Saturday, March 20, 2010

Inspectors Give Dozens Of High-Rent NYC Tenants The Boot After Discovery Of 60 Resident'l Units Carved Out Of 16-Story "Deathtrap" Sans Proper Permits

In New York City, the New York Post reports:

  • Dozens of families who thought they found luxury housing in a Manhattan landmark were homeless [this week] after city inspectors ordered them out of what one source described as a "deathtrap" that was illegally converted from office space. Inspectors from the Buildings and Fire departments slapped a vacate order on the 16-story landmark building at 1182 Broadway Tuesday after getting a tip that the office building was turned into an apartment building without any permits.

  • But inspectors also found that the building, which can be legally used only for offices, was converted without essential fire-safety systems, including sprinklers, alarms and a second stairway for residents to use in emergencies. "You've got one staircase in this building and no sprinkler system. If there's a fire, what's going to happen? This was a deathtrap," said a source familiar with the city's investigation, which was prompted by a tip phoned in late Monday.

  • The owners, who carved 60 apartments out of the top 13 floors, never received city permits to perform the renovations, or to convert the building to residential. Tenants, many with young children, were devastated by the sudden rush from their homes. [...] The building is owned by Mocal Enterprises, whose principals include Calvin Haddad and his daughter, Dana Haddad, who lives in the building, where monthly rents range from $2,900 to $5,000 for the one- and two-bedroom units.

For the story, see Deluxe tenants are 'evict'ims (Tossed from 'deathtrap' apts.).

Long Island Man Faces Charges In Alleged $140K+ Home Improvement Ripoff Of 74-Year Old Queens Woman

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

  • Queens District Attorney Richard A. Brown [] announced that a Long Island contractor has been charged with bilking a 74-year-old Queens homeowner out of more than $140,000 that she paid him over two years ago for an extension to her residence that he never started.(1)


  • District Attorney Brown said that, according to the criminal charges, 74-year-old Lilian Miller retained [Ron] Scott to build an extension to her house located [...] in the St. Albans section of Queens on August 4, 2007. At the request of Scott, it is alleged that Ms. Miller gave him that day a bank check in the amount of $138,500 (from a line of credit she obtained against the equity in her home) and a personal check totaling $5,000. [...] It is further alleged that Scott failed to return or perform any work on Ms. Miller’s residence and that despite numerous attempts by Ms. Miller to contact him via mail, telephone calls and emails to recover her funds, she was unsuccessful.

For the entire Queens DA press release, see Long Island Contractor Charged With Stealing $140,000 from 74-Year-Old St. Albans' Woman.

(1) The defendant, identified as Ron Scott, 68, of West Islip, Long Island, faces a three-count criminal complaint charging him with second-degree grand larceny, second-degree criminal possession of stolen property and a violation of New York State Lien Law 79-A (misappropriation of funds of trust). If convicted, he faces up to 15 years in prison.

Unsettled State Income Tax Consequences Of Debt Forgiveness On Short Sales, Foreclosures, Loan Mods Leave Some California Residents In Limbo

In Sacramento, California, The Sacramento Bee reports:

  • Accountants say rising numbers of California taxpayers who did short sales or received loan modifications in 2009 now fear they will be walloped anew by a cash-starved state government intent on taxing their forgiven debt. It's impossible to ease the fears or specifically answer many questions, these accountants say.

  • "We've had quite a few clients fall into that category," said Jennifer Neronde, office manager at Rocklin-based Cramer and Associates CPA. Uncertainty reigns with less than six weeks before the April 15 filing deadline because the forgiven debt question has gotten caught up in a larger tussle over business taxes between the Legislature and Gov. Arnold Schwarzenegger.

For more, see California tax law unsettled on home short sale.

Friday, March 19, 2010

Cal. Federal Judge Ditches Cash Bond Requirement In Granting Injunction Blocking F'closure; OneWest Unilaterally Xcelled Loan Mod Agreement, Says Suit

In Sacramento, California, News reports:

  • A Fair Oaks homeowner suing OneWest Bank in Sacramento federal court achieved a notable victory last week. Judge John Mendez granted a preliminary injunction March 3 blocking a foreclosure auction while not requiring the homeowner to post a cash bond equal to the home's value.

  • The homeowner's attorney, Jonathan Stein, told News10 it was the first case he knows of in California where the customary bond requirement was lifted.

  • Stein said OneWest had entered into a loan modification with his client and then unilaterally cancelled it.

Source: Homeowners claim bank prefers FDIC bailout over house payments.

Go here for a video presentation on an explanation of the sweetheart deal that the Indymac/One West operators were given by the FDIC on mortgages it acquired and are now looking to foreclose on.

Ex-Real Estate Agent Bagged For Allegedly Scamming Rent Deposits From Would-Be Tenants For Vacant HUD Homes; Used Craigslist, Fake Name, Say Cops

In Indianapolis, Indiana, reports:

  • A former real estate agent conned at least eight people by renting them properties actually owned by a federal agency and then running off with their deposits, prosecutors said. Authorities in three Indiana counties accuse Richard Swoveland, 38, of scamming people by persuading them to rent empty homes the U.S. Department of Housing and Urban Development was in the process of selling.

  • Investigators say the Greenfield man advertised the homes on the Craigslist Web site under a fake name. He allegedly showed prospective renters the homes using a HUD master key. HUD is investigating how he obtained the key, but officials suspect he got it while he was a licensed agent. Swoveland was a licensed real estate agent in Indiana until 2008. Swoveland, who is being held in the Hamilton County Jail, has pleaded guilty to a felony theft charge in that county and faces other charges in Hancock and Marion counties.

For more, see Greenfield man accused of housing scam.

Duo Facing Theft By False Pretenses Charge Accused Of Leasing Vacant Homes In Some Stage Of Foreclosure To Unwitting Tenants, Pocketing Deposits, Rent

In Barstow, California, the Desert Dispatch reports:

  • Barstow Police have arrested two people in connection with recent housing fraud involving foreclosed or pre-forclosure homes that were rented out to unsuspecting tenants. According to police reports, a Barstow code enforcement officer was checking out a vacant, pre-foreclosed home in early February and found tenants living inside the home. The tenants said they were renting from Evelyn Thompson, 50, who was arrested in Colton, Calif. on Wednesday and charged with theft by false pretenses.

  • Edward Tafoya, 52, — who police say assisted Thompson — was also arrested and charged with theft by false pretenses. Police say both are Barstow-area residents.

  • Over the course of the police investigation, additional renters were found to be in the same situation and all were renting from Thompson, who allegedly would pose as a property manager and collect deposit fees and subsequent rent.

For more, see Agent charged with defrauding renters (Police: woman posed as property manager, rented foreclosed homes).

"Walkaway" Homeowners Stay On Lenders' Radar For Unpaid Debt Balances

In Detroit, Michigan, the Detroit Free Press reports:

  • While foreclosures and loan modifications have made it tough for overwhelmed banks to go after walkaway borrowers, there's evidence they are starting to crack down. Lenders are hiring collection agencies. They also are getting deficiency judgments -- court orders that allow banks to collect on mortgage balances. Once an order is in place, lenders can garnish wages, tap bank accounts, seize tax refunds and put liens on other assets to satisfy the debt. These judgments also show up on credit reports. If the lender sells the home after a foreclosure for less than what is owed on the loan, the bank can come after the borrower for the deficiency balance.

  • Many states give mortgage holders as long as five years to seek a deficiency judgment. If a judgment is granted, the bank gets up to 20 years to collect and the option to renew for another 20 years if the debt isn't paid. In Michigan, lenders have six years from the date the last payment was due -- or 36 years on a 30-year mortgage, said Southfield real estate attorney John E. Jacobs.

  • "A lot of people do think ... they don't owe anything on the mortgage anymore," said Michael Greiner, a Warren attorney who specializes in personal bankruptcy. "That's not right. Banks try to collect on these mortgages." [...] "In a couple of years down the road, you will see a lot more of the collections on these debts," Greiner said.

