Saturday, February 21, 2009

Nevada Regulators Have Hands Full With Complaints About Foreclosure Consultants, Loan Modification Firms; Lawmakers Look To Close Loopholes

In Reno, Nevada, the Reno Gazette Journal reports:

  • [E]very day, agencies such as the state's Mortgage Lending Division and Consumer Affairs Division are contacted by home owners victimized by fraud. [...] Minorities who have difficulty communicating in English are especially susceptible, said Joe Waltuch, commissioner of the State of Nevada Mortgage Lending Division.

  • "Right now we have a lot of complaints," Waltuch said. "We get complaints daily regarding people who have paid money up front to either a foreclosure or loan modification specialist who claimed they would deal with the lender and help the borrower stay out of default or modify the terms of their mortgage. There have already been a couple of arrests and warrants outstanding for people."


  • Waltuch said his state office has the statutory authority to go after foreclosure consultants but not loan modification consultants who work with properties not in foreclosure. He said his agency work in a roundabout way using loopholes available through the Consumer Affairs Division. "It's a Band-Aid," said James Campos, commissioner of the Consumer Affairs Division. "There needs to be a more specific and targeted law in the books." On Feb. 11, the Assembly Commerce and Labor Committee held its first hearing on a bill sponsored by Assemblyman Marcus Conklin, D-Las Vegas, to address regulation of foreclosure and loan modification consultants, including the need for licensing.(1)

For more, see Struggling homeowners: Beware of scams.

(1) It may be that the state bar association should begin looking into some of these loan modification firms and foreclosure consultants. To the extent these operators are purporting to review homeowners' loan documents looking for violations of federal and state consumer & lending laws, those activities may constitute the unauthorized / unlicensed practice of law.

To the extent non-lawyer loan modification firms are teaming up with lawyers to provide these services, some activities (ie. using a person or organization to recommend or promote the lawyers’ services, aiding nonlawyers in the unauthorized practice of law, improperly sharing legal fees with nonlawyers, failing to seek lawful objectives of clients by failing to assess their individual needs, handling legal matters without adequate preparation, etc.) may constitute violations under the state bar's ethics rules.

For evidence of activities of attorneys involved with non-attorney loan modification firms that have caught the attention of state bar asociations, see:

Minneapolis Non-Profit Solicits, Obtains Sale-Leaseback Offer On Building To Bail Itself Out Of Possible Foreclosure; City Debt To Be Paid In Full

In Minneapolis, Minnesota, Finance and Commerce reports:

  • St. Paul-based Wellington Management Inc. has a deal to buy the Minneapolis home of the nonprofit Green Institute, an environmental consultant/salvage center that has struggled to stay current on loans from the city and its bank. With the sale of the building, “We’ll be completely out of debt, which will be nice,” said Jamie Heipel, executive director of the Green Institute.


  • The Green Institute was behind on payments to the city on two loans: a construction loan and a delinquency loan, related to the nonprofit’s ongoing efforts to keep up with payments. As the city of Minneapolis grew frustrated with the nonprofit’s financial struggles, it weighed options including foreclosure on the property.


  • Heipel said that the Green Institute will remain a tenant in the building, leasing about 2,200 square feet of office space and about 6,500 square feet for its ReUse Center, a retail operation that sells salvaged building supplies.

  • The Green Institute retained Kraus-Anderson Realty to broker the property. Heipel said the nonprofit ultimately drew three offers on the building, and added that the Green Institute accepted the offer from Wellington last week.(1)

For more, see Green Institute to sell, lease back headquarters from Wellington (Minneapolis-based environmental nonprofit has struggled to stay current on loans).

(1) The fact that the Green Institute hired a real estate broker to market the property (presumably as a sale-leaseback opportunity for an investor), and the fact that it obtained three (presumably arms-length) offers from which to select are factors that could weigh heavily against it if, a couple of years down the road (especially if the building's value at that time is much higher than the current sale price), it changes its mind and decides it wants the title to its building back, and goes to court to try and have the sale-leaseback arrangement recharcterized as an equitable mortgage. For a case where a court ruled against a property seller attempting to invoke the equitable mortgage doctrine four years after the sale in order to reacquire a property it sold for fair value, and which had increased in value subsequently thereafter, see Hamud v. Hawthorne, 52 Cal. 2d 78; 338 P.2d 387; (Cal. 1959).

Subject Matter Jurisdiction, Lack Of Standing & Void Judgments

The following cases have been compiled here as an attempt to understand how differing states view the relationship between: (1) a plaintiff in a lawsuit lacking standing to bring the action, and (2) the court in which such a lawsuit is filed lacking subject matter jurisdiction to entertain the suit by reviewing the comments of the various courts in some relatively recent decisions. All cases are available free online at and/or at LexisOne Free Case Law (each service may require free registration).

Unless otherwise noted, any bold text contained below is my own emphasis, not contained in the text of the case, which I add for ease in my future reference.


Alabama: Cadle Co. v. Shabani, 1070116, 2008 Ala. LEXIS 189 (2008):
  • Standing is "'"[t]he requisite personal interest that must exist at the commencement of the litigation."'" Pharmacia Corp. v. Suggs, 932 So. 2d 95, 98 (Ala. 2005) (quoting In re Allison G., 276 Conn. 146, 156, 883 A. 2d 1226, 1231 (2005), quoting in turn H. Monaghan, Constitutional Adjudication: The Who and When, 82 Yale L.J. 1363, 1384 (1973)). "When a party without standing purports to commence an action, the trial court acquires no subject-matter jurisdiction." State v. Property at 2018 Rainbow Drive, 740 So. 2d 1025, 1028 (Ala. 1999). The jurisdictional defect resulting from the plaintiff's lack of standing cannot be cured by amending the complaint to add a party having standing. Id. ("[A] pleading purporting to amend a complaint, which complaint was filed by a party without standing, cannot relate back to the filing of the original complaint, because there is nothing 'back' to which to relate."). See also Grand Lodge of Fraternal Order of Police v. Vann, 344 So. 2d 1212, 1214 (1977) ("We are unaware of any case where any court has reached a substantive issue absent a named plaintiff who has standing at the time the action was filed.")
  • When the absence of subject-matter jurisdiction is noticed by, or pointed out to, the trial court, that court has no jurisdiction to entertain further motions or pleadings in the case. It can do nothing but dismiss the action forthwith. "'Any other action taken by a court lacking subject matter jurisdiction is null and void.'" Rainbow Drive, 740 So. 2d at 1029 (quoting Beach v. Director of Revenue, 934 S.W.2d 315, 318 (Mo. Ct. App. 1996)).
Hawaii: Hawai'i Med. Ass'n v. Hawai'i Med. Serv. Ass'n, 113 Hawai'i 77, 94, 148 P.3d 1179, 1196 (2006):

  • "This court has long acknowledged that standing is that aspect of justiciability focusing on the party seeking a forum rather than on the issue he or she wants adjudicated." Sierra Club v. Hawai'i Tourism Auth., 100 Hawai'i 242, 271, 59 P.3d 877, 906 (2002) (brackets, citation, and internal quotation marks omitted); Warth v. Seldin, 422 U.S. 490, 498, 95 S. Ct. 2197, 45 L. Ed. 2d 343 (1975) ("In essence the question of standing is whether the litigant is entitled to have the court decide the merits of the dispute or of particular issues."). It is well-settled that courts must determine as a threshold matter whether they have jurisdiction to decide the issues presented. Pub. Access Shoreline Hawai'i v. Hawai'i County Planning Comm'n, 79 Hawai'i 425, 431, 903 P.2d 1246, 1252 (1995).

  • If a party is found to lack standing, the court is without subject matter jurisdiction to determine the action. See Pele Defense Fund v. Puna Geothermal Venture, 77 Hawai'i 64, 67, 881 P.2d 1210, 1213 (1994). Thus, "[i]f a court lacks jurisdiction over the subject matter of a proceeding, any judgment rendered in that proceeding is invalid." Bush v. Hawaiian Homes Comm'n, 76 Hawai'i 128, 133, 870 P.2d 1272, 1277 (1994).

  • "In determining whether [the plaintiff] has standing, we look solely to whether [the plaintiff] is the proper plaintiff in this case, without regard to the merits of the allegations [in the complaint]." Hawai'i Thousand Friends v. Anderson, 70 Haw. 276, 281, 768 P.2d 1293, 1298 (1989). Further, although lack of standing is raised by the defendant, the plaintiff bears the burden of establishing that he or she has standing. Sierra Club, 100 Hawai'i at 250, 59 P.3d at 885.
Massachusetts: Southwick v. Planning Bd., No. 07-P-251., 72 Mass. App. Ct. 266; 891 N.E.2d 239; 2008 Mass. App. LEXIS 783, (Mass App. Ct. July 24, 2008):

  • The judge may have been under the impression that the plaintiff's standing remained a live issue at the rule 60(b) stage, as reflected by his observation that the lack of standing was not a mere technical defect in the plaintiff's lawsuit, but rather an issue of subject matter jurisdiction. See Planning Bd. of Marshfield v. Zoning Bd. of Appeals of Pembroke, 427 Mass. 699, 703, 695 N.E.2d 650 (1998). However, standing is an issue of subject matter jurisdiction only in the sense that it is a criterion that must be met in order for the court to exercise jurisdiction, when the court otherwise is competent to decide the case. See Sarin v. Ochsner, 48 Mass. App. Ct. 421, 424, 721 N.E.2d 932 (2000). See also Nickerson v. Zoning Bd. of Appeals of Raynham, 53 Mass. App. Ct. 680, 681 n.2, 761 N.E.2d 544 (2002). Once a court has rendered judgment, and opportunities for appeal have been exhausted, a subsequent showing that the plaintiff did not, in fact, have standing does not mean that the judgment is void and must be vacated; the judgment is immune from postjudgment attack unless the court's exercise of jurisdiction constituted a "clear usurpation of power." Sarin v. Ochsner, supra at 424, quoting from Lubben v. Selective Serv. Sys., 453 F.2d 645, 649 (1st Cir. 1972).

