Saturday, November 8, 2008

Judge Voids Tax Lien Foreclosure Sale; Finds Faulty Notice To Owner = No Due Process; Subsequent Purchaser Ordered To Give Back Property

In Bridgeport, Connecticut, The Connecticut Post reports:

  • A Wood Avenue lot seized by the city through foreclosure and sold to a developer must be given back to the original owner, a Superior Court judge ruled last week. Judge John Blawie ruled that because the city did not send notice of the foreclosure to the correct address, its attempt to take property for tax delinquency is null and void.

  • Waikele Properties Corp., the Garden City, N.Y.-based developer that bought the Wood Avenue property from the city after the foreclosure, had begun clearing the property, digging a large hole in the center to build a house.

  • "In this case, the best address for the [defendant] was available right in City Hall. Because city officials did not comply with the notice procedures found in the governing statute," Blawie states in his ruling. "This court finds that due process was not afforded the [defendant] before tax liens on the property were foreclosed."


  • "Because notice of the petition was never mailed to the correct address, the defendants had no opportunity to present their case in court and be heard in its support before the property was taken by the plaintiff for unpaid taxes," the judge said. "At the very least, the defendants were deprived of the opportunity to make payment of any delinquent city property taxes before the court ordered the forfeiture of their property to the plaintiff."

For more, see Foreclosure notice to dead man (Judge orders seized, then sold, land returned to owner).

Go here for other posts on foreclosures involving faulty notifications to property owners. foreclosure faulty notice

Lawsuit Alleges Rent-To-Own, Rent Skimming Scam Led To Foreclosure

In Augusta, Georgia, the Augusta Chronicle reports:

  • Regina Preetorius blames the real estate market crash. A class action lawsuit filed in federal bankruptcy court says something else caused people who did business with her company, S.D.A. & Associates, to lose their investments and face eviction papers -- fraud.


  • [Juan Valencia and Decia Bostic-Valencia] got kicked out of a house in south Augusta last year despite putting nearly $16,000 down, paying $4,000 to "loan broker" Fred Climer and making 12 monthly payments of $976, the lawsuit says. They thought that they were working toward home ownership in a rent-to-own, bond-for-title deal, [their attorney Jack] Long said. Unbeknownst to them, the complaint alleges, S.D.A. took their money while letting an outstanding mortgage on the house go unpaid, leading to foreclosure.(1)

For more, see Fraud involved in home deals, lawsuit claims.

Go here for other posts and updates on this story.

For more on problems with "Rent To Own" and Lease / Option real estate deals, go here and go here.

(1) According to the story, the lawsuit names Mrs. Preetorius, her husband, Charles "Greg" Preetorius, and Mr. Climer as defendants and seeks to create a class of plaintiffs who fell into predicaments similar to the Valencias. rent to own lease purchase option scams yellowstone

Mass AG Brings "Sewer Service" Charges Against Process Server In Civil Suit For Allegedly Failing To Deliver Legal Papers To Parties Named In Lawsuits

From the Massachusetts Attorney General's office:

  • Attorney General Martha Coakley’s Office has filed a lawsuit and obtained a temporary restraining order against Boston-based process server Stokes & Levin, Inc. and its sole officer and director, Darren Stokes, in connection with allegations that Stokes & Levin engaged in a pattern of falsifying service of legal papers and filing those documents with state and federal courts.


  • According to the complaint, [...] Stokes & Levin filed documents on multiple occasions with courts, indicating that it had served documents on the intended recipients, when in fact, Stokes & Levin had not served the documents at all. These alleged actions left individuals exposed to potential liability in cases that they may not have been aware of.

  • Stokes & Levin also allegedly misrepresented in court filings and at court hearings that service of legal documents had occurred, thereby signaling that cases could proceed, when in fact, the intended recipients had not received the documents and were not on notice of the legal proceedings and hearings in which they were expected to participate and attend.

For more, see AG Coakley Obtains Temporary Restraining Order Against Process Server for Making False Representations to Courts.

