Wednesday, January 18, 2012

State AG Jumps Into Utah Homeowner's Foreclosure Case; Moves To Intervene, Contesting Adverse Court Ruling Holding Federal, Texas Law Trumps Local Law

In Salt Lake City, Utah, KCSG-TV Channels 14/16 report:
  • The Utah Attorney General has moved to intervene in a case filed by St. George attorney John Christian Barlow on behalf of Utah homeowner Garry Franklin Garrett in which senior Federal Judge David Sam ruled the Bank of America's foreclosure arm, ReconTrust Company, N.A. is operating under the National Bank Act regulated by the Office of the Comptroller of the Currency, is a trustee under the Texas law where ReconTrust is located, rendering Utah Code 57-1-21(3) inapplicable.


  • The Attorney General's Motion to Intervene and Memorandum of Support of Intervention written by Assistant Attorney General Jerrold Jensen said, "Utah is a non-judicial foreclosure State and that most real estate foreclosures in Utah never see the inside of a courtroom."


  • The pleading says that "in the last couple of years, as the number of foreclosures has escalated, there has been an increasing interest among homeowners who believe they have been wronged by their lender or mortgage servicer to challenge these foreclosure actions in court."

For more, see Utah Attorney General Moves to Intervene in Federal Judge's Ruling Utah Foreclosure Trustee Law Inapplicable.

Recent Michigan Appeals Court Foreclosure Ruling Expected To Affect Similar Suits Impacting On Lenders' Failure To Record Mortgage Assignments

In Shelby Township, Michigan, The Oakland Press reports:
  • A Shelby Township couple won a state Court of Appeals precedent-setting ruling that stops a foreclosure and allows them for now to keep their home that was once worth $650,000.


  • Husband-and-wife Eui H. and In Sook Kim gained a reversal of a Macomb County judge’s dismissal of their lawsuit against JP Morgan Chase Bank. The couple won because the bank failed to publicly record its interest in the mortgage after buying it from another bank, and before the sheriff’s sale.


  • The Kims’ attorney, Flint-based Bernhardt “Chris” Christenson, said the “for publication” decision likely will affect the outcome of other similar lawsuits and force banks to reveal it owns a mortgage before it can foreclose on a property. “Somebody will know who’s foreclosing on their house,” Christenson said. “Things (mortgages) change hands so frequently nowadays. You could be talking to one bank and they aren’t even the ones that have the mortgage.”


  • JP Morgan’s acquiring and interest in the property should have been recorded with the Macomb County Register of the Deeds, Christenson said. He said the bank likely avoided recording its interest to save filing costs, which could add up to a large sum of money if done on thousands of foreclosures.

For more, see Precedent-setting ruling that stops foreclosure could help other homeowners.

For the court ruling, see Kim v. JP Morgan Chase Bank, No. 302528 (Mich. Ct. of App., January 12, 2012).

Insurance Squeeze Continues For Florida Homeowners; 'Backdoor' Rate Increases, Industry Campaign Cash To Business-Friendly Governor Pinch Pocketbooks

In West Palm Beach, Florida, The Palm Beach Post reports:
  • Linda Sapp's reaction to her insurance bill was sticker shock: The annual premium doubled to $4,800, adding hundreds to her monthly mortgage payment. Her first thought: "There's no way I can afford my house."

***

  • In Boynton Beach, retiree Thomas Spatafora is on a fixed income and said he has never filed a property claim. But annual premium increases just keep on coming from the state's insurer of last resort, Citizens. "How the hell much is enough?" Spatafora said. "They keep increasing the cotton-picking premiums. Are they going to price us out of existence so we can't afford it?"


  • Affordability is not as popular a word as it once was in Tallahassee, where the emphasis these days is on encouraging insurance rates to rise. That is particularly true with Citizens [Florida's property/casualty insurer of last resort], the state's biggest carrier with 1.5 million policyholders.


  • "The true cost of living close to the coast, where hurricanes are most destructive, is much higher than Citizens policyholders have been paying," said Lane Wright, spokesman for Gov. Rick Scott. "That's because the rates have been held artificially low by politicians who've postponed the inevitable and kicked this can down the road. [...]"


  • Insurance interests gave more than $94,000 to Scott's campaign in the 2010 cycle, among the four industries most generous to him, according to online data compiled by the National Institute on Money in State Politics.


  • Private insurers stand to benefit as Citizens' bills climb, influencing the market as a whole. Scott wants legislators to consider letting Citizens raise rates beyond the 10 percent a year currently allowed.


  • For many customers, bigger hikes are already coming through what consumer advocates characterize as backdoor rate increases.


  • One way to boost premiums is to raise the projected cost of rebuilding homes, though existing home prices in many parts of Florida continue to fall and the construction industry has struggled. Software that Citizens uses to determine replacement costs is under review in South Florida and Tampa this month following consumer complaints.


  • Then there are reinspections that overwhelmingly tend to find homeowners no longer qualify for storm-resistant features that bring discounts, despite protests from homeowners they followed the rules the state set and later repeatedly changed. Reinspections raised Citizens premiums an average of 24 percent, or $718 a year, for 63 percent of 78,000 homes visited through Nov. 30. In 2012, reinspections are scheduled for 209,000 homes - adding $94 million to premiums at 130,000 homes statewide if trends hold.

For more, see Wind-less storm brews over skyrocketing premiums.

