Thursday, December 01, 2011

Notary Who Copped Plea In Massive Fraudulent F'closure Robosigning Case Found Dead In Home After Failure To Appear For Sentencing; Homicide Ruled Out

In Las Vegas, Nevada, KSNV MyNews Channel 3 reports:
  • The notary who signed tens of thousands of false documents in a massive robo-signing scandal case was found dead in her home on Monday.


  • The notary, 43-year-old Tracy Lawrence, was supposed to be in court at 8:30 Monday morning for her sentencing hearing. When her attorney did not hear from her for more than an hour, Sr. Deputy Attorney General Robert Giunta asked for a bench warrant to be issued for Lawrence. The judge denied the request.


  • Police were sent to Lawrence's house to check on her after her lawyer expressed concern for her client's well-being. They found her body inside her home. Metro Homicide Detectives are working currently the case. It is unclear if her death was due to natural causes, or if it was a suicide. Detectives said this afternoon that they have ruled out homicide as a cause of death.


  • Last Monday, Lawrence pled guilty to only one criminal charge of notary fraud. Lawrence came forward earlier this month and admitted that she had notarized around 25,000 fraudulent documents as part of a foreclosure fraud scheme.


  • Title officers Gary Trafford and Geraldine Sheppard of California are allegedly behind the fraud that involved forging signatures on tens of thousands of notices of default between 2005 and 2008. The two were indicted on more than 600 charges in a 439-page indictment filed on November 16.


  • The Nevada Attorney General is negotiating the terms of surrender for the pair. Both are expected to surrender sometime in December.

Source: Notary who blew whistle on foreclosure fraud found dead.

Thanks to Mike Dillon at GetDShirtz.com for the heads-up on the story.

IG Report Slams Fannie, Freddie Over Improper Foreclosures, Refusal To Force Banksters To Buy Back Crappy Home Loans; Cost To Taxpayers: Billion$

The Associated Press reports:
  • A government watchdog said Fannie Mae and Freddie Mac improperly foreclosed on homeowners and cost the government billions of dollars by not holding major banks to strict underwriting requirements.


  • The report released Tuesday also said the Federal Housing Finance Agency gave “undue deference” to Fannie and Freddie officials and didn’t scrutinize more than $35 million in bonuses and compensation to Fannie and Freddie executives.


  • FHFA’s inspector general had previously released each of the findings on an individual basis. But the semi-annual report to Congress sketched a portrait of abuse at the two mortgage giants that the government failed to stop.

***

  • The inspector general report found that Fannie and Freddie did not force banks to repurchase mortgages when they failed to meet strict underwriting requirements. That decision cost the government billions of dollars.


  • When a senior examiner at FHFA raised “serious concerns” about Freddie’ process for reviewing Bank of America’s mortgages, senior Freddie managers disagreed, according to the report. The managers also said they feared losing business from Bank of America if the government became more aggressive in getting money back for bad mortgages, the report said.


  • The report also found:

    — Fannie knew about allegations of improper foreclosure practices by law firms as far back as 2003 but did not act to stop them.
    — Fannie failed to establish an “acceptable and effective” way to monitor foreclosure proceedings between 2006 and early 2011.
    — FHFA failed to oversee the government’s signature foreclosure-prevention program, the Home Affordable Modification Program. As a result, it cost the government extra time and resources to fix it.

For the story, see Inspector general says housing regulator failed to stop Fannie, Freddie mortgage issues.

State AG Invokes NYS Martin Act To Acquire Jurisdiction In Probe Into Violations Of Federal Servicemembers Civil Relief Act In Home Foreclosures

In New York City, Financial Times reports:
  • Eric Schneiderman, New York attorney-general, has launched an investigation into possibly unlawful foreclosures on the mortgages of active-duty members of the US military.


  • Data released last week by a federal banking regulator suggested that 10 leading lenders may have seized the homes of about 5,000 service members in violation of the Servicemembers Civil Relief Act. The nearly-decade old law restricts foreclosures on the homes of members of the US armed forces while they are on active duty.


  • Mr Schneiderman’s probe is part of a larger investigation into banks’ mortgage practices, a person familiar with the matter said. Armed with the Martin Act, a powerful state law that gives prosecutors broad powers to investigate fraud, New York state’s top lawyer has contacted about a dozen banks and insurers as part of an investigation into the securitisation and marketing of mortgage securities, according to people familiar with the matter. A spokesman for Mr Schneiderman declined to comment.

For more, see New York probes military foreclosures.

Wednesday, November 30, 2011

Suspected Home Title Scammer Now Faces Lawsuit Involving Allegations Of $320K Church Ripoff In Allegedly Fraudulent Loan Transaction

In Boynton Beach, Florida, The Palm Beach Post reports:
  • The Haitian Bethel Baptist Church had a growing base of parishioners in the fall of 2009 when Pastor Jean Bilbalo Joint decided to expand his humble Boynton Beach facility - no more than a house, really - to accommodate the flock. He entered an agreement with Boca Raton-based Nationwide Mortgage Bankers Corp., writing checks totaling $321,222 to Interstate Title Services and Escrow for what he says he thought was a deposit to secure a $1 million loan.


  • But according to a lawsuit filed in March, no loan was ever secured nor was the $321,222 returned.


  • The church contacted The Palm Beach Post this week after reading its coverage Sunday about other real estate-related lawsuits involving Nationwide-associated companies and Guilfort Dieuvil - president of several of the firms.


  • The complaint filed by the church says Nationwide and Dieuvil never intended to secure a loan and instead defrauded the church in a "civil conspiracy" that involved the title agency and Nationwide Financial Consultants - a company Dieuvil also led, state records show.


  • Dieuvil says the church's money was to pay consultation fees to Nationwide Financial Consultants, and not for a deposit to secure a loan, according to the lawsuit. The suit further states that Dieuvil testified there is a written agreement between the church and Nationwide Consultants.


  • The church knows of no such agreement, and neither Dieuvil nor any representative of Nationwide has provided a copy of the agreement, according to the lawsuit. "They're very distraught," said Boca Raton­-based attorney Jeffrey Galvan, who is representing the church. "It took them years and years and years to save up this money, and now it's gone."