Go here for other posts on "sewer service" which, according to at least one source, is so named on the theory that the process server simply tosses the legal papers into the sewer instead of attempting to deliver them to the proper party named in the lawsuit. The server then files a sworn statement with the court attesting that the papers were properly served on the named parties. SewerServiceAlpha

Friday, November 7, 2008

Lenders' Problem Of Proving Promissory Note Ownership In Foreclosures Continues

In Sarasota, Florida, a recent column in the Herald Tribune describes the story of a local couple facing foreclosure that illustrates the problem some lenders are having proving in court that they have right to bring a mortgage foreclosure action, because of an inability to present proof of ownership of the promissory note secured by the mortgage.

  • Though there was apparently good cause to foreclose, and though Wells Fargo was represented by a Tampa firm that specializes in mortgage cases, Judge Paul Logan has dismissed the case. Why?

  • [The homeowners' attorney Nina] Perry hadn't claimed the couple had made the payments or soon would. She said that the plaintiff hadn't been able to show it had the right to sue, because there was no proof it owns the mortgage. Such proof isn't always easy now, when so many mortgages have been packaged as securities and sold and resold in bulk to various financial institutions that are often confused themselves about what they own.

  • Perry says the Bradenton case isn't necessarily over. The foreclosure could be filed again, with new evidence or maybe with a new plaintiff. But in the meantime, the owners haven't been kicked out and it may have become a better time for the right plaintiff -- if found -- to choose to make a deal.

For more, see Proving who owns a mortgage isn't easy.

For posts that reference the failure of some mortgage lenders and their attorneys to prove ownership of the promissory note when starting foreclosure actions, Go Here, Go Here, Go Here, and Go Here. missing mortgage foreclosure docs gamma

Lien Stripping Of Subordinate Home Mortgages In Bankruptcy Gaining In Popularity?

In Las Vegas, Nevada, the Las Vegas Business Press reports:

  • Homeowners upside down in their mortgages and facing foreclosure may have a new recourse. The relatively new practice of "lien stripping" is becoming a popular way to get out from under double mortgage payments and sometimes save homes. Not everyone, however, is praising the practice.

  • The lien removal business has increased in recent months as property values continue to sink. At least a handful of local bankruptcy attorneys are performing lien stripping for clients. One is making it a focal point of her practice.
For more, see That LIEN AND HUNGRY LOOK (Mortgage 'stripping' becomes marketing tool for bankruptcy attorneys).

For other posts on homeowners using Federal & state consumer protection statutes to try and undo bad mortgage loans, Go Here, Go Here, and Go Here. UndoMortgageLoans TILAdelta

Some Cash-Strapped Florida Condo Associations Resorting To Rent Skimming For Badly Needed Funds?

In Miami, Florida, the Daily Business Review reports:

  • Members of the board of The Grand condominium north of downtown Miami were increasingly frustrated as they waited for lenders to take over units facing foreclosure. Each month the units were in limbo was a month that desperately needed maintenance fees went unpaid.

  • Finally, the board decided on an unorthodox solution: Be the first to foreclose on the unit, then find a tenant and recover some of the delinquent dues through rents — at least until the lenders take back the unit.


  • Miami attorney Dennis Bedard is advising condo boards he represents to foreclosure on units whose owners are behind on maintenance fees and begin renting out the condos. [...] So far this year, The Grand, a Bedard client, has foreclosed on and rented 12 of 810 condos in the high-rise building at 1717 N. Bayshore Drive.(1)

For more, see Condo Meltdown: Condo boards in quest of cash.

(1) It is quite common for an institutional mortgage to contain an "assignment of rents" clause, which basically says that any rent generated by the property pledged as collateral for a mortgage loan itself shall serve as additional collateral for said loan. While the condo association pocketing the rent and stiffing the mortgage lender in the way described in this story may not be liable on the promissory note for making the mortgage payments, it could nevertheless be violating the terms of the mortgage (ie. by extracting the rent collected from the condo unit, which, technically, is part of the loan collateral, and applying it for its own purposes).

Also, assuming that a mortgage lender could legally considered to be an"owner" of an interest in the property in that it holds a security interest therein, I wonder if a mortgage lender could attempt to invoke Florida's anti rent skimming statute, F.S. 697.08 against a condo association in this type of case.

