Foreclosure Rescue Operator Gets 30 Months In Equity Stripping Mortgage Scam; Bogus Sale Leasebacks Left Investors Holding The Bag, Homeowners Booted

In Edmond, Oklahoma, The Edmond Sun reports:

• An Edmond man was sentenced Wednesday to serve 30 months in prison for money laundering, stemming from a mortgage fraud scheme. Phillip Neill Seibel, 39, of Edmond, was sentenced by U.S. District Judge David Russell, who ordered Seibel to pay $770,037.31 in restitution and serve three years of supervised release after completing his sentence.

***

• A licensed mortgage broker, Seibel formed Homesavers in April 2007. The company had an Oklahoma City address. Homesavers contacted homeowners facing foreclosure and told them they could remain in their homes while they worked to improve their credit, according to court records and court proceedings.(1)

For the story, see Edmond man sentenced in fraud.

(1) According to the story, the company also promised to find investors to buy homes and to let people remain in their homes and begin paying “rent.” Seibel’s company reportedly promised to use those payments to pay mortgages, and said sellers could rebuy the homes for a fixed price once their credit improved. The company promised the potential investors their only role would be to buy the homes. It would coordinate all rent payments with the sellers and ensure mortgages were paid on time, the story states. Homesavers then assisted the investors in obtaining financing to buy the homes, and regularly submitted false documents on the investors’ behalf to mortgage companies and assisted investors in submitting false documents to the mortgage companies. At closing, Seibel’s company would arrange to receive the equity checks directly and, without permission, endorse the sellers’ names and deposit the checks into a company bank account. The story states that Homesavers did not make the mortgage payments on the homes as promised, but repeatedly assured sellers falsely that mortgage payments were being made. Most of the homes were reportedly foreclosed upon, and the sellers lost all equity in their homes, according to the court document.

Debt Collector's Use Of 1st Amendment To Get Default Judgment Against Mentally Disabled Debtor Without Giving Proper Notice Slammed By Alaska Supremes

Public Citizen, a national, nonprofit consumer advocacy organization, recently announced:

• The Alaska Supreme Court ruled [last month] that debt collectors who employ unfair or deceptive tactics during collection lawsuits are not shielded by the First Amendment.(1)

***

• The case arose out of an attempt by a collection agency to sue Robin Pepper, a mentally disabled woman, without providing her with proper notice. The agency sent papers to a nonexistent address, misrepresented to the court that Pepper was competent, and tried to get a default judgment against her.

• Pepper, represented by Alaska Legal Services,(2) then brought a separate lawsuit, alleging that the collection agency’s practices violated the Unfair Trade Practices Act. The collection agency asked the court to dismiss Pepper’s case on the theory that its litigation conduct was protected by the First Amendment, which provides a right of access to the courts. The lower court agreed and dismissed Pepper’s case. Alaska Legal Services asked Public Citizen to handle the case on appeal.(3)

• The Alaska Supreme Court broadly rejected the debt collector’s immunity defense, ruling that the First Amendment’s petition clause does not extend to conduct that was unfair, deceptive, and in violation of the Unfair Trade Practices Act. Quoting Public Citizen’s brief, the court ruled that debt collectors have “no legitimate interest in pursuing collection litigation without notifying debtors, or in seeking to default incompetent debtors without notice to their lawyers or guardians.”(4)(5)

For Public Citizen's press release, see Debt collectors drubbed by Alaska high court (Constitution Does Not Shield Abusive Tactics by Debt Collectors, Alaska Supreme Court Rules).

For the ruling of the Alaska Supreme Court, see Pepper v. Routh Crabtree, APC, Supreme Court No. S-13042, No. 6437, 2009 Alas. LEXIS 160 (November 20, 2009).

(1) According to the press release, this case is the first ruling on the issue by any court nationwide. Debt collection firms have raised a constitutional defense, based on the right to petition the courts, in a series of consumer cases. This ruling overturns a lower-court decision that had ruled in favor of a collection agency.

(2) Alaska Legal Services is a private, nonprofit law firm that provides free civil legal assistance to low-income Alaskans.

(3) Also appearing in this lawsuit, as "friends of the court" on behalf of the consumer, were the National Association of Consumer Advocates and the National Consumer Law Center.

(4) “The Alaska Supreme Court’s ruling sends the message that debt collection companies can’t get away with abusive tactics simply by hiring lawyers,” said Deepak Gupta, the Public Citizen attorney who argued the case. “The court rejected a dangerous new immunity defense that would have created a gaping hole in consumer protection law.”

(5) Had the court ruled in the debt collection agency's favor, collectors would be in a position to slap judgment liens against any real estate owned by defaulting debtors and force the sale of those properties (subject to any applicable state or federal homestead exemption protections), as well as garnish the wages and seize the bank accounts belonging to these unwitting victims. For more on debt collectors and their attorneys obtaining default judgments against unwitting consumers by failing to serve proper notice of the lawsuit on them (ie. "sewer service"), see Justice Disserved: A Preliminary Analysis of the Exceptionally Low Appearance Rate by Defendants in Lawsuits Filed in the Civil Court of the City of New York.