  • Specific charges in the 46-page lawsuit include fraudulent misrepresentation, breach of contract and civil conspiracy. The church's allegations of real estate wrongdoing by Dieuvil and associated companies - the title firm's registered agent is listed in state records as vice president for Nationwide Mortgage Bankers Corp. - add to at least five lawsuits filed by ­homeowners who say they were wronged by another of Dieuvil's enterprises, Nationwide Investment Firm.


  • Those lawsuits describe variations of short sale abuses, but mostly revolve around a business model that includes having the homeowner quitclaim-deed his or her home to the firm.

For more, see Firm bilked Boynton church, lawsuit alleges.

Massachusetts AG Scores $52M Lawsuit Settlement Alleging Securitized Subprime Home Loans Were 'Presumptively Unfair'

In Boston, Massachusetts, The Boston Globe reports:
  • A Royal Bank of Scotland subsidiary will pay $52 million to settle claims related to its role in the state’s “subprime mortgage meltdown,’’ Attorney General Martha Coakley said yesterday, an agreement that will benefit more than 700 borrowers in Massachusetts.


  • RBS Financial Products Inc. agreed to the payment after the state determined that the company financed, bought, and bundled residential mortgage loans into securities that were “presumptively unfair,’’ Coakley’s office said.


  • Such subprime loans proved costly for consumers and were often approved for people who were not qualified borrowers, the state said. The RBS deal marks Coakley’s third major settlement with investment firms over how they packaged and sold home loans. Morgan Stanley and Goldman Sachs Group also agreed to settlements that totaled $162 million over the past two years.


  • The securitization of subprime loans by investment banks is a major cause of the economic crisis,’’ Coakley said in a statement. “The only way we are going to return to a healthy economy is to hold these banks accountable in order to achieve real relief for homeowners.’’

For more, see Bank settles subprime loans case for $52m (Deal will aid 700-plus struggling homeowners).

Scammers Exploit Close Ties To The Elderly To Carry Out Their Handiwork

A column in Canada.com reports on the ripoffs targeting the elderly by family members and others with close personal contact to the victims. An excerpt:
  • [T]here was the lonely, elderly man looking for a housekeeper. The middle-aged woman who replied to the ad cleaned at first but soon became more than an employee - within a week she had moved into the home and soon convinced him to get married.


  • With a marriage certificate, the new wife arranged a trip to a notary's office to have property transferred into joint tenancy - the notary's interview with the husband revealed he did not even know his new wife's name, and the notary refused to prepare the transfer as he was clearly incapacitated.


  • But a trip to a lawyer who did not know the elderly male gave the new wife all she wanted - her name added to the title, and using that to establish a $150,000 line of credit which she used to buy another home in her name.


  • With her husband's children growing suspicious, she convinced him to move to that new house and within six months they had plowed through all of his assets, and he died penniless and estranged from his children.


  • There is also the story of an elderly woman, housebound for medical reasons, who asked a notary for help changing her will to ensure one of her sons, who was disabled, would be cared for from the proceeds from her only asset, a waterfront home.


  • The notary advised her she should have an independent executor and power of attorney. However, the woman believed her other son, a successful lawyer who did not get along with his brother, would object if he was not given power of attorney.


  • When the mother's health deteriorated, the lawyer son moved her to a care facility and used the power of attorney to transfer the family home into his name, all but disinheriting his brother.

For the column, see Elders vulnerable to financial abuse (As our population of seniors grows, so does the incidence of fraud and it's often by family members).

Tuesday, November 29, 2011

$285M SEC/Citi Settlement Over Mtg Derivatives Kiboshed; Judge: Policy Of Allowing Targets Off Hook w/out Admissions, Denials Not In Public Interest

In New York City, The New York Times reports:
  • A federal judge in New York on Monday threw out a settlement between the Securities and Exchange Commission and Citigroup over a 2007 mortgage derivatives deal, saying that the S.E.C.’s policy of settling cases by allowing a company to neither admit nor deny the agency’s allegations did not satisfy the law.


  • The judge, Jed S. Rakoff of United States District Court in Manhattan, ruled that the S.E.C.’s $285 million settlement, announced last month, is “neither fair, nor reasonable, nor adequate, nor in the public interest(1) because it does not provide the court with evidence on which to judge the settlement.


  • The ruling could throw the S.E.C.’s enforcement efforts into chaos, because a majority of the fraud cases and other actions that the agency brings against Wall Street firms are settled out of court, most often with a condition that the defendant does not admit that it violated the law while also promising not to deny it.

For more, see Judge Blocks Citigroup Settlement With S.E.C.

For the ruling, see SEC v. Citgroup Global Markets, Inc.

(1) With regard to the settlement falling short in meeting the public interest, Judge Rakoff stated (SEC v. Citgroup Global Markets, Inc., at page 15):

  • Finally, in any case like this that touches on the transparency of financial markets whose gyrations have so depressed our economy and debilitated our lives, there is an overriding public interest in knowing the truth.

    In much of the world, propaganda reigns, and truth is confined to secretive, fearful whispers. Even in our nation, apologists for suppressing or obscuring the truth may always be found. But the S.E.C., of all agencies, has a duty, inherent in its statutory mission, to see that the truth emerges; and if fails to do so, this Court must not, in the name of deference or convenience, grant judicial enforcement to the agency's contrivances.

    Accordingly, the Court refuses to approve the proposed Consent Judgment. Instead, the Court hereby consolidates this case with the Stoker action, adopts the Case Management Order in that action as equally applicable to the instant case, and directs the parties to be ready to try this case on July 16, 2012.

    SO ORDERED.

Banksters Abusing FDIC Loss-Share Agreements?

The South Florida Sun Sentinel reports:
  • In the wake of the recent real-estate meltdown, the borrower of a nonperforming loan called his lender with promising news: "I have a buyer looking to make an all-cash offer for my Florida property. Will you meet with us tomorrow?" The lender's answer: "No."


  • Disturbingly, this implausible response is not uncharacteristic of lenders who exploit FDIC loss-share agreements by seeking to foreclose on nonperforming loans, even when prudent business judgment calls for short sale or loan modification solutions.


