Saturday, November 21, 2009

Elderly Couple Accuse Grandson Of Pocketing Mortgage Proceeds On Family Home After Duping Them Into Unwittingly Signing Over Title; Now Face F'closure

In St. Paul, Minnesota, Fox News TV Channel 9 reports:

  • [Stella] Hernandez is not embarrassed to admit she’s 81 years old. Her husband Joseph is 91. He is a decorated WWII veteran, and she was a real life “Rosie the Riveter” working on B-24 bombers at St. Paul’s Holman field. For the past 40 years they’ve lived on Dayton Avenue in the shadows of the St. Paul Cathedral. But now a family dispute means they may face foreclosure.

  • Six years ago, the Hernandez’s claim they were tricked into signing a qui[t] claim deed on the house giving ownership to their grandson. Afterwards they claim he allegedly took out loans on the home’s equity and didn’t repay them. What he did with the money they don’t know because they haven’t been able to talk to him. “I don’t know,” said Mrs. Hernandez. "I don’t know anything about his whereabouts or anything.”


For the story, see Elderly Couple Fighting Foreclosure in St. Paul. FinancialAbuseOfElderlyAlpha DeedContraTheft

Georgia Man Accused Of Getting His Dementia-Stricken Grandmother To Sign Over Title To Property

In Moultrie, Georgia, The Moultrie Observer reports:

  • A Moultrie man was apprehended Monday after he allegedly took advantage of his grandmother’s illness. Daniel Lee Baker, 25, [...] was charged with two counts of crimes against the elderly and probation violation. Colquitt County Sheriff’s Investigator Sgt. Jason Thompson said Baker allegedly had his grandmother’s property signed over to him. In addition to the property, his grandmother, who suffers from dementia, allegedly also gave Baker the power of attorney over her affairs. Additional changes against Baker were pending additional information into the allegations, Thompson said.

Source: Man accused of crimes against grandmother. FinancialAbuseOfElderlyAlpha DeedContraTheft

Lender Admits Screw-Up In Foreclosure Sale Where Homeowner Completed Trial Modification & Was Led To Believe Permanent Workout Was Forthcoming

In Phoenix, Arizona, KPHO-TV Channel 5 reports:

  • Despite being up-to-date on their modified mortgage payments, an Arizona couple found that their bank was foreclosing on their home, KPHO-TV reported. "You work so hard. Put a lot of money down on your house. You pay your taxes. You pay your mortgage, and it's all stolen from you," said Jeff Zerner, the homeowner. He and his wife, Yanthy, found out about the foreclosure when the new owner posted a notice on their door Nov. 4.


  • Just days before, the Zerners thought their home was safe. They had finished their trial modification with Chase and were led to believe they would qualify for a permanent modification. "We paid Chase several hundred dollars, which they accepted in good faith," said Zerner. "I feel extremely ripped off."

  • Chase officials admit they made an error by selling the house. They told KPHO-TV in a statement, "We apologize for the confusion over the modification actions and the parallel foreclosure steps Chase takes as a precaution. We have reached out to Ms. Zerner to discuss where we go from here." Loan modifications and foreclosures are parallel processes. In the Zerners' case, the sides failed to communicate with each other to halt the foreclosure until it was too late.

For the story, see Bank Accidentally Sells Couple's Home (Bank Cites 'Confusion' For Error). ForeclosureLockOuts

Loan Servicer Agrees To Modify Mortgage On Texas Widow's Home In Foreclosure After Story Hits TV

In The Colony, Texas, WFAA-TV Channel 8 reports:

  • After losing her husband of 47 years, Virginia Fraser was on the verge of losing her home in the foreclosure crisis. But thanks to kindly intervention, her story has changed. Last spring, Fraser was $7,000 behind in house payments and facing foreclosure. Her deceased Vietnam veteran husband had handled the family's finances.


  • Her fortune began to change when attorney Richard Anderson got a call for help from a priest at Holy Cross Church. "I stopped the foreclosure in December," Anderson said. "It was set again for January and February; I got it stopped again." The mortgage holder, Wells Fargo, had just received a $25 billion bailout. Anderson said once the story got on television last spring, they agreed to help Fraser. [...] Attorney Anderson was able to deliver the news to Fraser that her house payments will go from $1,500 a month to $423.

For the story, see Widow's home saved from foreclosure in The Colony.

See also, The Colony Courier-Leader: Knights ride to rescue veteran’s widow.

Friday, November 20, 2009

Maryland Man Accused Of Using Forged Deeds To Steal Real Estate; Judge Refuses To Allow Suspect To Use Allegedly Stolen Land To Secure Bail Bond

In St. Mary's County, Maryland, Southern Maryland Newspapers reports:

  • Daniel Jason Brown, 31, of Leonardtown faces 64 charges connected with four alleged incidents of property deed forgery and six charges connected with an alleged incident of witness corruption. [... Assistant State's Attorney Daniel] White [...] alleged that Brown is in possession of property that he acquired with stolen deeds and urged the court to force Brown to post a cash bond, rather than one backed by property. The land, White said, "in our opinion, is a proceed of those crimes." Judge C. Clarke Raley imposed a $50,000 cash bond, stating, "We have no prediction of what the future holds."

For more, see Indictments allege land deed forgery (Brown also faces charges connected with incidents of witness corruption).

Homeowner Faces City Demolition Order As She Attempts To Rescue Earlier-Vacated Home Now In Legal Limbo As Lender Fails To Hold Foreclosure Sale

In Mansfield, Ohio, the Mansfield News Journal reports:

  • Having recently learned she still owns the house she thought was lost to foreclosure last year, Tina Powell wants to move back in at 152 W. First St. The city, however, placed a demolition order on the home this fall. Powell insists she's the victim of a big mix-up. She and her husband bought the house in 2001, and he died there in 2006. She says she left their home behind in June 2008, believing her mortgage company had taken possession of it.

  • "I didn't have the money for an attorney. I didn't inquire. I just obeyed," Powell said. But then the mortgage company went defunct. And her name remained on the deed. Not knowing those crucial facts, she also later discovered she'd missed out on opportunities to fight demolition. "I didn't know I still owned the place. I would never had left, if I would have known," she said.

  • Over the course of the city's condemnation process, notifications were sent out with her name on them -- but to a Columbus address that apparently belonged to the mortgage firm, she said.

For the story, see Condemned house at issue in Mansfield. legal limbo

Foreclosed 15-Bedroom "Monster House" Homeowner Admits To Stripping $1M In Fixtures From Mansion; Now Faces Felony Grand Theft, Vandalism Charges

In Encinitas, California, The San Diego Union Tribune reports:

  • The woman who built the county’s largest home — known as the “monster house” — and lost it to foreclosure in February admitted [...] that she stripped it of $1 million in fixtures, but said it was to protect her masterpiece after the bank refused to hire security. Suzy Brown, 45, said she returned everything. But seven months after the property agent for Capital One Bank filed a police report, the District Attorney’s Office charged Brown [...] with felony grand theft and felony vandalism. [...] “I basically took the law into my own hands to protect a very special place,” Brown said in an interview [...]. “I removed the most valuable assets and I promptly returned them once they had a security guard.”

  • The bank foreclosed on the 15-bedroom Encinitas house Feb. 13 after Brown had not made payments for more than a year. She moved out March 22, and the missing items were reported March 26.

For more, see Mansion’s owner 'took law into my own hands'. foreclosure stripping

Homeowners Furious After Another Maintenance Fee Hike By Financially Struggling HOA; 50%+ Of Units Either Delinquent Or In Foreclosure

In Orange County, Florida, WOFL-TV Channel 35 reports:

  • When Tom Beard learned that the Tivoli Village homeowners association wanted to increase his fees for the second time in as many years, he organized a petition signed by residents who refused to pay the increase. "It really angers me. I'm very frustrated. I'm in the same financial situation as a lot of other people in this subdivision and my wife and I have sucked it up. We don't drive nice cars, we don't go on vacation," Beard said.
    Residents here currently pay nearly $2,500 dollars a year in homeowners fees. The increase would add another $375.

  • HOA members say they are $250,000 in the hole and can't pay their bills. Fifty percent of the units are delinquent in their fees, and another 20 percent are in foreclosure. "The reality of it is, in order for the association to support itself, the dues would have to go up, whether we still own lots in the community or not," said HOA president and developer Kyle Sanders. [...] At Tivoli Village, the developer still acts as the head of the homeowners association. He plans to approve the 15 percent increase and will place a lien on homeowner who don't pay, but residents like Beard say they're ready to fight for their rights.

For the story, see Homeowners furious over fee increase.

