Outgoing Utah AG Creates Appearance Of Selling Out To BofA By Settling Major Foreclosure Litigation Bankster Appeared To Be Losing; Will Now Join Law Firm That Regularly Represents Notorious Lender; Actions Leave Staff Members Blind-Sided

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

• Just days before leaving office, Attorney General Mark Shurtleff has reversed the state’s position and personally signed on to a settlement in a foreclosure lawsuit that Bank of America appeared to be losing.
  
  The practical effect of Shurtleff’s move, according to an attorney who filed the lawsuit, is to weaken Utah’s ability to enforce state law. It also weakens the state’s position in other lawsuits challenging foreclosures carried out by ReconTrust Co., Bank of America’s foreclosure arm, Abraham Bates said.
  
  Members of the Attorney General’s Office said Shurtleff’s actions blind-sided them, but they declined to comment publicly. The office had previously successfully intervened in the case as a plaintiff and argued that ReconTrust had violated state law in foreclosing on Utah homeowners Timothy and Jennifer Bell.
  
  U.S. District Judge Bruce Jenkins, who presides over the case, issued a strong ruling in favor of the homeowners’ and the state’s position. The assistant attorneys general conducting the state’s case hoped to keep it alive for a final ruling by Jenkins before a likely appeal to the 10th Circuit Court of Appeals for a definitive decision that would guide other similar lawsuits.
  
  Shurtleff leaves office on Monday and has announced he’ll join the international law firm of Troutman Sanders LLP. On its website, the firm says it “regularly represents Bank of America.”
  
  A combative Shurtleff said Wednesday there was no connection between his action in the Utah foreclosure case and the clients of his new law firm. He portrayed his decision as one that saved state resources by not pursuing a case in which the original plaintiffs had settled.
  
  Shurtleff acknowledged that assistant attorneys general who work on foreclosure matters disagreed with his decision. He said he made the decision and signed the document so they wouldn’t have to take an action they disagreed with.

***

• “To me this appears to be some type of a midnight pardon,” Bates said. “It certainly sends a confusing message to the public and to the courts and the 10th Circuit as to why the chief law enforcement agency in the state is dismissing its claims in defense of the laws of the state.”
  
  By signing the settlement, Shurtleff has weakened the state’s legal position on foreclosures by ReconTrust because the state was an actual plaintiff in the case where in other active cases it has merely filed “friend of the court” briefs that don’t carry the same weight, Bates said.

For more, see Lawyers question Shurtleff’s 180 in foreclosure case (Outgoing Utah A.G. says there’s no link between his support of BofA settlement and his new firm having bank as client).

Pennsylvania Appeals Court: OK To Screw Over Unwitting Homebuyers By Knowingly Failing To Disclose House Was Site Of Ex-Owner's Bloody Murder-Suicide; Economic Loss To Purchaser Of Nearly $100K Of No Consequence

Courthouse News Service reports:

• Pennsylvania realtors have no obligation to warn buyers if a murder occurred in the property they are selling, the state superior court ruled.
  
  In February 2006, 50-year-old Konstantinos Koumboulis allegedly shot his 34-year-old wife and then killed himself in his West Chester, Pa., home. The house was sold at a real estate auction to the Jacono family, who in turn commissioned local Re/Max agents to sell it.
  
  The Jaconos and Re/Max confirmed with both the Pennsylvania Real Estate Commission and the Pennsylvania Association of Realtors that they were not obligated to report the murder-suicide to buyers.
  
  One year later, a woman named Janet Milliken purchased the home for $600,000. Unaware of the Koumboulis history, Milliken believed that the home had gone into foreclosure. She learned of the tragedy three weeks after moving in and sued the Jaconos, Re/Max and her own realtor for fraud and misrepresentation.
  
  The trial judge granted summary judgment to the defendants, finding that Pennsylvania law does not require realtors to disclose that a murder occurred in the home.
  
  A divided panel of the appeals court affirmed last week.
  
  "If the murder/suicide cannot be considered a defect legally, or if the Sellers were under no legal obligation to reveal this alleged defect, there can be no liability predicated upon the failure to so inform," President Judge Emeritus Kate Ford Elliott wrote for the six-member majority.
  
  "Today, we find that psychological damage to a property cannot be considered a material defect in the property which must be revealed by the seller to the buyer. Thus, each of Buyer's issues on appeal must fail."
  
  Though the state Legislature requires realtors to disclose any material defects of the property to buyers, they do not have to report "psychological damage" to the property or its reputation, according to the ruling.
  
  Ford Elliott pointed out three main concerns with requiring such disclosure.
  
  First, "this sort of psychological damage to a house will obviously decrease over time as the memory of the murder recedes from public knowledge," Elliott wrote. "Requiring a seller to reveal this information may force the seller to sell the house under market value and allow the buyer to realize a windfall when the house is resold 10 years later and memories have faded."
  
  Such a result would be nonsensical, she argued.
  
  "Second, how can a monetary value possibly be assigned to the psychological damage to a house caused by a murder?" Elliott asked. "The psychological effect will vary greatly from person to person. There are persons for whom no amount of money would induce them to live in such a house, while others may not care at all, or even find it adventurous."
  
  And finally, requiring disclosure of nonmaterial damage could lead to a slippery slope, the court found.
  
  "If psychological defects must be disclosed then we are not far from requiring sellers to reveal that a next-door neighbor is loud and obnoxious, or on some days you can smell a nearby sewage plant, or that the house was built on an old Indian burial ground," Elliott wrote. "Indeed, one could identify numerous psychological problems with any house."
  
  The state Legislature, rather than the courts, must decide whether such an extension would be appropriate, according to the ruling.
  
  Milliken also failed to allege negligent representation because the seller did not owe her special duty.
  
  "Sellers simply did not engage in any deceptive conduct. Sellers merely declined to inform Buyer about a factor of which they were under no obligation to disclose," Elliott wrote.
  
  Judge John Bender penned a dissenting opinion joined by Judges Sallie Mundy and David Wecht.
  
  "The single certainty that permeates every aspect of this case is that Janet Milliken, who has now suffered a six-figure economic loss (and untold aggravation), was destined to discern the occurrence of a murder/suicide in her new home either before consummating her purchase or - as fate would have it - afterward," Bender wrote.(1)
  
  "The majority's ruling, which deprives Milliken of any legal remedy, rewards those sellers and short-circuits the legislative intent of the Real Estate Seller Disclosure Law." ["ie. RESDL](2)
  
  The definition of a "material defect" under RESDL could be read to include psychological damage, Bender pointed out.
  
  "A 'material defect' is 'a problem with a residential real property or any portion of it that would have a significant adverse impact on the value of the property or that involves an unreasonable risk to people on the property,'" he quoted.
  
  "Whereas the majority would consign the stigma of murder/suicide to the ethereal realm of 'psychological damage,' the statute recognizes it for what it is - documented economic loss - and a 'material defect' that must be disclosed."
  