  • By perverting the terms and spirit of loss-share agreements, these lenders are reaping windfalls while prolonging the foreclosure crisis, depressing real-estate values and sticking taxpayers with the bill.

For more, see Are loss-share lenders gouging us?

Fire, Vandalism To Attached Neighboring Property In Foreclosure Destroys Dreams For Young NJ Family

In Trenton, New Jersey, The Times of Trenton reports:
  • Remy Joseph says his American dream has been torn apart. Three years ago, he moved into 262 Home Ave. with his wife and three young children, thinking he had it made. His boss at the construction company where he works owned the building, and offered to rent it at a reasonable price. With three bedrooms, two baths, a backyard and a basement, it looked like the perfect place to raise a growing family. “The kitchen, the bedroom, everything was new,” Joseph said.


  • But adjacent to him was a gathering storm. The neighboring house, which shares a common wall with his, went into foreclosure. Last October the neighbors were kicked out and the home went to a sheriff’s sale. Neighborhood teenagers began using the vacant home as their clubhouse, and Joseph said they began harassing him and his family.


  • Finally, in June, the neighboring house went up in flames, which also caused heavy damage to Joseph’s home, and was followed by a rash of vandalism and looting that has left his place in tatters and barely worth repairing. The fire that drove Joseph from his residence struck June 30.


  • His children and his neighbor’s kids were on the second floor watching TV when the abandoned house went up in flames. The blaze got into the walls and made its way into Joseph’s house. Everyone escaped unharmed, but his home suffered heavy fire, smoke and water damage to the second floor and was left uninhabitable, according to the fire chief’s report.


  • The police said the youths had set the fire and arrested three of them. When they were released from custody they came back for their revenge, breaking into Joseph’s house, which had been boarded up for repairs, and completely trashing the inside, he said. “That’s like a slap in the face,” he said. “It’s not right. It’s not right at all. From where I come from, you don’t disrespect people.”


  • After the break-ins, more vandals and thieves followed. Less than five months later, the house is a husk, stripped of almost anything of value. Paint is strewn over the furniture and the dining room mirror. All the copper piping was ripped out of the basement and the walls; even the shower was torn apart to get to the metal.

***

  • Joseph’s daughter’s bed lies on its side in a destroyed room where the Latin Kings gang symbol has been marked on the pink walls. His children, a 7-year-old boy and 11- and 12-year-old daughters, are with his wife in New York while he stays in Trenton so he can keep working.


  • I’m at a point right now, I’m at a boiling point, where I’m like, ‘Forget it,’” he said. “It’s like telling those kids, ‘Do what you want to do. You’ll get a slap on the wrist.’” His boss has told him to simply let the home go into foreclosure, because repairs will now be too expensive, he said.

***

  • He estimates his side of the house needs $60,000 in repairs. He doesn’t have the money to fix the place up and his boss can’t get a loan for the work. The two homes’ problems are literally connected. The ceiling of Joseph’s home has been torn apart, so that thieves can move easily through the rafters from one house to another.

For more, see Dream of life in Trenton home fades after foreclosure, vandalism and fire.

Monday, November 28, 2011

NY Foreclosure Process Could Grind To A Halt Due To Imminent Closure Of Upstate Sweatshop

The New York Post reports:
  • The implosion of the foreclosure-mill law firm of Steven J. Baum has thrown close to 10,000 New York families into legal limbo. Baum announced last week that he was closing the firm after Fannie Mae and Freddie Mac, the government-run mortgage organizations, said the law firm was no longer eligible to handle foreclosures.


  • The Baum firm, which is located in Buffalo, with a second office in Westbury, Long Island, notified the New York Department of Labor that all 67 employees would be laid off in mid-February. (By law, any firm has to give employees 60 days notice when issuing mass layoffs.)


  • Last week, along with the Baum firm announcing its closure notice, Fannie Mae sent a directive that mortgage servicers are authorized to transfer Fannie Mae foreclosure or bankruptcy matters from Baum to any other retained attorney network firm in New York.


  • Baum’s folding is the second default-services firm to cease foreclosure operations in the wake of last fall’s robo-signing scandal and the investigations it spawned. In March, the David J. Stern law firm in Plantation, Fla., one of the largest foreclosure mills in the nation, ceased foreclosure work.


  • While some court observers speculate that, with the Baum firm’s closure, thousands of court cases will proceed with new counsel, that was not the case with the Stern shutdown. Many smaller firms picking up the Stern foreclosure cases could not get the needed paperwork to proceed because Stern placed liens on the paperwork in order to be paid for services it has already rendered.


  • Sources familiar with the Florida backlog say that delays in foreclosure cases are still occurring due to the ongoing paper chase. One attorney, who wishes not to be quoted directly due to having matters against these firms, suggested that other large foreclosure firms — which are the only ones to take on this size caseload — would be leery to step into the void left by Baum’s closure.


  • Another defense attorney said there has been radio silence from the Baum firm since the beginning of this month, despite numerous calls and e-mails sent to find out about pending foreclosure cases against their clients.


  • Many of the Baum lawyers were tied up with non-compete clauses in their contracts, so it’s unclear whether they can move to other firms now or have to wait until the planned shutdown next year.


  • In May, New York Attorney General Eric Schneiderman launched an investigation into the Baum firm; the AG’s office issued subpoenas, and at the time it was reported that the firm said it was fully cooperating. It is unclear whether criminal charges will result from the AG’s probe.

Source: Baum fall throws NY foreclosures a curve.

Real vs. Personal Property: Lender Screw-Up Leaves It Holding The Bag On Voided Mortgage Purportedly Secured By Manufactured Home

Lexology reports:
  • The case of In re Dickson, 655 F.3d 585 (6th Cir. 2011) centered on the status of the debtor’s manufactured home under Kentucky law. In Kentucky, a manufactured home is considered personal property. As such, in order for a lien to be effective, it must be noted on the certificate of title.


  • A manufactured home may be converted to real property, however, if the owner files an affidavit that states it is permanently affixed to real estate and then surrenders title.


  • In In re Dickson, the debtor purchased a manufactured home with the proceeds from a bank loan. From the loan transaction, the bank took a lien on all of the debtor’s real property, including any current and future improvements. Although the clause did not expressly refer to the debtor’s personal property, the debtor admitted in her deposition that she assumed the lien would apply to her newly purchased home when she was granted the mortgage. The bank promptly recorded its lien.