Thursday, November 19, 2009

S. California Man Gets 11 Years For Using Stolen I.D.s To Hijack Unwitting Homeowners' HELOC Accounts; Ripoff Netted $1M+

From the Office of the U.S. Attorney (Los Angeles):

  • An Orange County man has been sentenced to 132 months in federal prison for orchestrating two identity theft schemes in which he obtained personal information from hundreds of consumers and used the data in an attempt to fraudulently obtain approximately $1.5 million from home equity lines of credit (HELOCs) and credit cards accounts. Martin Quoc Pham, 28, of Garden Grove, was sentenced [...] by United States District Judge George H. Wu. In addition to imposing the 11-year prison term, Judge Wu ordered Pham to pay $537,973.


  • In the [HELOC] scheme, Pham and his associates used personal identifying information to take over HELOCs at JPMorgan Chase Bank. Once they had online access to the HELOCs, Pham and his co-conspirators transferred money into bank accounts they controlled. This scheme, which lasted only five months but netted well over $1 million, caused losses to the bank and to individual victims whose identities were taken over.(1)

For the U.S. Attorney press release, see Orange County Man Sentenced To 11 Years In Prison For Two Identity Theft Schemes Involving Lines Of Credit.

(1) In the second scheme, Pham and his co-conspirators used personal identifying information to encode counterfeit credit cards that were used to obtain merchandise and gift cards at WalMart stores and Sam's Clubs across Southern California.

California State Bar Task Force Hammers Five More Attorneys In Continuing Probe Into Alleged Loan Modification Misconduct

In San Francisco, California, The National Law Journal reports:

  • The State Bar of California's crackdown on attorneys for alleged loan modification misconduct has claimed five more lawyers in Southern California, three of whom have resigned.


  • On Nov. 2, Timothy Thurman of Trinity Law Group in Los Angeles resigned with charges pending after the FBI arrested him in October. He was charged with forging the signature of a federal judge on a fake court order that he gave to his clients so that they could avoid eviction. His law firm, launched earlier this year, provided litigation and loan modification services. [...] On Nov. 4, two other lawyers resigned with unspecified charges pending: Gary Davidson of Costa Mesa, Calif., and Eric Douglas Johnson of Culver City, Calif. Davidson did not return a call for comment, and a phone number to Johnson's law office is no longer in service.

  • Also on Nov. 4, Paul Lucas of Lucas Law Center in Aliso Viejo, Calif., was put on involuntary inactive status for allegedly becoming a threat to the public. Among the accusations are that he lied about his firm's refund policy and its relationship with Future Financial Services, which he has described as the marketing arm of his law office.


  • On [Nov. 6], Sean Rutledge of United Law Group in Irvine, Calif., was placed on inactive status for taking money from his clients, not performing services and failing to refund fees in 14 client matters.

For more, see Calif. Bar Crackdown on Loan Modification Misconduct Claims 5 More Attorneys.

See also, The State Bar of California news release: State Bar Loan Modification Task Force Shuts Down Practices Of More Lawyers.

NYC Man Accused Of Using Forged Documents In Attempt To Swipe $128K From Foreclosed Homeowner In Alleged "Surplus Scam"

From the Office of the Queens County District Attorney:

  • Queens District Attorney Richard A. Brown [...] announced that a Flushing man has been charged with second-degree attempted grand larceny, second-degree criminal possession of a forged instrument and other charges for allegedly forging the signature of a man whose home had been foreclosed on in an effort to collect the surplus that resulted from a sale of the house.(1) District Attorney Brown said, “The defendant is accused of trying to steal a large amount of money owed to the victim in this case – and then challenging the victim in court when the scheme was uncovered. [...].”


  • District Attorney Brown said that, according to the charges, the complainant, Leonard Lum, was the owner of a property [...] in Corona, Queens, which was foreclosed upon on March 21, 2003. As a result of the foreclosure, there was a surplus of $128,044 owed to him as proceeds from the sale of his property through foreclosure action. The District Attorney said that, on December 17, 2008, the complainant filed an action [...] to collect the surplus.(2)

  • On February 9, 2009, however, the defendant Harry Coumnas, of H.C. Sonic, Inc., allegedly filed a petition with the court in opposition of the complainant’s action, claiming that the complainant had assigned rights to the defendant to collect the $128,044 surplus in exchange for a payment of $25,000. The District Attorney further said that the defendant allegedly hired an attorney to file papers in an effort to collect the surplus, which included filing documents bearing the forged signatures of Leonard Lum and his wife, Betty Lum, purportedly assigning the surplus of $128,044 to the defendant in exchange for $25,000. According to the criminal complaint, the complainant never assigned the right to the surplus to the defendant and did not receive the sum of $25,000 from the defendant.

For the entire Queens DA press release, see Flushing Man Charged With Filing Fraudulent Court Papers To Collect Foreclosure Surplus (Allegedly Forged Victim’s Signature In Bid To Collect $128,000).

(1) The District Attorney identified the defendant as Harry Coumnas, 50, of 25-25 126th Street in Flushing. The defendant is charged with second-degree attempted grand larceny, second-degree criminal possession of a forged instrument, first-degree falsifying business records and first-degree offering a false instrument for filing.

(2) Assuming the absence of typographical errors in the DA's press release, it appears that the $128K foreclosure surplus was sitting in the court registry for well over five years before the foreclosed homeowner "woke up" and attempted to retrieve his funds (March 21, 2003 to December 17, 2008). For all anyone knows, he (like most people who lose their homes to foreclosure) may not have been aware that he's entitled to money from the foreclosure sale of his home to the extent the sale price exceeds the debt owed to the foreclosing lender (subject to the claims of any intervening lienholders), and may only have become aware of his right to the cash after having his suspicions aroused by one of the many "foreclosure surplus chasers" who make their living ripping off foreclosed homeowners unaware of their rights to the sale overage.

Wife Of Alleged Sale Leaseback, Foreclosure Rescue Scammer Cops Plea To Clipping IRS Out Of $900K+ In Unpaid Taxes

In Minneapolis, Minnesota, the Star Tribune reports:

  • A 38-year-old Chaska woman admitted [...] to preventing the IRS from collecting more than $900,000 in employment taxes from her ex-husband's mortgage brokerage company. In pleading guilty in federal court in St. Paul, Shelley Lee Milless acknowledged that she schemed with her then-husband, Timothy Lynn Beliveau, 41, of Mound, to shield from the IRS $901,985.94 in income tax, Federal Insurance Contributions Act tax and Medicare tax collected from employees of American Alliance Mortgage Group.


  • Beliveau, her former husband, was indicted last month on 12 counts, including mail fraud and willful failure to account for and pay taxes. 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 home to investors who would let them remain in the house and repurchase it on a contract for deed while they worked to restore their credit.

For the story, see Guilty plea in $900,000 scam to cheat the IRS.

Wave Of Chinese Drywall-Related Homeowners' Insurance Cancellations Begins Hitting Louisiana; Homeowner Could Face Threat Of Foreclosure, Job Loss

In New Orleans, Louisiana, The Times Picayune reports:

  • In August, Tamara Thomas filed a claim with her homeowners insurance company after discovering that her air conditioning and other appliances had failed because her three-year-old home was filled with defective drywall made in China. But before the Hanover Insurance Group even denied the claim, as most insurers have been doing with claims for Chinese drywall damage, it canceled her policy, effective Nov. 19. The Massachusetts company said there had been a "substantial change in risk" because the home was no longer occupied since Thomas and her family had begun staying in the guest room at her parents' house out of concerns over how the drywall was affecting their health.


  • So far, most insurance policy cancellations have been taking place in Florida. In Louisiana, insurers were universally denying claims, but it was believed that a state law making it difficult for insurers to drop coverage for homeowners who have been customers for at least three years would largely keep policies in place. But advocates for Chinese drywall victims have reported that in the past few weeks, a wave of cancellations has begun to unfold in Louisiana, even with people like Thomas, who had insurance on her home with Hanover for just over three years.(1)

  • "I'm hearing it every day now," said state Sen. Julie Quinn, R-Metairie, who has been holding town hall meetings about Chinese drywall issues. In canceling policies, insurers often cite the failure to maintain the home in insurable condition, or vacancies, Quinn said.

For more, see Insurers have begun cancelling policies on Louisiana homes with tainted drywall.

(1) Reportedly, while investigations into Chinese-manufactured drywall continue, Thomas now finds herself in a string of no-win situations. Although Thomas' skin problems, her husband's nosebleeds and her daughters' respiratory ailments have improved since they began staying at her parents' house, the insurance cancellation has caused a new set of nightmares, the story states.