  • Here, the court undoubtedly was competent to decide the case. See G. L. c. 41, § 81BB (permitting appeals from planning board decisions concerning subdivision plans to be brought in Superior Court or Land Court). Furthermore, until the trust's right of redemption was foreclosed, the plaintiff was entitled to rely upon the trust's interest in the lot as a basis for standing. See Hanna v. Framingham, 60 Mass. App. Ct. 420, 425, 802 N.E.2d 1061 (2004). Thus, even assuming that the plaintiff had no alternative basis for standing, there was, at most, an error in the continued exercise of subject matter jurisdiction after September 22, 2003, when the right of redemption was foreclosed, but there was no "clear usurpation of power" by the court. See generally Harris v. Sannella, 400 Mass. 392, 395, 509 N.E.2d 916 (1987); O'Dea v. J.A.L., Inc., 30 Mass. App. Ct. 449, 455, 569 N.E.2d 841 (1991).

Mississippi: Kirk v. Pope, NO. 2005-CA-02164-SCT, 973 So. 2d 981; 2007 Miss. LEXIS 692 (Miss. 2007):

  • A real-party-in-interest defense must be timely and may be waived if tardily asserted. Gogolin & Stelter v. Karn's Auto Imports, Inc., 886 F.2d 100, 102 (5th Cir. 1989); see also Rogers v. Samedan Oil Corp., 308 F.3d 477, 483-84 (5th Cir. 2002) (failure to raise the assertion that plaintiff was not the real party in interest until day before trial constituted waiver); United HealthCare Corp. v. American Trade Ins. Co., 88 F.3d 563, 569 (8th Cir. 1996) (assertion at pretrial conference constituted waiver); Hefley v. Jones, 687 F.2d 1383, 1388 (10th Cir. 1982) (assertion sixteen days before trial is untimely). Because the earliest Pope alluded to a possible real-party-in-interest defense was after jury selection and just prior to the start of the trial, we find that Pope waived any real-party-in-interest defense.

  • While Pope waived any real-party-in-interest defense, standing is a "jurisdictional issue which may be raised by any party or the Court at any time." City of Madison v. Bryan, 763 So. 2d 162, 166 (Miss. 2000) (citing Williams v. Stevens, 390 So. 2d 1012, 1014 (Miss. 1980)).P23. To have standing, this Court has stated, "there must be a present, existent actionable title or interest which must be completed at the time the cause of action is filed." Id. at 165 (quoting Crawford Commercial Constructors, Inc. v. Marine Indus. Residential Insulation, Inc., 437 So. 2d 15, 16 (Miss. 1983)). Kirk had a valid cause of action for breach of contract when he first filed suit and therefore initially had standing to pursue the claim. However, once Kirk filed his bankruptcy petition, he could have standing only if there was a proper ratification by the bankruptcy trustee.

Missouri: Chipman v. Counts, 104 S.W.3d 441, 448 (Mo. App. 2003):

  • Respondent is correct in stating that "standing is a jurisdictional matter antecedent to the right to relief." Farmer v. Kinder, 89 S.W. 3d 447, 451 (Mo. banc 2002) (citing State ex rel. Williams v. Marsh, 626 S.W.2d 223, 227 n.6 (Mo. banc 1982)). To determine a party's standing is to "ask[] whether the person[] seeking relief [has] a right to do so." Id. (citing State ex rel. Twenty-Second Judicial Circuit v. Jones, 823 S.W.2d 471, 475 (Mo. banc 1992)). If a court determines a party lacks standing, it "must dismiss the case because it does not have jurisdiction of the substantive issues presented." Id. (citing State ex rel. Ryan v. Carnahan, 960 S.W.2d 549, 550 (Mo.App. E.D. 1998); Rule 55.27(g)(3)).

Missouri: Farmer v. Kinder, 89 S.W. 3d 447 (Mo. banc 2002):

  • Standing is a jurisdictional matter antecedent to the right to relief. State ex rel. Williams v. Marsh, 626 S.W.2d 223, 227, n.6 (Mo. banc 1982). It asks whether the persons seeking relief have a right to do so. State ex rel. Twenty-Second Judicial Circuit v. Jones, 823 S.W.2d 471, 475 (Mo. banc 1992). Where, as here, a question is raised about a party's standing, courts have a duty to determine the question of their jurisdiction before reaching substantive issues, for if a party lacks standing, the court must dismiss the case because it does not have jurisdiction of the substantive issues presented. State ex rel. Ryan v. Carnahan, 960 S.W.2d 549, 550 (Mo. App. 1998); Rule 55.27(g)(3). Lack of standing cannot be waived. Foreclosure for Delinquent Land Taxes by Action in REM, 947 S.W.2d 90, 93 (Mo. App. 1997).

Nebraska: Myers v. Neb. Inv. Council, No. S-05-532., 272 Neb. 669; 724 N.W.2d 776; 2006 Neb. LEXIS 170 (December 8, 2006):

  • Standing is the legal or equitable right, title, or interest in the subject matter of the controversy, which entitles a party to invoke the jurisdiction of the court. Adam v. City of Hastings, 267 Neb. 641, 676 N.W.2d 710 (2004). Standing is fundamental to a court's exercise of jurisdiction, and either a litigant or a court before which a case is pending can raise the question of standing at any time during the proceeding. Smith v. City of Papillion, 270 Neb. 607, 705 N.W.2d 584 (2005). Standing is a jurisdictional component of a party's case because only a party who has standing may invoke the jurisdiction of a court. Chambers v. Lautenbaugh, 263 Neb. 920, 644 N.W.2d 540 (2002). As an aspect of jurisdiction and justiciability, standing requires that a litigant have a personal stake in the outcome of a controversy: a personal stake that would warrant invocation of a court's jurisdiction and justify the exercise of the court's remedial powers on the litigant's behalf. Id.

Nebraska: Adam v. City of Hastings, 267 Neb. 641, 676 N.W.2d 710 (2004):

  • Standing is the legal or equitable right, title, or interest in the subject matter of the controversy which entitles a party to invoke the jurisdiction of the court. Crosby v. Luehrs, supra; Hradecky v. State, 264 Neb. 771, 652 N.W.2d 277 (2002). Standing relates to a court's power, that is, jurisdiction, to address the issues presented and serves to identify those disputes which are appropriately resolved through the judicial process. Governor's Policy Research Office v. KN Energy, 264 Neb. 924, 652 N.W.2d 865 (2002); Mutual Group U.S. v. Higgins, 259 Neb. 616, 611 N.W.2d 404 (2000). Standing is a jurisdictional component of a party's case because only a party who has standing may invoke the jurisdiction of a court. Governor's Policy Research Office v. KN Energy, supra; Miller v. City of Omaha, 260 Neb. 507, 618 N.W.2d 628 (2000).

  • The purpose of an inquiry as to standing is to determine whether one has a legally protectable interest or right in the controversy that would benefit by the relief to be granted. Crosby v. Luehrs, supra; Hradecky v. State, supra. In order to have standing, a litigant must assert the litigant's own legal rights and interests and cannot rest his or her claim on the legal rights or interests of third parties. Id. The litigant must have some legal or equitable right, title, or interest in the subject of the controversy. See, Crosby v. Luehrs, supra; Chambers v. Lautenbaugh, 263 Neb. 920, 644 N.W.2d 540 (2002).

North Carolina: Tilley v. Diamond, NO. COA06-500, 2007 N.C. App. LEXIS 1591 (unpub.) (N.C. Ct. App., 2007):

  • Jurisdiction is "[t]he legal power and authority of a court to make a decision that binds the parties to any matter properly brought before it." BLACK'S LAW DICTIONARY 856 (7th ed. 1999) (defining judicial jurisdiction). . . . "A universal principle as old as the law is that the proceedings of a court without jurisdiction of the subject matter are a nullity." Subject matter jurisdiction is the indispensable foundation upon which valid judicial decisions rest, and in its absence a court has no power to act: A judgment is void, when there is a want of jurisdiction by the court over the subject matter . . . . "A void judgment is in legal effect no judgment. No rights are acquired or divested by it. It neither binds nor bars any one, and all proceedings founded upon it are worthless." In re T.R.P., 360 N.C. 588, 590, 636 S.E.2d 787, 789-90 (2006) (quoting Burgess v. Gibbs, 262 N.C. 462, 465, 137 S.E.2d 806, 808 (1964)), and Hart v. Thomasville Motors, Inc., 244 N.C. 84, 90, 92 S.E.2d 673, 678 (1956)) (internal citation omitted).


