Saturday, July 19, 2008

Ex-World Savings Loan Originator Sues Company For Retaliation For Reporting Alleged Improper Lending Practices

In Oakland, California, a story originally aired by KPIX-TV Channel 5 in May reports:

  • A former employee of Oakland's World Savings is suing the company (now owned by Wachovia) and its former principals, saying he was fired in retaliation for his reporting of improper practices and violations of state and federal laws [...] by World in selling loans in San Francisco and the Bay Area.


  • In the complaint, [ex-loan consultant Paul] Bishop claims World "preyed upon" desperate borrowers who were "enticed into bad/predatory loans…without being told the complete truth about the loans" and that "borrowers were not told the full story about the terms, assumptions or risks of their loans".


  • The complaint says Bishop began working for World in November of 2002 and in 2004 began to observe practices such as World brokers "helping outside brokers to circumvent underwriting guidelines" through classes where "it walked brokers through (World's) loan application and specifically told them to be sure borrowers qualify for loans, even indicating the necessity to overstate income, if need be, to get a borrower qualified."


  • The complaint further alleges that "World managers routinely overruled underwriting guidelines that would hae prevented loans from being approved" by using what the filing calls an "exception to policy" to get those loans approved. It says some decisions to deny loans were "overridden" by senior loan originating executives.

For more, see Oakland Bank's Lending Sparks Ex-Employee Lawsuit (read story) (watch video).

For a CBS News' "60 Minutes" interview with Paul Bishop (aired 2-15-09; 13+ minute video), see World of Trouble (read story) (watch video).

For a CBS News' "The Early Show" interview with Paul Bishop (aired 2-16-09; about 5 minutes), see Mortgage Whistleblower.

Go here for other posts on whistleblower suits involving alleged fraudulent mortgage lending practices.

Friday, July 18, 2008

Mezuzah Not Protected Under Fair Housing Act, Federal Appeals Court Rules

In Chicago, Illinois, the ABA Journal reports:

  • A federal appeals court has ruled that the Fair Housing Act does not protect the right of condominium owners to display mezuzot on their doorframes. The Chicago-based 7th U.S. Circuit Court of Appeals said the federal law requires accommodation for the handicapped but not for religion, the New York Sun reports. Content-neutral regulations that have the effect of banning religious displays are permitted, the court said in a 2-1 opinion (PDF).


  • The majority opinion by Judge Frank Easterbrook said the regulation was content-neutral. "It bans photos of family vacations, political placards, for-sale notices and Chicago Bears pennants."

  • Dissenting Judge Diane Wood said the rule operated as a constructive eviction of observant Jewish residents.

Source: Housing Law Doesn’t Protect Right to Mezuzah, Appeals Court Rules.

For the decision, see Bloch v. Frischolz (7th Cir., July 10, 2008).

Go here for other posts on condo association problems with mezuzot.


In disagreeing with her colleagues in the majority, Circuit Judge Wood made her feelings known by issuing a 17-page dissenting opinion in response to the 6-page majority opinion. A few of her comments are included in this excerpt from the New York Sun article:

  • In dissent, Judge Diane Wood said enforcement of the rule amounted to a "constructive eviction" of observant Jewish residents, as well as an effective bar on Jews moving into the housing complex. "Hallway Rule 1 operates exactly as a redlining rule does with respect to the ability of the owner to sell to observant Jews. No such person could buy a unit at Shoreline Towers," she wrote. "The Association might as well hang a sign outside saying 'No observant Jews allowed.'"

Thursday, July 17, 2008

Brooklyn Judiciary To Establish Mandatory Settlement Conferences In Certain Foreclosure Actions; Law Students To Participate In Process

In Brooklyn, New York, the Brooklyn Daily Eagle reports:

  • In the Brooklyn Supreme Court’s continued effort to fight the foreclosure crisis that is wreaking havoc across the country and ripping homes away from thousands of families, Administrative Judge Abraham Gerges met with community-board leaders last week to discuss the court’s role.


  • According to Gerges, he and other members of the judiciary will be meeting with various community boards throughout the borough, as well as the mortgage lenders. A system to have certain plaintiffs and defendants meet for mandatory settlement-conferences will be established, and students from Brooklyn Law School across the street are being enlisted to help in the legal process.

For more, see Foreclosure Talks Continue at (not in) Court (Brooklyn Supreme ‘One of the More Progressive Courts Across Country’).

Wednesday, July 16, 2008

The Secret's Out: Foreclosing Lenders Around The Country Continue To Get Hammered Over Missing, Inconsistent Mortgage Docs

The National Law Journal reports:

  • Alarmed by the dramatic rise in housing foreclosures across the nation, judges have taken a variety of actions to slow the pace, ranging from outright dismissals for incomplete work to mandated mediation to threatening attorneys with sanctions.


