Wisconsin AG Jumps Into Fray With Civil Charges Against Alleged Loan Modification Racket Currently Under FBI Probe, Targeted By Other States

In Dane County, Wisconsin, the Milwaukee Journal Sentinel reports:

• A California company offering to help distressed homeowners lower their mortgage payments has been sued by the Wisconsin attorney general's office for violating state law. In a civil complaint filed [...] in Dane County Circuit Court, the state accuses 21st Century Legal Services Inc., of Rancho Cucamonga, Calif., of instructing notaries it used to do business in Wisconsin not leave copies of signed agreements with customers and to obtain fees in advance of providing service. Both of those actions are against the law in the state, the lawsuit alleges.

• The lawsuit also says the company violated Wisconsin's no-call law, made misrepresentations in the course of conducting sales and failed to disclose the names of representatives making face-to-face solicitations. The lawsuit cites an instance in which 21st Century Legal Services sent a representative to the home of a Wisconsin woman in May about a loan modification. She paid $1,866.70 for the service but never heard from the firm or its representative again. Her loan was never modified and her home now is in foreclosure, the lawsuit says.

For more, see State sues company that offers help to distressed homeowners.

From the Wisconsin Department of Justice:

• Lawsuit: State of Wisconsin v. 21st Century Legal Services Inc., et al.,
• Press release: Attorney General Sues Loan Modification Company.

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In a related story on 21st Century Legal Services, see NBC Los Angeles: Scam Alert: Beware of Loan Modification Fraud (21st Century Legal Services, Fidelity National Legal Services under federal investigation):

• [T]wo ex-employees tell NBC that the majority of 21st Century clients never got their loans modified. [...] Complaints [...] caught the attention of the attorneys general in Ohio, Indiana, Arkansas and North Carolina. All four states banned 21st Century from doing business in their states. But authorities say 21st Century Legal Services changed its name to Fidelity National Legal Services and continued signing up new clients. Ex-employees say Fidelity was run out of the same office as 21st Century; was owned by the same woman, Andrea Ramirez; and even used the same ads to snare customers.

Florida Condo Associations Begin Seeking Blanket Receiverships On Delinquent Vacant Units Not Yet In Foreclosure In Battle To Stay Financially Afloat

In Miami, Florida, The Miami Herald reports:

• Condo owners behind on maintenance fees, beware: Condo boards are becoming more aggressive in collecting delinquent fees. One board even wants to try an untested strategy -- forcing renters into empty units to pay off deadbeat accounts. The board at the Jade Residences at Brickell Bay, a luxury condo of 341 units, is asking a Miami-Dade judge for permission to rent vacant units belonging to owners who aren't facing foreclosure but are behind on fees, which pay for the basic needs of the building such as water, power, insurance or even a new roof. As the collection crises for condo boards deepens, the forced-rental program is the latest example of associations becoming pushier -- and more creative -- in their attempts to wring revenue from delinquent homeowners and idle units.

***

• Current renters in Jade already turn over rent payments to the association when their landlords fall behind, dictated by a lease addendum landlords must sign before renting their condos. But [association attorney Guillermo] Mancebo says Jade and other condos need help with units that are lying fallow. In Jade's petition, Mancebo is asking the court to appoint a blanket receiver to manage the forced rental program. He's also asking the court to include units not yet in foreclosure by the association.(1)

For more, see Condo board tries new tactic to collect delinquent fees (A condo association is trying a novel legal strategy to collect delinquent association fees).

(1) In a court order last week, one Miami-Dade Circuit Court judge has already allowed a blanket receiver for another condominium complex to collect rents on units not in foreclosure by the association, the story states.

Federal Appeals Court Rules Favorably For Developers; Rejects Condo Purchasers' Attempt To Invoke Federal Law To Back Out Of Bad Deal

In Miami, Florida, the Daily Business Review reports:

• Bucking the Florida Supreme Court, a federal appellate panel waded into the battle between condo developers and buyers over the use of a consumer protection law to void contracts. The 11th U.S. Circuit Court of Appeals sided with developers in a Sept. 30 decision, giving them wide latitude in claiming an exemption from the Interstate Land Sales Full Disclosure Act, better known as ILSA.(1)

***

• Judge Ed Carnes, who wrote the 18-page opinion for the unanimous panel, said buyers have used ILSA disingenuously, changing their minds on what morphed into a bad real estate investment once the market turned. [...] “After the housing bubble burst, the Steins had second thoughts about their decision to purchase the condominium unit,” Carnes wrote. “Wanting out of their contract, they seized onto the Interstate Land Sales Full Disclosure Act, a federal statute that has become an increasingly popular means of channeling buyer’s remorse into a legal defense to a breach of contract claim.”(2)

For more, see Developers win in fight to enforce contracts.

For the ruling, see Stein v. Paradigm Mirasol, LLC, No. 08-10983, 2009 U.S. App. LEXIS 21512 (11th Cir., September 30, 2009).

(1) The story states that the ILSA was passed in 1968 to protect consumers from unscrupulous swampland salesmen, and that the plaintiffs' bar seized on the law when the real estate bubble burst as a way to get their clients out of their purchase contracts with developers and get back deposits. Go here for HUD's description and summary of the law, and here for the statute - 15 U.S.C. 1701 et seq.

(2) The condo purchaser's attorney Joseph Stern at Saraga & Lipshy of Delray Beach said the appellate court was clearly biased against the buyers. “They talk about our clients having buyer’s remorse. Statements like that have no place in the opinion. Those statements weren’t part of the record,” he said. Stern said he will ask the full 11th Circuit to hear the case en banc.

Idaho Finance Regulator Targets Alleged Loan Mod Racket Accused Of Unlicensed Activity & Scamming Upfront Fees From Homeowners With C & D Order

In Boise, Idaho, the Idaho Press Tribune reports:

• The Idaho Department of Finance announced [...] it issued a cease and desist order against a Meridian-based International Co-op LLC, a mortgage loan modification company, for engaging in unlicensed mortgage loan modification activities and for illegally charging distressed Idaho homeowners exorbitant upfront fees. Gavin Ge, director of the Idaho Department of Finance, said the department has received complaints from three Idaho homeowners who had paid the company $1,500 to $2,000 on the company's representation that it would assist the homeowners obtain mortgage loan modifications. "On top of the company's failure to obtain a license, the affected Idaho homeowners received nothing for their money and are worse off than they were before," Gee said.

For the story, see Officials: Meridian-based company preyed on distressed homeowners.

From the Idaho Department of Finance:

• Order to Cease & Desist: State of Idaho v. International Co-Op LLC,
• Press release: Department of Finance Orders Meridian Mortgage Loan Modification Company to Cease Further Business Activities.