  • Standing has been defined as "whether a party has a sufficient stake in an otherwise justiciable controversy so as to properly seek adjudication of the matter." Neuse River Found., Inc. v. Smithfield Foods, Inc., 155 N.C. App. 110, 114, 574 S.E.2d 48, 51 (2002). "If a party does not have standing to bring a claim, a court has no subject matter jurisdiction to hear the claim." Estate of Apple v. Commercial Courier Express, Inc., 168 N.C. App. 175, 177, 607 S.E.2d 14, 16, disc. review denied, 359 N.C. 632, 613 S.E.2d 688 (2005).

North Carolina: Estate of Apple v. Commercial Courier Express, Inc., 168 N.C. App. 175, 177, 607 S.E.2d 14 (N.C. Ct. App. 2005):

  • If a party does not have standing to bring a claim, a court has no subject matter jurisdiction to hear the claim. See Neuse River Found., Inc. v. Smithfield Foods, Inc., 155 N.C. App. 110, 113, 574 S.E.2d 48, 51 (2002).

Ohio: Black v. Aristech Chem. Co., Case No. 07CA3155, 2008 Ohio 7038; 2008 Ohio App. LEXIS 5890, Ohio Ct. App., 4th Dist., Scioto County, December 23, 2008):

  • Subject-matter jurisdiction describes a court's "statutory or constitutional power to adjudicate the case." Steel Co. v. Citizens for a Better Environment (1998), 523 U.S. 83, 89, 118 S.Ct. 1003, 140 L.Ed.2d 210; see, also, Pratts, at P11. "Once a tribunal has jurisdiction over both the subject matter of an action and the parties to it, '* * * the right to hear and determine is perfect; and the decision of every question thereafter arising is but the exercise of the jurisdiction thus conferred * * *.'" State ex rel. Pizza v. Rayford (1992), 62 Ohio St.3d 382, 384, 582 N.E.2d 992, quoting Sheldon's Lessee v. Newton (1854), 3 Ohio St. 494, 499. "[A] judgment rendered by a court lacking subject matter jurisdiction is void ab initio." Patton v. Diemer (1988), 35 Ohio St.3d 68, 70, 518 N.E.2d 941; see, also, Pratts, at P12.

  • In addition to subject-matter jurisdiction, a court must also have jurisdiction over a particular case. See Pratts, at P12. "'"[J]urisdiction over the particular case encompasses the trial court's authority to determine a specific case within that class of cases that is within its subject matter jurisdiction."'" Id., quoting State v. Parker, 95 Ohio St.3d 524, 2002 Ohio 2833, 769 N.E.2d 846, at P22 (Cook, J., dissenting), quoting State v. Swiger (1998), 125 Ohio App.3d 456, 462, 708 N.E.2d 1033. Unlike lack of subject-matter jurisdiction which renders a judgment void, "'lack of jurisdiction over the particular case merely renders the judgment voidable.'" Id., quoting Parker at P22 (Cook, J., dissenting), quoting Swiger, 125 Ohio App.3d at 462. Thus, "'"[w]here it is apparent from the allegations that the matter alleged is within the class of cases in which a particular court has been empowered to act, jurisdiction is present. Any subsequent error in the proceedings is only error in the 'exercise of jurisdiction,' as distinguished from the want of jurisdiction in the first instance."'" Pratts, at P22, quoting State v. Filiaggi (1999), 86 Ohio St.3d 230, 240, 1999 Ohio 99, 714 N.E.2d 867, quoting In re Waite (1991), 188 Mich.App. 189, 200, 468 N.W.2d 912. If a judgment is merely voidable, it may not be collaterally attacked. See Clark v. Wilson (July 28, 2000), Trumbull App. No. 2000-T-0063, 2000 Ohio App. LEXIS 3400 (stating that "if a judgment is deemed voidable, it will have the effect of a proper legal order unless its propriety is successfully challenged through a direct attack on the merits").
Ohio: State ex rel. Sautter v. Grey, CASE NO. 06-CA-6 , 2007 Ohio 1831; 2007 Ohio App. LEXIS 1673 (Ohio Ct. App. 5th Dist. Morrow County, April 18, 2007):

  • "Jurisdiction has been described as 'a word of many, too many, meanings.'" Pratts v. Hurley, 102 Ohio St.3d 81, 88, 2004 Ohio 1980, 806 N.E.2d 992, quoting United States v. Vanness (C.A .D.C.1996), 318 U.S. App. D.C. 95, 85 F.3d 661, 663, fn. 2. Because the term "jurisdiction" is used in various contexts and often is not properly clarified, misinterpretation and confusion has resulted. Pratts v. Hurley, 102 Ohio St.3d at 88."

  • 'Jurisdiction' means 'the courts' statutory or constitutional power to adjudicate the case.' "Pratts v. Hurley, 102 Ohio St.3d at 83, quoting Steel Co. v. Citizens for a Better Environment (1998), 523 U.S. 83, 89, 118 S. Ct. 1003, 140 L. Ed. 2d 210 (emphasis omitted); Morrison v. Steiner (1972), 32 Ohio St.2d 86, 87, 290 N.E.2d 841, paragraph one of the syllabus; see, also, In re J.J., 111 Ohio St.3d 205, 207, 2006 Ohio 5484, 855 N.E.2d 851. The term "jurisdiction" "encompasses jurisdiction over the subject matter and over the person." Pratts v. Hurley, 102 Ohio St.3d at 83, citing State v. Parker, 95 Ohio St.3d 524, 529, 2002 Ohio 2833, 769 N.E.2d 846. (Cook, J., dissenting).

  • "Because subject-matter jurisdiction goes to the power of the court to adjudicate the merits of a case, it can never be waived and may be challenged at any time." Pratts v. Hurley, 102 Ohio St.3d at 83, citing United States v. Cotton (2002), 535 U.S. 625, 630, 122 S. Ct. 1781, 152 L. Ed. 2d 860; State ex rel. Tubbs Jones v. Suster (1998), 84 Ohio St.3d 70, 75, 1998 Ohio 275, 701 N.E.2d 1002, reconsideration denied (1999), 84 Ohio St. 3d 1475, 704 N.E.2d 582. A distinction exists between a court that lacks subject-matter jurisdiction over a case and a court that improperly exercises subject-matter jurisdiction once conferred upon it. Pratts v. Hurley, 102 Ohio St.3d at 83-84.

  • Distinguishing between subject-matter jurisdiction and jurisdiction over a particular case is important "because ' " '[i]t is only where the trial court lacks subject matter jurisdiction that its judgment is void; lack of subject matter jurisdiction over the particular case merely renders the judgment voidable' " ' "In re J.J., 111 Ohio St.3d at 207, quoting Pratts v. Hurley, 102 Ohio St.3d at 83, quoting State v. Parker, 95 Ohio St.3d at 529 (Cook, J., dissenting), quoting State v. Swiger (1998), 125 Ohio App.3d 456, 462, 708 N.E.2d 1033. "Jurisdiction over the particular case," as the term implies, involves " ' "the trial court's authority to determine a specific case within that class of cases that is within its subject matter jurisdiction." ' " Pratts, 102 Ohio St.3d at 83 quoting Swiger, 125 Ohio App.3d at 462.

  • A void judgment is one rendered by a court lacking subject-matter jurisdiction or the authority to act. Pratts v. Hurley, 102 Ohio St.3d at 84; State v. Beasley (1984), 14 Ohio St.3d 74, 75, 14 Ohio B. 511, 471 N.E.2d 774. A voidable judgment, on the other hand, is a judgment rendered by a court having jurisdiction/authority and, although seemingly valid, is irregular and erroneous. State v. Montgomery, Huron App. No. H-02-039, 2003 Ohio 4095.

  • A voidable judgment is one rendered by a court having jurisdiction and although seemingly valid, is irregular and erroneous. Black's Law Dictionary (7 Ed.1999) 848. A voidable judgment is subject to direct appeal, R.C. 2505.03(A), Article IV, Section 3(B)(2), Ohio Constitution, and to the provisions of Civ.R. 60(B). A Civ.R. 60(B) application for relief must be made to the trial court that rendered the judgment from which relief is sought.

  • As the Eleventh District Court of Appeals noted in Clark v. Wilson (July 28, 2000), Trumbull App. No. 2000-T-0063, 2000 Ohio App. LEXIS 3400: "The distinction between 'void' and 'voidable' is crucial. If a judgment is deemed void, it is considered a legal nullity which can be attacked collaterally. Conversely, if a judgment is deemed voidable, it will have the effect of a proper legal order unless its propriety is successfully challenged through a direct attack on the merits. * * * " "Where it is apparent from the allegations that the matter alleged is within the class of cases in which a particular court has been empowered to act, jurisdiction is present. Any subsequent error in the proceedings is only error in the 'exercise of jurisdiction' as distinguished from the want of jurisdiction in the first instance." State v Filiaggi (1999), 86 Ohio St.3d 230, 240, 1999 Ohio 99, 714 N.E.2d 867, quoting In re Waite (1991), 188 Mich. App. 189, 200, 468 N.W.2d 912.

