Father-Son Duo Object To Getting 20 Months For Roles In Alabama Foreclosure Sale Bid Rigging Racket; Prosecutor: 'Perps Won Race To The Courthouse - They Got The Best Deal!' Ex-Homeowner/Victim: 'I Was Sick & Had No Insurance - I Could Have Used The Extra Cash From A Larger Surplus Check!'

In Mobile, Alabama, the Press Register reports:

• A federal judge Monday ordered almost two years in prison for a father-son investment team, the first area defendants in a long-running antitrust investigation to face incarceration for rigging foreclosure auctions.
  
  In addition to the prison terms, a year and eight months, U.S. District Judge Ginnie Granade ordered defendants Jason R. Brannon and Robert M. Brannon to pay $23,173 to homeowners who received less money from foreclosure sales than they would have gotten from a fair and open property auction.
  
  Deana Timberlake-Wiley, a trial attorney in the Justice Department’s Antitrust Division said her office calculated the figure using a formula it has applied to foreclosure-rigging cases across the country. The Department of Justice website lists some 45 defendants in active cases.
  
  “The formula that we use is very conservative,” she said.

***

• Defense attorneys Arthur Madden and Bradley Murray argued that their clients had cooperated completely and deserved leniency.
  
  “From the moment word of an FBI investigation got out … the Brannons stopped their activities,” said Madden, who represents Jason Brannon. “It’s a crime. They did wrong. They admit it.”

***

• Prosecutors have said the conspiracy operated like this: The investors would decide among themselves who would bid on a particular property put up for sale after the homeowner could not make mortgage payments. The collusion would artificially suppress the prices that the properties would fetch.
  
  The investors would hold a second, secret auction among themselves, writing their bids on a piece of paper. The highest bidder would get the property, and the others received payouts according to a formula based on their offers.

***

• Under state law, money from a foreclosure auction is used to pay off the outstanding mortgage to make the mortgage holder whole. Any money beyond that goes to the homeowner who lost the house. The rigged auctions reduced the money that those homeowners received.
  
  Prosecutors put on testimony from four area residents who lost homes in foreclosure. Deborah Adkinson testified that she, herself, had bought a Theodore home at a foreclosure sale 15 years earlier but fell behind in her mortgage payments when she developed Crohn’s disease and lost her job of 18 years.
  
  She said she was barely well enough to get out of bed when someone came to her house and told her she no longer owned it and would have to get out. She testified that no one informed her that she had a right to buy the house back even after the foreclosure sale. She said she believed she had to move out right away.
  
  “I honestly thought that’s how it worked,” she said.
  
  Adkinson testified that she would have benefited from a larger surplus check after the winning bidder won the auction. “I could have got medical help,” she said. “I had no insurance.”

***

• Madden argued that the Brannons were bit players in the conspiracy compared to some of the other investors, including ones given sweetheart deals by the Justice Department.
  
  “The major players have either been granted immunity or not been charged,” he said.
  
  Said [federal prosecutor] Timberlake-Wiley: “They were the earliest cooperators. They got the best deal.”(1)
  
  The prosecutor faulted the defendants for failing to take responsibility. “They’ve never shown any remorse,” she said. “They’ve always acted like this was just the cost of doing business.”

For the story, see Judge orders prison for father-son investment team in Mobile property auction rigging case.

For the U.S. Department Of Justice press release, see Two Alabama Real Estate Investors and Their Company Sentenced for Their Roles in Bid-Rigging and Mail Fraud Conspiracies Involving Real Estate Purchased at Public Foreclosure Auctions.

(1) See United States v. Moody, 206 F.3d 609, 617 (6th Cir. 2000) (Wiseman, J., concurring) for one Federal judge's observations on the so-called "race to the courthouse/prosecutor's office" that frequently takes place during the early stages of these "multi-target" criminal probes and conspiracy prosecutions:

• When a conspiracy is exposed by an arrest or execution of search warrants, soon-to-be defendants know that the first one to "belly up" and tell what he knows receives the best deal. The pressure is to bargain and bargain early, even if an indictment has not been filed.

Antitrust Feds Settle Civil Suit Against Energy Outfits Alleging That Operators' Purported 'Joint Bidding' Arrangement Was Illegal Conspiracy Not To Compete For Gov't Mineral Rights Leases

From a client alert from the law firm McDermott Will & Emery:

• On Monday, April 22, 2013, after rejecting the initial settlement agreement, Judge Richard Matsch (D. Colo.) approved a revised settlement of a suit brought by the U.S. Department of Justice (DOJ) against two energy companies for conspiring not to compete for mineral rights leases.
  
  Gunnison Energy Corp. (GEC) and SG Interests I Ltd. and SG Interests VII Ltd. (collectively "SGI") will each pay a fine of $275,000 to the DOJ to settle allegations of agreeing not to bid against each other in violation of antitrust law for natural gas leases on government land in western Colorado.
  
  These fines are in addition to those related to alleged False Claims Act violations, for which SGI and GEC paid government fines of $206,250 and $245,000 respectively. The new settlement is twice the amount of the fines in the original settlement.
  
  McDermott Will & Emery wrote an article in February 2012 analyzing the DOJ's initial complaint against the parties, and the competitive implications of joint bidding. At the time, the parties had agreed to pay a total of $550,000 in fines. The court rejected the settlement in December 2012 finding that it was not in the public interest. "There is no basis for saying that the approval of these settlements would act as a deterrence to these defendants and others in the industry, particularly as GEC considers 'joint bidding' to be common in the industry."
  
  Further, the settlement amount was "nothing more than the nuisance value of [the] litigation." Additionally, as reflected in the newly approved deal, the court wanted the alleged Sherman Act violations and False Claims Act violations settled separately, with a payment for the Sherman Act claims separate from, and in addition to, any amount due under the False Claims Act. At heart, it appears Judge Matsch wanted any settlement he approved to be meaningful enough to have a deterrent effect on future agreements.
  
  This was the DOJ's first challenge to an anti-competitive bidding agreement for mineral rights leases, but it is just one of the recent cases in which joint bidding activities have become the focus of antitrust scrutiny.
  
  In Summer 2012, the DOJ opened an investigation into Chesapeake Energy's acquisition of oil and gas properties in Michigan and the possibility that Chesapeake conspired with Encana Corp. to allocate bids on those properties. In 2006, the DOJ began investigating the joint bidding practices of private equity firms in connection with leveraged buyouts. That investigation led to class action suits against private equity firms. One of those suits survived a motion for summary judgment last month.
  
  It is important to note that the DOJ is paying attention to joint bidding practices and taking action. As noted in the SGI/GEC matter, while joint bidding may in fact be common practice in the energy field, it is not necessarily lawful.(1)  Each arrangement should be evaluated for potential anticompetitive effects.(2)

Source: Natural Gas Companies Settle Antitrust Suit Stemming From Joint Bidding.

(1) See Illegal Bid Rigging Racket? Or Mere Innocent 'Joint Bidding' Arrangement? for some background on what distinguishes a lawful joint bidding activity from an illegal racket designed to suppress competition and artificially depress prices in violation of the Sherman Antitrust Act in the context of competitive bidding activities.

(2) See DOJ Finds Antitrust Violation in Joint Bid for Oil & Gas Leases:

• [J]oint bidders increase their risk profile if the arrangement prevents them from bidding for assets that, absent the joint bid arrangement, they would have bid for separately.
  
  Joint bidding is typically pro-competitive when two companies that would otherwise be unable to bid individually work together to submit a bid. For example, if two energy companies would not individually bid on a lease because of their size or risk profile, they may choose to pool their resources and bid jointly. Joint bidding of this type should make the market more competitive, creating a bid the seller would not otherwise have received.
  
  On the other hand, parties incur risk if their intent in entering into the agreement is to purchase property at artificially depressed prices and to divide the savings among those competitors who refrained from bidding. From a practical perspective, if there are many firms likely to bid on an asset, a joint bid is less likely to lead to an anti-competitive outcome.

California Supremes Reverse Foreclosure Sale Where $200K Error In Announcing Credit Bid Attributable To Trustee's Mistake, Not Lender's Negligence; Winning Bidder Loses Out On Big Windfall, Parties Entitled To A 'Do-Over'

From a Justia.com Opinion Summary:

• Plaintiff filed an action to quiet title to a parcel of real property, alleging he owned the property because he had been the highest bidder at a trustee's sale.
  
  After Plaintiff gave the auctioneer his cashier's check at the sale, the trustee told Plaintiff the sale was void. The trustee based its refusal on its discovery that it had mistakenly communicated to the auctioneer an incorrect opening bid by the lender that was less than ten percent of the actual amount of the bid.
  
  After the trustee refused to tender the deed to Plaintiff, Plaintiff filed this action.
  
  The trustee moved for summary judgment on the ground that it had properly set aside the foreclosure sale due to a significant procedural irregularity in the statutory foreclosure process coupled with an inadequate sales price.
  