Loan Modification & Foreclosure Consulting Outfits Flout New Nevada Law Requiring Licensing & Bonding

In Las Vegas, Nevada, the Las Vegas Sun reports:

• Compliance with a new law aimed at regulating mortgage modification and foreclosure prevention, a runaway industry rife with scammers, is off to a slow start, causing concern for those on the front lines. Only 50 companies statewide have applied for the state’s new licenses for loan modification and foreclosure consultant services. That number represents as little as one-tenth of the businesses offering one or both of the services targeted by the new law, says Joseph L. Waltuch, commissioner of the Mortgage Lending Division of the state’s Business and Industry Department.

• After an extension was granted to allow each applicant to post the required $75,000 surety bond, only 18 have done so, and none has completed the process for obtaining the licenses, Waltuch adds. Consumer advocates and others are eyeing that slow uptake and worrying that it indicates the law will fail to meet its main goals: regulation of a fast-growing industry and, more important, deterrence of fraud.

For more, see Mortgage scammers haven’t felt law’s effect.

Manhattan Feds: "Mortgage Stacking" Scam Pulled Off By Corrupt Title Agent

In New York City, the Office of the U.S. Attorney recently announced criminal charges against 41 suspects in eight separate cases involving a variety of mortgage and real estate fraud. The allegations in one criminal complaint describe the conduct of one allegedly corrupt title agent:

• Poui Land acted as the title agent for many of the closings charged as part of this case, generating significant fees for the defendants, including, in one instance, approximately $68,000. In some cases, the Complaint alleges that the defendants failed to record the mortgages on the properties, or to properly transfer the titles, which permitted the defendants to obtain additional mortgage loans on the properties.(1)(2)

For the criminal charges in this case, see Complaint - U.S. v. Johnson, et al.

For the U.S Attorney press release, see Manhattan U.S. Attorney Charges 41 Defendants In Coordinated Mortgage Fraud Takedown Across New York State.(page 6).

(1) Scams involving the fraudulently-obtaining of multiple mortgages on the same property through different lenders (not necessarily done simultaneously), and/or by failing to record the new mortgages and without paying off the existing loans, often go by the label of "mortgage stacking" (When the mortgages are fraudulently obtained simultaneously, the scam is referred to by some as "shotgunning"). The use of bogus title reports in these scams stating that no first mortgage existed on the properties in question is referred to by some as "title washing."

(2) The six indicted suspects are: Beverly Andrea Johnson (aka Beverly Johnson, Beverly Samuels, Andrea Johnson), Carone Johnson (aka Carone Johnson-Holt, Carone Morris), Carianne Johnson, Carell Johnson, Oliver Anderson, Bradley Skierkowski.

Editor's Note: According to communication received by this blog from Carianne Johnson, the charges against her have since been dropped. (November 5, 2011)

Walls Closing In On Beleaguered Owners Of 11,000 Unit NYC Apartment Complex As State High Court Hammers Landlord For Illegal Rent Increases

In New York City, The New York Times reports:

• The state’s highest court dealt a financial blow on Thursday morning to the already beleaguered owners of the sprawling Stuyvesant Town and Peter Cooper Village complexes in Manhattan when it ruled that they improperly began charging market rents on thousands of apartments.

• The ruling by the Court of Appeals may mean that the current owner, a partnership of Tishman Speyer Properties and BlackRock Realty, and the former owner, Metropolitan Life, may have to pay an estimated $200 million in rent overcharges and damages to tenants of about 4,000 apartments. In a majority ruling (two of the six judges dissented), the court said the owners improperly raised rents beyond certain set levels at the complexes while receiving tax breaks from the city for major renovations.

• The decision could also affect landlords of as many as 80,000 apartments across the city who may also have improperly raised rents and deregulated apartments while receiving special tax breaks.

• But the immediate and most devastating impact was on the Tishman Speyer partnership, which was already facing extreme financial difficulties after paying a record $5.4 billion in 2006 for the properties near the East River. The owners are running out of cash to pay building loans, and analysts have said it is highly likely the partnership will default by December. If the owners are forced to reimburse tenants, analysts say it would only hasten the path to default.

For more, see Court Deals Blow to Owners of Huge Apartment Complex (The Court of Appeals has ruled that the owners of Stuyvesant Town may have to pay an estimated $200 million in rent overcharges and damages to tenants of some 4,000 apartments).

For the ruling, see Roberts v. Tishman Speyer Properties, L.P.

In a related story on this massive 56-building, 11,000-unit New York City apartment complex, described by some as an alleged "predatory equity" deal designed to force tenants from their homes, see The Wall Street Journal: An Apartment Complex Teeters (High-Profile Tishman/BlackRock Property in New York in Danger of Default).

CalPERS On The Hook For $600M In Failing NYC, Northern California "Predatory Equity" Real Estate Schemes Designed To Force Tenants From Their Homes?

NewsBlaze reports:

• CalPERS(1) will lose hundreds of millions of dollars in predatory real estate investment schemes according to recent reports in the New York Times, the Wall Street Journal, the San Jose Mercury News, and other publications. What has not been adequately reported is that these schemes are classic examples of what housing advocates call "predatory equity," overleveraged investments that rely on the displacement of tenants from rent-regulated housing in order to turn profits. CalPERS has effectively invested (and lost) the retirement funds of working people in projects that were designed to displace working people from their homes.

***

• CalPERS, the nation's largest pension fund, will lose $600 million in two separate real estate investment deals: one in New York City with partners Tishman Speyer Properties and BlackRock Realty(2) and another in East Palo Alto, CA with partner Page Mill Properties. Both investments have been the subject of considerable controversy as they have involved the mass displacement of low and moderate income tenants from their homes. They have also spawned multiple lawsuits and raised the ire of tenants, community organizations, public officials, and labor groups.

For more, see CalPERS Loses $600M in Schemes Designed to Displace Tenants.

In a related post on the NYC fiasco, see City Concerned About Effect On Tenants From Unwinding $5.4B Purchase Of 11,000+ Unit Apartment Complexes Gone Bad.

(1) The California Public Employees' Retirement System (CalPERS) is an agency in the California executive branch that manages pension and health benefits for more than 1.6 million California public employees, retirees, and their families.

(2) Other big players which can be heard "sucking wind" around the globe on the New York City alleged "predatory equity" deal involving a massive 56-building, 11,000-unit apartment complex, according to a recent Wall Street Journal report [see An Apartment Complex Teeters (High-Profile Tishman/BlackRock Property in New York in Danger of Default)], are:

• Government of Singapore Investment Corporation (GIC), a global investment management company established to manage Singapore's foreign reserves - reportedly on the hook for a loss estimated at $575 million;
• Florida State Board of Administration, the outfit which manages, invests and safeguards assets of the Florida Retirement System Trust Fund and other funds for the State of Florida and local governments - reportedly ready to eat a loss estimated at $250 million;
• California State Teachers Retirement System (CalSTRS), primarily responsible for providing retirement related benefits and services to teachers in public schools and community colleges - about to flush the toilet on an estimated $100 million;
• Hartford Financial, an insurance company facing a reported estimated $100 million;
• DG HYP, a Germany-based commercial real estate lender reportedly on the hook for close to $100 million; and
• The Church of England, which reportedly "donated" an estimated $70 million in pursuit of profit in this apparently now-hopeless cause.