Tuesday, January 17, 2012

Homeowner In Foreclosure Has Possession Of Vacated Home Swiped Out From Under; Cops Refuse Help, Say It's A Civil Matter

In Bakersfield, California, KGET-TV Channel 17 reports:
  • A viewer e-mailed 17 News, saying squatters have taken over his southwest Bakersfield home. He says no one will help get them out. "I was very naive, foolish you might say. I wanted to help them," said Juan Medina.


  • Juan Medina is packing up for a new life in Tehachapi. A messy divorce in 2008 left him with a house payment he could no longer afford. While trying to modify his loan, his southwest Bakersfield home was empty. Two months ago, he says he returned and discovered people living there.


  • "I went to the garage and the garage was locked with a different padlock, went to the front door and my keys did not work. I felt really bad for them. I had heard so many families get in trouble because they had been lied to. My first thought wasn't to kick them out. My first thought was to help," explained Medina.


  • The family told Medina they have a rental agreement with a local relator, but has yet to show him the document. Medina showed 17 News the deed to his home. He is the legal owner. But, he is trying to turn it over to the bank to avoid foreclosure.


  • However, that can't happen because Medina says the bank requires it to be empty and clean. "There's an unaccountable amount of dogs and cats running through the house, in the backyard, large dogs. It smells like feces and urine inside," he continued.


  • We followed Medina to his home. A man told us his sister lives in the home and has a rental agreement. "The cops were here yesterday and she showed cops. It has nothing to do with you guys," he said. A woman inside the home wouldn't come out and no one showed us the rental agreement. "I just want to speak to you for two minutes," Medina told the woman through the door. "Serve me a 30-day notice. Please leave me alone," she responded.


  • Medina said Bakersfield police officers came to the home, but they couldn't kick the family out. "Unless we can prove that the proclaimed renter knew that the situation was fraudulent from the very beginning, our hands are tied. It's a civil situation," said Sgt. Mary DeGeare, Bakersfield Police Department.

For the story, see 17 News investigation: Man says squatters have taken over his home.

NM Homeowner Seeks State High Court Review Of Subprime Refinance Involving No Appriasal, Income Check That Left Couple With Unaffordable Payments

In Santa Fe, New Mexico, NewsOK reports:
  • A Chimayo, N.M., couple remain in their home into the new year as their 2007 default on their refinanced mortgage wends its way to the New Mexico Supreme Court.


  • Their attorney, Joshua Simms of Albuquerque, N.M., said Joseph and Mary Romero continue to make minimal payments to the Bank of New York to stay in their family home until the legal fight is concluded.


  • They haven't had much success so far in the court system with their case, which has gotten the support of such groups as the Santa Fe Neighborhood Law Center, Somos Un Pueblo Unido and the Roman Catholic Archdiocese of Santa Fe.


  • The law center, in a court brief, called the Romeros' loan “a wild home mortgage refinancing loan based on no appraisal and no income verification.” The groups supporting the Romeros hope the case can lead to more support from the court system for those enticed into risky home mortgages.

For more, see New Mexico Supreme Court will rule on foreclosure case (A Chimayo, N.M., couple remain in their home into the new year as their 2007 default on their refinanced mortgage wends its way to the New Mexico Supreme Court).

Pair Cop Guilty Pleas in Scams Involving Use Of Forged Mortgage Satisfactions, Rent Skimming To Screw Over Banks, Landlords

From the Office of the U.S. Attorney (District of Columbia):
  • The owners of a property management company, Bryan W. Talbott, 48, and Chester D. Ransom, Jr., 44, have pleaded guilty to defrauding their clients, mortgage lenders, and the government out of more than $2.8 million.

***

  • According to the government’s evidence, Talbott was the president and Ransom was the vice president of a property management company located in Washington, D.C., that operated under multiple names, including Esquire LLC, Federal City Mowbray, and Private Properties Inc. (collectively referred to as “Esquire”). The defendants also lived together at a residence on North Portal Drive NW, Washington, D.C.


  • From 2004 to the present, the defendants engaged in three separate fraudulent schemes, resulting in more than $2.8 million in losses to the victims.


  • As part of [one of] their fraudulent scheme[s], the defendants frequently collected rental payments from tenants but did not pay the bills for the properties, despite falsely representing to the property owners that the bills had been paid. Instead, the defendants used these funds for their own benefit. In addition, the defendants also sent forged bank statements to some of their clients, misstating the balances in their clients’ accounts.


  • Through this fraudulent scheme, the defendants defrauded at least 54 clients out of a total of $1,269,278.


  • [In another fraudulent scheme,] On June 30, 2004, Ransom purchased the property on North Portal Drive NW for $975,000, financing the purchase, in part, with two loans in the total amount of $731,250 from WMC Mortgage Corp. , a mortgage lender. Ransom executed two deeds of trust on the property, granting WMC a security interest in the property.


  • On December 29, 2005, Ransom filed with the District of Columbia Recorder of Deeds two forged Certificates of Satisfaction, purporting to release the WMC liens on the Portal property.


  • Then, on January 13, 2006, Ransom sold the Portal property to Talbott for $1,110,000. The defendants provided copies of the forged lien releases to the settlement company. Talbott obtained a loan in the amount of $750,000 from Fremont Investment and Loan. Talbott executed a deed of trust on the property, granting Fremont a security interest in the property. Ransom received a check in the amount of $515,034 from the settlement.