  The trial court ultimately granted the motion. The court of appeals reversed, holding that the trustee's error was not a procedural irregularity in the statutory foreclosure process and that the trustee therefore had no discretionary authority to void the foreclosure sale.
  
  The Supreme Court reversed, holding that, under the circumstances here, the trustee acted within its discretion authority in declaring the sale void.(1)

Source: Opinion Summary - Biancalana v. T.D. Serv. Co..

For the ruling, see Biancalana v. T.D. Service Company, S198562 (Calif. May 16, 2013).

(1) For those who make a living or otherwise buy real estate at foreclosure sales in California, this court ruling, as well as the cases cited therein, make for must reading in understanding when a screw-up involving a foreclosure sale auction resulting in a windfall for a foreclosure investor may call for the sale to be voided and when it won't.

In a nutshell, whether or not a California court should exercise its discretion and void a foreclosure sale infected with some type of mistake will depend in large part on the following issues:

• Was the mistake attributable to the trustee and/or auctioneer conducting the sale while carrying out its statutory-definined duties (probably allowed to void the sale), or
  .....
• Was the mistake wholly under the control of the beneficiary/lender seeking foreclosure and arose solely from the beneficiary/lender's own negligence, thereby falling outside the procedural requirements for foreclosure sales described in the statutory scheme (probably not allowed to void the sale)?
  

If the mistake was attributable to the trustee and/or auctioneer conducting the sale while carrying out its statutory-defined duties, a further question must be addressed:

• Was the mistake caught before or after the trustee issued the deed to the winning bidder and did the error result in a grossly inadequate purchase price?

In this regard, the California Supreme Court made the following observation:

• Our holding is premised on the trustee discovering its mistake before it issues the deed.
  
  After the deed is issued, a bona fide purchaser is entitled to conclusively presume that the sale was conducted regularly and properly. (Moeller, supra, 25 Cal.App.4th at pp. 831–832.) The trustee thus has an incentive to exercise diligence in promptly reviewing the sale and identifying any irregularity before issuing the deed.
  
  In the present case, the trustee discovered its error within two days of the auction, and the error resulted in a grossly inadequate purchase price.
  
  Under such circumstances, we do not think the balance of public policy objectives weighs in favor of allowing the buyer to enjoy a substantial windfall while leaving the beneficiary to collect whatever remedy it can from the trustee. The more efficient course is to permit the trustee to quickly correct its mistake and hold a proper sale.

Lender Refuses To Accept Underwater-Home Title Surrender, Won't Foreclose, Won't Release Lien; Forceful Negotiation Or An Improper Coercion In Violation Of Bankruptcy Discharge Injunction??? 'It Depends,' Says Federal Appeals Court

From Bankruptcy-RealEstate-Insights.com:

• After filing a chapter 7 bankruptcy, the debtors tried to surrender their residence to the mortgage lender. After the bankruptcy the lender refused to accept a surrender, refused to foreclose and refused to release its lien.
  
  The debtors brought an adversary proceeding claiming that, among other things, this refusal constituted a violation of the discharge injunction they received in bankruptcy. The bankruptcy court found no violation; the Bankruptcy Appellate Panel agreed; and on appeal the 1st Circuit affirmed – but with some cautionary comments.(1)

For more, see Discharge Injunction Violation Can a Lender Refuse to Foreclose, Release Its Lien, or Accept Surrender of a Property.

For the ruling, see Canning v. Beneficial Maine, Inc. (In re Canning), 706 F.3d 64 (1st Cir. 2013).

(1) The court closed with these cautionary comments:

• A coda is necessary before we conclude. Today, where both lenders and homeowners strive to recuperate from hard economic times, this opinion should not be relied upon to leverage a way out of the bargaining table.
  
  It is one thing to insist upon state-law rights in refusing a recalcitrant “foreclosure or release” demand by a debtor, and completely another to refuse negotiating with a debtor willing to compromise.
  
  Put differently, while this case may provide some guidance on the dos and don’ts applicable to the bargaining dynamics between secured creditors and bankruptcy debtors, our remarks in Pratt still control: “the line between forceful negotiation and improper coercion is not always easy to delineate, and each case must therefore be assessed in the context of its particular facts.” 462 F.3d at 19.

Homeowner: Dubious Real Estate Operator Swindled Me Out Of $440K Home Sale Proceeds; Accused Perpetrator Has $1M+ In Unrelated Court Judgments, Was Recently Described By Judge As A "Scoundrel" & Slammed For $15K For Renting Out Vacant Recently-Foreclosed REO Without Authorization

In Calgary, Alberta, CBC News reports:

• A Calgary homeowner says he was swindled out of his own property by a realtor he thought was trying to help him.
  
  Seyfeddin Mohammed and his wife sold their home to a company offering a deal without legal or realtor fees. Now, Mohammed says that the property was transferred out of his name without him receiving any of the $440,000 purchase price.
  
  "There is some fraud going on," said Cass Lintott, Mohammed's lawyer. "That's our position and it will be Mr. Mohammed's position, and it's just a question of taking it in chunks, so first get title back into his name, make things right with his lender and then deal with the people who have done this to him."
  
  The company Mohammed sold to, www.freelistcalgary.com, is controlled by Derek Johnson.
  
  Johnson was recently fined by the Real Estate Council of Alberta for trading in real estate without authorization.(1)
  
  Court documents also show that Johnson has more than $1-million in judgements against him. All of the judgements are from separate matters and are not related to Mohammed.
  
  In one judgement unrelated to Mohammed's complaint, a Court of Queen's Bench judge described Johnson as "a scoundrel" who has appeared in court on several foreclosure proceedings.
  
  "Mr. Johnson ... has repeatedly and consistently argued the same nonsense to the detriment of his victims," Master Keith Laycock wrote. "These defendants have been victimized by him and his numbered company. He may even have committed fraud obtaining title to their residence."
  
  Recovering costs could be difficult
  
  Now, Mohammed is fighting to get his property back. He says that because he wasn't paid, the conditions of the sale were not completed. Mohammed also alleges that his signatures on the land transfer agreement were forged.
  
  "I got stress," Mohammed says, "not easy, during all life in this country, working everything for down payment for house and if I lost everything, I have no money, no house."
  
  In an email to the CBC, Johnson said that he has done nothing wrong. He wrote that the Mohammeds consented to the sale, including the transfer of title to Johnson's company.
  
  Despite going public and hiring a lawyer, Mohammed's lawyer says that recovering his costs could be difficult.
  
  Johnson says he's locked in a court battle against the mortgage company and that's why no funds have been paid out. He says that he will pay Mohammed once the court battle with the mortgage company is settled.

For more, see Homeowner says he was swindled out of his own property (Homeowner says he never received any of the $440,000 purchase price).

(1) See Calgary man fined $15K for posing as realtor (Real Estate Council of Alberta levies fine against man):

• The council says in schemes like this people obtain lists of foreclosed properties and then try to rent or sell them.
  
  "We find it's for nefarious purposes, and that is that they want to generate cash flow," said Charles Stevenson of the Real Estate Council of Alberta. "If at all possible they'll find a way to steal identity, perpetrate mortgage fraud and move the people on through without their knowledge."
  
  Calgary police would not say whether they will be investigating the Real Estate Council of Alberta information, but it is against the Real Estate Act to deal property without a licence in the province.

Bankster Accused Of Running Florida Force-Placed Insurance Racket Settles Class Action Suit, Dodges Stiff Penalties; Agrees To Cash/Credit Refunds Of 25% Of Premiums; Refuses To Admit Wrongdoing, But Promises It Won't Gouge Florida Borrowers In The Same Way Again

In Miami, Florida, The Palm Beach Post reports:

• Wells Fargo Bank and insurer QBE have agreed to pay an estimated $19.25 million to more than 24,000 Florida homeowners under a proposed settlement that plaintiff attorneys call “unprecedented.”
  
  Without admitting wrongdoing, the firms would settle claims they inflated premiums — often to five or six times above normal rates — for “force-placed” insurance. Lenders may impose such insurance in cases where a homeowner falls behind on payments or lets coverage lapse, but attorneys for homeowners have argued such charges have often been abusive and loaded with kickbacks for banks.
  
  The proposal filed in U.S. District Court in Miami May 13 is subject to a judge’s approval, which the parties are seeking within 60 days.
  
  Plaintiffs attorney Adam Moskowitz of Coral Gables said the settlement’s cash and credit refunds of 25 percent of premiums represent the highest percentage of any case involving force-placed insurance, to his knowledge.
  
  “It’s going to have a real impact on people’s lives,” Moskowitz said.
  
  This case represents a significant settlement in Florida, the biggest market for force-placed insurance, but his firm and others are also pursuing national cases involving Chase, Bank of America, Citi, HSBC and Wells Fargo, he said.
  
  The plaintiffs filed suit in 2011. U.S. District Judge Robert N. Scola Jr. in Miami ruled the case could proceed as a class-action suit last year.
  