Thursday, November 6, 2008

Tennessee AG, Memphis Legal Services Firm File Suits Against Upfront Fee Foreclosure Rescue Operator

In Nashville, Tennessee, WTVF-TV Channel 5 reports:

  • The Tennessee Attorney General filed suit Tuesday against a company suspected of charging consumers for services it and its principals have not provided. The lawsuit filed against Tennessee Housing Protection Agency, Inc., alleges violations of consumer protection laws.

  • "With foreclosures in Tennessee going up, we are concerned that homeowners across the state may turn to ‘foreclosure rescue' operations such as this that in some cases offer only false hope," said Tennessee Attorney General Bob Cooper, in a news release.

  • The lawsuit also alleges that the Memphis-based company's name is misleading and deceptive to consumers. The name sounds similar to an agency authorized by the state. The company is not a government agency and is not affiliated with the state.

Source: AG Files Suit Against Foreclosure Rescue Company.

Go here for the WTVF-TV Channel 5 video.

See also:

North Carolina AG Files Suit Against 3 Foreclosure Rescue Operators For Clipping Consumers Out Of Illegal Upfront Fees

From the North Carolina Attorney General's office:

  • Attorney General Roy Cooper is taking legal action to stop three Charlotte area foreclosure rescue companies from charging high fees but failing to save consumers’ homes.(1) [...] Cooper made the announcement at the Better Business Bureau (BBB) of the Southern Piedmont, which has assisted with the cases.

  • Homeowners turn to foreclosure rescue services because it sounds like the solution to all of their problems,” said Tom Bartholomy, president and CEO of the BBB of Southern Piedmont. “We want homeowners to know that anyone who charges you an advance fee for foreclosure help is trying to scam you and is breaking the law.”

  • In 2005, Cooper worked with state legislators to make it illegal for any foreclosure assistance business to collect fees upfront.

For more, see AG Cooper goes after Charlotte foreclosure rescue scams (Firms take struggling homeowners’ money, fail to save their homes).

(1) According to his press release, Cooper announced yesterday that he has filed suit against the following companies and their agents: Robert E. Cassell, Jr., doing business as American Mortgage Assistance in Fort Mill, SC; Home Assure, LLC and its vice president Michael Grieco of Charlotte; and Metrolina Mortgage Relief, LLC and its president Jeffery Mika of Charlotte.

San Diego DA's Office Using Mail To Issue Scam Warnings To Homeowners Facing Foreclosure

In San Diego, California, NBC-TV Channels 7/39 report:

  • Those falling behind on their house payments are increasingly being targeted by scam artists. Authorities say it's a problem that is likely to get bigger as more homeowners face foreclosure. The deputy district attorney's office has moved to protect homeowners, by sending out pamphlets to people who are late paying their mortgage or have received what's called a notice-of-default.

  • "We've seen a lot more activity in people taking advantage of distressed homeowners and we want to make sure they know how they're protected," said Michael Groch, Head of the Economic Crimes Division at the Deputy District Attorney's Office. He said those offering services to help those facing foreclosure: (1) Cannot accept money up-front, (2) Cannot take an ownership interest in the home, (3) Must provide a written contract detailing services offered, including how the contract can be terminated.

  • Groch says not following these guidelines could be a misdemeanor or a felony. They can carry a maximum sentence of up to three years in prison.

For more, see Scam Artists Target Foreclosure Victims (Authorities move to protect distressed homeowners).

Bringing Equity Strippers To Justice May Be Tough Row To Hoe

In Minneapolis, Minnesota, Minnesota Public Radio reports:

  • There's no running count being kept, but observers agree that most of the tens of thousands of Minnesotans scammed by equity strippers, predatory lenders and mortgage fraudsters have not gotten justice. The record for those who try is mixed.

For more, see Thousands of foreclosure scams yield a small number of criminal charges.

Go here for criminal prosecutions of foreclosure rescue operators.

For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.).

Wednesday, November 5, 2008

California AG Files Criminal Charges In Alleged Foreclosure Rescue, Loan Modification Scam That Clipped Homeowners For Up To $5K In Upfront Fees

The California Attorney General's office announced yesterday:

  • California Attorney General Edmund G. Brown Jr. [...] announced the arrests of three members of a fraud ring who preyed on desperate Southern California homeowners by falsely promising to renegotiate their home loans, but instead “ripped them off for thousands of dollars” while their homes fell into foreclosure.


