FTC Settles Foreclosure Rescue Claims With Four Texas Defendants & Their Companies

The Federal Trade Commission announced this week:

• [F]our Texas defendants and their companies(1) have agreed to settle FTC charges that they deceived homeowners facing foreclosure by falsely claiming they could prevent foreclosure in return for an up-front fee ranging from $500 to $1,200. The settlements bar them from further law violations and require them to pay more than $137,000 in redress for affected consumers.

• According to the Commission’s complaint, in numerous instances, the defendants did not prevent foreclosure for their clients; rather, they often ensured foreclosure by not taking promised actions or taking only minimal steps not calculated to prevent foreclosure. The defendants also increased the threat of foreclosure by inducing consumers to wait passively for weeks rather than contact the lender and explore possible options. In addition, they allegedly did not honor their promise to fully refund all fees if they could not stop foreclosure, which resulted in consumers sometimes losing the fees and their homes.

For more, see FTC Acts Against Two Family-Owned Mortgage Foreclosure ‘Rescue’ Operations.

For more on this case from the FTC, see:

• Stipulated Permanent Injunction and Final Order,
• Original FTC complaint - Federal Trade Commission v. National Hometeam Solutions, LLC, et al.

(1) According to the FTC press release, the defendants, all based in Texas, are Elias H. Taylor and his companies, National Hometeam Solutions, LLC, National Financial Solutions, LLC, and Elant, LLC; Everard Taylor and his company, Evalan Services, LLC; Emanuel Taylor and his company, United Financial Solutions, LLC; and Edwin P. Taylor, Sr., and his company, Nationwide Foreclosure Services, LLC.

Mortgage Lending Industry Dodges Bullet As Federal Appeals Court Strips Homeowners Of Class Action Status In Truth In Lending Lawsuit

Reuters reports:

• A lawsuit brought by a Wisconsin couple who accused a bank of deceptive lending practices and wanted to cancel their home loan has been stripped of class-action status in a victory for U.S. banks. In a 2-to-1 decision, a panel of the U.S. Court of Appeals for the 7th Circuit on Wednesday overturned a lower court ruling that had allowed other borrowers to join Susan and Bryan Andrews as plaintiffs against Chevy Chase Bank FSB.

In its ruling, the 7th Circuit U.S Court of Appeals indicated that it joins two other federal appellate courts(1) in refusing to certify a class action for claims seeking the remedy of rescission under
the Truth in Lending Act, 15 U.S.C. § 1635.

For more, see U.S. court sides with bank in mortgage loan case.

For the court ruling, see Andrews v. Chevy Chase Bank (7th Cir., 9-24-08).

For earlier stories on the Chevy Chase, option ARM class action lawsuit, see:

• The Washington Post: A Fight Over the Fine Print (Chevy Chase Bank Faces Suit Over Adjustable-Rate Mortgages),
• Milwaukee Journal Sentinel: Mortgage lawsuit may have big effect (Couple's low interest rate lasted a month).

(1) see McKenna v. First Horizon Home Loan Corp., 475 F.3d 418 (1st Cir. 2007); James v. Home Constr. Co. of Mobile, Inc., 621 F.2d 727 (5th Cir. 1980). UndoMortgageLoans TILAdelta

Maryland Feds Bag 2nd Guilty Plea In Alleged "Money Store" Foreclosure Rescue Scam

In Greenbelt, Maryland, The Washington Post reports:

• A Lanham man pleaded guilty yesterday to participating in a scheme to defraud people who faced losing their homes because they were behind in their mortgage payments. Clifford McCall, 47, was the president of a financial services firm that prosecutors say aided in the fraud orchestrated by Metropolitan Money Store, a Maryland corporation that did business in the District, Maryland and Virginia. McCall, appearing yesterday in federal court in Greenbelt, pleaded guilty to one count of conspiracy to commit mail and wire fraud.

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• McCall is one of nine people charged in the case and the second to plead guilty since the indictments were announced in June. [...] The unsealed portion of the plea documents does not indicate whether McCall is obligated to cooperate with investigators against the remaining defendants, including McCall's wife, Jennifer McCall, and a daughter, Chandra Jones. Both have pleaded not guilty, as have the other five defendants awaiting trial, including JoyJackson and Kurt Fordham, the husband and wife alleged to have masterminded the scheme.

For more, see Man Pleads Guilty To Fraud Charge in Foreclosure Scheme.