Oregon DOJ Task Force Begins Criminal Prosecutions Of Alleged Mortgage & Loan Modification Scammers; First Defendant Hit With $500K Bail

In Marion County, Oregon, the Statesman Journal reports:

• A Salem mortgage broker has been charged with using clients' personal information to purchase two homes. Julian James Ruiz III, 38, of Keizer was arraigned [last week on 17 counts] of mortgage fraud, aggravated theft, forgery and identify theft.

• Ruiz's criminal case is the first to be prosecuted by Oregon Attorney General John Kroger's Mortgage Fraud Task Force. [...] "The idea behind the task force is to not allow scammers to pick up steam," he said. [Oregon Department of Justice spokesman Tony] Green described the group as a coalition of criminal and civil attorneys, district attorneys, police and sheriff's offices, and investigators from throughout the state. The task force is investigating more than a dozen mortgage fraud and foreclosure scam cases across Oregon, he said.(1)

For more, see Keizer mortgage broker charged.

(1) According to the story, Ruiz' bail was set at $500,000. Julia Alavez, one of Ruiz's alleged victims, reportedly attended Thursday's hearing. "I went to him so he could help me with a loan modification on my home," Alavez, a cannery worker, said afterward. "I paid him $2,500 that he said he needed to pay fees to attorneys that would do the work," she said. "It's sad because you work long and hard for your money, and then someone just takes it away."

NJ AG: Fugitive Pair Abused Trust In $600K+ Sale Proceeds Ripoff From Financially Unsophisticated Homeowners Facing Foreclosure

In Trenton, New Jersey, The Trentonian reports:

• A pair of suspected frauds from Ewing charged with stealing $600,000 in a mortgage foreclosure scam that targeted poor people are fugitives of justice, New Jersey authorities said [last week] in calling on the public to turn in the pair. Wayne Betha, 39, and friend Joann Smith, 42, were indicted by a state grand jury on theft, money laundering, conspiracy and tax charges [last week] for allegedly ripping off 11 families forced to sell their homes [...].(1)

***

• “These defendants are charged with preying on people who had to sell their homes due to financial hardship, taking advantage of their trust and lack of financial sophistication,” said state Attorney General Anne] Milgram. “They stole from people who had little of nothing to spare.” Smith and Betha allegedly took the profit from home sales and put them in their own personal accounts for their use, deceiving the sellers into believing that they were not entitled to all of the profits from their home sale. Most of the sellers, who were not identified, were having serious financial problems and could not continue paying their mortgage.(2)

For more, see Milgram: Frauds stole $600K from the poor and are on run.

From the Office of the New Jersey Attorney General:

• Indictment: State of New Jersey v. Smith, et al.,
• Press release: Ewing Couple and Their Real Estate Firm Indicted on Charges They Stole Over $600,000 from Home Sellers (Also charged with defrauding mortgage companies of more than $600,000).

(1) The state attorney general alleges that the two, acting as real estate agents, stole more than $600,000 from clients who signed on to have Smith sell their homes. They’re also charged with defrauding three mortgage companies of $641,800 by falsifying the earnings of applicants for three home loans, the story states. Also indicted was their real estate company, S&B Properties Management and Maintenance, which allegedly was run from Smith's home.

(2) According to the NJ AG, the couple allegedly used a variety of schemes to fraudulently divert proceeds from the home sales into bank accounts maintained by Smith and S&B, which they allegedly used to launder the stolen funds. They represented to sellers and title companies that monies were owed to them for expenses, including property renovations and repairs that were never done and exorbitant consultant fees that they claimed the sellers had authorized. Many of the checks issued by the title companies handling the property sales were written to the home sellers, but Smith convinced the sellers to sign the checks over to her for payment of business expenses and fees. It is alleged that, in several instances, the defendants falsely indicated on HUD forms and tax forms that the sellers directly received all of the profits from the home sales.

They also omitted to tell sellers that they were agreeing in mortgage closing documents to pay large, unauthorized “seller’s concessions or seller’s assists” to the buyers. The victims were not financially sophisticated. They did not understand the details of the property closings and, because of their financial woes, were anxious to be free of the obligation of paying mortgages they could no longer afford. Smith and Betha allegedly took advantage of these facts to steal the victims’ profits from the home sales.

NYC Feds Describe Short Sale Flipping Deals, Sale Leaseback Foreclosure Rescue Arrangements In Recent Indictment Of Ten Suspects

In New York City, the Office of the U.S. Attorney recently announced criminal charges against 41 suspects in eight separate cases involving a variety of mortgage and real estate fraud. One case is described as follows:

• According to the Superseding Indictment, the defendants identified distressed properties that could be purchased at a low price, usually by targeting homeowners who had fallen behind on their mortgage payments and whose homes were facing foreclosure. In most instances, the defendants induced the homeowners to sell their homes to companies controlled by the defendants, including NNI, LLC, which was controlled by LAVETTE M. BILLS, and Recani Inc., which was controlled by WAYNE GREEN.

• These companies usually purchased the properties via "short sales," in which the lenders agreed to sell the properties for less than the balance owed on the loans and to discharge the remainder of the loans. The defendants then resold or "flipped" the properties to third party straw buyers at a higher price, usually on the same day.

• In other instances, the defendants tricked the homeowners into deeding or selling their homes to other persons, by falsely promising the homeowners that title would be returned to them at a later date or telling the homeowners that they were merely refinancing their homes.

For the criminal charges in this case, see Indictment - U.S. v. Bills, et al.(1)

For the U.S Attorney press release, see Manhattan U.S. Attorney Charges 41 Defendants In Coordinated Mortgage Fraud Takedown Across New York State (pages 4-5).

(1) The ten indicted suspects are: Lavette M. Bills, Kirk Lacey, Wayne Green Sherese W. Glenn, Revlon Hinds, Joseph Evans, Jerry Calonge, Mark Barnett, Omar Henry, and Peter Chevere.

Consumer Advocate: Mortgage Servicers Prefer More Profitable Foreclosures To Loan Modifications

From a press release from the National Consumer Law Center:

• Why have several recent programs designed to encourage loan modifications failed to slow America’s still-worsening home mortgage foreclosure crisis? A new report from the National Consumer Law Center (NCLC) discloses that mortgage servicers – including many large banks – have found it cheaper to foreclose on homeowners than to offer loan modifications that would benefit homeowners and investors.

• The result: Americans who might be able to stay in their homes under a loan modification plan are being moved right past that option and on to foreclosure. The new NCLC report, "Why Servicers Foreclose, When They Should Modify, and Other Puzzles of Servicer Behavior," reveals that servicers, unlike investors or homeowners, generally don’t risk losing money on foreclosures. In fact, servicers usually make money on foreclosures.