  • On June 15, 2006, the debtor defaulted and the bank initiated foreclosure proceedings. In these proceedings, the bank requested an order stating that the manufactured home had been converted to real property; a request that was unopposed. Even though the bank had neither a lien on the manufactured home’s certificate of title nor an affidavit converting it to real property, the court declared the home to be converted to real property on June 7, 2007.


  • A month later, the debtor filed a petition for relief under Chapter 13 of the Bankruptcy Code. The bank sought relief from the automatic stay to foreclose on the manufactured home. But the debtor opposed this motion, arguing that the bank’s lien on the home was avoidable as a preferential transfer. Both the district court and the Bankruptcy Appellate Panel found for the debtor and avoided the bank’s lien interest in the manufactured home.(1)


  • On appeal, the Sixth Circuit affirmed. The court noted that, under Sections 522(g)(1) and 547of the Bankruptcy Code, a Chapter 13 debtor may avoid a lien if, among other things, it resulted from an “involuntary” transfer that occurred within the ninety-day period that precedes the filing of a bankruptcy petition.


  • Here, the Sixth Circuit found that the transfer was involuntary because it occurred by operation of law. Although the mortgage on real property was granted by a voluntary agreement between the bank and the debtor, the bank’s actual interest in the home did not arise until the state court judgment. As such, the transfer occurred by operation of law.


  • Next, the court found that the language of the mortgage agreement included only real property. Accordingly, under Kentucky law, it did not encompass the debtor’s manufactured home.


  • Thus, the court determined that the mortgage agreement did not create a lien on the home in favor of the bank. Having found that the bank’s lien was created by an involuntary transfer within ninety days of the petition date, the Sixth Circuit held that the debtor could avoid the bank’s lien on her manufactured home.

Source: Sixth Circuit avoids bank's lien interest in manufactured home (may require subscription; if no subscription, GO HERE; or TRY HERE - then click the appropriate link).

For the 6th Circuit Court of Appeals court ruling, see In re Dickson, 655 F.3d 585 (6th Cir. 2011).

(1) Countrywide Home Loans v. Dickson (In re Dickson), 427 B.R. 399 (6th Cir. BAP 2010).

'My Grandson & His No-Good Wife Used Phony Promises To Squeeze Me Into Signing Over Deed To My Home,' Says Elderly Texas Woman In Lawsuit

In Galveston County, Texas, The Southeast Texas Record reports:
  • A Santa Fe woman and her grandchildren are embroiled in a legal dispute over local real property. June R. Curry claims Joshua and Maranda Curry fraudulently obtained the deed to 4917 Ave. H in Santa Fe, a lawsuit filed Nov. 17 in Galveston County District Court says.


  • According to the original petition, the defendants expressed their desire of becoming homeowners to the plaintiff, suggesting she should give them the title to her homestead in exchange for around the clock care and comfort for the rest of her life.


  • The couple, who reportedly lacked an education and a well-paying job, lived with the complainant for a year, all the while continuously asking her to turn the home over to them. "Their insistence and her need for care brought on by a mild stroke and her temporary loss of her son's care created a stressful and emotional need to have someone to help her," the suit says.


  • Court papers further explain the respondents acted upon their grandmother's wish to go on a sentimental journey to New Orleans in October 2010. They say "more emotional pressure was applied," and after the trip, June R. Curry was successfully talked into signing the deed over to her grandson and granddaughter-in-law.


  • The plaintiff alleges the grandchildren refused to allow her son to live in the home as well as informed her that she would have to pay for her own food and expenses, which apparently was contradictory to the respondents' promises.


  • "After heated discussions, they announced that they were leaving and she would have to pay her bills anyway she could," the suit says. It adds the complainant received financial help from her other children and other grandchildren and insists Joshua Curry is asking for $5,000 to have him and his wife live with her again.

Source: Woman, grandchildren in legal dispute over property.

Sunday, November 27, 2011

Recent Seizure Of Two Subs After Taking Beating For Underwriting Too Many Crappy Home Loans Pushes Mortgage Insurer To File For Ch. 11 Protection

The Associated Press reports:
  • Private mortgage insurer PMI Group Inc. is seeking shelter from creditors under the Chapter 11 bankruptcy code after the seizure of two of its subsidiaries by regulators in Arizona.


  • The company said Wednesday that it filed a petition for relief with the U.S. Bankruptcy Court in Delaware, but will continue operating as usual. PMI intends to use bankruptcy protection to assess its options in light of the action taken by the Arizona Department of Insurance.


  • On Oct. 20, insurance regulators in Arizona seized PMI’s main subsidiaries in the state, PMI Mortgage Insurance Co. and PMI Insurance Co., because the companies did not have enough money on hand to meet state requirements.


  • The state obtained an order from an Arizona Superior Court judge to take over the PMI subsidiaries. Shortly after, PMI said it would begin paying claims at just 50 percent.

***

  • The seizure of PMI’s subsidiaries followed heavy losses at the company since the housing market bubble burst. Private mortgage insurance protects lenders from losses if a homeowner defaults and the lender doesn’t recoup costs through foreclosure. The insurance costs the borrower a monthly fee, typically a set percentage of the total mortgage loan.


  • Like other mortgage insurers, PMI has been able to sell profitable policies in recent years, but the gains from those sales hasn’t outpaced losses from policies sold before the housing market collapsed. As flagging home prices have strapped borrowers, the company has had to pay more claims.

For the story, see PMI Group files for Chapter 11 bankruptcy protection, cites subsidiaries’ seizure by Arizona.

Elderly Woman Gets 5 Years In Loan Modification Foreclosure Rescue Ripoff; Stiffed Victims Out Of Promised Services After Pocketing Upfront Fees

In Fremont, California, Central Valley Business Times reports:
  • Angeline Lisa Lizarrago of Fremont could be as old as 74 when she finally totters out of state prison, following her sentencing [] for a mortgage scam that ripped off homeowners in the Central Valley and Northern California. She was ordered to prison for five years for charging homeowners for foreclosure services that were never delivered.