Financially Strapped Couple Scores Against Home Lender; Pays $1K In Full Payment Of Allegedly Fraudulent $103K Loan

In Bradenton, Florida, the Sarasota Herald Tribune reports:

• Pedro Torres and his wife purchased the Bradenton home they were renting in 2007 because it reminded them of their native Puerto Rico. They were told their monthly payment would be $670, but it turned out to be $800, about half of their income from Social Security. The couple, both over 65, struggled so much to make payments that Torres collected aluminum cans for food money. Torres and his wife, Ederlinda Soto, likely would have lost the home to foreclosure over the $103,000 mortgage.

• But when a Gulfcoast Legal Services attorney(1) found numerous problems and fraud in the loan, the lender offered to give them the home for a single $1,000 settlement payment.(2)

For more, see Bradenton couple prevail in mortgage imbroglio (Pedro Torres and his wife, Ederlinda Soto, struggled to pay their mortgage, which they thought would be $670 a month but ended up being $800. An attorney discovered so many problems in their loan document that they now own their Bradenton home free and clear).

(1) Gulfcoast Legal Services is a non-profit corporation providing free legal aid to income eligible residents of the greater Tampa Bay area, with offices in Pinellas, Manatee, Sarasota and Hillsborough counties.

(2) According to the story, the retired couple's mortgage contained problems common to loans approved during the height of Florida's real estate boom, said their attorney, Dawn Marie Bates-Buchanan. Torres and Soto reportedly got the low settlement offer from an attorney for California-based Accredited Home Lenders because the loan would likely have been voided if the case had gone to trial, Buchanan said. Also, Accredited could have faced up to $2,000 sanctions for each violation under truth in lending and unfair business practices laws, the story states. Accredited's attorney reportedly called Buchanan and said, "Basically, 'What do you want?'" she said. "My answer is, 'I don't want them to have a mortgage.'" Now, Torres and Soto are continuing their lawsuit against the mortgage broker and the sister and brother-in-law who helped arrange the loan, the story states. Gulfcoast Legal Services reportedly took the case because the couple is over 65 and has low income. The legal fees would have been unaffordable otherwise, something that leaves many Spanish-speaking victims of mortgage fraud unable to fight. UndoMortgageLoans TILAdelta

New Rule Now Mandates Foreclosing Lenders To Advise New Jersey Tenants Of Their Legal Right To Stay Put

In Northern New Jersey, The Record reports:

• New Jersey tenants whose landlords fall into foreclosure have a right to stay in their homes — and lenders must tell them that, under a new rule adopted by the New Jersey Supreme Court. [...] Under the rule, before lenders obtain a final foreclosure judgment, they must inform tenants living in the property that they have the right to stay. The rule also requires sheriffs to post notices about tenants' rights on the buildings before a foreclosure auction.

• New Jersey has some of the strongest tenant-protection laws in the nation. While the rising tide of foreclosures in other states has pushed out tenants, a New Jersey tenant "in good standing comes with the property when the property changes hands because of a foreclosure," [New Jersey Public Advocate Ronald K.] Chen wrote recently.(1)

• Matt Shapiro, president of the New Jersey Tenants Organization, praised the new rule. "Tenants have a lot of rights in New Jersey, but they don't always know it," he said. "A lot of tenants are being intimidated and displaced because they don't know their rights."

• Tenants in other states have much weaker protections, though a federal law passed earlier this year allows tenants to remain in their foreclosed rentals for at least 90 days.(2) Previously, many received almost no notice.

For the story, see In foreclosures, N.J. tenants have rights.

(1) "Tenants are the invisible victims of the foreclosure crisis,'' Chen reportedly said Tuesday. "It is critical that tenants are notified in these situations because many are unaware that, under New Jersey law, they cannot be evicted solely because of a foreclosure." Chen said his department has received nearly 200 calls since the beginning of the year from tenants who have been told — incorrectly — that they may have to move because their building is in foreclosure. Tenants living in foreclosed properties should call (609) 826-5070 if they are being pressured to leave, he said.

(2) Among other things, the 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. The new federal law appears to have little or no practical application in the state of New Jersey in light of existing state law that provides for greater protections for tenants.

Recent NY Court Foreclosure Ruling Wiping Out Mortgage Debt Not Expected To "Open The Floodgates" Against Lenders

In Suffolk County, New York, Newsday reports:

• A Suffolk judge's decision to wipe out the mortgage debt of a foreclosed-upon East Patchogue couple may send a message to predatory subprime lenders that unless they work to save their customers' homes, they stand to lose everything, some real estate attorneys said. "This case shows the change in the tide as to the sentiment about mortgage foreclosures in general," said Woodbury bankruptcy attorney Craig Robins, who called Suffolk County Court Judge Jeffrey Spinner's decision "a good demonstration that courts are not going to tolerate this type of conduct by the mortgage companies anymore."

***

• Robins said such improper and irresponsible practices were not isolated to IndyMac. But, while Spinner's decision could create important case law that will likely be cited by homeowners' attorneys in future foreclosure proceedings, Robins said he did not think it should "open the floodgates" for similar decisions.

• "I do see a lot of the irresponsible practices that mortgage lenders commit frequently, but I think what sets this case apart was that there were several irresponsible practices in this one case," said Robins, adding that Spinner "used this case to send a loud warning to all mortgage companies . . . that they better shape up and get their act together."