For the story, see Mortgage, tax bills ultimately come back to haunt walkaways.

Thursday, March 18, 2010

Ex-Lawyer Gets 21 Months In $2.4M+ Escrow Swindle; Issued Bogus Title Policies, Pocketed Payoff Proceeds Due On Existing Mortgages In R/E Closings

In Atlanta, Georgia, Forsyth County News reports:

  • A Forsyth County man who kept a law practice in Sugar Hill will spend nearly two years behind bars on a federal mail fraud conviction. Trent Edward Wright, 38, was sentenced Friday to one year and nine months in federal prison by U.S. District Judge Timothy C. Batten Sr. Wright will also spend three years on probation following his release and must pay more than $2.4 million in restitution.


  • Acting U.S. Attorney Sally Quillian Yates said in a statement that lenders and title companies relied on Wright as their closing attorney and agent. “He was supposed to pay off all prior encumbrances on properties to secure loans and pass clear title as warranted by the title insurance,” she said. “He didn’t. Now he is going to federal prison.”

  • According to the statement, information presented in court showed Wright closed about 17 loans during fall 2006 “in which lenders were falsely assured that all prior loans encumbering the properties securing their loans had been paid off.” As a result, the lenders thought they would be in the first position to recoup their loan amounts from the sale of the properties if they went into foreclosure, the statement shows.

  • In addition, Wright reportedly wrote title insurance for the loans, though he failed to pay off several prior recorded liens encumbering the properties. According to the statement, “Rather than ordering title searches and requesting payoff amounts from all prior lenders as required before the new loan closings, Wright either failed to order title searches or disregarded recorded prior encumbrances, causing over $2.4 million in losses.” Wright closed his Sugar Hill law practice in 2007. In December, he surrendered his license to practice law.

  • It appears Wright didn’t operate alone.Edward William Farley, 47, of Hoschton is identified in the statement as a co-conspirator in a related case.

For more, see Ex-attorney sentenced to federal prison (Forsyth man pleaded guilty in mortgage scheme).

For a press release from the U.S. Attorney's Office in Atlanta, see Former Georgia Closing Attorney Sentenced to Prison in Multimillion Dollar Mortgage Fraud.

Texas Woman Hounded By Zombie Bill Collector Over Debt Belonging To Another Belts Back By Filing Federal Lawsuit

In Tyler, Texas, The Southeast Texas Record reports:

  • A Tyler woman is suing a credit collection agency for repeatedly calling her about a debt that is not hers. Seeking $1,000 for each telephone call, Brandy Samuel filed suit against ER Solutions Inc. and Does 1-10 on Feb. 23 in the Tyler Division of the Eastern District of Texas.

  • According to the original complaint, Samuel claims the debt does not belong to her yet the collection agency continues to call her between 10 and 20 times per day. She alleges the defendants are rude and abusive, constantly harassing her and telling her to take over the debt. Samuel claims she has demanded that the creditor stop calling her about someone else's debt but the "defendants continued in their harassing tactics."

  • The plaintiff alleges the telephone calls violate the Fair Debt Collection Practices Act, the Texas Debt Collection Act and are an invasion of privacy. Samuel is asking the judge to award $1,000 for each violation of the Fair Debt Collection Practices Act, costs of litigation, punitive damages and actual damages including humiliation, anger, anxiety, fear, frustration, embarrassment and emotional distress.

Source: Texas woman sues debt collector over harassing phone calls.

Lender, Loan Servicer Committed Deceptive Trade Practice By Threatening Foreclosure On Homeowner In Full Compliance With Loan Mod Agreement, Says Suit

In Jefferson County, Texas, The Southeast Texas Record reports:

  • A woman has filed suit against a loan servicing agency and a mortgage company after she claims they have threatened to foreclose on her home. Lisa D. Perkins claims she owns a home at [...] in Port Arthur. Defendant Mortgage Electronic Registration Systems currently owns the mortgage on the home and defendant Litton Loan Servicing is the mortgage servicer for Mortgage Electronic, according to the complaint filed Feb. 17 in Jefferson County District Court.

  • On Aug. 1, 2009, Perkins entered into a loan workout with Litton. Under the plan, Litton promised to modify Perkins' mortgage as long as she complied with all terms of the plan, the suit states. Perkins has complied with all the plan's terms, yet Litton still notified her of its intent to foreclose on her home on March 2, the complaint says. "Plaintiff relied on these misrepresentations by Defendants to her detriment," the suit states.

  • By foreclosing on her home, Perkins claims Litton and Mortgage Electronic violated the Texas Deceptive Trade Practices Act and breached their contract with her. [...] Now, Perkins is seeking an ex-parte temporary and permanent injunction from the court demanding that Litton and Mortgage Electronic refrain from foreclosing on her home, the suit states. In addition, she seeks actual, consequential and statutory damages, attorney's fees, costs, pre- and post-judgment interest and other relief to which she may be entitled.

For the story, see Woman seeks TRO to stop foreclosure.

OneWest Bank "Shared Loss" Agreement With Feds Leads To Screwing Over Borrowers Seeking Loan Modifications, Says Attorney For Couple Facing F'closure

In Elk Grove, California, reports:

  • A couple facing foreclosure from OneWest Bank has joined the growing number of homeowners, attorneys and real estate professionals who believe the bank would rather foreclose than modify a loan. [...] The Cravalhos said their original lender, IndyMac Bank, agreed to a loan modification in the summer of 2008 that would have offered them a 3 percent interest rate for five years. But then IndyMac was seized by the Federal Deposit Insurance Corporation (FDIC), which sold the bank's assets to a group of investors who formed OneWest Bank in March 2009. Tom Cravalho said OneWest Bank has refused to honor the original agreement or discuss new terms.

  • The Cravalhos' attorney believes OneWest is more interested in reimbursement from the FDIC for the bad loan under a so-called "shared loss" agreement than it is in modifying the Cravalhos' mortgage. "They're going to make a lot more money getting Tom and Mona out of their house than they would leaving them in their house. A lot more money," said attorney Sean Gjerde. Gjerde explained that under the shared loss arrangement, OneWest could resell the home, collect an FDIC reimbursement, and actually end up with more money than it paid for the original IndyMac loan.(1)


  • The Cravalhos are suing OneWest Bank in Sacramento County Superior Court claiming the bank violated state law by not taking adequate steps to help them avoid foreclosure. They have also filed for personal bankruptcy, which stalled a courthouse auction originally scheduled last fall.

For the story, see Homeowners claim bank prefers FDIC bailout over house payments.

(1) Go here for a video presentation on an explanation of the sweetheart deal that the Indymac/One West boys were given by the FDIC.

Wednesday, March 17, 2010

Homebuyer Files Suit To Halt Foreclosure; Says Seller "Owner-Financed" Sale, Then Mortgaged Premises To 3rd Party & Failed To Make Loan Payments

In Jefferson County, Texas, The Southeast Texas Record reports:

  • A Beaumont couple claims a mortgage company is attempting to foreclose on their property even though they say they have made the required monthly payments. Antonio R. and Hilda L. Trista Candelaria filed a lawsuit March 1 in Jefferson County District Court against Edward Williams, Citimortgage, Carolyn Ciccio, Tommy Jackson, Misti Montalvo, Selim Taherzadeh, Cara Featherstone and David Moon.

  • The Candelarias claim they own property in Beaumont, which they purchased from Williams on Feb. 19, 2002. After Williams sold the Candelarias the property, he turned around and mortgaged the same property to Corinne Palmer Anold, who transferred the note to Citimortgage, according to the complaint.

  • The Candelarias faithfully paid their monthly mortgage payments to Williams, but remained unaware of the subsequent mortgage Williams issued, the suit states. "Apparently Defendant, Edward Williams, did not pay the mortgage even though he was paid by your plaintiffs," the suit states.(1)

For the story, see Couple seeks order to stop trustee's sale of property.

