Wednesday, June 27, 2012

Feds To Cut Banksters More Breaks; Will Ease 'Putback' Squeeze Felt By Lenders Required To Buy Back Crappy Mortgages

Bloomberg reports:
  • The Federal Housing Finance Agency, the regulator of Fannie Mae and Freddie Mac, plans to help banks avoid being forced to buy back mortgages as it becomes concerned that lenders are tightening standards even for the most creditworthy home buyers.

  • The FHFA will detail flaws that would trigger a putback request, Stefanie Johnson, a spokeswoman for FHFA, said in a statement. The regulator also is standardizing the data Fannie Mae and Freddie Mac collect on each loan so they have more information when buying mortgages from lenders, she said.
***
  • The lenders perceive the pendulum has swung too far, and they’re being held accountable for things beyond their control,” said Brian Chappelle, a partner at the bank consulting firm Potomac Partners. “Their reaction is going to be to tighten up.”
***
  • Fannie Mae and Freddie Mac, which own or guarantee more than half of U.S. mortgages, are currently demanding lenders repurchase faulty loans with unpaid principal balances totaling $15.3 billion, according to their earnings statements for the first quarter.

  • The two companies were taken over by the U.S. government in 2008 after investments in risky mortgages brought them to the brink of bankruptcy. They’ve received about $190 billion in aid since then and the battle with banks over repurchases is part of their efforts minimize losses.

State Bar's Public Repository Of Attorneys' Names, Bar Numbers A Handy Source Of Personal Info For Identity Thieves

In Los Angeles, California, The Recorder reports:
  • "You're not Jerry Garcia." It was a strange thing for Max Gerald "Jerry" Garcia to hear. For that is indeed the Lewis Brisbois Bisgaard & Smith partner's name. But on this March day, neither Garcia nor this confused man standing in the Los Angeles firm's 12th floor reception area recognized each other.

  • The man explained that he and his mother had met an attorney at another site across town. The attorney, who identified himself as Jerry Garcia of Lewis Brisbois, said he could help with an insurance matter. And he offered the family a deal: work with him alone — keep Lewis Brisbois out of it — and he'd only collect $1,000 from them.

  • The mother and son agreed. But then the son couldn't reach the attorney; the address on his business card turned out to be a mail drop in La Habra. So he turned to the State Bar's website and tracked down the man he thought was his lawyer at the Lewis Brisbois office. That's when both men discovered they were the victims of an identity thief. "I don't know why someone would do something like that," the real Garcia said. "It seems like you're doomed to get caught."

  • Garcia that day unwittingly joined a small but growing number of California lawyers whose names and bar numbers have been co-opted by scam artists. Though their methods and motives differ, the thieves adopt real attorneys' personas and professional stature to prey on victims who may speak little English and often have no familiarity with the law.

  • A common scheme involves debt collection. Someone using the name of a lawyer will call or send letters to victims warning them to pay up or face criminal charges. There may or may not be a real debt. But some recipients will pay without questioning. Others get angry and track down the "attorney's" name on the bar's website. That's often the first time a lawyer learns someone has swiped his or her identity.

  • "It just seems to be another scam to get money," said Cecilia Horton-Billard, senior trial counsel in the State Bar's office of intake.
***
  • State law makes attorneys' names and bar numbers public information. The State Bar's website provides an easily accessible repository for that data — a consumer-protection measure that also provides easy identity shopping for troublemakers.

Despite Defendant's Answer & Counterclaim, Judge OKs Foreclosure Judgment In Only Six Weeks Against Boca Temple, Religious School

In West Palm Beach, Florida, the South Florida Business Journal reports:
  • Only six weeks after filing a foreclosure lawsuit against Chabad of Boca Raton, Wells Fargo Bank won a judgment that has set the temple and Jewish school up for auction.

  • The bank (NYSE: WFC) filed a foreclosure lawsuit on May 4 against the nonprofit Friends of Chabad of Boca Raton and Torah Tots Academy. On June 14, Palm Beach County Circuit Judge David J. Crow awarded the bank a $2.2 million foreclosure judgment after finding that Chabad was in default on a $2 million mortgage, plus interest.

  • Six weeks is incredibly fast for a court system that often takes years to decide a contested foreclosure. It only usually happens that fast if it is an uncontested case, but Chabad filed an answer and counterclaim. Aventura attorney Phyllis Malinski, who represents Chabad of Boca Raton in the case, could not be reached for comment.

  • The 23,112-square-foot building on 3.1 acres at 17950 Military Trail is set for online auction July 26. Chabad of Boca Raton holds religious services there. It also hosts its Hebrew school, its Torah Tots pre-school and its Camp Gan Israel summer program. The building was constructed in 1999.

Tuesday, June 26, 2012

89-Year Old WW II Vet Says He Was Forced To Waive Homestead Exemption Over Unwitting Failure To Disclose Assets In Bankruptcy; Now Faces Loss Of Home

In Helena, Montana, The Associated Press reports:
  • A World War II veteran who lists a $981 monthly Social Security check as his only income has had to move out of his western Montana home after his late wife's medical bills led him to file for bankruptcy.

  • Warren Bodeker, 89, was ordered by a bankruptcy judge to leave the home that he and his wife built in Plains. His case has gone viral on the Internet after the group Oathkeepers posted a YouTube video featuring him and wrote a sympathetic account of his story on its website.