  • A number of suits have accused banks of allegedly taking shortcuts to rush foreclosures through, often using so-called "foreclosure mills" — law firms that handle a high volume of foreclosure actions — to handle the cases, according to foreclosure defense lawyers, bankruptcy lawyers and consumer rights groups.


  • In Ohio, which has been particularly hard hit by foreclosures, a consortium of plaintiffs' attorneys last month filed a class action against Deutsche Bank A.G. on behalf of Ohio homeowners facing foreclosure. The suit alleges that the bank lacks standing to bring foreclosures throughout Ohio and is missing key mortgage documents. Whittiker v. Deutsche Bank National Trust Co., No. 1:08cv00300 (N.D. Ohio).(1)

One Brooklyn, New York trial judge's approach to the apparent sloppy paperwork being filed by foreclosing lenders and their attorneys is described in these excerpts:

  • "I deny more foreclosures than I approve," said Justice Arthur Schack(2) of Kings County, N.Y., Supreme Court, in Brooklyn. "I want to see the servicing agent's power of attorney, I want to see all the paperwork before I approve it. If the paperwork is garbage, I deny it. If you're going to take away someone's home, it should be done properly."


  • In a blistering opinion in June, Schack, the Brooklyn judge, threatened Mary McLoughlin, an attorney at Rosicki, Rosicki & Associates of Carle Place, N.Y., with sanctions for filing a foreclosure on behalf of Wells Fargo. After doing his own research in the [computer-accessible New York City public records], Schack discovered that Wells Fargo never owned the mortgage. Schack denied the foreclosure and further set a hearing for Aug. 1 to afford her a chance to explain why she should not be sanctioned for "frivolous conduct." Wells Fargo Bank v. Reyes, No. 5516/08 (Kings Co., N.Y., Sup. Ct.) [2008 NY Slip Op 51211(U) [20 Misc 3d 1104(A)]; Decided June 19, 2008].(3)

For the whole story, see Judges, attorneys work to stanch foreclosures (As actions surge, so do dismissals, mediation orders) (no subscription required).

For other posts that reference the failure of some mortgage lenders and their attorneys to file the required loan documents when starting foreclosures, Go Here, Go Here, and Go Here.

(1) The suit alleges that, because Deutsche Bank lacked standing to bring foreclosure actions, its attempt to do so constituted violations of the Federal Fair Debt Collection Practices Act, as well as Ohio RICO, R.C. 2923.32 Engaging in pattern of corrupt activity, both on its part as well as on the part of its attorneys filing the foreclosure actions. In addition to damages and other relief, the homeowners seek the return of their homes lost to foreclosure, and request that the attorneys representing Deutshce Bank fork over all the fees they collected on the foreclosure actions.

(2) Ina recent case, Deutsche Bank Natl. Trust Co. v Maraj 2008 NY Slip Op 50176 (U); [18 Misc 3d 1123(A)]; January 31, 2008; Justice Schack, in denying a foreclosure, wondered if he was the target of a corporate "Kansas City Shuffle" (a reference to the 2006 film, Lucky Number Slevin, in which the term is explained by a hitman played by Bruce Willis) in that the paperwork filed by the foreclosing mortgage lender raised questions in his mind the answers to which weren't readily apparent to him, and which created the appearance of possible fraudulent activity, according to his written opinion. See earlier post, Brooklyn Judge Presides Over A Corporate "Kansas City Shuffle" In Foreclosure Action?

(3) In other gems by Justice Schack in which he denies foreclosure to other foreclosing mortgage lenders for submitting questionable paperwork, see HSBC Bank USA v Perboo, 2008 NY Slip Op 51385(U); Decided last Friday - July 11, 2008; and also a 2007 decision, Deutsche Bank Natl. Trust Co. v Castellanos, 2007 NY Slip Op 50978(U) [15 Misc 3d 1134(A)]; Decided May 11, 2007, a foreclosure action in which he subsequently again denied foreclosure in the opinion in Deutsche Bank Natl. Trust Co. v Castellanos, 2008 NY Slip Op 50033(U) [18 Misc 3d 1115(A)]; Decided January 14, 2008.

Tuesday, July 15, 2008

Cincinnati-Area Community Group Sues Deutsche Bank; Blames Institution For Abandoned Homes, Spreading Blight

In Cincinnati, Ohio, WKRC-TV Channel 12 reports:

  • Neighbors who live in Price Hill are taking on one of the world's largest banks. Price Hill Will is suing Deutsche Bank, accusing it of not taking care of the homes it has in foreclosure. The group blames the bank for virtually abandoning hundreds of homes, spreading blight in Price Hill. The suit asks the court to force Deutsche Bank to maintain its properties in accordance with local housing and health codes.

Source: Price Hill Group Sues Deutsche Bank.

