Title Insurer's Lack Of Action On Subcontractors' Mechanics Liens Filed Against Bankrupt Developer Leaves Recent Homebuyers In Refinancing Limbo

In Woodstock, Illinois, the Chicago Sun Times reports:

• Woodstock resident Deborah Sinnett's taste of the American dream has turned sour big-time, and she blames bankrupt Streamwood-based home builder Kirk Homes. Since Sinnett moved into her $355,000 Kirk home in December, 11 liens have been placed against the property by companies claiming they weren't paid by Kirk.(1) She faces the threat of foreclosure because of the liens, according to a local attorney. But her title insurance should cover her.

• Sinnett said the liens also have complicated her plans to refinance at lower rates. Kirk says she's protected. But the title insurer, First American Title Insurance Co., hasn't taken court action to remove the liens, and Sinnett doesn't know how long the liens will remain on her property. It could be a couple of years, according to state law.

***

• Sinnett said she received the first lien notice shortly before Christmas. She contacted First American Title and was told by letter that her title is insured, but "because there has been no action taken by the lien claimants to enforce their claims through a court proceeding, there is no action for First American to take at this time." [...] First American declined to comment on Sinnett's case, but said it "stands behind its policies of title insurance." But the company indicated Sinnett and others could be in for a long wait.(2)(3)

For more, see Kirk Homes bankruptcy leaves homeowners in limbo (STUCK IN MIDDLE With Kirk Homes in bankruptcy, many homeowners can't refinance because of contractors' claims).

For more on homeowners left in the lurch due to actions by builders/contractors, go here, go here, go here, go here, and go here.

Go here for other posts involving legal issues related to title insurance.

(1) Reportedly, Sinnett's situation isn't unique as builders across the country fold or file Chapter 11 bankruptcy.

(2) Reportedly, Sinnett shared documents showing liens totaling more than $140,000. "It's costing us hundreds of dollars per month to not be able to refinance. No mortgage company wants to talk with us about refinancing with all those liens," she said.

(3) If faced with a lien on your home, attorney Mark Nora, vice chair of the Chicago Bar Association's real property committee, provides this advice in the article:

• Homeowners can "make demand" on the title insurer to take appropriate action to discharge the lien. The insurance policy will specify how soon a homeowner must make that demand.
• Alternately, homeowners can demand in court that the filer of a lien either file a lawsuit to enforce the lien or be barred from proceeding with one.
• Those in the process of building a home can require in the contract proof that subcontractors are being paid as work has been completed and lien waivers to prevent those companies from filing liens on the property related to that work.
• Work with a qualified attorney, make sure you have title insurance from a company with sufficient reserves to handle claims and read the fine print. title insurance legal issues StiffingContractorsTheta

Washington AG Intervenes On Behalf Of Mobile Home Residents Alleging Property Titles Were Never Properly Transferred By Park Owner

From the Office of the Washington State Attorney General:

• Residents of a Spokane mobile home park were bewildered to learn they didn’t own the homes they live in. When an investigation by the Washington Attorney General’s Office revealed that the owner of West Prairie Village never properly transferred the titles, the business agreed to make things right. West Prairie Village owner, Vito Enterprises, U.S., Ltd., cooperated with the state’s investigation and signed an agreement submitted [...] for filing in Thurston County Superior Court.

***

• “Some of West Prairie Village’s residents are seniors who were denied property-tax exemptions because they didn’t own their homes,” Assistant Attorney General Jackie Findley said. “After the Spokane Assessor’s Office alerted us to the problem, we investigated and found that the titles hadn’t been properly transferred and the sales contract terms were vague.”(1) [...] The Attorney General’s Office alleged that Vito Enterprises’ sales practices were unfair and violated Washington’s Consumer Protection Act.

For the entire press release, see Stumped Spokane seniors told they didn’t own their homes (Mobile-home park owner changes sales terms after Attorney General’s Office steps in).

(1) The purchase agreements and promissory notes required new West Prairie Village homeowners to make monthly payments with 9 percent interest amortized at 15 years. Although the agreement referenced a “5-year term,” it wasn’t clear to purchasers that they were responsible for a balloon payment. At the end of five years, owners were told they needed to pay off the remaining balance or renew their contracts at a 12-percent interest rate. rent to own lease purchase option scams yellowstone

NY AG Scores Big Win As Supremes Reverse Lower Courts, Give Go-Ahead To States To Pursue Probes Of National Banks For Lending Discrimination

The Wall Street Journal reports:

• In a surprise win for state regulators over the banking industry, a divided U.S. Supreme Court on Monday gave New York prosecutors the green light to investigate national banks for lending discrimination. The high court, in a 5-4 opinion by Justice Antonin Scalia, said federal banking regulations didn't pre-empt the ability of states to enforce their own fair-lending laws.