For the entire press release, see Avoidable Foreclosures Continue Despite Servicers' "Loan Modifications" (New Report Describes How Little Noticed Incentives Prompt Banks to Deny Relief to Homeowners).

Thanks to nationally recognized mortgage servicing fraud watchdog Mike Dillon at GetDShirtz.com for the heads-up on the report.

Go here for Mr. Dillon's commentary on a variety of mortgage servicing fraud issues.

Ohio Lawmaker Seeks To Strip Lenders Of Right To Foreclose On Abandoned Homes Forced Into Legal Limbo

In Dayton, Ohio, the Dayton Daily News reports on the havoc being created by lenders and their loan servicers who, after initiating foreclosure actions, abandon the lawsuits after finding out the homes are abandoned and the cost of making repairs, paying delinquent real estate taxes, and paying off fines for code violations exceeds the property value. An Ohio state lawmaker has offered a solution to this problem of abandoned homes being left in legal limbo(1) by these financial institutions:

• State Rep. Dennis Murray, D-Sandusky [is] preparing a bill that would give lenders a set amount of time — say, 60 days — after filing a foreclosure on an abandoned property to do something with it or be stripped of their legal interest in it. Other provisions of the bill give judges more leeway in dealing with foreclosure cases. [...] He said he’s optimistic he can get the bill passed.

For the story, see Owners of abandoned properties are hard to track down.

In related stories from the Dayton Daily News, see:

• A new crisis: Lenders abandon properties (Owner, neighbors, city left to deal with a home that no one has any incentive to improve),
• Advice to homeowners in trouble: Stay in the house! (That’s the message from housing advocates and elected officials who deal with foreclosure issues),
• Drop in foreclosures called ‘very scary’ (Lenders’ actions show they think properties are not worth pursuing).

Go here for other posts on homes being left in legal limbo (when a lender intentionally delays completion of a foreclosure to avoid taking title to the repossessed collateral, or fails to record its deed after foreclosure sale).

(1) A March 3, 2009 National Public Radio story (see Banks Refusing To Take Back Foreclosed Properties) reported that Cleveland, Ohio Housing Court officials said they have seen homeowners take matters into their own hands when dealing with the abandonment of foreclosure lawsuits by lenders. One instance is cited involving a foreclosing lender that was reluctant to complete the foreclosure process and repossess a dilapidated property. In that case, the homeowner simply deeded back the property to the lender by preparing a deed, naming the lender as grantee, and recording it.

Such a conveyance may ultimately be found to be ineffective because the mortgage lender surely would assert that it never "accepted" the deed conveyed by the owner of the dilapidated wreck collateralizing its loan (ie. to be effective, a deed must be both "delivered" by the grantor-owner, and "accepted" by the grantee-lender; in other words, no acceptance = no conveyance). However, recording a deed in the name of the unwitting lender may, under state law, create a legal presumption that it has been "accepted" by the lender (see, for example, Janian v. Barnes, 284 A.D.2d 717, 718; 727 N.Y.S.2d 182 (N.Y. App. Div. 3d Dep't 2001)) until such time that it straightens out the mess by going into court, presenting evidence to a judge that there was no actual acceptance, and obtaining a judgment declaring the deed to be void. Unless and until it does so, the lender could arguably be treated as the legal owner of (and find itself legally responsible for the code violations on) its abandoned dilapidated loan collateral. Inasmuch as many mortgage holders, their loan servicers, and their assembly line foreclosure mill attorneys have proven themselves to be quite clumsy when handling the paperwork relating to their mortgages, it could be quite some time before they discover that title to the loan collateral has been put in their name - probably when they start getting tagged with the code violations - and possibly even longer before they figure out what to do. Accordingly, recording the paperwork necessary to deed the title to a dilapidated home in foreclosure back to the bank may be seen by some as a practical, low cost way for a homeowner of an abandoned home to shift (albeit, maybe only temporarily) the liability for code violations (and possible jail time for failure to cure the violations) away from themselves and onto the lender. responsibility code violations foreclosure BetaVacantForeclosure

Columnist To Florida Law Enforcement: Enough Already With The Civil Suit Probes; Start Criminally Prosecuting Foreclosure Rescue Scammers

In Sarasota, Florida, a recent column by Tom Lyons in the Sarasota Herald Tribune calls for Florida law enforcement authorities to stop limiting their efforts in combatting foreclosure rescue scams to civil investigations, and begin bringing criminal prosecutions against the perpetrators:

• The average citizen is no expert in real estate law, and doesn't want to be. It's pretty dry stuff. [Gulfcoast Legal Services attorney] Elizabeth Boyle was glad a civil jury hung in there as she presented document after document to show how a company called Profitmax had taken advantage of a desperate Sarasota County woman. [...] The jury awarded [homeowner Wanda] Costa $93,000 [see Home rescue was a scam, jury says].(1) But "awarded" doesn't really mean the woman will ever get the money, which is supposed to pay her back for lost equity and other costs. The judge hasn't even approved the verdict yet, and who knows if the money would ever be paid anyway.

• I congratulate the jury on the attempt and I hope it helps. But here's what I really wonder: If a jury can figure out that Costa was scammed, why the heck can't law enforcement and prosecutors do the same? How about filing criminal charges in cases like this, and going for jury verdicts that foreclosure-help sharks would really care about?

***

• Florida's attorney general's office claims to be paying attention. It organized a task force that has 73 active investigations, supposedly. But I am underwhelmed. I must see 50 suspicious-looking roadside signs advertising foreclosure assistance every time I drive to work. Heck, the AG's office says it has 180 such companies that are considered of interest, and cases haven't been filed yet for any of those. And guess what: In every one, if anything is ever filed, the plan is to make each a civil case, not one where anyone ever has to worry about spending time behind bars. Could a scammer dare ask for a better set up?

For the entire column, see Hollow court victories no deterrent to scams.

(1) According to an earlier story, Boyle plans to try another case in December against the same defendants - Gideon Rechnitz, Thomas Cook and their companies - alleging the same scam. Rechnitz owns nine other properties in Sarasota and Manatee counties, apparently under the same scheme, which makes him the trustee on a trust with the homeowner's name on it.

California AG: "Loan Modification Upfront Fee Loophole Has Now Been Closed!" - Law Violators To Get Up To 1 Year In Jail; $50K In Fines Possible

In Southern California, the Orange County Register reports:

• Attorney General Jerry Brown said [...] he will go after companies that violate the state’s new ban on collecting an advance fee for helping someone avoid foreclosure. [...] Governor Arnold Schwarzenegger [last week] signed several bills meant to curb lending abuses, including SB 94, which prohibits anyone from taking an advance fee for help getting a loan modification.

• AG Brown said [...] in a release, “Over the past two years, unscrupulous attorneys and real estate brokers have abused their trusted roles and exploited desperate homeowners seeking to avoid foreclosure. The loophole that allowed this abusive practice to continue has now been closed, and homeowners should avoid any person charging up-front fees for foreclosure relief services.”