***

  • In September 2010, Ms. Lizarrago was charged with 23 counts of felony fraud and theft committed at her Fremont business, Avemos Financial Group. The charges against Ms. Lizarrago and her co-defendant, Michael Douglas Young, 68, of Los Gatos, were based on 11 cases of fraud and theft totaling more than $50,000.


  • From June 2008 to October 2009, Ms. Lizarrago, owner of Avemos, and Mr. Young, the general manager, targeted Spanish-speaking homeowners, as well as Southeast Asian immigrants, who were desperate to save their homes.


  • People stood in line for hours to get into the Avemos waiting room, which was decorated with shrines to the Virgin Mary. Clients seeking help typically paid $1,500 initially. Ms. Lizarrago promised she would take steps to stop banks from foreclosing on clients' homes and renegotiate their loans to lower monthly loan payments and reflect their homes' current market value. She guaranteed a refund if they were unsuccessful. Many clients lost their homes in foreclosure and did not receive a refund.


  • Ms. Lizarrago also took advantage of the foreclosure crisis in another way, the attorney general says. She told an 89-year-old man and his wife, who wanted to move away from Stockton, that she owned 51 properties, many of which had been foreclosed upon, and she could find them a home in Fremont. She asked for an up-front fee, which she promised to return with interest once the purchase was made. In a series of payments, the couple gave her $25,000. She never found them a home, nor returned their money.


  • Mr. Young, who pled not guilty to the felony charges, is scheduled for jury trial on Jan. 23, 2012.

For the story, see Five-year sentence for foreclosure scam targeting Central Valley homeowners (Homeowners who were scammed lost their homes to foreclosure; An office decorated with shrines to the Virgin Mary).

The Fumbles In Foreclosure Cases Continue For One Palm Beach County Trial Judge As Florida Appeals Court Boots Back Another Blown Ruling

Another Florida trial judge fumbled the ball on a summary judgment motion in a foreclosure action. In this case, the foreclosing bankster failed to attach an assignment of mortgage to its foreclosure complaint, and neglected to submit the assignment thereafter. As expected, and possibly figuring that the filing of an appeal of her ruling was unaffordable for the homeowner, Palm Beach County Circuit Judge Meenu T. Sasser disregarded the failure to submit the mortgage assignment and, as has become common, she proceeded to issue an erroneous ruling granting summary judgment in favor of the bankster.

However, the screwed over homeowner did, in fact, appeal, and in a ruling not unlike similar earlier rulings by Florida appeals courts, reversed(1) and booted the case back to Sasser.(2)

For the ruling, see Duke v. HSBC Mortgage Services, LLC, No. 4D09-5183 (Fla. App. 4th DCA, November 23, 2011).

(1) According to the court:
  • The Dukes argued that at the time the foreclosure complaint was filed, the mortgage was held by First NLC, not appellee, HSBC. In its complaint, HSBC alleged it owned and held the note and mortgage at the time the complaint was filed. “When exhibits are attached to a complaint, the contents of the exhibits control over the allegations of the complaint.” BAC Funding Consortium Inc. v. Jean-Jacques, 28 So. 3d 936, 938 (Fla. 2d DCA 2010).

    Here, HSBC alleged in its complaint that it “now owns and holds the Note and Mortgage,” but an assignment was not attached to the complaint, supporting HSBC’s position. Instead, the mortgage attached to the complaint showed First NLC as the lender, creating discrepancies between the complaint and the attached exhibit.

    Thus, at the time of the argument on the summary judgment motion, genuine issues of material fact existed as to whether HSBC was the proper owner and holder of the note and mortgage where First NLC was named on the mortgage and evidence of an assignment was not included.

    We therefore reverse the trial court’s order granting summary judgment because genuine issues of material fact remain in dispute regarding the owner and holder of the note and mortgage at the time the complaint was filed.

(2) For other posts on earlier screw-ups by this judge, see:

Victim Of Possible Contract For Deed Scam Fights To Save Home; Says Bank F'closed Despite Her Prompt Payments To Intermediary 'Investment Company'

In Horry County, South Carolina, WMBF-TV reports:
  • One local viewer contacted WMBF News saying she's making her payments on time to live in her home, but it was recently foreclosed on. Linda Duncan said she is doing everything she can to hold on to it, but she said she is not the one at fault in the legal battle she is fighting.


  • Duncan said, "My grandkids love it here they call it the beach house." Duncan said she makes payments to an investment company, but her home is now getting foreclosed on by the bank. Duncan added, "It's a money order so I don't know who cashes them, and I don't know what happens to it once it hits the mailbox. We have done everything by the book."


  • Duncan said she's put almost all of her savings into fixing up her home in Longs. Duncan said, "We put up fans, made repairs, brought appliances, added cabinets. We love it here." So the thought of a foreclosure is what Linda calls a nightmare. Duncan added, "We pay electric, phone, lawyer, not asking for a handout-take a chance on us and let us keep our home."


  • Local attorney Steve Fowler said that is not out of the realm of possibility. Duncan gave WMBF News the documents proving her payments are up to date, and Fowler said her case may hold up in court. Fowler said, "She indicated to me that she made all the payments and not violated the terms of agreement so that is frustrating in this economy when they are doing what supposed to do."


  • Fowler said the housing business can be tricky so it's important to always keep records. Fowler said, "Make sure you keep the lines of communication with your attorney, lending institution, don't want to be a subject of foreclosure after making payments."


  • Linda Duncan said she is talking with her attorney about how to get the case dismissed. The bank and the investment company had no comment for WMBF News.

Source: Local woman fights to keep home.

Saturday, November 26, 2011

State High Court Gives Florida Attorney 90 Days In 'Penalty Box' For Representing Homeowner In Foreclosure Without Latter's Knowledge, Consent

In Tampa, Florida, the St. Petersburg Times reports:
  • Tampa condo owner Alejandro Salazar was surprised to learn that Clearwater lawyer Bruce Harlan was representing him in a foreclosure case. Surprised because Salazar never met Harlan, didn't hire him and didn't even want the condo.


  • But someone else did — Lori Polin, a real estate agent with a checkered past who paid Harlan $1,500 to delay the foreclosure because she hoped to buy Salazar's condo in a short sale.