• The ruling was a win for the New York attorney general's office, which had been seeking to investigate the banks' residential real-estate lending practices since 2005.(1) Scalia said New York Attorney General Andrew Cuomo couldn't issue executive subpoenas to the banks but could bring enforcement actions against them in court. The decision was a surprise because decades of U.S. Supreme Court rulings have favored federal banking regulation at the expense of state regulation. [...] Cuomo said the ruling "reaffirms the vital role state attorneys general play in protecting consumers from illegal and improper practices by our country's biggest and most powerful banks."

***

• The divided ruling didn't split along the court's normal ideological lines. Justice Clarence Thomas, whose views often align with Scalia's, wrote the court's dissent.(2)

***

• All of the other 49 states backed New York in the case, saying they have historically had the power to enforce consumer-protection laws against national banks. That power, the states said, was particularly important now because of the widespread mortgage abuses that contributed to the nation's economic crisis.

For the whole story, see US High Court: States Can Probe Natl Bank Lending (subscription required; if no subscription, try here, then click link for the story).

For the court's ruling, see Cuomo v. Clearing House Assn., L.L.C., Docket # 08-453 (June 29, 2009).

(1) According to the story, former New York Attorney General and Governor Eliot Spitzer launched the probe, saying mortgage data showed black and Hispanic borrowers received a larger percentage of high-interest home loans than white borrowers. Spitzer asked several banks, including Wells Fargo & Co., JPMorgan Chase & Co. and Citigroup Inc., to voluntarily produce non-public information about their mortgage-lending practices in New York. In response, the federal Office of the Comptroller of the Currency and a consortium of national banks each sued to block Spitzer's investigation.

(2) Justice Scalia was actually the swing vote in this ruling, aligning himself with Justices Stevens, Souter, Ginzburg, and Breyer, the four justices on the court widely considered to be politically "left of center". DiscriminationPredatoryLendingAlpha

Legal Advocates To Homeowners Facing Foreclosure: Stay Put & Fight Back; Clogged Courts, Budget Cuts Have Cases Moving At Snail's Pace

In Central Florida, the Sarasota Herald Tribune reports:

• Phil Agnes and other lawyers have two words for homeowners facing foreclosure: Stay put. The flood of foreclosures has clogged the courts, allowing homeowners to stay in their homes while the paperwork goes through the system. Many homeowners are unaware that they can remain at home for months while the foreclosure is in court, attorneys say.

• And homeowners willing to challenge the foreclosure sometimes can remain in their homes for more than a year, sometimes more than two years, just by filing a few basic legal documents. "It's in everyone's best interest to stay in the home," said Agnes, an attorney who volunteers at Gulf Coast Legal Services Inc.

***

• The Manatee and Sarasota court records are full of cases in which the banks waited months to move forward, even if the owner did not respond. Agnes said he has two cases where he responded for the homeowners, and the bank has not filed anything in almost a year. "And they're still in the house," he said.

***

• Adding to the clog, the lenders often pay law firms a flat fee for each judgment they obtain, so they focus on the easier cases, foreclosure defense attorneys who work in the system say. When a homeowner files paperwork(1) that takes the case out of the fast track and into the traditional court, lender attorneys sometimes seem to put the case aside. "They don't have time to necessarily fight these cases," Agnes said. [...] And any motion that requires the banks to produce information can delay the case for months. The more difficult the request, the longer the delay. The going time lag for banks to respond when a homeowner asks to see some types of paperwork? Up to six months.

***

• Requesting records from the lenders is more than just a stalling tactic, attorneys say. Homeowners have every right to force lenders to prove they really own the home loan. An unprecedented number of mortgages were repackaged together and sold as securities, which provides the best opportunities to homeowners trying to fight. The facts in every case differ, so there are no guarantees on how long a homeowner can stay after they stop paying the mortgage.

For more, see Attorneys advise clients to stay in their homes.

For a story that reflects the massive budget cuts and personnel layoffs being imposed on court systems throughout Florida, see The Florida Times Union: Florida court clerks face stiff budget cuts (A new law slashes budgets, leading to some counties' layoffs and office closings):

• Pointing to stacks of foreclosure [...] cases waiting to be filed, [Duval County Clerk of Courts Jim Fuller, who is president of the Florida Association of Court Clerks] said fewer employees probably will mean a longer lag time in filing cases.

(1) Go here for links to Sample Foreclosure Defense Legal Documents that some use when demanding that lenders produce the proper paperwork (ie. promissory notes, etc.), and who are otherwise fighting foreclosures. EpsilonMissingDocsMtg

Litigation In Baltimore City's "Ghetto Loans" Case To Go Forward As Judge Denies Wells Fargo's Request To Dismiss Suit

In Baltimore, Maryland, The Maryland Daily Record reports:

• The city of Baltimore’s mortgage-lending discrimination lawsuit against Wells Fargo Bank N.A. may proceed to what will be a “time consuming and expensive” discovery process, a federal judge ruled Thursday afternoon. Chief U.S. District Judge Benson E. Legg rejected the bank’s motion to dismiss the suit, four days after hearing arguments about the city’s alleged damages. The decision means the city will get access to more details about Wells Fargo’s lending practices since 2000; it had previously relied solely on publicly available information and information from a few industry insiders.