When she got the cancellation letter, Thomas immediately called her mortgage lender to tell the company about the situation. Her lender suggested that she contact the bank's force-placement insurance company to get coverage so that she would remain in compliance with the terms of her loan. But the force-placement company said that it couldn't bind coverage since she has an active problem at the house and has made a claim. She has since contacted Louisiana Citizens Property Insurance Corp., the state's insurer of last resort, but an agent with Citizens has advised her that it may not be able to write a policy for the same reason.

Failure to get new coverage in place by Nov. 19 will potentially put her in violation of the terms of her mortgage and at risk of foreclosure. If her loan goes into default, Thomas also risks losing her job, because, as a financial consultant, she is required by her employer to maintain perfect credit. "I have a $270,000 home that's worth zero dollars," Thomas said. "No one's going to insure me. My house could be foreclosed upon. I'm still paying my mortgage on a house I can't live in."

Wednesday, November 18, 2009

Federal Prosecutor In "Money Store" Foreclosure Rescue Scam Case Takes Punch In The Face From Supporter Of Co-Conspirator At Sentencing Hearing

In Greenbelt, Maryland, The Washington Post reports on the sentencing of Joy Jackson Fordham, a retired exotic dancer who went on to become president of the now-defunct Metropolitan Money Store, a foreclosure rescue scam operation that screwed homeowners facing foreclosure out of millions in equity in their homes by peddling bogus sale leaseback arrangements that were purportedly designed to help save their homes from being repossessed by mortgage lenders.

  • The case produced more courtroom drama Monday when Assistant U.S. Attorney James A. Crowell IV was punched in the face by a relative of Jackson's key accomplice, Jennifer McCall, witnesses said. McCall was in court to be sentenced at a separate hearing later in the day, but the hearing was postponed after she fired her lawyers. After Crowell, [...] asked that she be jailed pending sentencing, one of her relatives leapt into the well of the courtroom and punched him. The man was taken into custody, officials said.

For the story, see 12-year prison term in mortgage swindle (A Maryland woman who stole millions from Washington area homeowners trying to avoid foreclosure is a "vulture" whose case should serve as a warning to other con artists, a federal judge said yesterday before imposing a sentence of more than 12 years).

Novice Bidders In Online Condo-Lien Foreclosure Sales Left Holding The Bag As They Unwittingly Buy Units Subject To Unpaid, Big-Balance 1st Mortgages

In Sarasota, Florida, the Sarasota Herald Tribune reports:

  • Erika Ginsberg-Klemmt and William Anderson met online, but not in a good way. Driven by the misconception that they had stumbled on a brilliant formula that would allow them to buy a Siesta Key condominium for pennies on the dollar, the two novice real estate investors began unknowingly bidding against each other on Sarasota County's new online auction Web site. Anderson ended up prevailing with a bid of $86,001 and believed that he held unencumbered title to a condo once valued at $327,000. But all Anderson really won was the right to pay off $20,000 in unpaid association dues.

  • More than a dozen investors who made similar mistakes in Sarasota and Duval counties since July are now out hundreds of thousand of dollars. Though they acknowledge that they were "suckers" and "stupid," they also question why government-run Web sites do not do more to warn novice bidders. "Okay, I'm an idiot," said Ginsberg-Klemmt, who settled in Sarasota in 2005 and began buying liens this summer after living on a sailboat with her husband for more than a decade. "But I'm not alone. Every day another sucker believes what we did."(1)

  • The fact that inexperienced investors have been burned by bidding for foreclosures on the sites calls into question whether Florida counties have rushed into this brave new world of online bidding.


  • Thanks to a law passed by the Florida Legislature in 2008, counties across the state began to look at removing the auction process from the courthouse steps. The goal was to reduce costs and allow anyone to bid on foreclosed properties remotely. The first winning bidder for a sale held for Manatee County was someone from Montana, said Craig McIntyre, vice president at, the counties' auction company.

  • "Anyone on the Internet anywhere in the world can participate," he said. "You don't need to leave home and you can bid in your pajamas." Maybe that is the problem, burned investors say. Just because you are in your PJs does not mean you can skip a title search, property inspection or other basics before buying a property. But the process makes you feel like you can.(2)

For more, see When government auctions went online, what was for sale got lost.

(1) Ginsberg-Klemmt, the winning bidder on five condo association liens in Sarasota, Manatee and Duval counties, has been hyperactive in contacting people who have made the same mistakes, urging them to fight to get their money back and to force counties to change the process, the story states.

(2) According to the story, the attorney for Sarasota County Clerk Karen Rushing's office said, "Whether it be a sale in the courthouse or online it doesn't alleviate the onus of responsibility to research it."

Protection From F'closure Eviction No Help For Renters Getting Immediate Boot From Condemned Home Repo'd By Bank; Timing Of Bldg Inspection Questioned

In Enfield, Connecticut, The Hartford Courant reports:

  • George Lombardo of Thompsonville left for work as usual Monday morning only to find a notice posted on the porch of the house he rents on Lincoln Street. The house had been condemned as "unfit for occupancy." It was condemned Thursday, Nov. 5, according to the sign posted at the entrance to both sides of the duplex and signed by housing inspector Richard Metcalf. "I don't have a home now, and I just found out this morning on my way to work," Lombardo, 49, said Monday.


  • He called his landlord and found out that the property had been foreclosed about two weeks ago and is now owned by the bank, leading Lombardo to question the timing of a building inspection that determined his home to be uninhabitable. But Peter Bryanton, director of community development, said that the foreclosure and the inspection are unrelated. [...] "There was enough there to say, 'This is a dangerous situation,'" Bryanton said. "If we find it's a danger, a hazard, like we did, then we've got to get [the tenants] out." He said there is no formal process for letting residents know their residence is condemned besides posting the sign. After the signs are posted, tenants are to leave immediately, negating the [...] period a resident would typically have to leave after a foreclosure.


  • "[The home's] been in the same shape for eight years," Lombardo said. "There were no vermin, no leaks, no structural damage. There's a tarp on the roof, but that has been there for years."

For the story, see Enfield Tenants Have To Find New Homes After Duplex Is Condemned.

Lender Foiled In Attempt To Push Tenant Out Of Recently-Foreclosed Home; Renter Forced Into Court To Assert New Legal Rights To Dodge Eviction

In Sandy Springs, Georgia, The Atlanta Journal Constitution reports:

  • Crystal Johnson had no idea her landlord had financial trouble until police taped an eviction notice to the door of her Sandy Springs condominium in June. About a year into her two-year lease, Johnson faced the prospect of being forced out of her home because a bank had foreclosed on the landlord, who was in default on a loan. “They treated me like I was in default,” Johnson, a music producer and songwriter, said. “But I wasn’t in default.” [...] A federal law enacted in late May, however, has eased the pain for renters such as Johnson, a single mother raising her high school aged daughter and a nephew.(1)


  • Johnson and EMC Mortgage Corp., which owned the mortgage to her landlord’s condo and took possession of the home, finally settled the case in housing court on Oct. 20. EMC, which initially wanted her out of the property, agreed to honor the remainder of her lease. [...] Prior to the law, tenants had few rights in landlord foreclosures, said Tamara Serwer Caldas, managing attorney for the Atlanta Volunteer Lawyers Foundation. Caldas represented Johnson in her eviction fight.


  • Johnson said she learned about the law from her beautician, who saw a television news broadcast about it. It was part of broader legislation dealing with foreclosure mitigation. Even then, she said, only two of 15 lawyers she called for advice knew about it. “I really had to fight; I didn’t understand how this was happening,” Johnson said. “I knew I had my rights but they weren’t being enforced. I didn’t know if the marshals were going to be coming to my door. It was a very frightening time for me.” [...] Johnson said she was offered $700 by the bank that foreclosed on her landlord to leave the condo immediately. She refused and wound up going to court.

For the story, see Law helps renters forced out when landlord defaults.

(1) Among other things, this new federal law requires lenders taking title to foreclosed homes honor any existing tenant leases, and provide at least 90 days notice when vacating month-to-month renters. See Section 702(a)(2) of the Protecting Tenants at Foreclosure Act of 2009.

The following are documents from the National Housing Law Project and the National Low Income Housing Coalition that can be used to help keep tenants from being illegally forced out of foreclosed homes in violation of the new law:

  • Sample Notice for Tenants to be Used by Successors in Interest - click here,
  • NLIHC's One-page Explanation of the New Tenant Protection Provisions - click here,
  • Questions and Answers For Tenants Of Buildings At Foreclosure After May 20 - click here,
  • NHLP Cover Memo, Tenant Protections - click here,
  • Letter from a Section 8 Tenant to Landlord - click here,
  • Letter from a Non-Section 8 Tenant to Landlord - click here,
  • Sample Notice for all Tenants - click here,
  • Sample Notice for Section 8 Voucher Holders that a PHA Could Send - click here,
  • Sample Letter to Send to Judges who handle Landlord Tenant Cases - click here,
  • Sample letter to Send to Public Housing and Section 8 HCV Administrators - click here,
  • HUD Notice on tenant protection provisions - click here,
  • Protecting Tenants at Foreclosure Act Statute - click here,
  • Tenants in Foreclosure - Webinar.