  • California [authorities] arrested Rosa Conrado of San Bernardino, Saul Amador of West Covina, and Jesus Flores of Baldwin Park, believed to be members of the fraud ring. Law enforcement officers have issued arrest warrants for Juan Perez of Grand Terrace, and David Giron of Ontario, who are also suspected to be involved in the scheme. The Attorney General’s Office filed a 39-count complaint that includes multiple grand theft, money laundering and conspiracy charges against these suspects.(1)


  • Loan-modification scams are becoming more and more prevalent across the country, particularly in California,” Attorney General Brown said. “California homeowners should be aware of the warning signs of foreclosure scams, so they don’t fall victim to these cynical schemes.”

For more, see Attorney General Brown Breaks Up Foreclosure Scam Ring.

California AG court documents in this case:

Go here for criminal prosecutions of foreclosure rescue operators.

(1) The arrests came after an investigation into First Gov, also operating as Foreclosure Prevention Services, uncovered that the company was soliciting hundreds of homeowners with mail flyers offering to help them stop the foreclosure process on their homes. The scammers falsely told homeowners that they would renegotiate their mortgages, reduce monthly payments, and transfer any delinquent loan amounts to the renegotiated principle. The company demanded an up-front fee, ranging from $1,500 to $5,000, to participate in the loan-modification program. The company also told the victims to stop any mortgage payments or communications with their lender, claiming they would interfere with the company’s effort to negotiate the loan modification.

Ohio Man Guilty Of 26 Counts In Foreclosure Rescue, Rent Skimming Scam; Allegedly Conned 14 Homeowners Into Belief He Would Renegotiate Home Loans

In Newark, Ohio, the Newark Advocate reports:

  • As the guilty verdicts piled up -- 26 in all -- Harry Blausey sank further into his chair in Common Pleas Judge Thomas Marcelain's courtroom. [...] Blausey was facing 27 felony counts connected to a scheme he perpetrated on Licking County homeowners facing foreclosure.

  • He was found guilty of deceiving those couples and individuals into signing over deeds to their homes on the premise Blausey would negotiate with their mortgage companies to avoid defaulting on their home debts. Testimony and documentation from the prosecution claimed Blausey had little, if any, communication with the lenders and profited by renting out the homes until they were sold at auction.


  • He was convicted of [...] nine counts of grand theft, 13 counts of securing writings by deception and four counts of theft.(1)

For more, see Blausey guilty on 26 counts (Businessman convicted on all but most serious charge).

See also, The Columbus Dispatch: Newark man guilty in mortgage-fraud case.

Go here for other posts on foreclosure rescue operator Harry Blausey.

Go here for criminal prosecutions of foreclosure rescue operators.

(1) According to the story, Licking County Assistant Prosecutor Duke Frost said the potential exists to press forward with another indictment. "There are other pending allegations of similar conduct involving this defendant, and they'll be handled in the same manner as in any other case," he said.

Prince George's County Mortgage Foreclosure Fraud Unit Intent On Criminally Prosecuting Scammers

In Prince George's County, Maryland, The Sentinel reports:

  • [I]n the last two months and on several occasions, [Prince George's County] State's Attorney Glenn Ivey has emphatically stated his intent to aggressively surface and prosecute mortgage scammers who have defrauded new homeowners. "Not in this county, not in this state," is the mantra under which the new Division operates, said its staff.


  • [The Economic Crimes Unit of Ivey's office] is screening more than 10 calls a day, making a distinction between bad financial decisions vs. fraud for theft and fraud for profit and then investigating and prosecuting the most egregious first.

  • While Montgomery County's State's Attorney's office is also prosecuting mortgage fraud, Prince George's is the only jurisdiction with a dedicated unit, said Assistant State's Attorney Doyle Niemann, also of the Division, some weeks ago.

For more, see Briefing sheds light on mortgage fraud.

