Legal Services Of Northern Virginia To Launch Foreclosure Legal Assistance Project

In Northern Virginia, The Blog of Legal Times reports:

• Legal Services of Northern Virginia (LSNV) is launching a new program designed to help low-income homeowners facing foreclosure. The Foreclosure Legal Assistance Project (FLAP) is designed to provide a range of legal assistance. Potential clients call LSNV to make an appointment to meet with an attorney and housing counselor. The three review the homeowners’ financial information and possible legal solutions. The attorney and housing counselor may also offer advice about options lenders may accept to prevent a foreclosure.

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• FLAP is similar to other programs around the country including the Foreclosure Prevention Pro Bono Project in Maryland and the Foreclosure Prevention Collaborative Initiative in Boston.

For more, see Foreclosure Program to Help Low-Income NOVA Homeowners.

Foreclosure Crisis Has South Florida Legal Services Firm Operating At Full Capacity; May Begin Turning Away Clients In Foreclosure

In Fort Lauderdale, Florida, WFOR-TV Channel 4 reports:

• Legal Aid [Service] of Broward County has spent years as a lifeline for thousands of people needing legal help and dealing with foreclosures. But, the very thing Legal Aid has been fighting may become the latest victim of the continuing foreclosure disaster.

• "Given the volume of foreclosures and the number of people seeking help, it's just becoming ever more impossible to provide legal services to the people that need it," said attorney George Castrataro,(1) who works with Legal Aid. "We haven't seen an increase in funding since this foreclosure event started, yet the number of folks requiring assistance quadrupled, if not even more."(2) The problem Legal Aid faces comes at a bad time for homeowners in Broward County. The latest number showed 27,000 foreclosure actions have been filed in the first six months of 2008.

For the story, see Foreclosure Hurt Legal Aid Agencies (Legal Aid of Broward County is having to get selective of the cases they can help) (read story) (watch video).

For Florida homeowners who fear they may soon be unable to make their mortgage payments or have already missed payments and need help getting an attorney free of charge, try Florida Attorneys Saving Homes toll-free hotline, (866) 607-2187.

(1) According to the story, Castrataro says Legal Aid receives around 250 calls a week from poor and indigent people who need help fighting foreclosure. But, with the manpower and funding problems the agency faces, the agency will have to be more selective.

(2) The situation is just as tough for legal services firms in Northern & Central Florida. See:

• Florida Legal Services Firm Inundated With Foreclosure / Bankruptcy Clients; Campaign On To Raise Operating Funds,
• Central Florida Legal Services Firm Opens Walk-In Clinics To Address Rising Needs Of Homeowners In Foreclosure As Calls For Help Double.

NY Court Denies Tenant Eviction After Foreclosure Sale; Failure To Name, Serve All Occupants As Parties In Foreclosure Action Fatal To Removal Attempt

A February, 2008 lower court decision in Nassau County, New York addressed a situation involving the attempted eviction of four occupants in a home, the title to which was acquired by a mortgage lender in a foreclosure sale that foreclosed the ownership interest of the last owner of record, one Angello Bernard. The court described the four occupants as follows:

• [Kesha] Springer(1) resides in the Premises with her mother, Lecreta Springer, her sister, Cherryann Dalrymple and Cherryann Dalrymple's twelve year old son. She avers that she has lived in the Premises since 1997.(2) The Premises were previously owned by her parents. When Kesha's father died, her mother had trouble making the mortgage payments. To avoid foreclosure, Lecreta Springer transferred the property to Bernard, who refinanced the property.(3) Although Bernard owned the property, Lecreta Springer made the mortgage payments. Lecreta Springer was again unable to make the mortgage payments and the Property was foreclosed. Lecreta Springer and Kesha have been negotiating with the Bank to purchase premises but have been unable to do so.

In denying the foreclosing lender's motion for a writ of assistance to evict the occupants after the foreclosure sale, the court said:

• While a writ of assistance may be issued evicting [Kesha] Springer and Bernard from the property, a writ cannot be issued terminating the occupancy of Lecreta Springer, Cherryann Dalrymple or her son. Lecreta Springer, Cherryann Dalrymple and her son were not named or served as parties in the foreclosure action.(4)

The occupants were represented by attorney Lawrence S. Lefkowitz, Hempstead, New York.

For more, including the court's discussion of the New York law it applied in reaching its decision in this case, see MERS, Inc. v Bernard, 2008 NY Slip Op 50308(U) [18 Misc 3d 1134(A)]; February 19, 2008, Supreme Court, Nassau County.

(1) Along with Angello Bernard, Kesha Springer was named as a defendant in the foreclosure action and served with the foreclosure complaint.

(2) It is important to note that the occupants were living in, and were in possession of, the home prior to the commencement of the foreclosure action. The court's decision in this case may very well have been different had the occupants moved in after the commencement of the action, or more precisely, after the recording of the lis pendens once the action was initiated.

(3) I wonder if this was an equity stripping, foreclosure rescue scam???