Effort To Harass Tenants Out Of Recently Foreclosed Homes In Violation Of Federal Law Continues

In West Haven, Connecticut, the New Haven Register reports on another incident involving a lender and its attorneys allegedly attempting to bully tenants out of their rented, foreclosed homes through the use of deceptively written letters designed to mislead the tenants of their legal rights under the federal Protecting Tenants At Foreclosure Act,(1) as well as under Connecticut state law, and the work of a local legal aid office in assisting the tenants in asserting their legal rights to stay put until their leases expire.

  • The East Greenwich, R.I., law firm of Marinosci, Ceritto and Shapiro is handling the property for Deutsche Bank. A July 13 letter to the tenants gave them two days to get in touch to discuss possible monetary help in relocating or the firm would initiate legal action to evict them. Subsequent legal filings consistently misspelled the street name and cited Virginia law for the basis of their actions; one tenant was given six days to leave, while the Boyds got three months, and it was unclear what communication took place with Ramon Ayala, who lives in a basement apartment.

  • Buried within the legal “notice to quit” document sent later is a reference to leases. If the tenants in fact have them, they are entitled to stay until they expire. [New Haven Legal Assistance Association housing lawyer Amy] Marx said all three have leases, but the importance of those arrangements was not explained to tenants and all were preparing to leave. Also, the $1,600 “cash for keys” offer to the Boyds was $400 less than the minimum required by state law. [...] Marx said the July 13 letter, which was signed by “evictions team lead” Daniel J. Lailer of the Rhode Island firm, “is an outright violation of the tenant act.”(2)

For the story, see Federal law gives rights to renters.

(1) Among other things, this new federal law requires lenders taking title to foreclosed homes respect any existing tenant leases, and provide at least 90 days notice when vacating month-to-month renters. See Section 702(a)(2) of the Protecting Tenants at Foreclosure Act of 2009.

(2) It wouldn't surprise me if these deceptively written communications from attorneys, real estate agents, and others creates legal causes of action in favor of the tenant, the state attorney general's office, or both as violations of applicable state deceptive and unfair trade practices statutes.

Negotiating Deed In Lieu Of Foreclosure Without Obtaining A Release Of Deficiency Liability Leaves Homeowner In Hot Water

Attorney Jonathan Alper from the Florida Asset Protection Blog offers this caution to financially strapped homeowners when negotiating the transfer of their property to the foreclosing mortgage lender by a deed in lieu of foreclosure:

  • A deed in lieu of foreclosure is supposed to be a final settlement between owner and mortgage lender. The lender accepts a deed to the property in consideration for releasing the borrower of any further liability under the loan or mortgage. When my clients tell me they want to offer a deed in lieu they intend for the deed to the lender will end their liability under the mortgage loan.

  • When I looked at [one] client’s "deed in lieu" I found that the lender did not include a release of liability, and in fact the document referred to the borrower’s continued liability for a deficiency. This client had negotiated a deed in lieu of foreclosure but not a deed in lieu of deficiency liability. Also, by surrendering title to the property without the bank having to foreclose, the client gave up all the defenses available in a foreclosure action which he could use as leverage to negotiate a complete release. If your mortgage lenders offers you a deed in lieu make sure it’s the real deal. You give them the property back and they release you from any further liability. Anything less may be a trap.

Source: Deeds In Lieu Of Foreclosure : Make Sure Lender Is Offering The Real Thing.

Tuesday, November 17, 2009

Key Operator In "Money Store" Rescue Scam Gets 12+ Years; Targeted Homeowners In Foreclosure w/ Bogus Sale Leasebacks In Home Equity Ripoffs

From the Office of the U.S. Attorney (Greenbelt, Maryland):

  • U.S. District Judge Roger W. Titus sentenced the president of the Metropolitan Money Store, Joy Jackson, age 41, of Fort Washington, Maryland, [...] to 151 months in prison followed by five years of supervised release for conspiracy to commit mail and wire fraud in connection with a mortgage fraud scheme that falsely promised to help homeowners facing foreclosure keep their homes and repair their damaged credit, announced United States Attorney for the District of Maryland Rod J. Rosenstein. Judge Titus also entered a judgement ordering Jackson to pay restitution of $16,880,884.86 and to forfeit three residential properties in Oxon Hill, Capitol Heights and Laurel, Maryland and three vehicles.

  • Joy Jackson presided over a ‘money store’ that was in the business of ripping off homeowners and mortgage lenders by submitting fraudulent paperwork to support over $37 million of loans that were never intended to be repaid,” said U.S. Attorney Rod J. Rosenstein. “Instead of helping financially distressed homeowners keep their homes as promised, she secretly used the home equity to buy luxuries for herself, including furs, jewelry and over $800,000 on her wedding.”


  • Jackson and others conspired to fraudulently promise to help homeowners, who had substantial equity in their homes but were facing foreclosure because of their inability to make monthly mortgage payments, avoid foreclosure and repair their damaged credit. The homeowners were directed to allow title to their homes to be put in the names of third party purchasers (the straw buyers) for a year, during which time Metropolitan Money Store promised to improve the homeowners’ credit ratings, help them obtain more favorable mortgages, and eventually return title to their homes to them. The homeowners were told that the equity withdrawn from the properties would be used to pay the mortgage and expenses on their homes and to repair their credit. The straw buyers were paid up to $10,000 to participate in the scheme and allow the properties to be put in their names. Jackson also served as a straw buyer on several properties in Maryland.

For the entire press release, see President of Metropolitan Money Store Sentenced to Over 12 Years in Prison for $37 Million Mortgage Fraud Scheme (Personally Responsible for Over $16 Million in Losses to Mortgage Lenders; Used Over $800,000 of Fraudulently Obtained Proceeds to Pay for Her Wedding). foreclosure rescue

Expiring Statute Of Limitations To Allow Two Dozen Mortgage Fraud Suspects To Walk Free?

In Clarke County, Georgia, the Athens Banner Herald reports:

  • Prosecutors may have let too much time pass to indict nearly two dozen people arrested three and a half years ago and charged with a massive mortgage fraud scheme at a Southeastern Clarke County subdivision, some defense attorneys say.

  • A real estate professional tipped off Athens-Clarke police in spring 2005 that he suspected home sales at the Milford Hills subdivision [...] involved shady dealings; authorities rounded up suspects between April 2006 and June 2008, all on charges they violated the state's Racketeering Influenced and Corrupt Organizations Act.(1)


  • To prosecute a racketeering case, prosecutors must prove underlying crimes - like theft by deception, forgery, deceptive business practices and identity theft - each of which has a four-year statute of limitations in which the case must be prosecuted. The clock starts ticking when the alleged crime is committed. "It's our opinion the statute of limitation has already expired for most of the charges in this case, and if the state brings charges down the road, we would make the case it's too late to do so," said [Page] Pate, who represents Athens attorney C. Michael Rose, the closing attorney for many Milford Hills properties.

  • Prosecutors have five years to bring indictments for RICO crimes, but Pate said he and other attorneys would argue a racketeering case can't be made when the statute of limitations means prosecutors can't charge for the underlying crimes.


  • Although the attorney general hasn't yet sought indictments, that doesn't mean he's decided there's no case, said [Georgia Attorney General Thurbert] Baker's spokesman, Russell Willard.(2) "The matter is still open and pending," Willard said. "If we had affirmatively decided to not bring charges, we would already have closed the file." Willard refused to say whether he agrees with defense attorneys' claims that the statute of limitations for prosecution has expired.

  • Athens attorney Edward Tolley represents Brian Dupree, a former Athens businessman authorities say was at the center of the scheme to buy up Milford Hills properties, then inflate their values for resale. Tolley agreed with Pate that the statute of limitations may have passed, and if anyone's to blame for the Milford Hills fiasco, it's the banks, he said.

For more, see Time may be up on mortgage fraud cases (Attorneys point to statute of limitations).

(1) According to the story, the alleged plot, which may have netted as much as $7 million, was orchestrated by developers, real estate agents, appraisers and at least one lawyer who used fraudulent mortgage applications and property appraisals to inflate home values and defraud mortgage lenders, officials said.

(2) Initially investigated by Athens-Clarke police, this case later was taken over by the office of Georgia Attorney General Thurbert Baker, the story states.