Tuesday, November 4, 2008

Nantucket's "Joe The Plumber" Sues Lenders To Back Out Of Bad Loans

On Nantucket Island, Massachusetts, The Inquirer and Mirror reports:

  • [A]fter falling behind on his home mortgage last month, Joe Ciarmataro, an island plumber, has sued two mortgage companies in Nantucket Superior Court, claiming they knew he could not afford the $790,000 loan he took out to purchase a condominium on Witherspoon Drive in 2007.

  • The lawsuit alleges “unfair and deceptive acts and practices” by Connecticut-based Master Key Mortgage as well as a Texas corporation, American Home Mortgage Servicing, and that Ciarmataro was defrauded by the two companies.

  • Filed last week in Nantucket Superior Court, the lawsuit is illustrative of the national debate over whether predatory lenders or irresponsible borrowers are more responsible for the meltdown in the housing market and the dramatic rise in foreclosures.

  • Ciarmataro is seeking to have a judge rescind the mortgage altogether, in addition to compensation for losses, interest costs and attorney’s fees.

For more, see Nantucket’s own “Joe the Plumber” sues mortgage co. for unfair practices.

California Judge's Use Of "Rocks for Brains," "Obnoxious" & Other Remarks Towards Attorneys Yields Public Scolding By State Judicial Watchdog

In San Bernardino, California, The Associated Press reports:

  • A retired San Bernardino County judge has been publicly scolded by California’s judicial watchdog for rude, demeaning comments to attorneys. In one case, Superior Court Judge Paul Bryant Jr. suggested a prosecutor had “rocks for brains” for agreeing to a settlement. He called another lawyer “obnoxious” in front of his client.

  • The Commission on Judicial Performance admonishment Monday said Bryant failed to be “patient, dignified and courteous toward individuals he dealt with.” Bryant says only that it’s been a pleasure to serve the courts.

  • Bryant was a judge at the Rancho Cucamonga courthouse for 18 years before retiring. Now, he often serves as a retired judge on assignment in San Bernardino civil courtrooms.

Source: Judge scolded for rude courtroom remarks.

To view the admonishment, see In re Bryant - Decision And Order Imposing Public Admonishment.

For other posts on the questionable judgment exercised by some of the members of our esteemed judiciary, go here and go here. knuckleheaded judges zeta

Hip Hop Artist Alleges Forged Deed To Property In Baltimore Bankruptcy Court Proceeding; Seeks To Void Title Transfer

In Baltimore, Maryland, The Associated Press reports:

  • Usually you wouldn't think of a member of Salt-N-Pepa being shy at all in front of an open mic. But when the mic is on a witness stand at a court in Baltimore and the issue is money, you can understand why Sandra "Pepa" Denton said she was a little nervous. The judge told her to "take a deep breath and relax" to calm her nerves.

  • Denton was in court in a case that pits her against her ex-husband and his new wife over a property sale. She claims Emora Horton bought the home in Baltimore after a friend forged a signature on a deed. Denton wants the property returned to her. The defendants deny taking part in any fraud or forgery. A ruling is expected in January.

Source: Member of Salt-N-Pepa in Court.


See also, The Maryland Daily Record, which reported:

  • Whether Denton will get that property back, with or without liens, turns on the legal distinction between fraud and forgery, lawyers in the case say. “It really lives or dies on the forgery issue,” U.S. Bankruptcy Judge Robert A. Gordon said to Denton’s attorney, J. Michael Broumas.


  • Attorneys for the entities that made loans [secured by the property] argue [the deed signer's] actions instead constitute fraud [as opposed to forgery], since [the deed signer] signed his own name and made no attempt to conceal his identity. Under such a scenario, the property might still be Denton’s but would come with the lenders’ considerable liens, Broumas said. [...] Judge Gordon said his own research centered on a case out of the District of Columbia, McNairy v. Baxter, in which a forged limited power of attorney document made a subsequent deed ineffective.

For more, see:

IRS Eases Tax Rules On Mortgage Securtization Trusts That Engage In Loan Modifications Aimed At Reducing Foreclosures reports:

  • Many pools of mortgages are held in tax advantaged entities that qualify for tax purposes as REMICs that avoid double taxation under the Internal Revenue Code. But for an entity to qualify as a REMIC, the pooled mortgages must be basically treated as static pools of mortgage loans. Loan modifications could force a REMIC to lose its favorable tax treatment, and once REMIC status is lost, it is lost forever. This means that REMIC efforts to minimize foreclosures through loan modifications can threaten favorable tax status of the REMIC and its owners.

