Saturday, March 27, 2010

Louisville Man Charged In Alleged Attempt To Fleece 81-Year Old Dementia Victim Of Home, Other Assets By Duping Him Into Signing Legal Documents

In Louisville, Kentucky, WHAS-TV Channel 11 reports:

  • Police say an elderly Louisville man with dementia was the victim of a $150,000 theft scheme. Richard Pearson, 70, of Louisville is charged with exploitation and theft by deception.

  • Police say Pearson convinced the 81-year-old victim to place him as his power of attorney and had him sign a last will - giving Pearson all of his personal possessions, including his home. Pearson also allegedly told the victim he was signing paperwork to allow Fifth Third Bank and the VA Hospital to help him with his finances.

Source: Man charged with scamming elderly Louisville man with dementia.

Daughter Gets 16-20 Months For Ripping Off Elderly Mom; Abused POA, Pocketing Proceeds From Sale Of Home, Draining Bank Accounts, Cashing In Annuities

From the Office of the Nebraska Attorney General:

  • Attorney General Jon Bruning [] announced that Annigje (Ann) Perkins was sentenced to 16 to 20 months in prison by the Douglas County District Court for stealing $43,214.40 from her elderly mother. Perkins, of Sacramento, Calif., pled guilty to Theft by Unlawful Taking in December of 2009.

  • Between November 2005 and September 2008, Perkins, acting as her mother’s power of attorney, took money from bank accounts, cashed in two annuities and sold her mother’s trailer home, keeping the proceeds for herself. "Ms. Perkins abused her mother’s trust to line her own pockets," Bruning said. "We depend our family members to protect us, not take advantage of us in our time of need." The case was investigated by the Nebraska Medicaid Fraud and Patient Abuse Unit and was handled by its director, D. Mark Collins.

For the Nebraska AG press release, see Bruning: Theft From Elderly Mother Lands Daughter in Prison.

Ex-Ontario Attorney Gets 22 Months For Manufacturing Forged Mortgage Used To Swindle 85-Year Old Man Out Of $150K

In Barrie, Ontario, the Toronto Sun reports:

  • A Barrie-area lawyer was sentenced to 14 months in jail yesterday after being convicted fraud and forgery. Justice Amy Mullins imposed a 22-month sentence on Myles McLellan, 56, a real estate lawyer, but gave him credit for time already served in prison, leaving him facing a 14-month jail term.

  • McLellan was charged in 2006 after he forged his office clerk’s signature, Janet Laurin, and convinced an 85-year-old Toronto business man, Sam Klaiman, to loan him $150,000 for the false mortgage, which he deposited into his own bank account. At the time, McLellan, who has since been disbarred because of the charges, ran a legal service called the Law Store with offices in Barrie and Innisfil that offered mortgage financing services.(1)(2)

For the story, see Lawyer jailed for fraud.

(1) According to another story (see Lawyer sentenced 22 months for fraud), The Law Society of Upper Canada has disbarred McLellan from practicing law. In all, he was found to have misappropriated approximately $423,000 of trust funds belonging to four clients. McLellan will return to a Toronto court May 31 for preliminary hearing in connection with trust fund frauds.

(2) If an Ontario, Canada attorney or paralegal, either in the course of representing you or acting as a fiduciary, screws you out of money or property through dishonest conduct, check out the The Law Society of Upper Canada Compensation Fund for information on how to recover some or all of your losses from the fund.

Elsewhere in Canada, check the Canada Client Protection Funds Map for the attorney compensation fund for client protection available in your province.

In the United States, see:

Maps available courtesy of The National Client Protection Organization, Inc.

1st Time Offender Could Dodge Convictions; Charged w/ Forgery, Unlawful Use Of POA To Pocket Reverse Mortgage Proceeds On 90-Year Old Mom's Home

In Greenville, South Carolina, the Anderson Independent Mail reports:

  • Former Clemson City Council member Elouise James, facing multiple felony charges, will be entering a pretrial intervention program. [...] Pretrial intervention provides first time offenders with the opportunity to avoid prosecution and a criminal history. [...] For applicants who complete the program, charges are dropped and they can seek to have their arrest records pertaining to those charges expunged.

  • James was charged in September with two counts of forgery and one count of obstruction of justice in Greenville County and two counts of obtaining goods by false pretenses and one count of financial exploitation of a vulnerable adult in Pickens County.