Texas AG Moves To Recover Upfront Fees From Alleged Foreclosure Rescue Racket That Targeted Financially Strapped Homeowners

From the Office of the Texas Attorney General:

  • Texas Attorney General Greg Abbott [...] took legal action to obtain restitution for a fraudulent “mortgage rescue” firm’s victims. Dallas County 134th District Judge James M. Stanton granted an agreed temporary injunction barring Markus and Tyrone Bailey from deceptively operating the unlicensed businesses, Behind on Mortgage and Behind on Mortgages USA [...] in Dallas. The agreement requires the defendants to either reimburse all customers from whom it collected unlawful fees, or place these monies in a trust pending final judgment.


  • The defendants visited homeowners facing foreclosure and pitched a way for them to obtain new loans, renewals, extensions of time to pay and modifications of existing mortgage loans. In return, the defendants required at least $1,000 in advance from homeowners and demanded they have no contact with – or make future payments to – their original mortgage servicers.The defendants retained homeowners’ fees for services and provided no measurable foreclosure relief, nor did they negotiate with mortgage servicers. Thus, many homeowners who dealt with the defendants ultimately lost their homes to foreclosure action.

For the entire Texas AG press release, see Attorney General Abbott Takes Enforcement Action Against Dallas-area ‘Mortgage Rescue’ Operation (‘Behind on Mortgage’ defendants bilked unwitting homeowners).

Go here for the Texas AG's temporary injunction against Behind on Mortgages.

Florida AG Says Alleged Forclosure Rescue Racket

From the Office of the Florida Attorney General:

  • Attorney General Bill McCollum [...] announced that his office has filed a lawsuit against two Central Florida companies and their owner over allegations they charged up-front fees for foreclosure rescue-related services. National Payment Modification Company and The Bostonian Group, LLC, which conducts business under the name People’s First, allegedly charge up to $2,500 in up-front fees to homeowners trying to rescue their homes from foreclosure.(1)


  • An investigation conducted by members of the Attorney General’s Economic Crimes Division, working as part of the Attorney General’s Mortgage Fraud Task Force, determined that both companies charge the up-front fee and divide it into five equal payments secured by post dated checks. Each check, according to the lawsuit, is associated with a separate “sub-contract” or step in the loan modification process. Consumers complained that both companies cash the post-dated checks even though the companies have not begun negotiations or even contacted the consumers’ lenders.

For the entire press release, see McCollum Files Lawsuit Against Central Florida Companies for Loan Modification Scams.

(1) Also named in the lawsuit is William Rodriguez, the owner of both companies, who was a founding owner of Wineberg, Lopez, & Rodriguez Company. The Attorney General’s Office sued Wineberg, Lopez, & Rodriguez Company in March and obtained an emergency injunction barring the company from charging homeowners any fee in advance for providing foreclosure-related rescue services. That case is still pending in Orange County Circuit Court.

Struggling Florida Condo Associations Continue Requesting Court Orders For Blanket Receiverships In Effort To Stay Financially Afloat

In Palm Beach County, Florida, the Palm Beach Post reports:

  • With 50 percent of its owners owing a total of more than half-a-million dollars in overdue maintenance fees, a suburban West Palm Beach condo association wants to seize control of delinquent units, bypass owners when it comes to rent collection and possibly even rent units through a third party. The move by the Palm Beach Grande Condominium Association(1) is a desperation measure as coffers dwindle to amounts unable to support the association through the end of the year, according to a petition filed in Palm Beach County Circuit Court.


  • Since 2007, nearly 160 of Palm Beach Grande's 304 units have faced a foreclosure filing, according to Condo Vultures, a Miami-based consulting company. About $675,000 is owed Palm Beach Grande's association.


  • Now, faced with hundreds of delinquent units, "blanket receiverships" are becoming more common. Recent court decisions in Miami-Dade and Broward counties have granted blanket receiverships, allowing a court-appointed representative to directly collect rents to pay off maintenance fees. [...] The new legal tool appears to be moving north with one Palm Beach County property management company saying it expects about five condo boards it represents to file receivership requests within the next 30 days.

For the story, see Condo association says half its owners are behind on a total of $675,000 in fees.

(1) Reportedly, Palm Beach Grande was a rental apartment complex until 2006 when it converted into a condo.

Four Attorneys Get The Boot From Legal Profession In Florida For Alleged Real Estate, Trust/Escrow Account-Related Mischief

The Florida Bar, the state's guardian for the integrity of the legal profession, recently issued its periodic "scandal/gossip sheet" in which it announced that the Florida Supreme Court in recent court orders disciplined 19 attorneys, disbarring eight, suspending six and placing two on probation.

Among the 19 disciplined were the following four attorneys who allegedly engaged in certain real estate and trust/escrow account-related hanky panky which got them booted from the legal profession in Florida:

  • Jay Charles Floyd, disbarred for five years. Floyd was further ordered to pay restitution totaling more than $76,000 to four clients. Floyd misappropriated client settlement funds and used the money to satisfy his personal financial obligations.

  • Daniel Henry Fox, disbarred. Fox issued trust account checks, which were returned due to insufficient funds; he failed to maintain his trust account and he abandoned his representation of clients in connection with residential real estate loan modifications.

  • Richard C. Koskey, disbarred. Koskey was the subject of two Bar disciplinary investigations. In one case, Koskey failed to disburse $105,000 to pay off a mortgage and remit $91,000 to his client. In another case, Koskey caused to have a payoff letter prepared which falsely stated the amount due on a mortgage. As a result, he improperly received additional funds from the proceeds of a refinance transaction, causing the first lender to subsequently file a foreclosure action.

  • Jorge Enrique Rodriguez, disbarred. Rodriguez failed to preserve and apply funds in connection with real estate transactions.

Source: Supreme Court Disciplines 19 Attotrneys - 10/29/09.


If a Florida attorney, in the process of giving legal representation, screws you out of money or property through dishonest conduct, go to The Florida Bar's Clients' Security Fund for information on how to put in a claim to get possible reimbursement.

For other states and Canada, see:

Monday, November 16, 2009

Mass AG Reaches Agreement w/ Servicer To Provide Affordable Loan Mods To Qualified Borrowers, Up To $7.5K Relocation Expenses To Ineligible Homeowners

From the Office of the Massachusetts Attorney General:

  • [A]ttorney General Martha Coakley’s Office announced that it has entered into an agreement with Texas-based American Home Mortgage Servicing, Inc. (“AHMSI”) that will provide significant benefits to approximately 8,200 Massachusetts borrowers holding loans originated by Option One Mortgage Corp. (“Option One”) and H&R Block Mortgage Corp. (“H&R Block Mortgage”). Those mortgage loans are the subject of a lawsuit which the Attorney General’s Office filed in June 2008. The complaint alleges Option One and H&R Block Mortgage originated the risky subprime loans with reckless disregard for whether borrowers would be able to afford their loan payments – a practice that has contributed significantly to the foreclosure crisis in Massachusetts. Under the agreement, [...] AHMSI will be required to provide affordable loan modifications to certain borrowers who fall behind in their mortgage payments.(1)


  • The agreement is designed to remedy unfair and deceptive conduct by Option One and H&R Block Mortgage that was highlighted by the Superior Court in the injunction issued in November 2008. The injunction prohibits the defendants from initiating or advancing foreclosures on loans that are “presumptively unfair,” because they predictably led to default or foreclosure. That preliminary injunction was affirmed by the Massachusetts Appeals Court on October 28, 2009. The Attorney General’s litigation with Option One, H&R Block Mortgage, Block Financial Corp., and their parent company, H&R Block, Inc., is ongoing, and is expected to go to trial in 2010.(2)

For the entire Massachusetts AG press release, see Attorney General Coakley’s Office Reaches Affordable Loan Modification and Foreclosure Prevention Agreement with Mortgage Servicer (Purchaser Will Provide Affordable Loan Modifications to 8,000 borrowers).

(1) For delinquent borrowers who do not qualify for loan modifications, relocation payments of $3,000 to $7,500 and alternatives to foreclosure, such as deeds-in-lieu of foreclosure will be offered. The Attorney General’s lawsuit did not allege loan origination misconduct by AHMSI, and the company cooperated with the Attorney General in reaching this agreement.

(2) The lawsuit is seeking redress for the damage incurred by homeowners and Massachusetts communities as a result of the unfair and deceptive lending practices of the defendants. The lawsuit also alleges civil rights violations because the defendants' policies and practices resulted in discriminatory pricing to the detriment of black and Hispanic borrowers; disparate pricing violates antidiscrimination laws.