Ohio: Wash. Mut. Bank v. Novak, No. 88121 , 2007 Ohio 996; 2007 Ohio App. LEXIS 990 (Ohio Ct. App, 8th Dist. Cuyahoga County 2007):

  • Civ.R. 17(A) provides in part that "every action shall be prosecuted in the name of the real party in interest. * * * No action shall be dismissed on the ground that it is not prosecuted in the name of the real party in interest until a reasonable time has been allowed after objection for ratification of commencement of the action by, or joinder or substitution of, the real party in interest. Such ratification, joinder, or substitution shall have the same effect as if the action had been commenced in the name of the real party in interest. "A "real party in interest" is "one who has a real interest in the subject matter of the litigation, and not merely an interest in the action itself, i.e., one who is directly benefitted or injured by the outcome of the case." Shealy v. Campbell (1985), 20 Ohio St.3d 23, 24-25, 20 Ohio B. 210, 485 N.E.2d 701.

  • If a claim is asserted by one who is not the real party in interest, then the party lacks standing to prosecute the action, but the court is not deprived of subject matter jurisdiction. See State ex rel. Tubbs Jones v. Suster (1998), 84 Ohio St. 3d 70, 1998 Ohio 275, 701 N.E.2d 1002, citing State ex rel. Smith v. Smith (1996), 75 Ohio St.3d 418, 420, 1996 Ohio 215, 662 N.E.2d 366, 369; State ex rel. LTV Steel Co. v. Gwin (1992), 64 Ohio St.3d 245, 251, 1992 Ohio 20, 594 N.E.2d 616, 621.

  • Because compliance with Civ.R. 17 is not necessary to invoke the jurisdiction of the court of common pleas, State ex rel. Tubbs Jones v. Suster; First Union Natl. Bank v. Hufford (2001), 146 Ohio App.3d 673, 2001 Ohio 2271, 767 N.E.2d 1206, the failure to name the real party in interest is an objection or defense to a claim which is waived if not timely asserted. Id. See, also, MacLellan v. Motorist Ins. Co. (Nov. 8, 1993), Cuyahoga App. No. 64090, 1993 Ohio App. LEXIS 5557; Mikolay v. Transcon Builders, Inc. (Jan. 22, 1981), Cuyahoga App. No. 42047, 1981 Ohio App. LEXIS 11690.

  • Applying the foregoing to this matter, we initially note that defendant offered no evidence to demonstrate that he was entitled to relief from judgment under the grounds set forth in Civ.R. 60(B)(1)-(5), as he simply claimed that Washington Mutual was not the real party in interest. Further, defendant did not raise this contention until five years after the complaint was filed. Accordingly, the objection that Washington Mutual was not the real party in interest was not timely raised as a matter of law and was waived. First Union Natl. Bank v. Hufford, supra. We therefore do not accept defendant's claim that the default was "void" such that he is entitled to relief from judgment under Civ.R. 60(B).

Oregon: Lincoln Loan Co. v. City of Portland, SC S51666 , 340 Ore. 613; 136 P.3d 1; 2006 Ore. LEXIS 469, (Or. 2006):

The court cites Clawson et ux v. Prouty et ux, 215 Ore. 244, 249, 333 P.2d 1104 (1959) for the proposition that:

  • "Every court confronted with a law suit of any kind is under both the necessity and the duty of determining whether or not it has jurisdiction to entertain the suit, and it necessarily has jurisdiction to make this determination." (internal quotations and citations omitted.

Texas: In the Interest of CMC, 192 SW3d 866, 869 (Tex App., 2006):

  • Standing, as a necessary component of a court's subject-matter jurisdiction, is a constitutional prerequisite to maintaining a suit under Texas law. Tex. Ass'n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 444, 36 Tex. Sup. Ct. J. 607 (Tex. 1993). If a party lacks standing, a court lacks subject-matter jurisdiction to hear a case. Id.


  • [A] decision concerning whether a party has standing is not a decision deciding the merits of a case. See Blue, 34 S.W.3d at 554. "A plea to the jurisdiction is a dilatory plea, the purpose of which is to defeat a cause of action without regard to whether the claims asserted have merit." Id. Without subject-matter jurisdiction, the trial court must dismiss the case. Am. Motorists Ins. Co. v. Fodge, 63 S.W.3d 801, 805, 45 Tex. Sup. Ct. J. 122 (Tex. 2001). Dismissal is the appropriate disposition when a party lacks standing; it is not a decision on the merits of the case.

Texas: Whitworth v. Whitworth, NO. 01-04-01026-CV , 222 S.W.3d 616; 2007 Tex. App. LEXIS 2238, Tex, Ct. App., 1st Dist., Houston, March 16, 2007):

  • Standing is implicit in the concept of subject matter jurisdiction. Waco Indep. Sch. Dist., 22 S.W.3d at 853; Doncer v. Dickerson, 81 S.W.3d 349, 353 (Tex. App.--El Paso 2002, no pet.). Subject matter jurisdiction is essential to the authority of a court to decide a case. Texas Ass'n of Bus., 852 S.W.2d at 443. Standing, as a necessary component of a court's subject matter jurisdiction, is a constitutional prerequisite to maintaining suit. Id. at 444; In re C.M.C. & J.T.C., 192 S.W.3d 866, 869 (Tex. App.--Texarkana 2006) (orig. proceeding). The standing requirement under Texas law stems from two limitations on subject matter jurisdiction: the separation of powers doctrine and the open courts provision, "which contemplates access to the courts only for those litigants suffering an injury." Texas Ass'n of Bus., 852 S.W.2d at 443-44; see also Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S. Ct. 2130, 2136, 119 L. Ed. 2d 351 (1992) (standing in federal law is essential and unchangeable requirement of case-or-controversy requirement of Article III of Constitution). Standing in Texas state court requires (a) "a real controversy between the parties" that (b) "will be actually determined by the declaration sought." Texas Ass'n of Bus., 852 S.W.2d at 446. Subject matter jurisdiction is never presumed and cannot be waived. Id. at 443-44. If a party lacks standing, a court lacks subject matter jurisdiction to hear the case. Id. at 444; In re C.M.C., 192 S.W.3d at 869.

Vermont: Bischoff v. Bletz, No. 07-001, 2008 VT 16; 949 A.2d 420; 2008 Vt. LEXIS 9 (Vt. 2008):

  • Vermont courts have “subject matter jurisdiction only over actual cases or controversies involving litigants with adverse interests.” Brod v. Agency of Natural Res., 2007 VT 87, ¶ 8, 182 Vt. 234, 936 A.2d 1286. One element of the “case or controversy requirement is that plaintiffs must have standing, that is, they must have suffered a particular injury that is attributable to the defendant and that can be redressed by a court of law.” Parker v. Town of Milton, 169 Vt. 74, 77, 726 A.2d 477, 480 (1998). Without standing, the court has no jurisdiction over a petition for declaratory relief. See Brod, 2007 VT 87, ¶ 2 (plaintiff “must demonstrate standing for a court to have jurisdiction over a petition for declaratory relief” (quotation omitted)); Ladd v. Valerio, 2005 VT 81, ¶ 3, 178 Vt. 614, 883 A.2d 764 (mem.) (“Every petition for declaratory relief must be rooted in an actual controversy between the parties; otherwise, the plaintiff lacks standing to sue, and the courts have no jurisdiction to grant the relief sought.”); Parker, 169 Vt. at 77, 726 A.2d at 480 (explaining that standing is jurisdictional requirement in declaratory-judgment actions because declaratory judgments “can only provide a declaration of rights, status, and other legal relations of parties to an actual or justiciable controversy” (quotation omitted)).

  • Because standing is a necessary component of the court's subject-matter jurisdiction, it cannot be waived, and its absence can be raised at any time. See Brod, 2007 VT 87, ¶ 2 (equating Court's review of dismissal for lack of standing in declaratory-judgment action with dismissal for lack of subject-matter jurisdiction); Town of Charlotte v. Richmond, 158 Vt. 354, 357-58, 609 A.2d 638, 640 (1992) (subject-matter jurisdiction cannot be waived and can be raised at any time); Harris v. Evans, 20 F.3d 1118, 1121 n.4 (11th Cir. 1994) (noting that standing cannot be waived and may be asserted at any stage of litigation); Palmer v. Bahm, 2006 MT 29, ¶ 16, 331 Mont. 105, 128 P.3d 1031 (stating that standing is “threshold requirement of every case” and may be raised at any time); see also Warth v. Seldin, 422 U.S. 490, 517-18, 95 S. Ct. 2197, 45 L. Ed. 2d 343 (1975) (“The rules of standing … are threshold determinants of the propriety of judicial intervention.”).