For the story, see Foreclosure ruling sends message to lenders (requires paid subscripition to Newsday; those without a subscription can try here).

Debt Collection Law Firm Faces Hot Water For Dragging Wrong Person Into Court; Resists Judge's "Suggestion" To Compensate Victim For Lost Day's Pay

In Brooklyn, New York, The New York Times reports:

• Conducting a digital dragnet, [debt collection firms] troll through commercial databases searching for debtors. Because of the vast sloppiness and fraud involved, Attorney General Andrew M. Cuomo has shut down two of the collection firms and is suing 35 law firms tied to the business.

• A person who blows off a civil court summons — even if wrongly identified — faces a default judgment and frozen bank accounts. But to date, there have been few penalties against collectors for dragging the wrong people into court. Until [Mark] Hoyte turned up last week in Brooklyn.

• After trying to settle the case in the hallway — the 11th floor of 141 Livingston Street is an open bazaar of haggling — the collections lawyer realized he had the wrong man. He got Mr. Hoyte to sign an agreement that would end the case against him, but not against the Mark Hoyte who actually owed the $919. In front of the judge, the lawyer, T. Andy Wang, announced that the parties had reached a stipulation dismissing this Mr. Hoyte from the suit.

• Not so fast, said the judge, Noach Dear. “Why didn’t you check these things out before you take out a summons and a complaint?” Judge Dear asked. “Why don’t you check out who you’re going after?” [...] “So you just shoot in the dark against names; if there’s 16 Mark Hoytes, you go after without exactly knowing who, what, when and where?” Judge Dear asked. [...] The judge turned to Mr. Hoyte, who works as a building superintendent, and asked him how much a day of lost pay would cost. Mr. Hoyte said $115.

***

• The judge said he was prepared to dismiss the case and wanted Mr. Hoyte compensated for lost wages. “Your honor,” Mr. Wang said, “I’m personally not willing to compensate him.” No, the judge said; he meant that the law firm, Pressler & Pressler — one of the biggest in the collection industry — should pay the $115. He would hold a sanctions hearing, a formal process of penalizing the law firm for suing the wrong man.

***

• He told Mr. Wang and Mr. Hoyte to come back to court in January. “If, somehow, counsel, you decide that you’re going to compensate him for his time off,” Judge Dear said, “I will reconsider sanctions.”

For the story, see Hello, Collections? The Worm Has Turned.

-----------------

In a related story, see The Village Voice: An Unlikely Rescuer from the Jaws of Debt (By 9:30 a.m., the 11th-floor hallway of a courthouse in downtown Brooklyn is filled with tight huddles made up of people in debt and the lawyers who are after them to pay):

• It's a scene that will be repeated over and over again in the courtroom of Judge Noach Dear, as he repeatedly dismisses lawsuits, denies attorneys seeking payment, and sends people on their way, amazed that they are free from further harassment by collection agencies. Twice on a recent morning, his rulings are met with standing ovations.

Central Florida Chief Judge Ramps Up Court Foreclosure Mediation Effort

In Central Florida, The Tampa Tribune reports:

• Pasco homeowners in foreclosure could have more of a chance to keep their homes if a court system emphasis on mediation succeeds. The push began last month when Chief Judge Thomas McGrady signed an administrative order adding more prominent language about mediation into paperwork homeowners receive when they're served with foreclosure lawsuits. The drive for mediation is a response to the continued onslaught of foreclosure filings and to the inability of homeowners in foreclosure to get in touch with their lenders, McGrady said. [...] Homeowners interested in mediation can find information and a form motion requesting mediation at the Sixth Judicial Circuit's Web site, [...].

For the story, see Pasco courts move to help homeowners.

Go here for standard form Defendant's Motion for Mediationin Mortgage Foreclosure Action.

Prohibition Against Upfront Fees Fails To Stop Out-Of-State Loan Modification Racket, Leaving North Carolina Woman Out Cash, Home

In Greensboro, North Carolina, WXII-TV Channel 12 reports:

• Susan Pifer, who drives a bus and works at Ellis Middle School, said her family lost $2,000 to a company in Arizona that claimed it would keep her and her family from losing their home. Despite paying the company, Pifer's home was foreclosed on last April. Pifer said the company promised to refund the money if it couldn't negotiate the lower payment. Pifer, who has since moved into a rental property, said the company no longer returns her phone calls.

***

• An independent processor who worked on Pifer's loan modification said she knew of at least three other families who lost their money to the same company. According to North Carolina law, it's illegal to charge up-front for these types of services.

For the story, see Family Lost Cash, Home To Mortgage Scam (Mortgage Scam Complaints Soar In NC).

Prosecutor Drops Charges Against Woman Accused Of Forging Hubby's Name On POA In Sale Leaseback Of Family Home Resulting In Both Getting The Boot

In Bantam, Connecticut, The Register Citizen reports:

• A criminal case brought against a Bethlehem woman for allegedly selling her family’s home without her husband’s knowledge was dismissed [...] at her husband’s request.(1) Shelley Ciriello, 55, was arrested Sept. 19 [...] and charged with second-degree forgery, for allegedly signing her husband’s name to a power of attorney to sell their marital home. Further, without her husband knowing, Ciriello reportedly agreed to rent the house from the new owner. [...] The Ciriellos were evicted from the house after rent checks for $3,767 bounced, according to court records.(2)

Source: Case dismissed for woman who sold husband's family home.