  • Bodeker, who has prostate cancer and has been staying with friends, said he is tired from the months-long legal fight, but hopes that he can halt the sale of his home before it goes through at the end of the month.
***
  • Bodeker said the home and its 10-acre property is worth more than $300,000. The Bigfork attorney overseeing his bankruptcy case is selling it for $155,000.
***
  • The judge has ordered Bodeker to leave the home, noting that Bodeker had filed for bankruptcy relief, "which carries burdens as well as benefits;" that Bodeker had waived his homestead exemption; and that he had failed to disclose some of his assets. Those assets included a stuffed Dalls sheep head later sold by [bankruptcy trustee Christy] Brandon for $450 and gold and silver buried in his yard that Bodeker said was appraised at $66,000.

  • Bodeker said he did not consider the gold and silver to be an asset, because he buried it so that "we would have money to pay our property taxes and buy food and not depend on the government for welfare" if the economy soured.

  • He said he was threatened with charges of fraud for hiding them, so he agreed to waive his homestead exemption and allow the sale of his home. "I wanted to get the thing settled and get on with my life," he said. "I released my homestead, then they dropped the price they were selling the house for. I objected, but it didn't make any difference to (Brandon)."
***
  • Earlier this month, Bodeker himself was diagnosed with prostate cancer. He missed a June 12 court hearing because he was being treated for a kidney stone at a hospital in Helena, where he then found out about the cancer.

  • The legal and administrative fees in the bankruptcy proceedings are piling up, even after his attorney withdrew from the case this spring. Bodeker has been representing himself.

  • A friend who is housing Bodeker, Roxsanna Ryan, said the total cost of the creditors and fees is now estimated at $166,000. That would negate any of the proceeds he will see from the sale of the home.

  • Bodeker had been a paratrooper during World War II, making three combat jumps in the Philippines. He said he was part of a successful mission to free more than 2,100 prisoners at a Japanese camp. He left the Army in 1946. He said he hopes that he will be able to hire another attorney, but acknowledged that he does not know whether he will be successful in his attempts to get back his home — and if he fails, where he will go.

Couple Seeks To Undo Land Lease w/ Gas Drillers; Say They Were Duped Into Accepting Rent So Low "As To Shock The Conscience"

In Wheeling, West Virginia, The West Virginia Record reports:
  • Two gas drilling companies being sued by a Brooke County couple over a land lease asked this week to have the lawsuit moved to federal court.

  • Defendants Chesapeake Appalachia LLC, based in Oklahoma, and Statoil USA Onshore Properties Inc., based in Texas, filed their notice of removal in the U.S. District Court for the Northern District of West Virginia Monday. The plaintiffs, Ramon and Lois Bowen, sued Chesapeake, Statoil and Range Resources-Appalachia LLC, which is based in Pennsylvania, in May in Brooke County Circuit Court.

  • The Bowens are seeking declaratory relief and unspecified amount of compensatory damages and punitive damages for alleged "economic loss, slander of title, loss of use of their land, lost opportunity, lost profits, aggravation and inconvenience, along with all available interest, costs, attorney fees, fines and penalties."

  • The Bowens, [...] are claiming a breach of implied covenants, the West Virginia Consumer Credit and Protection Act, unjust enrichment, unlawful holding-over, slander of title, trespass, tort of outrage and civil conspiracy.

  • According to the Bowens' complaint, they entered into an oil and gas lease with Great Lakes Energy Partners LLC, now known as Range Resources, leasing their oil and gas interests to 53.10 acres of land. The lease subsequently was assigned to Chesapeake -- 73.12 percent -- and Statoil -- 26.88 percent.

  • Under the deal the Bowens signed in 2007, they received $50 per acre, rental payments of $7 per year and a 14 percent interest in royalties.

  • Now, the couple -- who claim the amounts are so low "as to shock the conscience" -- want a judge to declare the lease expired and punish the companies they allege took advantage of them.

  • In their notice of removal, Chesapeake and Statoil argue that federal court is the more appropriate venue since the matter in controversy exceeds $75,000 and the cases arises between citizens of different states.

City OKs Slapping Landlords With Liens For Money Owed By Trash Bill-Stiffing Tenants

In Gilroy, California, the Gilroy Dispatch reports:
  • A motion to place liens on 127 Gilroy properties with tenants who haven’t paid their trash bills for a minimum of 120 days reluctantly received a passing vote by the City Council Monday. Council members said they are legally bound to approve it because of city health codes.

  • Recology South Valley, the company that holds an exclusive trash collecting contract with the city, claims the total of outstanding bills from Gilroy homes is $35,131. Recology sent letters to homeowners with outstanding bills in April, giving them a June 15 payment deadline.

  • There’s got to be a better way," Mayor Al Pinheiro said. “It doesn’t make any sense at all.” Pinheiro, a landlord himself, doesn’t understand why a homeowner is punished for a bill the tenant does not pay, questioning why Recology can’t just stop service to the tenants who don’t pay – or take some other credit action against the tenants, not the homeowner.

  • Recology provided Council with a list of those who haven’t paid their trash bill – about half of whom also own of the property – and how much each of them owes.