Virginia: Porter v. Commonwealth, Record Nos. 071928 & 071929, 276 Va. 203; 661 S.E.2d 415; 2008 Va. LEXIS 78 (Va. 2008):

  • Jurisdiction is a term which can engender much confusion because it encompasses a variety of separate and distinct legal concepts. We addressed this topic and differentiated the categories of jurisdiction in Morrison v. Bestler, 239 Va. 166, 387 S.E.2d 753, 6 Va. Law Rep. 1125 (1990). A court may lack the requisite "jurisdiction" to proceed to an adjudication on the merits for a variety of reasons. The term jurisdiction embraces several concepts including subject matter jurisdiction, which is the authority granted through constitution or statute to adjudicate a class of cases or controversies; territorial jurisdiction, that is, authority over persons, things, or occurrences located in a defined geographic area; notice jurisdiction, or effective notice to a party or if the proceeding is in rem seizure of a res; and "the other conditions of fact must exist which are demanded by the unwritten or statute law as the prerequisites of the authority of the court to proceed to judgment or decree." Farant Inv. Corp. v. Francis, 138 Va. 417, 427-28, 122 S.E. 141, 144 (1924).

  • While these elements are necessary to enable a court to proceed to a valid judgment, there is a significant difference between subject matter jurisdiction and the other "jurisdictional" elements. Subject matter jurisdiction alone cannot be waived or conferred on the court by agreement of the parties. Lucas v. Biller, 204 Va. 309, 313, 130 S.E.2d 582, 585 (1963). A defect in subject matter jurisdiction cannot be cured by reissuance of process, passage of time, or pleading amendment. While a court always has jurisdiction to determine whether it has subject matter jurisdiction, a judgment on the merits made without subject matter jurisdiction is null and void. Barnes v. American Fert. Co., 144 Va. 692, 705, 130 S.E. 902, 906 (1925). Likewise, any subsequent proceeding based on such a defective judgment is void or a nullity. Ferry Co. v. Commonwealth, 196 Va. 428, 432, 83 S.E.2d 782, 784 (1954). Even more significant, the lack of subject matter jurisdiction can be raised at any time in the proceedings, even for the first time on appeal by the court sua sponte. Thacker v. Hubard, 122 Va. 379, 386, 94 S.E. 929, 930 (1918).

  • In contrast, defects in the other jurisdictional elements generally will be considered waived unless raised in the pleadings filed with the trial court and properly preserved on appeal. Rule 5:25.

  • One consequence of the non-waivable nature of the requirement of subject matter jurisdiction is that attempts are sometimes made to mischaracterize other serious procedural errors as defects in subject matter jurisdiction to gain an opportunity for review of matters not otherwise preserved. See Restatement (Second) of Judgments, § 11 (1980).Id. at 169-70, 387 S.E.2d at 755-56.

  • Our recitation in Morrison reflects the long-standing distinction between subject matter jurisdiction, which cannot be granted or waived by the parties and the lack of which renders an act of the court void, and territorial jurisdiction or venue. The latter goes to the authority of the court to act in particular circumstances or places and is waived if not properly and timely raised. The judgment of a court which is defective in territorial jurisdiction or venue is thus only voidable and not void. Id.; Southern Sand and Gravel Company, Inc. v. Massaponax Sand and Gravel Corporation, 145 Va. 317, 326, 133 S.E. 812, 814 (1926). sub-mat-jurisd-alpha

Friday, February 20, 2009

Ohio Homeowners Facing Foreclosure Fight Back; Claim Lender Has No Right To Sue; Seek Class Action Status

In Sandusky County, Ohio, the Toledo Blade reports:

  • Facing the loss of their home in the tiny northwest Ohio village of Gibsonburg, Jeffrey and Katrina Weickert pleaded for more time. Instead, lawyers for their mortgage holder asked a judge in Sandusky County Common Pleas Court to expedite foreclosure proceedings.

  • Now, Mr. and Mrs. Weickert are using the court system to fight back. They are among thousands of homeowners nationwide who are challenging the right of mortgage servicing companies and trustees to commence foreclosure proceedings. "We have 20 of these cases pending all over northwestern Ohio," said John Murray, a lawyer with the Sandusky firm of Murray & Murray.

  • Few of the complaints deny that homeowners have fallen behind in mortgage payments. Rather, they typically question whether mortgage servicing firms and trustees seeking foreclosure have the right to sue. It's often a legitimate question, said Lauren Saunders, an attorney with the National Consumer Law Center in Washington. In the mortgage craze that led to the economic crisis, proper documentation sometimes wasn't finished on behalf of investment trusts that own most mortgages, she explained.

For more, see Toledo area couple fighting foreclosure in court (More homeowners resist mortgage firms).

For posts that reference the failure of mortgage lenders and their attorneys to file the proper paperwork when bringing foreclosure actions, Go Here, Go Here, Go Here, Go Here, and Go Here. KappaMtgDocsMissing

50-State Report On Unfair & Deceptive Acts & Practices Statutes

From the National Consumer Law Center:

Go here for the entire press release.

A permanent link to the report appears in the right-hand sidebar for future reference.

CBS' 60 Minutes On World Savings' Whistleblower

CBS' 60 Minutes ran a story last Sunday night featuring the story of Paul Bishop, a plainspoken former loan salesman who is blowing the whistle on his former employer, one-time subprime lending giant World Savings, about the kinds of loans they were making to homeowners who couldn't afford to repay, and how they went about making the loans. While working at World, he reportedly told executives what they didn't want to hear about three years before the real estate market exploded. According to him, they responded by canning him. He has since filed a lawsuit against them. He now tells his story to 60 Minutes.

For the report (13+ minutes), see World of Trouble (read story) (watch video).

For an interview last Monday on the CBS' News: The Early Show, (about 5 minutes), see Mortgage Whistleblower.

For the initial report on this story from KPIX-TV Channel 5 in May, 2008, when Bishop first filed his lawsuit against World Savings, see Oakland Bank's Lending Sparks Ex-Employee Lawsuit (read story) (watch video).

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

Another Rent-Paying Section 8 Tenant Caught Up In Foreclosure Eviction May Be Failing To Exercise Special Rights Under Federal Law

In Pittsburg, California, the Contra Costa Times reports:

  • Pittsburg resident Casandra Jackson-Gordon is moving — again. For the second time in less than two years, Jackson-Gordon says she has lost her subsidized rental home to foreclosure. The first time, she also lost her $1,500 security deposit — but the bank offered her $3,500 to move out fast so it could sell the property. That money helped her get into another house. She's hoping the lender that holds the mortgage on her current residence will be equally generous.


  • The city of Fairfield[, California], which also has been hard hit by foreclosures, set up a program late last year to help low-income residents whose landlords went into foreclosure by giving them grants of up to $3,000 to cover the security deposit on a new place in the city. Recipients must be documented U.S. citizens without criminal records.


  • Like Jackson-Gordon, other residents who receive Section 8 housing assistance also have been forced to move when their landlords lost their houses.(1)

For more, see Renters, too, feeling effects of foreclosure crisis.

(1) It may be important to note that, in the case of a tenant who receives a Section 8 federal rent subsidy (ie. a "Section 8" tenant), it has been reported that federal law prohibits a new owner, including foreclosure purchasers and foreclosing lenders, from evicting Section 8 tenants unless they first go to court and prove they’re being economically harmed by having a tenant remain in a building, or show other good cause. However, many Section 8 tenants panic and don’t fight eviction notices, not realizing they have these special rights granted by Federal law. For more on this point, see Foreclosures hit tenants (Activists: New owners trample on renters’ rights).

For the specific federal regulation on this point, see 24 CFR 982.310(d)(1). Go here for the regulations (24 CFR 982) regulating the Section 8 rent subsidy program. SkimmingKappaRent

Federal Class Action Suit Targets Use Of "Chinese Drywall" Used In Building Florida Homes

The South Florida Business Journal reports:

  • A federal lawsuit alleges that fly ash residue from Chinese power plants was used in drywall that's the subject of growing scrutiny in Florida. The suit, which seeks class action status in U.S. District court in Fort Myers, alleges 10 million square feet of the drywall was used in Florida homes. If true, the allegation indicates more than 200,000 sheets of the drywall were used in the state – enough to build 800 to 2,000 homes, depending on their size.


  • The federal suit claims that the defendants, [...] negligently manufactured and sold the defective drywall, which was "unreasonably dangerous" in normal use because it caused corrosion to air-conditioning and electrical components, and caused coughing and irritation of sinuses, eyes and throats. It goes on to state that, “when combined with moisture in the air, these sulfur compounds create sulfuric acid.”

For more, see Class action lawsuit filed over Chinese drywall.

In related stories from The Wall Street Journal, see:

Go here for links to recent media reports on the problems with "Chinese drywall."