• Anyone who violates the ban can be fined up to $10,000 and imprisoned for up to one year. Corporations can be fined up to $50,000.

For more, see AG Brown to enforce ban on advance fees for mortgage aid.

For AG Brown's press release, see Brown Alerts Homeowners that New Law Prohibits Up-front Fees for Foreclosure Relief Services.

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In a related story, see The Recorder: Lawyers Vexed by New Law Barring Upfront Fees for Mortgage Modification Work:

• [R]eal estate attorneys say the new rules have created a host of unanswered questions. Can a firm accept a litigation retainer and later secure an unanticipated loan modification? Can lawyers place fees in a trust and draw on them when they finish the work? [...] Bar spokeswoman Diane Curtis said Bar attorneys are working on a document that will answer members' questions about the new law. The law calls for violators to face Bar discipline.

Attorneys Begin Going Down In Ongoing California State Bar Loan Modification Probe; 700+ Investigations Active

The State Bar of California announced this week:

• The State Bar’s loan modification task force announced [Wednesday] that it obtained the resignations of three California attorneys as a result of misconduct related to their loan modification activities.(1) It also placed another attorney on inactive status, charging his work poses a threat to the public, and has undertaken similar efforts against two other lawyers.(2)

• In addition, James Parsa, a southern California lawyer who extensively advertises his loan modification work, resigned [Wednesday]. He faced interim suspension from practice as a result of a 2001 misdemeanor conviction for sex with a child under 18 that he never reported to the bar. Parsa, 44, has advertised heavily throughout California for the past several months, offering to help homeowners facing foreclosure. Although he provided evidence to the bar that he was in fact working on cases, an investigator uncovered two 2001 misdemeanor convictions for sex with an underage girl. The bar court ordered that Parsa be placed on interim suspension. His resignation will make the suspension moot.

***

• Last month, it released the names of 16 attorneys it was investigating for possible misconduct related to loan modification.(3) Four of the six who resigned or face inactive enrollment were on that list.

For more, see Attorneys Resign Over Loan Modification Activities.

(1) The attorneys who resigned from the State Bar are:

• CAMERON EDWARDS, Alliance Law Center in San Diego, resigned Sept. 25,
• RONALD RODIS, of Rodis Law Group and America’s Law Group in Newport Beach, resigned Oct. 13 (Rodis Law Group and America’s Law Group were named in this Temporary Restraining Order With Asset Freeze in a separate legal action brought by the Federal Trade Commission),
• JEFFREY NEMEROFSKY, U.S. Advocacy Law Group and U.S. Financial Products, in Laguna Niguel, resigned Oct. 16.

(2) Those the bar is seeking to place on involuntary inactive status for posing “a substantial threat of harm to (their) clients or the public” under Business & Professions Code §6007(c) are:

• PAUL LUCAS, of Lucas Law Center in Aliso Viejo. The State Bar petitioned to put him on inactive status Sept. 21; Lucas did not reply to the petition and the State Bar Court has taken the matter under submission (Lucas, his firm, and others were named in this separate legal action brought by the Federal Trade Commission),
• SEAN RUTLEDGE, of United Law Group in Irvine, has a hearing Oct. 23; the bar filed its petition Sept. 22. The bar earlier charged him with seven counts of misconduct in handling a loan modification for a client who paid an advance $3,500 fee. Rutledge never took any action to negotiate with the client’s mortgage lender, the bar charges.

In addition, CHRISTOPHER L. DIENER, of Irvine, principal attorney for Home Relief Services LLC, was placed on inactive status Oct. 9, due to the State Bar Court judge's finding that he poses a substantial threat of harm to his clients and the public. Diener is also a target in a recent lawsuit brought by the California Attorney General in connection with his loan modification activities. See Questionable Short Sale Services Alleged By California AG In Recent Suit Against Group Accused Of Squeezing Homeowners For Upfront Fees For Loan Mods.

(3) According to their press release, The State Bar's 10-person loan modification task force has 738 active investigations underway. The task force was created in March after receiving thousands of calls from homeowners complaining that lawyers have done no work after taking fees purportedly to help avoid foreclosure. For those interested in The Bar's view on attorney participation in loan modifications, see ETHICS ALERT: Legal Services to Distressed Homeowners and Foreclosure Consultants on Loan Modifications.

Minnesota Feds: Sale Buyback Foreclosure Rescue Scam Leaves Unwitting Investors, Homeowners, Lenders With $2.5M+ In Losses

In Minneapolis, Minnesota, the Star Tribune reports:

• A Mound man who allegedly defrauded six Northwest Airlines pilots and a flight attendant out of $1.5 million in a real estate investment scheme has been indicted by a federal grand jury on conspiracy, mail fraud and tax charges. The indictment, made public Thursday, accuses Timothy Lynn Beliveau, 41, of using two firms he owned to skim the equity from distressed homeowners who had turned to his companies for help in avoiding foreclosure.(1)

***

• From 2004 until July 2007, the indictment says, Beliveau conspired to "fraudulently induce" investors into buying real estate at inflated prices with borrowed money as part of a "mortgage reconveyance" program. But Believeau and an unnamed coconspirator then spent the money raised from investors for their own use. In addition, the indictment says Beliveau raised more than $1 million from real estate investors that he then used to pay personal expenses.

***

• The government says Beliveau preyed on people facing foreclosure by promising to sell their homes to investors who would let them remain in the homes and repurchase them on contracts for deed while they worked to restore their credit. In fact, the process "artificially increased the purchase price of the homes and therefore made it extremely difficult for the homeowners to reacquire them," the indictment says.(2) [...] "Ultimately, the defendant's scheme occasioned losses to approximately 14 investors, the investors' mortgage lenders and 35 distressed homeowners in an amount exceeding $2.5 million," the indictment says.

For more, see Mound man indicted in real estate scheme (Timothy Beliveau is accused of preying on people whose homes were being foreclosed).

From the Office of the U.S. Attorney (Minneapolis):

• Indictment: U.S. v. Beliveau,
• Press release: Mound man indicted for stealing more than $2.5 million in real estate fraud scheme.

(1) Reportedly, Beliveau owned American Alliance Mortgage Group, which had offices in Minnetonka, Plymouth, Roseville, Wayzata, Edina and Hudson, Wis., and U.S. Housing & Financial Services LLC, "which held itself out as a company that assisted distressed homeowners in foreclosures," the indictment says.

(2) Among those homeowners who were screwed over was Telsche Paulson. After her husband died and her downstairs tenants moved out, the 87-year-old fell behind on mortgage payments on the Minneapolis duplex she'd lived in for 50 years. Beliveau's company sent her a letter offering to save her home from foreclosure. Like most of the distressed homeowners who turned to Beliveau for help, Paulson ultimately lost the house. Although she won a lawsuit against Beliveau and his ex-wife, Shelley Milless, they said in court filings that they had no money left. sale leaseback

Manhattan Chief Federal Prosecutor To Mortgage & Foreclosure Rescue Scammers: "We Will Find You, Arrest You, & Send You To Jail!"

