Suit: Banksters "Fraudulently Conceal Their Unlawful Assessment Of Improperly Marked-Up Or Unnecessary Fees For Default-Related Services"

In San Francisco, California, Courthouse News Service reports:

• Wells Fargo Bank and J.P. Morgan Chase charge homebuyers who go into default inflated fees and interest rates, customers say in a federal RICO class action. Lead plaintiff Latara Bias claims the defendants, including Chase Home Finance, service almost 20 million mortgage loans, approximately 25 percent of the home loans made in the United States.



• The class claims the defendants use an automated mortgage loan management system, and subsidiaries, to "fraudulently conceal their unlawful assessment of improperly marked-up or unnecessary fees for default-related services, cheating borrowers who have least afford it."



• The plaintiffs concede that when mortgage borrowers go into default, it is natural for lenders to act to protect their interest in the property. "However, lenders are not permitted to mark up the fees for such services to earn a profit," the complaint states.



• "Nor are lenders permitted to assess borrowers' accounts for defaulted-related service fees that are unreasonably and unnecessary. Nevertheless ... using false pretenses to conceal the truth from borrowers, that is precisely what defendants do. In effect, to generate hearty profits, defendants have substituted inflated interest rates with inflated fees.

For more, see Homebuyers Sue Banks in RICO Class Action.

For the lawsuit, see Bias, et al. v. Wells Fargo & Company, et al.

NY High Court Chief Announces Initiative Allowing All Empire State Homeowners With Some Legal Representation During Foreclosure Settlement Conferences

In Albany, New York, Reuters reports:

• A new court initiative will allow all New York homeowners facing foreclosure to obtain legal representation and streamline the process of settling mortgage disputes out of court, Chief Judge Jonathan Lippman said Tuesday during his annual State of the Judiciary speech.



• The "unprecedented" deal between the state, legal service groups and four large banks -- Wells Fargo, Citibank, Chase and Bank of America -- includes the creation of a new court part that will hear only foreclosure settlement conferences, Lippman said. Each week of the month will be dedicated to a different bank, with one attorney assigned to handle all cases for that lender.



• "There will be no more excuses, no more delays," Lippman said. "Real negotiations will take place, and homeowners will leave the table with the best available offer."



• The court system, Lippman said, is seeking to avoid scenarios that can delay settlement conferences for years, including homeowners being told their paperwork is out-of-date and lawyers for banks claiming to have incomplete sets of documents.



• The program will kick off in New York City, where non-profit legal service groups have agreed to represent all homeowners entering the settlement conference process. The new part will not launch for "at least a couple of months," said Paul Lewis, who helps coordinate courts' handling of foreclosure proceedings for the Office of Court Administration.

For more, see Chief judge announces new foreclosure court part in state of judiciary speech.

Court Rulings Lean Heavily Against Screwed Over Homeowners Seeking To Sue For Banksters' HAMP Violations

Lexology reports:

• The Home Affordable Modification Program (HAMP) is designed to help homeowners avoid foreclosure by modifying qualifying loans to a level that is both affordable and sustainable. The program is intended to provide clear and consistent loan modification guidelines for the mortgage industry and to incentivize loan modifications for borrowers, servicers and investors.

***

• While HAMP does not mandate that any particular loan be modified (instead providing a framework for determining eligibility), the structure of the program has at least one undesirable side-effect: persuading borrowers who were either ineligible or unsuccessful in the program that their inalienable rights have been violated and that they should sue their servicer and investor for the failure to modify their loan.



• Most of these lawsuits are subject to a motion to dismiss for failure to state a claim, because the vast majority of courts around the country have concluded that neither HAMP nor the Emergency Economic Stabilization Act of 2008 (EESA), under which the HAMP program was crafted, provide borrowers with a private right of action. According to a recent review, in 75 cases courts have found that there is no private right of action under HAMP.(1)



• There have been two cases in which the opposite result was reached, both in the Southern District Court of California. A third trial court decision finding a private right of action is on appeal in Tennessee. These figures are not intended to be comprehensive, but to provide a broad view of the current status of this issue, and there may be other recently decided cases that were not included in the review.

For more, and a list of recent HAMP decisions, see No private right of action under HAMP: the growing consensus (may require subscription; if no subscription, GO HERE; or TRY HERE - then click the appropriate link).

(1) A possible 'work-around' to the obstacle that consumers have no private right of action under HAMP, at least in those states that have strong statutes prohibiting unfair and/or deceptive trade practices, is to bring an action under state law asserting that loan servicer conduct that violates HAMP constitutes a "per se" violation of the applicable state statute prohibiting unfair and deceptive trade practices. See, generally, National Consumer Law Center: CONSUMER PROTECTION IN THE STATES: A 50-State Report on Unfair and Deceptive Acts and Practices Statutes.

For those in Florida looking for a helpful reference on this point, see The Florida Bar:

• Per Se Violations of the Florida Deceptive and Unfair Trade Practices Act,
• Obtaining Relief for Deceptive Practices Under FDUTPA.

Savvy Business Reporters & Their Pinheaded Take On Foreclosure Fraud Settlement

Blogger David Dayen writes in Firedoglake:

• We’re going to have to endure this line of argument from those savvy business reporters, and Diana Olick is at the head of the pack, so we might as well take on this argument about the foreclosure fraud settlement directly.
  
  "Let’s take a step back for a second to remember the fall of 2010, when “robo-signing” came to light. The idea that one low-paid guy sitting in a room was signing his, or perhaps somebody else’s, name to thousands of foreclosure documents was appalling. It is appalling, no question. But let us not forget that the vast, vast majority of those foreclosures being processed were in fact legitimate foreclosures; it was the documentation process that was fraudulent. Banks didn’t foreclose on borrowers for no reason, they foreclosed because borrowers weren’t paying their mortgages."
  



• It continues to amaze me how this “no harm, no foul” argument gets employed, when it would not fly in any other context in jurisprudence. Let’s rewrite that claim slightly, with a different scenario but the same spirit.
  
  "The idea that one rogue cop sitting at the police station was fabricating evidence was appalling. It is appalling, no question. But let us not forget that the vast, vast majority of criminal suspects are in fact legitimately guilty of some crime; it was the evidence gathering that was fraudulent. Cops didn’t pick up suspects for no reason, they picked them up because they did something wrong."
  