  • On the [] charge of taking financial advantage of a vulnerable adult, investigators say James unlawfully used a power of attorney to obtain a reverse mortgage on her 90-year-old mother’s home. The [South Carolina Law Enforcement Division] report says James used $15,451.60 obtained from the mortgage to pay an outstanding balance of restitution fees related to her daughter’s probation. The payment reportedly occurred a few days before Kristyn James’ scheduled probation revocation hearing.

For the story, see Former Clemson council member enters pretrial program.

Son Gets Six Months In Life Savings Swindle Of Dementia-Stricken Mom; Need To Meet Nursing Home Expenses Makes Sale Of Family Farm Likely

In Hennepin County, Minnesota, the Star Tribune reports:

  • Anna Sitte lost her life's savings to swindle, her ability to recognize family members to dementia and, at 78, is about to lose what's left of the farm her family settled a century ago. "What she has is a measure of dignity," her son Jimmy said. "There are lots of ways to measure justice, but I tell the prosecutors that they did something good."

  • The family, however, has been torn apart. Jimmy's brother, Steven Carl Sitte, 53, of New Hope, is serving six months in the Hennepin County workhouse after pleading guilty to swindling their mother, who has Alzheimer's disease. He was turned in by Jimmy.

  • Anna Sitte is expected to be moved within weeks to a nursing home in Wahpeton, along the Minnesota border and 12 miles from her North Dakota farm. It's an assisted-living complex that Jimmy said Anna really can't afford. Jimmy said he will probably sell the three remaining acres of the 188-acre family farm to help the state of Minnesota pay for his mother's assisted-living home. With her medication, Anna's monthly living expenses are expected to reach $7,000, he said.

  • "The judge ruled that my brother owed my mother $274,000 in restitution, but I doubt they're ever going to see a penny of it because he's broke," said Jimmy Sitte, a musician who lives modestly.

For the story, see She lost the farm, but found a new life (A victim of an elder abuse scheme is about to go to a home, while one son serves time and another tries to make sense of a family divided).

Niece Overcomes Authorities' Initial Reluctance To Prosecute Cousin For Stealing Aunt's Life Savings As Man Cops Plea To $53K+ Embezzlement

In Sylva, North Carolina, the Asheville Citizen Times reports:

  • Ann Buchanan isn't one to give up. And that trait served her and her family well as she pushed to have a cousin charged and ultimately convicted of stealing her 89-year-old aunt's life-savings. Marc Jeffery Hawk, a 54-year-old former county maintenance supervisor, pleaded no contest to four counts of embezzlement and one count of exploitation of an elder for taking $53,438 from his aunt's bank account.


  • He is the first person in Western North Carolina to go to jail under a law aimed at protecting the elderly from financial exploitation. But the conviction wasn't easy for [the 89-year old widow's] family. At first, authorities didn't want to prosecute the case, and throughout the process, Buchanan said, officials suggested it should be handled in civil court. Now she's hoping others will take notice of potential elder abuse and use a 2005 law aimed at protecting North Carolina's oldest residents. “Be persistent,” she said. “And don't take no for an answer.”


  • The nature of exploitation makes winning a criminal case hard, said Michael Rich, director of the 30th Judicial Alliance, a group that advocates for victims of abuse in the state's seven western counties. Often, he said, family members are the criminals and families don't want to bring charges against their own or spend the time it takes to get through the criminal court process. And the victims often aren't good witnesses because of disabilities such as Alzheimer's or dementia.


  • Buchanan said throughout the process, officials suggested the case should be handled in civil court. But that's not what the family wanted. “We weren't after money for us,” she said. “We were after justice for Aunt Mae. We were just so afraid that this case was going to be eventually dismissed.”

  • Rich said her experience is common. “When it comes to financial issues, it appears to many in law enforcement and in the court system that these are civil rather than criminal issues,” he said. “Criminal charges mean an investigation that might involve hard work. A civil case means that the victim and his abuser are responsible for following through.”


For the story, see Jackson County man Marc Hawk convicted of stealing $53,000 from 89-year-old relative.

Friday, March 26, 2010

Judge: No "Clanging Of The Prison Gates" For POA-Abusing Lawyer Who Swindled Ailing Mom, Stiffed Nursing Home; Upcoming Afghan Gig Earns Him Free Pass

In Guildford, Surrey (United Kingdom), the Telegraph reports:

  • Paul Mowbray, 38, who works as a solicitor, admitted draining more than £10,300 from his mother's bank account after she was admitted to a care home and gave him control of her finances. Judge Peter Moss told Guildford Crown Court such cases normally demanded a prison sentence but said he would not even force Mowbray to do community service because of his service in Afghanistan would be so testing.

