Upstate NY Non Profits Pick Up $700K Grant To Fight Foreclosures

In Buffalo, New York, Business First of Buffalo reports:

• The Western New York Law Center in partnership with HomeFront Inc. has been awarded a $700,000 two-year grant by the New York State Department of Housing and Community Renewal. The funding will be used to address the subprime mortgage crisis in the region.

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• HomeFront and the Western New York Law Center are offering their services free of charge to qualified borrowers. HomeFront will provide counselors who can assist borrowers in developing workout agreements.

• The Center will represent borrowers in cases that cannot be resolved through counseling and in mandatory court settlement conferences, which [pursuant to a new state] law must be scheduled within 60 days of the date legal action is filed with the county clerk.

For more, see Aid for subprime mortgage holders.

Go here for a partial list (by county) of New York not-for-profit organizations that are providing foreclosure prevention services. New York homeowners at risk of foreclosure are encouraged to contact an organization in their area to seek assistance.

Texas Homeowner Files Suit Alleging Race Bias, Truth In Lending Violations In Predatory Refinance

In Baytown, Texas, The Houston Chronicle reports:

• Nanette Lewis refinanced her mortgage to get peace of mind. Instead, she says, she got a bait-and-switch, predatory loan and heartbreak. Now far less naive, the Baytown woman decided to fight back. In a lawsuit she filed against her lenders in federal court last week, she alleges she was targeted for a loan with onerous terms because she's black. Her suit mirrors one filed by the attorney general of Massachusetts and another by the city of Baltimore.

• All three accuse lenders of "reverse redlining" — targeting minority loan applicants for the worst possible mortgage deals. Lewis' lawsuit may be the first of its kind in Texas. She is represented by a legal aid lawyer and seeking primarily, she said, to get the word out about what happened and to remove the lien from her property, though she still would be responsible for repaying the mortgage.

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• When she was laid off, Lewis worried she'd miss a mortgage payment and lose the house. She went to Lone Star Legal Aid to see how she could keep the home safe. Lawyer Sapna Aiyer said she was surprised at Lewis' "horrible, horrible" mortgage terms. Aiyer said the lawsuit cites the federal Home Ownership and Equity Protection Act and the Texas Constitution, which bar lenders from excessive points and fees (more than 8 percent) and from certain changes in loan terms at closing.(1)

For more, see Lawsuit over signing shock (Baytown woman sues lenders, says she was a victim of predatory lending practices because she's black).

For the homeowner's lawsuit described in this story, see Lewis v. Alpha Mortgage, et al.

The non-profit legal services firms representing the homeowner are Texas RioGrande Legal Aid (Austin, Texas; provides free legal services to low-income and disadvantaged clients in a 68-county service area that covers the southwestern third of the state, including the entire Texas-Mexico border region) & Lone Star Legal Aid (Houston, Texas; serves 72 counties in the East Region of Texas and 4 counties in Southwest Arkansas).

For the race bias-related lawsuits referenced in the story filed by Massachusetts & Baltimore City, see:

• Commonwealth of Massachusetts v. H&R Block, Inc., et al.,
• Mayor and City Council of Baltimore v. Wells Fargo Bank, N.A., et al. (8.76 MB).

For a July, 2008 study on Mortgage Lending & Race, see the National Community Reinvestment Coalition Study: Income Is No Shield Against Racial Differences in Lending.

Go here and go here for other posts on alleged race bias in real estate transactions.

(1) The lawsuit alleges violations of Home Ownership and Equity Protection Act (15 U.S.C. §§ 1602(aa) and 1639); the Truth in Lending Act (15 U.S.C. § 1601 et seq. and § 1640(a)); the Equal Credit Opportunity Act (15 U.S.C. § 1691- 1691 (f)); the Fair Housing Act (42 U.S.C. § 3605); and the Texas Constitution, Article 16, §50(e)(2). PredatoryLendingRaceBias

Florida Firm Charged In 14th Civil Suit Brought By Illinois AG Against Foreclosure Rescue Operators

From the Illinois Attorney General's Office:

• [Illinois Attorney General Lisa] Madigan filed suit [last week] in Cook County against Law & Associates LLC, and its managing member, Thomas E. Law, II, alleging the defendants violated the [Illinois] Mortgage Rescue Fraud Act and the [Illinois] Consumer Fraud and Deceptive Business Practices Act by falsely promising to help consumers save their homes after falling behind on their mortgage payments. According to the complaint, the defendants charged consumers up to $1,900 and promised to provide mortgage foreclosure rescue services that they either failed to perform the services or only performed ineffective services. Attorney General Madigan’s Consumer Fraud Bureau has directly received one complaint relating to the defendant and 68 complaints referred from the Better Business Bureau.(1)

For more, see Illinois AG Sues 14th Company For Mortgage Rescue Fraud (Madigan Alleges Florida Company Takes Advantage of Homeowners on the Verge of Losing their Homes to Foreclosure).