  • To address these risks, the Internal Revenue Service and U.S. Department of the Treasury have taken actions to expand safe harbor rules that apply to REMICS. Through a number of recently issued revenue procedures, the IRS has provided assurances that REMICs can retain their favorable tax status when mortgage servicers make certain loan modifications as part of programs aimed to reduce foreclosures. The safe harbors allow REMICs to engage in certain, previously prohibited activities that in the past could have resulted in significant tax penalties.

For more, see Relaxed REMIC Requirements: IRS And Treasury Efforts To Address The Subprime Mortgage Crisis.

Monday, November 3, 2008

NJ To Take Statewide Approach To Mandatory Mediation Program In Owner-Occupied Home Foreclosure Actions, State Chief Justice Says

The New Jersey Judiciary announced:

  • [New Jersey Supreme Court] Chief Justice Stuart Rabner [last week] announced the roll-out of a statewide Judiciary program to assist homeowners in foreclosure actions. The program will provide mediators to help homeowners and lenders negotiate with one another and try to work out agreements to avoid foreclosures.

  • Chief Justice Rabner said, “While the courts must remain neutral in all foreclosure matters, it is in everyone’s best interest to have a forum where homeowners facing foreclosure have the opportunity to negotiate to save their homes. Our goal is to get lenders and borrowers to meet at the table and work out a mutually beneficial arrangement. I encourage continued cooperation among the courts, lenders, borrowers, and the bar as we address the increasing number of foreclosure actions in New Jersey in today’s difficult economic times.”

  • Under the program, the courts will require mediation in all cases in which homeowners contest owner-occupied foreclosure actions. Volunteer mediators will meet with eligible homeowners and their lenders in an effort to resolve the foreclosure action and renegotiate the terms of mortgage agreements.

For more, see Judiciary Announces Foreclosure Mediation Program to Assist Homeowners at Risk of Losing Their Homes.

Florida Court To Impose Formal Conciliation Process Upon Lenders In Home Foreclosure Actions

In Sarasota, Florida, the Herald Tribune reports:

  • As more and more Florida homeowners slip into foreclosure, the law firms handling the cases for the banks have become harder to reach, those familiar with the system say. Homeowners and their attorneys, and even judges, cannot get a call back, making it impossible to dispute a debt or work out deals other than foreclosure until the case is in front of a judge. "The lenders are just not talking to them," Chief Circuit Judge Lee Haworth said.

  • Now, Haworth and other 12th Judicial Circuit court judges are going to force those law firms to meet with the homeowner within 45 days for a frank discussion on alternatives to foreclosure. Those discussions could center around refinancing, forgiving part of the debt or clarifying the amount required to reinstate or pay off the loan.

  • The Homestead Foreclosure Conciliation Program will start in December. It aims to keep people in their homes and reduce the strain on the court system from foreclosure cases, which are on pace to double this year compared with 2007. The program applies only to property registered as a primary residence under the homestead exemption. Local bar associations and legal aid organizations agreed to provide some attorneys to assist those homeowners during the meeting at no cost.

  • The law firms representing lenders are also required to notify any homeowner of the program, contact them and invite them to participate. The large increase in foreclosures has strained almost every part of the foreclosure process, from serving legal papers to finding courtroom time. Coming to a solution within 45 days would avoid protracted legal battles and reduce the number of cases going through the system.

  • Those long legal battles seem to be the only way to get law firms representing banks to return calls, Miami-based foreclosure attorney Rick Neustein said. "Most of the time they don't want to talk to us until they see this thing is being hotly contested," Neustein said. "They don't get serious until we're defending the foreclosure for nine months."

  • Haworth said the main issue is only a small number of law firms handle the foreclosure cases for the banks for small legal fees, so they want to put as little time as possible into a case.(1) If the law firms do not comply with the new order, they will face courtroom sanctions that would cost them money, since it would take their attorneys more time to handle the cases.(2)

For the story, see Lenders told they can't hide (if there's a problem with this link, try here).