For earlier story, see Wife sold house, husband clueless.

(1) According to the story, the prosecutor said he decided to drop the charge against Ciriello after the husband agreed to adopt his wife’s property transactions. “The defendant’s husband wrote a letter indicating he didn’t want to pursue case because they are under great financial hardship and it would only further victimize him,” Supervisory Assistant State’s Attorney Devin Stilson reportedly said. “He did not want to pursue the case or testify.”

(2) According to an earlier story, Ciriello found herself in financial trouble by reportedly abusing a line of credit, using the family home as collateral. Ciriello then responded to an advertisement from a now-defunct lending company, which arranged a sale leaseback with a third party in an attempt to provide relief from the financial pressure. The lending company reportedly has since been shut down by the State of Massachusetts for offering sub-prime loans and inflating borrower assets.

Grand Rapids "Grave Robber" Cops Plea In $4.2M Cemetary Trust Funds Ripoff; Suspected Of Similar Swindle Of $20M In Indiana

From the Office of the Michigan Attorney General:

• Attorney General Mike Cox [...] announced that Robert Earl Nelms pleaded guilty to two felonies for embezzling more than $4.2 million in cemetery trust funds from Chapel Hill Memorial Gardens in Grand Rapids, and failing to properly administer numerous funeral contracts over a three year period. "Stealing from the dead is a betrayal of the highest order," said Cox. "Families who have laid their loved ones to rest have a rightful expectation that this sacred ground will forever be protected."

***

• In total, it is alleged Nelms stole more than $24 million from cemeteries and funeral homes he controlled in Michigan and Indiana. He did this by selling cemetery products and services but failing to deposit the required portion in trust for cemetery upkeep and consumers' use. Approximately $4.2 million dollars were from the Grand Rapids cemetery, with Nelms facing charges in Indiana for the rest.(1)

For the Michigan AG press release, see Cemetery Swindler Convicted of Felony Embezzlement.

(1) According to the press release, this is the second defendant convicted by Attorney General Cox for involvement in a major theft of cemetery trust funds. Carter Green of Nevada was convicted in Wayne County Circuit court in December of 2007 for his role in aiding co-defendant Clayton Smart. Cox alleges that Smart embezzled as much as $70 million in cemetery trust funds from 28 Michigan cemeteries. Clayton Smart is awaiting trial in Tennessee on related charges. Upon completion of that trial, Smart will be transferred to Michigan for arraignment on charges filed by Cox, the press release states. EscrowRipOffKappa

Offer Of "Free Consultation" To Would-Be Client Gets Expensive For Florida Personal Injury Attorney

In a recent column, Texas attorney John G. Browning writes in The Southeast Texas Record on some oddball court cases that affirm the age-old adage that reality is often stranger than fiction. Here's one example:

• Most people who visit a plaintiff's personal injury attorney expect to find a sympathetic ear and a champion to take up their cause, not a basis for another lawsuit. At least one person arriving at the Palm Beach, Fla., law offices of Fetterman and Associates in response to an ad proclaiming "If you are the victim of injuries... please contact us for a free consultation" didn't have far to go.

• Robert Friedrich visited the law firm in 2003 to discuss suing someone as a result of a car accident nine days previously. During his consultation, however, he gained a whole new cause of action when the chair he was sitting in collapsed and he struck his head on another piece of furniture in the firm's conference room. Friedrich then sued the law firm as well as the company that sold the allegedly defective chair, claiming serious neck injuries.

• In May a Palm Beach County [jury] found both defendants liable for the chair collapse, and awarded over $2.2 million in damages. For a "free" consultation, this turned out to be pretty expensive indeed for the Fetterman law firm.

For other examples, see Still Litigating In The Twilight Zone.

Homebuilder's Trade-In Offer To Prospective Buyers Sours, Leaving Them Mired In Mess

In Genesee Township, Michigan, WJRT-TV Channel 12 reports:

• Some homebuyers are calling it one of the worst mistakes of their lives. A deal that promised the house of their dreams turned sour. [...] The pitch sounded great: Trade in your old home, trade up to a new one. "To tell you the truth, I think it's a great deal," said Carol Eberhardt from Symphony Homes during a 2007 interview. But for Tony Grubish, it was no deal at all. "It's probably one of the biggest regrets I have in my life."

***

• Grubish says he and his then-pregnant wife filled out the paperwork and were about to move into a new Symphony home in Genesee Township. But one week before closing, the deal ran into a snag. "At the last second, they said, 'Oh, I have bad news. We can't finance you for two FHA loans," Grubish said.

• So instead, he says, Symphony convinced him to sign a land contract for that new home. "My first instinct was to get up and walk out. But again, I had a pregnant wife who was pretty torn and distraught about it. We were pretty much led up, up until that point, to believe this was going to happen."

• He learned Symphony wouldn't lease or buy his old house, either. Eventually, the old home slid into foreclosure, and Grubish couldn't afford the new one. Now, he says he's out roughly $25,000 and 180 points off his credit score. "I probably won't be able to get financed for at least 10 years, probably," he said. "We're throwing the thought around of even just filing for bankruptcy."(1)

For more, see ABC12 Investigates: Symphony Homes.