In announcing the indictments last week of 41 suspects in connection with eight separate mortgage fraud indictments, Preet Bharara, the United States Attorney for the Southern District of New York, issued this declaration of war against mortgage and foreclosure rescue scammers:

• "As the U.S. economy struggles, we will continue to have a zero tolerance policy for those who defraud financial institutions and prey on homeowners on the brink of foreclosure. The type of criminal conduct charged today constricts the credit markets and makes it harder for honest people to realize the American dream of home ownership. It is especially alarming when lawyers, loan officers, and mortgage brokers treat their professional licenses as license to loot banks and profit from other people's pain. Particularly in this down economy, the message to those professionals and their alleged criminal cohorts is simple: we will find you, arrest you, and send you to jail."

For the Manhattan U.S. Attorney's press release, see Manhattan U.S. Attorney Charges 41 Defendants In Coordinated Mortgage Fraud Takedown Across New York State (Defendants Charged With Fraudulently Obtaining More Than $64 Million In Residential Mortgages On More Than 100 Properties; Lawyers, Mortgage Brokers, And Loan Officers Among Those Arrested In "Operation Bad Deeds").

Go here for links to the "OPERATION BAD DEEDS" Charging Documents for each of the eight cases.

Florida AG: Foreclosure Rescue Operators Screwed Homeowners In Foreclosure Out Of $1.9M+ Using Bogus Sale Leasebacks Designed To Strip Home Equity

From the Office of the Florida Attorney General:

• Attorney General Bill McCollum [last week] filed a lawsuit against a Miami-Dade County business, its owners and several straw buyers for their participation in an equity skimming scheme that victimized at least 20 South Florida homeowners. Xolutex, Inc., and principals Ceasar F. Tavaras and George Ibanez are named in the lawsuit, which claims the equity losses as a result of the scheme exceeded $1.9 million.(1)

***

• According to the lawsuit, the defendants allegedly sought homeowners who were in various stages of foreclosure proceedings and met with them under the guise of offering foreclosure rescue and credit counseling. Homeowners were then lured into the scheme where straw buyers would purchase the homes for inflated home prices, maximizing the money they could skim from the homeowners. To facilitate the straw buyers’ ability to qualify for these loans, Xolutex and its principals allegedly helped falsify loan applications.(2) Additionally, Tavaras and Ibanez allegedly convinced the homeowners to sign documents which caused virtually all of the equity in the homes to be paid to Xolutex.

***

• The Attorney General is [...] seeking [among other things] full restitution on behalf of all victimized consumers, civil penalties of $10,000 for each violation of the Florida Unfair and Deceptive Trade Practices Act.(3)

For the entire press release, see Attorney General Sues South Florida Business for Equity Skimming Scheme.

For the indictment, see State of Florida v. Xolutex, Inc., et al.

(1) Also named as defendants are: Paola Pino, Laura Ibanez, and Guillermo Gomez.

(2) If there is proof beyond a reasonable doubt that the operators prepared, or otherwise knew of, falsified loan applications, this would appear to be an easy case for the South Florida Feds to piggyback off of by bringing subsequent criminal charges in Federal court.

(3) Since this matter was brought by the Florida AG as a civil case (as opposed to a criminal case), there is no threat of jail time for the defendants in the event the allegations against them prove true.

Convicted C. Florida Scammer Charged w/ Using Phony Non-Profit To Make Bogus Loan Offers Designed To Swipe Home Equity From Those Facing Foreclosure

In Tampa, Florida, the St. Petersburg Times reports:

• Peter Porcelli, the telemarketing tycoon who poured part of his fortune into the former world champion Tampa Bay Smokers fast-pitch softball team, has been indicted on a mail fraud charge in connection with a mortgage foreclosure program. Porcelli, 57, of Oldsmar is already behind bars. Two years ago, he was sentenced to 13 years in federal prison and ordered to pay $11.9 million in restitution for a credit card scam that victimized tens of thousands of credit-poor consumers nationwide. A federal indictment unsealed Friday accuses Porcelli of using a foreclosure salvage service and a mortgage lending business to defraud homeowners in financial distress.(1)

***

• Kathy Visceglie, a Pasco County resident who organized homeowners to expose Porcelli's foreclosure salvage tactics, cheered news of the indictment but said it comes too late to help dozens of area residents who lost their homes. "Porcelli's company looked like a nonprofit that was offering hope, but it turned out to be the worst kind of fraud," she said. "I'm relieved the government finally took action. But it's too late to put people back into the homes they lost."

For the story, see Convicted telemarketing tycoon now facing mail fraud charge.

(1) Porcelli incorporated the Safe Harbour Foundation, a Clearwater nonprofit firm that offered to "help save homeowners from foreclosure by introducing them to lenders," according to court papers. But homeowners then found themselves referred for financial help to Silverstone Lending, a second company set up by Porcelli. Prosecutors say Silverstone used high-fee second mortgages and short-term balloon loans in which a quick default often ended with borrowers losing their homes. One victim reportedly said he phoned Safe Harbour looking for help with a foreclosure and he was talked into borrowing $35,000 when he needed only $20,000 to settle the case. He says he didn't understand that the Silverstone loan carried an option to take his house.

Porcelli's alleged foreclosure rescue, equity stripping racket is more fully described in civil lawsuits filed against him by victimized homeowners who faced foreclosure. See C. Florida Foreclosure Rescue Operator Faces Another Suit; Racketeering, Conspiracy, Criminal Usury, TILA Violations Alleged. foreclosure rescue

Judge Slams Sloppy Lender Unable To Prove Note Ownership; Voids Debtor's $461K Home Loan; Docs Signed By Multiple Hat-Wearing VP Sinks Servicer, MERS

In White Plains, New York, The New York Times reports:

• [B]anks and borrowers still do battle over foreclosures on an unlevel playing field that exists in far too many courtrooms. But some judges are starting to scrutinize the rules-don’t-matter methods used by lenders and their lawyers in the recent foreclosure wave. On occasion, lenders are even getting slapped around a bit.

• One surprising smackdown occurred on Oct. 9 in federal bankruptcy court in the Southern District of New York. Ruling that a lender, PHH Mortgage, hadn’t proved its claim to a delinquent borrower’s home in White Plains, Judge Robert D. Drain wiped out a $461,263 mortgage debt on the property. That’s right: the mortgage debt disappeared, via a court order.(1)

• So the ruling may put a new dynamic in play in the foreclosure mess: If the lender can’t come forward with proof of ownership, and judges don’t look kindly on that, then borrowers may have a stronger hand to play in court and, apparently, may even be able to stay in their homes mortgage-free.