  The dissent pointed to a ruling by the California Court of Appeals, which held that undisclosed information must be analyzed to determine the "gravity of the harm inflicted by nondisclosure; the fairness of imposing a duty of discovery on the buyer ... and its impact on the stability of contracts if rescission is permitted."(3)

Source: Realtors Can Keep Mum on Home's Bloody Past.

For the ruling, see Milliken v. Jacono, 2011 PA Super 254 (November 29, 2012).

(1) The dissenting judges added:

• [T]he financial penalty Mrs. Milliken has suffered was entirely avoidable had the sellers from whom she bought her home merely exercised a little more integrity and a little less greed.

(2) The dissenting judges highlight the problem of possible big losses by unwitting homebuyers if sellers are not required to disclose facts that, while not affecting the physical structure of the premises, can nevertheless impact on a buyer's wallet (RESDL refers to the Pennsylvania Real Estate Seller Disclosure Law):

• Not surprisingly, it also truncates the ability of homebuyers across this Commonwealth to avoid potentially catastrophic losses in purchasing a home. The RESDL-on its face—does not countenance such an untoward result, notwithstanding the Majority's speculation about unproven consequences in scenarios not before us. In my opinion, the circumstances of record in this case, considered through the prism of the RESDL and the causes of action Mrs. Milliken avers, raise questions of fact that must be resolved at trial.

***

• In this case, the adverse impact of the murder/ suicide on the value of Milliken's home is documented in the reports of two expert real estate appraisers, one of whom opined that the attendant stigma reduced the value of the property by ten to fifteen percent of its $610,000 sale price, and the other of whom attested that the value of the home did not exceed $525,000. To the extent that a reduction of almost $100,000 in value can be deemed a “significant adverse impact on the value of the property,” the RRETL, considered in conjunction with RESDL, mandates that the cause of the stigma be disclosed. Thus, whereas the Majority would consign the stigma of murder/suicide to the ethereal realm of “psychological damage,” Majority Slip Op. at 9, the statute recognizes it for what it is—documented economic loss—and a “material defect” that must be disclosed.

(3) See Reed v. King, (1983) 145 Cal.App.3d 261, 193 Cal. Rptr. 130. The dissenting judges quoted from the California appellate court in this excerpt:

• The murder of innocents is highly unusual in its potential for so disturbing buyers they may be unable to reside in a home where it has occurred. This fact may foreseeably deprive a buyer of the intended use of the purchase. Murder is not such a common occurrence that buyers should be charged with anticipating and discovering this disquieting possibility. Accordingly, the fact is not one for which a duty of inquiry and discovery can sensibly be imposed upon the buyer.

***

• If information known or accessible only to the seller has a significant and measureable effect on market value and, as is alleged here, the seller is aware of this effect, we see no principled basis for making the duty to disclose turn upon the character of the information. Physical usefulness is not and never has been the sole criterion of valuation. Stamp collections and gold speculation would be insane activities if utilitarian considerations were the sole measure of value.
  
  Reputation and history can have a significant effect on the value of realty. “George Washington slept here” is worth something, however physically inconsequential that consideration may be. Ill-repute or “bad will” conversely may depress the value of property.

The diseenting judges then added:

• Of course, the Court's decision in Reed does not bind us.
  
  Nevertheless, its analysis offers a valuable perspective that should cause the Majority pause in its insistence that pragmatic considerations militate against the conclusion that damage to the reputation of a property poses a quantifiable economic loss. As the Court in Reed has amply demonstrated, the truth is quite the contrary.
  
  Moreover, to the extent that the cause of loss can be proven by expert testimony, it imposes “significant adverse impact on the value of the property,” and must be recognized as a “material defect” under the RESDL. Pursuant to the language of RESDL section 7303, disclosure of such defects by the seller should be deemed mandatory, and a seller who fails in this regard should answer for his conduct in damages.
  
  Consistent with this rationale, I would vacate the trial court's award of summary judgment and remand this matter for trial. Inasmuch as the Majority declines this course, I must respectfully dissent.

Facing Foreclosure, Hubby, Wife, Daughter Pinched On Suspicion Of Torching Their Home To Pocket Insurance Proceeds

In Fountain Inn, South Carolina, WSPA-TV Channel 7 reports:

• A father, mother and their daughter have been arrested after sheriff's deputies say they were involved in a suspicious fire at a home in Fountain Inn.
  
  The Laurens County Sheriff's Office and South Carolina Law Enforcement Division Arson Unit investigated the December 14 fire at a home at 13 Hunter Road.
  
  Robert D. Pike, 64, Yvonne L. Pike, 63, and Yvonne M. Pike, 21, were arrested on Tuesday. LCSO investigators say all three suspects live at that address in Fountain Inn.
  
  LCSO investigators say the home was in foreclosure and they believe the three set the home on fire to collect insurance money. All three suspects have been released from the Johnson Detention Center on $8,000 bonds.

Source: Dad, Mom, Daughter Arrested In "Suspicious" Home Fire In Fountain Inn.

Ponzi Scheme Operator Cops Guilty Plea; Also Admits To Ripping Off His Own Parents By Taking Out $493K Loan Against Their Home

From the Office of the U.S. Attorney (Los Angeles, California):

• A Glendale man has agreed to plead guilty to federal fraud charges, admitting that he ran three separate scams, including a Ponzi scheme that defrauded 30 families out of more than $8 million.
  
  Kaveh Vahedi has also admitted his role in a mortgage fraud scheme that submitted hundreds of falsified loan applications to banks through his brokerage firm, Countywide Financial. Vahedi has also acknowledged stealing more than $700,000 from his parents by draining their bank account and taking out a loan on their home.

***

• In addition to [Ponzi scheme] crimes, Vahedi also agreed to plead guilty to one bank fraud count in a pending indictment against him related to a fraud he perpetrated against his own family. In his plea agreement, Vahedi admits that he posed as his father in order to withdraw approximately $250,000 from his parents’ bank account. He also impersonated his father and took out a $493,000 home equity loan against his parents’ home.

For the U.S. Attorney press release, see Con Man Agrees To Plead Guilty In Three Fraud Schemes, Including Multi-Million Dollar Ponzi And Separate Mortgage Fraud Scheme.

NY AG: Watch Out For Scammers Targeting NYC Tenant-Beneficiaries Of Recent $69M Stuyvesant Town/Peter Cooper Village Rent Rebate Settlement

From the Office of the New York Attorney General:

• Attorney General Eric T. Schneiderman [] issued an open letter to tenants of Stuyvesant Town and Peter Cooper Village in Manhattan warning them of a possible scam related to a recently announced multi-million rent-rebate settlement. Last week, several tenants reported receiving what appear to be scam calls about the settlement, and in which they were asked to provide personal information. The Attorney General warned residents about providing information to unknown callers and encouraged tenants to contact his office with information that may assist the investigation.