(1) Reportedly, Symphony Homes' headquarters in Davison is empty. That hasn't changed for months. But what has changed is the growing list of debt collection notices on the front door, according to the story. The company filed for Chapter 11 bankruptcy protection in August 2008 and had been run by two men: realtor Steve Burges and builder Don Mahoney, the story states.

Senior "$CAMS" Detection Project Focuses On Identifying Nursing Home Residents With Past Due Accounts In Effort To Stamp Out Elder Financial Abuse

From the Office of the Michigan Attorney General:

• Attorney General Mike Cox [...] announced criminal charges against six individuals accused of financially exploiting senior citizens. The charges are a result of Project $CAMS (Stop Crimes Against Michigan Seniors), an initiative to protect nursing home residents from scams, misappropriated resources and embezzlement. Operated by the Attorney General's office, along with the Office of Inspector General for the Social Security Administration, Project $CAMS uncovers potential financial exploitation by identifying nursing home residents with past due accounts. Since the project was announced in May of 2008, 43 criminal cases have been filed.

***

• [N]ursing home residents are the most vulnerable and the least likely to be able to detect or report it. It is estimated that only one in 100 instances of victimization is typically reported.

• Servicing 39 counties when launched in 2008, Project $CAMS currently protects seniors in over 250 nursing homes across 75 counties. The nursing home facilities participate by identifying residents who are behind in their payments and providing the Attorney General's office with relevant documentation. Nursing home arrearages as a result of thefts have been as high as $75,000. In the majority of the cases, the perpetrator was a relative.

For the entire Michigan AG press release, see Cox Charges Six for Scamming Seniors. FinancialAbuseOfElderlyAlpha

Illinois AG Cracks Down On Home Repair Companies In Various Alleged Scams; One Equity Stripping Ripoff Cost Victims Nearly $1.3M, Says Lawsuit

The Office of the Illinois Attorney General Lisa Madigan has recently filed a string of civil lawsuits against home repair companies alleging various acts of misconduct perpetrated against homeowners:

• Madigan Cracks Down On Chicago Mortgage And Home Repair Fraud Scheme ($1.3 Million Swindled from Elderly, African-American Homeowners in Subprime Loan Scam): Lawsuit filed against a Chicago man and five home repair and mortgage companies for conducting a wide-spread scheme that targets African-American consumers on Chicago’s South and West sides and has stripped nearly $1.3 million in equity from the homes of at least 36 consumers, including several who lost their homes to foreclosure.

• Madigan Sues Chicago Contractor For Failure To Fulfill Home Improvement Contracts: Lawsuit filed alleging that a Chicago home repair contractor solicited contracts without a license and collected up to $26,000 in fees for work that he failed to perform or completed in a substandard manner.

• Madigan Sues Cook County Roofer For Failure To Fulfill Home Improvement Contracts: Lawsuit filed alleging that a Mount Prospect, Ill., contractor solicited roofing contracts without a license and for work that he either failed to perform or completed in a substandard manner.

• Madigan Sues Rockford Home Contractor For Shoddy Work, Failure To Complete Fence Installations: Lawsuit filed alleging that a Rockford contractor solicited contracts to remove or install fences but failed to complete contracted projects or completed them in a substandard manner.

FTC Consumer Video Warns Against Loan Modification Rackets

As part of their "consumer enlightment" program on loan modification foreclosure rescue scams, the Federal Trade Commission has put out a video intended to discourage homeowners needing help with their mortgage payments from patronizing outfits seeking upfront fees while making promises they can't keep.

For the video, see Real People, Real Stories (Avoid Foreclosure Rescue Scams) (Vea en español).

Long Term Residents In 43-Unit NJ Hotel Facing Foreclosure Claim Foul; Say Management Gave Them The Boot Without Going Thru Proper Eviction Proceeding

In Pitman, New Jersey, The Gloucester County Times reports:

• Claiming that she and fellow residents at the [43-unit] Hotel Pitman were illegally evicted on Nov. 14, Christy Blair cites the New Jersey statutes for proof. "My husband and I were both residents of the Hotel Pitman and I say residents, not guests, because we lived there for almost 14 months," said Blair. "Many of the people living there were long-term, and according to NJSA 55:13-B-3 (h), if at least 15 percent of the rooms of a hotel are occupied by people who have lived there for more than 90 days, the law considers that property a rooming or boarding house, which means we should have the same rights as boarding house residents, including the right to be legally evicted." Instead, said Blair, residents encountered only a flier hanging in the lobby six weeks before the hotel's closure.

***

• Another resident, Jesse Evans, says he has been living in a pick-up truck since he lost his room at the hotel. He was also unable to get back in to retrieve his possessions, he said. "A rumor started in the summer that the hotel would go into foreclosure, but we mentioned it to management and they flatly denied it," said Evans. "All that appeared was that letter mentioning economic circumstances six weeks before it closed, and that was unsigned. Based on the law (specifically, NJSA. 2A: 18-61.2), New Jersey required him to give us 18 months' notice." Evans echoed Blair's complaint about the lack of a signed notice.(1)

• According to borough officials, the hotel will go to sheriff's sale on Dec. 9.