  • The court was told the former lawyer, a long term member of the TA [Territorial Army] and currently training to become a regular soldier, abused his position holding power of attorney over his mother's affairs.

  • Leila Gaskin, prosecuting, said Mowbray began his crime after Sigtrud Mowbray, 87, went to stay in a care home, Esher, in 2007 after she had a fall and broke her hip. When Mowbray failed to pay the £92,000 bill, social services were contacted and officials discovered large amounts of money had been leaving her account, so they contacted police. The court heard the defendant had been taking an average of £1,400 a month from his mother's account.

  • Judge Moss said: "Normally a solicitor committing this sort of offence could expect to hear the clanging of the prison gates. "But no amount of unpaid work imposed by this court could match those conditions." Mowbray, a lance sergeant with the honourable artillery company, had originally denied fraud but later changed his plea.

  • The court was told that Mowbray, from Leatherhead, Surrey, had already repaid £7,752 and he was ordered to repay the balance of £2,643, plus £1,200 in costs.

Source: TA sergeant stole £10k from mother (A Territorial Army sergeant who stole over £10,000 from his mother was given a conditional discharge because a judge said no penalty could compare with his upcoming stint in Afghanistan).

Daughter Charged w/ Putting Herself On Title To Now-Deceased Stroke Victim's Home, Then Mortgaging Property To Drain $134K+ In Equity

In St. Paul, Minnesota, the Star Tribune reports:

  • Anacleto Adamez raised 10 children in his small 1 1/2-story home on St. Paul's West Side. After suffering a stroke in August 2000, he gave his son Jesus power of attorney over his affairs. Unknown to the rest of the family, his daughter Alma Adamez-Randle filed a quit-claim deed on Aug. 15, 2000, making herself co-owner of her father's home. She then took out three mortgages, the last in 2006, for more than $134,000, according to court documents.

  • She also allegedly helped herself to his bank account, making large withdrawals after she moved into his house to help him with daily living, the documents said. Anacleto Adamez died Sept. 28 at age 82.

  • Alma Adamez-Randle, 46, was charged Monday in Ramsey County District Court with one felony count of theft by swindle. She must appear in court April 7. Adamez-Randle is a lieutenant at the Shakopee women's prison.

For more, see Daughter accused of swindling ailing St. Paul father (Alma Adamez-Randle is accused of taking thousands of dollars by mortgaging his home, draining bank accounts).

Philly Candidate For State Legislature Once Served As Notarizing Dupe For Convicted Scammer In Deed Theft Racket; Elderly Among Those Victimized

In Philadelphia, Pennsylvania, the Philadelphia Daily News reports:

  • Michelle Brownlee, an aide to state Rep. Frank Oliver for 37 years, says she forgot all about the criminal trouble she got into in 2002 until somebody told her the other day that info about the case had been circulating in the 195th District.

  • Brownlee was charged with forgery and other crimes in 2002, after she notarized a deed for the sale of an Olney home. The deed held phony signatures from the couple who owned the home but who had been dead for decades, according to court records. Brownlee, who is hoping to replace her retiring boss, said a ward leader got an anonymous call last week about her arrest, then received paperwork from her court case. "I know the perception is bad," said Brownlee, one of seven Democrats on the primary-election ballot. "It's being circulated so I expect somebody is going to use it."

  • Brownlee agreed to cooperate against Melvin Lindsey, aka Ali Abu Lumumba, who was being investigated by the District Attorney's Office for using bogus deeds to steal several houses. Brownlee entered the Accelerated Rehabilitative Disposition program, meaning her record would be cleared if she stayed out of trouble for six months. "Of course, that was a piece of cake for me," Brownlee said.

  • Brownlee said - and the D.A.'s office agreed - that she hadn't profited from Lindsey's scam and had been duped by the conman into notarizing the deeds. She said Lindsey had come into Oliver's district office asking for help with clients who were too elderly to come themselves.

  • "Some of the people in the community seemed to think he was a pretty good guy," Brownlee said. "I thought I was doing a community service." The state Constitution says no person "convicted of embezzlement of public moneys, bribery, perjury or other infamous crime" can serve in the General Assembly. The Department of State said that would not apply to Brownlee, since she completed the ARD program and has no conviction.

  • Lindsey, now in state prison, ran under the name Lumumba as a Republican for City Council in 1995 and in 1983, and for mayor in 1979 on the Consumer Party line.