Monday, June 25, 2012

NJ Appeals Court Calls BofA On Carpet For Pulling Rug Out From Under Homeowner By Initiating Foreclosure Despite Prompt Payment History On Loan Mod

In Jefferson County, New Jersey, the Daily Record reports:
  • Saying Bank of America tried to “pull the rug out from under” a Jefferson Township homeowner, a state appeals court Thursday enforced a loan modification plan that will let the homeowner keep the mortgage on the almost $600,000 house she bought in 2007.

  • The appellate panel went so far as to say Bank of America’s tactics bordered on “unconscionability” in its dealings with Sylvia T. Ficco.
***
  • In its appeal, the bank claimed the loan modification was not enforceable because “there was never a meeting of the minds” since its March 2010 letter was sent in error. The bank also argued that the trial period offer was conditional and that Ficco was never offered a permanent loan modification.

  • The appeals court disagreed, saying the bank was bound to fulfill an offer that Ficco accepted and she reasonably relied on the bank’s urging to make regular mortgage payments.

  • In a footnote, the court said it was puzzled why a mortgage company would choose to continue foreclosure proceedingsagainst a debtor who, unlike many, is actually paying her mortgage.”

  • Finally, we observe that inducing debtors to continue making mortgage payments over an extended period of time, on the promise of a loan modification, only to eventually pull the rug out from under them when they are unable to satisfy criteria beyond prompt continuing payment of the mortgage, borders on unconscionability,” the appeals court said.
For the ruling, see BAC Home Loan Servicing, L.P. v. Ficco, Docket No. A-4756-10T4 (App. Div. June 21, 2012) (unpublished). (If link expires, try here).

Despite Screw-Up In Legal Process, Buyers At Foreclosure Sale Forced To Take Feds To Court To Recover Funds Paid Towards Purchase Price

In Warner Robins, Georgia, The Telegraph reports:
  • A couple who battled with the U.S. Department of Agriculture for four months because of a botched foreclosure sale has gotten their money back.

  • In an e-mail [], Bonnie Walker said she had received the check from USDA’s Farm Service Agency that returned the $37,500 she and her husband, Charles, paid for the home at a foreclosure auction.

  • After they paid for the house, the couple learned the foreclosure was illegal because USDA hadn’t given proper notice, so they couldn’t evict the residents and they couldn’t get their money back.

  • After filing a complaint against USDA in Houston County Superior Court, USDA agreed to a consent order to vacate the foreclosure and return the money.

FTC Continues w/ Toothless Wins Against Loan Mod, Forensic Audit Peddlers; Operators To Give Back Some Of What They Took, Promise To Never Do It Again

From the Federal Trade Commission:
  • The operators of an allegedly deceptive mortgage modification business will pay more than $750,000 in ill-gotten gains to settle Federal Trade Commission charges. The settlements also permanently ban the 11 defendants from selling any mortgage assistance relief products.

  • The FTC’s case against the four operators of the Debt Advocacy Center and another group of seven defendants that allegedly provided “forensic audits” to consumers are part of the agency’s ongoing crackdown on frauds targeting consumers in financial distress.
For more of the FTC press release and links to relevant court documents, see Operators of "Debt Advocacy" Firm Settle with FTC, Must Pay More than $750,000 (FTC Alleged that They Deceptively Marketed Mortgage Modifications and "Forensic Audits", Settlements Ban Them from Mortgage Relief Business).

Sunday, June 24, 2012

Banksters, Title Insurers Score Big Win In Bay State; Dodge Billions In Liability For Wrongful Foreclosures, Evictions

In Boston, Massachusetts, The Boston Globe reports:
  • The highest court in Massachusetts on Friday clarified protections in state law for homeowners facing foreclosure but said its ruling applies only to future foreclosures, disappointing some advocates who had hoped the closely watched decision would apply more broadly.

  • The Supreme Judicial Court ruled in the case of a Boston woman who sued after Green Tree Servicing LL sold her house to Federal National Mortgage Association, Fannie Mae, at a foreclosure sale in 2010. Henrietta Eaton’s lawyer argued that a lender does not have the right to foreclose unless it holds both the mortgage itself and the promissory note, which creates an obligation to pay the debt.

  • A lower court [earlier had] ruled the lender could not prove it held the promissory note and declared the foreclosure invalid. The SJC agreed with Eaton that state law requires both documents before foreclosure. But the court said its ruling applies only to future foreclosures.

  • Justice Margot Botsford, who wrote the unanimous opinion, said it seeks to clarify some confusion in the law about the meaning of the term “mortgagee’’ and the proper procedures a mortgagee must follow to foreclose on a property.

  • We now construe the term to refer to the person or entity holding the mortgage and also either holding the mortgage note or acting on behalf of the note holder,’’ Botsford wrote.

  • Further, we exercise our discretion to treat the construction announced in this decision as a new interpretation of the relevant statute, only to apply to foreclosures … after the date of this decision.’’

  • Samuel Levine, who argued the case before the SJC on Eaton’s behalf while he was still a student at Harvard Law School, called the case “a win’’ for Eaton and homeowners who face foreclosure in the future, but said advocates had hoped the court would apply the rule retroactively.

  • We’re disappointed that the homeowners who have already lost their homes will not have any recourse under this decision,’’ Levine said. “But we think going forward it will curb the worst practices.’’

  • Georgetown University Law Professor Adam Levitin, who wrote a friend-of-the-court brief supporting Eaton’s position, said the decision makes clear that lenders who do not hold both the mortgage and the promissory note do not have the right to foreclose, an area of state law that until now has been ambiguous.