  • Less than a month later, on February 2, 2006, Ransom again “sold” the Portal property to Talbott, this time for $1,250,000, despite the fact that Talbott was already the legal owner.


  • The defendants provided copies of the forged lien releases to the settlement company. Talbott obtained a loan of $890,000 from First National Bank of Arizona. Talbott executed a deed of trust on the property, granting First National Bank of Arizona a security interest in the property. Ransom received a check in the amount of $801,280 from the settlement.

For the U.S. Attorney press release, see Owners of Property Management Company Plead Guilty To Defrauding Clients, Mortgage Lenders and Government (Scheme Involved More Than $2.8 Million).

Monday, January 16, 2012

Recent Florida IG Report Adds More Proof Of State Officials' Fear Of Prosecuting Foreclosure Fraud

In West Palm Beach, Florida, The Palm Beach Post reports:
  • The Nevada attorney general calls signing another person's name on documents used to repossess a home "forgery" and a "scheme."


  • Michigan's attorney general launched a criminal investigation that includes whether "falsified signatures" were used in foreclosure cases.


  • But Theresa Edwards and June Clarkson were forced to resign their jobs as foreclosure fraud investigators for the Florida Attorney General's Office, in part, for referring to so-called "surrogate signing" as forgery.


  • According to a Florida Inspector General report that cleared Attorney General Pam Bondi's office of wrongdoing in the firings, the duo repeatedly used the word "forgery" in a 2010 presentation that included documents from the Jacksonville-based Lender Processing Services. The company complained and drew the attention of economic crimes boss Richard Lawson.


  • Lawson says in the inspector general's Jan. 6 report that surrogate signing as it relates to Lender Processing Services, also called LPS, is not forgery, which requires an intent to defraud. The practice was authorized by the company, more evidence, Lawson said, that no forgery occurred.


  • Homeowner advocates who support Edwards and Clarkson are now questioning portions of the 83-page report. They point to the LPS signature issue as an example of what they say is Florida's resistance to go after foreclosure fraud.

For more, see Is signing foreclosure documents for others forgery?

NJ Feds Squeeze Guilty Plea From Another Sale Leaseback Peddler In Equity Stripping Ripoff Of Homeowners In Foreclosure Having High Equity, No Cash

From the Office of the U.S. Attorney (Newark, New Jersey):
  • A former employee of a Parsippany, N.J., mortgage lender admitted [] to taking $138,402 in illegitimate proceeds of multiple home sales as a result of a mortgage fraud scheme, U.S. Attorney Paul J. Fishman announced.


  • Jorge Abbud, 33, of Dover, N.J., pleaded guilty before U.S. District Judge William H. Walls in Newark federal court to an Information charging him with wire fraud.


  • According to documents filed in this case and statements made in court:

    In 2008, Abbud was an employee of a Parsippany mortgage lender. He admitted that he targeted homeowners in New Jersey who had equity in their homes, but were facing foreclosure because of their inability to pay their monthly mortgage payments.

    Abbud falsely promised to help these homeowners avoid foreclosure, keep their homes, and repair their damaged credit. He instructed the homeowners to permit the titles of their homes to be recorded in the names of third-party purchasers ( “straw buyers”) for approximately one to three years, promising the homeowners that he would improve their credit scores during that time, obtain mortgages with more favorable interest rates for them and return the titles of the homes to the homeowners.

    Abbud said he then recruited straw buyers with good credit scores to act as buyers of the homes facing foreclosure. He told the straw buyers they were helping the homeowners keep their homes, and that the straw buyers would make money when the homes were sold back to the original homeowners.

    Abbud admitted that on certain occasions, and notwithstanding his promises to the homeowners and straw buyers, the homes fell into foreclosure.

For the U.S. Attorney press release, see Former employee of Parsippany, N.J., mortgage lender pleads guilty to fraud.

For the formal criminal charges, see Information - U.S. v. Abbud.

Michigan Appeals Court: Failure To Record Mortgage Assignment Prior To Sale Sinks Foreclosure

From a press release from the Michigan law firm Warner Norcross & Judd:
  • On January 12, 2012, the Michigan Court of Appeals issued its opinion in Kim v. JP Morgan Chase Bank, No. 302528. The foreclosure-by-advertisement statute, MCL 600.3204, provides, “If the party foreclosing a mortgage by advertisement is not the original mortgagee, a record chain of title shall exist prior to the date of sale under section 3216 evidencing the assignment of the mortgage to the party foreclosing the mortgage.” MCL 600.3204(3).


  • In Kim, the defendant was the assignee of the mortgage, and it failed to record its ownership of the mortgage before foreclosing by advertisement.


  • Thus, the Court held that the foreclosure sale was invalid because the defendant had not complied with MCL 600.3204’s requirements.

For more, see Court Sets Aside Foreclosure Sale Where Assignee Of Mortgage Failed To Record Its Interest Prior To Sale.

For the court ruling, see Kim v. JP Morgan Chase Bank, No. 302528 (Mich. Ct. of App., January 12, 2012).

Sunday, January 15, 2012

Unimpressed w/ Progress In Current Negotiations, State AG Group Meets To Discuss Enforcement Options/Strategies Around Various F'closure Fraud Issues

The Huffington Post reports:
  • Attorneys general or representatives from nearly 15 states met in Washington, D.C., on Tuesday to discuss and share different enforcement options and strategies around various mortgage-related issues, according to sources familiar with the conversation.