Source: Clout: Free advice: Mariano offers redistricting help.

Ex-Granite State Lawyer Gets 51 Months In $2.3M+ Ripoff Of Deceased Client's Estate; Handiwork Included Selling Family Home Out From Under Heirs

In Concord, New Hampshire, the New Hampshire Union Leader reports:

  • A longtime Manchester attorney and city water commissioner was sentenced [] to four years and three months in a federal corrections facility. Thomas J. Tessier, a partner in the now shuttered Christy & Tessier law firm, pled guilty in November to bank fraud, mail fraud and money laundering in an agreement with U.S. Attorney's Office. [...] Tessier pleaded guilty to bilking a client of more than $2.3 million over several years.


  • The case involves the family of Beatrice Jakobiec, who died in 2001 without a will, but had set up trusts for her two sons [...]. According to the agreement with the U.S. Attorney's Office, Tessier submitted documents to banks with forged signatures, which gave him access to certificates of deposit from Jakobiec's estate.

  • Tessier also created fraudulent documents indicating he had the power of attorney to sell the family homestead, which he did and deposited most of the money into his personal bank account. And he cashed in Jakobiec's insurance policies, investment accounts and trust accounts, claiming he had the legal right to do so and created fraudulent trusts to hide much of the money.

  • Although he funneled small amounts of money to the family members, Tessier kept more than $2.3 million for himself, according to court documents. Assistant U.S. Attorney Robert Kinsella said earlier that Tessier spent most of the money on personal expenses. [...] A substantial amount of money has been repaid to the victims, Kinsella said. Tessier was disbarred in December 2008 by the State Supreme Court.

For the story, see Tessier sentenced to 4 years in federal facility.

Five Named In 327-Count Indictment In Alleged NYC Mortgage Fraud Scam Using Stolen IDs; Deceased Woman’s Home Allegedly Sold Out From Under Her Estate

From the Office of the Queens County District Attorney:

  • Queens District Attorney Richard A. Brown [] announced that five individuals [...] have been charged in a 327-count indictment in connection with an approximately $2 million mortgage fraud scheme in which stolen identities were allegedly used to buy and sell three properties in Queens.(1)


  • District Attorney Brown said that the investigation began after one of the owners of a property located at 120-18 132nd Street in South Ozone Park began receiving mail indicating that the mortgage had been paid off and the home was now in the name of another individual – who also had come to the District Attorney’s office complaining that he, too, had been the victim of identity theft.

  • An investigation revealed that the property was allegedly sold during a closing on July 13, 2006, that began in an attorney’s office in Westbury but concluded that evening in a restaurant parking lot in Deer Park, Long Island. It is alleged that three unidentified individuals showed up at the closing with fake identification and pretended to be the two actual homeowners (one of whom had died three months earlier) and the buyer. The house was sold for $500,000, of which $340,948 was due the two homeowners – less their existing mortgage. However, it is alleged that $250,0000 of that amount went to [Martina] Duran – who organized and was present at the closing – and her co-conspirators.

For the details of the other two fraudulent home sales, see Five Charged In $2 Million Fraud Operation That Used Stolen Identities To Illegally Obtain Mortgages (Deceased Woman’s Home Allegedly Sold Out From Under Her Estate).

(1) According to the press release, nightclub owners Roger Arias and his mother, Martina Duran, allegedly orchestrated the three transactions and pocketed the majority of the fraudulent proceeds from the closings, which the other three defendants helped facilitate. According to the DA's office, the others are: Aldo Bussi, 41, of Levittown, Long Island, Ramon Gaston, 29, from parts unknown, Percy Randall, 54, of Westbury, Long Island. Four of the defendants are in custody and the fifth is presently being sought.

Family Friend Charged With Swindling $130K+ Proceeds From Sale Of Investment Home Sold Out From Under Grieving, Recently-Widowed Senior

In Naples, Florida, the Naples Daily News reports:

  • A man who claimed he was a broker is accused of bilking a long-time family friend out of more than $130,000. Brian William Cramer, 33, who used to live in [...] Marco Island, was arrested [...] at his house [...] in Cincinnati by a Cincinnati police officer, said Hamilton County (Ohio) Sheriff's Office spokesman Steve Barnett. Cramer remained in an Ohio jail pending Wednesday extradition to Lee County.