• This flies in the face of hundreds of years of established law, and the cop, as well as the police department, would be rightly condemned by everyone for allowing a systematic process of evidence fabrication to go on. Practically nobody would make the argument that the suspects were guilty anyway, evidence fabrication be damned. But that’s precisely what Diana Olick is saying with a straight face.

For more, see CNBC’s Diana Olick’s Wrongheaded Analysis of the Foreclosure Fraud Settlement.

Owners Of Bay State Island Summer Retreat Lose Property In Sale Leaseback Deal They Believed To Be Financing Arrangement; Now Face The Boot

In Swansea, Massachusetts, the Herald News reports:

• The embattled owners of Pleasure Island have lost the one-time summer retreat and may be evicted from the property. Last week, a panel of three judges of the Commonwealth of Massachusetts Appeals Court in Boston ruled that the property is owned by Costa Management.



• Former owners, Kenneth and Sandra Stebenne of 469 Corp., have been in a title dispute with Costa Management for the past two years. The Stebennes sought to retain the property, but apparently signed paperwork turning it over to Costa Management in 2005. The Stebennes, if they choose, may appeal the decision with the Supreme Judicial Court within 30 days.



• Attorney John Francoeur of Levin and Levin, representing Edward Costa and Costa Management of Westport, said Monday his client plans to go through with eviction proceedings.

***

• The Stebennes faced a looming foreclosure in 2005. They believed they had entered into a private financing agreement with Edward Costa and retained ownership of the island. [Swansea Town Attorney Arthur Frank Jr.] said they actually transferred the property and entered into a lease agreement. They did have an option to repurchase the island.



• Frank said the judges looked at the documents, including a purchase and sale agreement, which Sandra Stebenne signed as “seller” and Edward Costa signed as “buyer,” and found that they were clear and straightforward, and were binding whether the plaintiff understood what was signed or not.



• Costa Management in 2009 filed the $462,908 2005 deed after offering the Stebennes a chance to repurchase the property. [...] Francoeur said Costa Management will likely put Pleasure Island up for sale.

For the story, see Court rules on title of Pleasure Island, saying Swansea property belongs to new owner.

High Court Declines To Hear Appeal Of Innocent Wife Who Lost Home Over Tax-Delinquent Hubby's IRS Lien; Still Gets To Split Proceeds From Forced Sale

Lexology reports:

• The Supreme Court of the United States recently denied the taxpayer's petition for certiorari in United States v. Barczyk, 6th Cir. No. 10-1498 (Aug. 18, 2011) cert denied (Jan. 17, 2012).



• In Barczyk, the Sixth Circuit upheld the lower court's order allowing the United States to foreclose on its tax lien and sell real property Deborah Barczyk owned with her tax-delinquent husband as tenants by the entirety. The Court of Appeals ordered an equal distribution of the sale proceeds, to the Internal Revenue Service and to Deborah Barczyk, applying the presumption that Deborah Barczyk and her husband had equal interests in the marital home.

For more, see Tax Court reaffirms that a tax lien attaches to property held in tenancy by the entireties: United States v. Barczyk (may require subscription; if no subscription, GO HERE; or TRY HERE - then click the appropriate link).

For the Federal appeals court ruling that was allowed to stand, see United States v. Barczyk, No. 10-1498 (6th Cir. Aug. 18, 2011).

Suit: Bankster Waits Until Homeowner Successfully Completes Ch.13 Payment Plan To Stop Foreclosure, Then Belts Her With Bogus Fees; Takes Home Anyway

In Clark County, Nevada, KTNV-TV Channel 13 reports:

• Wrongful foreclosure, fraud and deceit... all allegations at the center of a lawsuit against JPMorgan Chase. As Contact 13 Chief Investigator Darcy Spears reports, the nation's second largest mortgage lender is accused of taking a family's home while it was supposed to be under court protection.

***

• It started when Cathy [Gaither's] mother, [homeowner] Jo Ann Gaither, filed bankruptcy in 2003. She did that to re-organize her finances and keep her home while paying off her debts.



• Her mortgage, originally through Washington Mutual, was part of the bankruptcy plan. But [Cathy's attorney Chris] Keller says the bank ignored the rules, repeatedly sending her foreclosure notices despite the fact that she was under bankruptcy protection. The bankruptcy was successfully dismissed in 2008.



• "We thought finally we've completed it, now we can move on and pay normal mortgage payments and there's not gonna be any more notices posted on the window and we can move on now, it's a fresh start," Cathy recalls.



• Not from the bank's perspective. The same month the bankruptcy was discharged, Washington Mutual sent a letter saying Jo Ann owed more than $15,000. "And they were seeking to foreclose on the property that same month -- the very month that she finished the bankruptcy itself!" Keller says in disbelief.



• [Cathy's] lawsuit says payments during the bankruptcy were "illegally applied" and that the bank tacked on inappropriate late fees and other charges.



• Washington Mutual's May 2008 letter even says "we understand you have been discharged from the indebtedness through bankruptcy. Nevertheless, our records reflect that your account remains delinquent and foreclosure proceedings may be warranted."

***

• In the midst of it all, Washington Mutual became Chase, the loan modification was denied, and Jo Ann Gaither died. "And the last foreclosure notice that was sent to the property was forwarded the month that she died in July of 2010," [attorney] Keller explains. The house immediately went into probate in another court that Keller says the mortgage lender chose to ignore.

***

• The court has ruled that Cathy can stay at her family home until her lawsuit, which is now in federal court, is resolved. But even that has proved impossible since Fannie Mae took over the house.



• "Since that time, the water company has refused to allow the water to be on at the property because, technically, the property is owned by Fannie Mae," says Keller. "They won't allow me to get the water on and they actually had my power turned off three days after Christmas also," Cathy says.



• The power was turned back on after Keller threatened an even bigger lawsuit. But the house has been without water for an entire year. "I have a 5-gallon bottle I bring in for my dogs or to do little things and that's about it," Cathy says.



• She asked to talk with us out front because the house is in such bad shape. Even vandals have struck. "This window got busted out. There's two, looks like pellet gun holes in the window right here."