NYC Legal Aid Files Class Action Alleging Servicer Spuriously Denied Access To HAMP; Feds Named For Failure To Provide Appeals Process For Rejections

The Legal Aid Society in New York City announced:

  • Four homeowners from Queens and Brooklyn, who are at risk of losing their homes to foreclosure, [...] filed a federal class action lawsuit, charging that Aurora Loan Services, their mortgage servicer, has denied them access to the Obama Administration’s Home Affordable Modification Program (HAMP) for spurious reasons, and has failed to provide them with notice so they may contest such denials.(1)

  • The lawsuit, Edwards et al v. Aurora Loan Services, LLC et al filed in the United States District Court for the District of Columbia, is one of the first lawsuits to challenge a mortgage servicer for breach of contract by failing to review mortgage loans of eligible homeowners for HAMP and to provide a procedure to contest denial. As the economic crisis places record numbers of homeowners at risk of losing their homes, the lawsuit contends that the named plaintiffs have been denied their rights under the program.


  • The lawsuit, [...] seeks class action status and requests a preliminary and permanent injunction, preventing Aurora from engaging in all unjust and unreasonable practices. It also requests that the Court order Aurora to provide a meaningful notice of HAMP denial, the specific grounds for denial and a process to challenge such denials.(2)

For the entire press release, see Civil Practice Files Law Suit to Help Homeowners At Risk of Losing Homes to Foreclosure.

(1) The lawsuit also names federal officials including The United States Treasury and the Federal National Mortgage Association because of their failure to ensure that homeowners are afforded their full due process rights. The four homeowners are represented by The Legal Aid Society in New York City. Lawyers handling the case include Oda Friedheim, Scott Rosenberg and Judith Goldiner.

(2) A lawsuit filed in July [see Williams, et al. v. Geithner, et al.] by the Foreclosure Relief Law Project, a program of the Housing Preservation Project, alleging a failure to create an appeals process when loan servicers deny access to HAMP loan modifications was recently dismissed by a Minnesota Federal Court. See:

For an earlier post on the Minnesota suit, see Minnesota Suit Seeks To Slam Brakes On Foreclosures Until Feds Implement Better Procedures In Program Borrowers Claim Violates Due Process Rights.

Minnesota Federal Judge Dismisses Suit Seeking To Block Foreclosures Alleging Due Process Violations In HAMP Program

In Minneapolis, Minnesota, The Wall Street Journal reports:

  • Borrowers don’t have a legal entitlement to loan modifications. That was the conclusion of a federal judge who this week dismissed a lawsuit filed by Minnesota homeowners seeking to block foreclosures.(1) The decision was a setback to struggling borrowers who have turned to the courts in an effort to get help under the Obama administration’s housing rescue plan.


  • The lawsuit, which was filed in U.S. District Court in Minnesota and sought class action status, alleged that the Obama administration’s foreclosure prevention plan violated borrowers’ constitutional rights because homeowners who were denied help under the program weren’t given a written denial and an opportunity to appeal. The action sought to halt foreclosures on homeowners eligible for the Obama plan until the government put in place certain procedural safeguards, such as creating a formal appeals process. In a decision Monday, U.S. District Court Judge Ann Montgomery said that Congress did not make loan modifications an entitlement. In addition, the Treasury Department gave mortgage companies some discretion in evaluating borrowers for help, the decision said.(2)

For more, see Minnesota Judge Delivers Setback to Struggling Homeowners.

(1) See Williams, et al. v. Geithner, et al.: Order denying Plaintiffs' Motion for Preliminary Injunction. For more information on the Minnesota lawsuit or to read the filed documents, click here.

(2) According to the story, Mr. Ireland, an attorney with the Housing Preservation Project, said that the administration has taken several steps to improve the process since the lawsuit was filed. In October, for instance, the Treasury Department issued guidelines that require mortgage companies to provide borrowers a written notice of denial within 10 days. Earlier this month, it required that mortgage companies stop foreclosures when a borrower challenges the denial and provides specific denial information, including some of the data used to evaluate the borrower for help.

Federal Appeals Court Reinstates Homebuyers' Class Action Suit Alleging PMI Kickback Racket Between Countrywide & Reinsurance Company

A Federal appellate court recently reinstated a homebuyers' class action lawsuit against Countrywide Home Loans, Inc. and Balboa Reinsurance Company alleging violations of the Real Estate Settlement Procedures Act ("RESPA"). The court described the plaintiffs allegations as follows:

  • Plaintiffs alleged that their private mortgage insurance premiums were channeled into an unlawful “captive reinsurance arrangement”—essentially, a kickback scheme—operated by their mortgage lender, Countrywide Home Loans (“Countrywide”), and its affiliated reinsurer, Balboa Reinsurance Co. (“Balboa”), in violation of RESPA section 8(a) and section 8(b), 12 U.S.C. § 2607(a)-(b). The thrust of their complaint was that, in enacting and amending section 8, Congress bestowed upon the consumer the right to a real estate settlement free from unlawful kickbacks and unearned fees, and Countrywide’s invasion of that statutory right, even without a resultant overcharge, was an injury-in-fact for purposes of Article III standing.

A lower court disagreed and dismissed the complaint without prejudice for lack of jurisdiction. The 3rd Circuit Court of Appeals concluded differently, reversed the lower court, and reinstated the lawsuit.(1)

For the ruling, see Alston v. Countrywide Financial Corporation, et al., No. 08-4334, 2009 U.S. App. LEXIS 23822 (3rd Cir., October 28, 2009).

Thanks to nationally recognized mortgage servicing fraud watchdog Mike Dillon at for the heads-up on the court ruling.

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

(1) The U.S. Department of Justice - Civil Division intervened in this matter, siding with the homebuyers' position.

Closing Agent's Use Of Rubber Checks To Pay Off $1.6M In Existing Mortgages Leaves Refinancing Homeowners Mired In Legal Mess, Facing Foreclosure

In Will County, Illinois, the Chicago Tribune reports:

  • In early April, Jeff Franson refinanced his mortgage, switching it from Chase to SecurityNational Mortgage Co. On a sunny Saturday in early October, as he was mowing the front lawn of his Mokena home, a process server drove up and handed Franson papers that showed Chase was planning to foreclose on his home. Franson was current on his mortgage with SecurityNational. But the $93,702.51 check cut by Counselors' Title Co. to pay off the Chase loan bounced. After months of phone calls and letters between Franson, his attorney and the companies involved, Chase filed foreclosure papers in Will County Circuit Court.


  • Franson and at least seven other Midwestern homeowners who did business with Counselors are wondering what's in store for their homes and what happened to the $1.6 million that was supposed to pay off their loans. [...] The crux of the problem for Franson and other homeowners who closed their transactions at Counselors' offices is that Ticor Title Insurance Co., a national title insurance underwriter, says it terminated its underwriting agreement with Counselors before those closings occurred.


  • In early May, less than a week after Chase notified Franson of the bounced check, Ticor filed suit in federal court in Cincinnati against Counselors, [and its three principals, James Erwin and Shari Erwin of Chicago and Damian Sichak of Homer Glen], claiming they had committed breach of contract and fiduciary duty, fraud and negligence, among other allegations. Ticor's suit states that it terminated its contract with Counselors on March 13, but that Counselors continued to "issue purported Ticor title insurance 'commitments' " and "is representing to its customers that Ticor remains its title insurance underwriter." In the filing, Ticor said it was aware of eight affected borrowers in Illinois, Indiana and Ohio, including Franson, and loans totaling almost $1.6 million. The suit also stated that Counselors told Ticor a fire destroyed many of its records at its Crestwood office in January and, as a result, it was unsure how many other checks it issued would bounce. Ticor's suit also claims the Erwins and Sichak are personally liable for Counselors' failure to comply with its agency agreement.(1)

For more, see Homeowners left in a lurch after mortgage refinancing checks bounce (Borrowers face foreclosure after title company fails to pay off original mortgages).

(1) Separately, in July, Landmark American Insurance Co., which provided Counselors with professional liability insurance, filed suit in Cook County Circuit Court against Counselors, the Erwins, Sichak and Ticor, the story states. Landmark claims it is not responsible for covering any claims if there is a court finding of dishonest, fraudulent, criminal or intentional activity, if the principals were found to have signed personal guarantees, if the company is insolvent or if the escrow funds were improperly handled, according to the story. title insurance legal issues EscrowRipOffKappa

Sunday, November 15, 2009

Staten Island DA Charges NJ Man w/ Felony Grand Larceny In Alleged Sale Leaseback, Foreclosure Rescue Ripoff That Victimized 86-Year Old Homeowner

In Staten Island, New York, the Staten Island Advance reports:

  • It was supposed to be a "mortgage rescue" operation: An 86-year-old woman and her daughter put their trust in a New Jersey accountant who promised to help keep them in their family home. Except the accountant was running a complex deed-theft scam, authorities say, and the Richmond grandmother finds herself living in a home that no longer belongs to her, still fighting to stave off the foreclosure the accountant was supposed to prevent.(1)

  • Earlier this week, District Attorney Daniel Donovan's office charged Alejandro Alonzo, 58, of North Bergen, with felony grand larceny, accusing him of orchestrating the scheme and pocketing more than $30,000 in the process. "This transaction was structured to make it look like a refinancing," said Jeff Gentes, a staff attorney with the Homeowner Defense Project of Staten Island Legal Services in St. George, who represents the original homeowner. "But in reality, they're selling their house." And Alonzo, who was supposed to have used the proceeds of the sale to make good on a year's worth of mortgage payments, instead made off with the cash, Gentes said.(2)

For more, see Grandmother at risk of losing her home (Mortgage 'savior' was a wolf in sheep's clothing, prosecutors say).