  • The meeting was prompted by the slow pace at which a national foreclosure settlement led by the Obama administration is progressing, and is likely to be the first in a series, said these sources.


  • The participating attorneys general, from states including California, Nevada, Delaware, Massachusetts and New York, discussed how they could possibly join together to investigate and potentially file lawsuits against abusive mortgage lenders and servicers. Principals or representatives also attended from Hawaii, New Hampshire, Missouri, Mississippi, Maryland, Kentucky and Minnesota.


  • "This past Tuesday, a group of like-minded Attorneys General met in D.C. to discuss ongoing and future investigations into the mortgage finance and foreclosure industries," said Delaware Deputy Attorney General Ian McConnel.


  • "The talks weren't just about investigations," said a source with knowledge of the discussions. "They were also about the attorneys general offices feeling uninvolved in a process by which their federal colleagues have been negotiating on their behalf."

For more, see Attorneys General, Frustrated With National Foreclosure Settlement, Consider Alternate Course.

Process Server's Failure To Keep Adequate Records Sinks NY Foreclosure; May Open Floodgates In Effort To Vacate Judgments

In Nassau County, New York, Reuters reports:
  • A process server working for a once-prolific foreclosure law firm in upstate New York broke the law by failing to keep any record of papers served in a 2008 foreclosure case, a Long Island judge has ruled, giving defense attorneys a new angle to explore in foreclosure cases as they seek to buy time for their financially beleaguered clients to modify or refinance their mortgages.


  • Gary Cardi, a former police officer contracted by A&J Process Service -- which has offices on the same floor in the same building as the foreclosure firm Steven J. Baum PC -- admitted in Nassau County court last October that he didn't have any record of serving foreclosure papers on Soledad Murillo in 2008. In fact, he told state Supreme Court Justice F. Dana Winslow during an October hearing, he hasn't kept records of any of the "thousands" of cases he served over the last six years.


  • An attorney for the Baum firm, Victor Spinelli, representing foreclosing bank U.S. Bank NA, told Winslow that he thought the failure to keep tabs on service wasn't a reason to overturn a foreclosure judgment against Murillo under New York law.


  • But Winslow disagreed. Not only was Cardi required to keep some record of his attempts to serve Murillo, Winslow ruled, but his failure to do so violated New York General Business Law Article 8, which defines and outlines the duties for process servers -- including, Winslow said, the need to keep "legible" records of service.


  • "The duty to keep comprehensive records may have been unnoticed, or underestimated, by litigants and the courts," Winslow wrote in a ruling dated Dec. 22. "Past practice, however, cannot be the motivating force for future conduct and determinations.


  • "The need, particularly in this economic environment and under these telling circumstances, for valid and reliable proof of service, mandates the rejection of 'trust me,' and the adoption of 'show me,'" Winslow wrote.

***

  • Traverse hearings -- which are held to determine whether parties were properly served -- are still a relative rarity in foreclosure cases, said Rebecca Grammatico, an attorney at the Empire Justice Center who works on foreclosure issues.


  • But defense attorneys in foreclosure cases may find a useful new approach in the wake of Winslow's ruling, Grammatico said. "Time is frequently the thing you really need," she said. "This will, for many petitioners across the state, become the tool."


  • It is possible that other defendants who were served by Cardi or another server who failed to keep records could use Winslow's ruling as a way to get judgments against them vacated, Grammatico added.

For the story, see NY judge: Sloppy service has legal consequences.

Squatters Score With Vacant Foreclosed Homes; Use Phony Leases To Get Free Temporary Housing, Squeeze Banks For 'Cash For Keys' 'Walking' Money

In Antioch, California, NBC Bay Area reports:
  • It's a problem plaguing our country. Squatters moving into foreclosed homes and banks paying them to get out. It's happening in one Antioch neighborhood. Neighbors formed a neighborhood watch program in part because they noticed lots of homes being foreclosed in he area.


  • They were apparently right to be worried. Police arrested three people Tuesday on Bedrock Way in Antioch.


  • Police said the people in the home tried to show them a phony lease, but they weren't fooled. A following search of the home netted stolen goods and a stolen car.


  • Authorities believe the people arrested were involved in what is called cash for keys. That's when criminals move into foreclosed homes and banks end up paying them thousands of dollars to move out.


  • "I think most of the bank agents know that these folks shouldn’t be there it’s easier just to pay them get them out and everything’s left there," Capt. Leonard Orman with Antioch police said. Orman said cash for keys happens all the time in his city where there are hundreds of bank owned homes nestled in nice neighborhoods.

Source: Squatters Plaguing Foreclosure Neighbors (The latest crime wave to hit Antioch is called cash for keys).

Cops Pinch Pair For Illegally Hijacking Possession Of Temporarily Vacated Rental Home; Landlord Was In Process Of Remodeling Unoccupied Premises

In Taylorsville, Utah, KSTU-TV Channel 13 reports:
  • Amanda Booth and Tony Hoskins face criminal charges related to squatting in a Taylorsville home. The two suspects apparently took up illegal residence November by allegedly squatting at a home on 5200 South and 3700 West.


  • The rental property was vacant and being prepared for a new tenant, according to Taylorsville Police Sgt. Tracy Wyante. Wyante says the owner was upgrading the space by having it remodeled.