See also:

Monday, July 14, 2008

IndyMac Bank Subprime Related Lawsuits

For those interested in the kinds of allegations being made in subprime-related lawsuits brought by homeowners and others from all over the country involving the recently FDIC-seized IndyMac Bank as one of the named defendants, the following links will take you to copies of some of the actual lawsuits filed against this lender. These lawsuits are made available online courtesy of the Center for Responsible Lending ("CRL"), and are all referenced in an investtigative report CRL recently issued on IndyMac.

Alleged Bait & Switch Tactics (among other allegations):

  1. Ferguson v. IndyMac Bank, U.S. District Court for the Eastern District of New York, February 14, 2008;
  2. Howard v. Countrywide Home Loans Inc., U.S. District Court for the District of Columbia, 2008;
  3. Elouise Manuel v. American Residential Financing, Inc., et al, Superior Court of Gwinnett County, Georgia, 2008;
  4. Zurawski v. Mortgage Funding Corp., U.S. District Court for the District of New Jersey, 2008;
  5. Hartman v. Deutsche Bank National Trust Co., U.S. District Court for the Eastern District of Pennsylvania, 2007;
  6. Mitchell v. IndyMac Bank, U.S. District Court for the Eastern District of Virginia, 2008;
  7. Brannan v. IndyMac Bank, U.S. District Court for the District of Colorado, 2006;
  8. Darling v. IndyMac Bancorp, U.S. District Court for the District of Maine, 2006;
  9. Harris v. Vinson Mortgage Services, U.S. District Court for the Eastern District of Missouri, 2008;
  10. George v. IndyMac Bank, U.S. District Court for the Central District of California, 2008;
  11. Thomas v. DCI Mortgage Bankers, U.S. District Court for the District of New Jersey, 2007;
  12. Glover v. Equity Source, U.S. District Court for the District of New Jersey, 2007;

Alleged Racial Discrimination:

  1. Mables v. IndyMac Bank, (seeks class action status) U.S. District Court for the Northern District of Illinois, 2008;

Alleged Inflated Appraisals:

  1. Cedeno v. IndyMac, U.S. District Court for the Southern District of New York, 2006;

Alleged Falsified Paperwork:

  1. George v. IndyMac Bank, U.S. District Court for the Central District of California, 2008;
  2. Ware v. IndyMac Bank, U.S. District Court for the Northern District of Illinois, 2007;

Alleged Funding of Loans For Developer in an Area Known as a Hotbed for Mortgage Fraud Without Proper Due Diligence:

  1. Gaines v. Parisi, U.S. District Court for the Middle District of Pennsylvania, 2006;

Shareholder Class Action Lawsuit citing Alleged Questionable Lending Practices:

  1. Tripp v. IndyMac Bancorp, Inc., U.S. District Court for the Central District of California, 2007.

For the recently issued CRL report on IndyMac Bank, see IndyMac: What Went Wrong? (How an “Alt-A” Leader Fueled its Growth with Unsound and Abusive Mortgage Lending). subprime lawsuits, subprime lender lawsuits

Sunday, July 13, 2008

Maryland AG Sues Eight In Alleged Equity Stripping, Foreclosure Rescue Scam; Seeks Return Of Homes To Victims

In Baltimore, Maryland, the Maryland Attorney General's office announced yesterday:

  • Attorney General Douglas F. Gansler announced [Thursday] that the Consumer Protection Division has filed a complaint in Baltimore City Circuit Court against a group of individuals and companies(1) alleging they took the equity in consumers’ homes under the guise of providing them with assistance to stop foreclosures.


  • The complaint alleges the defendants offered to help homeowners avoid foreclosure and repair their credit history and financial situations while remaining in their homes. According to the Complaint, the defendants set up fictitious sales of homeowners’ houses throughout the Baltimore-Washington Metropolitan area to investors who, along with the consultants, obtained large fees for participation in the deal. As a consequence of these transactions, the homeowners lost the equity they built up in these properties.

  • The Attorney General’s Office has asked the court to stop the defendants’ unlawful practices, restore property to the injured homeowners and impose fines for violations of the Protection of Homeowners in Foreclosure Act, the Maryland Credit Services Business Act and the Consumer Protection Act. This is the third lawsuit that Attorney General Gansler has brought against alleged foreclosure rescue scams.

Source: Maryland AG Press Release: Attorney General Gansler Announces Consumer Protection Division Files Complaint Against Operators of Alleged Foreclosure Rescue Scam.

(1) The complaint names Rodney Spellen, Jemel Lyles, Brian Boyd, Mid Atlantic Consulting Firm LLC, Absoloot Ventures, Inc., Phillip George, Certified Title & Escrow, Inc., First Choice Property Management Firm, Inc., First Choice Property Management Firm, Sahar Begun Ali, Reggie Simmons, Alan Muniu, Jason Ford and Thuy Thu Nguyan as defendants.