controversy over "robo-signing," and has been accused by consumers, consumer advocates, other attorneys and even judges of submitting sloppy and perhaps fraudulent paperwork riddled with legal errors.


  • The firm is currently challenging as unconstitutional a new state rule requiring foreclosure attorneys to affirm, under penalty of perjury, that the documents they submit are accurate.


  • It agreed a few weeks ago to pay a $2 million fine and change its practices under a settlement with the U.S. Attorney Preet S. Bharara in Manhattan, capping a probe by the U.S. Justice Department. It's currently under investigation by New York Attorney General Eric T. Schneiderman, who has issued subpoenas to the firm and those associated with it. It has also been sued several times in class-action cases.

For the story, see Fannie Mae hits Baum firm with ban (Foreclosure specialist no longer gets referrals).