Thursday, February 19, 2009

Misinformation Provokes Stampede Of Homeowners Filing Homestead Affidavits To Avoid Foreclosure

In Prescott, Arizona, The Daily Courier reports:

  • The Yavapai County Recorder's Office is on the receiving end of a small stampede of county residents filing homestead affidavits. The reason - homeowners have a mistaken belief it will protect them from banks or creditors foreclosing on their homes."That is a totally false rumor," Jill Hoogendyk, president of Arizona Mortgage Lenders Association said. "Homestead protects you from losing your equity in a home if you are getting sued, but it has nothing to do with foreclosure." [...] Hoogendyk said that the misinformation about a homestead exemption protecting against foreclosures, sounds to her like "a sign of our times with so many people getting foreclosed on."

For more, see Homestead filing no protection against foreclosure.

Elderly Homeowner In Foreclosure Allegedly Victimized By Predatory Loan Commits Suicide

In East Palestine, Ohio, The Youngstown Vindicator reports:

  • A 72-year-old woman who feared she’d lose her home to foreclosure hanged herself to death, the family lawyer said. [She] died the morning of Jan. 24 at her home, just days after receiving her second summons and foreclosure complaint from her mortgage lender, said Atty. Robert B. Holman of Bedford.


  • The foreclosure complaint was filed Jan. 6 in Columbiana County Common Pleas Court by Chase Home Finance in Columbus. [...] In a 31-page counterclaim lawsuit,(1) Holman names as third-party defendants Lake Erie Title Agency in Dayton, North Coast Capital Funding in Cuyahoga Falls and SML Corporation, a real estate agency in Hudson, Ohio.

For more, see Family says suicide caused by foreclosure action (Lawyer: Couple in their 70s and on fixed income was given a 30-year, $160,000 loan).

Go here for other posts on foreclosures and suicide.

(1) Holman alleges in the lawsuit filed on behalf of the [homeowners] that [they] were the victims of a predatory lending scheme. He said the bank, mortgage company and title insurance company used an inflated appraisal of $200,000 to create an over-inflated mortgage loan, thereby putting [them] on the path to financial ruin. He said the property [...] had a market value of $80,000. suicide homeowner foreclosure zeta

County Quashed In Attempt To Take 8-Acre Property From Owner Over Failure To Include $24 Interest With Delinquent Tax Payment, Rules NY Appeals Court

In Canandaigua, New York, the Daily Messenger reports:

  • A Monks Road property owner has won his court case against Ontario County. The state Appellate Division’s Fourth Department ruled Friday that Bruce Middlebrook should be allowed to keep his 8-acre wooded parcel the county had scheduled to be auctioned off last May for unpaid property taxes.

  • The record establishes” Middlebrook “in fact paid his property taxes by the deadline provided ... in order to avoid losing his property,” stated the court decision. Even assuming the property owner received notice he owed roughly $24 in interest on the delinquent property taxes, “that minor amount of interest would result in a disproportionately harsh result,” concluded the court.

  • We are pretty happy,” said Middlebrook’s attorney, David Whitcomb with Muehe and Newton, LLP in Canandaigua. He said the panel of seven judges ruled unanimously, recognizing his client shouldn’t lose his property over $24.

For more, see Canandaigua landowner wins county foreclosure case.

For the court decision, see Matter of County of Ontario, 2009 NY Slip Op 00912 (NYS Sup. Ct. App. Div., 4th Dept., February 6, 2009).

For an earlier report on this story, see County, homeowner battle over auction.

Hiring A Contractor For Home Improvement Work? Buying A New Home From A Builder? Don't Forget To Get Those Lien Waivers

An excerpt in a recent Q & A column appearing in the Daily Herald, Illinois attorney Tom Resnick gives this reminder of the importance obtaining lien waivers anytime a property owner hires others to make home improvements on a home, or when a home buyer is purchasing a newly-constructed home from a builder:

  • [A]nyone who performs work or furnishes materials that ultimately improve your property obtains certain rights under the mechanics lien act. The most basic of these rights is that the contractor may record and ultimately foreclose his or her lien. In the event the contractor prevails on his or her lien claim, if the contractor is not paid, he or she can force the sale of the property to satisfy the claim.

  • Accordingly, it is imperative that anytime a party performs work at your property, upon final payment, you should insist on receiving a Final Waiver of Lien. This document generally states that the contractor waives any lien rights he or she has on the property. A properly drafted and executed Final Waiver of Lien will generally defeat a lien claim that evolved before the execution of the Final Waiver.(1)

For more, including some options applicable to Illinois homeowners when a contractor slaps a lien on their property, see Don't forget a final, important step in dealing with contractors.

(1) Obtaining lien waivers from any subcontractors and suppliers involved in the job may not be a bad idea, either. Buyers of newly-constructed homes are also well-advised to assure themselves that the appropriate lien waivers have been obtained by the title insurance agent handling the closing. For an example of what could happen if the lien waivers are not obtained and the homebuilder or general contractor goes out of business, see Stiffed Sub Sues Contractor For Unpaid Work At New Development; Slaps Liens, Seeks Foreclosure On Residents' Homes. StiffingContractorsTheta

Wednesday, February 18, 2009

Hawaii Feds Bust Four Foreclosure Rescue Operators In Alleged Equity Stripping, Sale-Leaseback Scam Targeting Financially Strapped Homeowners

In Honolulu, Hawaii, the Honolulu Advertiser reports:

  • The two top executives of a Honolulu mortgage company were indicted by a federal grand jury for allegedly coordinating a scheme that bilked banks and troubled homeowners out of hundreds of thousands of dollars, court documents show.(1)


  • They are accused of targeting homeowners on the brink of foreclosure — including some who were members of Calvary Chapel Pearl Harbor — and offering relief if the homeowners agreed to a temporary sale of the house to a third party "investor" who worked for John Dimitrion, according to court documents.

  • The four allegedly told the homeowners they could remain in their homes and their title would be returned to them after a set period of time. Homeowners paid John Dimitrion $20,000 for the service, thinking their mortgage payments would be handled by Dimitrion's company, court documents said.

  • John Dimitrion and his associates applied for larger loans than what the homeowners owed and allegedly stole the proceeds by funneling the money into fake escrow accounts created by Julie Dimitrion, the documents said. In each case the homeowner was unable to make the payments on the larger loan, the documents show.

For more, see Honolulu mortgage company executives indicted in scam (Company's founder, wife, 2 others accused in home loan scheme).

(1) According to the story, John M. Dimitrion, founder and chief executive of Mortgage Alliance LLC and his wife, Julie A.B. Dimitrion, the firm's chief financial officer, were indicted with Rick Kealoha Pa Jr. and Benjamin Yoshito Thompson after they allegedly defrauded homeowners and lending institutions by promising to stave off foreclosure.

Feds Drop Most Charges Against Cincy Cop/Foreclosure Rescue Operator Accused Of Preying On People Facing Foreclosure

In Cincinnati, Ohio, the Cincinnati Enquirer reports:

  • A Cincinnati police officer admitted Wednesday he cheated on his taxes and stole a widow’s life insurance benefits. Officer Adrian Mitchell, who has been suspended without pay since last May, pleaded guilty in U.S. District Court to charges of mail fraud and filing a false tax return. He faces up to three years in prison when he is sentenced later this year.

  • Mitchell, 36, had been charged with mail, wire and bank fraud, and federal prosecutors had accused him of preying on people who lost their homes to foreclosure. Most of those charges were dropped Wednesday when Mitchell agreed to the plea deal that slashed his potential prison time from 30 years to three.


  • Mitchell, the owner of Rich Properties, bought homes on the brink of foreclosure and then offered to rent them back to the original homeowners with promises they could eventually buy back the properties, court records say. Prosecutors said last year that Mitchell sometimes misled banks by using “sham” buyers or other tactics to obtain loans to buy properties.

  • When one renter hanged himself, prosecutors say, Mitchell filled out life insurance forms intended for the man’s widow. They say he then cashed checks totaling $188,000 from an account the life insurance company set up for the widow.

For more, see Cincy cop fleeced widow.

Philly DA Announces Issuance Of Arrest Warrants In Alleged Deed Theft Operation; Among Targeted Victims Were The Non-English Speaking & The Deceased

From the Philadelphia, Pennsylvania District Attorney's Office:

  • District Attorney Lynne Abraham [Wednesday] announced that arrest warrants have been issued for fifteen people for engaging in a continuing conspiratorial and criminal enterprise to steal homes, [...] among other crimes.(1)


  • The Grand Jury investigation revealed that generally, this ring forged and recorded deeds to abandoned or otherwise uninhabited properties, transferring these properties from their true and rightful owners to codefendants, or fictitious person, and then "sold" these properties to unsuspecting victims. [...] In each case of fraud, the lawful owner was totally unaware, and never consented to the "sale" of his property. In many instances the true and lawful owners of the property were dead for a number of years. Often the conspiratorial ring targeted immigrant, non-English speaking citizens specifically because of the lack of sophistication with the laws and procedures of the transfer of property in this state.

For the entire press release, with the list of addresses of the stlen homes, see Fifteen Arrest Warrants Issued in House Stealing Cases Based on Grand Jury Presentment (More than 80 Properties Illegally Sold Victimizing Legal Homeowners and Unsuspecting Buyers).

