A Case Study In Sleazy "Tag Team" Tactics Used By Real Estate Agent & Attorney To Illegally Intimidate Family From Foreclosed Home

In New Haven, Connecticut, a recent New Haven Independent story reports on the recent action by the Connecticut Attorney General in targeting at least 30 law firms, real estate agencies and lenders with cease and desist orders in connection with sleazy practices designed to intimidate tenants out of recently foreclosed homes.

Reportedly, some foreclosure attorneys and real estate agents statewide are allegedly working in tandem to illegally force these tenants to vacate, in violation of the federal Protecting Tenants At Foreclosure Act. Their alleged conduct centers on intimidating letters being sent to the renters that create the impression that they are facing imminent eviction, coupled with "cash-for-keys" offers in amouts for less than the minimum required by Connecticut law.

The story profiles the experience of one local resident who, along with his wife and three children, have been allegedly subjected to this harassment. The contents of one threatening letter from the lender's real estate agent to the family shortly after the foreclosure reportedly contained the following text at the top of the correspondence:

• VERY IMPORTANT !!!!!!!! THE BANK NOW OWNS THIS PROPERTY—YOU WILL BE REQUIRED TO VACATE THE PREMISES SHORTLY—THERE MIGHT BE MONEY TO HELP YOU MOVE OUT, BUT YOU WILL NEED TO CONTACT ME WITHIN 48 HOURS AT THE NUMBER LISTED BELOW.

The problem with this all-caps message is that it creates a false sense of urgency that suggests that the tenants have to leave immediately when, in fact, the Protecting Tenants At Foreclosure Act expressly provides that tenants have 90 days from the receipt of proper notice from the foreclosing lender or until the completion of their lease to move out, whichever is later.

Shortly thereafter, another letter was reportedly received by the family, this time from the foreclosing lender's attorney containing, in part, the following language:

• You must vacate and surrender possession of the Premises to U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR THE STRUCTURED ASSET INVESTMENT LOAN TRUST, 2006-BNC3 unless you provide acceptable evidence to the undersigned law firm that you are a bona fide tenant pursuant to Section 702(a)(2)(A) of the Federal “Protecting Tenants at Foreclosure Act of 2009."

An additional false sense of urgency is created when an intimidating letter sent by a real estate agent is followed by another one from an attorney (this is an old debt collector trick that has been ruled by courts to be illegal - designed to create the impression that the process against the consumer is moving forward ("the walls are closing in on the consumer") and legal action is imminent unless the consumer succumbs to whatever demands on them have been made).

The following excerpt describes the position of local legal services attorneys, as well as the tenant's feelings about what is going on here:

• [The letter from the attorney is] not written as if “they care about the person understanding it,” [attorney Amy] Marx said. It’s written, she argued, like a credit card disclosure statement. Not only is the form of the letter problematic, the content of it is wrong also, Marx said. The letter asks Torres to prove he is a tenant of the building. It’s obvious [the lender's attorney] knows he and his family are tenants, she said. The letter was sent to them at the apartment by certified mail.

• The letter [also] uses the phrase “within ninety (90) days,” suggesting the Torres family may have less than the full 90 days they are allowed by law, Marx said. The letter further threatens that if the Torres family does not leave, the bank may seek “damages caused by your unlawful detention of the Premises.”

• “Get out of here immediately or you’re going to be stuck with a big legal bill,” Marx translated. She said such a threat is illegal. But Torres didn’t know that. Until Monday, when his lawyer explained his rights, he thought he could be evicted at any minute. Fearing that he was about to be evicted, and in need of money for a deposit on a new apartment, Torres signed a cash-for-keys agreement with American Home Mortgage Servicing, Inc. on Jan. 15. He agreed to move out on Jan. 31 in exchange for $1,500.

• That was another illegal action, according to his lawyers. The law states that tenants must receive at least $2,000 under a cash-for-keys agreement, said attorney Amy Eppler-Epstein. Just days after he signed the agreement, Torres received yet another letter. This one was from legal aid, informing him of the federal law and advising him of his rights. That’s how he ended up in the offices of legal aid, with attorneys working on his case.

***

• Torres’ experience is a case-study of the problem the attorney general is trying to combat, she said. “This is exactly what [Connecticut Attorney General] Richard Blumenthal is issuing cease and desist orders on today,” she said. Eppler-Epstein characterized the communications from the realtor and [the] attorney [] as “intimidating and untruthful action.” What they’re doing is scaring people, she said. “It’s just wrong.”

• Torres, speaking in Spanish, said the letters from the realtor and the lawyer frightened him. He said he signed the cash-for-keys agreement for fear that he and his family would be evicted and left with nothing. Torres has been unemployed for several months. He said he was working for a construction company in Branford but got laid off. He’s hoping he’ll get rehired when the warmer weather comes. In the meantime he’s been looking for work and collecting unemployment, he said.

For the story, see Blumenthal Puts Bankers, Lawyers On Notice.