  After the filing, Wells Fargo said it would no longer take an 11 percent commission on force-placed insurance for Florida borrowers, according to the settlement documents. Insurer QBE Speciality announced it would phase out certain lines of business while affiliate Praetorian Insurance would operate under an 18.8 percent rate cut approved earlier this year by state regulators.
  
  “We are pleased that we were able to resolve this particular matter,” said Wells Fargo spokeswoman Vickee Adams. “We continue to support programs like our lender-placed insurance services which provide continuous hazard insurance protection for real property owned by our customers.”

For more, see Wells Fargo, insurer QBE agreed to $19.25 million settlement with 24,000 homeowners.

Renter-Family Given 5 Minutes Notice Before Getting 'Screw-Up Triggered' Foreclosure Boot From Home Landlord Bought For All Cash From Foreclosing Bankster Several Years Earlier; Fear Of Arrest Keeps Victims Out Of Improperly-Seized Premises

In Charlotte, North Carolina, WSOC-TV Channel 9 reports:

• Frank Cole was shocked to get a call from his wife in tears Thursday. She explained that sheriff's deputies were at their rented home in west Charlotte and were forcing them to get out.
  
  "The sheriff was giving her five minutes to pack some things and leave and apparently, we've been evicted," Cole said. "They left all kinds of embarrassing kinds of papers all over the door and windows and stuff."
  
  Since the homeowner, Allison Brown, had paid cash for the home several years ago, this seemed impossible to both her and the Cole family.
  
  The Cole family had been receiving letters about foreclosure proceedings threatening eviction, but they were addressed to Arthur and Kim Felder, the previous homeowners, who lost the home to foreclosure years ago. The Cole family did what most would in the incident in receiving wrongly addressed mail and sent the letters back.
  
  Channel 9 obtained the eviction order and it has the Felders' names on it and not the Cole family. Brown, an Asheville resident, bought the home after the bank foreclosed on it.
  
  Similar to the Cole family, Brown is upset about this unexpected eviction and the manner in which it was handled.
  
  "So get this, I am not allowed on property. They threatened my property manager to get off. My tenants are in a motel, and I can't seem to get any answers," Brown said.
  
  Several calls were made to the Hunover Law firm, who Eyewitness News was told ordered the eviction, but no contact was made. Cole said he has called them too, and wants answers and his family back in his home.
  
  Until then, going back to their home is out of the question.
  
  "Because it is a court order, it still stands and until that order is rescinded, we cannot go into the house or we risk being arrested," Cole said.(1)

Source: Family says they were erroneously evicted from home.

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

• Nevada High Court OKs $1M+ Damage Award To Homeowner Due To Mortgage Company Misidentification Of Home In Foreclosure (for the court ruling, see Countrywide Home Loans v. Thitchener, 192 P.3d 243; 2008 Nev. LEXIS 79; 124 Nev. Adv. Rep. 64 (Nev. 2008)),
  .........................
• Long Island Judge Hammers Wells w/ $155K Tab For Oppressive, Heavy Handed, Egregious Conduct For Pre-Sale Lockout Of Homeowner In Foreclosure (for the court ruling, see Wells Fargo v. Tyson, 27 Misc.3d 684, 897 N.Y.S.2d 610 (Sup. Ct., Suffolk County, 2010); reversed on procedural grounds Wells Fargo v. Tyson, 82 A.D.3d 757, 917 N.Y.S.2d 914 (App. Div. 2d Dept. 2011).

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

• Bank admits mistake on Willcox home foreclosure (involving an Arizona homeowner) (for a copy of the resulting federal lawsuit, see Newman v. Bank of America, N.A. and go here for the attached Exhibits),
• Couple: Bank Foreclosed On Wrong House (New Bedford Couple Suing Bank Of America) (involving a Massachusetts resident with a home in Florida) (for a copy of the resulting federal lawsuit, see Cardoso v. Bank of America, et al.),
• Family's recently purchased home, gutted by property removal service (involving a Michigan homeowner) (for a copy of the resulting federal lawsuit and accompanying Exhibits , see Rought v Deutsche National Trust Company, Trustee, et al.),
• In a Sign of Foreclosure Flaws, Suits Claim Break-Ins by Banks (involving a California homeowner) (for a copy of the resulting federal lawsuit, see Ash v. Bank of America),
• Former Lake Villa couple sues Bank of America over ‘illegal’ lockout (involving a Chicago, Illinois-area homeowner) (for a copy of the resulting federal lawsuit, see McKee v. Bank of America).

Banksters Continue Assault On Aggrieved Homeowners With Slow-Paying Habits

From Public Citizen's Consumer Law & Policy blog:

[Washington Post business reporter] Danielle Douglas reports that it's taking a long time for the money to be paid out. Here's an excerpt:

• Banks have paid less than half the $5.7 billion in cash owed to troubled homeowners under nearly 30 settlements brokered by the government since 2008, delaying help to the millions of victims of discrimination and shoddy lending that epitomized the housing crisis, according to a Washington Post analysis of government data.
  
  When the settlements were announced, with great fanfare, government officials hailed them as the long-promised reckoning with the financial industry. Regulators found that some banks had saddled borrowers with unaffordable mortgages or assigned higher rates to minorities even when they qualified for a better deal. Some banks were accused of having employees “robo-sign” foreclosure documents without reading them or having proper documentation. ...
  
  In 2011, Wells Fargo agreed to compensate up to 10,000 borrowers after the Federal Reserve found the bank was steering them into subprime loans even though they qualified for better mortgages. But no borrowers have received money yet.
  
  Last year, Bank of America agreed to pay some borrowers between $1,000 and $5,000 for what the Justice Department called lending discrimination. The agency said the bank illegally asked some would-be home buyers who relied on disability income to provide a doctor’s letter verifying the severity of their ailment. But it’s still unclear how many people will ultimately be paid. There isn’t a full list of the victims.

Source: Mortgage fraud settlement money not getting to consumers.

Maine Woman Sues State For Allegedly Using Brother's Mental Incapacity To Wrestle Away Legal Control Of Decades-Family-Owned Oceanfront Real Estate & Selling It At Public Auction For Significantly Under Fair Market Value

In Liberty, Maine, Maine Public Broadcasting Network reports:

• A Liberty woman has filed suit against the Maine Department of Health and Human Services and the Key Trust Company National Association over what she says was a breach of fiduciary duty, violation of her due process rights and the improper sale of some family property for substantially less than fair market value.
  
  The case arose after a member of the woman's family became incapacitated. DHHS then allegedly took over his assets, secretly sold them and had his cat euthanized without his knowledge.

For more, see Maine Woman Sues State DHHS Over Assets Sale.

Sovereign Citizen Gets 34 Years For Creating, Using Bogus Land Documents To Swindle Unwitting Potential Homebuyers

From the Office of the Indiana Secretary of State:

• Secretary of State Connie Lawson is warning potential homebuyers about scam artists who use authentications from the Secretary of State’s office to swindle Hoosiers into fraudulent real estate transactions. The scam artists are domestic terrorists who refer to themselves as sovereign citizens and believe the government is illegitimate. They are using authentications from the Secretary of State’s office to create the illusion they own vacant property to trick Hoosiers into illegitimate home sales.
  
  “Today, a judge sentenced Shela Amos of Indianapolis to 34 years for defrauding victims using the vacant home sale scheme,” said Secretary Lawson. “While this will stop Amos, unfortunately, others are waiting to pick up where she left off. Hoosiers should use extreme caution when dealing with sovereign citizens. They have no regard for the law and are master manipulators.”
  
  The vacant home sale scheme is popular among sovereign citizens. At first, they identify abandoned homes and create documents claiming they own the property. Then they have a notary sign the document. They bring the signed document to the Secretary of State’s office and request an apostille, a gold seal for overseas authentications, to certify the notary’s signature is authentic.
  
  After the document has an apostille, they file it with the county recorder’s office. Once the document has the seal and is on file with the recorder’s office, the scam artists bring prospective home buyers to the recorder’s office to show them the document they created as proof they own the real estate they are selling.

For more, see Secretary of State Connie Lawson issues a warning about scam artists using Notary and Apostille seals to con Hoosiers homebuyers.

Bankruptcy Receiver Tags S. Florida Lawyers In Suit To Recover Money Allegedly Ripped Off In Foreclosure Rescue Racket

In Fort Lauderdale, Florida, the South Florida Business Journal reports:

• New lawsuits are being filed against South Florida attorneys over allegations they received money connected to Prime Legal Plans, a $21 million foreclosure rescue fraud closed by the Federal Trade Commission in September.
  
  On Thursday, receiver Charles Lichtman of Berger Singerman filed suit against the Litvin Law Firm, Litvin Torrens & Associates and attorneys Gennady Litvin and Luis Torrens. The firms have offices in New York and Fort Lauderdale, while Torrens is from Miami Lakes.
  
  Lichtman also handles work in the Chapter 11 wind-down of Rothstein Rosenfeldt Adler.
  
  According to the FTC, Prime Legal Plans was one of several foreclosure rescue scams that promised relief from mortgage defaults in exchange for monthly payments; but little actual legal work was usually performed.
  