(1) Some guidance to those seeking an approach to undoing bogus sale leaseback, foreclosure rescue scams on behalf of financially strapped homeowners who have been screwed over in these equity stripping rackets can be found in a couple of 2008 Brooklyn, New York lower court rulings favorable to the scammed homeowners and obtained on their behalf by the non-profit law firm, Brooklyn Legal Services Corporation A. See Brooklyn Court Rulings Void Deeds & Subsequent Mortgages Used To Drain Home Equity In Bogus Sale Leaseback Foreclosure Rescue Scams.

(2) Criminal prosecution alone will not be of much help to the scammed homeowner in attempting to recover from this ripoff. Undoing a scam like this in order to return the scammed homeowner to her financial position before Alonzo arranged the sale leaseback, foreclosure rescue transaction that stripped her home equity will probably require the homeowner to bring a civil lawsuit in which she attempts to:

  • Void the title transfer as one procured by fraud, or recharacterize the title transfer as an equitable mortgage; and

  • Assert that the lender providing the financing for the equity stripping transaction (ie. Countrywide) was, by reason of the scammed homeowner's continued possession of her home, on notice of the scam and, accordingly, not entitled to protection of the recording statutes as a bona fide purchaser / bona fide encumbrancer (and, thereby, subjecting the lender's mortgage lien to cancellation as well - except to the extent that the loan proceeds were applied to satisfy any existing mortgages, in which case the lender would be entitled to subrogate itself to (ie. step into the shoes of) those existing mortgage holders with respect to their rights in the property).

The unavailability of bona fide purchaser protection to real estate purchasers and lenders when a seller of real estate remains in possession of the premises sold has, arguably, been best expressed by the California Supreme Court in Pell v. McElroy, 36 Cal. 268, 1868 Cal. LEXIS 186 (1868):

  • The simple, independent fact of possession is sufficient to raise a presumption of interest in the premises on behalf of the occupant. And we can discover no just or rational ground for giving to this fact less significance as notice to a party purchasing the legal title from one not in possession, in consequence of the fact that such occupant had by deed divested himself of the legal title.


  • An absolute deed divests the grantor not only of his legal title, but right of possession; and when such grantor is found in the exclusive possession of the granted premises long after the delivery of his deed, here is a fact antagonistic to the fact and legal effect of the deed; and we cannot appreciate the justice, sound reason, or policy of a rule which would authorize a subsequent purchaser, while such fact of possession continues, to give controlling prominence to the fact and legal effect of the deed, in utter disregard of the other notorious prominent antagonistic fact of exclusive possession in the original grantor. He cannot be regarded a purchaser in good faith who negligently or willfully closes his eyes to visible pertinent facts, indicating adverse interest in or incumbrances upon the estate he seeks to acquire, and indulges in possibilities or probabilities, and acts upon doubtful presumptions, when by the exercise of prudent, reasonable diligence he could fully inform himself of the real facts of the case.


  • The continued exclusive possession of a vendor after his formal conveyance of the legal title is a fact in conflict with the legal effect of his deed, and is presumptive evidence that he still retains an interest in the premises, and is sufficient to put a purchaser upon inquiry, and subject him to the general rule heretofore announced in case of the party in possession being a stranger to the title as of record.


Courts in other states have taken positions consistent with the foregoing. For example:


Life Savings & Loan Association v. Bryant, 125 Ill. App. 3d 1012, 81 Ill. Dec. 577, 467 N.E.2d 277 (1st Dist. 1984):

  • Illinois courts have uniformly held that the actual occupation of land is equivalent to the recording of the instrument under which the occupant claims interest in the property. (Bullard v. Turner (1934), 357 Ill. 279, 192 N.E. 223; Beals v. Cryer (1981), 99 Ill. App. 3d 842, 426 N.E.2d 253). The open and visible possession of land by the equitable owner is sufficient to charge a mortgagee with notice of the rights of such owner, and the mortgagee will take subject to the rights of the person in possession. Williams v. Spitzer (1903), 203 Ill. 505, 68 N.E. 49.

In re Cutty's-Gurnee, Inc., 133 B.R. 934 (USBC N.D. Ill. 1991) (applying bona fide purchaser doctrine in the context of an equitable mortgage):

  • It is clear that where a physical inspection of the property would reveal an adverse interest or where there is a party in possession other than the record title owner, the subsequent lien claimant has a duty to inquire of the possessor as to his interest and is charged with knowledge of the facts discoverable from such an inquiry or inspection. Miller, 381 Ill. at 244, 44 N.E.2d at 853; Burnex Oil Co. v. Floyd, 106 Ill. App. 2d 16, 23, 245 N.E.2d 539, 544 (1st Dist. 1969); In re Ehrlich, 59 Bankr. 646, 650 (Bankr. N.D. Ill. 1986).


Whiten v. Murray, A04A0655, 267 Ga. App. 417; 599 S.E.2d 346; 2004 Ga. App. LEXIS 671 (2004):

  • Possession of land shall constitute notice of the rights or title of the occupant. In order for the possession to have the effect of notice, it must be actual, open, visible, exclusive, and unambiguous. He who takes with notice of an equity takes subject to that equity. Notice sufficient to excite attention and put a party on inquiry shall be notice of everything to which it is afterwards found that such inquiry might have led. Ignorance of a fact, due to negligence, shall be equivalent to knowledge in fixing the rights of the parties. (Citations and punctuation omitted.) Bacote v. Wyckoff, 251 Ga. 862, 866 (2) (310 S.E.2d 520) (1984).


Stone v. Jetmar Props., LLC, A06-851, 733 N.W.2d 480; 2007 Minn. App. LEXIS 80 (Minn. App. 2007):

  • Public policy generally favors allowing a degree of reliance on the title shown in public records. See Nussbaumer v. Fetrow, 556 N.W.2d 595, 599 (Minn. App. 1996), review denied (Minn. Feb. 26, 1997) (stating policy of allowing judgment creditors to rely on record). But the reliance allowed is not absolute. A "party attempting to invoke the doctrine [of equitable estoppel] cannot be negligent and cannot have knowledge of the defect in the title." W. Concord Conservation Club, Inc. v. Chilson, 306 N.W.2d 893, 896 (Minn. 1981). A prospective purchaser is obligated to discover anyone in possession of the land at issue and to "inquire into the nature and extent of the occupant's interest." Id. As a result of this obligation, the purchaser is held to have knowledge of all the "rights of the [possessor] and also of all facts connected therewith which reasonable inquiry would have developed." Claflin v. Commercial State Bank, 487 N.W.2d 242, 248 (Minn. App. 1992), review denied (Minn. Aug. 4, 1992). "In order to have status as a bona fide purchaser the mortgagee's inquiry must be directed to the person in possession; inquiry of the mortgagor, who may have reason to conceal the truth, is not sufficient." Id.

In New York, where the Staten Island Advance story took place, the New York Court of Appeals has enunciated principles not in conflict with California's Pell v. McElroy ruling in this regard. The following excerpt from Phelan v. Brady, 119 N.Y. 587; 23 N.E. 1109; (NY 1890) captures this point:

  • At the time of the execution and delivery of the mortgage to the plaintiff, the defendant Mrs. Brady was in the actual possession of the premises under a perfectly valid but unrecorded deed. Her title must, therefore, prevail as against the plaintiff. It matters not, so far as Mrs. Brady is concerned, that the plaintiff in good faith advanced his money upon an apparently perfect record title of the defendant John E. Murphy. Nor is it of any consequence, so far as this question is concerned, whether the plaintiff was in fact ignorant of any right or claim of Mrs. Brady to the premises. It is enough that she was in possession under her deed and the contract of purchase, as that fact operated in law as notice to the plaintiff of all her rights.