• Making Cathy wonder why the bank even wants the house, and why they're putting her through this. "And not just to me but to so many people. There's so many people out there that don't have homes because of something like this."



• Keller says this situation illustrates the flaws in our banking system. "And the inability of the banks to police themselves." Both legally, he says, and morally.



• Cathy hopes her story will empower others to push back against the big banks. "I didn't give up for my mom's sake. And now, yeah, my mom passed away but I'm still not gonna give up."



• Cathy recently got an order from North Las Vegas Justice Court that forces Fannie Mae to allow her to have water at the house while the case is ongoing.

For the story, see Chase accused of wrongful foreclosure.

'All Cash' Homebuyer Loses Priceless Family Heirlooms To Bankster's Trash-Out Contractor; Cops On Refusal To Take Crime Report: 'It's A Civil Matter!'

In Kansas City, Missouri, KCTV Channel 5 reports:

• A Kansas City man's plans to move his mother closer to his home turned into a nightmare. And, he says, led to the theft of priceless family heirlooms. In September 2010, Alan Danforth helped purchase a two-story house on Agnes Avenue for his mother Carol Higgs.



• Because it was a $16,000 cash short sale, with the proceeds going to Chase Home Finance, there was no mortgage on the home. The sale was recorded with Jackson County that same month. "We just gave them a lowball offer and surprisingly they took it and so that's how we got it," Danforth said.



• Danforth began remodeling the house. This included redoing the floors, hanging new doors and putting up fresh paint. Higgs began moving in furniture, kitchen supplies and even some family heirlooms. "There were things that I had for my grandchildren, my great grandchildren, to pass on and pass down," she said.



• But in November 2010, Danforth's remodeling work came to an abrupt halt when he discovered the locks had been changed and a notice was on the door. "A lockbox was put on the door, notices that the house was foreclosed upon. That it had been cleaned and winterized," he said.



• Chase Home Finance had begun foreclosure proceedings on the residence before the short sale to the Danforths. The financial institution failed to update its paperwork. As a result, Chase hired Safeguard Properties to winterize the home, clean it and lock it up.



• But Danforth says Safeguard did much more than that. "They cleaned it out," Danforth said.. "It's gone. Everything's gone. They cleaned out the garage; they cleaned out the house, cleaned out the barn. Everything was gone."



• That included the pieces of family history that his mother had collected. "Broke my heart when I found it was gone," Higgs said. "Materialistic stuff can always be replaced. But they took things that belonged to my mother and my grandmother. I cried."



• The two have repeatedly tried to get answers from Safeguard about where they took the property but have been unsuccessful. Dealing with Chase has been a nightmare because bank operators want Danforth's mortgage information before discussing the missing property.



• "I kept explaining, 'There is no mortgage on this home. We paid cash for it,'" an exasperated Danforth said "And they were like, 'Why are you contacting us?' And I said, ‘Because I want help finding where the stuff went.' They're thinking I need help with the mortgage. There is no mortgage, it's paid for."



• He tried to file a theft report with the Kansas City Police Department but officers declined to accept the report because it appears to be a civil dispute over a mortgage. "I explained to the police, ‘No we paid cash for it. There is no mortgage,'" said Alan. "And he goes, "That's between you and Chase.'"(1)



• In desperation, the mother and son reached out to KCTV5's Investigative Unit. A Chase spokesman eventually admitted a mistake had been made.



• The company accidentally sent Safeguard Properties into a home Chase no longer owned to winterize, clean, and change the locks. However, Chase denied the allegations that personal property was removed. Chase claimed it has pictures proving the Danforth home was empty when Safeguard entered it. But the bank refused to produce those pictures or do an on-camera interview with KCTV5.

***

• [University of Missouri at Kansas City law professor Patrick] Randolph points out that in similar cases, some courts have hit banks with punitive damages of more than a million dollars.(2) "You've got to keep in mind, that the invasion itself that would justify punitive damages. It would be exacerbated by the fact that they lost this woman's treasures of a lifetime."



• While punitive damages might pay for some of the property Higgs has had to replace, they won't bring back those heirlooms. For that reason, Higgs is seeking an apology from Chase. "Right is right and wrong is wrong and the least I would have expected was a 'sorry,'" Higgs said. "There is no 'sorry.'"



• Danforth and Higgs are hoping to find an attorney willing to take their case and seek damages.(3) And hopefully get the return of the family heirlooms that no money can replace.

For the story, see KCTV5 Investigates: Chase for Answers.

Go here for other stories on homeowners getting screwed over by improper 'trash-outs.'

(1) This isn't the first time that cops have washed their hands when investigating these real estate-related crimes. See:

• Fed. Court Affirms 29+ Year Sentence For F'closure Rescue Operator In Rackets That Local Cops, DAs, Texas AGs Cluelessly Minimized As 'Civil Matters';



• Would-Be Buyers Screwed Over In Rent-To-Own Racket Involving Homes In F'closure Complain To Local Prosecutor; Ripoff Is Treated As A Civil Matter;



• Cops Accept "The Bank Sent Me!" Defense In Home Break-In Probe Targeting "Trash-Out" Agent; Say No Crime Was 'Intended' - "It's A Civil Matter!";



• Another F'closed Homeowner Illegally Driven From Home; Cops Decline To Pursue Criminal Charges; Call Premature, Unauthorized "Eviction" A Civil Matter;



• Suspected Home Hijacking Case Once Considered "Civil Matter" Will Now Be Treated As Criminal Trespass, Say Cops;



• Another Foreclosure Misidentification Screw-Up Results In Pair "Cleaning Out" Wrong Home; DA Declines Prosecution - Says It's A Civil Matter.

(2) For those homeowners who've been screwed over by wrongful lockouts by foreclosing lenders (and their confederates) and seek some possible guidance on how much their cases might be worth if they seek to sue, see:

• Nevada High Court OKs $1M+ Damage Award To Homeowner Due To Mortgage Company Misidentification Of Home In Foreclosure (for the court ruling, see Countrywide Home Loans v. Thitchener, 192 P.3d 243; 2008 Nev. LEXIS 79; 124 Nev. Adv. Rep. 64 (Nev. 2008)),



• Long Island Judge Hammers Wells w/ $155K Tab For Oppressive, Heavy Handed, Egregious Conduct For Pre-Sale Lockout Of Homeowner In Foreclosure (for the court ruling, see Wells Fargo v. Tyson, 2010 NY Slip Op 20079 (Sup. Ct., Suffolk County, March 5, 2010)).