  • Because of Harlan's actions in the case, the Florida Supreme Court this month suspended him from practicing law for 90 days starting in mid December. "Even if Mr. Harlan had good intentions, his clients, Mr. Salazar and Ms. Polin, had adverse interests and Mr. Harlan was representing both of them at the same time,'' the Florida Bar said in finding Harlan guilty of a conflict of interest.


  • The bizarre chain of events started in 2007 when Salazar's architectural design business foundered and he and his wife moved to her native Spain, defaulting on their mortgage and condo maintenance fees. The Westchase Community Association took title to the condo and deeded the unit to Polin after she paid the back fees.


  • At the time, Polin was about to go into foreclosure on her own Westchase condo. She moved into the Salazars' unit and rented out hers, collecting more than $14,000 in rent, but not making payments on either property. Instead, Polin hired Harlan to delay the foreclosure on the Salazars' condo while she negotiated with the bank to buy it for far less than the $137,000 the couple then owed.


  • When Salazar returned to Tampa for a visit in 2009, he called the bank to see why its foreclosure suit had dragged on for so long with steadily mounting fees. "Because,'' the bank told him, "your attorney has been fighting us for a year.''


  • Salazar pieced together what happened and complained to the Bar.

For more, see Clearwater attorney is suspended for involvement in agent's dubious real estate deal.

See The Florida Bar v. Harlan for the Report Of The Referee Accepting Consent Judgment.

City: BofA The Biggest Culprit In Ignoring City Ordinance To Ensure Maintenance Of Vacant Homes; Bankster Heads List Of Worcester Scofflaws

In Worcester, Massachusetts, the Worcester Telegram & Gazette reports:
  • A national bank that city officials say is the biggest culprit in ignoring a city ordinance to ensure vacant properties are maintained and secured has been ordered to comply with the local law.


  • Charlotte, N.C.-based Bank of America was ordered by a Worcester Housing Court judge last week to obey the city’s vacant and foreclosing property ordinance for 1 Blodgett Place. The city’s Department of Inspectional Services has issued orders on 124 other properties owned by Bank of America. If the bank does not comply, those cases they will be forwarded to Housing Court for adjudication.


  • The city has taken other banks to court and they have lost too, but none was as large as Bank of America, according to city officials. The move comes as the city tries to hold owners of vacant and foreclosed properties accountable for the condition of those properties.


  • You would hope there was a sense of responsibility in these mega-institutions for the mess they all contributed to, but I gather that is asking too much,” City Manager Michael V. O’Brien said. “Look, these banks, ‘too big to fail,’ as the regulators say, got billions and billions and billions of taxpayer dollars rewarding them for their excesses and largesse, faulty lending practices and exotic financial products that collapsed our economy.”

For more, see Bank of America faces local order (City seeks compliance with vacancy ordinance).

Victimized Florida Foreclosure Defense Attorney Points Finger Of Blame At BofA For Role In $100K+ Ripoff; Says Bankster Was Asleep At Wheel

In Fort Lauderdale, Florida, WTVJ-TV Channel 6 reports:
  • A Fort Lauderdale attorney says she was duped out of more than $100,000 by her former trusted accountant. Carolyn Hochberg owns the Foreclosure Defense Law Group. She says the accountant, who worked in her office, opened his own bogus business called Foreclosure Defense Loss Mitigation Group and then opened a bank account to go along with it.


  • Hochberg says the accountant would take checks written out to her business and deposit them into his account. Since the names of the two businesses were similar, Hochberg says bank employees never questioned it.


  • "If somebody at Bank of America had read the name on the check, he wouldn't have been able to do that," she said. Hochberg says Bank of America took those checks for about one year. She told NBC Miami the accountant opened his own account at a branch right near her office on Commercial Blvd. in Fort Lauderdale.


  • Hochberg is angry at the bank, and she feels the institution has not responded appropriately. "They're taking no responsibility. They don't realize their negligence. They want to pass it off on everybody," she said.


  • Fort Lauderdale police are investigating, and they say this type of check fraud is not so rare. They say the most common check fraud crime is old-fashioned check printing. Bank of America is also investigating.


  • "Simply when somebody compromises your account, makes up checks and circulates them to individuals to go into banks or other check cashing places and basically withdraws funds from your account, " said Det. Steve Sceolfo. Hochberg has a list of more than 60 checks for $110,000, all of it stolen, she says, by her former trusted accountant.

Source: Woman Claims She Was Duped by Former Accountant (Carolyn Hochberg claims she was duped by a former employee).

Tenants In 100-Unit Apt. Complex In F'closure Left Out In Cold As Landlord Skips Town, Closes Utility Account, Leaves Residents w/out Heat, Hot Water

In Bethany, Oklahoma, The Oklahoman reports:
  • When tenants saw the moving trucks outside their landlord's apartment at Rockwell Arms, they became concerned. When their heat and hot water was shut off a few days later, they panicked.


  • Would the residents of all 100 units be evicted? With Thanksgiving just around the corner, where would they have their holiday meal? “I saw her moving van, but all of us tenants thought, ‘Oh, we must be getting new management,'” said Sarah Shamblin, who has lived in the apartments at 2500 N Rockwell Ave. for more than a year. “We didn't think anything about her moving.”


  • Shamblin said living without heat and hot water for the past four days has been a challenge, especially with her 6-year-old daughter. “To keep warm and hot I clean my house even though it's already cleaned,” Shamblin joked. “We have electricity and we got some heaters. Some of us have central heat and air, a lot of us don't. I have heaters, five of them, but it's still freezing cold.”


  • The tenants pay for their own electricity, but the property manager paid the gas bill and before she skipped town in the midst of a foreclosure, she called the gas company and had the service turned off.


  • Oklahoma Natural Gas Co. received a shut-off order on Nov. 11, asking that service be terminated Nov. 18, spokeswoman Cherokee Ballard said. Gas service was shut off Nov. 19 because the utility company did not know anyone was living at the apartment complex. "Had we known ... that people still lived there, we wouldn't have done that,” Ballard said.


  • She said ONG tried to restore gas service to the apartments, but the boiler room was locked. It took a judge intervening to get the gas restored to tenants Tuesday afternoon. However, while the units had hot water, the heating systems still weren't working Tuesday evening.