  • It may be true, as has been argued by the plaintiff's counsel, that when a party takes a conveyance of property situated as this was, occupied by numerous tenants, it would be inconvenient and difficult for him to ascertain the rights or interests that are claimed by all or any of them. But this circumstance cannot change the rule. Actual possession of real estate is sufficient notice to a person proposing to take a mortgage on the property, and to all the world of the existence of any right which the person in possession is able to establish. Governeur v. Lynch, 2 Paige, 300; Bank of Orleans v. Flagg, 3 Barb. 318; Moyer v. Hinman, 14 N. Y. 184; Tuttle v. Jackson, 6 Wend. 213; Trustees of Union College v. Wheeler, 61 N. Y. 88, 98; Cavalli v. Allen, 57 id. 517.)

For a couple of relatively recent New York intermediate appellate court rulings referencing the effect of continued possession of an occupant on the status of a buyer or lender as a bona fide purchaser / bona fide encumbrancer, see:

  • Ward v. Ward, 503624,2008 NY Slip Op 4984; 52 A.D.3d 919; 859 N.Y.S.2d 774; 2008 N.Y. App. Div. LEXIS 4816 (App. Div. 3d Dept. 2008;
  • Doyle v. Siddo, 31 A.D.3d 697, 818 N.Y.S.2d 474, 2006 N.Y. App. Div. LEXIS 9569 (N.Y. App. Div. 2d Dep't, 2006).

For other states, see Bona Fide Purchaser Doctrine, Possession Of Property By Occupants Other Than The Vendor & The Duty To Inquire.

Michigan Judge Says Failure To Modify Loan In Violation Of HAMP Is Defense To Set Aside Foreclosure & Can Be Raised In Subsequent Homeowner Eviction

In Macomb County, Michigan, Workers World reports:


  • Attorneys who work with the coalition won a significant court victory on an appeal in a foreclosure eviction case. The Macomb County Circuit Court held that a lender’s failure to modify a loan in accordance with the federal Home Affordable Modification Program can be asserted as a defense to void a foreclosure, and that this defense can be raised by homeowners in an eviction proceeding stemming from the foreclosure. This is one of the first cases in the country to affirm this right.(1)

Source: Coalition wins foreclosure victories.

(1) Despite these victories, coalition organizers report that the foreclosure and eviction crisis is intensifying, according to the story. Jerry Goldberg, a foreclosure attorney and coalition leader, noted how increasingly the government, through Fannie Mae and Freddie Mac, is the main culprit in eviction actions stemming from foreclosures.

Colorado Homeowner Obtains Temporary Restraining Order Halting Foreclosure; Alleges Loan Servicers Failed To Respond To HAMP Loan Mod Applications

In Brighton, Colorado, The Denver Post reports:

  • Traci Willms turned to the federal Home Affordable Modification Program to save the childhood home in Brighton she bought from her mother and shares with her two children. But after two separate loan-modification applications with two different servicers in the past six months, she never received an answer.

  • Last week, she sued to stop the foreclosure sale of the home, arguing that the HAMP program prevented such an action. "All we want them to do is run the paperwork and do their job," Willms said. An Adams County judge issued a temporary restraining order to prevent a sale, in what could be an early test case of the new loan-modification program. "We are arguing that this foreclosure is illegal and should be stopped," said Sarah Parady, a consumer attorney with Colorado Legal Services in Denver. Mortgage servicers participating in the HAMP program agree to suspend foreclosure proceedings for borrowers whose applications are under review or who are in a trial modification period, Parady said.

  • Complicating Willms' case, GMAC Mortgage, which participates in HAMP, transferred servicing rights to her loan to MGC Mortgage of Plano, Texas, which does not, in July. Within days, the owner of the loan, LNV Corp., initiated a foreclosure. To prevent lenders from giving loans the hot-potato treatment, HAMP requires anyone accepting a loan under review for modification to treat it as if it were still under the program, Parady said.


  • Shannon Peer, director of housing counseling with Brothers Redevelopment, said many lenders keep the foreclosure clock ticking even as they review a modification application. Some servicers will deny a modification request right before the deadline for a foreclosure sale, he said. But in Willm's case, she never got an answer.

For the story, see Brighton homeowner in fight to stop foreclosure (Cites loan-modification delays).

Increase In Housing Discrimination Against Families With Children Attributed To Growing Use Of Internet To Advertise Rentals

In Grand Rapids, Michigan, The Grand Rapids Press reports:

  • When a landlord told a young Grand Rapids mother interested in renting a duplex that she would have to pay twice the regular security deposit because she had three children, the woman was shocked. “I know I have kids, but I don’t have animals for children,” said the 24-year-old, whose children are 5, 2 and 2 months. “I don’t know what kind of damage they would do that would take two months’ security deposit.” The mother, who asked not to be identified, eventually learned the requirement was illegal: The Fair Housing Act bans discrimination on the basis of “familial status.”


  • Nationwide, familial status complaints rose from 3,500 in 2006 to 5,300 last year, according to the National Fair Housing Alliance. The increase is attributed to the growing role of Internet advertising. Newspapers are held liable under the Fair Housing Act for their advertising content, but Web sites such as or are held to a different standard: The burden is on the poster, not the site owner.

For mrore, see More renters claiming landlords are unlawfully discriminating against families.

Mass. Landlords Get Hammered For Failing To Lease To Renters w/ Kids To Avoid Lead Paint Abatement Requirements, Tenants w/ "Section 8" Subsidies

The Office of the Massachusetts Attorney General has taken recent action in connection with enforcing housing discrimination laws involving the alleged refusal by landlords to rent to families with children & tenants receiving housing subsidies, as well as the refusal of lanlords to remediate lead based paint hazards in rental units and common areas:

  • Coakley Obtains Consent Judgment Against Quincy Landlords for Discriminating Against Section 8 Recipients: Attorney General Martha Coakley’s Office obtained a consent judgment against Inna Bogina, the owner of a three-bedroom rental property in Quincy, and her daughter Tatiana Bogina, the rental agent for the property, resolving allegations that they violated state anti-discrimination laws by refusing to rent to recipients of housing subsidies and a family with children. The consent judgment, entered yesterday by Judge Barbara A. Dortch-Okara in Norfolk Superior Court, orders Inna and Tatiana Bogina to pay $5,000 to the victims, bars the Boginas from discriminating in the future, and requires Tatiana Bogina to attend a training on fair housing laws.

  • Coakley Reaches Settlement with East Boston Landlord Resolving Allegations of Housing Discrimination: Attorney General Martha Coakley’s Office reached a settlement with an East Boston landlord, resolving allegations that he unfairly discriminated against prospective tenants, denying them the opportunity to rent an apartment. The Assurance of Discontinuance, filed [...] against Russell Tremaine, the landlord, alleges that he violated state anti-discrimination and lead paint laws by denying a couple with a young child the right to rent an apartment in East Boston because of the presence of lead paint. "It is against the law to deny a family the opportunity to rent an apartment because the family has a child under six, which would require the landlord to abate or remove any lead paint from the unit and common areas. Those who choose to be landlords and participate in the rental market must play by the rules and abide by the laws meant to ensure people’s health and safety,” said Attorney General Martha Coakley.

  • Coakley Reaches Statewide Settlement with 20 Landlords and Real Estate Agents for Discriminatory Advertisements on Craigslist and Files Suit Against Six Others: Attorney General Martha Coakley’s Office reached settlements in 20 cases against landlords and real estate agents across the Commonwealth accused of violating state anti-discrimination laws by making discriminatory statements in rental advertisements posted on the popular classified advertising website (“Craigslist”). The Attorney General’s Office also filed lawsuits against six other defendants based on similar allegations. The settlements and lawsuits are a result of a statewide investigation into reports of widespread discriminatory Internet advertising, [...]. Under Massachusetts law, it is illegal to discriminate against someone because the presence of children might trigger a property owner’s duties under the lead paint laws or because someone receives a housing subsidy, such as a Section 8 voucher, to pay for some or all of their rent. The advertisements in question in this investigation include such language as “no children” or “no Section 8,” in blatant violation of the law. The settlements, [...] require the property owners and real estate agents to pay the Commonwealth $18,250, ($8,750 of which is suspended pending compliance with the agreements), attend trainings on state and federal fair housing laws, remove lead paint hazards from the rental units, and prohibit the defendants from placing discriminatory advertisements or otherwise discriminating against any person who seeks or applies for housing because they are a member of a protected class.

  • Coakley Settles with Cambridge Real Estate Company That Discriminated Against Family with Young Child: Attorney General Martha Coakley’s office obtained a consent judgment against ABG Residential, a Cambridge-based realty company, and its agent, Georgina Zala, resolving claims that the company refused to rent an apartment to a couple because they had a nine-month old child whose presence would require abatement of lead paint hazards under state law. The consent judgment, [...] orders the defendants to pay $3,500 to the couple and bars the defendants from future acts of discrimination.