(3) For examples of filed lawsuits involving illegal bank break-in, "trash-out" & lockout cases, see:

• Bank admits mistake on Willcox home foreclosure (involving an Arizona homeowner) (for a copy of the resulting federal lawsuit, see Newman v. Bank of America, N.A. and go here for the attached Exhibits),



• Couple: Bank Foreclosed On Wrong House (New Bedford Couple Suing Bank Of America) (involving a Massachusetts resident with a home in Florida) (for a copy of the resulting federal lawsuit, see Cardoso v. Bank of America, et al.),



• Family's recently purchased home, gutted by property removal service (involving a Michigan homeowner) (for a copy of the resulting federal lawsuit and accompanying Exhibits , see Rought v Deutsche National Trust Company, Trustee, et al.),



• In a Sign of Foreclosure Flaws, Suits Claim Break-Ins by Banks (involving a California homeowner) (for a copy of the resulting federal lawsuit, see Ash v. Bank of America).

Landlord's Manager Charged w/ Theft After Allegedly Pocketing Rent, Failing To Pay Mortgage; Leads To F'closure Action, Owner's Credit In Shambles

In York, Pennsylvania, The York Dispatch reports:

• A local attorney said the man accused of stealing more than $9,000 from him was a close friend for nearly two decades. "I totally trusted this guy," attorney Mike Fenton said of Stephen Lee Newport. "You just don't expect to be screwed by someone you've treated so well."



• Newport, 58, of 718 Prospect St. in York City, remains free on his own recognizance, charged with the third-degree felony of theft by failure to make required disposition of funds. He was arraigned Feb. 1, according to court records.

***

• The allegations: Since September 2005, Newport managed a property at 875 Prospect St. for Fenton, who bought it in September 2005, and Newport was supposed to collect rent from tenants and pay the mortgage on the property, according to his arrest affidavit. Instead, the mortgage wasn't paid, and the property went into foreclosure, the affidavit states.



• Police said Newport collected rent, but didn't pay the mortgage and also allowed outstanding sewer and refuse bills to reach about $2,952, according to the affidavit. Court documents allege the scheme netted Newport $9,100. Fenton said the true amount is about $18,000.

***

• [F]enton said he incurred fees in order to get the property out of foreclosure. The mortgage on the property is $432 a month, he said. "I have no idea why he would do this to me. I just paid more than $15,000 to cure the foreclosure," Fenton said. "I have a good tenant, and I'm back on course -- except for my credit, which is destroyed." Fenton said he believes the alleged scheme was going on for three or four years.

For the story, see Man charged with stealing thousands from York attorney.

Feds Bag Three More Northern California Real Estate Operators On Charges Of Bid Rigging At Public/Courthouse Foreclosure Sales

From the U.S. Department of Justice:

• Three Northern California real estate investors have agreed to plead guilty today for their roles in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California, the Department of Justice announced. To date, as a result of the ongoing investigation, 20 individuals have agreed to plead guilty.



• Charges were filed [] in U.S. District Court for the Northern District of California in Oakland, Calif., against Barry Heisner of Brentwood, Calif.; Dominic Leung of Alameda, Calif.; and Hilton Wong of San Ramon, Calif.



• According to court documents, for various lengths of time between August 2008 and January 2011, Heisner, Leung and Wong conspired with others not to bid against one another at public real estate foreclosure auctions. Instead, the investors designated a winning bidder to obtain selected properties at public real estate foreclosure auctions in Contra Costa County.

***

• Heisner, Leung and Wong also were charged with conspiracies to use the mail to carry out a scheme to fraudulently acquire title to selected properties sold at public auctions, to make and receive payoffs, and to divert money to co-conspirators that would have gone to mortgage holders and others by holding second, private auctions open only to members of the conspiracy.



• The department said that the selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions. The private auctions took place at or near the courthouse steps where the public auctions were held. According to court documents, a forfeiture allegation was also included in the charges against Heisner.



• The department said that the primary purpose of the conspiracies was to suppress and restrain competition and to conceal payoffs in order to obtain selected real estate offered at Contra Costa County public foreclosure auctions at noncompetitive prices.



• When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner.



• Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. Each count of conspiracy to commit mail fraud carries a maximum sentence of 30 years in prison and a $1 million fine.



• The government can also seek to forfeit the proceeds earned from participating in the conspiracy to commit mail fraud. The maximum fine for the Sherman Act charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than the $1 million statutory maximum.(1)

For the U.S. Justice Department press release, see Three Northern California Real Estate Investors Agree to Plead Guilty to Bid Rigging at Public Foreclosure Auctions (Investigation Has Yielded 20 Plea Agreements to Date).

Go here for other posts & links on bid rigging at foreclosure and other real estate-related auctions.

Go here for links to more from the U.S. Justice Department on bid-rigging prosecutions, generally.

(1) According to the press release, [these] charges are the latest cases filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa and Alameda Counties, Calif. The investigation into fraud and bid rigging at certain real estate foreclosure auctions in Northern California is being conducted by the Antitrust Division’s San Francisco Field Office and the FBI’s San Francisco office.

Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Field Office at 415-436-6660, visit www.justice.gov/atr/contact/newcase.htm or call the FBI tip line at 415-553-7400.

By the way, by agreeing to plead guilty, these defendants (at least implicitly) have acknowledged that their 'arrangement' at the foreclosure sales was not an innocent, lawful joint bidding endeavor. See Illegal Bid Rigging Racket? Or Mere Innocent 'Joint Bidding' Arrangement?

Utah Foreclosures By BofA-Controlled Confederate To Be Governed By Texas State Law: Federal Trial Judge; State AG Seeks To Intervene

In Salt Lake City, Utah, The Salt Lake Tribune reports:

• A federal judge has ruled that Texas laws, and not those of Utah, govern foreclosures by a unit of Bank of America. The ruling by U.S. District Judge Ted Stewart is the second to go that way in federal courts in this state, and the Utah Attorney General’s Office is asking to intervene to protect Utah’s ability to set its own laws regarding foreclosures.