  The suit seeks to recover more than $4 million from the Litvin parties. Their attorney, Joe Gormley, noted in an email that the FTC didn't bring charges against his clients. "We feel... that the receiver's attempt to reverse the Federal Trade Commission's decision is inappropriate, and that ultimately the courts will agree."(1)
  
  “Prime Legal Plans used a network of attorneys who were allegedly going to provide excellent defenses, supposedly for a fixed fees. Unfortunately most of the victims here were flat broke and needed every penny they could make,” Lichtman said.
  
  He said he may sue other attorneys but the Litvin firm was a clearinghouse for other referrals.

Source: Receiver in $21M Prime Legal Plans fraud sues attorneys.

(1) It's understandable that private lawsuits are necessary to squeeze money out of scammers. The FTC, while having a track record of obtaining significant money judgments against scammers, are notorious for failing to actually collect on said judgments, except for the occasional paltry payments that sometimes trickle into their coffers.

Homeowners' Lawsuit: Now-Disbarred Lawyer Ran Illegal Upfront Fee Loan Modification Ripoff

In Los Angeles, California, Courthouse News Service reports:

• A disbarred attorney helped a dozen people and six businesses defraud people of "thousands of dollars" in a mortgage assistance scam, eight homeowners claim in court.
  
  Lead plaintiff Marcia Baker sued nine businesses and 13 people in Superior Court. The lead defendant is Platinum Law Group; also sued are Platinum Law Center and former attorney Jerry Stevenson.
  
  The plaintiffs claim the defendants took thousands of dollars by promising financially distressed homeowners services they didn't provide.
  
  "Preying on plaintiffs' few remaining hopes, defendants used deceptive and misleading marketing tactics to lure plaintiffs into sham contracts under which plaintiffs paid thousands of dollars in illegal up-front fees for loan modification services," the complaint states. "Simultaneously, defendants also advised plaintiffs to stop paying their mortgages and to stop communicating with their mortgage providers, claiming this would accelerate and facilitate the loan modification process."

***

• The plaintiffs claim defendant Jerry Stevenson roped people into the scam by mailing them "unsolicited and misleading" ads.
  
  Stevenson was disbarred after he received two disciplinary actions related to the scam, the complaint states.
  
  Hundreds of lawsuits have been filed across the country, alleging similar scams by other defendants.
  The plaintiffs seek at least $16,000 in damages per person, exemplary damages, an injunction and restitution for fraud, unfair competition, false advertising and consumer law violations.

For the story, see Mortgage Assistance Frauds Abound.

Suspect Who Used Bible Verses On Phony Deeds To Dupe Prospective Renters Cops Plea To Two Felonies As Prosecutors Drop Eleven Counts

In San Bernardino, California, The Press Enterprise reports:

• A man who persuaded potential renters to trust him by writing Bible verses on fake grant deeds has pleaded guilty in San Bernardino County court to two felony charges.
  
  Bob Frierson, 42, pleaded guilty May 8 to two counts of recording a false document. As part of the plea bargain, 11 counts were dropped: four of recording a false document, six of forgery and one of residential burglary.
  
  Frierson, who is in custody, is scheduled to be sentenced July 10.
  
  Ed Nyberg, a senior investigator with the San Bernardino County district attorney’s office, said in an interview that Frierson drove around north Fontana, Rancho Cucamonga and Victorville the past three years to find vacant homes that were in foreclosure.
  
  Frierson would then forge grant deeds and show them to unsuspecting renters as proof that he owned the properties, Nyberg said.
  
  The Bible verses, which Nyberg said he saw on seven fake grant deeds, were often two or three sentences and contained themes of personal rights of staying on a property or giving property to other people.
  
  Frierson would collect rent until the properties were foreclosed on, and the banks would then evict the renters, who would lose their deposits, Nyberg said.

Source: Bible-touting man admits scamming renters.

Squatters' Use Of Phony Lease Gets Trio Pinched For Burglary, Possession Of Forged Instrument In Connection With Attempted Possession-Hijacking Of Vacant Foreclosure

In Richmond, Kentucky, WKYT-TV Channel 27 reports:

• For nearly two years, neighbors say this house on Bowerwood Drive has been empty after it went into foreclosure. Then, about three weeks ago, things changed.
  
  "We noticed some young folks kind of milling around the house. Before we knew it, they had moved in and claimed they were renting the house. We were kind of suspicious from day one," said Kelly Harmon.
  
  Another neighbor went over to say hi. He said the man living inside showed him a lease agreement. Even then, the neighbors weren't convinced. "We knew, more than likely, foreclosed houses don't get rented out," said Harmon. Then, they said things got stranger.
  
  "We never saw furniture moved in, they were in and out sporadically, different cars. It was suspicious from day one," said Harmon.
  
  Police said another neighbor called them and they looked into it. On May 3, they arrested Dylan Cartwright, Brittany Coovert, and Tiffany Templin. They said the three had created a fictitious lease agreement and charged them with burglary and possession of a forged instrument. Kelly Harmon said he'd be keeping a close eye on his neighborhood.

For the story, see Police: Squatters created fake lease agreement.

Underwater Homeowner's Bankruptcy Maneuver Leaves Another 'Stripped-Off" Mortgage-Holding Bankster Holding 'Unsecured' Bag; Federal Appeals Court: "We Find Nothing In The Act To Suggest That Congress Intended To Bar Lien-Stripping Of Worthless Liens In Chapter 20 Proceedings!"

From a Justia.com Opinion Summary:

• Debtors filed a Chapter 7 bankruptcy petition and sought to discharge their unsecured debt, strip down liens on their primary residence and a rental property, and obtain a loan modification to address mortgage arrears on the properties.
  
  The Trustee subsequently challenged confirmation orders entered by the bankruptcy court and affirmed by the district court, stripping off junior liens against debtors' residences.
  
  The Trustee argued that the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 created a per se rule barring lien-stripping in so-called "Chapter 20" cases.(1) The Act, however, did not bar the orders entered by the bankruptcy court, and the stripping off of valueless liens - liens secured by collateral without a single penny of value to support it - was otherwise consistent with the Bankruptcy Code.(2) Accordingly, the court affirmed the judgment.

Source: Justia.com Opinion Summary: Branigan v. Davis.

For the ruling, see Branigan v. Davis, No. 12-1184 (4th Cir. May 10, 2013).

(1) In actuality, there is no such thing as a "Chapter 20" bankruptcy (the U.S. Bankruptcy Code, as currently constituted, only has 15 chapters).The appeals court addresses "Chapter 20" in footnote one of its majority opinion:

• "Chapter 20" is a colloquial reference to a Chapter 13 bankruptcy filed within four years of a Chapter 7 bankruptcy that concluded with a discharge.

(2) The majority ruling sums up its analysis of the relevant law and its application with the following comments:

• In sum, although BAPCPA clearly tipped the bankruptcy scales back in the direction of creditors, we find nothing in the Act to suggest that Congress intended to bar lien-stripping of worthless liens in Chapter 20 proceedings.
  
  This, we conclude, is the most sensible reading of a complex statutory scheme that admittedly "abounds with arbitrary distinctions." Lane, 280 F.3d at 669. We therefore affirm the judgment of the district court.

Ohio Court Upholds Validity Of Defectively-Notarized Oil & Gas Lease; Exploration/Production Outfit Dodges Flood Of Landowners Challenging Improperly-Acknowledged Instruments Conveying Mineral Rights

From a client alert from the law firm McGuireWoods:

• On April 15, 2013, U.S. District Judge John R. Adams of the Northern District of Ohio dismissed Ohio landowners’ claim that oil and gas leases not properly notarized are invalid, in Cole v. EV Properties, L.P.
  
  In this class action lawsuit, the landowner plaintiffs admitted to signing an oil and gas lease, but contended that the lease should be declared invalid because they did not acknowledge their signatures on the lease before a notary, as required by Ohio law. The landowners’ argument rested on their allegation that oil and gas leases are akin to standard leases of surface property, and not the conveyance of a greater interest in property.
  
  The court rejected the landowners’ argument, explaining that oil and gas leases are inherently different from standard leases of property and convey a fee simple interest in the rights contained therein.
  
  Based on this finding, the court agreed with the gas producer defendants that it should follow the ruling in Citizens National Bank v. Denison, in which the Supreme Court of Ohio held that “[a] defectively executed conveyance of an interest in land is valid as between the parties thereto, in the absence of fraud.”
  
  This result followed a similar result in the Trumbull County, Ohio, Court of Common Pleas, on Feb. 25, 2013, in Tomko v. Cobra Leasing, LLC, when the court granted the gas producer defendants’ motion to dismiss in its entirety, dismissing the landowner plaintiffs’ claim to invalidate their oil and gas lease due to defective notarization.
  
  Cole and Tomko were the first favorable rulings by Ohio federal and state courts on this issue for an exploration and production company. To be sure, a decision in the landowners’ favor on this issue would have prompted countless Ohio landowners to flood the court system with challenges to the validity of the landowners’ oil and gas leases.