***

• [On behalf of his homeowner/client, Manhattan consumer bankruptcy lawyer David B. Shaev] asked for proof that U.S. Bank was indeed the holder of the note.(2) All that was provided, however, was an affidavit from Tracy Johnson, a vice president at PHH Mortgage, saying that PHH was the servicer and U.S. Bank the holder.

• Among the filings supplied to support Ms. Johnson’s assertion was a copy of the assignment of the mortgage. But this, too, was signed by Ms. Johnson, only this time she was identified as an assistant vice president of MERS, the Mortgage Electronic Registration System.

For more, see If Lenders Say ‘The Dog Ate Your Mortgage’.

For an earlier related New York Times story, see The Mortgage Machine Backfires.

Go here for other posts on multiple corporate hat-wearing vice presidents involved in foreclosure actions.

(1) PHH appealed the judge’s ruling late last week, the story states.

(2) Reportedly, Mr. Shaev said that when he filed the case, he had simply hoped to persuade PHH to modify his client’s loan. But after months of what he described as foot-dragging by PHH and its lawyers, he asked for proof of PHH’s standing in the case. Mr. Shaev reportedly said he was shocked when the judge expunged the mortgage debt. EpsilonMissingDocsMtg

More On MERS, Standing-Lacking Lenders & Their Multiple Corporate Hat-Wearing Vice Presidents

In a recent story in CounterPunch on the problems the Wall Street mortgage securitization industry faces resulting from courts refusing to let foreclosure actions go forward, and changes in financial reporting requirements imposed by the Financial Accounting Standards Board, writer Pam Martens offers this description about one of the companies in the middle of this entire mess, (and everyone's favorite mortgage electronic registration system), MERS:

• In recent years, MERS has become less of an electronic registration system and more of a serial defendant in courts across the land. In a May 2009 document titled “The Building Blocks of MERS,” the company concedes that “Recently there has been a wave of lawsuits filed by homeowners facing foreclosure which challenge MERS standing…” and then proceeds over the next 30 pages to describe the lawsuits state by state, putting a decidedly optimistic spin on the situation.

• MERS doesn’t have a big roster of employees or lawyers running around the country foreclosing and defending itself in lawsuits. It simply deputizes employees of the banks and mortgage companies that use it as a nominee. It calls these deputies a “certifying officer.”(1) Here’s how they explain this on their web site: “A certifying officer is an officer of the Member [mortgage company or bank] who is appointed a MERS officer by the Corporate Secretary of MERS by the issuance of a MERS Corporate Resolution. The Resolution authorizes the certifying officer to execute documents as a MERS officer.”

She also offers this observation on the mortgage securitization trusts that have been foreclosing on the sliced-up loans it holds without possessing the proper paperwork:

• Astonishingly, representatives for the trusts have been foreclosing on homes across the country, evicting the families, then auctioning the homes, without a proper paper trail on the mortgage assignments or proof that they had legal standing. In some cases, the courts have allowed the representatives to foreclose and evict despite their admission that the original mortgage note is lost. (This raises the question as to whether these mortgage notes are really lost or might have been fraudulently used in multiple securitizations, a concern raised by some Wall Street veterans.)

For more, see The Next Financial Crisis Hits Wall Street, as Judges Start Nixing Foreclosures (New Shockwaves From Courts and Accounting Board).

(1) Known around here as a "multiple corporate hat-wearing vice president," or a "dummy" or "straw" vice president.

Rhode Island Attorney: Entire Practice Now Devoted To Putting Heat On MERS By Challenging Its Legal Standing On Behalf Of Homeowners In Foreclosure

In Providence, Rhode Island, The Providence Journal reports:

• A Providence lawyer, George E. Babcock, said his entire practice is now devoted to challenging the legal standing of a private mortgage registration service, the Mortgage Electronic Registration Systems, Inc., known as MERS, to foreclose under Rhode Island law.(1)

***

• Despite being on the losing end of an Aug. 25 decision by Providence Superior Court Judge Michael A. Silverstein, which he has appealed to the Rhode Island Supreme Court, Babcock said he is still filing “two or three” MERS lawsuits a week for clients hoping to stop foreclosure proceedings. Babcock estimates he is pursuing a total of about 100 MERS cases.

For more, see Mortgage transfers spur R.I. lawsuits.

For NBC Nightly News interview with attorney George E. Babcock (video approx. 2:16), see Lawyer Practices "Foreclosure Stoppage."

(1) Formed in 1995 by the mortgage finance industry, MERS was created to increase profits and efficiency by eliminating the need to record changes in mortgage ownership at local government property registries, the story states. MERS is a corporation that also acts as a nominee for lenders and their successors.

In a separate, unrelated lawsuit [see Homeowners In Foreclosure Being Clipped For Illegally Inflated Legal & Appraisal Fees, Says Lawsuit], the following all star lineup of mortgage lenders have been named and identified as allegedly the controlling shareholders of MERS:

• Citigroup, Inc., the now-deceased Countrywide Financial Corporation (now owned by Bank of America), Fannie Mae & Freddie Mac (both of which are sucking wind financially, and are currently operating under the control of the Federal government), GMAC-RFC Holding Company, LLC, (doing business as GMAC Residential Funding Corporation), HSBC Finance Corporation, JP Morgan Chase & Co., the late Washington Mutual Bank (now owned by JP Morgan Chase & Co.), and alleged "ghetto loans" peddler, Wells Fargo & Company. EpsilonMissingDocsMtg

Antics Of Multiple Corporate Hat-Wearing Vice Presidents Featured In Recent Research Paper

Those facing foreclosure seeking a guide to looking up public records online in an attempt to detect possible forgeries, fabrications, and certain fraud contained in recorded, error-ridden mortgage and mortgage-related documents committed by multiple corporate hat wearing vice presidents (and their confederates) working for loan servicers and others may find a research paper recently posted on the Internet worth a look.

For more, see Foreclosure Fraud - Guide to Looking up Public Records for Fraud.

For an earlier report that featured the antics of multiple hat wearing vice presidents, see Sue First & Ask Questions Later! (A Pew Mortgage Investigations Report On the Predatory Servicing Practice of False & Forged Signatures Employed by Ocwen & Others). EpsilonMissingDocsMtg

Central Florida Chief Judge "Objects" To Foreclosure Defense Attorney's "Attempts" To Gum Up "Rocket Docket;" Jurist: "It's Just A Stall"

In Central Florida, St. Petersburg Times' staff writer James Thorner blogs:

• A piece I wrote last week about Tampa Bay foreclosure defense attorney Mark Stopa [see Delaying foreclosure can lead to ethical 'heebie jeebies'] has attracted what could be unwanted attention from the top judge in Pinellas/Pasco County civil court. Judge Thomas McGrady summoned yours truly to his office this morning and gently, but pointedly, objected to Stopa's technique of delaying foreclosures by filing motions to dismiss lenders' lawsuits.