***

• On December 11, New York City Councilmember Daniel Garodnick reached out to the Attorney General’s office to report that several tenants of the complexes had received telephone calls from individuals claiming to be the claims administrator of the Settlement. The callers attempted to solicit personal information from the tenants on the pretext that this information is required for the tenants to recover on the Settlement. The Attorney General’s office determined that these calls were not from the Settlement claims administrator or anybody else legitimately affiliated with the Settlement. Instead, the calls were a scam apparently designed to deceive tenants of the complexes into disclosing highly personal information to fraudsters who will use this information for their own personal gain.
  
  The Roberts v. Tishman Speyer case was settled on November 30th and will result in nearly $69 million being returned to tenants overcharged for rent between 2003 and 2011. The case was initially filed in 2007 by Stuyvesant Town residents against Tishman Speyer and Met Life, the former owner of the East Village building complex, claiming that units had been illegally deregulated while the development was receiving a J-51 tax abatement. The state’s top court, ruled in favor of the tenants in October 2009 and a settlement was reached this fall. The case involved the status of 4,311 apartments and will impact approximately 22,000 current and former residents.

For the New York AG press release, see A.G. Schneiderman Warns Against Stuyvesant Town Settlement Scam (Tenants Should Beware of Scam Calls Asking For Private Information; A.G. Schneiderman: Be Careful of Scammers Preying On Tenants).

County Sheriff Sits On Over $100K In Foreclosure Sale Surplus Proceeds Belonging To Booted Homeowners That Can't Be Found

In New Casstle County, Delaware, The News Journal reports:

• The New Castle County Sheriff’s Office has more than $100,000 that belongs to the owners of eight homes that were sold earlier this year because of tax delinquencies and a foreclosure.
  
  The government, however, can’t find the people to give them the money.
  
  The money is excess proceeds from the sales, which took place over the past six months, Sheriff Trinidad Navarro said. He suspects the owners of the homes have no idea they are entitled to the difference between what was owed the government or mortgage company and the amount of the tax sales.
  
  In most cases, homes lost at sheriff sales are sold for less than what is owed. But that’s not the case for the eight property owners Navarro is trying to find.
  
  “They assumed the sale meant a total loss of their home,” Navarro said. “In these cases, there was money left over and I want to get it to them, because it’s not the government’s money. It’s theirs.”
  
  The sheriff’s office has returned more than $60,000 to people since Navarro took office last year. In March, he found Lamarr Cannon, whose home in Garfield Park was sold at sheriff sale in October 2011 because he owed about $8,000 in county and school taxes. Cannon’s dad gave him the house and the mortgage had been paid off years before.
  
  The house sold for $34,000, so Navarro handed Cannon a check for almost $26,000.
  
  Before Navarro took office, the county would simply transfer excess proceeds from sheriff sales to Delaware Superior Court, which operates Project Rightful Owner, a project that tries to get the excess money from the sales to the people who are entitled to it. The court program has disbursed nearly $4.9 million since 2005, Superior Court officials said earlier this year.

***

• Navarro said many people are skeptical that he’s telling the truth. He’s actually found some people who are owed money, told them to come to his office to start the process of getting it back and they’ve never shown up.
  
  “I understand why,” he said. “We warn people to be alert for scams all the time and it’s not very often that someone calls you telling them they are owed money.”

For more, see Funds sit, wait to be returned (County sheriff hopes to distribute $100,000).

Banking Regulators Near $10B Settlement With 14 Banks Over Foreclosure Abuses; Deal Could Be More Generous To Booted Homeowners Than 49-State AG Deal Made Last Year

The New York Times reports:

• Banking regulators are close to a $10 billion settlement with 14 banks that would end the government’s efforts to hold lenders responsible for foreclosure abuses like faulty paperwork and excessive fees that may have led to evictions, according to people with knowledge of the discussions.
  
  Under the settlement, a significant amount of the money, $3.75 billion, would go to people who have already lost their homes, making it potentially more generous to former homeowners than a broad-reaching pact in February between state attorneys general and five large banks. That set aside $1.5 billion in cash relief for Americans.
  
  Most of the relief in both agreements is meant for people who are struggling to stay in their homes and need the banks to reduce their payments or lower the amount of principal they owe.
  
  The $10 billion pact would be the latest in a series of settlements that regulators and law enforcement officials have reached with banks to hold them accountable for their role in the 2008 financial crisis that sent the housing market into the deepest slump since the Great Depression. As of early 2012, four million Americans had been foreclosed upon since the beginning of 2007, and a huge amount of abandoned homes swamped many states, including California, Florida and Arizona.
  
  Federal agencies like the Securities and Exchange Commission and the Justice Department are continuing to pursue the banks for their packaging and sale of troubled mortgage securities that imploded during the financial crisis.
  
  Housing advocates were largely unaware of the latest rounds of secret talks, which have been occurring for roughly a month. But some have criticized the government for not dealing more harshly with bankers in light of their lax standards for making loans and packaging them as investments, as well as their problems with modifying troubled loans and processing foreclosures.
  
  A deal could be reached by the end of the week between the 14 banks and the nation’s top banking regulators, led by the Office of the Comptroller of the Currency, four people with knowledge of the negotiations said. It was unclear how many current and former homeowners would receive money or when it would be distributed.
  
  Told on Sunday night of the imminent settlement, Lynn Drysdale, a lawyer at Jacksonville Area Legal Aid and a former co-chairwoman of the National Association of Consumer Advocates, said: “It’s certainly a victory for consumers and could help entire neighborhoods. But the devil, as they say, is in the details, and for those people who have had to totally uproot their lives because of eviction it may still not be enough.”
  
  In recent weeks within the upper echelons of the comptroller’s office, pressure was mounting to negotiate a banner settlement with the banks, according to people with knowledge of the matter. The reason was that some within the agency had started to realize that a mandatory review of millions of bank loans was not yielding meaningful examples of the banks’ wrongfully evicting homeowners who were current on their payments or making partial payments, according to the people.
  
  Representative of banking regulators did not return calls for comment on Sunday.
  
  The biggest action against the banks for foreclosure-related abuses has been the $26 billion settlement between the five largest mortgage servicers and the state attorneys general, Justice Department and the Department of Housing and Urban Development after allegations arose in 2010 that bank employees were churning daily through hundreds of documents used in foreclosure proceedings without properly reviewing them for accuracy.
  
  The same banks in that settlement — JPMorgan Chase, Bank of America, Wells Fargo, Citigroup and Ally Financial — are included in the current negotiations.

For more, see Settlement Expected on Past Abuses in Home Loans.

Federal Racketeering Suit Targeting Banksters Moves On After Two Attempts To Quash Litigation Fail

In Sarasota, Florida, the Sarasota Herald Tribune reports:

• Self-help author Liz Coursen was not looking to set a precedent when she decided to go after the big Wall Street investment bank that foreclosed on her Sarasota home. She just wanted her house back.
  