  • Crews doing the remodeling noticed something was wrong when thousands of dollars worth of new carpet was missing. They informed the owner, who called police. "The case was investigated as a burglary, unfortunately we could not prove the burglary element of the case, which certainly existed, but we couldn't prove it," says Wyante.

***

  • Police say it is becoming more common to see individuals squat in homes while hundreds of properties sit vacant due to foreclosure, from owners who walked away from an upside-down mortgage, or, such as this case, a home that is being renovated.

For the story, see Police say squatters allegedly took up residence in vacant Taylorsville home.

Saturday, January 14, 2012

Court To Slum-Financing Lender: Cough Up The Repair Cash; Bank Learns It 'Can't Just Wash Its Hands & Walk Away'

In Brooklyn, New York, the New York Daily News reports:
  • City Council Speaker Christine Quinn on Tuesday was touting a court decision to hold a bank responsible for repairs to a dilapidated Brooklyn tenement. “I think this is really a precedent-setting decision,” the mayoral hopeful said. “The buck finally stops somewhere for tenents in the city of New York.”


  • Six elderly and disabled tenants at 294 5th Avenue in Park Slope filed a motion in May 2011 after two years of living with deteriorating conditions since the building’s owner defaulted on a $1.85 million mortgage. The tenants were living with on-and-off heat and hot water, no trash collection, an unsecured front door and a roof in danger of collapse.


  • The building has 109 open violations, including seven “immediately hazardous” violations, according to the New York City Department of Housing Preservation and Development. The decision by Judge Sylvia O. Hinds-Radix on Dec. 20 orders the National Bank of New York City to pay a receiver who is responsible for overseeing repairs when the rent doesn’t cover the fixes.


  • Shira Galinsky, a senior Staff attorney at South Brooklyn Legal Services, which handled the case, said the case will lead to banks being “held responsible for bad lending.”


  • Quinn said the decision can be cited by tenants in future cases to force banks to pay for repairs when a foreclosure had been initiated and a receiver is in place to oversee repairs. "It says that the mortgage holders are not without responsibility,” Quinn said, “that they can’t just wash their hands and walk away.”

Source: Christine Quinn touts case which could lead to banks being 'held responsible for bad lending' (Court holds bank responsible for repairs to Brooklyn tenement).

See also, Elderly and Disabled Tenants Win Suit Compelling Bank to Pay for Repairs.

Court Strips Landlord Of Control Over Dilapidated Buildings Innundated With Code Violations; Gives Hope To Dozens Of Poor, Boot-Fearing Residents

In St. Paul, Minnesota, the Star Tribune reports:
  • Halima Eidl lives in a St. Paul apartment that has urine-stained carpet and also mold, mice, roaches and rats. Despite that, she isn't looking to move. But Eidl and about five dozen of the city's poorest families could find themselves homeless later this month.


  • The families live in two East Side apartment buildings that are on the verge of bank foreclosure, city condemnation or orders for eviction. Because money is short, moving isn't possible for most tenants, including Eidl and her daughters, Rashida Eidl, 17, and Maidah Ali, 11. Halima Eidl said owners Peggy and Randall Chun repeatedly ignore requests to fix problems.

***

  • In early December, an inspection of the two buildings [...] yielded nearly 300 code violations -- an appalling number to City Council members. The buildings each have about 30 rental units and also have produced a substantial history of police calls for thefts, drug dealing and prostitution.

***

  • Wells Fargo filed in Ramsey County District Court to foreclose on the Chuns for the $3.1 million mortgage on the buildings, [...]. The bank will ask a judge [] to appoint a receiver who could begin repairs on the battered properties.

For more, see Families face eviction from infested St. Paul apartments (The landlords said they will make the necessary repairs on the rundown East Side property, but it may be too little too late).

For story updates, see:

Another Would-Be Tenant Clipped By Rent-Skimming Property Owner; Kicks Herself For Not Checking Out Home's Foreclosure Status Before Signing Lease

In Augusta, Georgia, WRDW-TV Channel 12 reports:
  • An Augusta woman thought she found her dream home only to be forced to move out weeks after signing the lease. April Williams fell in love with the two-bedroom, one-bath cottage on McDowell Street as soon as she stepped through the front door.


  • "Once I seen it I said, 'This is the spot for me. This is where I want to be,'" she said. She signed a year lease after two long months of searching for the perfect, affordable home. "It was right at $1,300 because I had to pay the $650 deposit and the $650 to move in," she said.


  • She moved into her new address Dec. 6. A month later, she found a letter posted on her front door. "It says, 'This property is now owned by Fannie May,'" she said.


  • Williams says her landlord never told her the home was in foreclosure. "I'm tremendously angry and she is still trying to call and get money from me," she said. The government requires Fannie Mae to pay Williams to move out.


  • Williams is kicking herself for not checking to see if the property was in foreclosure before she signed the lease. "It never crossed my mind -- never, never, never, because she never said anything. Nothing," she said.

Source: 12 On Your Side: Renter finds herself in foreclosure, forced to move (A woman is forced to move after finding out the home she just leased was foreclosed on).