• The city claims the bank targeted black borrowers for subprime loans, a practice known as reverse-redlining, and that the resulting foreclosures have cost it tens of millions of dollars in lost property revenues and police, fire, and rehab expenditures.

***

• “Based on the new affidavits submitted by former Wells Fargo employees Elizabeth Jacobson and Tony Paschal, the City has proffered sufficient proof to proceed with its claim for disparate treatment discrimination under the Fair Housing Act,” Legg wrote in a 4-page memorandum.(1)(2) [...] The ruling represents a big victory for the city, since its suit was the first of its kind when filed in January 2008. A similar suit brought by the city of Cleveland under a public nuisance theory was dismissed in May.

For more, see Judge won’t dismiss City’s suit against Wells Fargo (if link expires, try here).

Go here for Judge Legg's 4-page order.

For earlier reports on this case, see:

• The Maryland Daily Record: Ex-workers allege race-based loan approach at Wells Fargo,
• The New York Times: Bank Accused of Pushing Subprime Deals on Blacks.

(1) In addition to denying Wells Fargo's Motion To Dismiss the lawsuit, the court, in footnote 1 of this order, grants the City of Baltimore's Motion To Amend its Complaint.

(2) According to an earlier report, the two whistleblowers claimed their co-workers targeted black ZIP codes and churches, used software to “translate” marketing materials into African-American vernacular, and referred to subprime loans in minority communities as “ghetto loans” and to borrowers as “mud people.” The loan officers, who worked for Wells Fargo in the Baltimore-Washington area from the late 1990s until 2007, also reportedly alleged that bank employees deceptively steered prime borrowers into subprime loans for their own financial benefit and joked that they were “riding the stagecoach to Hell.”

Central Florida Judges Hit With Federal Suit Over Implementation Of "Rocket Docket" Foreclosure Hearings

In Sarasota, Florida, the Sarasota Herald Tribune reports:

• Gregory Dixon and Maria Goldberg expect to lose their homes to foreclosure, so they have not appeared in court or tried to defend themselves. But they also think the way the judicial system handles uncontested foreclosure cases such as theirs violates the constitutional rights of all Sarasota and Manatee county residents, and they are asking a federal judge to step in.

• Their lawsuit against 12th Circuit Chief Judge Lee Haworth and two judges handling foreclosure cases argues that the courts should review cases to prevent lenders from taking homes based on incomplete or incorrect information. Their attorney, Richard Kessler, says judges have a responsibility to verify documents filed by lenders, and not doing so violates foreclosure defendants' rights to due process in court.(1)

***

• Kessler's lawsuit argues that a new "rocket docket," where up to 250 uncontested foreclosures are heard in one day to help unclog the congested court system, only accelerates the problem. But, judges say, it is the defendants' job to challenge the documents being used by lenders to take their property.

For the story, see Homeowners contend courts must review documents.

For earlier stories on Sarasota's foreclosure "rocket docket," see:

• Two minutes, and home goes away,
• 'Rocket docket' for foreclosures begins,
• It's fast, furious at Sarasota's 'Rocket Docket' court.

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, Go Here, Go Here, and Go Here.

(1) Reportedly, Kessler conducted a study of 180 Sarasota County cases and found only one in four had complete paperwork. EpsilonMissingDocsMtg

Lawyers Bellyaching Over Exclusion From Fannie, Freddie "Assembly Line Foreclosure Attorney List"

The Connecticut Law Tribune reports:

• To most Connecticut foreclosure attorneys, it's known as "the list." Inclusion is supposed to guarantee not only prestige in the legal community but, more importantly, a massive flow of foreclosure cases at a time when there's money to be made in volume work.

• Mortgage giant Fannie Mae maintains the primary list, called the retained attorney network, and it includes about 140 select law firms in 31 states. Many of those chosen firms also comprise the Freddie Mac designated counsel list of about 50 members.

• So what's the big deal?

For more, see Elite Lists for Foreclosure Work Under Scrutiny (Firms frustrated over difficulty in qualifying for work on Fannie Mae and Freddie Mac foreclosures; Connecticut attorney general is investigating).

For more on the Connecticut attorney general inquiry on how Fannie Mae, Freddie Mac, and mortgage-processing services company Lender Processing Services Inc. select law firms for foreclosure services, see:

• The Wall Street Journal: Conn AG Seeks Information On Foreclosure Law Firms (requires subscription; if no subscription, try here, then click link for the story),
• Connecticut Attorney General press release: Attorney General Investigates Selection Process For Law Firms, Marshals Handling Foreclosures,
• Go here for Connecticut AG Blumenthal's letters to LPS , Fannie, Freddie requesting information.