For the story, see Bethany landlord facing foreclosure moves, leaves tenants in the cold (Rockwell Arms tenants spent the last four days without heat after their landlord moved out of town and had the gas shut off to the complex).

New Haven Slumlord Continues Pocketing Taxpayer-Subsidized Sec. 8 Rent Despite Stiffing Tenant Out Of $30K Lawsuit Award For Ceiling Cave-In Injuries

In New Haven, Connecticut, the New Haven Independent reports:
  • It’s been more than two years since the bathroom ceiling in Delwanna Wiggins’ apartment caved in on her. It’s been four months since Apple Holdings LLC—one of New Haven slumlord Michael Steinbach’s corporate aliases—was ordered to pay her $30,665.50 in damages. Wiggins never got a cent.


  • Steinbach, on the other hand, continued to collect rent for her apartment from the government long after the ceiling collapsed—courtesy of the taxpayer. Wiggins lives in a property with rents subsidized by the federal Department of Housing and Urban Development’s (HUD) Section 8 program.


  • Her encounter is the latest example of the individual impact of a string of problem properties controlled by Steinbach and his partner Janet Dawson, with the generous help of government officials. “I was going through a hell of a lot of pain,” said the 34-year-old Wiggins, who was pregnant at the time of the accident. She miscarried a few months later.


  • She called her lawyer about the accident, gave her testimony. They filed suit. They won. She thought justice had been served. But when her attorney, Loren Costantini, sent out a notice to Michael Steinbach to collect the $30,665.50 judgment in September, all he got in return was a notice of Chapter 11 bankruptcy.


  • It turned out that Apple Holdings, LLC had filed for bankruptcy in August. That would make it far more difficult for the damages to be collected, Costantini said. “I’m disgusted by the situation.”


  • Since then, Wiggins has given up hope of getting any money. She has an infant son to care for. Her mother, who lives in the apartment directly below her, has cancer and visits the doctor as often as twice a month. Before the accident Wiggins was a store manager at McDonald’s making good money; she hasn’t been able to work since then.

***

  • Michael Steinbach and his business partner, Janet Dawson, own hundreds of rental properties in New Haven under a never-ending string of corporate aliases. Rents at many of the properties are paid for by the government’s Section 8 program, which means they must pass regular housing inspections. Tenants allege rampant abuse by the landlords, who they say just “barely” fix what needs to be fixed and then let the problems rot until the next year’s inspection.


  • City inspectors consider them among the most notorious of New Haven’s problem landlords and have been chasing them for years to take better care of their properties. The two are listed as defendants in more than 100 lawsuits in Connecticut. Many of those are foreclosure lawsuits that they’ve managed to drag out for years while continuing to collect government rent.


  • Others allege defective premises and were filed by people like Wiggins. (Click here to read a story in the New Haven Advocate about more of those lawsuits.)

For more, see Ceiling Fell. Baby Died. Slumlords Paid Nothing.

Pair Pinched For Allegedly Ripping Off, Pawning Property From Home In Foreclosure They Were Hired To Winterize

In Pahrump, Nevada, KTNV-TV Channel 13 reports:
  • A couple that was hired to winterize a home in Pahrump has been accused instead of stealing property from it. A company had been hired by a bank to winterize a home in Pahrump that was scheduled for foreclosure. The company in turn hired a couple, Ricardo and Jenny Muniz, to do the work.


  • Witnesses said these individuals appeared to be winterizing the property at first and then stealing from it after the fact. Ricardo then allegedly pawned some of the stolen property from the home.


  • Nye Country Sheriff's Deputies arrested and booked both Ricardo and Jenny Muniz on the charges of grand larceny, burglary, conspiracy to commit a crime and transfer of stolen property. Susequent to their arrest, NCSO Detectives recovered several additional stolen items from the Muniz residence in Las Vegas.

Source: Couple hired to winterize home in Pahrump accused of burglary.

Florida 'Ana Nicole' Judge Accused Of Attempting To Hijack Now-Deceased Widow's Estate Settles Civil Action

In Fort Lauderdale, Florida, the South Florida Sun Sentinel reports:
  • The civil case accusing former Broward Circuit Judge Larry Seidlin of fleecing a wealthy, widowed neighbor of money and property worth hundreds of thousands of dollars has been resolved by way of a confidential settlement, according to one of the attorneys involved in the case.


  • Barbara M. Kasler, who lived in the same Fort Lauderdale condo as the onetime judge, his family and in-laws, died Nov. 7, 2010, at age 84. A confidential mediation settlement agreement was signed by the parties in September and October.


  • The civil lawsuit filed in Kasler's name, estimated her wealth at $5 million, and accused Seidlin — who gained national notoriety over his televised tearful handling of the Anna Nicole Smith death case — of feigning friendship with the widow, siphoning off her money and trying to hijack her estate.


  • The suit also accused Seidlin's in-laws, Oren and Barbara Ray, of buying a condo from Kasler at an unfair discount.

For more, see Former judge accused of exploiting elderly neighbor settles lawsuit.

Repeatedly Kissing Co-Worker, Representing Mom In F'closure After Stiffing Her On Illegal Campaign Loan Among Antics Meriting Pink Slip For Judge

In Tallahassee, Florida, Florida Today reports:
  • The state Supreme Court removed a central Florida judge from the bench [], ruling that he was unfit to hold office because of a pattern of unethical and illegal conduct.


  • One of the high court’s findings was that Circuit Judge N. James Turner of Osceola County repeatedly hugged and kissed a female court worker, Heather Shelby, without her permission.


  • Turner became involved in her personal life by asking to visit her home and her son in the hospital, as well as inviting her to lunch and to his office for a personal discussion while he was dressed in a T-shirt and shorts, the justices said in an unsigned unanimous opinion.


  • Judge Turner refused to take no for an answer on several occasions,” the justices wrote. "Moreover, Judge Turner’s interest in Ms. Shelby was well known throughout the court, causing Ms. Shelby extreme embarrassment and requiring changes to her professional life.”


  • The high court also found Turner violated judicial ethics by representing his mother in a foreclosure case while a sitting judge and the state’s campaign finance law by accepting and failing to report a $30,000 campaign loan from her.(1) The loan violated a $500 contribution limit.