(1) If the Candelarias took possession of the home prior to Williams' mortgaging of the premises, the Candelarias' ownership interest in the home may have priority over the mortgage now in foreclosure. Under Texas law (and the laws of most states), a purchaser of, or mortgage lender secured by, real estate is charged with constructive notice of all claims of a party in possession of the property that the purchaser or lender might have discovered had he made proper inquiry. Madison v. Gordon, 39 S.W.3d 604; 2001 Tex. LEXIS 5; 44 Tex. Sup. J. 410, (Tex. 2001). See also, footnote 2 of this post for more on the duty of a bona fide purchaser in Texas to inquire into the rights of persons in possession of real estate.

For other states, see Bona Fide Purchaser Doctrine, Possession Of Property By Occupants Other Than The Vendor & The Duty To Inquire. See also, The Bona Fide Purchaser for Value of a Legal Estate Without Notice.

NYC Couple Charged With Using Forged Certified Bank Checks To Fleece Dozen Property Owners Out Of $16M+ In Real Estate

From the Office of the Queens County District Attorney:

  • Queens District Attorney Richard A. Brown [] announced that a Flushing man who held himself out as an attorney, accountant and banker and his female accomplice have been charged with stealing more than $16 million from a dozen individuals selling real estate and other assets.

  • District Attorney Brown said, “The defendants are accused of conning twelve property owners out of more than $16 million in assets – including properties located in Oyster Bay, Long Island, Pennsylvania, Texas and California – during seven closings held last Saturday in Queens. In some instances, the defendants are alleged to have promised to double any money the victims brought to the closings, thereby duping their victims out of $310,000 in cash, as well as diamonds, gold and mink coats.”

For the Queens DA press release, see Flushing Couple's Charged With Fleecing 12 Individuals Out Of $16 Million In Real Estate, Cars, Cash, And Other Valuables.

(1) The District Attorney identified the defendants as Matthew McEntee, 50, and Marina M. Mora, 45, both of 157-33 Rose Avenue in Flushing, Queens. The defendants, who are presently awaiting arraignment in Queens Criminal Court, are charged with first-, second-, third- and fourth-degree grand larceny, second degree criminal possession of stolen property, second-degree criminal possession of a forged instrument and first-degree scheme to defraud. If convicted, they each face up to 25 years in prison.

S. California Duo Get 27+ Years In Home Title-Snatching Scam Using Forged Land Documents, Stolen I.D.s; 88-Year Old Alzheimer's Patient Among Victims

From the Office of the Los Angeles County District Attorney:

  • A 48-year-old man was sentenced [] to 27 years, four months in prison for helping defraud nearly a dozen victims through a sophisticated real estate fraud scheme. Deputy District Attorney Clay Peters of the Real Estate Fraud Section said jurors convicted Joseph Little of 40 counts on Dec. 8, 2009. Co-conspirator Dwight Rolland Shelton, 40, was convicted of 51 counts. Los Angeles Superior Court Judge Robert Perry, who presided over the trial, said restitution would be addressed at a later date. Judge Perry sentenced Shelton to 29 years, four months state prison on Jan. 28. [...] Five other defendants involved in the scheme pleaded before trial.


  • Over a period of nearly 18 months, Little and Shelton orchestrated a complex scheme that involved a fictitious person and a “straw buyer” who were used to obtain home loans on properties that were either not being sold by the victims, or were not being bought by the alleged purchaser, prosecutors said.

  • This resulted in financial losses to civilian victims and lenders, as well as the temporary loss of title by the homeowner-victims. In total, the defendants received $780,000 in monies obtained through fraudulent transactions.(1)


  • Among the defendants’ victims was an 88-year-old widower with Alzheimer's disease, whose home was paid in full. He suffered a financial loss of more than $125,000, prosecutors said.

For the L.A. County DA press release, see Man Sentenced to More than 25 Years in Real Estate Fraud Case.

(1) According to the DA's press release, prosecutors said the monetary loss to the civilian victims was greater as this figure does not reflect attorneys and private investigators fees and lost work wages. Financial institutions also lost hundreds of thousands of dollars in loans that were not repaid and, in some cases, in properties that had to be resold at a loss.

NYC Man Gets 3 To 9 For Using Forged POA To Pocket $300K+ In Loan Proceeds By Draining Equity In Unwitting Mother-In-Law's Queens Condo With Mortgage

From the Office of the Queens County District Attorney:

  • Queens District Attorney Richard A. Brown [] announced that an international businessman who resides in Manhattan has been sentenced to three to nine years in state prison for having used a forged power of attorney to unlawfully obtain a mortgage on his mother-in-law’s condominium in the Little Neck section of Queens and steal more than $300,000. The condominium had been free and clear of any mortgages prior to the theft.

  • District Attorney Brown said, “The victim had accepted the defendant as family and, in turn, he thanked her by draining the equity from her condo, stripping her of all financial security. In seeking justice in this case, it was important that the defendant not only pay for his crime but take steps to repay his mother-in-law the monies he had stolen.”

  • The District Attorney identified the defendant as Shih Siang Shawn Liao, 35, of [...] Manhattan. [...] As part of his sentence, Liao also signed a confession of judgment admitting that he owed a debt, including late charges, totaling $444,892 – payable to Chase Home Finance and his mother-in-law, Fanny Lam. A confession of judgement authorizes the victims to enter judgment against the defendant for the owed amount. The amount represents Liao’s civil liability to the two parties in connection with his illegal activities.

For the entire Queens DA press release, see Manhattan Businessman Sentenced Up To Nine Years In Prison For Stealing Over $300,000 By Surreptiously Taking Out Mortgage On Mother-In-Law's Queens Condo.

Use Of Forged Land Documents In Title-Hijacking & Home Equity-Snatching Swindles On The Radar At Hillsborough County Registry Of Deeds

From the Hillsborough County, New Hampshire Regsitry of Deeds:

  • Preventing mortgage fraud and identity theft is a top priority of your Hillsborough County Registry of Deeds office. The Register's office has made a conscious effort to be on the look out for documents that may involve deed or mortgage related fraud. For your protection, consider subscribing to our "FREE" Property Fraud Alert website for real-time monitoring and notification of any potential fraudulent activity of interest to you. Your security does matter!!!!

  • Unfortunately, it's all too easy for a criminal to record a fraudulent deed making it appear as if they now own your home. Once they've done this, they can use your name as collateral on a mortgage or even attempt to sell your home to an unsuspecting buyer. Don't let this happen to you!

  • To sign up for this free service, go here and click on "BEGIN HERE" to register. The service will notify you if a document is recorded with your name and you will be given the option to be notified by "Email" or by "Phone". If you have any questions regarding this or are having trouble signing up, please call 1-800-728-3858 for assistance.

Go here for other counties making this service available throughout the country.

Thanks to Mike Dillon at for the heads-up on the news release.

Tuesday, March 16, 2010

BofA's Recent Illegal Padlocking Of Home Not In Foreclosure, Coupled With Abduction Of Homeowner's Pet Parrot Hits Major National News Media

In Allegheny County, Pennsylvania, Bank of America's recent blunder of improperly padlocking and taking possession of a home believed to be in foreclosure and taking the owner's pet parrot, Luke, has hit the major national media outlets, evidenced by the following stories:(1)

The Wall Street Journal reports that:

  • [The homeowner's] lawyer, Michael Rosenzweig, a partner at Edgar Snyder & Associates in Pittsburgh, said Ms. Iannelli was seeking damages of more than $50,000. The amount of any damages would be decided by a jury if the case goes to trial.(2)

This is not Bank of America's first screw up in this regard, according to the ABC News' story:

For other published reports of similar Bank of America screw-ups, see:


(1) The media appear to be having a field day reporting on this story, as evidenced by the following headlines:

(2) Based on a few recent reports of litigation involving foreclosing lender screw-ups in this regard, damage awards to the victimized homeowners in cases of improper lockouts have ranged from $150,000 to well over $1,000,000. See:

  • Plaintiff home sick by decision (Attorneys seeking to lower a $1,050,000 award to $200,000 obtained a tentative reduction of $550,000, and left the status of another $300,000 in punitive damages up in the air. The remaining $200,000 in damages was left untouched),

  • Court reduces $3 million judgment in wrongful foreclosure case (A company that wrongfully foreclosed on a Las Vegas family’s condominium will pay the owners $1.29 million, not the original $3 million jury verdict. The Nevada Supreme Court reduced the amount that Countrywide Home Loans Inc. must pay Gerald and Katrina Thitchener and their family in general and special damages, but upheld the $968,070 in punitive damages; for the actual ruling of the Nevada Supreme Court, see Countrywide Home Loans v. Thitchener, 192 P.3d 243; 2008 Nev. LEXIS 79; 124 Nev. Adv. Rep. 64 (September 11, 2008)).