  • The case dates back to September 2005 when Deborah and Joe Workman of Naples decided to sell a Fort Myers Beach investment home. Joe Workman died Sept. 5, 2005 at the age of 72. Deborah Workman, still grieving and taking care of her late husband's estate, didn't know anything about the Sept. 7, 2005, sale of the house until several months later. She learned about it from one of Cramer's friends.


  • In records dated Sept. 7, 2005, Deborah Workman's signature appears on closing paperwork for the house. The money from the sale, $132,841.39, was to be placed in escrow. She told investigators it was not her signature on the documents and she never received the money.

  • Deborah Workman said she didn't find out about the sale until March 2006 when she was told by a friend of Cramer's it had sold. She began contacting Cramer about the money, and he said it was in an escrow account. "Deborah Workman gave the issue no more thought for several months as she had complete confidence and trusted Brian Cramer," Lee County Sheriff's Office Detective Mark Zellman wrote in his report.

  • She began losing that trust when, "as time went by, it became increasingly difficult to reach him and ... eventually he stopped returning her calls...." Several months later, after numerous attempts to get the money, she contacted an attorney to get things straightened out. "He dropped the ball," she said Wednesday, explaining the two-year gap before trying to report the theft to the Sheriff's Office on April 28, 2008.

  • Sheriff's Office records show an offense report was not taken and she was told her only recourse was to file civilly. She continued to try to recover her money, but was eventually told by an attorney to again report it to the Sheriff's Office. She did so and spoke with Zellman on May 22, 2009. Zellman's investigation and the packet of information Workman gave to the detective, shows that the money was put into Cramer's business account listed under BC Properties LLC at a Wachovia bank and he was the sole signatory on it. A Wachovia employee told the detective the account was not an escrow account, but has been Cramer's business account since Nov. 18, 2004.

For more, see Marco Island man arrested in Ohio on grand theft charge.

Thursday, March 25, 2010

Georgia Supremes Rip State Bar For Proposed Handslap For Wayward Lawyer Who Used Stolen ID, Phony Documents To Rip Off Employer Of Nearly $500K

In Atlanta, Georgia, Business Insider reports:

  • The Georgia Supreme Court called out the State Bar on Monday for its meek punishment of a fraudulent lawyer, calling the proposed sanction "troubling" in its unanimous rejection of his petition for voluntary suspension.(1) The Bar had agreed to a six month to one year retroactive suspension for Michael J.C. Shaw for using fake identities to bilk Greenberg Traurig(2) of nearly $500,000 by posing as a third-party vendor on invoices.


  • The firm uncovered the misconduct in the summer of 2009. He was fired and subsequently cooperated with the firm's investigation and coughed up $526,922 to the firm, per their request. Shaw requested a retroactive six to 12 month suspension, to which the Georgia State Bar agreed. He is not charged with a crime.

Source: Georgia Supreme Court Chews Out Former Greenberg Traurig Partner And State Bar.

See also: ABA Journal: Ga. Supremes Want Tougher Sanction for Ex-Greenberg Traurig Associate.

(1) At the risk of appearing like I'm piling on, I provide below the entire concurring opinion of Justice David Nahmias, who ripped the Georgia State Bar and Shaw for the suggested sanction for this guy after getting bagged for ripping off his employer of nearly $500K:

  • In my view, Michael J. C. Shaw is fortunate not to be incarcerated in a state or federal prison for the half-million-dollar fraud he perpetrated against his employer, along with related crimes such as identity theft and misuse of someone else's social security number. His multi-year, multi-faceted scheme ended only when he was caught. I join the Court's unanimous decision rejecting Shaw's petition for voluntary discipline of a six to twelve month suspension, "preferably retroactive" to the date he stopped practicing law, which occurred when his law firm discovered his scheme and terminated him. I write to express how troubling I find it that Shaw and, even worse, the State Bar apparently believe that such a short "break" from practicing law is appropriate discipline for his extended, extensive, and serious misconduct, notwithstanding the factors he presents in mitigation. I expect that most members of the Bar, and almost every citizen in this State, would be equally disturbed by that concept of attorney discipline. I am authorized to state that Presiding Justice Carley joins in this concurrence.

Source: In The Matter Of Michael J. C. Shaw, No. S10Y0571 (March 15, 2010).