  • It’s not an outright victory. The court was definitely concerned that if it applied the ruling retroactively, that it would cloud title for a lot of real estate in Massachusetts. They avoided that,’’ Levitin said.
See also, Credit Slips: Eaton v. Fannie Mae Analysis for some analysis on this ruling.

Securitization Screw-Ups - Litigation Update

Georgetown University Law School Professor Adam Levitin writes in Credit Slips:
  • The wheels of litigation move slowly, but there are a couple of recent securitization fail litigation decisions that are worthy of note. First, in the Congress case, a wrongful foreclosure action in Alabama (see my previous blogging on it here), the Alabama appellate court reversed and remanded, a victory for the homeowner.

  • The reversal and remand was on a rather narrow ground, namely that the trial court applied too demanding a standard when evaluating the homeowner's argument that the allonge in the case had been fabricated. Yet this means that this securitization fail case is still alive. It's also interesting to see how suspicious some courts have become about mysteriously appearing allonges and the like.

  • Second, the Illinois Court of Appeals for the 2d District just issued a ruling in a commercial mortgage foreclosure case, Bank of Am. Nat'l Ass'n v. Bassman FBT, 2012 Ill. App. LEXIS 487 (Ill. App. Ct. 2d Dist. 2012), with some wide reaching implications for securitization fail arguments. It's mainly a choice of law opinion, but there are two interesting things about the case.

Heirs: Caretaker Ripped Off Our Dementia-Afflicted Granduncle Out Of Millions In Real Estate! Suit Filed To Resolve Manhattan Land Grab

In New York City, the New York Post reports:
  • An elderly, lonely Manhattan pharmacist was allegedly duped by a Polish immigrant and her attractive daughter into signing over his $13 million real-estate portfolio before he died — and now his family is fighting for the properties, The Post has learned.

  • Retired Boghen Pharmacy owner Joseph Bogen, 91 — whose family name is spelled differently from the Upper East Side business — died in 2011, leaving no children and no wife.

  • But when it came time to read his will, his family — including relatives of his late wife, Anna Bogen — was shocked to learn his entire fortune had been left to Elzbieta Sztuka, her daughter, Karin Michonski, and Michael Wallerstein, the daughter’s fiancé — whom the elderly man had met only five years prior.

  • He was tricked!” said Michael Friedman, an attorney for Bogen’s grandnieces and grandnephews, who are fighting in Manhattan Surrogate’s Court to get back their granduncle’s millions.

  • Bogen was a lonely octogenarian living on the Upper East Side when he ran into Sztuka in 2006. The Polish immigrant claims he became smitten with her immediately, court papers show. “He was all alone for almost 16 years,” Sztuka said of Bogen’s time as a widow. She insisted it wasn’t his money that sparked her attention.

  • A Mount Sinai Hospital doctor noted ahistory of dementiain Bogen’s report during a 2010 visit, family attorneys said. “She came in and helped him clean [his home] up, helped him with his finances, cooked his meals, took him shopping and exercised a certain degree of control over him,” Friedman said.
***
  • Without a will, his family would have received his property under state law.
For more, see Tragic battle of will (Gal’s real-estate ‘grab’).

NC AG Pushes For Fracking-Related Consumer Protections Amidst Growing Natural Gas Speculators Door-To-Door Campaign Pressing Landowners To Sign Leases

From the Office of the North Carolina Attorney General:
  • Legislation that would give North Carolina homeowners some of the strongest legal protections in the country related to fracking could be voted on by the North Carolina House [].

  • Homeowners need these legal protections if North Carolina is going to move forward with fracking,” Cooper said. “Speculators are already knocking on doors, pressing people to sign leases, so we need to put these protections in place now.”

  • Cooper’s Consumer Protection Division studied legal and consumer protection issues relevant to fracking, including impacts on landowners, ownership of oil and gas rights, and existing legal protections. A report issued by the Attorney General in May recommended many legislative changes, most of which are included in Senate Bill 820.

  • The legislation, which would authorize shale gas extraction, also known as fracking, in North Carolina, was approved last week by the North Carolina Senate. The latest version of Senate Bill 820 put forward by the House Committee on the Environment adds to the bill three more key consumer protections that Cooper’s office found to be absolutely critical: [...]
For more of the North Carolina AG press release, see Homeowners Need Fracking Protections Now, AG Cooper Urges (Key consumer protections pushed by Cooper among strongest in the nation).
Forth the NC AG report, see North Carolina Department of Justice Consumer Protection Division: North Carolina Oil and Gas Study under Session Law 2011‐276: Impacts on Landowners and Consumer Protection Issues, May 1, 2012.
For other natural gas drilling-related stories reporting how landowners can get screwed over, see:

Saturday, June 23, 2012

Increase In Complaints Against Non-Lawyers Filing Bankruptcy Papers For A Fee Attributed To Upswing In Foreclosure Rescue & Loan Modification Peddling

The BLT: The Blog of Legal Times reports:
  • There has been an increase in the number of complaints against non-lawyers preparing bankruptcy filings for a fee, according to a report the Administrative Office of the U.S. Courts released [this month].
  • Federal law allows bankruptcy filers to use an attorney or go it alone as pro se filers. Those who elect to file themselves can use the help of non-lawyer, bankruptcy petition preparers who often charge a fee to help prepare the filing. The increase in the abuse is due in part to the mortgage crisis that has gripped much of the country, the AOC concluded.
  • "The increase in 'foreclosure rescue' and 'loan modification' services seems to be the source in the past three years," U.S. Bankruptcy Judge Maureen Tighe in the Central District of California said in the report. "The homeowners are desperate and take advice from the most questionable sources."(1)
(1) For more on the various types of foreclosure rescue ripoffs, see:

Foreclosing Bankster At Center Of Earlier Pet Parrot Pilfering Now Implicated In Alleged Vintage Muscle Car Heist

In Worcester, Massachusetts, the Worcester Telegram & Gazette reports:
  • As David vs. Goliath struggles go, they don't get much more lopsided than a lone muscle-car enthusiast going up against a mega-bank with more than $2 trillion in assets. But that's exactly what Aaron Dahrooge of Worcester has been doing for three months now in an effort to get back his beloved 1973 Dodge Challenger.

  • The distinctive muscle car, which is painted “plum crazy” purple and has a burly V-8 engine with a chrome air scoop popping up through the hood, was taken from the garage of his deceased mother's home in Burncoat in late March. Bank of America has vital information, but won't tell him, Mr. Dahrooge claims.

  • His mother, April Dahrooge, died last year. Her mortgage lender, Bank of America Corp., had an ongoing foreclosure proceeding against the house at the time of her death. The foreclosure proceeding has not been completed, according to city property tax and state land records.

  • Mr. Dahrooge said he stored the Challenger in the garage of his mother's house over the winter as he typically did because he was the executor of her estate. In late March, Mr. Dahrooge went to the house at 78 Uncatena Ave. with his teenage son to retrieve the purple Challenger, which he had found years before rusting in a field and fully restored into an attention-grabbing hot rod.

  • When he pulled into the driveway, he immediately noticed the garage door had been padlocked from the outside. I thought that was weird, so I went around to the back to look through the window and saw the car was gone. My heart just dropped,” Mr. Dahrooge recalled.

  • A neighbor told Mr. Dahrooge that a work crew in a GMC Yukon had come to the house a few days before to winterize and secure it, a typical step banks take to protect their collateral in foreclosure proceedings on vacant houses. A sign posted in the window of the house reads: “Caution: this house has been winterized with anti-freeze in all drains and toilet bowls. Please run water through the drains before using.”

  • The sign is dated March 19, 2012 — three days before Mr. Dahrooge came to get the car. The neighbor, who requested that he not be identified by name, said in an interview yesterday that he was outside playing basketball with his son in March when the same GMC Yukon pulled up to the house two days after the winterization work.

  • They unlocked the garage lock with their keys and towed the car out of there. The whole thing took five minutes,” the neighbor said.

  • Mr. Dahrooge reported the car stolen, and the neighbor gave a statement to police about what he had seen.

  • Mr. Dahrooge began frantically calling Bank of America to find out the name of the contractor the bank hired to secure and winterize the house. He called the bank numerous times, was transferred to different departments, left messages for various bank officials, he said, but never got anywhere.

  • I've called and called and called. Nobody will answer. When they do answer, they send you to some other department and things of that nature,” Mr. Dahrooge said.

  • Spokespeople for the Worcester Police Department and Worcester District Attorney Joseph D. Early Jr.'s office declined to comment on the case, saying the investigation into the missing car remains open.
***
  • Bank of America made headlines in Pittsburgh last year, and ultimately apologized, when its contractor there broke into the home of a borrower, who hadn't even defaulted on her mortgage, while she was away.

  • The workers padlocked the doors, shut off utilities and took her pet parrot, Luke, according to an account published in The Wall Street Journal. The bank has been hit with lawsuits alleging similar incidents in California and Texas, The New York Times reported.(1)
For more, see Worcester man battles bank after vintage muscle car hauled off (Owner claims bank stonewalls on info).
(1) For other posts on Bank of America's seemingly relentless involvement in mortgage servicing screw-ups, see:

BofA Fails To Give Vacant Home In Foreclosure Proper Attention Until It Finds Itself On City Wrecking Ball Appointment List

In Portland, Oregon, The Oregonian reports:
  • Mitch McKee clicked off his flashlight and walked out of a Northeast Portland house with broken windows, a fire-damaged roof, no working utilities and garbage piled waist-high in a detached garage. "They cleaned up a bit," he told police officers waiting outside.

  • The quick check last week that the house was empty was, in fact, pretty low-key for the Portland senior housing inspector who has become the point man for the city's recession-fueled stock of dilapidated homes.
***
  • According to Multnomah County records, the home was first scheduled for foreclosure sale in December 2010, but the bank called off the sale. It's now scheduled for auction next month. In the meantime, no one at Bank of America gave permission to vacate the house of people staying illegally and allow the city to board up entrances.

    Threatening demolition

  • Portland officials held an administrative hearing for a warrant to board up the house and, when break-ins continued, scheduled a hearing for permission to tear down the house. That got someone's attention. A Bank of America representative attended the hearing and agreed to provide basic maintenance and routine checks that the property was staying vacant.

  • "We weren't able to get anywhere until we held that hearing and proposed demolition, and we were prepared to go through with it," [Portland's Bureau of Development Services enforcement manager Mike] Liefeld said. "That's the goal. We're leveraging our ultimate authority to try and get a responsible party to comply with adopted codes."