Bankruptcy Judge Hammers Mass. Money Lender Accused Of Predatory Practices In Piling Up Loan Charges, Wrestling Property Ownership Away From Borrowers

In Worcester, Massachusetts, the Worcester Telegram & Gazette reports:

• A loan repayment demanded at gunpoint, effective interest rates exceeding 41 percent and a near decade-long litany of coercion and strong-arm tactics left two borrowers “between the proverbial rock and a hard place,” according to a federal judge’s ruling that comes down hard on a controversial Marlboro lending firm and its president.

• U.S. Bankruptcy Court Judge Joel B. Rosenthal’s decision last week in favor of two corporations controlled by area real estate developers David D. Depietri of Southboro and Robert Depietri Jr. of Worcester marked the first time complaints against LBM Financial LLC and its owner, Marcello M. Mallegni, were aired in a trial and ruled upon by a judge. In his decision, Judge Rosenthal declared that LBM and Mr. Mallegni used a variety of “unscrupulous, to say the least” tactics to ensnare the Depietri brothers’ corporations, 201 Forest Street LLC and 219 Forest Street LLC, into a cycle of ever-increasing default interest and late fees.

***

• The ruling had been anxiously awaited by those who have filed more than a dozen state and federal lawsuits that accuse LBM and people associated with it of using similar tactics — including loan sharking, racketeering, extortion and fraud — in transactions they had with the firm.(1) The underlying intent of LBM and its principals, the lawsuits allege, was to wrest control of development projects through foreclosure, or, at the very least, force delays to run up the cost of those loans by piling on fees, penalties and default interest rates.(2) “This is exactly what they did to me,” said Barnstable developer Robert M. Bradley, who has a pending federal racketeering lawsuit against LBM, Mr. Mallegni and others. His experiences, he added, “absolutely mirror those made in this case, only tenfold.”

For more, see ‘Unscrupulous’ loan tactics cited (LBM Financial and owner Mallegni fined $1.1M).

For Judge Rosenthal's recent ruling in this matter, see 219 Forest Street LLC et al v. LBM Financial, LLC et al (6-30-2009).

Go here for Judge Rosenthal's April 8, 2009 ruling resulting in the discharge of one of the mortgages in this case pursuant to the application of Massachusetts "Obsolete Mortgages Statute" - M.G.L. ch 260, section 33.

Go here for other posts on accusations of strong arm money lending practices made against these "hard money" lenders.

(1) According to the story, many of the state and federal lawsuits filed against Mr. Mallegni and LBM also name David G. “Duddie” Massad, chairman and primary owner of Commerce Bank, as a defendant.

(2) An earlier Worcester Telegram & Gazette story (see Strong-arm tactics are alleged - LBM Financial target of complaints) reports, in the following excerpt, how LBM Financial routinely dodges the application of the Massachusetts criminal usury statute in lending transactions by availing itself of a huge loophole in the state's law that allows a lender to charge more than the maximum interest rate, provided that it notifies the state attorney general in writing ahead of time about it (see M.G.L. Chapter 271: Section 49(d). Criminal usury). Keep in mind that actually obtaining approval to make these loans from the state attorney general (or any other government authority, for that matter) is not necessary; you merely have to let the AG's office know, in writing, that you're going to do so.

• The state usury law dating back to the 1970s ostensibly caps the maximum legal interest rate at 20 percent, but also allows lenders to charge higher rates if they notify the state attorney general’s office in writing. LBM filed notifications announcing its intention to charge interest rates above the usury limit on loans in 1997, 2000, 2002, 2005, 2006, 2007 and 2008, according to records on file at the attorney general’s office. The one- or two-page notification letters, signed by Mr. Mallegni, don’t say exactly how far above the usury limit the company intended to set its interest rates. “All that the statute requires is that if a business is going to lend above a certain rate, they must file with this office,” said Melissa Sherman, a spokeswoman for Attorney General Martha Coakley. “We do approve these, but serve more as a depository for such notices.”

Go here for an example of an LBM Financial letter informing the Massachusetts AG it will be charging usurious rates.

Northern Florida County Clerk Stops Issuing Summonses To Tenants In Foreclosure Actions

In Alachua County, Florida, The Gainseville Sun reports:

• Clerk of Court Buddy Irby said the Clerk's Office stopped issuing the summonses [to tenants in foreclosure actions] on Jan. 15 on the advice of the clerk's attorney because of concerns that they show the tenants as being sued in court records. "If you were a renter, I'd think you'd be upset that the court records show that you are being sued in a foreclosure suit," he said. Irby said the summonses also created a lot of paperwork at considerable time and expense, with taxpayers footing the bill. He said it would be easier for the lenders or their attorneys to send letters informing any tenants of the foreclosure.(1)

Source: What if your apartment complex forecloses? New law may ease the big surprise.