  But JPMorgan Chase and Washington Mutual have tried to quash her federal racketeering lawsuit twice, so far without success, putting the Sarasota resident in the unlikely position of potential giant killer. If the suit proceeds and Coursen prevails, her case might serve as a legal roadmap for other borrowers.
  
  Wall Street firms — targeted in reams of litigation after they handed out billions of dollars during the real estate boom only to grab assets back during the recession — have blocked most individual plaintiffs.
  
  But not the 53-year-old author.
  
  At least part of that is because of Coursen herself, who spent five lonely years acting as her own counsel in court. Her case, which alleges conspiracy and corporate deceit, gained more traction in recent months, thanks to Sarasota attorney Jacqulyn Mack, who specializes in consumer law and took the case last November.

For more, see Sarasota author suing biggest U.S. bank over foreclosure.

Protecting Tenants At Foreclosure Act: Collection Of Cases

The following court cases, collected by the National Housing Law Project, may be of some guidance to those representing tenants in enforcing their rights under the federal Protecting Tenants at Foreclosure Act:

• Bank of N.Y. Mellon v. De Meo, 254 P.3d 1138 (Ariz. App. 2011)
  
  In a case of first impression, the appellate court held that the Protecting Tenants at Foreclosure Act requires post-foreclosure owners to serve a tenant with an unambiguous 90-day written notice before it may move forward with an eviction action.
  
  Bank of Am. N.A. v. Owens, 903 N.Y.S.2d 667 (City Ct. 2010)
  
  A post-foreclosure owner may not require tenants to prove bona fide tenancy within five days to avoid its obligation to provide 90-day notice under the PTFA. If the owner has not provided the required 90-day notice, the burden is then on the owner to demonstrate that a property resident is not a bona fide tenant.
  
  Southland Home Mortg. v. Valle (In re Valle), No. 10-15196, 2011 WL 722388 (Bankr. S.D. Cal. Feb. 16, 2011)
  
  In this case, the bankruptcy court denied the bank's motion for relief from the automatic stay because the tenant's lease remained valid under the Protecting Tenants at Foreclosure Act as amended by the Dodd-Frank Act.
  
  RWW Properties v. Stepanoff, No. N10-0072 (Cal. Super. Ct. App. Div. May 25, 2010)
  
  The decision of a California Superior Court judge who allowed a tenant to be evicted after only 30 days notice after foreclosure on the basis that the PTFA only applied to federally related mortgages was reversed on appeal.
  
  Alta Cmty. Invs. III v. Ottoboni, No. 1370195 (Cal. Super. Ct. July 29, 2010)
  
  In this tentative ruling, an eviction based on a 3/30/60/90 day was dismissed for failing to give proper notice. The court ruled that the notice is equivocal/ambiguous and thus was not effective to terminate the tenancy.
  
  E Trade Bank v. Salter, No. 1372298 (Cal. Super. Ct. Jan. 20, 2011)
  
  In this tentative ruling, the court dismissed the eviction based on a 3/60/90 day notice because the notice required any tenants to provide proof of tenancy within three days. The court held the notice to be equivocal because the notice period would vary depending on what steps an occupant takes in response to the notice.
  
  PD Realty, LLC v. Azevedo, No. 11H84SP000071, 2011 WL 481489 (Mass. Hous. Ct. Feb. 3, 2011)
  
  In this case, the court held that a tenant occupying an illegal unit may still be a bona fide tenant under the PTFA.
  
  Fed. Nat'l Mortg. Ass'n v. Vidal, No. 11H84SP004364, 2012 WL 597929 (Mass. Hous. Ct. Feb 17, 2012)
  
  In this decision, the court found that Fannie Mae must serve bona fide tenants a 90-day notice under the PTFA, even if the eviction is based on non-payment of rent (which required only a 14-day notice under state law).
  
  PNMAC Mortg. v. Stanko, No. 11U04495, 2012 WL 845508 (Cal. Super. Ct. Mar. 7, 2012)
  
  In this case, the court granted the Delta motion and found that the bank must serve bona fide tenants a 90-day notice under the PTFA, even if the eviction is based on non-payment of rent (which required only a 3-day notice under state law).
  
  Fed. Nat'l Mortgage Assoc. v. Dobson, No. 10-CVG-02140 (Ohio Mun. Ct. Mar. 1, 2010)
  
  Unless proven otherwise, an existing tenant is presumed to be a bona fide tenant protected under the PTFA.

Source: The Foreclosure Crisis and Its Impact on Tenants.

Feds Drag Feet In Assuring That Terms Of BofA/Countrywide Fair Lending Lawsuit Settlement Is Carried Out; Compensation Slow In Reaching Victims

The Wall Street Journal reports:

• A big legal settlement usually marks the end of the bulk of the work for the Justice Department. But a year after a $335 million deal with Bank of America Corp. to compensate minority borrowers for alleged discrimination, much remains to be done.
  
  The department's settlement administrator just began notifying affected borrowers in November, about five months later than originally planned. Then, weeks after letters went out to more than 233,000 presumed victims, about 10% of those letters have been returned as undeliverable, according to Justice Department officials.
  
  U.S. officials had warned that it might take two years for eligible borrowers to receive money from the settlement, but they also expressed hope that checks could be mailed out sooner. Those hopes have dimmed.
  
  "There were a number of production and other delays in getting the letters out to borrowers. However, we believe that we should be able to meet our original two-year time frame," Justice Department spokeswoman Dena Iverson said.
  
  The settlement covers lending during the height of the housing bubble from 2004 to 2008 by Countrywide Financial, the big mortgage lender acquired by Bank of America in 2008.
  
  Announced in December 2011, the agreement was the department's largest fair-lending settlement in history. The department said Countrywide charged black and Hispanic borrowers higher mortgage-lending fees or steered them into costly subprime loans even though their credit histories qualified them for a mortgage with more favorable terms.

For more, see BofA Settlement Hits Snags (Justice Department Behind Schedule in Resolving Lending-Discrimination Case).

Banksters Dodge Paying HOA Dues By Dragging Feet On Filing Foreclosure Paperwork While Forcing Delinquent Homeowner-Borrowers Onto The Streets

In Atlanta, Georgia, WSB-TV Channel 2 reports:

• Lenders have taken over hundreds of thousands of North Georgia homes, because the owners couldn't pay.
  
  But now, homeowners associations said those banks aren't paying what they owe, and it's costing all homeowners.
  
  "It's a serious crisis in our area," said Michael Crew, who manages 120 homeowners and condo associations across the metro area.
  
  Crew said it's very common for banks to force homeowners out, but then wait to file the paperwork.
  
  Under current Georgia law, when the bank finally does foreclose, it can wipe out all of those old homeowners association bills.
  
  "They are really hurting the people that are their neighbors in essence. But since they don't live in these communities, they apparently don't care about that part of it," Crew said.
  