LA Law Firm Accused Of F'closure Defense Ripoff Of Over 2 Dozen Clients In Civil Suit; Accused Of Clipping Homeowners For Close To $7K In Upfront Fees

In Los Angeles, California, JD Journal reports:

  • According to the L.A. Times March 10 article, center attorney Yungsuhn Park said testimony indicates that the firm targeted hundreds of Korean immigrants, whose limited English and unfamiliarity with U.S. law made them particularly vulnerable.

  • Trinity lawyer Timothy D. Thurman used agents who spoke Korean to recruit clients, the Center’s complaint alleges. Allegedly, Thurman and others charged clients a retainer up front around $7,000. The clients were told their litigation against lenders would forestall foreclosure and reduce the principal they owed. However, Trinity provided no actual services, the complaint also alleges. Thurman was arrested last year in conjunction with a fraud case involving another loan modification.

For the story, see Center’s Complaint Accuses Trinity Law Associates, Inc. of Defrauding Korean Immigrants.

See also:

  • KABC-TV Channel 7: Lawsuit alleges firm targeted Korean immigrants: (The suit says Trinity Law Firm hired Koreans to place ads, then illegally paid them, like bounty hunters, to bring in customers. "This practice known as 'running and capping' is against the law,"(1) said Yungsuhn Park, of the Asian Pacific American Legal Center. "Attorneys are prohibited from paying non-attorney agents to find clients.").

(1) See California Business and Professions Code sections 6151 and 6152.

Upstate NY Judge Excoriates Wells Fargo For Acting In Bad Faith By Offering "Adjustable Rate" Loan Modification To Homeowner In Foreclosure

In a January, 2010 ruling, New York Supreme Court Justice Timothy J. Walker takes Wells Fargo to task for its feeble attempt in a case before him to modify a loan for a homeowner in foreclosure.(1) Walker prefaces his evaluation of Wells' conduct in the case with a recitation of the severe criticism adjustable rate mortgage loans ("ARMS") have received from various sources, the part these mortgages played in the current foreclosure crisis, and recent New York State legislation intended to help homeowners stay in their homes, afterwhich he gives the following analysis of the lender's actions in this foreclosure action [emphasis added, not in the original text of the ruling]:

  • It is against this universal condemnation of ARM loans and their contributory role in the current foreclosure crisis that this Court evaluates Well's Fargo's conduct in this case.

  • Commencing on August 13, 2009, and through the end of October 2009, this Court conducted several conferences with counsel for the parties, pursuant to CPLR §3408. The conference process concluded with Wells Fargo offering Hughes a proposed loan modification agreement, dated October 27, 2009 (the "Modification Agreement"), which included, inter alia, the following terms:

  • Interest Rate: An initial interest rate of 7.850% for the first five years of the modified loan, but, thereafter, rate changes would resume in accordance with the terms of the original Note. Not surprisingly, Hughes objected to the proposed Modification Agreement because it included an ARM. This Court informed Wells Fargo that it rejected the ARM and directed Wells Fargo to offer Hughes a modification agreement that included a fixed interest rate. Wells Fargo refused to do so.

  • Amounts Past Due to be Capitalized: As of October 27, 2009, Wells Fargo determined that Hughes owed it $24,414.65 in arrears, which it agreed to recapitalize into the modified loan. Included in this amount were unspecified "corporate advances" of $3,708.02 and an unexplained charge of $5,562 identified as "OSFC."

  • Amortization Term: The amortization term did not change and the loan, as proposed to be modified, would have matured on April 1, 2035 as set forth in the original Note. Wells Fargo's refusal to extend the term resulted in a monthly principal and interest payment in the Modification Agreement, commencing on November 1, 2009, of $703.67, as compared to the monthly payment of $520.81, which Hughes was required to pay commencing on May 1, 2005 in accordance with the original Note. The required monthly payment of $703.67, which does not reflect any upward adjustments created by the adjustable rate provision, was approximately 35% higher than the Note's original monthly payment of $520.81, which Hughes could not afford.

  • It is well settled that a plaintiff seeking equitable relief, such as Wells Fargo in the instant foreclosure action, has the burden of satisfying the requisites of equity by coming to court with "clean hands." [Dunn v. Moss, 64 AD2d 838 (4th Dept. 1978); see also, M & T Mortgage Corp. V. Foy, supra, at 275]. The terms of the proposed Modification Agreement, particularly but not exclusively the inclusion of an adjustable rate component, are unacceptable to the this Court.

  • The proposed Modification Agreement flies in the face of the above-described legislation passed in 2008 and in December of 2009, which was designed to assist borrowers in foreclosure cases to remain in their homes and to prevent a foreclosure crisis like the one currently gripping this State and the nation from re-occurring in the future.

  • Moreover, Wells Fargo has acted in bad faith and contrary to CPLR §3408 by presenting Hughes with the Modification Agreement described above and, notwithstanding the Court's directive, obstinately refusing to revise its terms in accordance with the stated intention of the Legislature.(2)


In light of the foregoing, and the fact that Wells Fargo failed to prove that it had standing to foreclose anyway,(3) Walker dismissed the foreclosure action, without prejudice.

For the ruling, see Wells Fargo Bank, N.A. v Hughes, 2010 NY Slip Op 20081 (Sup. Ct. Erie County, January 13, 2010).(4)

Thanks to "Deontos .is" for the heads-up on the court ruling.

(1) In another of his court rulings [Deutsche Bank Natl. Trust Co. v McRae, 2010 NY Slip Op 20020 (Sup. Ct. Allegany County, January 25, 2010)], Walker discussed the significance of standing and real party in interest in foreclosure litigation and analyzes the applicable law in New York in connection thereto, and in which he emphasizes the importance of judges exhibiting the necessary initiative to scrutinize the status of the plaintiffs bringing these foreclosure actions in cases involving homeowners unrepresented by legal counsel.

(2) There is usually an implied requirement of "good faith and fair dealing" in a contract-based relationship. For additional commentary on the principles of "good faith and fair dealing" in the context of a loan workout, see Lexology: How to avoid lender liability - part 2. (requires registration; if no registration, either (a) go here, or (b) try here, then click link for the article).

(3) With respect to Wells' Fargo lack of standing in this case, Justice Walker stated:

  • The complaint alleges that Wells Fargo is "the owner and holder of the subject mortgage and note, or has been delegated the authority to institute a mortgage foreclosure action by the owner and holder of the subject mortgage and note." Wells Fargo, however, has failed to attach a copy of an applicable assignment of mortgage and note, assuming one exists. Nor has Wells Fargo submitted an affidavit of merit from a representative of Wells Fargo, with knowledge, attesting to the delivery of the Note and Mortgage to Wells Fargo prior to the commencement of this action. Similarly, in the event Wells Fargo did not own the Note and Mortgage at the commencement of this action, Wells Fargo has failed to submit a power of attorney from the holder of said Mortgage and Note, authorizing it to proceed with the action. Accordingly, Wells Fargo has not established that it has standing to commence this action. [see Mortgage Electronic Registration Systems, Inc. V. Coakley, 41 AD3d 674 (2nd Dept. 2007); see also HSBC Bank USA, N.A. v. Cherry, 18 Misc 3d 1102(A) (Sup. Ct.., Kings County 2008)].

(4) Representing the homeowner was the Buffalo-based Western New York Law Center, a not for profit law and technology firm that represents low-income and underserved clients and groups in civil cases and that provides legal, training and technical assistance to legal service organizations.