For more, see State Supreme Court removes Osceola judge (Justices: Turner unfit for office due to unethical, illegal conduct).

For the Florida Supreme Court ruling, see In Re Inquiry Concerning A Judge Turner, No. SC09-1182 (Fla. November 18, 2011).

(1) It is interesting to note that the $30,000 loaned to Turner came as a result of him talking his presumably elderly mother into refinancing her condo in Miami-Dade County, Florida, enabling him to get his hands on the cash needed to help him pay off the outstanding campaign debt he incurred in his successful run for his seat on the Osceola County bench (In Re Inquiry Concerning A Judge Turner, Count 7). It was this refinanced mortgage that his mother had subsequently become unable to repay that drew Turner into his ill-advised representation of her in the associated foreclosure action (In Re Inquiry Concerning A Judge Turner, Counts 8-9).

Friday, November 25, 2011

Sacramento Feds Put Pinch On Sale Leaseback Foreclosure Rescue Peddler In Connection With Alleged Equity Stripping Ripoff

In Southern California, the Central Valley Business Times reports:
  • John Marcus Desenberg, 44, formerly of Newbury Park, has been arrested by FBI agents in Southern California on a ten-count federal indictment alleging mail fraud on connection with a Central Valley foreclosure scheme. According to the indictment, Mr. Desenberg was purportedly in the business of rescuing homeowners from foreclosure in Merced and Placer couties.


  • Doing business as Creative Lending Solutions, Mr. Desenberg offered homeowners a “Fresh Start” program that would find an investor to purchase homes from distressed homeowners, says U.S. Attorney Benjamin Wagner.


  • Some of the proceeds of the sale would be used to make mortgage payments for the next 12 months and the property owners were allowed to stay in the homes and work on repairing their credit so that at the end of the period, they could obtain new mortgages and purchase their homes back from the investors.


  • But. according to the indictment, Mr. Desenberg [lied] when he said that he would be monitoring the situation for the next 12 months, and that he would ensure the investor made the mortgage payments.


  • In fact, says the grand jury, he did not monitor the 12-month credit-repair period, nor did he ensure the mortgage payments were being made. Eventually homeowners lost their homes to foreclosure, with more than $300,000 in equity lost.


  • Mortgage fraud schemes victimize homeowners, not just mortgage lenders. Foreclosure rescue schemes target homeowners when they are most vulnerable — when they are in fear of losing their homes,” says Mr. Wagner. If convicted, Mr. Desenberg faces a maximum statutory penalty for each count of mail fraud of 20 years in prison, a $250,000 fine and up to three years supervised release following incarceration.(1)

Source: Arrest made in Central Valley foreclosure scheme (Homeowners thought they were being ‘rescued’, ‘Foreclosure rescue schemes target homeowners when they are most vulnerable).

For the U.S. Attorney press release, see Merced And Placer Counties Foreclosure Rescue Scheme Results In Arrest.

(1) For more on sale leaseback equity stripping ripoffs, see:

Municipal Insurer Coughs Up $884K To Cover 90% Of County Employee/Bookkeeper's Theft In Foreclosure Surplus Snatching Scam

In Memphis, Tennessee, The Commercial Appeal reports:
  • Shelby County government's insurance carrier has issued a check for $884,306 to cover about 90 percent of losses incurred in a Chancery Court embezzlement scheme. County Chief Administrative Officer Harvey Kennedy said Tuesday that Traveler's Insurance cut the check last week.


  • "We've been paying premiums all these years. It's one of these things where you never expect to need it," Kennedy said.


  • Former Chancery bookkeeper Brandon Gunn, 47, pleaded guilty in federal court last month to three counts of theft, conspiracy and money laundering in connection with a three-year scheme that tapped $1,063,903 from trust funds owed to Shelby Countians who lost homes in tax foreclosure sales. A second man, Correy Isom, 35, a Hickory Hill restaurant employee, also has been charged. Isom has pleaded not guilty and awaits trial.


  • Although Gunn admitted to stealing more than $1 million, Kennedy said the "net theft'' amounted to $982,548 because Gunn repaid $81,355. That happened last spring when Gunn, still working for the county, funneled two large cashier's checks written under disguised names to the county after his bosses asked him to repay money.


  • Following the payment from Traveler's, the county is left with $98,242 in losses resulting from the embezzlement scheme. "We will ultimately be responsible for that,'' Kennedy said. "The (former home) owners are entitled to that money."

Source: Insurer covers 90 percent of loss in Chancery Court embezzlement.

Home Refi Scam Lands Mortgage Broker In Hot Water After Alleged Escrow Cash Ripoff; Unwitting Couple Ultimately Left Homeless By Foreclosure

In Los Angeles, California, The Modesto Bee reports:
  • Authorities arrested a Los Angeles man Tuesday after a federal grand jury indicted him in connection with a mortgage fraud scheme that victimized a Tuolumne County couple who lost their home.


  • Secret Service agents arrested Steve Zaven Kessedjian, 48, in Los Angeles on suspicion of mail fraud, according to the U.S. attorney's office in Sacramento. Kessedjian's company, Amerilend Inc. in Woodland Hills, helped homeowners secure loans to refinance their homes. When a loan was funded, Amerilend would use Targa Escrow, another business owned by Kessedjian, to disburse the escrow funds, federal prosecutors said.


  • In December 2007, an Amerilend employee helped the Tuolumne County couple to refinance their home to consolidate their credit card bills. Prosecutors said the bank paid off the first mortgage and then wired the remainder of the loan, $57,343, to Targa Escrow. Instead of disbursing the rest of the loan to the credit card companies, Kessedjian took the funds for his own purposes, according to the indictment.


  • The prosecutors said the victims lost their home to foreclosure and their home-based business, as they could not make payments for the refinanced loan and pay the creditors who were supposed to have been paid.


  • If convicted, Kessedjian faces a maximum sentence of 20 years in federal prison, a $250,000 fine and up to three years of parole.

Source: Suspected scammer of Tuolumne couple arrested in fraud case.

For the U.S. Attorney press release, see Los Angeles Mortgage Broker Arrested For Stealing Escrow Funds From Tuolumne County Couple.