• Stewart handed down the decision this week in dismissing a proposed class-action lawsuit against BofA and its foreclosure arm, ReconTrust, as well as an attorney who performs the foreclosures in Utah for the bank. Stewart adopted the reasoning of Judge David Sam, who reached the same conclusion in a ruling handed down in December.



• But Deputy Utah Attorney General John Swallow said his office intends to defend the state law that says only Utah attorneys and title companies with offices in the state can act as a trustee and foreclose on property.



• Stewart held that ReconTrust performs its duties related to foreclosures in Texas, where it is headquartered. That means that under the National Bank Act that state’s laws govern foreclosures in Utah, the judge wrote.



• "Foreclosures are personal, and foreclosure laws should be set by the state where the foreclosure is actually done," Swallow said. "We jealously guard our right to dictate how foreclosures work in Utah. I think they’re dead wrong when they try to rule otherwise."

For the story, see Federal judge: Texas law governs Utah foreclosures (State A.G. seeks to intervene in case to preserve state’s standing).

Attorney Pinched Again For Alleged Role In Another Dubious Real Estate Deal; Accused Of Pocketing Homebuyer's $75K Escrow Deposit From Trust Account

On Staten Island, New York, the Staten Island Advance reports:

• A real estate lawyer already facing prosecution in a Brooklyn mortgage fraud scheme now stands accused of stealing a $75,000 down payment from a Staten Island woman who was selling her house.



• Prosecutors say Jarrett Haber, 45, of Hicksville, had already been indicted in Brooklyn -- alongside a disgraced rabbi who would later be accused of arranging two murders -- when he helped himself to the money in 2010. Haber was representing a friend of his who was selling her Bentley Street home for $475,000, and the buyer had placed $75,000 in an escrow account as a down payment, prosecutors allege.



• On July 29, 2010, the date of the closing, the money wasn't there, authorities allege. Haber told investigators the money was stolen from him, a law enforcement source said. Nevertheless, the source said, "The money came out of the account that he was in control over."



• A grand jury returned an indictment against Haber last month, charging him with second-degree grand larceny and second-degree criminal possession of stolen property.(1)

***

• Haber had been arrested back in Feb. 2010, accused of running a mortgage fraud scheme alongside Rabbi Victor Koltun of Brooklyn. That case is still pending.(2) [...] The two are accused of taking out a $225,000 mortgage on the home of a Brooklyn woman who was living in a nursing home. She got a call in October 2009 demanding payment on the mortgage, prosecutors said, which came as a surprise because she and her husband had owned the home since 1975, and hadn't had a mortgage on it since 1987.



• Investigators found out that Haber and Koltun fraudulently used several properties to secure a $225,000 mortgage, which they used to pay down a debt from another real estate scam in Long Island.

For the story, see Real estate lawyer charged in 2010 fraud scheme now accused of stealing $75,000 from Staten Island woman.

(1) To the extent Haber is found guilty or otherwise responsible for the 'disappearance' of the homebuyer's $75,000 deposit, the victim may have some recourse if Haber fails to cough up and return the missing cash that a court may order he (Haber) pay in the form of restitution.

The Lawyers’ Fund For Client Protection Of the State of New York exists to protect legal consumers from dishonest conduct in the practice of law in the state, to preserve the integrity of the bar, to safeguard the good name of lawyers for their honesty in handling client money, and to promote public confidence in the administration of justice in the Empire State. It attempts to secure these goals by, among other things, reimbursing client money that is misused in the practice of law.

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

• Directory Of Lawyers' Funds For Client Protection (courtesy of the American Bar Association);
• Check the USA Client Protection Funds Map;
• Check the Canada Client Protection Funds Map.

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

(2) See New York Daily News: 3 lawyers and correction officer among 12 charged with real estate fraud.

Closing Attorney Gets Year & Day For Role In Escrow Account Ripoffs In Real Estate Deals; Losses Total $2.8M+; Title Insurer Left Holding $1.7M Bag

From the Office of the U.S. Attorney (Baltimore, Maryland):

• U.S. District Judge William M. Nickerson sentenced Stephen J. Troese, Sr., age 72, of Davidsonville, Maryland, [] to a year and a day in prison followed by three years of supervised release for wire fraud arising from a scheme to defraud lenders and a title insurance company of $2,838,231.

***

• According to his plea, Troese practiced as a title attorney and was variously an owner, part owner, or the controlling figure of a number of title companies that did business in the Baltimore, Annapolis and Washington, D.C. metropolitan areas, including Troese Title Services, Inc. (Troese Title), located in Camp Springs, Maryland; and [other entities].

***

• Troese Title and Troese/Hughes, which Troese formed in 1994 with co-defendant James Kevin Hughes, shared a joint escrow account for the receipt and disbursement of funds in connection with real estate closings carried out by both title companies.

***

• By 2005, the joint escrow account had developed a shortfall of more than $2 million, partly as a result of several major employee errors and embezzlements. [...] In approximately 2006, the real estate industry started to slow, resulting in a steep decline in business for Troese Title and Troese/Hughes, further aggravating the problem of the shortfall in the escrow accounts.



• In 1994, Troese had refinanced his home, claiming that the $655,000 loan would be used to pay off the previous first and second mortgages. In fact, the mortgages were not paid off. In February 2006, Troese again refinanced his home, representing that the loan of $964,533.26, would be used to pay off the two existing mortgages. Again, the mortgages were not paid off, but instead the funds were used to help cover the existing shortfall in the Troese Title escrow account.



• Troese concealed the fact that the mortgages were not paid off by continuing to make the monthly mortgage payments on all three loans. The resulting loss to Chicago Title was $937,183.47, which it was required to pay to satisfy the two previous mortgages and pass clear title to the new lender.

For more of Troese's handiwork, and the entire U.S. Attorney press release, see Owner of Troese Title Companies Sentenced to Prison In $2.838 Million Mortgage Fraud Scheme.

Nationwide Federal/State Robosigning Settlement Not Yet Final?