(4) Apparently, the fact that one of the home's occupants was only 12 years old was no bar to his due process right to be named as a party in the foreclosure action and be served with the lawsuit. Presumably, if there were more minor children living in the household, they, too, would have been entitled to their due process right to be named and served in the foreclosure action, regardless of age. I wonder how many attorneys for foreclosing lenders ever bother naming and serving any occupants who are minors.

The fact that the foreclosing lender named "John Doe" & "Jane Doe" to designate any of the home's occupants as additional defendants in the foreclosure action was apparently, at least in this court's view, insufficient to cut off their occupancy rights in the home after completion of the foreclosure. For more on the use of "John & Jane Doe" alias when naming unknown tenants in foreclosure actions, see yesterday's post, Failure To Name Tenant In Home Foreclosure Action Thwarts Subsequent Eviction Attempt; Use Of "John Doe" Alias Ruled Ineffective Absent Due Diligence. (I can't help wondering how often some attorneys representing foreclosing mortgage lenders mindlessly utilize the "John & Jane Doe" mechanism to name unknown tenants & occupants without exercising any diligence in attempting to ascertain their actual names - maybe as often as they mindlessly use "lost note affidavits" in cases where they don't have physical possession of the actual promissory note). TenantRentSkimmingAlpha

Failure To Name Tenant In Home Foreclosure Action Thwarts Subsequent Eviction Attempt; Use Of "John Doe" Alias Ruled Ineffective Absent Due Diligence

Last month, a Nassau County, New York trial court ruled that, under the specific facts of the case, the failure by a mortgage lender to name a tenant as a defendant in a home foreclosure proceeding kept the tenant from being subsequently evicted after the foreclosure sale. In addressing the lender's failure to name the tenant in the foreclosure action, the court made these observations (citations footnoted for ease of reading):

• [T]he respondent [tenant] was not properly named as a party in the foreclosure proceedings [...]. "In order to cut off the interest of an occupant of the premises, the occupant must be named as a party in the foreclosure proceedings."(1) The respondent was not named in the foreclosure proceedings and therefore her rights were "not affected by the judgment of foreclosure and sale."(2)

• The respondent, as the sole tenant, is a necessary party to the foreclosure proceeding (see 78 NY Jur. 2d Mortgages §588). As a necessary party who was not named in the foreclosure proceeding, the respondent's rights were "unaffected by the judgment and sale, and the foreclosure sale may be considered void as to the omitted party."(3) Thus, a tenant or occupant who was not named as a party in the foreclosure action retains his or her possessory rights and a right of redemption.(4)

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• The foreclosure action has a designation for "John Doe" so as to include any unknown persons. The fact that the respondent [tenant], as a necessary party, was not named or served in the foreclosure proceeding would not be remedied, even if she, as an unknown person, were considered to be a "John Doe." CPLR 1024 [of the New York statute] permits a plaintiff to proceed against an unknown party but would be inapplicable in regard to the respondent. "Before naming a party as a "John or Jane Doe", the plaintiff must establish that it has made a genuine effort to ascertain the name of the party but has been unable to do so."(5) If the plaintiff knew or could have discovered the actual names of the parties named as "John or Jane Doe" with the exercise of due diligence, then the summons naming such parties as unknowns is jurisdictionally defective.(6)

Representing the tenant was the non-profit firm Nassau/Suffolk Law Services Committee, Hempstead, New York.

For the court decision, see Countrywide Home Loans, Inc. v Williams; 2008 NY Slip Op 51319(U) [20 Misc 3d 1111(A)]; July 1, 2008, District Court Of Nassau County, First District.

(1) Mers, Inc. v. Bernard, 18 Misc 3d 1134(A) [SCt, Nassau County 2008] (citing Douglas v. Kohart, 196 App Div 84 [2d Dept 1921]; and Krotchka v. Green, 121 Misc 2d 471 [Yonkers City Ct, 1983]).

(2) Id. (Citing Polish National Alliance of Brooklyn, U.S.A. v. White Eagle Hall Co., Inc., 98 AD2d 400 [2d Dept, 1983] and Empire Savings Bank v. The Tower Co., 54 AD2d 574 [2d Dept, 1976].

(3) 6820 Ridge Realty, L.L.C. v. Goldman, 263 AD2d 22, 26 [2d Dept, 1999] (see Si Bank & Trust v. Sheriff of the City of New York, 300 AD2d 667, [2d Dept, 2000]).

(4) Id.; and Davis v. Cole, 193 Misc 2d 380 [SCt NY, 2002].

(5) Mers, Inc. supra, citing Tucker v. Lorieo, 291 AD2d 261 [1st Dept, 2002] and Porter v. Kingsbrook OB/GYN Associates, P.C., 209 AD2d 497 [2d Dept, 1994].

(6) Id. citing ABCKO Industries, Inc. V. Lennon, 52 AD2d 435 [1st Dept, 1976].

Convicted Southern California Con Man Found Guilty In Alleged Deed Theft, Rent Skimming Scams

In Los Angeles, California, Fox News 11 reports:

• A Mission Hills man was convicted Monday of 14 felony charges involving real estate foreclosure and investment fraud. A San Fernando Superior Court jury deliberated about an hour before finding 51-year-old James Anthony Rojas guilty of grand theft, forgery and attempting to file false or forged grant and trust deeds. He also was convicted of three misdemeanor counts of rent skimming.