For more, see Pitman Hotel closing illegal, evicted claim.

For more on tenants' rights in New Jersey, see:

• The Nuts and Bolts of Fighting Evictions,
• Tenants' Rights in New Jersey (go here for index), Legal Services of New Jersey’s guide to landlord-tenant law for New Jersey residents,
• Rights of NJ tenants in Rooming and Boarding Homes and Mobile Home Parks.

(1) According to the story, New Jersey Department of Community Affairs Public Information Officer Lisa Ryan confirmed the residents' reading of the law. "If at least 15 percent of the dwelling units were, in fact, occupied over 90 days, the building would have been subject to the Rooming and Boarding House Act of 1979 and to the protections accorded under the Residential Eviction Law, NJSA 2A:18-61.1," said Ryan. "The people impacted are free to seek legal representation at their local legal aid office."

"If it was considered a boarding house, those residents should be covered by the anti-eviction act. Even some hotel residents are protected by that act," said Joanne Gottesman, a clinical associate professor at Rutgers University School of Law in Camden. "It sounds like there are some good arguments that the anti-eviction act would apply to them." Gottesman said it seemed like some procedural issues were not followed, and she encouraged the residents to contact South Jersey Legal Services at (800) 496-4570 for help in determining their rights.

Pennsylvania AG Tags Four Loan Modification Outfits For Pocketing Upfront Fees, Failing To Provide Promised Foreclosure Relief

From the Office of the Pennsylvania Attorney General:

• Consumer protection lawsuits were filed [...] against four loan modification or "mortgage rescue" businesses, along with their officers, who are accused of deceiving Pennsylvania consumers seeking help modifying their mortgage loans. "Consumers struggling with high interest rates or large loan payments were drawn to these businesses by misleading ads, deceptive websites and false promises of 'permanent changes' to their mortgages," Attorney General Tom Corbett said. "Instead, many consumers paid large up-front fees that resulted in little, if any, relief from their mortgage problems - leaving them in even worse financial situations."

For more, including a description of the charges in each lawsuit, see Attorney General Corbett announces lawsuits against four loan modification businesses accused of deceiving consumers about "mortgage rescues".

(1) According to the AG's press release, Corbett said the civil lawsuits were filed by the Attorney General's Bureau of Consumer Protection against the following businesses and individuals:

• Foreclosure Awareness Inc., of Bensalem and Boca Raton, Florida, along with owner Michael Squillace,
• Nationwide Foreclosure Prevention Center LLC, of Williamstown, NJ, and owner Robert P. Valentin,
• Best Interest Rate Mortgage Company LLC, of Huntingdon Valley, PA and Westmont, NJ, as well as company President Michael J. Diplacido,
• U.S. Mortgage Mod LLC, of Philadelphia, and owner Marc Dambrosio.

Corbett said that in addition to false or misleading claims about the ability to actually modify loans, some of the companies named in these lawsuits also allegedly:

• used deceptive mailings to consumers designed to appear as if the correspondence came from a government agency or government-related program,
• did not provide consumers with state-required financial disclosure information,
• failed to inform consumers about their five-day right to cancel and accepted up-front fees without posting the necessary surety bond or trust account,
• were not licensed by the Pennsylvania Department of Banking to handle mortgage loans or loan refinancing.

New Mexico Man Faces 13 Counts In Alleged Home Hijacking Scam; Targeted Houses In Foreclosure, Unwitting Tenants Seeking Rentals, Say Investigators

In Albequrque, New Mexico, KRQE-TV Channel 13 reports:

• A purported landlord who used foreclosed homes to scam unsuspecting tenants will face charges once he is located, according to Albuquerque police. Last summer KRQE News 13 interviewed three women who said they rented houses from Ernest Garcia. But according to police Garcia had broken into foreclosed homes which he then pretended to own while collecting cash from would-be tenants.

***

• Now a grand jury has indicted Garcia on 13 counts including fraud, forgery and burglary. "It's a scheme that I don't think any of us have ever seen before and certainly one that is propelled by the economy," Pat Davis, a spokesman for Bernalillo County District Attorney Kari Brandenburg, said. [...] But there's one problem. Investigators don't know where to find Garcia. A warrant is out for his arrest, and he has a court hearing scheduled Thursday in an aggravated DWI case. If he shows, he will be arrested. Garcia has a criminal history dating back to 1989 that includes burglary, forgery and conspiracy.

For the story, see Indictment: Fake landlord duped tenants (Passed off foreclosed homes as his). KappaPhonyLandlordScam

Michigan AG Files Criminal Charges In Separate Cases Alleging Loan Modification Firms Clipped Homeowners For Upfront Fees, Then Failing To Help

From the Office of the Michigan Attorney General:

• Attorney General Mike Cox today announced the filing of three criminal complaints and a total of 10 charges against illegal advanced fee "foreclosure rescue" operations accused of defrauding Michigan families of thousands of dollars. Global Financial Consulting Services of Dearborn Heights, Advanced Mediation Services of Midland and James Klein of Midland are accused of illegally charging homeowners facing foreclosure upfront fees for mortgage modification assistance.(1) The defendants claimed they would help homeowners by working with their lenders in an attempt to modify the borrower's mortgage. After paying the upfront fee, borrowers found that the companies could not secure a modification and were subsequently unable to get their money back.