American Banker reports:

• More than a day after the announcement of a mammoth national mortgage servicing settlement, the actual terms of the deal still aren't public. The website created for the national settlement lists the document as "coming soon."



• That's because a fully authorized, legally binding deal has not been inked yet. The implication of this is hard to say. Spokespersons for both the Iowa attorney general's office and the Department of Justice both told American Banker that the actual settlement will not be made public until it is submitted to a court.



• A representative for the North Carolina attorney general downplayed the significance of the document's non-final status, saying that the terms were already fixed. "Once the documents are finalized, they'll be posted to nationalmortgagesettlement.com," the representative said in an email to American Banker.



• Other sources who spoke with American Banker raised doubts that everything is yet in place.

***

• Some who talked to American Banker said that the political pressure to announce the settlement drove the timing, in effect putting the press release cart in front of the settlement horse.



• Whatever the reason for the document's continued non-appearance, the lack of a public final settlement is already the cause for disgruntlement among those who closely follow the banking industry. Quite simply, the actual terms of a settlement matter.



• "The devil's in the details," says Ron Glancz, chairman of law firm Venable LLP's Financial Services Group. "Until you see the document you're never quite sure what your rights are."

For more, see Missing Settlement Document Raises Doubts on $25B Deal.

See also, Daily Finance: Why the Foreclosure Mess Settlement Proposal Can't Fix the Damage:

• [I]t can't go far enough, because it can't address one of the most confounding problems the banks have created: the millions of properties nationwide that now have "clouded" titles. To put it plainly: Because of these bad titles, property owners can't prove they own the properties they think they bought, and banks can't prove the had the right to sell them.

Banksters' Big Win In Robosigning Scandal: Were America's Prosecutors Outgunned, Wilting Before Prospect Of Battling High-Priced, White Shoe Lawyers?

Rolling Stone columnist Matt Taibbi writes:

• So the foreclosure settlement is through. A few weeks back, I was optimistic about it – I had been worried that it was going to contain broad liability waivers for all sorts of activities, and I was pleasantly surprised when I heard that its scope had essentially been narrowed to robosigning offenses.(1)



• However, now that the settlement is finalized, and I've had time to think about it and talk to people who know far more than I do about this, I'm feeling pretty queasy.



• It feels an awful lot like what happened here is the nation's criminal justice honchos collectively realized that a thorough investigation of the problem would require resources they simply do not have, or are reluctant to deploy, and decided to accept a superficially face-saving peace offer rather than fight it out.



• So they settled the case in a way that reads in headlines like it's a bite out of the banks, but in fact is barely even that.

***

• Really this looks like America's public prosecutors just wilted before the prospect of a long, drawn-out conflict with an army of highly-paid, determined white-shoe banker lawyers. The message this sends is that if you commit crimes on a large enough scale, and have enough high-priced legal talent sitting at the negotiating table after you get caught, the government will ultimately back down, conceding the inferiority of its resources.

For more, see Why the Foreclosure Deal May Not Be So Hot After All.

See also, Daily Finance: Why the Foreclosure Mess Settlement Proposal Can't Fix the Damage.

(1) In his earlier column, Taibbi emphasizes that he is not minimizing the significance of the robosigning scandal with the following observation:

• Robosigning is not a small offense. It's not a "clerical" issue. It's a mass-perjury issue, a tax evasion issue, a contractual fraud issue, and it's a criminal conspiracy issue (the banks' highest executives were engaged in planning it) and it resulted in millions of errors that resulted in untold numbers of premature foreclosures.

The Top 12 Reasons Why The Nationwide Federal/State Mortgage Settlement Deal Stinks!

From Naked Capital blogger Yves Smith:

• As readers likely know by now, 49 of 50 states have agreed to join the so-called mortgage settlement, with Oklahoma the lone refusenik. Although the fine points are still being hammered out, various news outlets (New York Times, Financial Times, Wall Street Journal) have details, with Dave Dayen's overview at Firedoglake the best thus far.



• The Wall Street Journal is also reporting that the SEC is about to launch some securities litigation against major banks. Since the statue of limitations has already run out on securities filings more than five years old, this means they'll clip the banks for some of the very last (and dreckiest) deals they shoved out the door before the subprime market gave up the ghost.



• The various news services are touting this pact at the biggest multi-state settlement since the tobacco deal in 1998. While narrowly accurate, this deal is bush league by comparison even though the underlying abuses in both cases have had devastating consequences.

For more, including a list of the top twelve reasons why this deal stinks, see The Top 12 Reasons Why You Should Hate the Mortgage Settlement.

See also, Daily Finance: Why the Foreclosure Mess Settlement Proposal Can't Fix the Damage.

Scam Artist To Spend 180 Days In Pokey, Five Years Probation For Hijacking Vacant Homes In Foreclosure, Renting Them Out To Unwitting Tenants

In Fresno, California, KFSN-TV Channel 30 reports:

• The man behind a foreclosure scam gave a public apology in court, then went to jail for ripping off dozens of people desperate for homes. Police uncovered the scam when a homeowner found someone living in her house. Prosecutors say Sam Haley is a scam artist who's still trying to scam people. But Haley claims he's just a military veteran suffering from post-traumatic stress disorder.



• Haley was expecting leniency in court because of his military service, and the mental troubles he says he's suffering. But while the judge acknowledged Haley's PTSD, he said that wasn't what caused Haley to commit grand theft.

***

• The foreclosure crisis has crushed thousands of Valley families, but Sam Haley found opportunity in the troubles of others. The former real estate agent lost his license to practice in the business in 1979, but using his insider's knowledge, he found a way to profit on lost homes.



• Haley found empty homes in the foreclosure process and rented them out to desperate families. Police caught him in 2008, but only after dozens of people gave Haley money. Four years later, the 69-year-old is headed to jail for his crimes, despite a plea for leniency because of some serious health issues.

***

• The judge sentenced Haley to 180 days in jail, plus five years of probation. He also ordered Haley to pay the victims more than $35,000 in restitution.

For the story, see Sam Haley heads to jail in foreclosure scam.