(2) For other stories on alleged "follies" connected to this law firm, see:

Arizona AG Squeezes Duo For $120K Settlement In Civil Suit Alleging Flipping Racket Combining Use Of Straw Buyer Investors, "Rent-To-Own" Homebuyers

In Pima County, Arizona, the Arizona Daily Star reports:

  • Two Tucson real estate agents and their affiliated companies agreed to a $120,000 settlement for their role in a deal that state prosecutors say deceived novice investors, lenders and unqualified home buyers.(1)


  • The Attorney General's Office alleged that [Andrew] Silverstein, when he was a real estate agent with Re/Max All Executives, told investors they could purchase investment homes and obtain 100 percent financing. Silverstein and other co-defendants told the investors they would find rent-to-own buyers to purchase the properties, and they would receive their rent every month whether or not rent was collected, according to the attorney general.

  • Silverstein and other co-defendants then sought out rent-to-own buyers to enter into purchase agreements for homes that they would otherwise not qualify for, state prosecutors said. Eventually, the attorney general said, investors no longer received rental amounts that covered their increasing mortgage payments and many of the homes went into foreclosure.


  • Others originally named in the case - Tucson Mortgage Co., WGA Enterprises, William Anastopoulos and Jane Doe Anastopoulos -reached a $60,000 settlement with the attorney general on Jan. 8. The Attorney General's Office said its case remains active against additional defendants, including other loan officers and a rent-to-own company, AZI Rent2Own LLC, which does business as Arizona Investments and AZI, and its owner.

Source: 2 realty agents settle investment case.

For the Arizona AG press release, see Terry Goddard Announces Settlements in Real Estate Fraud Case.

(1) The settlement was reached with Andrew T. Silverstein; his company, Andrew Silverstein PLLC; and VinLan Ventures Inc., doing business as Re/Max All Executives. Vincent Volpe, Re/Max's president and CEO, also agreed to the settlement. Their attorneys said the judgment, filed in Pima County Superior Court, didn't include any admissions of wrongdoing.

Ten Facts About Mortgage Debt Forgiveness

Syndicated real estate columnist Kenneth R. Harney writes:

  • The IRS gets involved in mortgage principal write-downs because the federal tax code generally treats any forgiveness of debt by a creditor in excess of $600 as ordinary taxable income to the recipient. However, under legislation that took effect in 2007, certain home mortgage debt cancellations - such as through loan modifications, short sales or foreclosures - may be exempted from tax treatment as income.

For more, see IRS issues loan write-down rules.

See also:

Feds Get AIG Units To Cough Up $7.1M To Settle Race-Based Discrimination Claims In Home Mortgage Lending Practices

The Washington Post reports:

  • Two AIG units settled federal charges that they discriminated against black home buyers on fees for mortgages and will pay $7.1 million for restitution and education efforts, the U.S. Justice Department said.(1)

  • The units, AIG Federal Savings Bank and Wilmington Finance Inc, will provide $6.1 million to about 2,500 borrowers in at least 19 major metropolitan cities who were affected by the alleged discrimination, according to the department. "This sort of practice is what I often call discrimination with a smile, because I would predict that many of the victims that we will contact will have no idea that they were victimized," said Thomas Perez, head of the Justice Department's civil rights division.

  • Blacks were charged fees by mortgage brokers that were on average one-fifth of a percentage point higher than whites for the mortgages, which were all subprime loans, Perez said. The victims will receive on average about $2,300 back. He also said that there were some 45 lending discrimination cases pending.

For more, see AIG units settle mortgage discrimination case.

(1) The settlement was filed in conjunction with a civil lawsuit brought under the federal Fair Housing and Equal Credit Opportunity Acts, which alleges African American borrowers nationwide were charged higher fees on wholesale loans. For the U.S. Department of Justice press release, see Financial Fraud Enforcement Task Force Announces Settlement with AIG Subsidiaries to Resolve Allegations of Lending Discrimination.

Forced Placed Insurance Causes Unit Owner's Mortgage Payment To Skyrocket After HOA Drops Windstorm Coverage; Suit Filed Seeking Reimbursement

In Oakland Park, Florida, The Miami Herald reports:

  • Carla Gemmati, 45, a resident at the Lake Pointe Condominium in Oakland Park, saw her mortgage almost double from $975 to $1,700 in December. The additional cost was to cover a windstorm insurance that her condominium's association had just eliminated,(1) forcing her mortgage lender, Bank of America, to purchase a policy of more than $4,500 on her behalf and charge the cost against her monthly mortgage payment. "I haven't been able to make the whole payment,'' Gemmati said. "If I can't make the payments, I foresee that [a foreclosure] can happen.''