Man Pinched For Setting Up Indoor Pot Farm In Foreclosed Dad's House; Said He Decided To Grow His Own Stash After Being Burned By Local Pot Peddlers

In Sheboygan Falls, Wisconsin, the Sheboygan Press reports:
  • A marijuana growing operation discovered when the locks on a house were changed during foreclosure led to charges Friday for a 43-year-old Sheboygan Falls man. Brock O. Bizzell, [...] is charged with marijuana manufacturing, maintaining a drug trafficking place and marijuana possession, felonies punishable by up to eight years in prison.


  • Bizzell was arrested Wednesday after police raided a house at W3180 Highway PP and seized 40 marijuana plants and an array of related equipment. Sheboygan Falls Police Chief Steve Riffel called it a "large-scale and elaborate growing operation."

***

  • [According to a criminal complaint,] Bizzell admitted to growing the marijuana but claimed it was only for personal use. He told police he was sick of getting burned by the people he bought marijuana from and decided two months prior to start growing his own. Bizzell did not live at the home, which had belonged to his father.

For the story, see Foreclosure helps uncover marijuana growing operation.

Cops: 'Disappointed' Homeowner Threatened To Shoot Judge After F'closure Hearing, Telling Paralegal He Was Taking Bomb, Missiles, Gun Into Courthouse

In Lakeland, Florida, The Ledger reports:
  • A Lakeland man is accused of threatening to shoot a Polk judge after a foreclosure hearing, deputies said. Walter E. Norris, 55, was arrested Friday and charged with threatening to discharge a destructive device.


  • Norris called his lawyer [...] and told a paralegal that he was going to take a bomb, missiles and a gun into the courthouse, according to an arrest report. The law firm's security division contacted deputies.


  • Norris was released Saturday on a $5,000 bail, according to records.

Source: Man Accused of Courthouse Plot, Threatening to Shoot Judge at Hearing.

Friday, January 13, 2012

Bay State High Court Invites Supplemental Briefing In Pending Foreclosure Case That Looms As Possible Disaster For Massachusetts Land Titles

From The Boston Globe's Real Estate Now blog:
  • Attorney Richard D. Vetstein reports on another court case about foreclosure paperwork problems.

    The Supreme Judicial Court has just issued an unusual order in the very important Eaton v. Federal National Mortgage Association case, indicating its deep concern over whether its ruling with have a disastrous impact on foreclosure titles and, if so, whether its ruling should be applied prospectively rather than retroactively.

    As outlined in my
    prior post on the case, the Court is considering the controversial question of whether a foreclosing lender must possess both the promissory note and the mortgage in order to foreclose. If the SJC rules against lenders, it could render the vast majority of securitized mortgage foreclosures defective, thereby creating mass chaos in the Massachusetts land recording and title community. If you thought U.S. Bank v. Ibanez was bad, Eaton v. FNMA could be Apocalypse Now.

    The court is requesting supplemental briefing on whether requiring a unity of the mortgage and the underlying promissory note, in order for there to be a valid foreclosure, would cloud any title that has a foreclosure in the chain of title, regardless of how long ago the foreclosure occurred, and if so, what legal or practical measures exist that might limit the consequences of such a requirement.

    The court is also concerned that if it were to hold that unity of the mortgage and note is required under existing law, whether the court’s holding should be applied prospectively only.

For more, see SJC concerned with toxic foreclosure fallout.

Go here for links to the briefs filed in this case.

NYS Insurance Regulator Probes Suspected Force-Placed Insurance Shenanigans By Major Bankster/Servicers

The New York Times reports:
  • A New York State financial services agency is investigating several large banks to see whether they fraudulently steered homeowners into overpriced insurance policies. The investigation centers on so-called force-placed insurance that has become increasingly common since the downturn of the housing market began and homeowners had trouble keeping up with payments on their home insurance.


  • JPMorgan Chase, Bank of America, Citigroup and Wells Fargo are among the major companies involved in the inquiry by the office of Benjamin M. Lawsky, the superintendent of New York State’s Department of Financial Services, according to a person briefed on the investigation who asked to remain unidentified because the matter was private.


  • Mr. Lawsky’s office issued 31 subpoenas or other legal notices related to the case in early October, just as the state’s insurance and banking departments were merged under his new agency. His office has already turned up instances where mortgage servicing units at large banks steered distressed homeowners into insurance policies up to 10 times as costly as the homeowners’ original plans.

For more, see Big Banks Face Inquiry Over Home Insurance.

Now-Disbarred Closing Attorney Gets 3 Years For Looting Trust Accounts Of $1M, Ingloriously Ending 44-Year Law Career

In Henrico County, Virginia, the Richmond Times Dispatch reports:
  • Character witnesses for longtime attorney William Orr Smith described him Tuesday as a trusted mentor whose decades-long career combined a sharp knowledge of the law, respect and a street-smart awareness.


  • But when Smith stood to address a Henrico County judge poised to sentence him in a $1 million embezzlement scheme, Smith described his 44-year career as leading to guilty pleas that reduced him to "a common thief."


  • The solemn-looking, chagrined attorney will spend three years in prison despite sentencing guidelines that called for no active prison time. Smith, 72, will report to the Henrico jail Jan. 27, Circuit Judge George F. Tidey ruled.


  • Special Prosecutor Tracy Thorne-Begland described Smith as unequalled in the assistance he gave investigators tasked with unraveling the savvy attorney's embezzlements from a subsidiary of Bank of America that handled foreclosures and mortgages. But Thorne-Begland said, too, that the five-year scheme involved hundreds of illegal transfers from mortgage accounts and foreclosure accounts — repeated acts that could have stopped at any time but that resulted in only three actual criminal counts of embezzlement.