Pastor Pleads No-Contest To Charges He Targeted Congregation Members In Loan Modification Ripoffs, Home Improvement Scam

In Sacramento, California, The Sacramento Bee reports:

• An Elk Grove man has entered a no-contest plea in a case involving the illegal collection of upfront fees for loan modification services. Rodney Andrews, 57, pleaded no contest to two felony violations of embezzlement, two felony violations of theft by false pretenses, one felony violation of diversion of construction funds and one felony violation of unlawful use of personal identifying information, according to a Sacramento County District Attorney's Office news release.



• At the time he committed the offenses, Andrews operated a company known as Andrews Investment Group, which offered loan modification services. He also was a pastor at the Comeback Christian Church, where he solicited congregation members and low income property owners to refinance their homes, lower their mortgages or stall out their foreclosures, officials said.



• Andrews collected upfront fees in violation of a statute passed by the California Legislature to prevent individuals from preying on vulnerable home owners facing foreclosure or mortgage payments they couldn't afford. He also failed to provide proper notifications as required by law, did not provide the services he promised and did not use the funds he obtained for the represented purposes, according to the news release.



• In addition, Andrews obtained from one home owner money that was supposed to be used on a project to improve her home. Andrews represented to the victim that he had a business known as Low Cost Construction. Officials said there is a company by that name, but it is owned by another contractor.



• Andrews hired a subcontractor to remodel the property but paid him with insufficient funds checks. The subcontractor stopped working before the project was completed. Andrews never finished the remodel, leaving the victim's home in an inhabitable condition. Officials said Andrews spent the money and did not use it on the project.

Source: Elk Grove man pleads no contest to illegal conduct in loan modification.

Indiana AG Continues 'Civil' Assault On Alleged Loan Modification Rackets With 'Non-Criminal' Charges Brought Against Four More Outfits

In Indianapolis, Indiana, Legal Newsline reports:

• Indiana Attorney General Greg Zoeller announced four lawsuits on Wednesday against mortgage rescue companies that allegedly scammed Indiana consumers out of thousands of dollars.



• LA Strattan Law Firm and Strategic Alliance of California, National Financial Services of Texas and United Capital of Maryland allegedly violated Indiana's consumer protection laws by taking more than $4,300 from customers.

***

• The lawsuits allege that the companies also violated the Deceptive Consumer Sales Act, the Home Loan Practices Act, the Mortgage Rescue Protection Fraud Act and the Credit Services Organization Act. The defendants allegedly failed to register a $25,000 surety bond with Zoeller's office to conduct business officially as Indiana foreclosure consultants.



• The four lawsuits bring the total number of actions taken by Zoeller's office against foreclosure rescue companies up to 95 since 2006.

For the story, see Ind. AG sues mortgage rescue companies.

Use Of Arrest Warrants By Bill Collectors To Squeeze Consumers For Cash Probed By Some Lawmakers, Government Regulators

Lexology reports:

• Some lawmakers and regulators are probing the use of arrest warrants by the U.S. debt collection industry to recover money owed by borrowers behind on loans, credit card payments, and other bills.



• Warrants are generally issued for contempt of court after the borrower fails to comply with a court order to repay a debt or to appear in court. Although U.S. statistics are unknown because many courts do not track the number of warrants issued by offense, judges interviewed by the Wall Street Journal reported that the number of borrowers threatened with arrest has vastly increased since the beginning of the financial crisis.

For more, see Lawmakers investigating use of arrest warrants against debtors (may require subscription; if no subscription, TRY HERE; or GO HERE - then click the appropriate link for the story).

Thanks to Deontos for the heads-up on the story.

Suit: Bill Collector For 'America's Stagecoach To Hell' Falsely Reports Suicide Threat By 85-Year Old Debtor; Leads To 'Forced Trip' To Emergency Room

In Lane County, Oregon, ABC News reports:

• When Anne Sessions, 85, of Lane County, Ore., fell behind in her credit card payments, she said an aggressive debt collector harassed her to the point of calling the police with a phony claim she threatened to commit suicide, costing her $1,055 in medical bills. Now she is suing for $250,000 over the incident, which led to an involuntary hospital visit.



• Sessions fell behind on her credit card payments in 2010 after unanticipated financial setbacks, potentially facing foreclosure. As she survived on a fixed income from Social Security and a "very modest" pension, she was strapped.



• Wells Fargo began calling Sessions "numerous times" and threatened legal action if she did not make payments, the suit said. [...] Sessions says she worked out a payment plan with Wells Fargo, and the calls had stopped until February 2011, when a Wells Fargo employee called her on a Sunday.

***

• Within 30 minutes of the call, Sessions said three police officers arrived at her home and told her that the employee had called 911 and reported she had made "multiple suicide threats" during the collection call, requesting police be sent to her home.



• The police then "forcibly" took her to the local hospital emergency room, "over her objections," then told the hospital personnel that she was suicidal. She was held at the hospital for "several hours," and seen by a doctor and the hospital's crisis staff. She was released after they reported they felt "strongly" she was not a threat to herself or others, the suit states.



• One week later, she received a bill from the hospital for $712, and a few days later $343 for physician charges. Without medical or other insurance, she now owed $1,055 for the unnecessary hospital visit, in addition to her credit card debt.



• When she called Wells Fargo to complain, she asked to speak to the same employee and his co-worker told her he was not there. When Sessions told the co-worker about the 911 call, "the employee laughed loudly and plaintiff could hear her calling out something like 'Hey Chuck ... that woman you called the police on got taken to the hospital by the police,'" according to the suit.



• Sessions said she heard "loud laughter in the collections center and the female employee proceeded to congratulate defendant Gajewski on how effective his call had been in a way that [Sessions] was certain to hear."



• She said the incident caused her extreme anxiety, embarrassment, depression, feelings of worthlessness, and loss of sleep, among other effects, causing non-economic damages in the amount of $250,000.

For more, see Debt Collector Allegedly Makes Bogus 911 Suicide Call on Elderly Oregon Woman.

Loan Mod Scam Artist Dodges Major Jail Time; Gets Year & Day For Ripping Off Homeowners Of Monthly Payments After Making 'Home-Saver' Promises

In Fort Lauderdale, Florida, Broward/Palm Beach New Times reports:

• Marlon Baugh's federal court documents are practically a how-to guide on money laundering and mortgage fraud. The guy was a scam artist. He worked in Hallandale Beach for National Foreclosure Centers, a business that also went by the name Home Savers.