***

• In addition to [the above] charges, Cox announced that he has partnered with the Federal Trade Commission and delivered Notices of Intended Action (NIAs) to 13 out-of-state companies accused of illegally demanding upfront fees from Michigan consumers for loan modification services.(2)

For the entire press release, see Cox Takes Aim at Advanced Fee "Foreclosure Rescue" Scams.

(1) According to the AG's press release, Global Financial Consulting Services faces four criminal counts including two counts of charging upfront fees before services were rendered, a violation of the Credit Services Protection Act, and two counts of making misleading statements. Advanced Mediation Services and James Klein each face two counts of charging upfront fees before services were rendered, a violation of the Credit Services Protection Act, and one count of making misleading statements. Each of the charges carries a penalty of up to 90 days in jail and/or a fine of $1,000 in addition to the requirement that the companies make full restitution to each of their victims.

(2) The companies receiving NIA warnings from Cox today include:

• 1 Global Financial, Inc., of Fort Lauderdale, FL;
• 21st Century Legal Services and Fidelity National Legal Service, of Rancho Cucamonga, CA;
• Best Interest Rate Mortgage, of Westmont, NJ;
• Echo Loans & Financial Solutions, of Foothill Ranch, CA;
• Elect Group LLC, of Oakland Park, FL;
• Federal Home Savers, of Commack, NY;
• Fresh Start Home Modification, of Woodbury Heights, NJ;
• Hope N Housing, of Norwalk, VA;
• IMC Financial, of Clearwater, FL;
• Lifeguard Financial, of Fort Lauderdale, FL;
• National Modification Corp., of Hauppauge, NY;
• North American Relief, LLC, of Costa Mesa, CA; and
• Peoples First Financial Inc., of San Diego, CA.

Connecticut AG Files Suit Against Out-Of-State Company Running Allegedly Bogus Upfront Fee Loan Modification Scam

In Hartford, Connecticut, the Hartford Courant reports:

• The state is suing a South Florida mortgage rescue company that charged Connecticut homeowners tens of thousands of dollars but failed to help them avoid foreclosure. The company, FHA All Day.com, also refused to refund the fees, between $2,500 and $4,500. [...] As of Oct. 1, the state began banning companies from demanding up-front payments for mortgage help.

***

• FHA All Day couldn't be reached for comment. FHA All Day's website said it is no longer accepting new applications. A call to a telephone number on the site yielded a recording saying the number was not accepting calls. FHA All Day was sued by the state of Florida in July.

Source: Connecticut Sues Florida Mortgage Rescue Company.

See also, Connecticut AG news release: Attorney General, DCP Sue Florida Mortgage Rescue Company For Allegedly Defrauding CT Homeowners.

New Video To Provide Instruction On Navigating HAMP

PMI Mortgage Insurance Company recently announced:

• PMI Mortgage Insurance Co. [...] introduced a new video to help homeowners experiencing financial hardship understand the benefits of the Home Affordable Modification Program (HAMP) and how they can take advantage of this important program. HAMP is the national loan modification program offered in the Obama Administration’s Homeowner Affordability and Stability Plan which mortgage servicers are implementing broadly to bring long-term affordability to homeowners struggling to keep their homes. Navigating the Home Affordable Modification Program, one of the first videos available for homeowners, explains the benefits, eligibility requirements and types of adjustments that can be made to mortgage loans. The video also provides a realistic example of a couple’s experience before-and-after receiving a HAMP modification.

***

• Navigating the Home Affordable Modification Program is divided into two parts. Part I is a basic orientation for viewers who may not have heard of HAMP, the objectives of the program, how to determine if your loan is owned by Fannie Mae or Freddie Mac, and how to find out if you qualify. Part II discusses the information homeowners need to provide their mortgage servicer, demonstrates how affordability is achieved through a realistic example, and the steps homeowners need to take to ensure success in modifying their loan.

For more, including links to the video, see PMI Introduces New Video To Help Distressed Homeowners (Navigating the U.S. Treasury's Home Affordable Modification Program (HAMP)).

California Woman Gets Five Years For Using Forged Documents To Swipe, Mortgage & Sell Widow's Home Out From Under Her

From the Office of the San Bernardino County, California District Attorney:

• [J]udge Rod Cortez sentenced Oralia Hidalgo, 46, of Colton to prison for real estate fraud related crimes.(1) [...] In July 2003, Hidalgo forged the victim’s name on a Grant Deed illegally taking title to a residence in Colton. The signature of the victim's husband was also forged on the Grant Deed. The husband had died approximately two years prior to the forgery. The defendant encumbered the property and subsequently sold it for $125,000. The defendant falsified several real estate deeds and forged the signature and stamp of a notary public. The fraudulent deeds were later recorded at the San Bernardino County Recorder's Office. The issue of restitution has been reserved for an upcoming hearing.

For the DA's press release, see Colton Woman Sentenced to Prison for Real Estate Fraud.

(1) According to the DA's press release, Hidalgo was ordered to serve five (5) years in the California state prison system. The defendant was found guilty on nine (9) felony counts ranging from forgery, grand theft, filing of false instruments, and a grand theft enhancement, which were filed by the San Bernardino County District Attorney’s Real Estate Fraud Unit.