Source: Defective Acknowledgement Does Not Invalidate Oil and Gas Lease According to Ohio Courts.

Alabama Man Who Lost Real Estate In Tax Foreclosure Scores Windfall As State Appeals Court Kiboshes Mortgage Lienholder's Attempt To Snatch Surplus Proceeds To Satisfy Loan

From a Real Estate Finance Newsletter from the law firm Bradley Arant Boult Cummings LLP:

• In Alabama, when a property owner fails to pay his ad valorem property taxes, his property may be sold at a public auction to the highest bidder (the “tax purchaser”). Statutory law in Alabama provides that the owner of the property who failed to pay the taxes, and certain other parties, such as a lender holding a mortgage on the property, have the subsequent right to redeem the property by paying the back taxes, the accrued interest and any excess bid paid by the tax purchaser at the tax sale.
  
  However, the Alabama Court of Civil Appeals recently addressed the rights of redemption by various parties and reached a decision that not only penalizes a lender for redeeming property in order to protect its interest but also provides a windfall to a property owner who failed to pay his property taxes and allowed his property to be sold at a tax sale.
  
  Discussion
  
  In First United Security Bank v. McCollum, the Alabama Court of Civil Appeals addressed the rights of a lender that redeems property sold at a tax sale as a result of its borrower’s failure to pay his property taxes. In McCollum, the property owner executed a promissory note and a mortgage in favor of his lender.
  
  When the property owner failed to pay his 2009 property taxes, his property was sold at a tax sale. The tax purchaser not only paid the back taxes for 2009, but also paid an excess bid of $32,305.12. The lender subsequently foreclosed on the property and recorded its foreclosure deed in the county where the property was located. The lender, as the current owner of the property, then redeemed the property by paying the back taxes for 2009, interest and the excess bid of $32,305.12.
  
  The lender then applied to the probate court for reimbursement of the excess bid it paid to redeem the property. The probate court refused, saying that the excess bid could only be claimed by the original property owner, that is, the individual who failed to pay the taxes on the property.
  
  In rejecting the lender’s claim for reimbursement of the excess bid, the Court in McCollum stated that only the property owner was entitled to receive the excess bid even though such owner did not pay to redeem the property. The court based its ruling on Section 40-10-28 of the Alabama Code which provides, in pertinent part, as follows:
  
  The excess arising from the sale of any real estate remaining after paying the amount of the decree of sale, and costs and expenses subsequently accruing, shall be paid over to the owner, or his agent, or to the person legally representing such owner, or into the county treasury, and it may be paid therefrom to such owner, agent or representative in the same manner as to the excess arising from the sale of personal property sold for taxes is paid.
  
  The Court then ruled that even though the lender foreclosed on the property and was now the owner of the property, the lender still would not be entitled to receive the excess bid because the lender foreclosed after the tax sale took place.
  
  Therefore, the only person entitled to recover the excess bid was the owner of the property at the time of the tax sale, the person who failed to pay the property taxes. The Court reached its decision even though a party other than the property owner paid the excess bid as part of its redemption of the property.

For the story, see Pitfalls in the Redemption of Property by Lenders.

For the court ruling, see First United Security Bank v. McCollum, (Ala. Civ. App. November 30, 2012).

Lack Of Contract Privity Between Mortgage Servicer, Borrower Sinks Homeowner's Claim Under Ohio Consumer Protection Law; Court Ruling Kiboshes Use Of Attorney Fee-Shifting Statute Against 3rd Party Banksters

In Columbus, Ohio, The Columbus Dispatch reports:

• The Ohio Supreme Court has ruled that servicing a residential mortgage does not constitute a “consumer transaction” as defined by state law, a ruling that consumer groups and attorneys say eliminates a protection for homeowners trying to save their homes amid the housing collapse.
  
  The ruling stems from a lawsuit filed by a Norwalk homeowner against Barclay’s Capital Real Estate in U.S. District Court in Toledo.
  
  The homeowner, Sondra Anderson, alleged that Barclay’s, which operated the mortgage-servicing business under the name HomEq before selling it three years ago, had not applied her mortgage payments correctly. As a result, she was stuck with hundreds of dollars worth of fees that it has yet to account for, despite her attempts to obtain more information, said her attorney, John Murray of Sandusky. He said Anderson is up to date with her mortgage payments.
  
  The federal court asked the Supreme Court for clarification of the situation in the context of the Ohio Consumer Sales Practices Act, which generally prohibits unfair or deceptive acts in consumer transactions. It is common for federal courts to ask for guidance from the Supreme Court on questions of state law.
  
  The court, in a 5-2 ruling written by Chief Justice Maureen O’Connor, effectively determined that the interaction between the servicer and the homeowner is not a consumer transaction. Mortgage-servicing companies act as an agent for the lender by collecting payments, late fees and other assessments and handling day-to-day interactions between lenders and their customers.
  
  “Mortgage servicing is a contractual agreement between the mortgage servicer and the financial institution that owns both the note and mortgage,” she wrote. “Mortgage servicing is carried out in the absence of a contract between the borrower and the mortgage servicer.”
  
  O’Connor acknowledged that the servicer’s duties may involve interactions with borrowers and may even help them modify their loans, but the company does that on behalf of the financial institution.
  
  In his dissent, Justice William O’Neill said dealings between consumers and mortgage servicers should not be exempt from the law.
  
  “Given the foregoing history of protecting consumers when they are forced into the hands of third-party debt collectors, it is wholly appropriate to also protect residential-mortgage-loan borrowers when they are forced into the hands of mortgage-loan servicers,” he said.
  
  The issue of whether the state’s consumer-protection law applies in these relationships was important because the law would have allowed consumers the possibility of recovering attorney fees along with damages, attorneys say.
  
  “A lot of homeowners in foreclosure don’t have the money to pay the attorneys to represent them,” said Linda Cook, senior staff attorney for the Ohio Poverty Law Center. “Legal-aid resources are limited ... so having fee-shifting statutes in consumer sales practices actions level the playing field.”
  
  Cook disagreed with the ruling, saying mortgage servicers “are the middlemen, and most of the time that’s the only entity that homeowners deal with once the loan is closed.”
  
  Murray said the problems Anderson has been facing are industry-wide. “It’s unfortunate for consumers to not have this protection,” he said. Murray said the ruling will not stop the lawsuit that he expects ultimately will include tens of thousands of homeowners.
  
  Attorney General Mike DeWine’s office, which also asked the court to rule on Anderson’s behalf, said it, too, was disappointed in the court’s ruling.

For the story, see Mortgage servicer isn’t held by consumer law, justices rule.

For a summary of the case, see Residential Mortgage Servicing Company is Not “Supplier” Subject to Ohio Consumer Sales Practices Act.

For the court ruling, see Anderson v. Barclay’s Capital Real Estate, Inc., Slip Opinion No. 2013-Ohio-1933.

Credit Reporting Agencies' Improper Reporting Of Short Sale As Foreclosure Haunts Ex-Homeowner Looking To Get Back Into Real Estate Market

Real estate columnist Kenneth Harney writes:

• Are large numbers of homeowners who have negotiated short sales with lenders at risk because of a startling omission in the American credit system? Do their credit reports and scores indicate that they were foreclosed upon, rather than having negotiated a mutually agreeable resolution with their lender?
  
  The answers appear to be yes, and last week the Federal Trade Commission and the Consumer Financial Protection Bureau were asked to investigate why. The reality is this: The credit reporting system now in place does not have a separate code that distinguishes a short sale from a foreclosure. Yet there are crucial differences between the two:
  
  1- In a short sale, the bank approves the sale of the house to a new buyer at a mutually acceptable price. Any unpaid loan balance not covered by the sale proceeds may then be either partially or fully forgiven. The bank is an active participant throughout the process, negotiating for a higher price and higher repayment of principal from the original borrower.
  
  2- In a foreclosure, the bank is essentially left holding the bag. The owners walk away at some point or live in the property rent-free until they’re evicted. Frequently, there is damage to the house left by the departing owners; sometimes it is extensive. There is little or no cooperation between them and the bank.

***

• George Albright, who completed a short sale on his home in New Port Richey, Fla., in 2010, has been trying for months to get through the hoops for a Fannie Mae conventional mortgage. According to his mortgage broker, Pam Marron, Albright has a solid 720 FICO credit score, down-payment cash of 20 percent and more than adequate monthly income and reserves for a new home. But he keeps getting rejected because his credit report indicates a foreclosure, not a short sale.
  
  That’s not unusual, Marron said, since there is no specific code to identify short sales. In a highly automated and strict underwriting environment, lenders go by the codes, according to Marron, harming creditworthy applicants such as Albright.
  
  “I did my time,” Albright said in an interview. “I’m ready to move on,” but because of the inadequacy of current credit reporting practices “I’m still paying more for rent than I’d be paying on a new mortgage.”

For more, see Short sales may be treated like foreclosures by credit-reporting agencies.