Child Endangerment Among Charges Facing Mom Living In Abandoned Building In F'closure After 2-Year Old Son Falls Out 2nd Floor Window While Left Alone

In Chicago, Illinois, WLS-TV Channel 7 reports:
  • Police say a 2-year-old boy was alone when he fell from the second-floor window of an abandoned building on the city's Chicago Lawn neighborhood. His mother has been charged with child endangerment.

  • The child, who was found on the ground outside the building by a neighbor, survived the fall. He is hospitalized at Comer Children's Hospital. Family members say the boy is wearing a neck brace, but doctors told them he'd be OK.

  • The boy's mother, Venisha Carter, 22, faces misdemeanor charges, including one count of endangering the life and health of a child and one count of reckless conduct and bodily harm. Authorities say Carter and her son were living in that abandoned building with others. Her boyfriend said they moved into the abandoned building when they fell on hard times.
***
  • As many as 20 people were living in that building, sources say. County records indicate it is in foreclosure. [...] Those staying in the building were offered housing in shelters or transportation to get to relatives.

  • The owner of the building did not return ABC7's calls.(1) The former property manager said its company quit working at the building last year when the owner did not maintain financial commitments.

(1) If the city of Chicago has a local ordinance requiring window guards in multiple dwelling units, the landlord in foreclosure might also find himself/herself in hot water. Apparently, pre-school children falling out windows is not an uncommon occurrence in Chicago, as well as other big cities. See, for example, Pediatric window falls: not just a problem for children in high rises (Window falls are a frequent cause of injury (15/100,000) among Chicago preschool children. In Boston and New York, public health efforts have successfully decreased window fall injuries. [...] The median age was 2 years old.).

Father/Son Landlords Face Manslaughter Charges After Fatal Fire In Illegal Carved-Up Bldg Claims Five; Blaze Allegedly Set By Drunk Guest Of A Tenant

In Brooklyn, New York, the New York Post reports:
  • A father-and-son team that owned an illegally carved-up building in which five Guatemalan immigrants died in a fire have been charged with manslaughter, Brooklyn prosecutors said [].
  • Vasilio Gerazounis, 68, and his son, Argyrios, 37, pleaded not guilty to charges tied to the January 2010 blaze. Daniel Ignacio, a guest of one of the doomed tenants, faces second-degree murder charges for allegedly setting the fire in a first-floor stairwell while drunk.
  • But DA Charles Hynes said, “The landlords share in the responsibility.”
Source: Landlords in fatal-fire bust. subdivided

Landscaper's Screw-Up Drives 200 Seniors From Their Homes; Damage To Gas Line Triggers Fire, Forcing Residents To Live Out Of Their Suitcases

In Lyndhurst, Ohio, Newschannel 5 reports:
  • A large group of Lyndhurst seniors have been living out of a suitcase for nearly three months, after a fire struck their apartment complex in late March. Many of the residents who call the Sherri Park Apartments "home" are wondering when they will finally be able to return to their units.

  • "We've had so many different dates, we don't know when we're going to get back," said Sherri Park resident Betty Hersch. "We were told June 15, then June 18, then June 28. Now nobody knows."

  • The fire started at the complex after a landscaping company hit a gas line just outside the building. Fortunately, there were no injuries, but residents have been forced to live in temporary accommodations at the Homewood Suites Hilton in Beachwood for 11 weeks.
***
  • Mayor [Joseph] Cicero believes delays in building repairs have been caused by insurance and legal issues surrounding the fire. "This is between, the gas company, the contractors and apartment management," said Mayor Cicero. "There's a boat load of lawyers on either side."
***
  • [Tenant] Les Checel and other displaced seniors can only hope their insurance coverage will hold-out, and keep them off the street. "I would encourage them to do whatever it takes to get the building inspected and make it ready for occupancy, so people don't have this cloud hanging over their heads as to what their future holds," said Checel.
For more, see 200 Lyndhurst seniors remain displaced nearly 3 months after apartment fire (Apartment management offers few answers).
  • Three thefts were reported last week at the Sherri Park Apartments, from where many residents were evacuated and eventually moved to temporary housing after a fire there in late March.

  • A gold coin valued at $10,000 and jewelry valued at about $3,000 were reported stolen June 12 from one apartment. On June 13, jewelry valued at $400 and a can of coins valued at $350 were reported stolen from another unit, and June 16, a $1,400 laptop computer and about $200 worth of coins were reported stolen from a third residence.

Friday, June 22, 2012

Minnesota AG: Hospital Bill Collector Used 'ASS' & 'Blue Balls' To Squeeze Emergency Room Patients With Bedside Collection Visits, Overbilled Charges

In St. Paul, Minnesota, Legal Newsline reports:
  • Minnesota Attorney General Lori Swanson wants to add new allegations in her lawsuit against Accretive Health, a company that engages in medical debt collection. Her initial complaint, filed in January, alleged the company failed to protect patient health care confidentiality. In April, she released a report that alleged the company may have broken the law by asking patients to pay their bills as they sought care.

  • The report prompted a stock plunge and shareholder lawsuits. Her second amended complaint would add the report's allegations to her lawsuit.

  • "Accretive prepared a document called the 'Accretive Secret Sauce,' or 'ASS,' touting: 'You've never seen ASS like ours!' and 'Check out our ASS!'" says Swanson's memorandum in support of a second amended complaint, filed Tuesday.