Chapter 7 Proceeding No Shield For Operators Of Alleged Idaho-Based Loan Modification Racket, Says Bankruptcy Trustee Chasing Nine Officers For $1.3M+

In Coeur d'Alene, Idaho, The Spokesman Review reports:

  • The trustee for a bankrupt Coeur d’Alene mortgage modification company is suing nine former officers for as much as $1.3 million he says they did not earn. Apply 2 Save Inc. closed its doors last May, and filed for liquidation in June. The company allegedly ripped off hundreds of consumers who paid as much as $1,500 for help staving off foreclosure.

  • Few got the help they paid for. Many lost their homes. Dozens of employees, many with debt issues of their own, were not paid for their last weeks of work. “The whole thing was a complete sham from start to finish,” said Ford Elsaesser, the Sandpoint attorney leading the effort to sort out Apply 2 Save’s affairs.

  • He estimated the company received $9 million in revenues during its one-year existence. Slightly more than $1.3 million went to nine officers, some unqualified for the positions they held, or were overpaid for the work they did, and all of whom he said did nothing to protect the consumers they were supposed to be assisting.

  • Elsaesser Tuesday asked the U.S. Bankruptcy Court in Coeur d’Alene to order the officials to account for the money they received, surrender money obtained improperly, and to impose liens to prevent “unjust enrichment.”(1)

Source: Bankrupt company’s officers face suits (Trustee calls Apply 2 Save ‘sham,’ seeks repayments).

(1) Accoring to the story, the defendants and the maximum sums they allegedly owe are:

  • Steven Lux, senior vice president for sales, $331,647;
  • Russell Ratshin, senior vice president for technology, $185,953;
  • Jesse Daly, creative director, $170,460;
  • Colleen Damiano, senior vice president for human resources, $158,147;
  • Marc Bonanni, legal counsel, $157,137;
  • Joe Doyle, senior vice president of marketing and business development, $137,030;
  • Richard Dawley, director of retail, $79,487;
  • David Shaidell, network administrator,$71,608; and
  • Enrique Garibay, vice president of software development, $69,913.

Reportedly, former President Derek Oberholtzer, who filed a separate bankruptcy, was not among those sued, but trustee Elsaesser said more litigation may be filed.

Minnesota Man Accused Of Sale Leaseback, Foreclosure Rescue Ripoffs Cops Plea To Money Laundering, Tax Dodging Charges; 50+ Victims Clipped For $2.46M

In Minneapolis, Minnesota, the Star Tribune reports:

  • When Timothy Beliveau appeared in federal court Tuesday to plead guilty to money laundering and tax evasion charges,(1) he didn't mention the people who allegedly lost their home equity in his "foreclosure rescue" plan, or the Northwest Airlines pilots who unwittingly helped fund the fraud scheme.(2) Instead, Beliveau, 42, explained to U.S. District Judge James Rosenbaum that he had laundered money by commingling his investors' money with his own, and then using the money to buy luxuries for himself.


  • Six pilots and one flight attendant told the Star Tribune in 2007 that they had sunk more than $1.5 million into two of the Mound man's real estate ventures. Some took out second mortgages on their homes and raided savings for the cash, hoping to offset pending salary cuts. They said they believed their money would be used to help people who were struggling to keep paying for their homes.

  • People like Telsche Paulson, 87, who was trying to hang on to her Minneapolis duplex after her husband died and her downstairs tenants moved out. Beliveau's company sent her a letter offering to save her home from foreclosure. One of the investors bought the property and sold it to one of Beliveau's relatives. But Paulson ultimately lost her home and moved to Farmington. She received $116,972 from a state fund for victims of unscrupulous real estate professionals.(3) Beliveau's plea agreement says the fraud he committed resulted in losses of $2.46 million for more than 50 victims.

For more, see Equity skimmer admits to crimes (A mortgage company owner told a court he's guilty of money laundering and tax charges).

For the U.S. Attorney press release, see Mound man pleads guilty to charges in connection with real estate fraud scheme.

(1) For the indictment, see U.S. v. Beliveau.

(2) See NWA pilots say they were misled in foreclosure venture (A Minnesota couple's investment and real-estate programs are under federal investigation).

(3) See State Recovery Fund To Cough Up $116K+ To Compensate Elderly Victim Of Bogus Sale Leaseback Equity Stripping Scam Involving Licensed Real Estate Agent.

Maryland Feds Continue "Money Store" Sale Leaseback, Equity Stripping, F'closure Rescue Racket Prosecution; Nail Loan Officer With 11-Count Indictment

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

  • A federal grand jury has indicted Rolando Alonzo Cousins, a/k/a “Junior,” age 31, of Bowie, Maryland, for conspiracy to commit mail fraud, mail fraud, and money laundering, in connection with a massive mortgage fraud scheme which promised to help homeowners facing foreclosure keep their homes and repair their damaged credit, but left them homeless and with no equity. [...] According to the 11-count indictment, Cousins was a Senior Loan Officer with the Metropolitan Money Store (MMS), located in Lanham, Maryland, which offered foreclosure consultation and credit services to financially distressed homeowners.(1)

For the entire press release, see Senior Loan Officer with Metropolitan Money Store Indicted in Mortgage Fraud Scheme.

(1) According to the press release, the indictment alleges that from September 2004 through June, 2007, Cousins, Joy Jackson, Jennifer McCall, and others, operating through several companies, including the Metropolitan Money Store, fraudulently promised to help homeowners avoid foreclosure, keep their homes, and repair their damaged credit by directing the homeowners to allow title to their homes to be put in the names of third party purchasers (the straw buyers) for a one-year period, during which time the defendants would help the homeowners obtain more favorable mortgages, improve their credit rating and eventually return title to their homes to them. Cousins, Jackson, McCall, and others told the homeowners that the equity withdrawn from the properties would be used to pay the mortgage and expenses on their homes and to repair their credit. In fact, the indictment alleges that Cousins, Jackson, McCall, and others paid approximately $10,000 to each of the straw buyers to participate in the scheme; fraudulently bolstered the credit of the straw buyers so they could qualify for more favorable mortgages; obtained fraudulently inflated loans on the properties in the straw buyers names; served as straw buyers themselves; stripped away the bulk of the homeowners equity proceeds and converted that money to their own personal use; and stopped making the mortgage payments on the homes, resulting in the homes being foreclosed upon.

Joy Jackson and Jennifer McCall pleaded guilty to their role in the scheme and were sentenced to 151 months in prison and 135 months in prison, respectively. Nine other co-conspirators also pleaded guilty and were sentenced, according to the press release.

Claim Of "Pro Bono" Representation While Failing To Disclose Loan Mod Fees Clipped From Clients Among Bad Acts Landing Lawyer From Hell In Hot Water

In a recent ruling from a Federal bankruptcy court in northern California, Bankruptcy Judge Alan Jaroslovsky writes [my emphasis added, not in the original]:

  • Attorney Deborah Pimentel is in the business of filing fraudulent bankruptcy petitions. She has filed at least 27 bankruptcy petitions for clients in this district, most in the last 90 days. Most of these filings, including those above, were made without the minimum documents required to commence a good faith case. These cases all lacked a list of creditors. Several lacked a Statement of Social Security Number and even a filing fee. Several are filed in a court of improper venue.

  • When these cases began to show up, the court staff assumed that Pimentel was a new bankruptcy lawyer — there are many these days — and attempted to help her file proper cases. Deputy clerks patiently explained to Pimentel and her staff that without a filing fee the case would have to be dismissed and without a proper list of creditors and a Statement of Social Security Number the court could not notify her client's creditors of the bankruptcy. Only after Pimentel's repeated failure to correct deficiencies and disregard for attempts to help did the deputy clerks come to realize that Pimentel was completely uninterested in filing proper cases. At that point, the court was required to act.


  • Pimentel produced fee disclosures stating that she received no compensation, and originally represented to the court that her services were "pro bono." Upon questioning, however, she admitted that she charged each of her clients several thousand dollars for "loan modification" services.