• He helped run a scheme in which he promised to help families whose homes were in danger of foreclosure. Then he'd bail and let the homes go into foreclosure anyway -- not before taking $800 to $2,000 per month from his victims.



• Federal mail-fraud penalties max out at 30 years in prison and a $1 million fine when financial institutions are involved. Late last week, though, Baugh switched his plea to guilty. His sentence? Just a year and a day in federal prison.



• Baugh's scheme was two-pronged.

***

• If you need to supplement your fraud income, you might want to consider writing a wildly overpriced ebook too: Since the investigation started several years ago, O'Donnell said Baugh "turned his live around the past four or five years" and has several books in the works. While we can't say for sure it's the same guy, there's a "Marlon Baugh" in the Fort Lauderdale area pimping himself online as a "nationally known mortgage expert" and selling a book of "insider load modification secrets" for 50 bucks.

For more, see Marlon Baugh Fakes Documents, Bails on Scam Mortgages, Gets a Single Year in Prison.

Couple Face Foreclosure After Falling For Mortgage Payment Hijacking Scam; Signed Up For $1700/mo Bogus 'Auto-Pay' Deal While Home Loan Went Unpaid

In Portland, Oregon, KATU-TV Channel 2 reports:

• A year and a half worth of mortgage payments were stolen from a local couple in a phishing scheme. he money went to an offshore bank account operated by someone pretending to be a Bank of America employee. A person calling herself Lisa McNaughton sent the Schelhaas family an automatic payment agreement that looked legitimate but it wasn't from Bank of America at all.



• The family bought the home 18 years ago and refinanced about five years ago. A couple years later they got a letter in their mailbox asking if they wanted to start automatic withdrawals.



• The family thought it was making payments on their Southeast Portland home after agreeing to those electronic transfers. More than $1,700 was coming out of their checking account per month.



• And then in May 2010 they received a foreclosure notice posted on their front door that they were 18 months behind on payments. They were shocked and said they had every reason to believe the payments were being made."Yeah, no reason not to," said Dan Schelhaas. "Like I say when the letter is coming on Bank of America letterhead, with our account number, property address and all of that kind of stuff."



• Schelhaas said he knows the $31,000 did not go to Bank of America but to someone living in a foreign country. He and his wife learned recently their home will go on the auction block March 30. According to a Bank of America representative, the bank normally communicates by mail and phone and the contact is more frequent as someone becomes more delinquent.

For the story, see Family gets ripped off in mortgage phishing scam.

Spokane-Area Man Pinched For Allegedly Running Rental Scam On Craigslist; Pocketed Upfront Cash Promising Lease-To-Own Deals On Houses He Didn't Own

In Spokane, Washington, Northwest Cable News reports:

• Spokane Valley Property Crimes Detectives arrested 35 yr. old Eric Pittsley of Newman Lake, WA on February 1st. The investigation started when several victims called in to report being “scammed” by Pittsley. During the investigation, numerous other victims reported similar instances of being swindled out of money by Pittsley. To date, there have been at least seventeen different victims.



• Some of the reports were from victims who would meet Pittsley and were told he was an auto repo man who could get various makes and models of vehicles.

***

• Numerous other victims were scammed when they responded to a Craigslist ad that Pittsley had posted regarding homes for rent or homes he was offering on a Rent-to-Own program.



• Pittsley did not own any of the homes he would advertise for rent. There were times when he would contact a victim directly from a Craigslist ad they themselves had posted whereby they were seeking a place to rent.



• Pittsley would tell the victims he was a property manager who had several homes they could look at in different neighborhoods throughout Spokane County. He would give addresses of homes that were being lived in and some of the homes were in various stages of foreclosure.



• He would tell the victims not to “bother” the existing tenants and to call him back once they looked at the homes if they were interested. When they called him back, he would tell them he is waiting for the existing tenants to move out. He would meet them at various locations such as hotels or coffee shops to get the victims to complete an application he had printed out and collect a small application fee.



• Pittsley would later call them back and advise them they have been approved to move-in and that he needed to meet with them again to get the 1st month’s rent and a security deposit. Sometimes he would ask for additional months of rent be paid up front and would sweeten the deal by telling them, if they paid for several months in advance, they could get one month free. Many of the victims paid him in cash or money orders and often would get a signed lease agreement and a house key.

For the story, see Spokane man arrested in Craigslist scam.

Title Agency Abruptly Shuts Down As Criminal Probers, Auditors From State Regulator, Insurance Underwiter Look For Million$ In Missing R/E Escrow Loot

In Farmington, New Mexico, The Daily Times reports:

• Several million dollars appear to be missing from title and escrow accounts at New Mexico Title Co., a police detective said Tuesday, as the investigation widens into possible wrongdoing at the Farmington business. "It's going to be a pretty large and complex investigation," said Farmington Police Sgt. Brandon Lane.



• The New Mexico Division of Insurance is auditing the business with the help of the title company's insurance underwriter, First American Title Insurance Co. A report is expected as soon as this week. Once that report is completed, Farmington police will determine if criminal charges are warranted, Lane said. Investigators are working to discover the extent of funds missing, but the initial investigation suggests it could be more than $10 million, he said.

***

• On Friday, the state's Financial Institutions Division obtained a restraining and enforcement order to prevent documents at the business from being destroyed or altered. First American Title Insurance won a similar court order giving auditors access to the business. In its complaint seeking the court order, the Santa Ana, Calif.-based insurance company said its auditors were barred from entering the business and examining documents on Feb. 1.

***

• New Mexico Title Co. closed abruptly on Jan. 30 when it stopped accepting title work and interim manager Quentin Smith sent employees home. For days afterward, a phone message said that the business was closed. Customers began to stream in to inquire about their escrow accounts and the status of their real estate transactions.



• Several New Mexico Title Co. customers told The Daily Times they had not received expected disbursements from escrow accounts, or that their payments to escrow accounts were not properly credited.

For more, see Millions missing: Investigation widens into NM Title Co.

Thanks to Deontos for the heads-up on the story.