  • Windstorm insurance coverage is mandated under Chapter 718 of Florida Statutes, or the Condominium Act. According to the law, insurers issuing residential property insurance policies, in this case the condominium's association, are required to include hurricane windstorm coverage. In February, Gemmati filed an unprecedented lawsuit against the condominium association and members of its board in order to regain the windstorm coverage and get reimbursed for the price hike in her mortgage.

  • The lawsuit states that, "the defendants intentionally refused to obtain and maintain adequate insurance, specifically windstorm coverage.'' Robert Kaye, a managing member of Kaye & Bender in Pompano Beach, is representing Gemmati, who is a collection specialist in the same firm. "Florida Statute and the declaration of the condominium require the association to provide a certain level of insurance for the buildings and that includes the windstorm insurance,'' Kaye said.

  • Gemmati has been living at the Lake Pointe Condominium for five years. Up until last September, the windstorm coverage was provided by the association and included in the $375 fee homeowners paid each month to the association. "All the insurances are supposed to be included,'' Gemmati said.

For the story, see Lawsuit targets wind insurance.

(1) I suspect that this condo association, like many throughout Florida, is getting stiffed left and right by delinquent unit owners on their monthly maintenance payments (many facing foreclosure), and the association is simply looking for a way to cut expenses without having to jack up the monthly fees on the fee-paying owners. Such an increase may serve to push some of those owners into the delinquent category.

R/E Agent Faces Charges Of Using Downpayment Cash From Would-Be Homebuyers To Take Title To House; Unwitting Couple Left As Tenants In Own Home

In Newman, California, The Modesto Bee reports:

  • Carlos Gonzales and Ernestina Valladarez said they have faced 13 judges in criminal, civil and bankruptcy courts in what's become a five-year fight to save their home. The couple said then-PMZ agent Erica Burdg of Modesto took $350,000 from them, including a down payment and monthly mortgage payments on their Newman house. Then Burdg tried to evict them.


  • Gonzales, 59, and Valladarez, 60, said they believed they were buying a home in the summer of 2002, when they gave Burdg $22,481 and moved into a three-bedroom, two-bathroom house on a corner lot in Newman. [Attorney Mike] Linn said Burdg crafted a purchase agreement for Gonzales, but sold the home to her husband, then to her son. He claims the signatures of Gonzales and the home's previous owners were forged on sales documents. Burdg later filed a lawsuit to evict the Newman couple, who prevailed in November 2006 when a Superior Court jury said Gonzales and Valladarez didn't have to move out. A three-judge appellate panel agreed.

Reportedly, Judge John G. Whiteside said Burdg and her son, Carlos Obando, must face a jury in September after the two pleaded not guilty [] to all charges.

For the story, see Judge orders trial on Newman couple's claims of real estate fraud.

For an earlier story, see Who owns home? Newman case tied up in courts.

Ex-Agent Charged w/ Theft By False Representation In Contract For Deed Home Sale; Collected Cash From Would-Be Buyer, Failed To Pay Pre-Existing Loan

In Kenosha, Wisconsin, the Kenosha News reports:

  • Arraignment has been set for April 14 for a former real estate salesman accused of embezzlement and theft. Michael H. Granger, 50, appeared Wednesday in Kenosha County Circuit Court for his two felony files — one for allegedly pocketing a $12,000 commission, the other for allegedly taking more than $7,800 from a would-be home buyer, according to criminal complaints.


  • In the theft case, the charges stem from an August 2008 land contract [aka "contract for deed" or an “installment sale agreement”] meant to purchase a $140,000 property [...] in Kenosha. The would-be buyer said she wrote Granger seven checks for what she believed were mortgage payments and other fees. All the checks were cashed. But, she later learned, the land contract was never filed and the home went into foreclosure in February 2009.

  • When the woman asked Granger about the money she gave him, she reported that he said it was “none of her business” and it was spent, a criminal complaint says. The homeowner said Granger told him the land contract was needed because the buyer had trouble getting financing. He said he was never presented any paperwork until February 2009, when he said Granger met him at a bar, scrawled out a statement and had him sign it. The broker for whom Granger worked at the time confirmed that the land contract had not been filed; the incomplete contract was later found in Granger’s desk. Granger faces two felonies for theft by false representation for the deal.

Source: Former real estate salesman arraigned (Granger facing embezzlement, theft charges).