  • The court has no way of knowing if Pimentel is performing any sort of valuable service for her clients or is merely preying on their desperation. If Pimentel had only paid a little more lip service to the formalities of bankruptcy filings, the court would be content to dutifully dismiss each of her fraudulent cases without making serious inquiry into her schemes. However, by her cavalier disregard of basic filing requirements Pimentel created a great deal of extra work for a hard-pressed clerk's office. The court is now compelled to sanction Pimentel for her conduct.

For more, see In re: Deborah Pimentel, Misc. No. 10-101, No. 10-10481., 10-10480, 10-10494, 10-10509 (USBC N.D. Calif. March 8, 2010).

Monday, March 15, 2010

How Some Of Wall Street's Finest Minds Managed To Destroy $1.75 Trillion Of Wealth In The Subprime Mortgage Markets

CBS News' 60 Minutes reported last night:

  • If you had to pick someone to write the autopsy report on the Wall Street financial collapse 18 months ago, you couldn't do any better than Michael Lewis. He is one of the country's preeminent non-fiction writers with a knack for turning complicated, mind numbing material into fascinating yarns.


  • His new book, called "The Big Short: Inside the Doomsday Machine," comes out later this week and it explains how some of Wall Street's finest minds managed to destroy $1.75 trillion of wealth in the subprime mortgage markets. "60 Minutes" and correspondent Steve Kroft spent two days debriefing Lewis at his home in California.

To read the entire transcript of this story on last night's 60 Minutes program, see Wall Street: Inside the Collapse (Author Tells "60 Minutes" What Led to Wall Street Collapse and Who Predicted It).

To watch the 60 Minutes' program,(1) see:

  • Inside The Collapse, Part 1 (Michael Lewis writes about a handful of Wall Street outsiders who realized the subprime mortgage business was a house of cards and found a way to bet against it),
  • Inside The Collapse, Part 2 (Michael Lewis talks about the current situation on Wall Street, the large bonuses still being paid and his predictions for the future of the industry).

(1) For the real junkies into this kind of stuff, 60 Minutes provides these "web extras" on its website on last night's story:

New Washington State Law Targets Foreclosure "Surplus-Snatching" Scams; Caps "Overage-Chaser/Scavenger" Fees At 5% In Tax Sales

In Olympia, Washington, LegalNewsline reports:

  • Washington residents who lose their home because of back property taxes could get a little extra money in the end thanks to a bill championed by state Attorney General Rob McKenna that was signed into law Friday. Signed by Democratic Gov. Chris Gregoire, the new law places a 5 percent cap on fees charged by firms that contact owners of foreclosed properties offering to obtain money remaining after their land's auction.


  • "As foreclosures have increased, we've seen an uptick in get-rich-quick schemes that prey on those who have lost their homes," McKenna said. "This new law is part of our ongoing efforts to help financially-strapped families keep the little money they have left."


  • The group's legislative chair, Lewis County Treasurer Rose Bowman, said in a statement that firms charging property owners exorbitant fees was a growing problem. "We were looking for a way to protect our most vulnerable population - people who, for whatever reason, have lost their property to tax foreclosure - and figure out how we can get their money to them and not to others who are trying to claim it," Bowman said. Bowman added there is no need for residents to even use outside help to get surplus funds returned to them. All that is needed is a notarized from, and a notary at the county will provide the service for no charge, she said.(1)(2)

For the story, see Washington AG gets finder-fee cap in foreclosure cases.

For the Washington State Attorney General press release, see New law protects families in foreclosure.

(1) According to the state AG's press release, individuals who provided such services previously kept as much as 50-70 percent of the former homeowner’s money; and Bowman added that many of the “finders” use shady tactics, including hounding the original homeowner to sign a paper or trying to convince county officials that they are a relative of the original homeowner, and therefore entitled to the money. “It’s amazing the lengths they go to try to intercept these funds,” she reportedly said.

(2) In May, 2009, the Washington Attorney General's office won a civil jury verdict which hammered a foreclosure rescue operator whose activities allegedly included the snatching of foreclosure surplus funds due to homeowners after they lost their homes in tax sales. The jury found that the business practices engaged in by the operator violated the state Consumer Protection Act. See Washington AG Scores Big Win In Bogus Equity Stripping, Land Trust/Sale Leasebacks & Surplus Ripoffs; Foreclosure Rescue Operator Tagged For $4.2M.

Loan Mod Scammer Serving 2 To 5 Years Gets Another 6 To 24 Months On Theft By Deception Charge As "Poor Business Decisions" Defense Falls On Deaf Ears

In Wyoming County, Pennsylvania, The Times Tribune reports:

  • A New Jersey woman who claimed to help people with potential foreclosure problems was sentenced in Wyoming County on Thursday for theft by deception. Shirley Matthews, 54, of Willingboro, N.J., was ordered to serve six months to two years in prison on the theft by deception conviction for bilking a Tunkhannock man out of $8,000.

  • Ms. Matthews will serve that sentence after she finishes a 2- to 5-year prison term on similar charges from Monroe County, Judge Russell Shurtleff ordered.

  • Also, additional charges are now pending against Ms. Matthews in Luzerne County. In all of the cases, Ms. Matthews was accused of taking payments from home­owners in exchange for helping solve mortgage foreclosure problems, then failing to follow through. [...] Her attorney, Robert Saurman, told the court Ms. Matthews may have made some poor business decisions, but it wasn't her intent to harm.(1)

For the story, see N.J. woman gets 2 to 5 years in prison for taking from people facing foreclosure.

(1) The problem that some police and prosecutors have in dealing with scams like this one that are disguised as legitimate business transactions is that it's too easy for the scammer, once "caught," to hide behind the terms of what purports to be a "legitimate" business contract. A scammer who pocketed money in exchange for performing a slew of failed loan modifications may assert that the terms of the business contract with the victims insulate him/her from criminal prosecution, and at most, may simply "confess" to being a crappy businessperson who made lousy business decisions, but without any intention of actually screwing anybody, leading some authorities to decline investigation and prosecution. It's not uncommon for authorities to claim that such incidents are "civil cases," suggesting the victim would need to file a civil lawsuit against the scammer to seek a remedy. Fortunately for the victim in this case, the police and prosecutors did not adopt that approach here and, instead, looked through the paperwork to show the true nature of the transaction.

See People v. Frankfort, (1952) 114 Cal.App.2d 680, 700; 251 P.2d 401, for the following commentary by a California appellate court on how it dealt with a scammer who tried to hide behind the terms of a "legitimate" contract with a "customer/victim" in a failed attempt to dodge criminal prosecution (case law links are found at - may require free registration):

  • Defendants insist these contracts insulate them from this prosecution because they contain the statement that they constitute the entire agreement between the parties, that the Spa Corporation is not bound by any representations outside the contract, that no salesman is authorized to make any additional or contrary representations, and that the club member has read and understands what he is signing. The simple answer to this argument is that "The People prosecuting for a crime committed in relation to a contract are not parties to the contract and are not bound by it. They are at liberty in such a prosecution to show the true nature of the transaction." (People v. Chait, 69 Cal.App.2d 503, 519 [159 P.2d 445]; People v. McEntyre, 32 Cal.App.2d Supp. 752, 760 [84 P.2d 560]; People v. Jones, 61 Cal.App.2d 608, 620 [143 P.2d 726]; People v. Pierce, supra, p. 605.) The practical wisdom of the rule is illustrated in this case. Upon at least three occasions prospective purchasers complained to defendant Nudelman that the written agreement did not seem to conform to what they had been told, whereupon he assured each party, in effect, that everything would be taken care of and he need not worry.

Effort To Curb "Sewer Service" May Require NYC Process Servers To Use GPS To Electronically Record All Attempts To Deliver Lawsuit Notice To Defendnts

In New York City, The New York Times reports:

  • In a proposal aimed at unscrupulous debt collectors, the City Council is considering legislation that would require process servers to use global positioning systems to show that they have actually visited consumers’ homes or workplaces to deliver notices of collection proceedings.