For Philadelphia Daily News' coverage on these charges, see:

  • 15 charged as house thieves ("House-stealing is a regular and cottage industry in the city," Abraham said);
  • Stealing houses (Abraham says that as many as 500 fraudulent sales are being investigated);
  • Hot line for house thefts (The DA's Office has set up a special hot line - 215-686-9901 - for those who are victims of "house stealing," in which scammers prey on homeowners by forging documents for empty homes, then selling them to another buyer).

For an old NBC10 television story on the deed theft problem in Philadelphia, see Stolen Homes.

Go here, Go here, Go here, go here, go here, and go here for other posts related to deed or refinancing scams by forgery, swindle, etc.

(1) Those charged are Carlos Quiles, Ivan Delgado, Troy Baylor, Richard Smith, Kenneth Lyons, Lenora Irene Jackson, Rebecca A. Robinson, Tyrone Davenport, Juanita Torres, Alberto Rodriguez, Daralease Brown, Vincent Wilder, David Lespier, Maria Roman, Zoraida Cuevas and Marino Rodriguez. They face numerous counts of:

  1. Corrupt Organizations, 18 Pa.C.S.A. §911 ( F-1);
  2. Criminal Conspiracy, 18 Pa.C.S.A. §903 (F-3);
  3. Theft by Unlawful Taking or Disposition, Pa.C.S.A. §3921 (F-3);
  4. Theft by Deception, 18 Pa.C.S.A. §3922 (F-3);
  5. Forgery, 18 Pa.C.S.A. §4101 (F-3);
  6. Perjury, 18 Pa.C.S.A. §4902 (F-3);
  7. Burglary, 18 Pa.C.S.A. §3502 (F-1);
  8. Criminal Trespass, 18 Pa.C.S.A. §3503 (F-2 );
  9. Tampering with Records or Identification, 18 Pa.C.S.A. §4104 (M-1);
  10. Securing Execution of Documents by Deception, 18 Pa.C.S.A. §4114 (M-2); and
  11. Tampering with Public Records or Information, 18 Pa.C.S.A. §4911 (F-3). DeedGammaTheft

Vacant Home Hijackers On The Radar For Dallas-Area Cops, Prosecutors

Buried in a recent story from Dallas County, Texas on scammers hijacking vacant homes involved in the foreclosure process and renting them out, The Dallas Morning News references these recent efforts to prosecute the alleged perpetrators:

  • [O]n Thursday, a judge convicted pastor Jackie Lewis, 53, of Cedar Hill, on one count of securing execution of a document by deception in connection with renting a foreclosed home in Cedar Hill. The charge is normally a third-degree felony, but because of a 1994 theft conviction, he could face two to 20 years in prison. His sentencing is scheduled for March 6.


  • DeSoto, Cedar Hill and Lancaster investigators have all arrested [Morris] Mosley on charges related to the foreclosure scheme. Late last month, [police] arrested Mosley outside a southeast Oak Cliff home that Mosley wanted to rent out. He's being held on two counts of suspicion of burglary of a habitation and one count of securing execution of a document by deception. Mosley, 48, is being held at Lew Sterrett Justice Center. His trial is set for April 20.

For the story, see Scammers finding open door at foreclosed homes.

Go here, go here, and go here for posts on phony landlord rent scams. PhonyLandlordScamZeta

Arrest Warrants Issued For Suspects Accused Of "Hijacking" Vacant, Foreclosed Home In Gated Community

In Sacramento, California, News10 reports:

  • The neighbors were suspicious but the tenants showed police a lease to prove they belonged. But now, the case of mystery tenants moving into a vacant upscale Natomas house in the Westlake subdivision last week has brought arrest warrants for those tenants and their real estate broker.(1)

  • After a one-week investigation, Sacramento Police Department detectives confirmed the couple who moved into 3700 Clubside Lane in the exclusive neighborhood had no legal right to be there. The suspicion is that with help from a friend who's a real estate broker, the couple moved in and may have planned to get money from the legal owner in return for moving out later without going through the long eviction process, according to police Sgt. Norm Leong.

For more, see Natomas Rental Fraud Brings Arrest Warrants.

(1) Arrest warrants have been issued for real estate broker Phillis Powers, 52. Also sought under the warrants are Carver Barney, 57, and his wife Sandra Barney, 54, the couple who had moved into the house. A fourth suspect is Dennis Eugene, 49, who Powers or the tenants allegedly hired to clean up the house. The warrants are all for a charge of criminal trespass. The legal owner of the house is Aurora Loan Services of Colorado which purchased the house at auction on Jan. 29. PhonyLandlordScamZeta

Tuesday, February 17, 2009

Central Florida Chief Judge Revokes "Phone Privileges" For Foreclosure Attorneys Due To Actions Of Sloppy "Foreclosure Mills"

In Bradenton, Florida, the Bradenton Herald reports:

  • The area’s top judge has lost patience with so-called foreclosure mills so he’s ordering them to appear in court. Non-local law firms that specialize in mass foreclosure filings have ignored local court procedures, filed incomplete or inaccurate court documents and “widely abused” the privilege of appearing at court hearings by telephone, 12th Judicial Circuit Chief Judge Lee Haworth said. He’s cracking down, requiring lawyers in foreclosure cases filed in Manatee, Sarasota and DeSoto counties to attend all foreclosure-related hearings in person.


  • While the order affects all lawyers in foreclosure cases within the district, it’s pointed directly at so-called foreclosure mills that file the bulk of local cases. Those firms’ heavy workloads often result in incomplete court files and missed court hearings, causing delays and wasting court resources, Haworth said.(1)


  • He declined to name the firms that have drawn his ire. But court records show the biggest filers of foreclosure actions in Manatee include Florida Default Law Group in Tampa; the David J. Stern law firm in Plantation; and the Marshall C. Watson law firm in Fort Lauderdale.

For more, see Area's top judge cracks down on foreclosure mills.

See also, Sarasota Herald Tribune: Judge requires lawyers to show up for foreclosure hearings.

For an earlier report on this story and links to the local court procedures established for foreclosure actions filed in Florida's 12th Judicial Circuit, see The Sloppiness Continues For Attorneys Representing Foreclosing Lenders; "They Are Totally Disorganized!" Says Florida's 12th Judicial Circuit Chief.

(1) For posts that reference the failure of mortgage lenders and their attorneys to file the proper paperwork when bringing foreclosure actions, Go Here, Go Here, Go Here, Go Here, and Go Here. KappaMtgDocsMissing

North Carolina Couple Loses Home To Foreclosure After Loan Modification Firm Allegedly Beat Them Out Of $1,300

In Raleigh, North Carolina, WRAL-TV Channel 5 reports on a local couple who found themselves stuck with an "exploding" adjustable rate mortgage on their home that doubled their house payment within six months of obtaining the loan, and who needed help:

  • That was beyond what they could handle, so the Mizers looked for refinancing. They tried 40 lenders, but all of them turned down the family down. Then they got a letter from mortgage restructuring firm Augustus, Rae & Reed that claimed to have a "95.5 percent resolution success" rate in stopping foreclosures. “I remember us hugging (and saying) ‘Baby, we're going to get to keep the house,’ (and) telling the kids we're going to be able to keep the house," Mizer said.

  • The company charged more than $1,300 upfront and told the Mizers not to communicate with their lender. Company representatives said they would handle everything, according to Mizer, who said that was the last time she heard from the company. One month later, the family's bank started foreclosure proceedings and told them it had never been contacted by Augustus, Rae & Reed. The Mizers lost their house.

For the story, see Facing foreclosure? Watch out for scammers.

Central Florida Woman Loses Home To Foreclosure Despite Paying Thousand$ For Loan Modification

In Orlando, Florida, WFTV Channel 9 reports:

  • An Orlando woman hired a foreclosure rescue service. She not only lost thousands of dollars, she's also losing her home. "I'm scared every day every minute," said Michelle Campbell. The bank has already foreclosed on her home in west Orlando--so she faces eviction any day. Michelle says her daughter's sudden death from a rare seizure -- left her scrambling to make mortgage payments. That's when the realtor she hoped could sell her house ---- instead told her to hire a foreclosure rescue company.


  • Michelle says he recommended U.S. Loss Mitigation and the American Housing Authority. Both out-of-state firms promised to negotiate with her bank to lower the payments and save her house ... But first she had to pay the rescue companies 3 thousand dollars up front.(1) According to Michelle, both failed to even contact her lender---her home was sold by the bank last month.

For more, see Woman Loses Home After Paying Thousands To Home Rescue Companies.

(1) Upfront fees for these services is now against Florida law. See Florida AG Shuts Down Tampa-Area Foreclosure Rescue Operator; Accused Of Taking Upfront Fees In Violation Of New Law.

CBS Evening News On South Florida Loan Modification Firm Currently Facing Civil Charges From State AG

The CBS Evening News recently ran a story on South Florida loan modification firm Outreach Housing, which summarized their approach to financially strapped homeowners with this excerpt:

  • For homeowners the pitch went like this: They would pay Outreach Housing an upfront fee of about $1,200. They would then stop paying their lender and instead pay Outreach every month an amount equal to two-thirds of their monthly mortgage.