  Phil Smith is president of the McGill Park condominium association in downtown Atlanta. He said it's lost nearly $150,000 in the past three years, because banks refused to pay dues they owe.
  
  "The bills don't stop coming just because the bank isn't paying for the bills for the property that they've taken possession of," Smith said.
  
  He said the banks deliberately wait to file, even though they've kicked out owners months or years earlier.
  
  If they foreclosed right away, the banks would have to pay the dues for all of those months the units sit empty.
  
  "They know that until they actually file that foreclosure paperwork, they can get away without paying and that's just simply not right," Smith said.
  
  He and Crew are partnering with other homeowners associations to support legislation to stop it.
  
  "When they actually do foreclose on it and they go sell it, they still reap the benefits of the maintenance that occurred during the period of time when they did not contribute," Crew said.

For more, see HOAs saying banks aren't paying what they owe.

Indoor Pot Farmer Gets 32 Months For Role In Running Large-Scale Marijuana Grow House Operation Out Of 26 Upscale Homes Financed By Straw Buyer Scam

In Stockton, California, The Record reports:

• A man who helped buy homes fraudulently in Stockton for use as indoor marijuana farms was sentenced to two years and eight months in prison, U.S. Attorney Benjamin Wagner said.
  
  Michael Giang, 39, of San Francisco received the sentence [] in federal court in Sacramento for his role in what authorities have called one of the largest, most sophisticated residential indoor marijuana growing operations. The scheme included 26 homes in upscale Stockton neighborhoods that were purchased with 100 percent financing, gutted and used to grow vast quantities of marijuana, authorities said.
  
  Several large raids occurred in 2006 and 2007 in Stockton, Lathrop, Mountain House, Tracy and other Central Valley cities.
  
  Court documents alleged Dickson Hung used personal information from several straw buyers to purchase the homes in Stockton.
  
  Giang's role was preparing and submitting false loan applications and other related loan documents to the financial institutions and mortgage lenders on behalf of the straw buyers, the U.S. Attorney's Office said. Those documents contained false representations and omissions regarding the borrower's monthly income, employment and rental histories, assets and even intent to live at the homes, officials said.
  
  Once the homes were purchased, the growing operations cut into the main electrical lines to bypass the electrical meters. That enabled them to use electricity without being detected or paying for it. Each house stole $4,000 of electricity every month, according to court records. Most of the homes went into foreclosure.
  
  Giang, a court concluded, was responsible for a loss of more than $7.2 million.

For the story, see Pot house accomplice sentenced.

Michigan Supreme Court: Bankster Screw-Ups When Following Foreclosure Process As Laid Out Under State Law Result In Foreclosures That Are Merely Voidable, Not Void Ab Initio

From the Syllabus of a recent Michigan court ruling, prepared by the Reporter Of Decisions for the Michigan Supreme Court:

• Euihyung and In Sook Kim brought an action in the Macomb Circuit Court against JPMorgan Chase Bank, N.A., seeking to set aside a sheriff’s sale of their home.
  
  Plaintiffs had obtained a loan from Washington Mutual Bank to refinance their home and granted Washington Mutual a mortgage interest in the property to secure the loan.
  
  The federal Office of Thrift Management subsequently closed Washington Mutual and appointed the Federal Deposit Insurance Corporation (FDIC) as receiver for the bank. Defendant acquired Washington Mutual’s assets, including loans and loan commitments, pursuant to a purchase and assumption agreement that it reached with the FDIC. After plaintiffs defaulted on their loan payments, defendant foreclosed on the property by advertisement and purchased the property at the sheriff’s sale.
  
  Both parties moved for summary disposition. Plaintiffs argued in part that defendant had failed to comply with the statutory foreclosure-by-advertisement requirements and that as a result the foreclosure sale was void ab initio.
  
  The court, [...] granted summary disposition in favor of defendant, finding that because defendant had acquired plaintiffs’ mortgage by operation of law, defendant was not required to record the mortgage assignment before beginning foreclosure-by-advertisement proceedings.
  
  The Court of Appeals, [...] reversed, concluding that because defendant was not the original mortgagee and had acquired the loan by assignment rather than by operation of law, defendant was obligated under MCL 600.3204(3) to record the assignment of plaintiffs’ mortgage to it before foreclosing by advertisement. The Court of Appeals determined that defendant’s failure to record the assignment rendered the sheriff’s sale void ab initio. 295 Mich App 200 (2012).
  
  The Supreme Court granted defendant’s application for leave to appeal. 491 Mich 915 (2012).
  
  In an opinion by Justice MARILYN KELLY, joined by Justices CAVANAGH, MARKMAN, and HATHAWAY, the Supreme Court held:
  
  When a subsequent mortgagee acquires an interest in a mortgage through a voluntary purchase agreement with the FDIC, the mortgage has not been acquired by operation of law and that subsequent mortgagee must comply with the provisions of MCL 600.3204 and record the assignment of the mortgage before foreclosing on the mortgage by advertisement.
  
  Any defect or irregularity in a foreclosure proceeding results in a foreclosure that is voidable, not void ab initio.(1)

For the full Syllabus, and the Michigan high court ruling, see Kim v. JPMorgan Chase Bank, N.A., Docket No. 144690 (December 21, 2012)

(1) The Michigan Supreme Court addresses this issue in the following excerpt:

• As noted earlier, MCL 600.3204 sets forth several requirements for foreclosing a property by advertisement. Subsection (3) requires a party that is not the original mortgagee to record the assignment of the mortgage to it before foreclosing. Because defendant acquired plaintiffs’ mortgage through a voluntary transfer, and given that it was not the original mortgagee, it was subject to the recordation requirement of MCL 600.3204(3). Having made that determination, we must now decide the effect of defendant’s failure to comply with that provision.
  
  With meager supporting analysis, the Court of Appeals concluded that defendant’s failure to record its mortgage interest before initiating foreclosure proceedings rendered the foreclosure sale void ab initio.
  
  It cited one case in support of its holding, Davenport v HSBC Bank USA. There, the plaintiff, who was in default on her mortgage, brought an action to void a foreclosure. The defendant, who was the successor in interest of the initial mortgagee, had initiated the foreclosure proceeding several days before acquiring its interest in the mortgage. The trial court granted summary disposition to defendant.
  
  The Court of Appeals reversed the trial court’s ruling. It held that the defendant’s failure to comply with MCL 600.3204(1)(d), which requires that a party own some or all of the indebtedness before foreclosing by advertisement, rendered the foreclosure proceedings void ab initio.
  
  But it cited not a single case in support of the proposition that the foreclosure was void ab initio as opposed to merely voidable. Davenport’s holding was contrary to the established precedent of this Court.
  