  • "The main ingredient of the 'Secret Sauce' is that only in 'Accretive hospitals' are emergency room patients hustled with bedside collection visits. The impact of the 'Secret Sauce' on patients is very real. Its tactics also violate the law." Swanson says state law forbids debt collectors to imply or suggest medical care will be withheld in an emergency situation when collecting on a bill.

  • Included in her memorandum are stories from several individuals who claim Accretive did just that. Those testimonials allege a woman from Accretive demanded payment while the patients were receiving emergency care. The woman allegedly gave the impression care would be withheld if payment was not collected. Seventeen affidavits in support of Swanson's motion were filed with it.

  • Swanson also alleges Accretive overbilled patients using its own software program, known as A2A. "A hospital registration employee using A2A cannot process a patient electronic record unless he or she first processes informational 'balls' that pop up on the screen," the motion says.

  • "The system is derisively referred to by hospital employees as the 'Blue Balls' program. A2A purportedly determines the financial responsibility of insured patients for co-pays, deductibles, co-insurance, and for past balances, as well as the amount to be asked of uninsured patients for past balances and present bills.

  • "Based on the information in A2A, patients are then told to pay money to the hospital. The amount calculated by A2A for patients to pay often exceeded the amount owed by the patient. As a result, Minnesota patients sometimes paid more than they owed."
Go here for the Minnesota AG's:
For the Minnesota AG report on Accretive Health, see:

Mobile Home Dealer Pockets Customer Cash, Then Fails To Deliver To Some, Sells Damaged, Mold-Vulnerable Houses To Others, Says NC AG

From the Office of the North Carolina Attorney General:
  • A Robeson County manufactured home dealer cannot take new orders or accept payments until all previous orders have been filled or consumers have gotten their money back, Attorney General Roy Cooper announced [].

  • Consumers deserve to be treated fairly when they buy a home, and they deserve homes that are safe to live in,” Cooper said. “People should get what they paid for and receive a refund if they don’t.”

  • Cooper filed suit [...] against McMillian Properties of Shannon and its manager, Bradley McMillian, for a variety of violations including taking consumers’ money but failing to deliver homes as promised and selling damaged homes that were virtually uninhabitable. He is seeking a permanent ban on the defendants’ unfair business practices, refunds for consumers, and civil penalties.
***
  • As alleged in the Attorney General’s complaint, McMillian Properties regularly misled consumers about the condition of the homes it sold. Many of the homes were unfit to live in due to mold and structural problems. When consumers complained, the company promised to make repairs but failed to keep their promises.

  • Cooper contends that some consumers never even received their homes from McMillian Properties, despite having paid for them. Instead, the company offered excuses about why the home couldn’t be delivered, and refused to provide refunds.

  • For example, as explained in an affidavit filed with the complaint, one 93-year-old woman paid McMillian Properties $25,000 for a manufactured home so that she could move out of an assisted living facility. The home was supposed to be delivered by February 1 but Bradley McMillian repeatedly told the woman’s neighbors, who were helping her make the purchase, that it was delayed due to bad weather and other excuses. In their final conversation, McMillian claimed that he was about to leave to pick up the home. The callers were outside and could see that McMillian and his equipment never left to go get the home.
For the North Carolina AG press release, see AG Cooper goes after shoddy manufactured home dealer (McMillian Properties can’t take new orders until previous customers are satisfied).

Minnesota Regulator Takes Action Tagging Outfit That Allegedly Used Correspondence Simulating Government Docs To Dupe Homeowners Into Loan Mod Ripoffs

From the Minnesota Department of Commerce:
  • In a coordinated effort with federal law enforcement agencies that executed search warrants at three locations associated with C.C. Brown Law Office in Utah Tuesday, Commissioner Mike Rothman issued a statement of charges against Charles Craig Brown, Chad Gettel, and C.C. Brown Law, LLC for allegedly engaging in unlicensed mortgage modification activities in Minnesota.
***
  • The statement of charges issued by the Commissioner includes allegations that C.C. Brown Law, Charles Craig Brown, and Chad Gettel:

    1) Operated in Minnesota without an appropriate license.
    2) Collected advance fees from Minnesotan consumers totaling more than $134,000 to work with the customers’ lenders to modify the terms of their mortgages.
    3) Failed to deposit the up-front fees in a trust account as required by Minnesota Statutes.
    4) Accessed customers’ bank accounts using E-checks, which resulted in unauthorized withdrawals.
    5) Neglected to return advance fees upon request, after failing to complete the loan modification.
    6) Misled consumers by using advertisements that appeared to be sent by the government, using perforated, government-style checks, prequalification numbers beginning with the letters “U.S.” and “Housing & Economic Recovery Program (PL 110-289)” on the outside of the envelope.
For the Commerce Department press release, see Commerce Department teams up to crack down on unlicensed loan modification companies (Commissioner Rothman issues statement of charges against C.C. Brown Law on behalf of consumers).

One More Alleged Loan Modification Racket Finds Itself On Indiana AG Civil Lawsuit Hit List

From the Office of the Indiana Attorney General:
  • Indiana Attorney General Greg Zoeller has filed a lawsuit against a foreclosure consultant for contracting with a local homeowner and then taking off with their money.