See also:

• Original Federal indictment - U.S. v. JoyJackson, et al.,
• USDOJ news release: President of Financial Services Firm Pleads Guilty In Metropolitan Money Store Mortgage Fraud Scheme (Fraudulently Obtained Almost $2.5 Million in Scheme to Take Title of Homes from Financially Distressed Homeowners and Secretly Use Home Equity for Personal Benefit).

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

More On Mortgage Lenders' Lack Of Legal Standing To Foreclose

In New York City, The Village Voice reported earlier this month:

• [A] series of startling court decisions nationwide have ruled against subprime lenders attempting to foreclose on borrowers after failing to legally establish ownership of the loans in question because they had been 'transferred' multiple times.

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• More and more Judges have demonstrated they are not willing to foreclose on a mortgage when they can't determine where it originated, or who actually owns the loan.

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• [Josh Zinner, co-director of NEDAP, New York Economic Development Advocacy Project] said that after the recent spate of publicity subprime garnered, courts are becoming more open to hearing about abuses in the lending system.

For more, see Fighting Foreclosure: Subprime Borrowers Battle (and Beat) Lenders in Court.

Mortgage Servicer Agrees To $28M Payment To Settle FTC Charges Alleging Unlawful Practices

The Federal Trade Commission announced earlier this month:

• The Bear Stearns Companies, LLC and its subsidiary, EMC Mortgage Corporation, have agreed to pay $28 million to settle Federal Trade Commission charges that they engaged in unlawful practices in servicing consumers’ home mortgage loans. The companies allegedly misrepresented the amounts borrowers owed, charged unauthorized fees, such as late fees, property inspection fees, and loan modification fees, and engaged in unlawful and abusive collection practices. Under the proposed settlement they will stop the alleged illegal practices and institute a data integrity program to ensure the accuracy and completeness of consumers’ loan information.

For more, see Bear Stearns and EMC Mortgage to Pay $28 Million to Settle FTC Charges of Unlawful Mortgage Servicing and Debt Collection Practices.

Go here, go here, and go here for posts on questionable mortgage servicing practices. questionable mortgage servicing practices tactics xero

For the relevant court documents, see:

• Stipulated Final Judgment and Order,
• Plaintiff Federal Trade Commission’s Complaint for Permanent Injunction and Other Equitable Relief.

Hawaii Feds Charge 6th Suspect In Alleged Foreclosure Rescue Scam; Loan Officer, Two Others Agree To Plead Guilty This Week

In Honolulu, Hawaii, the Star Bulletin reports:

• Federal prosecutors have charged a sixth defendant in a mortgage fraud case that displaced two families on Oahu. Paula Galacgac is the unindicted co-conspirator named as P.G. in an indictment returned by a federal grand jury in May charging five others with crimes related to mortgage fraud. Prosecutors charged her Friday and she has agreed to plead guilty this week. Two other defendants, Albert Alimoot and Evan Koizumi, are scheduled to plead guilty [today] before a federal magistrate judge.

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• Galacgac was a loan officer with a mortgage broker company. She identified properties occupied by individuals facing foreclosure and otherwise having financial difficulty, according to court documents. She, along with John Mendoza, Antonio Alcantara Jr., Ira Altwegg, Alimoot and Koizumi, are accused of convincing troubled property owners that they could sell their properties to so-called "straw purchasers" without having to move out.

• The straw purchasers didn't intend to occupy the homes but filled out false loan applications to obtain loans they never intended to repay, according to the indictment.

For the story, see Defendant No. 6 joins mortgage fraud case.

To view the original indictment, see U.S. v. Mendoza, et. al.

The Call Grows For The Right To Legal Counsel In Civil Cases?

The National Law Journal reports:

• Through litigation and legislation, a growing number of private and public interest lawyers across the country are pushing to secure those with low incomes the right to counsel in civil matters, including foreclosures, evictions and child custody cases. Legal aid groups are under-funded and overworked, they argue, and pro bono services aren't enough to fill the gap for the millions who go unrepresented.

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• On the litigation front, attorneys are asking the Ohio Supreme Court to rule that an elderly, low-income couple facing loss of their home through foreclosure has a state constitutional right to counsel at state expense. Hill v. Myers, No. 08-1141. [...] On the legislative front, [... i]n New York City, a proposed bill is pending that would give low-income seniors the right to an attorney in eviction cases and foreclosures.

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• In 2006, the ABA [American Bar Association] adopted a resolution urging governments to provide lawyers in civil cases where "basic human needs are at stake, such as those involving shelter, sustenance, safety, health or child custody."

For more, see Suits, Legislation Over a Civil Right to Counsel Grow Across U.S.