  • That's money homeowners like Frank Kosa believed they would go toward their mortgage while Outreach worked with his bank to reduce his payment. "They said 'don't worry about anything. Don't pay anything. We are taking care of everything,'" said Kosa. But they didn't. Instead, as victim after victim told CBS News, they got taken.

  • According to a lawsuit filed by Florida Attorney General Bill McCollum, Outreach Housing was engaged in a "systematic pattern" of "fraudulent," "unfair" and "deceptive" practices, leaving behind at least 600 victims.

For more, see Scams Rampant In Foreclosure Fraud Hotbed (CBS Evening News: Growing Number Of Scams Target Homeowners Struggling To Keep Homes); or go here for CBS News video, Inside Mortgage Rescue Scams.

For the Florida Attorney General's 10-16-08 press release announcing the filing of the lawsuit against Outreach Housing, see Broward Foreclosure Debt Mitigation Company Sued for Deceptive Practices.

Go here for other posts on this case.

Florida AG Hits Orlando Loan Modification Firm With First Lawsuit Under New State Foreclosure Fraud Law

From the Office of the Florida Attorney General:

  • Attorney General Bill McCollum today announced that his Economic Crimes Division has filed a lawsuit against an Orlando company allegedly providing loan modification services to homeowners facing foreclosure -- the first lawsuit filed under the new Foreclosure Rescue Fraud Protection Act. According to the lawsuit filed today in Orange County, FMA Servicing, Inc. and its owners are in violation of the law which, among other provisions, prohibits a company providing foreclosure-related rescue services from charging consumers any up-front fee.


  • An investigation conducted by the Economic Crimes Division revealed that FMA Servicing, which does business under the name Financial Management Advisors,(1) allegedly charges an up-front fee as high as $2,500 to homeowners seeking loan modification services. Additionally, the lawsuit claims the company misrepresented relationships with lenders and falsely advertised the presence of attorneys and certified public accountants on staff. The Attorney General has also filed a motion seeking to temporarily prevent FMA Servicing from charging up-front fees.


  • Florida Statutes 501.1377, which took effect on October 1, 2008, protects homeowners who are in foreclosure or nearing foreclosure from companies offering potentially fraudulent foreclosure "rescue" services. Specifically, the statute governs companies providing foreclosure-related rescue services including loan modification and short sale services. These companies are prohibited from charging homeowners an up-front fee for these services and must provide homeowners with a written agreement.

For more, see McCollum: First Lawsuit Filed Under New Foreclosure Rescue Fraud Law (Orlando company sued for allegedly engaging in fraudulent foreclosure rescue services).

For the lawsuit, see State of Florida v. FMA Servicing, Inc., et al.

(1) Other defendants named are Edward Billings, Joseph Esposito, and Salvatore Esposito. They face civil charges of violating:

  • §§501.1377(3)-(4), Florida Statutes, (2008), Violations Involving Homeowners during the Course of Residential Foreclosure Proceedings;
  • §817.06(1), Florida Statutes, (2008), False Advertising;
  • §817.41(1)-(2), Florida Statutes, (2008), Misleading Advertising; and
  • §865.09(3), Florida Statutes (2008), Fictitious Name Act.

Florida AG Shuts Down Tampa-Area Foreclosure Rescue Operator; Accused Of Taking Upfront Fees In Violation Of New Law

From the Florida Attorney General's Office:

  • Attorney General Bill McCollum [Tuesday] announced that his Economic Crimes Division has reached a settlement with a Tampa business engaged in foreclosure rescue services over allegations the conduct violated the newly enacted Foreclosure Fraud Protection Act.(1) Attorney Debt Services, LLC, which conducted business under the name HomeKeeper USA, will cease its operations until it is able to fully comply with the law. Additionally, it will pay $10,000 to the Attorney General's Seniors vs. Crime program.

  • A four-week investigation by the Economic Crimes Division revealed Attorney Debt Services was allegedly providing foreclosure rescue services to homeowners who were in various stages of the foreclosure process. The company allegedly offered, for an advance fee, to assist consumers in arranging an alternative payment plan with the homeowners' lender for the purpose of avoiding foreclosure.

For more, see Foreclosure Rescue Company Shut Down for Fraud (First company closed under Attorney General's new foreclosure rescue fraud prevention law).

Go here for the the settlement agreement between the Florida AG and Attorney Debt Services, LLC, dba HomeKeeper USA and James T. Pappas.

(1) Florida Statute Sec. 501.1377.

Monday, February 16, 2009

Another Upfront Fee Foreclosure Rescue, Loan Modification Firm Under Fire From Feds

The Federal Trade Commission announced Wednesday:

  • In a case that affects consumers throughout the nation, the Federal Trade Commission has charged a mortgage foreclosure “rescue” company with falsely claiming that it will stop foreclosure or fully refund consumers’ money.(1) A federal court ordered a halt to the alleged practices and froze the defendants’ assets pending trial. Many people who paid the company ultimately lost their homes to foreclosure, and others avoided foreclosure only through their own efforts. The FTC seeks to prohibit the deceptive claims and make the company pay consumer redress.

  • According to the Commission, the company promotes its “Fresh Start Program” by mailing ads to consumers who are behind on their mortgage payments and facing foreclosure. [...] Consumers who call the company are told that negotiations with lenders will begin once consumers pay a fee ranging from $300 to more than $1,000, which typically is paid before the consumer receives a contract.

For the entire press release, see FTC Sues Mortgage Foreclosure “Rescue” Operation.

For the FTC legal documents filed in this case, see:

  • Temporary Restraining Order With Asset Freeze, Appointment of Temporary Receiver and Other Equitable Relief, and Order to Show Cause,
  • Complaint for Permanent Injunction and Other Equitable Relief

(1) The defendants are National Foreclosure Relief Inc., David Ealy, Chele Stone, also known as Chele Medina, and Hugo Tapia. The Commission vote to authorize staff to file the complaint was 4-0. The complaint was filed in the U.S. District Court for the Central District of California on February 2, 2009; the court entered a temporary restraining order and asset freeze later that day.

Federal Judge, State Bar Slam Attorney For Stiffing Clients Referred By Loan Modification Firm; Lawyer/Foreclosure Consultant Ties Now Facing Scrutiny

San Francisco Weekly reports:

  • Thanks in part to a recent SF Weekly column detailing the latest exploits of longtime con man Paul Noe II, a federal judge recently announced he would advise federal, state, and municipal prosecutors to investigate a suspicious statewide "foreclosure assistance" operation that targeted defaulted homeowners in the San Francisco Bay Area.

  • "I am referring these matters to the State Bar of the State of California, to the State Bar of the State of Nevada, to the United States Attorney in the Central District of California, and to the district attorney of Los Angeles and San Bernadino and Orange Counties, so that they can make an investigation of this matter, and do what is required under the law of the State of California," U.S. District Judge Manuel Real said during a Jan. 13 hearing.

  • Real had just heard allegations that Mitchell Roth, a longtime attorney of Noe's, had filed multiple lawsuits on behalf of clients, then failed to show up in court to prosecute the cases. The filings were submitted on behalf of customers of a Noe front company called United First, Inc. whose business model involved convincing desperate homeowners that they might have grounds for a so-called "missing title" lawsuit. These suits would supposedly be based on the legal theory that banks had lost track of buildings' titles when mortgages were bundled into securities, and thus had no right to foreclose.


  • Rick Jurgens, an advocate with the National Consumer Law Center in Washington, D.C., reviewed a copy of a Roth/Noe contract SF Weekly sent him, and noted: "Bogus doesn't begin do define it ... To have these for-profit enterprises come in and throw a deal that's just there to squeeze the last penny out of a victim's pocket is really horrifying to see."

For more, see Justice Closing in On Notorious 'Foreclosure Assistance' Firm.


In related stories on California attorney Mitchell Roth, see:

Metropolitan News Enterprise: State Bar Takes Over Ex-Judicial Candidate’s Law Offices:

  • The State Bar of California [Thursday] disclosed that it has taken over the Sherman Oaks, San Diego and Riverside law offices of attorney Mitchell Roth. [...] The State Bar alleged that an estimated 2,000 clients were referred to Roth by a company doing business as United First, which is not a law firm. Roth’s phone message informs callers that the office has been temporarily closed and refers foreclosure clients back to United First.

The National Law Journal: Three offices of attorney declared a 'vexatious litigant' are shut down:

  • The State Bar of California has shut down three Southern California offices of attorney Mitchell W. Roth, who was recently declared a vexatious litigant by a federal judge in Los Angeles, according to the State Bar.

The San Diego Daily Transcript: State bar shuts down foreclosure law practice (subscription required):

  • State Bar of California prosecutors Wednesday obtained a Superior Court order effectively shutting down the Sherman Oaks, San Diego and Riverside law offices of attorney Mitchell Roth.


For a five-page, heavily footnoted, ethics alert recently issued by The California State Bar Association Committee on Professional Responsibility and Conduct addressing the relationship between lawyers and loan modification & foreclosure consultants (and addresses the above-referenced conduct), see ETHICS ALERT: Legal Services to Distressed Homeowners and Foreclosure Consultants on Loan Modifications.