Bankster To File Foreclosure Lawsuit Against Colorado Homeowner Who Questioned Constitutionality Of Non-Judicial Process "To Remove Any Due Process Concerns" That Come From A Public Trustee Foreclosure

In Denver, Colorado, The Denver Post reports:

• The owners of an Aurora woman's mortgage said they absolutely will file a foreclosure lawsuit to take her house because of claims that Colorado's public trustee process is unconstitutional.
  
  In a request to dismiss a federal lawsuit against them, lawyers for U.S. Bank on Thursday said they'll pursue a foreclosure against Lisa Kay Brumfiel in Arapahoe County District Court "to remove any due process concerns" that come from a public trustee foreclosure.

For more, see Lawsuit to take Aurora woman's house is guaranteed, bank says.

WV Non-Profit Public Interest Lawyers Take Up Fight For Another Homeowner Over Allegations Of Improper Debt Collection Activities Against Notorious Banksters

In Charleston, West Virginia, The West Virginia Record reports:

• A Charleston man is suing Bank of America N.A. and JPMorgan Chase Bank N.A. for illegal debt collection in two separate lawsuits.
  
  In 2005, William Martin was induced into two simultaneous loans with Quicken Loans based on misrepresentations regarding the actual value of his property, according to two complaints filed April 17 in Kanawha Circuit Court.
  
  Martin claims his Pennsylvania home secured the loans and the combined indebtedness of the two loans was more than $293,000; the first mortgage was for $187,000 and the second mortgage was for $106,300.
  
  Quicken’s appraiser appraised the property at a value of $300,000 when, unknown to Martin, the property was only worth approximately $240,000, according to the suits.
  
  Martin claims the first mortgage was subsequently assigned to Bank of America and the second mortgage was assigned to Chase.
  
  In January 2006, Martin discovered the inflated appraisal when his job required that he relocate to West Virginia, according to the suits.
  
  Martin claims after he moved he was unable to sell the property for enough to cover the two loans and, because he could not sell the home for enough to satisfy the indebtedness, he contacted the defendants to explore loss mitigation alternatives.
  
  The defendants refused to provide Martin with any assistance and he obtained counsel, which then provided the defendants with his counsel’s information, according to the suits.
  
  Martin claims despite being aware that he was being represented by counsel, the defendants continued to attempt to contact him to collect the debt.
  
  Bank of American engaged in illegal debt collection attempts on at least 19 occasions and Chase engaged in illegal debt collection attempts on at least 20 occasions, according to the suits.
  
  Martin is seeking actual damages and civil penalties of $4,800 for each violation pursuant to West Virginia code. He is being represented by Bren J. Pomponio and Sean W. Cook of Mountain State Justice.

Source: Man sues Bank of America, JPMorgan Chase for illegal debt collection.

(1) Mountain State Justice, Inc. is a non-profit public interest law office dedicated to pursuing litigation focusing primarily on combating predatory lending and abusive debt collection techniques on behalf of low-income West Virginians, and which provides free legal services in its areas of practice to qualifying individuals.

See Despite Jury's Actual Damage Award Of $0, Booted WV Homeowner Walks Away With $32K In Inflation-Adjusted Civil Penalties, $30K In Attorney Fees Anyway In Connection With Foreclosing Lender's Unlawful Debt Collection Practices for a post on a recent West Virginia Supreme Court of Appeals case in which Mountain State Justice scored a win for another screwed over homeowner.

Indiana Woman Who Had Home Sold Out From Under Her In Tax Foreclosure Sale Fights To Get It Back; Currently Awaits State High Court Ruling In Seperate Case Addressing Constitutional Sufficiency Of Pre-Sale Notices Under 14th Amendment's Due Process Clause

In Mishawaka, Indiana, the South Bend Tribune reports:

• A series of setbacks led to a Mishawaka woman's home being sold at a county tax sale, and a St. Joseph County judge is weighing whether she was adequately warned that her house was in jeopardy.
  
  Meanwhile, attorneys and judges around the state are waiting for the Indiana Supreme Court to rule on a case they heard earlier this year, which could determine how constitutional the state's tax sale process is.

***

• The Indiana Supreme Court decided to take on the issue of due process and tax sale notifications, hearing oral arguments on Feb. 14. [...] In that case, M&M Investment Group v. Ahlemeyer Farms, the property was sold without notifying the bank that owned the mortgage, which had $700,000 outstanding.
  
  Indiana's law on tax sales require mortgage holders, even after the mortgage is initially recorded in public records, to send an auditor a certified letter every year asking for notification of any possible tax sales. In the Bartholomew County case, that did not happen.
  
  But a trial judge ruled in the bank's favor, and the Indiana Appeals Court agreed, saying, in part, "We therefore conclude that the Indiana pre-sale notice violates the Due Process Clause of the Fourteenth Amendment because it does not require the government to provide sufficient notice prior to the tax sale."
  
  The appeals court noted several earlier cases, quoting extensively from a 1983 Indiana case, Mennonite Board of Mission v. Adams, in which the U.S. Supreme Court ruled that the auditor did not go far enough in determining whether a mortgage was involved.
  
  The most recent appeals court ruling quoted from the Mennonite case: "A party's ability to take steps to safeguard its interests does not relieve the State of its Constitutional obligation. It is true that particularly extensive efforts to provide notice may often be required when the state is aware of a party's inexperience or incompetence."
  
  In a 2006 U.S. Supreme Court decision, Jones v. Flowers, the court addressed similar due process issues relating to an Arkansas property owner whose notices had been returned unclaimed.

For the story, see Woman fights to keep house (Judge reviews tax sale case -- as state court tackles the larger issue).

Elderly Homeowner On Verge Of Losing Mortgage-Free Home Over $4K+ In Back Taxes Saved By Good Samaritan; Senior Says Tax Bills Sent To Wrong Address

In Miami, Florida, WSVN-TV Channel 7 reports:

• An elderly woman on the verge of losing her South Florida home received the best Mother's Day gift after a Good Samaritan came to her rescue.
  
  Thousands of unpaid property taxes almost caused Thelma Turner to lose the house she has called home all her life. "We grew up in that house," said Turner, "going to school, senior high school, all the neighbors know us and stuff."
  
  An unexpected gift gave Turner a second chance. "Now we're going to pay your house off," said foreclosure specialist Luis Valdeon. Turner had gone to foreclosure specialist Luis Valdeon for help. Turner could not come up with the money she owed to save her home.
  
  Valdeon paid off the back taxes of more than $4,000. Valdeon called it a late Mother's Day gift and a reverse birthday gift for him. "For me, to give her my birthday is the same as they give it to me. It's the same thing," said Valdeon.
  
  Turner's home was built in the 1930s and purchased by her grandmother in 1961. The home's mortgage was paid in full. Valdeon said no one should lose their home over unpaid taxes. "You imagine losing a free and clear house? The system really doesn't work," he said. "If you've been working in this country for 65 years, don't you think that people can not afford... can't they give them like a break?"
  
  Turner said she did not receive a tax bill since 2009 because it was being sent to the wrong address. She found out about the tax debt though a notice that her home would be auctioned. "Never, never, never, as long as I live and God is my witness, I will be in this situation again." she said.
  
  Turner hopes the house will remain in the family and plans on passing it on to her son Brandon.

Source: Good Samaritan pays off woman's home taxes.

Sneaky Accounting Firm CEO, Wife Squeezed For $110K+ Over Sleazy Move In Unloading Mansion While Stiffing Long-Time Friend/Real Estate Broker Out Of Sales Commission

In White Plains, New York, the New York Post reports:

• Deloitte CEO Joe Echevarria and wife Ana have been ordered by a judge to pay $110,000 to their 82-year-old real-estate broker after cheating her over the sale of their New York mansion.
  
  The head of the prestigious firm didn’t account for the fact that Bernice Gottlieb, a longtime friend who even trained his wife as a real-estate broker, would sue them after they gave her the exclusive listing for their $3 million home — but then, the couple secretly sold it to realty firm Weichert, which handles Deloitte relocations, in 2011.
  
  But last week, Supreme Court Justice Mary H. Smith ruled their contract “unambiguously” made it clear the Echevarrias were obligated to direct all sales inquiries to Gottlieb, and that “Ana had admitted that she had failed to inform Ms. Gottlieb of the Weichert offer.”
  
  Echevarria, who became CEO of accounting, tax and consultancy firm Deloitte in June 2011, put his five-bedroom Irvington mansion on the market in March of that year for $3 million, and gave Gottlieb and her firm Hudson Shores Realtors a six-month exclusive right to sell it with a 4 percent commission on the sale price.
  
  In July 2011, according to court papers, Gottlieb brought in an offer of $2.4 million, which the following month Ana said they would accept “only if the closing was in two weeks” — which Gottlieb responded was impossible.
  
  The filing adds that the Echevarrias — who’d claimed in their legal response that they were unhappy with Gottlieb’s work and were in a rush to sell because they were moving to Miami — stopped communicating with Gottlieb, who discovered their deal with Weichert for $2.1 million when they called to ask for the keys.
  