For other recent civil actions by other state attorneys general against Law & Associates, see:

• Minnesota: State sues two firms that asked cash for foreclosure assistance (The attorney general says some companies claiming to help in a foreclosure do anything but),
• Florida: State of Florida v. Law & Associates, et al. (alleges an upfront fee foreclosure rescue operation).

(1) According to the Illinois AG's news release, Madigan’s suit asks the court to prohibit the defendants from engaging in mortgage rescue practices. The suit also seeks a civil penalty of $50,000, additional penalties of $50,000 for every violation found to have been committed with the intent to defraud, and a $10,000 penalty for each violation committed against a person 65 years or older. Further, the suit asks the court to rescind the contracts signed as a result of these deceptive practices and offer full restitution to affected consumers. Finally, Madigan’s suit asks the court to order the defendants to pay all costs associated with the investigation and prosecution of the lawsuit.

Maryland Attorney Cops Plea In Metropolitan Money Store Alleged Equity Stripping, Foreclosure Rescue Scam

The U.S. Attorney's Office for the District of Maryland announced yesterday:

• Richard Allison, age 37, of Camp Springs, Maryland, an attorney and employee of the U.S. Census Bureau, pleaded guilty today to conspiracy to commit mail and wire fraud, in connection with a mortgage fraud scheme which falsely promised to help homeowners facing foreclosure keep their homes and repair their damaged credit, announced United States Attorney for the District of Maryland Rod J. Rosenstein.

• According to his plea agreement, Allison became employed by the Metropolitan Money Store located in Lanham, Maryland in December 2005. He provided legal services to: the Metropolitan Money Store, which offered foreclosure consultation and credit services to financially distressed homeowners; the Fordham & Fordham Investment Group, Ltd., a foreclosure consulting and credit servicing business based in Lanham and Greenbelt, Maryland; Burroughs & Smythe Financial Services, Inc., another foreclosure consulting and credit servicing business based in Lanham, Maryland; and several individual officers of the companies.

For more, see Lawyer Pleads Guilty In Metropolitan Money Store Mortgage Fraud Scheme (Conspired to Take Title of Homes from Financially Distressed Homeowners and Secretly Use Home Equity for Personal Benefit).

See also: The Washington Post: Lawyer Pleads Guilty in Metropolitan Money Store Scheme.

To read the original Federal indictment of the alleged perpetrators, see U.S. v. JoyJackson, et al. (available online courtesy of the consumer protection attorneys at The Holland Law Firm, P.C. and the Legg Law Firm).

Go here and go here for other posts on the alleged Metropolitan Money Store foreclosure rescue scam. joyjackson

Some Seniors Look To Pro Bono Attorneys To Undo Damage Done In Real Estate Scams

A recent article in Newsday recounts two stories in downstate New York of elderly victims of real estate scams who have sought help from local attorneys working on a pro bono basis to recover some of what they have been swindled out of.

In a Nassau County case involving a foreclosure rescue scam:

• Attorneys Douglas Good and Jennifer Hillman of the Uniondale firm Ruskin Moscou Faltischek worked pro bono to arrange a settlement for [homeowner Priscila] Nano in which she eventually got back most of the value of her home. Additionally, the "mortgage broker" who scammed Nano has been told by the courts to pay her a $3.5 million judgment, although he has few documented assets.

In a Queens County case involving alleged deed thefts of two homes through forgery from an elderly man suffering from Alzheimer's:

• Artee McKoy, 94, had two homes stolen "out from under him," according to Queens District Attorney Richard Brown (see Queens County DA's news release). [... The two suspects] are charged with multiple counts of grand larceny totaling $800,000 and are out on bail.

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• Ann Goldweber, director of the Elder Law Clinic at St. John's University School of Law, is working for convictions in McKoy's case and to have McKoy's finances made whole again. "Our position is he should get back title to both homes and not be responsible for paying back the mortgage, which is held by HSBC. Anything McKoy signed should be voided because of his lack of competency," said Goldweber.

For the story, see Seniors, be wary of scam artists who target you.

Bankruptcy Court Disallows Creditor Claim, Voids Mortgage Lien Due To Lender's Screw Up In Establishing Chain Of Title

On the Bankruptcy Law Network blog, Massachusetts attorney L. Jed Berliner comments on a 2006 case in which a bankruptcy judge disallowed a mortgage lender's secured claim for a loan it held and voided the lien of the mortgage:

• Foreclosures are being stopped because the purported mortgage holder cannot prove it holds rights to the mortgage. Those cases do not remove the mortgage entirely, but only stop the foreclosure. More can be done.

• Section 506(d) of the Bankruptcy Code will permanently void a mortgage [lien](1) if the claim is disallowed. This can be easier than you think. With so many mortgages being sold and resold, the electronic transfer of the funds moves much faster than the papers. Sometimes the paperwork is never completed.