  We have long held that defective mortgage foreclosures are voidable. For example, in Kuschinski v Equitable & Central Trust Co, the Court considered a foreclosure undertaken in violation of a restraining order. The Court held:
  
  Our attention is called to a few isolated cases where under a different factual set-up, such sales have been held to be void. The better rule seems to be that such sale is voidable and not void. Plaintiff was not misled into believing that no sale had been had because of the order restraining such action. He knew of the sale and, although he was warned by defendants’ attorneys, violated the rule that in seeking to set aside a foreclosure sale, the moving party must act promptly after he becomes aware of the facts upon which he bases his complaint. The total lack of equity in plaintiff’s claim, his failure to pay anything on the mortgage debt and his laches preclude him from any relief in a court of equity.
  
  Similarly, in Feldman v Equitable Trust Co, the Court held that a foreclosure commenced without first recording all assignments of the mortgage is not invalid if the defect does not harm the homeowner.
  
  This Court, the Court of Appeals, and the United States District Court for the Eastern District of Michigan have consistently used this interpretation. We continue to adhere to it.
  
  Therefore, we hold that defects or irregularities in a foreclosure proceeding result in a foreclosure that is voidable, not void ab initio.
  
  Because the Court of Appeals erred by holding to the contrary, we reverse that portion of its decision.
  
  We leave to the trial court the determination of whether, under the facts presented, the foreclosure sale of plaintiffs’ property is voidable. In this regard, to set aside the foreclosure sale, plaintiffs must show that they were prejudiced by defendant’s failure to comply with MCL 600.3204. To demonstrate such prejudice, they must show that they would have been in a better position to preserve their interest in the property absent defendant’s noncompliance with the statute.

Void Or Voidable Foreclosure? Federal Appeals Court Reinstates Homeowner Challenge Involving Post-Sale Redemption Attempt Under Michigan State Law

In a recent ruling from a Federal Appeals Court, a homeowner's challenge to a non-judicial foreclosure action in Michigan was reinstated for further litigation.

In the case, the estate of a deceased homeowner challenged a foreclosure on the grounds that the foreclosing bank failed to provide proper notice under Mich. Comp. Laws § 600.3204(4)(a) regarding the necessity to comply with the loan-modification process when conducting a foreclosure by advertisement. Further, an issue arose as to whether the estate attempted to have redeemed the property pursuant to Michigan state law prior to the end of the statutory redemption period.

The estate contended that, because the statute wasn't followed, the foreclosure action was absolutely void (ie. void ab initio). Based on this argument, the estate asserted that the redemption period on a void foreclosure never started and, accordingly, it should be allowed to redeem the property. The lower court dismissed the estate's challenge, and the estate subsequently filed an appeal.

On appeal, the 6th Circuit Court of Appeals determined that the facts of the case were not fully developed by the lower court so as to determine whether a failure to comply with the Michigan statute rendered the foreclosure void ab initio, or merely voidable.

Accordingly, the appellate court reversed the earlier ruling and booted the case back to the lower court to further develop the facts necessary to determine whether the flaw in the foreclosure process rendered the sale void ab initio, or merely voidable.

The appeals court discusses the foregoing in the following excerpt ("Mitan" refers to the personal representative of the deceased homeowner's estate):

• As a general rule, Michigan law does not permit property owners to make claims related to foreclosed property after expiration of the redemption period. See Piotrowski, 4 N.W.2d at 517; Overton, 2009 WL 1507342, at *1. Mitan claims that this rule is not applicable here. Because the foreclosure by advertisement violated Mich. Comp. Laws § 600.3204(4)(f), he argues, it was void and the redemption period never began. We agree with Mitan's interpretation of the law.
  
  Michigan law distinguishes between foreclosures with notice defects and those with "structural defect[s] that go[] to the very heart of defendant's ability to foreclose by advertisement in the first instance." Davenport, 739 N.W.2d at 384.
  
  Notice defects render a foreclosure voidable. Jackson Inv. Corp. v. Pittsfield Prods., Inc., 413 N.W.2d 99,101 (Mich. Ct. App. 1987).
  
  Structural defects, on the other hand, render the foreclosure absolutely void. Davenport, 739 N.W.2d at 385. In Davenport, for instance, the defendant bank had no statutory authority to foreclose because it did not own an interest in the mortgage when it published its first notice of foreclosure, as required by Mich. Comp. Laws § 600.3204(1)(d). Similarly, Mich. Comp. Laws § 600.3204(4) is a statutory prohibition on foreclosure by advertisement where a lender does not take the required steps to negotiate a loan modification.
  
  Although one of the required steps is to provide notice, see Mich. Comp. Laws § 600.3204(4)(a), the failure to comply with the loan-modification process as outlined in the statute is a structural defect because it deprives the borrower of the opportunity to demonstrate eligibility for a loan modification that would avoid foreclosure altogether. See id. § 600.3204(4)(f).
  
  In contrast, the notice defect at issue in Jackson did not call into question the underlying right of the lender to foreclose once past the procedural defect. See 413 N.W.2d at 101. It follows that, as a matter of Michigan law, a lender that fails to follow the loan-modification procedures set forth by the statute has engendered a structural defect and is thus without authority to commence a foreclosure. Without a valid foreclosure, the redemption period has not begun, and the owner of the property retains an interest conferring standing to sue.
  
  The remaining question is factual. Did Wells Fargo, in this particular case, foreclose on the property in violation of the loan-modification law? On this record, we are unable to tell. Mitan alleges that Frank returned the necessary paperwork to Wells Fargo, that Wells Fargo had approved a loan modification, and that Frank qualified for a loan modification under the statutory calculations. Portions of the record bring these points into dispute. Besides this, it is altogether unclear why Wells Fargo's designated agent did not have access to communications that Frank may have sent directly to Wells Fargo. It is also unclear whether Wells Fargo or its agent ever attempted to make the calculation required under Mich. Comp. Laws § 600.3205c(1).
  
  If further factual development shows that Wells Fargo did not comply with the loan-modification law, then Mitan has standing and may pursue the merits of his claim.
  
  In sum, the district court erred when it held that Mitan lacked standing because the redemption period had expired. If Wells Fargo violated the loan-modification law, then the redemption period never began. On remand, the district court should make factual findings to determine whether Wells Fargo assessed Frank's eligibility for a loan modification as required by statute.

For the ruling, see Mitan v. Federal Home Loan Mortgage Corporation, No. 12-1169 (December 12, 2012).

Editor's Note: In unrelated litigation decided by the Michigan Supreme Court nine days after this ruling was issued (on December 21, 2012), the state high court appears to have decided whether screw-ups in the foreclosure process result in foreclosures that are either void ab initio or merely voidable. See Michigan Supreme Court: Bankster Screw-Ups When Following Foreclosure Process As Laid Out Under State Law Results In Foreclosures That Are Merely Voidable, Not Void Ab Initio.