  Gottlieb was awarded $85,333.32 plus interest from August 2011 and legal costs of $25,000. She told us, “I feel embarrassed, betrayed and humiliated. It’s hard for me to understand because I have great admiration for Joe Echevarria, and I knew them for years. We socialized . . . his wife worked for me. I am glad justice has been done, but it took two years.” Echevarria’s lawyer and a Deloitte rep didn’t get back to us.

Source: Tax mogul must pay broker.

For the trial judge's ruling, see Hudson Shores Realty v. Echevarria.

Illinois Family Facing Imminent Foreclosure Dodges Boot After Cleaning Out Kitchen Cookie Jar & Finding $4.85M

In Geneva, Illinois, WBBM-TV Channel 2 reports:

• The timing couldn’t have been better for a family from north suburban Geneva when they hit the jackpot after finding some old Lotto tickets stuffed in a cookie jar.
  
  Earlier this month, Ricardo Cerezo said his wife was cleaning the kitchen in the home they were about to lose to foreclosure. She told him to take the old Lottery tickets out of the jar and have them checked, or toss them out. “It was either take them, get them checked, or she was going to trash them that night,” he said.
  
  So he took the tickets to a local gas station to get them scanned. The first 8 or 9 tickets weren’t winners. “The following one was $3, so I was excited. I get to pay for my Pepsi. And then the last one said file a claim,” he said.
  
  Cerezo went online to check the ticket, and couldn’t believe it when the numbers matched the Feb. 2 Lotto drawing.
  
  “As each number kept matching, the smile kept going higher and higher, and when I realized we had all six numbers, it was that shocking moment of ‘Whoa, can this really be?’” he said. “Fast forward to the next day, Monday; called in sick from work, went down into Chicago. It’s one of feelings where it’s okay if they fire me.”
  
  He visited the Lottery offices in Chicago, and learned he’d won $4.85 million.
  
  Just three months before finding the winning ticket, Cerezo stood before a judge at a foreclosure hearing for their home. He was given a few more months to find a new home before they would be evicted.
  
  “That was on February 12th, so we were sitting on $4 million at that time in this jar,” he said. Cerezo said the family plans to pay off their home loan, get new cars, and give some of the winnings to charity.
  

Source: Facing Foreclosure And Eviction, Family Finds Winning Lotto Ticket.

200+ Attorneys, Support Staff That Represent Low-Income New Yorkers At NYC Non-Profit Public Interest Firm Conduct Mass Walkout Over Salary, Benefits Squeeze

In New York City, The Wall Street Journal reports:

• More than 200 attorneys and support workers with Legal Services NYC, which aids impoverished New Yorkers, walked off the job Wednesday in a dispute over salary increases and retirement and health-care benefits.
  
  Legal Services NYC is the largest provider of civil legal services in the country and receives about a third of its funding from the federal government. The group expects that by 2015, it will have lost half of the federal funding it had in 2010, in part because of widespread spending cuts known as the sequester, said Executive Director Raun Rasmussen.
  
  The organization works with more than 45,000 low-income clients on issues such as eviction and foreclosure, domestic violence and unemployment insurance. Mr. Rasmussen said unless it reduces costs, as many as 50 employees would have to be laid off by the end of next year.

For more, see Lawyers Who Aid Impoverished New Yorkers Walk Off Job (Workers at Legal Services NYC Protest in Dispute Over Salary, Benefits).

See also:

• Legal Services NYC Responds to Union Strike Vote,
• New York Law Journal: Legal Services NYC's Employees Strike; New Case Intake To Be Cut.

NYC Feds' $17.75 Forfeiture Score Biggest In U.S. Marshals Service History; 14-Room Upper East Side Co-Op's Former Owner Now To Reside In Slammer For 12 Years For Running $292M Ponzi Scheme On Notorious Banksters

In New York City, the New York Post reports:

• The US Marshals Service said [] that its $17.75 million sale of fraudster Hassan Nemazee’s plush Park Avenue penthouse marked the biggest real-estate deal in the agency’s 224-year history.
  
  The 14-room duplex was forfeited by the former Democratic campaign bundler as part of his guilty plea for running a $292 million Ponzi scheme on Bank of America, Citibank and HSBC.
  
  Combined with other properties and possessions that Nemazee coughed up — including an apartment in Rome, a Westchester estate, a 2008 Maserati Quattroporte and a 2007 Cessna airplane — the banks have gotten back more than $90 million, Manhattan US Marshal Joseph Guccione said.
  
  Nemazee’s former co-op at 770 Park Ave. was bought in March by hedge-fund analyst Thomas Purcell and his wife, Marina Shields Purcell, who’s the half-sister of actress Brooke Shields.
  
  The sprawling, 5,130-square-foot apartment was initially listed for $28 million in 2011.(1)
  
  Nemazee is serving 12 years in the slammer for bank and wire fraud.

Source: Park Ave. Ponzi pay.

(1) For a view of the lifestyle that a $292 million Ponzi scheme fuels, see Curbed NY: Inside a Jailed Fraudster's $28 Million Park Avenue Palace.

S. Florida Feds Pinch Tax Preparer On Charges Relating To Alleged False Claims Of Entitlement To 1st Time Home Buyers Credit On Behalf Of Himself & Some Of His Customers

From the Office of the U.S. Attorney (Fort Lauderdale, Florida):

• Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and Michael J. DePalma, Acting Special Agent in Charge, Internal Revenue Service, Criminal Investigations (IRS-CI), announced that Efrain Felipe, 41, of Hallandale Beach, was charged in a two count Information with making and subscribing a false tax return on behalf of a client, and aiding and abetting, in violation of Title 26, United States Code, Sections 7206(1) and 7206(1).

***

• According to the charges, Felipe operated a tax preparation business in Broward County, and prepared fraudulent tax returns on behalf of his customers by claiming that some customers were entitled to a First Time Home Buyers Credit (FTHBC) of $7,500.00, for properties they did not own or for properties that were purchased years earlier. Felipe also falsely claimed the FTHBC on his own personal tax return.

For the U.S. Attorney press release, see Tax Preparer Charged With Filing False Tax Returns On Behalf Of His Clients.

Woman With Two Foster Children Faces Foreclosure Evictions Despite Protections Under Federal Law; Bankster Says Existing Lease Not "Bona Fide"

In Wilmington, North Carolina, WECT-TV Channel 6 reports:

• Sheree Harrell, a woman who fosters children with autism, is facing eviction. The home she rents in Landfall was foreclosed on by the bank after the homeowner fell behind on his mortgage payments.
  
  Right now, Harrell has two foster children living with her. She said it would be disruptive to the children's progress if she's forced out of the house.
  
  The company the bank hires to handle foreclosures, Brock and Scott, sent Harrell an eviction notice.
  
  Under the Protecting Tenants at Foreclosure Act of 2009, renters must be allowed to stay in their homes until the end of their leases - if the home their renting is foreclosed on by the bank.
  
  There is a provision that said the renter can be evicted if they don't have what's called a "bona fide" lease. A lease is considered bona fide if the mortgagor or a child, spouse, or parent of the mortgagor under the contract is not the tenant, if the lease was the product of an arm's-length transaction, or if the rent is substantially less than fair market rate.
  
  Still, Harrell said the company is contesting her loan. Emails provided to us by Harrell show the company's position is that Harrell's lease is not bona fide.
  
  "They're going to have to drag me out of here," she said. "I will not go willingly. I know what they're doing is illegal and I'm not going to tolerate it." She said she's not leaving without a fight for the sake of her foster children.

Source: Foster mother in Landfall fighting eviction.

Antitrust Feds Tack On Obstruction Of Justice Charge Against Accused Foreclosure Sale Bid Rigging Suspect In Connection With Alleged Deletion Of Electronic Records Related To Case, Software Installation Designed To Prevent Review, Recovery Of Destroyed Records

From the U.S. Department of Justice (Washington, D.C.):

• A federal grand jury in U.S. District Court for the Eastern District of California in Sacramento [] returned a superseding indictment charging Andrew B. Katakis, of Danville, Calif., with obstruction of justice related to a federal investigation into conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions held in San Joaquin County, Calif., the Department of Justice announced.
  
  The remaining allegations are unchanged from the original indictment, which was returned by a federal grand jury on Dec. 7, 2011. The pre-existing counts charge Katakis, Donald M. Parker, Anthony B. Joachim and W. Theodore Longley with conspiring with other unnamed co-conspirators to rig bids and commit mail fraud when purchasing selected properties at public real estate foreclosure auctions. Wiley C. Chandler, another real estate investor who was also charged in the original indictment, pleaded guilty on Feb. 24, 2012.
  
  The added charge alleges that after Katakis received a letter notifying him that a federal grand jury had subpoenaed his bank account, he deleted and caused others to delete electronic records and documents related to the conspiracies.
  
  The superseding indictment alleges that Katakis also installed and caused others to install and use a software program that overwrote deleted electronic records and documents so that they could not be viewed or recovered.