For more, see James Anthony Rojas Convicted in Real Estate Fraud Case.

See also, KHTS Radio AM 1220: Rojas Convicted Of Real Estate Fraud.

For earlier stories, see:

• The trial of James Rojas on fraud and theft charges was underway on last Tuesday,
• Real Estate Advisor Faces 82 New Felony Counts,
• Stevenson Ranch Fraud Victim Reaches Out To Others (Victim of fraud and forgery losing house, looking to talk with other victims).

Judge Places Hold On Foreclosure Sale; Finds It "Shocking" That Plaintiff Sought Judgment While Leading Defendant To Believe Saving Home Was Possible

In New York City, a Staten Island trial court recently invoked its "inherent equitable power over its judgments and decrees"(1) to set aside a previous judgment foreclosing a mortgage and permitting the sale of the subject property as a result of certain conduct engaged in by the foreclosing lender. The effect of the court's action was not to throw out the foreclosure action altogether, but to give the homeowner a couple of more months to determine if a loan modification on her home loan was possible.

According to the court:

• [W]hile defendant [homeowner] engaged in good faith negotiations, plaintiff’s [foreclosing lender's] counsel chose to submit an order directing the sale of the subject property to this court for signature. This is a classic case of the left hand does not know what the right hand is doing. [...] On several occasions defendant represented to this court that she is currently paying a second mortgage on the subject premises. Obviously the owner would not normally pay a second mortgage when she was not paying the first mortgage unless she reasonably believed she was resolving the problem with the first mortgage holder.

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• In this case the plaintiff engaged in conduct that led defendant to believe that the sale of her home was not imminent. The defendant argues and the plaintiff does not deny that the defendant engaged the plaintiff to modify her loan agreement on November 28, 2007.

***

• It is shocking that plaintiff would submit an application for a Judgement of Foreclosure Sale to this court while at the same time leading the defendant to believe a possibility existed to save her home. Defendant further asserts that she engaged in additional telephone conferences with the plaintiff prior to the foreclosure sale date of February 25, 2008. Defendant states that during these subsequent phone calls plaintiff’s attorney never mentioned the impending foreclosure sale of the subject property. Plaintiff does not deny these allegations.

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• Even had the plaintiff offered [evidence that homeowner's income did not support a loan modification,] it does not absolve plaintiff of applying to this court for a judgment from this court while concurrently leading the defendant to believe that modification was possible, especially when she continued paying the second mortgage.(2)

For the court's Decision and Order, see Deutsche Bank National Trust Co. v. White, et al. 2008 NY Slip Op 31906(U); July 2, 2008.

(1) For authority to invoke the court's equitable powers, Richmond County Supreme Court Justice Joseph J. Maltese quoted from, among other cases, the New York Court of Appeals decision in Fisher v. Hersey, 78 NY 387 (1879):

• Courts of equity exercise a supervision of sales made under their decrees, which is not in all cases controlled by legal rules, but may be guided by considerations resting in discretion. They may set aside their own judicial sales, upon grounds insufficient to confer upon the objecting party an absolute legal right to a re-sale. They may relieve against mere mistakes, accidents or hardships, or oppressive or unfair conduct of others, though such conduct may not amount to a violation of law; and where fraud is alleged they may order a re-sale upon facts casting such a degree of suspicion upon the fairness of the sale as to render it, in their judgment, expedient, under all the circumstances, to vacate it, though the alleged fraud may not be clearly established.

(2) In setting aside the Judgement of Foreclosure and Sale, the court stated:

• It is the finding of this court that these actions taken by plaintiff were not maliciously motivated, but were instead careless administrative errors. It is the further finding of this court that this administrative error by the plaintiff’s officers in failing to communicate with their attorneys that the judgment was submitted is a mistake that causes the previous order directing the foreclosure and sale of the subject premises to be patently unfair to the defendant. This court would not have signed that judgment with the knowledge of the foregoing facts. Therefore, this court is setting aside the judgment dated December 21, 2007. A court cannot condone such a practice, even if it is unintentional, by giving it the protection of a judicial order.

Foreclosure Rescue Scams Being Challenged In Staten Island

In New York City, the Staten Island Advance ran a story on three separate incidents of alleged sale-leaseback, foreclosure rescue scams reportedly involving operators AFG Financial in Garden City, Long Island and broker Patrick Jean Baptiste; and a company called Revolutionary Capital and its CEO, Casman Samuel.

Two of the cases are currently being played out in civil litigation; the third case has been referred to the Staten Island District Attorney's office (Richmond County) for possible criminal prosecution. One of the suits reportedly alleges violations of the homeowner's civil rights, fair-housing and truth-in-lending acts when it convinced her to transfer the deed to her property to the company,

For more, see Duped when they're down, then forced out (Quick-fix rescue scams for those in foreclosure are widespread and often exact a terrible toll).