• In In re Long, 353 B.R. 1 (Bankr D MA 2006) (Somma, J.), the bankruptcy court permanently voided a mortgage where the holder could not prove it held rights to the mortgage.(2)

Source: Missing Assignment Voids Mortgage.

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, Go Here, and Go Here.

(1) In contrast to voiding the actual debt secured by the mortgage lien.

(2) According to the following excerpt from the case, bankruptcy judge ruled that the existence of two critical gaps in the mortgage loan's chain of title from the initial mortgage holder to the last mortgage holder was fatal to the secured creditor's bankruptcy claim (see In re Long, pp. 26-27):

• Portfolio contends that it holds title [to the mortgage in question] by virtue of two assignments: the first from Astrum to Union Mortgage Company, and the second from Resolution GGF OY “as successor in interest to Union Mortgage Company” to Portfolio. The first assignment has been well established: the assignment from Astrum to Union Mortgage Company, having been made and signed by Astrum itself, appears to be valid and in order.

• The second assignment, however, was not executed by Union Mortgage Company, the assignee under the first mortgage. Rather, it was executed by “Foremost Servicing Company, Inc., by Power of Attorney for Resolution GGF OY, Successor in Interest to Union Mortgage Company, Inc.”

• The assignment is effective only if (1) Resolution GGF OY was in fact the successor in interest to Union Mortgage Company with respect to ownership of the promissory note and mortgage and (2) Foremost Servicing Company, Inc. held a valid power of attorney for Resolution GGF OY.

• The assignment itself is not evidence that either of these necessary conditions was satisfied when the assignment was executed. (my emphasis added) Proof that these conditions were satisfied requires evidence extraneous to the assignment. Portfolio submitted no such evidence either with the proof of claim or at the evidentiary hearing.22

• Hence, there are two critical gaps in the Portfolio’s proof that it holds title (my emphasis added). In view of these gaps, I conclude that the Debtor has rebutted the prima facie evidence of the proof of claim, that the burden of proof was thereby shifted to Portfolio to prove that it is the holder by assignment of the promissory note and mortgage, and that Portfolio has failed to carry this burden. Portfolio has failed to establish that it is the holder by assignment of the second mortgage. The Debtor’s objection to the secured claim of Portfolio must therefore be sustained, the claim disallowed, and, in accordance with 11 U.S.C. §506(d),23 the mortgage declared void. missing mortgage foreclosure docs gamma

Georgia Lawmakers Close Class Action Loophole On Little Known Law Allowing Homeowners To Hammer Sloppy Lenders After Paying Off Mortgage

In Atlanta, Georgia, The Atlanta Journal Constitution reports:

• Here's an obscure law that mortgage lenders would probably rather you didn't know about: Georgia statute 44-14-3. The reason is, it can cost mortgage lenders $500 or more if they didn't properly finish the paperwork for a homeowner who paid off his or her loan. The law has been on the books for decades, but because of a recent amendment, more folks are likely to be hearing about it as they pay off their mortgages, refinance or sell their homes.

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• Under Georgia law, lenders are required to notify the county clerk within 60 days after a mortgage is paid off. But about a third of the time, they don't, estimates [title insurance agency president Michael] Watkins, which means his company's employees often see deed records that falsely indicate a property has more than one loan outstanding.

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• As the result of an amendment enacted in May, lenders are now required to notify homeowners who pay off their mortgage that they can collect $500 if their lender doesn't send the proper paperwork to clear up their property title within 60 days. The amendment, to forestall class-action lawsuits against lenders, also requires the homeowner to make that demand in writing after waiting at least 60 days.(1) Georgia law has long allowed homeowners and other real estate owners to demand $500 in damages from lenders who didn't meet the deadline, but most people didn't know about the law, [Atlanta attorney Jennifer] Fitzgerald(2) said.

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• Joe Brannen, president of the Georgia Bankers Association, said the trade group sought the amendment to remove the threat of several class-action lawsuits, agreeing to the extra notification as "part of the negotiation."

For the story, see Little-known law can snag lenders.

(1) Prior to the law's amendment, homeowners weren't required to send a formal written notice demanding that the lender record the satisfaction of mortgage prior to commencing a lawsuit. The requirement of first sending a lender a a written demand before bringing a lawsuit will obviously make the lenders less likely to screw up when complying with their obligations post-mortgage payoff, thereby making it tougher for:

• homeowners to sue the mortgage lenders for their 500 bucks, and
• homeowners' attorneys to obtain court-ordered attorney fee awards, the bill for which has heretofore been footed by the lenders.

(2) Reportedly, Fitzgerald said she has filed "several hundred" lawsuits on behalf of homeowners in recent years. In addition to the $500 the homeowner is entitled to, lenders that fail to comply with the law are also liable for homeowners' legal fees.