Bankster Ordered To Send Company President To Court, Sends Flack Instead; Now Finds Itself In Contempt Hot Water

In Sarasota, Florida, the Sarasota Herald Tribune reports:

• A circuit court judge found one of the largest banks in the country in contempt of court on Friday over a foreclosure case that has dragged through the system for several years.
  
  Attorneys for Dimitri Jansen, a local schoolteacher whose former home in North Port is in foreclosure, said such the contempt order against Minneapolis-based U.S. Bank, is “unprecedented.”
  
  Jansen says his mother’s name was mistakenly added to the mortgage he obtained in 2006, that the bank has ignored requests to remove her name from the foreclosure documents and thus wrecked her credit history, and that the bank held up a pending short sale.
  
  Another Sarasota judge, apparently frustrated with U.S. Bank, had ordered the bank’s president to be present in court on Friday. The bank instead sent a senior representative, who declined to comment.
  
  Sarasota Circuit Court Judge Charles Williams found the bank in indirect civil contempt. It is unclear what, if any, sanctions the bank will face at the next court hearing in February 2013.
  
  “Fundamentally, they refused to respect the court,” Jansen’s attorney, Matt Weidner, said of U.S. Bank. “What this shows is willful negligence.”
  
  Like many other foreclosure cases throughout the country, Jansen’s is a tale of paperwork mistakes.

For more, see Judge finds U.S. Bank in contempt in foreclosure case.

The Grief Continues For Surviving Widows Being Refused Loan Help & Forced Into Foreclosure Shortly After Hubby's Death

In Tampa, Florida, the Tampa Bay Times reports:

• Lawyers and legal-aid counselors call it a sad reality of the housing crisis: Widows refused loan help and forced into foreclosure in the years after their spouses' death.
  
  For distressed homeowners, the bureaucratic obstacle course of refinancing in an age of tight credit is hard enough to navigate on its own. But for grieving widows with finances already in disarray, the loan maze and its accompanying fears of losing a family home have proven a demoralizing shock.
  
  "It's a clash of circumstances that couldn't be any more devastating," said Kathleen Mullin, the executive director of St. Petersburg-based Gulfcoast Legal Services.
  
  "This problem and the web of paperwork causes so much stress that it can impact (widows') health, impact their well-being, to the point where they don't even know what to do. They're just frozen."
  
  Widows caught in this runaround, counselors said, never realized the damage it could cause if only their husband signed the mortgage note. They did not expect it would prevent them from a loan modification that could allow them to keep paying and stay in their homes.
  
  There's no public data on how many widows have faced this frustration. But attorneys and counselors say it is a growing problem for surviving spouses – predominately women – barely seen before the foreclosure crisis began.
  
  Billy Howard, the Morgan & Morgan attorney representing Jackson in a harassment lawsuit against Wells Fargo, said his firm has more than 25 widows with similar problems, up from only a few cases in recent years.
  
  "You've got people who want to be able to pay and think they could afford to stay," said foreclosure defense attorney Mark Stopa, whose firm has about 10 similar cases, up from none a few years back, "and the bank tells them it is simply not possible."
  
  The trap has proven particularly troublesome in Florida, with high rates of home distress and more than 1 million widows and widowers, according to the U.S. Census Bureau's 2010 American Community Survey.

***

• Karine Gialella, a Gulfcoast Legal Services attorney, said she worked with a St. Petersburg widow in her 80s who found the only way to avoid foreclosure was to file for bankruptcy.

***

• Though due-on-sale clauses allow lenders to demand full payment when a loan changes hands, federal law prohibits calling in a loan just because a widow took it over.(1) But banks have argued in court that they're demanding payment because of the default, not the death, said Matt Bayard, a staff attorney with Legal Services of Greater Miami. Some judges have agreed.

For more, see Widows face foreclosure due to mortgage Catch-22.

(1) For the Federal law, see 12 USC 1701j–3(d)(5) - Preemption of due-on-sale prohibitions (Exemption of specified transfers or dispositions).

Homeowners' Move To Foreclose On Banks Begins To Take Hold In Florida

CNNMoney reports:

• Since the housing bubble burst in Florida five years ago, more than 400,000 borrowers have had their homes foreclosed on by their lenders. But for some, it's payback time.
  
  Hundreds of homeowners and condo associations are foreclosing on banks that have failed to pay dues and other expenses on the properties they've repossessed.
  
  When banks foreclose on a home they become responsible for paying fees to the homeowners association -- both any unpaid fees going back as far as 12 months and all expenses going forward.
  
  In many cases, however, banks are failing to pay, leaving these associations short on cash, according to Miami-based attorney Ben Solomon.
  
  But now, homeowners groups are putting liens on the properties until banks pay up and foreclosing on them if they don't.
  
  So far, Solomon's firm has filed more than 1,100 liens against banks on behalf of homeowners and has pursued 131 foreclosures. In more than 90% of the cases, he said, the banks settle by paying the bills.

For more, see Payback time: Florida homeowners foreclosing on banks.

Feds Wait Until Home Goes Into Foreclosure & Ex-Servicemember Dies Before Coughing Up Pension Benefits; VA Bureaucrat Declares Reversal Of Initial Denial Of Now-Dead Vet's Claim A Success

A recent story in the San Francisco Chronicle highlights the problems that former armed service members are having receiving their well-earned pension benefits from the Veterans Administration, often times with the latter waiting until after the veteran dies before making payouts. Here's a sample:

• In November, more than a year after Vietnam veteran John Conrad died of leukemia, the VA sent his widow a letter acknowledging his cancer was caused by exposure to the toxic defoliant Agent Orange.
  
  The decision marked a reversal for the agency, which had denied Conrad's claim for disability benefits for three years while the former Army specialist was still alive. The denials had come despite supporting medical opinions from a series of doctors, including the VA's own oncologist.
  
  "We went through our savings and our retirement money. And then, after he died, they said they made a mistake and sent a check for $79,000," his widow, Linda Conrad, said in an interview at her home outside Phoenix.
  
  Home in foreclosure
  
  By the time the VA reversed itself, the family home was in foreclosure. Linda Conrad, who had quit her job as a paralegal to care for her husband during his last days, found her efforts to secure a new job thwarted by the recession.
  
  Yet, in an interview, VA officials deemed John Conrad's saga a success, because the more experienced claims processors who handled Conrad's claim after his death had the authority to reinterpret the medical evidence.
  
  "That's the way it's supposed to work," said Brad Flohr, assistant director for policy at the VA's compensation service.

For the story, see Veterans die awaiting pension benefits.

Jury: OK For Insurer To Stiff Property Owner On $6M Damage Claim Where Latter Found Responsible For Torching Premises While On Verge Of Foreclosure Sale

In Asheville, North Carolina, The Asheville Citizen Times reports:

• A federal jury ruled that the former owner of the Richmond Hill Inn participated in the intentional burning of the historic structure nearly four years ago.
  
  The judgment in a lawsuit means the ownership group, The Hammocks LLC, won’t be able to collect on a $6 million insurance policy taken out on the property overlooking the French Broad River.
  