***

  • "It was who he was for virtually all his life," defense lawyer Craig S. Cooley said of Smith's ended law career, noting that insurance will pay $650,000 of the loss and that Smith will be hard-pressed to make restitution of the balance of the $1,065,327.10 that he pilfered.


  • Smith surrendered his law license in June, cooperating with State Bar investigators as much as he did detectives. He pleaded guilty to two embezzlement counts in September.

For the story, see Lawyer, 72, will serve three years in $1 million embezzlement.

Thursday, January 12, 2012

Chase Beginning Consumer Debt Collections Shutdown? Lawsuits Virtually Disappeared In Several Major Cities; Document Irregularities May Be Problem

American Banker reports:
  • JPMorgan Chase & Co. has quietly ceased filing lawsuits to collect consumer debts around the nation, dismissing in-house attorneys and virtually shutting down a collections machine that as recently as nine months ago was racking up hundreds of millions of dollars in monthly judgments.


  • A sampling of court records in the major cities in five states shows that Chase collection suits have virtually disappeared. In a sixth state, Illinois, contract attorneys continue to file small-dollar cases, though at a reduced rate.


  • It is unclear whether Chase has stopped pursuing collection on many claims nationwide, or if intends to pursue the debts in some other fashion. The bank has not explained its apparent moratorium and declined comment.


  • Chase's halt does, however, follow scattered defeats in state courts and a whistle-blower's allegation that it falsely overstated the balances of thousands of delinquent accounts it sold to a third party. Former Chase employees and debt collection experts insist that the bank would not have abruptly retreated from its collections efforts in the absence of trouble.


  • In a sign that Chase acted with urgency, numerous regional collections teams were fired in mid-2011 at the order of the New York bank's headquarters, according to people familiar with the events.


  • "Nobody told anybody anything. It was very traumatic," says a former Chase attorney who asked to remain anonymous because of a nondisclosure agreement. "I think there were investigations by the [Office of the Comptroller of the Currency] and other government entities. If we're not there, we can't be interviewed."

***

  • Robo-signing, or the high-volume production of signed legal documents, has been a key element of the governmental and media foreclosure reviews. Chase's current pullback raises at least the possibility that at least some banks may have documentation problems in other business lines.

***

  • Linda Almonte, a former team leader in Chase's San Antonio credit card services division, accused the bank of firing her for objecting to the sale of $200 million in legal judgments obtained by bank attorneys. Half the accounts lacked adequate documentation of judgment and one-sixth listed the wrong amounts owed, Almonte claimed in a suit filed in U.S. District Court for the Western District of Texas.


  • In its response, Chase did not dispute inaccuracies in the debt balances and documentation. Instead, it said its sales agreement allowed for errors and thus was proper. "[T]he parties explicitly agreed that the judgments were purchased 'as is' and "with all faults," Chase's attorney wrote.


  • Chase was unsuccessful in getting the case dismissed and settled it on undisclosed terms last April; it ceased filing new consumer debt lawsuits in many states the same month.

For more, see JPM Chase Quietly Halts Suits Over Consumer Debts.

Fla Appeals Court: 'Green Card-Lacking' Couple Entitled To Benefit Of State Homestead Exemption Against Forced Sale, Dodging $500K Claim Against Home

The Florida Bankruptcy Law Blog reports:
  • A Florida appellate court has liberalized homestead exemptions for temporary U.S. residents. The court said that a foreign citizen’s eligibility for Florida homestead depends on his intent rather than the U.S. Immigration Service’s rules.


  • A debtor’s eligibility for homestead is based on the all the facts relevant to his intent to reside permanently in his house even if the debtor has not yet received agreen card.”


  • The court upheld the homestead exemption of a foreign debtor who resided in a Florida property since its purchase, had a visa giving him the right to reside in Florida, and was actively pursuing permanent resident status.(1)

Source: Court Liberalizes Homestead Exemption For Foreign Debtors Living In Florida Properties.

For the court ruling, see Grisolia v. Pfeffer, Case No. 3D11-198 (Fla. App. 3d DCA, November 23, 2011).

(1) It should be noted that a fact in this case that appears to have played a big part in tipping the scales in favor of the non-U.S. citizen, 'green card-lacking' homeowners (a wife & her now-deceased husband) was the fact that they had a U.S.-born son (making the child a U.S. citizen) who was the target of an attempted kidnapping in the family's native country, Venezuela.

The court made the following observations in connection with the foregoing:

  • It is undisputed that the Decedent and the Widow were not in the United States as tourists. Instead, they were registered aliens legally allowed to reside in the United States under their temporary visa.

    Moreover, in the Son's case, he was an American citizen who was born in Miami, Florida and had resided in Florida since his family moved here in 2005.

    The Widow testified at the evidentiary hearing that her intent, along with that of the Decedent, was that the family reside permanently in the Property due to safety concerns stemming from the attempted kidnapping of the Son in Venezuela.

    The Widow further testified that she and the Decedent had applied for permanent residence in the United States prior to the Decedent's passing.
    [5] These specific circumstances are sufficient to demonstrate the Decedent's intent to have his family permanently reside in Florida.