(1) In judicial foreclosure states, basic foreclosure law says that unless all parties holding legal interests in real property (including leasehold interests, liens, etc.) that are subordinate to a mortgage in foreclosure are served with notice of the lawsuit, those subordinate interests are not cut off and will survive the foreclosure action. For this clerk of the court to decide not to issue summonses to tenants in possession of property in foreclosure actions (and thereby abridging their due process rights) to save money seems pretty ridiculous. I also find it hard to believe that the clerk's attorney advised him to do this.

Ohio Lawsuit Against County Sheriff, Others Alleges Appraisal Improprieties In Connection With Foreclosure Process

In Youngstown, Ohio, The Vindicator reports:

• A local attorney feels something is amiss with Mahoning County Sheriff Randall Wellington and those appointed to appraise county property, and he is taking the matter to court. Atty. Brian P. Kish filed a civil lawsuit in common pleas court [...] against Wellington and county appraisers Daniel Battisti, Gail Battisti, Geraldine Damico and Richard Jeren, alleging improprieties in the appraisal practices for property in the county.

***

• Kish said for the purposes of foreclosure and sheriff’s sale, every appraisal in the county is to be done by three independent appraisers. After each appraiser has appraised the property, an average of the three assessments is calculated and sent to all parties involved. Kish said he collected a list of sheriff’s return of appraisals on file since 2006 and randomly checked the documents. He said in every case he checked, all three appraisers listed on the document came up with the same value for each piece of property being appraised.

***

• Kish said he believes the appraisers are not independently checking the properties being appraised but are instead sending only one person to do an appraisal while the other two simply agree with the assessment and collect the appraisal fees.(1)

For the story, see Suit alleges improprieties in property appraisal (The suit names the sheriff and six others).

(1) If these charges are true, I wonder if there is a basis for voiding foreclosure sales in those cases where this conduct may have taken place?

Complaints From Homeowners, Former Company Employees Raise Questions About Activities Of Southwest Florida Foreclosure Rescue Firm

In Lee County, Florida, WINK News reports:

• The Florida Attorney General's Office has nine complaints against a Bonita Springs foreclosure rescue company, alleging that it may be breaking the law. Elite Financial Management Group, also known as Home Protection Agency, claims to help homeowners who are facing foreclosure by either mediating their mortgages or helping them with short sales.

***

• Three complaints from former Elite employees are also on file at the Attorney General's Office. One man, who worked for the company for a little over a month, said he quit because he was not comfortable with how it was operated. Another former employee asked the Attorney General's office if he would be held liable criminally or civilly for any practices that go on at the company. A third employee complaint came from a woman who said her final paycheck bounced.

• Elite Financial claimed they are not breaking the law because they collect fees in payments as they are performing services. When asked how that was legal given the specific language of the law,(1) they said they would prepare a written response.

For more, see CALL FOR ACTION: Helping or hurting homeowners? (WINK News investigates a foreclosure rescue company).

For story update, see Elite Financial Responds to Call For Action Investigation.

(1) Governor Charlie Crist signed a law in May, 2008 making it illegal for foreclosure rescue companies to collect payments from customers before completing the entire service. That law went into effect October 1, 2008. loan modification

DOJ Alleges Race Discrimination In Civil Suit Against Owners, Managers Of Mobile Home Park

The U.S. Department of Justice recently announced:

• The Department [...] filed a lawsuit against the former owner and managers of Homestead Mobile Home Village, a mobile home park in Gulfport, Miss., for violating the Fair Housing Act by discriminating against black tenants on the basis of race or color.

• The lawsuit filed in U.S. District Court for the Southern District of Mississippi charges that Edward and Barbara Hamilton, the former managers of the mobile home park, unjustly sought to evict a black couple and their five minor children who had moved there after being displaced by Hurricane Katrina. According to the complaint, the Hamiltons attempted to evict the family and other black residents for allegedly violating the rules of the park, but did not attempt to evict white residents for as many or more violations. The complaint also alleges the Hamiltons harassed and intimidated black tenants. The suit names as a defendant Indigo Investments LLC, the owner of Homestead Mobile Home Park at the time the Hamiltons managed the park.

For more, see Justice Department Files Lawsuit Alleging Racial Discrimination at Mobile Home Park in Gulfport, Mississippi (Federal Civil Rights Complaint Filed on Behalf of a Family Displaced by Hurricane Katrina).

State AG Shuts Down Western NY Debt Collection Operation; Arrest Owner/Convicted Felon For Unrelated Gun Possession

In Buffalo, New York, the New York Post reports:

• New York authorities say they've shut down a debt collection company that was falsely telling people they'd be thrown in jail if they didn't pay immediately. State Attorney General Andrew Cuomo says the Buffalo firm routinely broke the law by having its collectors impersonate law enforcement officials. In reality, the company was run by ex-convicts.

• Owner Tobias Boyland was arrested Tuesday after investigators serving a search warrant discovered a loaded pistol. A judge issued a temporary order closing the company's doors. Boyland's firm did nationwide business under several names. It was the subject of an expose on Dateline NBC in March. Messages left with the company and Boyland's lawyer weren't immediately returned.

