Thursday, January 19, 2012

Lawsuit: Bankster Played "Hide & Seek" With Debtors, Judges, Others In Battling Tens Of Thousands Of Bankrupt Homeowners; Action Seeks Class Status

In Los Angeles, California, Courthouse News Service reports:
  • JPMorgan Chase routinely fabricated documents to deceive bankruptcy judges, going so far as to Photoshop documents to "create the illusion" of standing "in tens of thousands of bankruptcy cases," according to a federal class action.


  • Lead plaintiff Ernest Michael Bakenie claims that Chase's "pattern and practice of playing 'hide-and-seek' with debtors, judges and other bankruptcy players" bore rich fruit: that Chase secured motions for relief of stay and proofs of claim in 95 percent of its cases.


  • "Through the use of fabricated assignments, endorsements and affidavits that purport to transfer deeds of trust, notes and the rights to all monies due under the terms of tens of thousands of non-negotiable promissory notes (the 'MLNs'); Chase has demonstrated a pattern and practice of playing 'hide-and-seek' with debtors, judges and other bankruptcy players," the complaint states.

For more, see Chase Accused of Brazen Bankruptcy Fraud.

For the lawsuit, see Bakenie v. JPMorgan Chase Bank, et al.

Foreclosure Sweatshop Operator Takes Scolding From Judge Over Sloppy Work; Ordered To Continue Personal Court Appearances Until Each File Is Corrected

In Poughkeepsie, New York, the New York Post reports:
  • Take that, Steven Baum! The 50-year-old lawyer, who owns New York’s largest home-foreclosure mill, made a rare appearance in a courtroom [recently] — and was promptly ripped by a Bankruptcy Court judge frustrated by his firm’s sloppy work.


  • Baum, whose eponymous firm has filed more than 25,000 foreclosure actions across the state over the past three years — many of which have been attacked for containing bogus documents — was lectured by Judge Cecilia Morris to correct his way of practicing law.


  • How many times do I have to tell you, you didn’t do it right,” Morris said during the afternoon hearing. “Do you not understand ‘do it right’?” she asked Baum.


  • Morris had ordered Baum to appear in her courtroom personally after a steady stream of his firm’s lawyers mucked up several of the 180 foreclosure cases he has before the New York federal courts.


  • The judge accused Baum of “slowing down the court” by failing to properly transfer his cases to other lawyers as he prepared to shutter his Buffalo-area firm. [...] “Please don’t make me angry,” Morris warned.


  • The hearing in the Poughkeepsie courtroom was attended by several bankruptcy lawyers who have sparred with Baum in the past, who said afterwards that they were there just to see Baum sweat.

***

  • Apparently not happy with his responses to questions, Morris ordered Baum to make repeat appearances in her courtroom until “each file” is corrected. “I’m telling you, you are walking on bad faith,” Morris said.

For the story, see He’s losing his appeal (Judge gives foreclosure king the Baum’s rush).

Bay State Regulator Strips Sticky-Fingered Broker Of Real Estate License; Writing Rubber Check, Failure To Return Buyer's Deposit Among Dirty Deeds

In Marblehead, Massachusetts, The Salem News reports:
  • The state board that oversees real estate brokers has revoked the license of a Marblehead man who allegedly failed to turn over deposits to a seller and a buyer, as well as a commission owed to another broker, in real estate transactions he handled in 2010.


  • Barry A. Rosenberg's license was revoked effective Oct. 8, the Board of Registration of Real Estate Brokers and Salespersons announced in a press release yesterday, after Rosenberg failed to respond to requests for information or documentation concerning the complaints.


  • According to findings issued by the board, Rosenberg handled the sale of a property on Sayward Street in Gloucester, as well as two properties in Chelsea, during the summer and fall of 2010.


  • The board found that in the first Chelsea transaction, Rosenberg sent the seller's attorney a check for $9,665 that later bounced.


  • He then allegedly handled the sale of the Gloucester property but failed to pay a commission to another broker that was spelled out under the Multiple Listing Service agreement.


  • In October 2010, he was given a deposit to put in escrow by the buyer of another Chelsea property, but when the seller backed out of the deal and took the property off the market, Rosenberg failed to return the $10,600 deposit to the potential buyer.

For more, see Marblehead real estate broker loses license.

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.