For the Justice Department press release, see Northern California Real Estate Investor Indicted on Additional Charge (Superseding Indictment Adds Obstruction of Justice to Bid-Rigging and Mail Fraud Charges).

Bay State Senator To Feds: Why The Hell Aren't You Ever Taking The Sleazy Banksters To Trial?

Mother Jones reports:

• On Tuesday, fierce consumer advocate and needler of banks Sen. Elizabeth Warren (D-Mass.) called out Wall Street regulators for their habit of giving tepid punishments to misbehaving banks, and asked the agencies to justify their policy of settling with the wrongdoers out of court.
  
  Warren sent a letter to the Justice Department, as well as to the Securities and Exchange Commission and the Federal Reserve, asking them for evidence on how a settlement that doesn't require a bank to admit guilt would be better policy than taking the bad apple to trial. If regulators at least show that they are willing to play tough, she argued, it will help deter bad behavior and allow regulators to negotiate bigger fines in the event of a later settlement.
  
  Here are a few snippets:
  
  There is no question that settlements, fines, consent orders, and cease and desist orders are important enforcement tools, and that trials are expensive…But I believe strongly that if a regulator reveals itself to be unwilling to take large financial institutions all the way to trial…the regulator has a lot less leverage in settlement negotiations and will be forced to settle on terms that are much more favorable to the wrongdoer…If large financial institutions can break the law and accumulate million in profits, and if they get caught, settle by paying out of those profits, they do not have much incentive to follow the law.

For more, see Elizabeth Warren to Obama Administration: Take the Banks to Court, Already!

Go here for Sen. Warren's letter to the Feds, and here for her office's press release.

NYS Intermediate Appeals Court: OK To Screw Big-Time Bond Insurer In Collateralized Crappy Mortgage Transaction; Victim Was Too Commercially Sophisticated, It Should Have Known Better Than To Get Into A Deal Like That!

The Wall Street Journal reports:

• Goldman Sachs Group Inc. obtained a victory in New York state appeals court in a case involving a complex mortgage security, moving the firm further from a crisis-era cloud.
  
  The New York state appeals court tossed out a lawsuit on Tuesday by bond insurer ACA Financial Guaranty Corp., which got burned in a complex security deal along with investors while hedge fund Paulson & Co. scored big profits.
  
  ACA had maintained that Goldman fraudulently induced it to insure the collateralized-debt- obligation deal known as Abacus 2007-AC1.
  
  A CDO is a pool of loans, such as subprime mortgages, sold in slices to investors. Goldman arranged it just as the housing market was collapsing in 2007 in the months leading up to the financial crisis.
  
  The New York State Supreme Court’s Appellate Division, in a 3-2 decision, dismissed ACA’s fraud claims against Goldman, saying as a “highly sophisticated commercial entity,” ACA should have realized something was amiss.

***

• “It’s a good day for Goldman, but the other shoe may still drop,” said John Coffee, a professor at Columbia Law School in New York. With a 3-2 decision on a high-profile case, the matter “is likely to go up to the court of Appeals,” Mr. Coffee added.

For more, see Judge Says Insurer Should Have Known Better on Debt Deal (Goldman Sachs scored a victory in a New York state appeals court Tuesday, winning the dismissal of a lawsuit filed against it by a bond insurer over a financial product that went sour during the financial crisis).

Robosigning, Sewer Service Allegations Continue Dogging Banksters In Recent California AG Suit Tagging Chase For Practices In Credit Card Collection Cases

From the Office of the California Attorney General:

• Attorney General Kamala D. Harris [] filed an enforcement action against JPMorgan Chase & Co. (Chase) alleging that the bank engaged in fraudulent and unlawful debt-collection practices against tens of thousands of Californians.
  
  The suit alleges that Chase engaged in widespread, illegal robo-signing, among other unlawful practices, to commit debt-collection abuses against approximately 100,000 California credit card borrowers over at least a three-year period.
  
  “Chase abused the judicial process and engaged in serious misconduct against California credit card borrowers,” Attorney General Harris said. “This enforcement action seeks to hold Chase accountable for systematically using illegal tactics to flood California’s courts with specious lawsuits against consumers. My office will demand a permanent halt to these practices and redress for borrowers who have been harmed.”
  
  From January 2008 through April 2011, Chase filed thousands of debt collection lawsuits every month in the State of California. On one day alone, Chase filed 469 such lawsuits in California. The Attorney General’s complaint against Chase alleges that, to maintain this pace, Chase employed unlawful practices as shortcuts to obtain judgments against California consumers with speed and ease that could not have been possible if Chase had adhered to the minimum substantive and procedural protections required by law.
  
  “At nearly every stage of the collection process, Defendants cut corners in the name of speed, cost savings, and their own convenience, providing only the thinnest veneer of legitimacy to their lawsuits,” the complaint states.
  
  Chase used California’s judicial system as a mill to obtain default judgments, the suit alleges, using illegal tactics to flood the state’s court system in order to secure default judgments and garnish wages from Californians.
  
  The alleged misconduct includes:
  
  Robo-signing: Chase illegally robo-signed various litigation filings, including sworn documents, declarations, and verified complaints, without reviewing the relevant files or bank records or even reading the documents before signing.
  
  “Sewer Service”: Chase failed to properly serve notice of debt collection lawsuits against consumers while claiming they had been served as required by law. This practice, known as “sewer service,” deprives the consumer of any notice of the lawsuit.
  
  Filing Irregularities: Chase haphazardly assembled its official legal filings. For example, Chase failed to redact consumers’ personal information in attachments to filings, potentially exposing them to identity theft and in violation of California law. In addition, when asking courts to enter default judgments against consumers, Chase consistently swore under penalty of perjury that the consumers were not on active military duty. In fact, Chase never checked. This deprived servicemembers of important legal protections to which they are entitled while on active duty.

For the California AG press release and the link for the lawsuit, see Attorney General Kamala D. Harris Announces Suit Against JPMorgan Chase for Fraudulent and Unlawful Debt-Collection Practices.

More Homeowner Horror Stories To Come As Banksters Begin Unloading Servicing Rights; Trouble Expected As Buying & Selling Servicers Begin Fumbling Handoffs

In Charlotte, North Carolina, the News & Observer reports:

• Millions of homeowners around the country have received an unexpected message from their banks: Goodbye.
  
  After years of collecting mortgage payments from as many people as they could, big U.S. banks such as Bank of America and Wells Fargo are scaling back. As servicing mortgages grows less lucrative, they’re selling the rights to do so in deals measured by the billions.
  
  The buyers are specialty companies much less known to the public. And as the massive transfers take place, regulators have signaled they are concerned about a small but growing fraction of homeowners who report falling through the cracks.
  
  Some have found their online accounts unavailable. Others have reported delays in receiving account numbers. The details of some promised loan modifications haven’t been carried through with the new servicer.
  
  In Charlotte, one man said his short sale, arranged with Bank of America, wasn’t honored after the mortgage was transferred. The home is now in foreclosure.
  
  Tales like these have led the Consumer Financial Protection Bureau and Conference of State Bank Supervisors to warn the industry they’ll be paying close attention to how the handoffs work.

For more, see Borrowers see glitches as big banks sell off mortgage rights.

Defaults On Mortgages Where Borrower Need Not Make Any Monthly Payments Of Principal & Interest On The Upswing?

The Wall Street Journal reports:

• Growing numbers of older borrowers with reverse mortgages are delinquent on these loans. But a little-known federal guideline can help steer such individuals out of financial trouble.
  
  Reverse mortgages allow people age 62 or older to convert their home equity into cash. The homeowner can elect to receive a lump sum, a line of credit or monthly payments. With a conventional loan, such as a home-equity line of credit, a borrower can tap into a home's equity but must make monthly repayments. Reverse mortgages, in contrast, are due with interest when the borrower dies, moves or sells the house.
  
  Defaults occur when a borrower fails to pay property charges, including property taxes and homeowners insurance. Of the almost 600,000 reverse mortgages outstanding, 9.8% are currently delinquent, up from 8% in 2011, the first year for which statistics are available, according to the federal Department of Housing and Urban Development, whose Federal Housing Administration insures virtually all reverse mortgages.
  
  Delinquencies have increased in recent years as up to 70% of borrowers have opted for lump-sum payouts.
  
  "For many homeowners, taking all eligible cash upfront results in insufficient cash flow in later years for property upkeep, taxes and insurance," HUD warned in a November report to Congress.
  
  The good news: Help is available. Under guidelines HUD released in 2011, lenders—before initiating foreclosure proceedings—are required to notify borrowers who fall behind of free financial counseling. Such sessions can help them get back on track by, among other things, tapping benefit programs for some older individuals.
  
  Unfortunately, many older borrowers "don't know about these programs," says Ramsey Alwin, senior director of economic security at the National Council on Aging, one of a handful of nonprofits that provide the free counseling.

For more, see Reverse-Mortgage Defaults Increasing.