Elderly Parents Accuse Daughter Of POA Abuse; Suit Says Woman Pocketed Cash By Mortgaging Family Residence, Moved 90-Year Old Couple Into Nursing Home

In Chicago Illinois, the Chicago Tribune reports:

• An elderly couple are suing their daughter, accusing her of cheating them out of their South Side home and moving them to a nursing home. Overton and Bernice Williams, both born in 1917, say in their lawsuit that they are "unsophisticated in legal matters." They had lived in the home with their daughter, whom they say they trusted "implicitly as to all their financial affairs." In 2006, the daughter sought and received power of attorney for her parents, the lawsuit states. In 2008, the daughter took out a home equity loan on the house and pocketed the money, it says. The daughter then placed her parents in a nursing home, the suit states. The couple are suing their daughter, Leshia Williams, and EquiFirst Corp. The couple say their son later took them to live with him in Alaska. They want their house back and want their daughter to return the loan money.

Source: Elderly couple sue daughter, say she cheated them out of their Chicago home (Daughter moved couple in their 90s to a nursing home, lawsuit says). DeedContraTheft FinancialAbuseOfElderlyAlpha

Ratings Agency Analyst On MBS Offerings: "We Rate Every Deal - It Could Be Structured By Cows & We Would Rate It" - CEO Admits "Drinking The Kool Aid"

From the Office of the Ohio Attorney General:

• Ohio Attorney General Richard Cordray [...] filed a lawsuit against Standard & Poor’s, Moody’s and Fitch, three national agencies that are responsible for providing accurate credit ratings of investments. The lawsuit, filed in United States District Court for the Southern District of Ohio on behalf of five Ohio public employee retirement and pension funds, charges the rating agencies with wreaking havoc on U.S. financial markets by providing unjustified and inflated ratings of mortgage-backed securities in exchange for lucrative fees from securities issuers.

***

• Public statements and testimony indicate that rating agency executives and analysts knew their ratings of mortgage-backed securities were wrong. Indeed, one rating agency analyst admitted that the market for mortgage-backed securities was “little more than a house of cards” with a much higher risk of devaluation than indicated by the purported investment-grade “AAA” rating. Another rating agency analyst said that “we rate every deal. It could be structured by cows and we would rate it.”

• Raymond McDaniel, CEO and Chairman of Moody’s, described the ratings frenzy: “What happened in ’04 and ’05 … is that our competition, Fitch and S&P, went nuts. Everything was investment-grade. It really didn’t matter… No one cared because the machine just kept going.” McDaniel added that Moody’s also “[drank] the Kool-Aid.”

• “This misconduct has caused immense harm to Ohio police officers, firefighters, teachers, government workers, investors and retirees,” said Cordray. “Our lawsuit against these rating agencies is another step toward holding Wall Street accountable for its wrongs.”

For the Ohio AG press release, see Cordray Sues National Rating Agencies for False and Misleading Ratings.

For the lawsuit, see Ohio Police & Fire Pension Fund, et al. v. Standard & Poor's Financial Services LLC, et al.

For a summary of securities litigation managed by the Ohio Attorney General’s Office, see Holding Wall Street Accountable (Protecting Investors, Retirees, Workers and Families).

(1) Attorney General Cordray noted his reasons for bringing this lawsuit: “The rating agencies were central players in causing the worst economic crisis in Ohio since the Great Depression. The rating agencies assured our employee pension funds that many of these mortgage-backed securities had the highest credit ratings and the lowest risk. But they sold their professional objectivity and integrity to the highest bidder. The rating agencies’ total disregard for the life’s work of ordinary Ohioans caused the collapse of our housing and credit markets and is at the heart of what’s wrong with Wall Street today.”

More On Class Action Seeking To Void Foreclosure Sales Due To Alleged Sheriff's Office Screw-Up; Some Auctions Didn't Even Taking Place: Plaintiff

In Detroit, Michigan, The Michigan Citizen reports:

• Over 40 Wayne County homeowners have filed a $10 million class action lawsuit that could invalidate tens of thousands of mortgage foreclosure sales executed while Warren Evans was Sheriff. The lawsuit is a significant step in a long battle led by Yvonne Cross, the owner of several family properties in Detroit. It was filed by Bloomfield Hills attorney Paul J. Nicoletti.

***

• “In addition to the technicalities listed in the lawsuit, such as the fact that Evans’ subordinates were not authorized to sign deeds of sale, we are contending that sheriff’s auctions were not even held in many cases,” said Cross. “The sales should be null and void, and the original property owners should still own their homes under the law.”

• Cross herself won back ownership of her home [...], which originally belonged to her grandmother. She obtained an affidavit from Attorney Kate Ben-Ami of the sheriff’s office stating that no sheriff’s auction had been held on the date and time specified in the sheriff’s deed. She has obtained similar affidavits regarding other properties, including one in Macomb County. Cross has also filed actions with the state’s attorney grievance commission against six attorneys from the law firm of Trott and Trott who were involved in the sale of her grandmother’s home.

For the story, see Fight against foreclosures gaining momentum (Michigan, Kansas, Massachusetts cases set precedents).

For an earleir story, see The Detroit News: Lawsuit claims Wayne County foreclosures were illegal. EpsilonMissingDocsMtg