Source: Authorities Shut Down False Debt Collectors.

For the New York AG's press release, see Attorney General Cuomo Shuts Down New York Debt Collection Operation That Used Illegal Scare Tactics To Threaten Consumers Across The Country (Employees Posed as Law Enforcement Officials and Threatened to Throw Consumers in Jail if They Didn't Immediately Pay Debts; Latest Action in Cuomo's Ongoing Probe into Unlawful Debt Collection Practices ).

For the Dateline NBC expose on the debt epidemic and the sleazy tactics used by some bill collection agencies and "debt scavengers" in hounding consumers into making payments on delinquent credit accounts, see Inside The Financial Fiasco: Debt Trap.

(1) According to the NY AG press release, the operation consisted of at least nine debt collection companies across Western New York. They operated under several names, including: Central Resource Management, Final Claims Asset Locators, Final Control Asset Locators, Interchange Payment Solutions, Next Step Services, Portfolio Asset Assurance, Silverbay Services, and Teleport.

Long Island Lawyer Accused Of Pocketing $80K+ In Real Estate Sale Proceeds Due To Seller, $20K+ In Alleged Debt Consolidation Scam

From the Office of the Nassau County, New York District Attorney:

• Nassau County District Attorney Kathleen Rice announced [...] that an East Meadow attorney has been arrested and charged with three felonies after three victims accused him of stealing more than $100,000 of their money. Craig Heller, 49, has been charged with for Grand Larceny in the Second Degree, Grand Larceny in the Third Degree, and Scheme to Defraud in the First Degree. He faces up to 15 years in prison if convicted. [...].

• Rice said that in June 2007, Heller was hired by a divorced couple to manage their debt consolidation. The ex-husband, of Bethpage, and ex-wife, of Seaford, each put $10,000 into an escrow account for Heller to pay their bills. Each party also agreed to pay Heller a $2,500 fee for his services. Heller soon received complaints from the ex-wife after she realized he was not paying off their debts. Heller agreed to repay both the $20,000 with interest and a portion of the attorney’s fee on Dec. 31, 2008. The money, however, was never repaid.

• In a separate incident, Heller, acting as escrow agent, was hired in November 2007 to remit a settlement check for more than $82,000 to the partial owner of a piece of Brooklyn property that was sold. The closing took place on April 18, 2008, but Heller never gave the victim, of Brooklyn, a check. He was ordered to pay the amount on Dec. 18, 2008, but failed to do so. As in the other case, Heller promised numerous times to pay his victim.(1)

For the entire Nassau County DA press release, see East Meadow Attorney Charged With Stealing More Than $100K from Three Victims (Heller faces 15 years in prison for thefts).

Go here, Go here, Go here, Go here, and Go here for other stories of trust account / escrow account theft of funds.

(1) If a New York attorney, in the course of representing clients, screws them out of money or property through dishonest conduct, go to the The Lawyers’ Fund For Client Protection Of the State of New York for more information. For other states and Canada, see:

• Directory Of Lawyers' Funds For Client Protection (American Bar Association);
• Check the USA Client Protection Funds Map;
• Check the Canada Client Protection Funds Map. EscrowRipOffKappa

Mortgage Broker Gets 3 Years For Illegally Pocketing $16K By Filing Phony Mechanics Lien On Home Shortly Before Title Closing

In Jacksonville, Florida, The Florida Times Union reports:

• A Jacksonville mortgage broker faces three years in prison for pocketing thousands of dollars at a real estate closing by pretending she did home repairs. Katina Mickens, 30, was sentenced [...] for grand theft, filing a false construction lien claim and acting as an unlicensed real estate agent at a 2005 home sale where she arranged the mortgage.

***

• The day before the house went to closing, Mickens filed a document called a claim of lien. Under a fictitious name, J&J Properties, Mickens reported she had done work on the house and was owed $16,000. That represented about 18 percent of the $85,000 mortgage on the home, putting an unnecessary added burden on the buyer, [Assistant State Attorney Stephen] Siegel said.(1)

Source: Mortgage broker faces 3 years on theft charges (4th story from the top).

Go here for other posts on suspected mechanics lien scams.

(1) Reportedly, J&J Properties filed lien claims at six Jacksonville homes in 2004 and 2005, claiming to be owed a total of $117,835. Former owners of five of those properties said they never hired Mickens or J&J to do any repairs, and none was done, according to the story. A hearing is scheduled in July about other charges involving some of those homes, Siegel said. MechanicLienScamTheta

NYC Woman Faces Charges Of Allegedly Pocketing $11K+ By Renting Out Apartment She Didn't Own; Used Craigslist To Reel In Seven Victims, Says DA

In Richmond Hill, Queens, the New York Post reports:

• Elizabeth Mosh was so excited when she rented a Queens apartment for $650 a month last September, that she even ordered a bed and a flat-screen TV online so they would be there when she moved in. But the 23-year-old preschool teacher was never able to make the move into the two-bedroom apartment in Richmond Hill because the woman who rented it to her via Craigslist doesn't own it, authorities said [...].