For more on the new foreclosure procedural rules in Florida's 12th Judicial Circuit, see:

Go here for Notice To Attorneys Filing Foreclosure Actions in Florida's 12th Judicial Circuit.

(1) Go here for more on so-called Assembly Line, Foreclosure Mill Lawyering in foreclosure actions.

(2) According to the story, the law firms for lenders would not be able to settle the case through a summary judgment, a quick resolution to cases. The lender attorneys would no longer be able to appear at hearings over the telephone. And that lender's cases would be assigned the lowest priority for court hearing times, which may delay the case for an extended period. ForeclosureMillAttorneysAlpha

Sunday, November 2, 2008

Lawmaker To Attempt To Lift State Homestead Exemption Limit To Attract Wealthy To Move To Nevada

Buried at the end of a story on a proposed new law to safeguard Nevada tenants unwittingly renting homes from landlords in foreclosure, the Las Vegas Sun reports:

  • [L]egislators and local governments so far have asked that 633 bills be drafted for introduction next year. [One] recent request comes from Assemblyman Morse Arberry, D-Las Vegas, who wants to remove the cap of $550,000 on homestead exemptions.(1)

  • The law protects the forced sale [except for mortgage foreclosures] of a home whose value is up to $550,000 to recover a debt if the property has been designated as a homestead. The 2007 Legislature raised the homestead exemption from $350,000 to $550,000.

  • And Arberry said he is working on a bill to eliminate the cap as a way to attract rich people to locate in Nevada. Otherwise if these affluent people had a $1 million home that was designated as a homestead, it would be shielded from judgments to collect any debt [except home mortgages and certain other debts].

  • The present law provides that if the home is worth more than $550,000, a judge must appoint three independent appraisers to value the home. If it exceeds the homestead exemption permitted, the judge must decide whether any part of the property can be sold to satisfy the debt without “material injury” to the home. If the judge decides the property can not be divided, than [sic] he can order home sold and the money divided between the creditor and the homeowner.

For the story, see Bill to protect renters in foreclosure cases.

(1) If successful, Nevada will be eligible for induction into the Homestead Exemption Hall of Fame, joining the great states of Florida, Texas, Oklahoma, Kansas, and Iowa who likewise impose no dollar limit on the amount of home equity (ie. loosely defined for homestead exemption purposes, as home value less existing home mortgages, unpaid real estate taxes, IRS tax liens, and unpaid home improvement costs - check the relevant state law for the exact specifics) a state resident can play "keep away" with when fending off unsecured general and judgment creditors seeking repayment of debts they've been stiffed on. There are, however, limitations based on property size, such a limit may depend on whether the home is located within or outside of an incorporated municipality (or, in the case of Texas, whether state law considers the homestead to be an "urban homestead" or a "rural homestead").

Extortion Sting Results In Charges Against Maryland Man For Allegedly Trying To Squeeze $5K From Winning Bidder At Foreclosure Sale

In Elkton, Maryland, The Associated Press reports:

  • The Cecil County Bureau of Investigation has charged an Edgewood man with extortion for allegedly demanding money from the winning bidder in a home foreclosure auction. Authorities say 48-year-old Frank Wilhelm telephoned the winning bidder one day after the auction and threatened to challenge the sale unless he was paid $5,000. Lt. Bernard Chiominto says challenging the sale would have frozen the bidder's payment, possibly for months.

  • Wilhelm was arrested last Thursday in Perryville, after the winning bidder contacted police and helped them set up a sting. According to Chiominto, Wilhelm told investigators that he had heard that winning bidders "usually pay up" when threatened with a contested auction sale.

Source: Edgewood man faces extortion charge.

Professional Conflicts Of Interest An Obstacle For Some Attorneys In Pro Bono Foreclosure Fight

American Banker reports:

  • As the mortgage crisis deepens, lawyers around the country are volunteering to help distressed homeowners avoid foreclosure, but those with the most relevant experience often face the potential for conflicts of interest involving lender clients. [... G]etting involved has [...] created a delicate situation for some of the largest law firms, which have the most staff to contribute to such projects — but often represent major lenders.


For more, see Homeowner Legal Aid Programs Address Conflicts.