***

  • Under the specific facts of the this case, because the Decedent's American-born Son resided in the Property since its purchase, the Decedent and Widow had a visa which gave them the legal right to reside in Florida, and were actively pursuing permanent residence status prior to the Decedent's death, we find that the Decedent demonstrated the requisite intent to make the Property his family's permanent residence.

    Based upon the foregoing, we reverse the probate court's order denying the petition for declaration of homestead exemption.

    Reversed.

--------------------------------------

In this case, the court made clear the distinction between the homestead exemption granted to Florida homeowners under Article X, Section 4 of the state Constitution (which deals with the protection against forced sale of a Florida resident's homestead), and the real estate tax exemption (also referred to as a homestead exemption) allowed to Florida homeowners under Article VII, Section 6 of the state Constitution.

  • Other cases cited by Appellees are inapposite as they involve Florida's homestead exemption from taxation that is now set forth in article VII, section 6 of the Florida Constitution ("Tax Exemption"), rather than the homestead exemption from forced sale found in article X, section 4.

    For example, in Juarrero v. McNayr
    , 157 So. 2d 79 (1963), the Florida Supreme Court held that a citizen and former resident of a foreign country, who is in the United States solely on the authority of a temporary visa, "has no assurance that he can continue to reside in good faith for any fixed period of time in this country . . . [and, therefore] does not have the legal ability to determine for himself his future status and does not have the ability legally to convert a temporary residence into a permanent home."[6] Id. at 81.

    Likewise, in DeQuervain v. Desguin
    , 927 So. 2d 232 (Fla. 2d DCA 2006), the court found that homeowners who held only temporary visas "could not form the requisite intent to become permanent residents for purposes of the [Tax Exemption]." Id. at 233.

    However, the Second District also clarified that "because the [Tax Exemption] provides relief from an ad valorem tax, we must construe the statute strictly against [the homeowners]." Id. (citing Capital City Country Club, Inc. v. Tucker
    , 613 So. 2d 448, 452 (1993)). The strict construction applicable to the Tax Exemption stands in contrast to the liberal construction of the homestead exemption from forced sale at issue here. See Taylor, 941 So. 2d at 562; Law, 738 So. 2d at 524.

    Similarly, at the evidentiary hearing the Appellees raised the fact that the Decedent had never claimed a Tax Exemption on the Property. They further argue on appeal that a person in the United States under a temporary visa cannot meet the requirement of permanent residence or home, and therefore, cannot claim the Tax Exemption. Fla. Admin Code R. 12D-7.007 (2002).

    We note that the portion of the Florida Administrative Code to which they cite applies to the Tax Exemption and not to the homestead exemption from forced sale at issue here. The probate court referenced in the order on appeal that "[i]n fact, the Decedent never claimed a [Tax Exemption] according to the Miami-Dade County Tax Rolls."

    As we have previously stated, "[f]ailure to claim the [Tax Exemption] is not evidence that property is not, in fact, homestead." Taylor
    , 941 So. 2d at 563 (citing Pierrepoint v. Humphreys, 413 So. 2d 140, 143 (Fla. 5th DCA 1982)).

    Clearly, "the homestead exemption from forced sale is different from the [Tax Exemption]." Taylor
    , 941 So. 2d at 563 (citing S. Walls, Inc. v. Stilwell Corp., 810 So. 2d 566, 569 (Fla. 5th DCA 2002))., 810 So. 2d 566, 569 (Fla. 5th DCA 2002)).

-----------------------------------------------

Prevailing in this case was a big win for the family in that the stakes for them were pretty high. By being entitled to the homestead exemption against forced sale of their homestead as provided to Florida homeowners under the state's Constitution, a claim against the family home made by a creditor of the deceased husband's estate to the tune of $500,000 was successfully avoided.

Bankster's Insurance Premium Overcharge Drives Foreclosure Defense Attorney Into Foreclosure

In Indianapolis, Indiana, The Huffington Post reports:
  • Christine Jackson's three-bedroom wood-frame home in Indianapolis is in danger of foreclosure. It's not because she can't afford her mortgage, but because of a bank error, she said.


  • Jackson is among thousands of homeowners from all walks of life who have complained that the major banks that service their mortgages have made frequent errors in calculating their loans. These errors include slapping unnecessary inspection fees onto accounts, misapplying payments in violation of Fannie Mae and Freddie Mac guidelines and "force-placing" expensive insurance on homes that are already insured.


  • Jackson knows all this all too well because she is a lawyer who represents homeowners trying to stave off foreclosure. Often, those clients have claimed that their bank or mortgage servicer made a mistake in tabulating the cost of their loan, triggering a wrongful default.


  • Jackson, 54, a former fraud investigator for the Internal Revenue Service, now understands firsthand the frustration that her clients feel.


  • JPMorgan Chase & Co., the bank that services Jackson's mortgage, has declared her loan in default, blocked access to her online account and threatened foreclosure if she doesn't pay late charges that she said are unwarranted. Her once sterling credit is ruined and she could lose her home if the mess isn't resolved, Jackson said in a recent interview.


  • Jackson blames her situation on an extra annual insurance premium that she said Chase deducted from her account in 2009 on top of her usual payment. The overcharge triggered a series of account miscalculations, eventually leading to default, according to Jackson.


  • "I'm disgusted with the whole thing," she said. "My credit is trashed. I have nothing at all to finance my business. I might have to file for bankruptcy."

For more, see Foreclosure Lawyer Could Lose Her Home Because Of Alleged Bank Error.