  • Zoeller’s lawsuit filed in Adams County Circuit Court targeted H&R Financial Services, Inc. of New Mexico and its owners William John Heckler and Richard Ruegsegger. The company is accused of collecting $1,683 upfront from a Geneva resident and failing to obtain the promised home-loan modification or to provide a refund.
***
  • According to the complaint, H&R Financial Services violated the Credit Services Organization Act, the Mortgage Rescue Protection Fraud Act and Deceptive Consumer Sales Act. The company also failed to obtain a certificate of authority from the Indiana Secretary of State’s Office to conduct business in Indiana. The state seeks an injunction, restitution and civil penalties.

Thursday, June 21, 2012

Sale Leaseback Peddler Gets 33 Months In Racket That Ripped Off Victims' Home Equity & Led To Their Getting The Boot

From the Office of the U.S. Attorney (Norfolk, Virginia):
  • Philip Villasis, 41, of Chesapeake, Va., was sentenced [] to 33 months in prison, followed by 24 months of supervised release for conspiracy to commit wire fraud in connection with a fraudulent foreclosure rescue scheme. Villasis also will be required to pay over $216,000 in restitution to his victims.
***
  • According to court documents, from November 2006 until February 2011, Villasis engaged in a foreclosure rescue scheme that defrauded homeowners and mortgage lenders. Villasis promised homeowners that he could save them from foreclosure by arranging a sale of their homes to co-conspirator, Ray D. Gata, and other straw borrowers.

  • The homeowners were promised that they could remain in their homes after the sale, pay rent, and Villasis would resell the homes back to them once they were more financially secure. Villasis and Gata profited from this scheme by taking all of the proceeds from the home sales.

  • They completed the scheme by executing false closing documents that showed the proceeds of the sale going back to the homeowners when, in fact, the proceeds were going to Villasis, Gata and the other straw borrowers.

  • The homeowners received nothing from the sale of their homes while Villasis, Gata and others received in excess of $170,000. In almost every case, Villasis required the homeowners to pay more in rent to cover a larger mortgage, and ultimately evicted these homeowners from their homes.
For the U.S. Attorney press release, see Chesapeake Man Sentenced For Mortgage Fraud Scheme.

Ex-Tax Preparer Who Provided Falsified Work, Income Records In Connection With Sale Leaseback Foreclosure Rescue Ripoff Gets Two Years

In Los Angeles, California, City News Service reports:
  • A former tax preparer from Downey was handed a two-year federal prison sentence [] for his role in a mortgage fraud scheme that preyed on Latino homeowners by secretly taking title to their properties and draining the equity from their homes. Pablo Araque, 41, was also ordered by U.S. District Judge S. James Otero to pay restitution of $1 million.

  • Araque pleaded guilty in January to federal identity theft and mail fraud charges stemming from the scam in which homeowners' properties were sold, usually without their knowledge, to third-party straw buyers.
***
  • Co-defendant Juan Rangel, 48, was sentenced last year to 22 years behind bars for running both the foreclosure fraud and a separate Ponzi scheme that took in at least $30 million from over 500 victims.

Target Of Florida AG Probe Into Debt Settlement Scheme Now Peddling Purported Mortgage Cancellation Program To Homeowners Using Quiet Title Actions

In West Palm Beach, Florida, The Palm Beach Post reports:
  • By the time the stranger called that Thursday in March, suburban Boynton Beach homeowner Marcie Lowe was out of options to fix her failed real estate wager. The savvy 78-year-old played her hand well for years in the home-buying game, picking up properties in California and Key West to rent to kids in college and bartenders serving drinks on Duval Street.

  • But she got caught with a 10 percent interest-only loan on her gated Valencia Isles home, which is now worth hundreds of thousands of dollars less than the $571,000 she paid in 2003. “What would you think of this?” Lowe remembers the caller saying.

  • He proposed a fresh strategy to end-run the banks — a complex legal plan that begins when you deed your home to the Fort Lauderdale-based Fidelity Land Trust Co. for an average fee of $2,500. Conceived, at least in part, by a man barred by the state from engaging in consumer debt-related services, the trust then sues the bank to cancel your mortgage while offering a new contract with lower payments. “He said more than 250 people were already set up for this,” Lowe recalls.

  • Fidelity Land Trust has quietly amassed about 80 Palm Beach County deeds since it registered as a limited liability corporation with the state in December. The firm is the owner of record for another 76 properties in Broward and Miami-Dade counties, according to clerk of court records.

  • If the trust is successful in canceling the mortgage through a quiet title action, the homeowner is still responsible for the loan debt, or note, but the trust then tries to buy that debt from the bank for pennies on the dollar. Because the debt no longer has collateral in the form of the home, the idea is the bank will be more willing to negotiate.
***
  • Within the layers of corporations tied to Fidelity Land Trust is Edward C. Tudor — a registered fictitious name for Edward Cherry, according to the Florida Department of State Division of Corporations. State records show the managing member of Fidelity Land Trust Co. is Fidelity Land Trust Partners, whose “member or authorized representative” is Edward C. Tudor.

  • Cherry was barred in a 2009 consent judgment by Florida’s attorney general from dealing in consumer debt-settlement services after a state investigation concluded companies he was involved with “diverted millions of dollars to themselves and a coterie of families and associates.”

  • In 2010, the attorney general accused Cherry of violating the order after he allegedly conducted debt-related seminars that charged attendance fees of upwards of $95, according to a pending Broward County court case.
For more, see Underwater owners try to beat the bank (Post Exclusive: Homeowners seeking lifeline).