• Mosh and six others were victims of Tonja Fenton, 35, who allegedly rented the same apartment to seven people and pocketed $11,735 in deposit fees, a spokeswoman for the Queens District Attorney's Office said. The apartment is in the basement of a two-family home where Fenton lives.

• Fenton has been charged with grand larceny and scheming to defraud. Mosh said she gave Fenton $1,300 in cash for the first month's rent and the security deposit after finding the apartment listing on Craigslist. But at 6 a.m. on the day she was supposed to move in, Fenton allegedly called and said she couldn't do so because a pipe had burst and there was a flood in the apartment.

Source: CRAIGSLIST APT. 'SWINDLE.'

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

Arizona AG Has 50+ Firms In The Crosshairs In Ongoing Probes Into Loan Modification, Refinancing Rackets

In Phoenix, Arizona, the Phoenix Business Journal reports:

• Arizona Attorney General Terry Goddard said the state is investigating more than 50 mortgage modification and refinancing firms his office has received complaints about for ripping off consumers. Though Goddard would not disclose which companies are under investigation, he said the biggest problems in the industry right now are third-party advocates that charge up-front fees of sometimes thousands of dollars and promise distressed homeowners reworked mortgages that lower payments to help forestall foreclosures.(1)

For more, see Arizona investigating mortgage firms for fraud.

(1) Reportedly, homeowners are getting solicitations from all sorts of mortgage and refinancing firms. Some of the solicitations come in the form of letters, e-mails and automated telephone calls that can lead homeowners to believe they are from their lenders or from government agencies related to the federal “Making Home Affordable” program. Sometimes mortgage firms will create logos that look like government agencies or use the non-copyrighted federal fair housing and other logos, according to the story.

Law Students Spending Their Summer Vacation Helping Renters Beat Back Foreclosure Evictions

In Fall River, Massachusetts, The Herald News reports:

• A small group of area law students is circulating throughout this city and elsewhere in the SouthCoast to help tenants learn their rights and avoid evicted under harsh terms because landlords didn’t pay the bills and the banks came knocking at their doors. “Only the court can evict you after a foreclosure,” said Kelly Rafferty, one of six Roger Williams University School of Law students involved in a new summer program organized through South Coastal Counties Legal Services, headquartered on Bedford Street.(1)

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• The law students have been combing legal ads and housing court records to determine where foreclosures are happening in Fall River, Taunton, Brockton and New Bedford to notify residents. [...] With the dreaded foreclosure increasingly swallowing up landlords, tenants and entire neighborhoods alike throughout the country, South Coastal lawyers, student interns and volunteers are using tools and skills to battle back.

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• In additional to canvassing neighborhoods hard hit by foreclosures in the target cities each Monday, they hold free clinics in the city legal service offices each Thursday and Friday from 10 a.m. to noon. Their advice includes turning down the “keys for cash” program that banks use to offer token money and empty their foreclosed buildings. “We always ask the tenant what they want,” Rafferty said. For some, it’s more time, for others it’s funds to pay the next rent and deposit.

For more, see KNOW YOUR RIGHTS: Law students help tenants protect themselves.

(1) See the "No One Leaves" campaign conducted by another group of Massachusetts law students helping renters beat back foreclosure evictions.

House OKs Bill Allowing LSC-Affiliated Non-Profit Law Firms To Pocket Prevailing Party Legal Fees From Losing Litigant; Senate To Address Measure

The Washington Post reports:

• [Last week] the House [of Representatives] approved a budget of $440 million for the LSC [Legal Services Corporation](1) -- up $50 million from 2009 funding and $5 million more than the amount requested by the Obama administration. Lawmakers also lifted a restriction that kept legal aid lawyers who prevail in cases from recovering attorney's fees from the losing party -- a benefit available to winning lawyers in many civil rights or consumer protection cases. This move was important because those fees could be used to further supplement the LSC's budget. The Senate, which is scheduled to take up the funding measure [...], should go even further in freeing legal aid lawyers from federal restrictions.

For more, see Helping Lawyers Help the Poor (Congress should free legal aid lawyers from burdensome restrictions).

(1) Created by Congress in 1974, the LSC provides grants to civil legal aid organizations that in turn help represent the poor in civil cases.

Cops: Forged Docs Used To Steal Home In Foreclosure, "Satisfy" Unpaid Loan, Pocket $167K+ From Subsequent Refi, Swipe Add'l $6K In Rent To Own Scam

In Newington, Connecticut, The New Britain Herald reports:

• A Glastonbury real estate investor is accused of forging documents to take out more than $167,000 in mortgages on a Newington property in foreclosure, police said. Thomas “Steve” Moynihan, 48, [...], was charged by warrant Friday with larceny and forgery after a several-month investigation revealed he allegedly forged documents, including a quit claim deed signing a Newington home over to his company, court papers said.