  U.S. District Court Judge Martin Reidinger also ruled this month the company must pay the legal bills incurred by Harleysville Mutual Insurance Co. in fighting the suit.
  
  The mansion, once the home of former congressman and ambassador Richmond Pearson, was destroyed on March 19, 2009, in a fire set by an arsonist, according to investigators.
  
  Harleysville refused to pay the insurance claim, prompting The Hammocks to sue for breach of contract. The insurance company countersued, claiming the owners violated the terms of the policy.
  
  A jury found at the conclusion of a trial in Asheville that The Hammocks was responsible for setting the fire. It also found the company did not willfully make false representations on its insurance policy application.
  
  “Based on the foregoing facts as found by the jury,” Reidinger wrote in his ruling, “the court concludes as a matter of law that the defendant has no duty to provide coverage for the claim of loss tendered by the plaintiff and that the insurance policy at issue is null and void, under the terms and conditions of the policy, as a result of the plaintiff’s intentional participation of the burning of the insured property.”
  
  William Gray, managing member of The Hammocks, declined to comment on the ruling.
  
  While investigators determined the fire that destroyed the inn was intentionally set, no arrests have been made in the case.
  
  The property was in foreclosure at the time of the blaze, and investigators said the sprinkler system had been turned off and they found evidence that a petroleum product was used to start the fire.
  
  Buddy Thompson of the Asheville-Buncombe Arson Task Force said he doesn’t know if there ever will be an arrest.
  
  “All of our leads have been run at this point,” he said. “We really have nothing else to go on unless someone comes up with some new information.”
  
  Thompson said the jury’s conclusion in the civil trial doesn’t mean there’s enough evidence to bring criminal charges.
  
  “There’s a difference in the way that evidence is looked at in a civil and a criminal case,” he said. “In a civil trial it’s the preponderance of the evidence. In a criminal trial you have to find guilt beyond a reasonable doubt.”
  
  Three days before the fire, Buncombe County officials finalized the property’s foreclosure and set the auction for a month later.

For more, see Jury: owner set Richmond Hill fire (Insurer not liable for $6M Richmond Hill claim).

Property Owner In Foreclosure Suspected Of Staging Mistaken Mob Hit, Then Torching Premises To Cash In On $500K+ Insurance Policy

In Portland, Maine, the Portland Press Herald reports:

• The owner of an apartment building in Windham that burned on Dec. 7 is now suspected of setting the fire and then tying himself up to make it look like a mob hit.
  
  Investigators with the state Fire Marshal's Office have not charged Donato Corsetti, 66, owner of the Corsetti's Market next to the apartment building. But officials say in court papers that they believe he set the fire to collect on an insurance policy.
  
  "Donato's objective was to make the event so sensational by staging an attack that investigators would not suspect him as the perpetrator," wrote Christopher Stanford, senior investigator for the Fire Marshal's Office, in an affidavit in support of a search warrant.
  
  Only Corsetti was hurt in the fire. People who were in an adjacent apartment got out safely.
  
  Corsetti's apartment building and his own home had recently been foreclosed on, and he still owed more than $174,000, according to the affidavit filed Dec. 17 in Cumberland County Unified Criminal Court.
  
  He was served with eviction papers three days before the fire.

***

• Investigators then interviewed Corsetti on the day after the fire, at the police station, where he described two attackers, one tall and skinny and the other short and stocky, though he did not offer more details.
  
  He said the men had nothing in their hands, there were no flammable liquids stored in the apartment and the lamps for the vacant apartment were kept in the closet.
  
  Investigators challenged his story, and he changed it.
  
  "He answered by telling us that he had lied the first couple of times and that it was actually a 'set up' by an organized crime group from Rhode Island that he would not identify as the Mafia," Stanford wrote in the affidavit. "He told us that they had come after him by mistake and that he was going to make some calls down in Rhode Island and have the problem taken care of."
  
  "We asked him why he was not poured with ignitable liquid if it was a hit on him, and he answered by saying they just wanted to scare him," the affidavit says. He asked them not to investigate any further.
  
  Corsetti initially agreed to a polygraph exam but then backed out, saying he had to check with his doctor because he had a heart condition, the affidavit says.
  
  Corsetti admitted to being behind on all of his debt payments except for the store, though he denied that the apartment building had been foreclosed on, according to the affidavit. Officers later learned that Corsetti's home also had been foreclosed on.
  
  At the time of the foreclosure, the properties were worth $250,000 and Corsetti owed more than $425,000. He was left owing more than $175,000 after Fannie Mae bought the property in foreclosure on Nov. 29, the affidavit says.
  
  The insurance policy on the properties was for $509,800, the affidavit says.
  
  On Dec. 11, Corsetti told police that he did not want to cooperate any more and gave them his attorney's name, the affidavit says.

***

• Stanford said he believes that Corsetti set the fire and no one was trying to kill him. "Donato did not have any trace of ignitable liquid on his clothing, which in my experience is not the case when a perpetrator is trying to kill someone with the use of such liquids and fire," Stanford wrote.
  
  Sgt. Joel Davis of the Fire Marshal's Office said Corsetti has not been charged with any crime. "We're still finishing up some things before we present everything to the district attorney."
  
  Corsetti has had two previous fires, one that destroyed the store in 1998 and one that damaged his home in 2007. Davis said investigators would take another look at the reports from those fires, which were deemed accidental, but they happened so long ago that it's unlikely any new investigation would be started.

For the story, see Windham fire explanation too 'sensational' for investigators (Court papers say Donato Corsetti staged the fire to collect on an insurance policy).

Orlando Homeowner Applies For 'Free Paint Job' To Dodge Mortgage Payments For Twelve Months

In Orlando, Florida, WFTV-TV Channel 9 reports:

• Hundreds of homeowners in Orlando who want to live mortgage-free for a year have agreed to be part of an extreme and controversial marketing campaign.
  
  Tammy Valdes is one homeowner who's applied to transform her home into a neon-hued billboard to get her mortgage paid for a year. "It would be such a relief. It would be such a burden off of me to have my house that color," said Valdes.
  
  A marketing company, Brainiacs From Mars, is using such homes to advertise its creativity. After painting its first home in California, it signed several Fortune 500 companies and doubled its staff. More than 300 Orlando homeowners have applied for the program so far. The company's California CEO said his decision will be based on who needs help the most.

***

• The city of Orlando has rules that prevent signs on homes, but doesn’t have restrictions on paint -- and some neighbors have big concerns about the neon colors. They worry a neon-colored home would stick out.
  
  But the Valdes family said looking at neon paint colors would be better than looking at a foreclosure. "We love our home and want to stay here and this would definitely help us stay," Valdes said. [...] The company plans to choose an Orlando homeowner next month and will pay to have that home repainted.

For the story, see Marketing campaign offers free mortgage for select homeowners.