  • Lawmakers hope the measure will help curb a long-running practice known in legal circles as “sewer service,” which occurs when process servers fail to serve court papers on defendants but file affidavits swearing that they did so — which allows the cases to proceed.(1) [...] The bill would require process servers in New York City to electronically record every instance in which they serve or try to serve someone, using a global positioning system that would pinpoint their exact location.

  • Advocates for consumers say that sewer service has grown in recent years because of the recession and an increase in the number of collection firms that buy bad debts from credit card companies for pennies on the dollar and then seek to collect them.(2)


  • A federal class-action lawsuit(3) was filed in Manhattan in December against several debt-purchasing companies and firms that help them collect debts, accusing them of fraudulently obtaining judgments against debtors.

  • The bill was introduced amid an investigation by the state attorney general, Andrew M. Cuomo, into fraudulent process serving. Last year, Mr. Cuomo’s office arrested the owner of a Long Island process serving firm, accusing the company’s servers of frequently filing false affidavits in which they claimed to have attempted to serve three and four people at the same time.(4)

For the story, see Council Seeks to Crack Down on Process Servers Who Lie.

(1) According to the story, the victims are often debtors involved in collection suits who, when they fail to show up in court, are nailed with default judgments, often for thousands of dollars. Councilman Daniel Garodnick, a Manhattan Democrat who is the bill’s lead sponsor, reportedly said “Tens of thousands of people are being sued for debts that they may or may not truly owe, but they only learn that they’ve been sued after they’ve lost, and find their bank accounts are frozen and their wages are garnished.”

(2) For more on the "sewer service" problem, see MFY Legal Services: 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 ) (documents problem of improper service of process in debt collection lawsuits that have led to judgments entered against unknowing victims).

(3) According to an earlier New York Times story [Suit Claims Fraud by New York Debt Collectors]:

  • The class-action lawsuit [...] goes after an entire debt collection chain, starting with the debt-buying companies, the law firm they hired to collect the debt, and the process-serving firm used to notify debtors. The suit names five debt-buyer firms with variations of the names L-Credit and LR Credit. All are subsidiaries of Leucadia National, a $6 billion publicly traded holding company engaged in various businesses, including timber and manufacturing. The company, which is also named as a defendant, declined comment on the suit.

  • Mel S. Harris & Associates, the law firm named in the suit, did not return phone calls seeking comment. The process-serving company, Samserv Inc., out of Brooklyn, denied allegations that it filed false affidavits of service. [...] The lawsuit was filed by MFY [Legal Services], the Neighborhood Economic Development Advocacy Project and the law firm of Emery Celli Brinckerhoff & Abady. It claims it could represent more than 100,000 victims of judgments won through the actions of the companies in New York civil courts since 2006. A central claim of the action is that most debt-buying firms do not get enough information in the volume data they buy to meet the burden of proof to win a debt case. They therefore seek default judgments.

See also: Civil Rights Advocates File Civil Racketeering Lawsuit Against Major Debt Collection Network.

For the class action lawsuit, see Sykes, et al. v. Mel S. Harris and Associates LLC, et al.

(4) The Times reports that one server, according to the AG's complaint, claimed to have made 77 service attempts on one day, interspersed at locations in Brooklyn and Cattaraugus County, roughly 400 miles apart — a feat that would have required 11 round trips covering 8,194 miles.

Use of Adverse Possession "Defense" By Vacant Home Hijackers Now Drawing Attention From Florida Lawmaker

In Tallahassee, Florida, The Tampa Tribune reports:

  • State lawmakers may beef up protections of property owners' rights by rewriting a law this spring that is at the center of a case of alleged fraud in Pasco County. Florida, like most states, has a statute enabling people to stake a legal claim to property that already belongs to someone else. The intent behind the so-called adverse possession statute is to encourage the best use of land that may otherwise go neglected and to maximize the taxes collected on it.

  • To initiate an adverse possession, a person must file notice with the county property appraiser of his intention within a year of occupying it. The prospective owner must then occupy, improve and pay taxes on the property for seven years before gaining title.

  • That's what Stephen Bybel said last month that he was in the process of doing when he took over 72 vacant properties, mostly in central Pasco County, cleaned them up and then rented out 31 of them. Bybel claimed he was following the adverse possession statute to make money and clean up the community at the same time.

  • Local law enforcement took a different view, saying that he broke into properties that didn't belong to him and changed the locks before renting the properties to unsuspecting tenants. Pasco County Sheriff's detectives arrested him in February on a charge of scheming to defraud; Bybel has pleaded not guilty, and the case is still pending.


  • Among other things, [Florida state Senator Paula] Dockery is proposing to require anyone filing an adverse possession claim to send notice to the owner of record. A county receiving a tax payment from someone seeking to take over a property would have to hold onto it until after the tax due date, and then return the payment to the adverse possessor if the owner of record pays the tax bill on time.(1)

For more, see Ownership rights to get another look.

(1) Before lawmakers in any state begin thinking about passing laws addressing these bogus adverse possession claims, they may simply want to take a look at their existing laws (including their state's case law) to conclude that the hijacking of possession of these homes is actionable as a trespass.

For example, a New York trial judge recently reviewed the case law of New York addressing trespass in the context of a mortgage lender taking wrongful possession of real estate in a home foreclosure action (Wells Fargo v. Tyson, 2010 NY Slip Op 20079 (Sup. Ct., Suffolk County, March 5, 2010)) (my emphasis added, not in the original text of the case):

  • Distilled to its very essence, trespass is characterized by one's intentional entry, with neither permission nor legal justification, upon the real property of another, Woodhull v. Town of Riverhead 46 AD3d 802, 849 NYS2d 79 (2nd Dept. 2007).

  • The injury arising therefrom afflicts the owner's right of exclusive possession of the property, Steinfeld v. Morris 258 AD 228, 16 NYS2d 155 (1st Dept. 1939), Kaplan v. Incorporated Village of Lynbrook 12 AD3d 410, 784 NYS2d 586 (2nd Dept. 2004).

  • The elements of a claim for trespass are intent coupled with the entry upon the land that is in possession of another. In order for trespass to lie, general intent is legally insufficient. Instead, there must be a specific intent, either to enter the land or to engage in some act whereby it is substantially certain that such entry onto the land will result therefrom, Phillips v. Sun Oil Co. 307 NY 328, 121 NE2d 249 (1954).

  • The intent need not be illegal or unlawful, MacDonald v. Parama Inc. 15 AD2d 797, 224 NYS2d 854 (2nd Dept. 1962) but even one who enters the land upon the erroneous belief that he has the right to enter thereon will be held liable in trespass, Burger v. Singh, 28 AD3d 695, 816 NYS2d 478 (2nd Dept. 2006).

  • Trespass will lie against a party if entry upon the land was perpetrated by a third party, such as an independent contractor or other party, at the direction of the party to be charged, Gracey v. Van Kamp 299 AD2d 837, 750 NYS2d 400 (4th Dept. 2002).

  • It follows then, both logically and legally, that the injured party must have been in possession, whether actual or constructive, at the time that the alleged wrongful entry occurred, Cirillo v. Wyker 51 AD2d 758, 379 NYS2d 505 (2nd Dept. 1976).

Possession Of Another Unoccupied House In Foreclosure Swiped In Home Hijacking Scam Disguised As Legitimate "Adverse Possession" Claim

In Puyallup, Washington, KOMO-TV Channel 4 reports:

  • A young couple facing foreclosure says their house was hijacked and rented to strangers without their consent. Eric and Ashlie Bogue found themselves locked out of their own house. "I still own this property. They changed the locks on the door. I can't even get into my own house," said Eric Bogue.

  • The Bogues got behind in their payments. The bank agreed to a short sale. So they moved out to keep the house ready to show at a moment's notice. But when they went to check on the house on Saturday, they saw an entire family moving in with their beds, their clothes and all of the kids' toys, including the son's baseball card collection.