• McGrady described a court system that's drowning in foreclosure cases. Just three years ago 12 judges who deal with foreclosures handled about 800-1,000 open cases. These days each judge juggles about 3,400 cases. So McGrady clearly didn't appreciate attempts to gum up the works further. He said foreclosure cases are rarely dismissed, and lawyers who use the tactic have little chance of succeeding.(1) Even if the lender's case is thrown out, they almost always refile. "It's just a stall," McGrady said.(2)

• The judge went further. While appreciating that lawyers need to make a buck, he recommended most home owners NOT hire an expensive defense attorney if their goal is simply to postpone repossession of their house. The calendar is so jammed that many people wouldn't be thrown out of their homes for more than a year after they stopped paying their mortgage.

Source: Pinellas County chief judge "irritated" by foreclosure lawyer tactics.

(1) One reason why at least some of these foreclosure cases aren't dismissed, I suspect, is that some judges, knowing that the underfinaced homeowners can't afford the legal firepower necessary to seek a review of their rulings by an appeals court of any lousy, erroneous rulings, will simply rationalize a dismissal of the homeowners' motions (judges who take this rubber-stamp approach to adjudicating foreclosures, thereby keeping their "foreclosure rocket docket" moving deserve nomination for The Broken Gavel Awards). Further, some of these same judges may figure that the homeowners can't afford to pay for the posting of the appeals bond necessary to halt the foreclosure sale while the appellate court conducts its review of their rulings. Without posting the bond, the homeowners get booted from their homes while an appeal is pending, thus rendering a request for an appellate court review of a ruling impractical for them (assuming, of course, they could afford to appeal the ruling to a higher court in the first place).

(2) The solution seems simple. If the motions to dismiss filed by the foreclosure defense attorney are frivolous, the judge should simply sanction the attorney filing the motions. If not, then due consideration should be given to the motion. EpsilonMissingDocsMtg

Central Florida "Caregiving" Pair Convicted Of Duping Senior Out Of Title To Home Gets 10 Years For Grand Theft; Ordered To Return Ownership To Victim

In New Port Richey, Florida, the St. Petersburg Times reports:

• For four years, Eloise Mudway has waited for justice for the people who promised to be her caregivers but ended up mistreating her and stealing her home. On Thursday, the 92-year-old woman watched as a judge sent them to prison for 10 years. Joseph and Cynthia Clancy, convicted last month of grand theft of a person 65 or older, also were ordered to transfer ownership of the Hilltop Drive home back to Mudway.

***

• It's still unclear what will become of the property, which went into foreclosure and is in disrepair. Because of the debt on it, Cynthia Clancy's attorney speculated that by transferring the deed back to Mudway, the mortgage holder could call the debt due. Nevertheless, Circuit Judge Shawn Crane ordered it back to Mudway, calling that the right thing to do.

For more, see Pasco couple sentenced to 10 years for stealing elderly woman's home. DeedContraTheft

State Lawmakers Take Closer Look At Aggressive "Debt Buyer" Practices; NC Statute Takes "Produce The Note" Approach When Filing Collection Suits

The Associated Press reports:

• With many Americans in dire financial straits, states are cracking down to make sure aggressive debt collectors target only people who legitimately owe them money. [...] Since the recession started, at least a half-dozen states have adopted additional limits, like imposing statutes of limitation on collections and adding opportunities to punish abusive practices in court. Other states may follow suit. [...] Lawmakers are increasingly focusing on outfits that buy bad debt from credit card companies and other lenders for pennies on the dollar and profit when they collect more than they paid.

***

• A North Carolina law that took effect this month requires debt buyers filing collection lawsuits to produce documents proving they're the ones owed the money. Trying to collect on a debt that a company should reasonably know is invalid could lead to lawsuits and civil penalties of up to $4,000 per violation. North Carolina Attorney General Roy Cooper cites the case of a 65-year-old woman who had been plagued by up to five collection calls a day until her lawyer demanded proof she owed the money, then learned collectors were looking for a debtor in Greensboro, about 140 miles to the west. "We've gotten a lot of cases that the debt is not owed or the debt has been paid off," Cooper said. "They call and they browbeat people to pay money that they don't even owe."

***

• A New York City ordinance passed last spring requires similar proof from debt collectors, forcing them to tell consumers what company they represent, the original creditor, and the amount of the debt they owe. "Anyone contacted by a debt collection agency will now be empowered to demand written documentation regarding the status and history of the debt," Mayor Michael Bloomberg said.

For more, see States Raise Limits On Creditors As Debtors Squirm (Financial Misery Prompts States To Pass New Protections Against Aggressive Debt Collectors). zombie debt

South Florida Couple Files Suit Against Lender, Saying B of A Welched On Loan Modification Agreement

In Broward County, Florida, the South Florida Sun Sentinel reports:

• Weston attorney Kraig Weiss and his wife, Ana, are living what they call a "loan modification horror story." Earlier this year, the Weisses agreed to a loan modification with Bank of America, only to have the bank take the offer back. The Weisses sued. Now the bank is moving toward foreclosure, even though the Weisses are making mortgage payments. "The truth is, they don't care. They feel they are above it all and they don't have to answer to us," Kraig Weiss said.

***

• The Weisses' suit, filed in June, accuses the bank of breach of contract. They've also said that bank representatives traipsed onto their property to take pictures of their house during Yom Kippur, frightening Ana Weiss' 76-year-old mother when she looked outside. Bank of America declined to comment on the case.

For the story, see South Florida banks and borrowers struggle with loan modifications (Sides have sharply different understanding of what it means to modify a mortgage).

Buyer Of Foreclosed House Ignores Existing Lease; Seeks To Immediately Boot Family From Home, Says Tenant

In Bakersfield, California, KERO-TV Channel 23 reports:

• A southwest Bakersfield family renting a foreclosed home claims the new owner is unfairly trying to kick them out just four days after he bought the home. Earlier this month, Anthony Moore received notice the home he and his family had been renting for the past four years was foreclosed and would be up for sale at an auction. Moore said the home sold [...], and already the owner is pressuring him to get out in 90 days or sooner.

***

• Because of the new federal law Protecting Tenants at Foreclosure Act of 2009, Moore said he has the right to stay in the home until April 2010, that's when his lease is up. Congress passed the law in May aimed at protecting renters in foreclosure situations. Under the law, tenants are able to stay in their home until the end of their lease term, except if the new owner has plans to occupy the home then the tenant has 90 days to vacate.

• Moore said he has been in contact with Monique Cervantes, who identified herself as the landlord. He said Cervantes told him that the owner, Shae Mhlay has no intentions on living in the home. "She's saying that it's not legal, that they don't have to follow the lease and basically told me the first day that the new owner is lethal, is ruthless and wants us out," said Moore. On the County Assessor's Web site, ABC 23 found Mhlay had purchased close to 70 homes since January this year.

For more, see Renter Claims Rights Are Being Violated (Federal Law Aims At Protecting Tenants Rights). RentSigmaSkimming