• The scheme began to unravel in September 2008, when a Newington resident was notified that his foreclosure hadn’t gone through because he had filed for bankruptcy. The man hadn’t filed for bankruptcy and noticed that people were living in the Hartford Avenue home he had left while the foreclosure proceedings were taking place, a warrant for Moynihan’s arrest said.

• The man discovered that Moynihan had filed a quit claim deed with his signature at Town Hall, essentially giving the [...] property to Moynihan free of charge, the warrant said. The man brought the document to Newington police, who discovered a chain of forged papers that allowed Moynihan to take out two mortgages totaling $167,000 on the [...] property.

• Police also learned that Moynihan had told a Hartford man he could live in the home with an option to buy the property if he used his own money to make repairs. That man allegedly gave Moynihan a $6,000 deposit toward the purchase of the home and used his own money to make thousands of dollars in repairs, the warrant said.

• Moynihan was charged with first-degree larceny, third-degree larceny, two counts of second-degree forgery, identity theft and criminal impersonation. He was released after posting $50,000 bond and is scheduled to be arraigned on the charges July 6.

Source: Man charged with forging real estate documents.

Go here, Go here, Go here, 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, power of attorney abuse, etc.

Go here and go here for stories on how easy some tenants found it in getting screwed over in these lease/option, "rent to own" and contract for deed real estate deals. rent to own lease purchase option scams yellowstone DeedContraTheft

California DRE Posts List Of Alleged Loan Modification Scofflaws

The California Department of Real Estate has posted a list of persons and entities that have been served with a Desist and Refrain Order and/or Accusation by the Department resulting from a loan modification and/or foreclosure rescue transaction. In some instances, the person or entity has been ordered to stop providing loan modification and/or foreclosure rescue services because the person or entity is not licensed by the Department of Real Estate. In other instances, the person or entity has been ordered to stop collecting advance fees.

For the list of alleged loan modification rules violators, and links to the orders issued by the Department, see Desist and Refrain Orders and/or Accusations for Loan Modification Activities.

Go here for a non-inclusive list of State Foreclosure Rescue Enforcement Actions, compiled by the Federal Trade Commission.

Lender "Hijacks" House In Foreclosure Despite Court Order To The Contrary; Judge Orders BofA To Turn Over Keys To Homeowner & Pay Her Legal Fees

In Kissimmee, Florida, WFTV Channel 9 reports:

• Eyewitness News found an Osceola County homeowner won her battle in court to save her home from foreclosure, but the bank wouldn't listen. Ana Chavez used to live on Killamanjaro Drive until the Bank of America changed her door locks in violation of a court ruling.

• A judge told the bank that if Chavez does not get her keys by noon Thursday, he's is dismissing the foreclosure lawsuit and the bank will face more penalties. In the meantime, the bank couldn't explain why it took over a house it did not own.

• Homeowner Ana Chavez is fighting to save her home from going into foreclosure. She is hoping to modify her loan and Chavez thought she was one step closer when a judge ruled in her favor last month. Bank of America asked the judge to set a foreclosure sale date on her Kissimmee home, but the judge denied the request. Despite the judge's ruling, the bank decided to take over Chavez's home. [...] Ana Chavez had been away from her home for a couple of days. When she came home she tried to get into her house, but all the locks had been changed. The bank hired a locksmith, changed the locks and refused to give Chavez access to her home. The bank's attorney even called the bank and said there was a mistake, but those calls were ignored too.

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• Attorney Adam Sudbury says he hopes the punishment sends a message to the banks. "These banks and these attorneys they steam roll over people like there is no tomorrow and unfortunately for them sometimes they run into a road block," said Sudbury. Judge James Stroker wasn't happy with the bank's actions and has now ordered Bank of America to turn over the keys to her within 24 hours, pay for Chavez's attorney's fees and the bank may also have to pay for her living expenses.

Source: Bank Locks Woman Out Of Her Own Home.

For story update, see Bank Gives Woman Keys Back To Home (Bank of America has complied with an Osceola County judge's orders and has given a homeowner her keys back).

Go here for other posts on foreclosure & eviction screw ups.

(1) Last year, the Nevada Supreme Court approved a jury award of over $1 million, including punitive damages of $968,000, against a foreclosing lender for improperly booting a couple from their home and trashing its contents. See Nevada High Court OKs Damage Award To Homeowner Due To Mortgage Company Misidentification Of Home In Foreclosure.

For the Nevada high court decision, see Countrywide Home Loans v. Thitchener, 192 P.3d 243; 2008 Nev. LEXIS 79; 124 Nev. Adv. Rep. 64 (September 11, 2008), or go here for a summary of the Thitchener ruling from the Nevada Law Journal. ForeclosureLockOuts