  • The Bogues tracked down paperwork that traces back to one rental agent, Washington Resolution Trust. Peter Dodsondance,(1) the man behind the company, says there's nothing funny going on. "No I'm not trying to do anything shady. What I'm trying to do is save our communities," he said. Dodsondance said he's acting as the custodian of the Bogues' home, which the couple abandoned.

For more, see Couple returns home, finds family of strangers living inside.

See also, KING-TV Channel 5: Puyallup couple says squatters trying to take over their home:

  • The new occupants told [the Bogues] they were making a claim to the house because it had been abandoned. "They told us they were renting it, and that they were doing adverse possession on the property," said Bogue. [...] We showed the adverse possession claims filed on the Bogues' home to a real estate attorney. "What they amount to is some stranger coming in and recording something that looks legal and using that to claim the property. These are not functionally any different than a forged deed," said Gerald Robison. Robison says "adverse possession" claims are being made all over the country and are even promoted on the Internet and in books as perfectly legal.

(1) According to other stories, Dodsondance reportedly:

  • pleaded guilty to felony theft for taking money from an elderly woman in a real estate transaction in 2007,
  • goes by the names Peter T. Dodsondance, Peter T. Dance, aliases that appeared in a trail of courthouse records in both Pierce and King counties,
  • has used seven different social security numbers, including that of a dead man, according to detectives looking into the case,
  • appears to do property managing under a number of different titles: United Plus Property Management, CW & Jones Property Management, Washington Pacific NW Trustee Service, Inc. and a nonprofit, the DodsonDance Foundation, among others.


Another BofA Blunder: Files Suit To Foreclose On Former REO Sold To Retired Ex-Cleveland Cop For Cash, Then Issues Apology For Foreclosure Fiasco

In Naples, Florida, the Naples Daily News reports:

  • It was retirement incarnate. Then, the foreclosure lawsuit came. Warren Nyerges, 45, left his law enforcement career and moved to Golden Gate Estates late last year with his wife. He was spending his days preparing his backyard for grass, painting the interior of his home and joking about the snow he abandoned in Cleveland.

  • I’ve had nothing but a ball. To come down here, it’s a life dream,” Nyerges said. To top it all off, the couple’s single-story, 2,700-square-foot home was paid off. Nyerges said he even offered $5,000 more than Bank of America was asking, quickly sealing the deal with title insurance.

  • But on Feb. 18, a man came to the couple’s home with a lawsuit. Bank of America had begun foreclosing on the property, and Nyerges’ dream was temporarily put on hold.


  • In a statement, Bank of America said officials are still trying to determine what happened. "Bank of America sincerely apologizes to Mr. Nyerges for this inconvenience. We are currently researching the matter and are stopping the foreclosure,” the statement said. "We are still in the process of identifying the root cause that created this issue.”

For more, see Foreclosure lawsuit fiasco upends Estates man’s retirement.

BofA Again In Spotlight For Allegedly Reckless Conduct; Illegally Seized Borrower's Home, Says Lawsuit

In Allegheny County, Pennsylvania, the Pittsburgh Post Gazette reports:

  • A Hampton woman is suing Bank of America, saying one of its contractors wrongly repossessed her home, padlocked the doors, shut off the utilities, damaged the furniture and confiscated a pet parrot, though her mortgage payments were on time. Angela M. Iannelli, 46, suffered "severe emotional distress, embarrassment and ridicule" as a result of the company's "de facto foreclosure process and seizure proceedings," attorney Michael Rosenzweig wrote in the suit, filed Monday in Allegheny County Common Pleas Court.

  • The suit accuses Bank of America and its contractor, Ebensburg-based Snyder Property Services, of trespass, unfair business practices, defamation, libel and other offenses during the October foreclosure of Ms. Iannelli's home [...]. She is seeking an unspecified amount in compensatory and punitive damages.

  • Bank of America instructed Snyder Property Services to "enter, seize, padlock, 'winterize' and take possession" of Ms. Iannelli's house, the lawsuit said, cutting water lines and electrical wiring, pouring anti-freeze down her drains and "stealing" her pet parrot, Luke.

For more, see Woman says Bank of America wrongly repossessed home.

See also WTAE-TV Channel 4: Bank Sued Over 'Invasion' Of Wrong House, Pet Theft, Damages (Angela Iannelli Says Bank Of America Mistakenly Targeted Home For Foreclosure).

Sunday, March 14, 2010

Long Island Judge Hammers Wells w/ $155K Tab For Oppressive, Heavy Handed, Egregious Conduct For Pre-Sale Lockout Of Homeowner In Foreclosure

In a court ruling issued March 5, 2010, Suffolk County, New York Supreme Court Justice Jeffery Arlen Spinner clobbered another rogue foreclosing lender for its improper conduct in connection with the carrying out of a foreclosure action. This time, it was Wells Fargo, who felt the wrath of Justice Spinner.(1) According to the ruling, Wells locked out a homeowner in foreclosure before the legal action was complete and, for its conduct, was ordered to pay the aggrieved homeowner:

  • $200 in damages for the trespass to homeowner's possessory interest in the property,
  • $4,892 in damages representing the value of the personal possessions lost as a direct result of Wells Fargo's actions in trespass,
  • $150,000 in exemplary damages, which, in effect, serves as a reminder to Wells Fargo and any other lender to refrain from engaging in this kind of crap in the future.

A couple of excerpts from Justice Spinner's ruling follows [my emphasis added, not in the original]:

  • In the matter before the Court, it is apparent that Plaintiff [ie. Wells Fargo] has perpetrated a trespass against the real property of Defendant [homeowner facing foreclosure], which is actionable and subjects Plaintiff to liability for damages. Distilled to its very essence, trespass is characterized by one's intentional entry, with neither permission nor legal justification, upon the real property of another, [citation omitted].


  • Here, the Court is constrained to find that the conduct of Plaintiff in this matter was both willful and wanton, as evidenced by not one but two unauthorized entries into Defendant's dwelling, occurring in complete derogation of Defendant's right of possession. This conduct becomes even more glaring when consideration is given to the fact that Defendant affirmatively notified Plaintiff that he had secured the property and that it was not abandoned and still contained his personal property.

  • Even so, Plaintiff maintains that it has entered the property under a color of right, which turns out to be illusory under the circumstances. In spite of these declarations, Plaintiff willfully took it upon itself to enter the property on more than one occasion, doing so unreasonably and without notice, in direct contravention of the terms of its mortgage promulgated to Defendant by its assignor. This is even more distressing when it is considered that Plaintiff breaches its obligations to Defendant under the mortgage, running roughshod over Defendant's rights with a specious claim that it is acting to protect its rights and the property. In short, the conduct of Plaintiff was nothing short of oppressive and would best be described as heavy handed and egregious, to say the very least.

  • Certainly, the trespass was willful and calculated and was not accidental in any way and the Court finds that Plaintiff did not act in good faith. Under these circumstances, an award of both actual and exemplary damages is necessary and appropriate in order to properly compensate Defendant for the losses he has sustained by way of Plaintiff's shockingly wrongful conduct as well as to serve as an appropriate deterrent to any future outrageous, improper and unlawful deeds.

  • The Court finds the appropriate measure of damages for the trespass to Defendant's possessory interest in the property to be in the amount of $200.00. The Court further finds that Defendant is entitled to recover $4,892.00 representing the value of the personalty lost as a direct result of Plaintiff's actions in trespass. Finally, the Court finds that Defendant is entitled to recover exemplary damages from Plaintiff in the amount of $150,000.00.

For the entire ruling, see Wells Fargo v. Tyson, 2010 NY Slip Op 20079 (Sup. Ct., Suffolk County, March 5, 2010).

Thanks to "Deontos .is" for the heads-up on the court ruling.

(1) Back in November, 2009, Justice Spinner nailed IndyMac Bank for its own egregious conduct in another foreclosure action. See L.I. Judge Gives Foreclosing Lender Verbal Horse-Whipping As He Wipes Out Mortgage Debt, Cancels Lien For "Repugnant, Shocking, Repulsive" Conduct.