Wednesday, March 24, 2010

Oregon AG Scores 1st Conviction Under New Law Targeting Loan Modification Scams, Mortgage Fraud; Defendant Gets 61 Months, Ordered To Pay $469K

From the Oregon Department of Justice:

  • Oregon Attorney General John Kroger [] announced the conviction and sentencing of a Salem mortgage broker on mortgage fraud, theft, identity theft and tax evasion charges.(1) [...] Julian James Ruiz III (DOB: 4/28/1971) was sentenced to 61 months in prison after pleading guilty to 2 counts of Aggravated Theft in the First Degree; 1 count of Aggravated Identity Theft in the First Degree; 1 count of Identity Theft in the First Degree; 1 count of Mortgage Fraud; 1 count of Forgery in the First Degree; 1 count of Tax Evasion; and 1 count of violating House Bill 3630, which prohibits collecting advance fees for loan modifications.

  • Ruiz was stripped of his mortgage license and permanently barred from working in the industry. The judge also ordered Ruiz, manager and owner of American Home Modifications, a Salem-based loan modification company, to pay $469,500 in restitution to more than 100 victims.(2)

For the Oregon AG press release, see Mortgage Broker Sentenced To Prison (Julian James Ruiz III pleads guilty to multiple counts of theft, mortgage fraud and tax evasion and is sentenced to 61 months in prison).

(1) This is the first criminal case completed by the Attorney General's new Mortgage Fraud Task Force. The Mortgage Fraud Task Force was created by Attorney General Kroger in late 2009 to combat fraud in the mortgage and foreclosure relief industries.

(2) See also, the Statesman Journal: Mortgage fraud costs man his freedom (Dealings will send him to prison and ban him from license):

  • Several of Ruiz's former clients spoke at the sentencing. "He took advantage of our trust because we did not know English. We considered him a friend," said Veronica Villasana, who addressed the court in Spanish with the help of an interpreter. "He promised to help me, but he did not," said Julian Ortiz, who also spoke through an interpreter. Ortiz said he was charged $2,500 for loan modifications services and is now on the verge of losing his home.

Homeowner Gets Clipped For $1500 On Failed Loan Modification; Loses Home To Foreclosure, Then Gets Run-Around From Operator On Promised Refund

In Bakersfield, California, KBAK-TV Channel 29 reports:

  • During the foreclosure crisis many homeowners turned to companies to get their home loans modified. One of those homeowners is Zuleyka Ruiz of Bakersfield. Her home was in foreclosure and had a sale date of December 12, 2009.

  • On December 6, Ruiz went to Mortgage Solutions which is located inside the law offices of Julio Jaramillo [...].(1) "They asked me for $1500 for paperwork to pay the people, to stop the sale date," she said. Ruiz paid the money, however, a law passed on October 11, 2009 makes it illegal for companies to charge for home loan modifications upfront.

  • We spoke with the owner of Mortgage Solutions, Ricardo Melgoza, about why he charged Ruiz even though it was illegal. Melgoza said Ruiz wasn't getting a home loan modification so he could charge her. But Ruiz's paperwork says she was getting a modification. Regardless, Mortgage Solutions couldn't save her home, and on December 29 she called the company about getting her money back.

  • Ruiz said she spoke to Melgoza who promised to give her a refund during the first week of January. [...] After Eyewitness News approached Melgoza about Ruiz's refund, he said Ruiz would get her money the first week of March. That didn't happen. Melgoza told Eyewitness News if this story made him look bad he wouldn't pay. Meanwhile, Ruiz is still out $1,500. "It's a lot of money and it's a lot of money that is not mine," she explained. "I got the people from other people that want to help me to keep my house."

  • To prevent future clients from not paying for his services Melgoza said he plans to up his prices from $2,000 to $4,000-5,000.

For the story, see Homeowner wants refund for loan modification that didn't happen.

(1) An upfront fee loan modification outfit located inside someone's law office??? This arrangement sounds like it could be similar to the numerous "lawyer renting" loan modification rackets that authorities like The State Bar of California and others are currently busting up. See, for example, Southern California attorney arrested for loan modification activities.

California Authorities Apply Heat On Now-Defunct Suspected Loan Mod Racket With "Loose Affiliations" w/ Lawyers; Outfit Took In $20M, Bar Probers Say

In Fresno, California, KFSN-TV Channel 30 reports:

  • Last may, we investigated a company called Green Credit Solutions. It sold loan modification services for $3,495 dollars through local brokers. The state bar raided its Southern California offices this past December. Investigators say they uncovered thousands of victims of the loan modification company, bringing in more than $20-million dollars combined.


  • Green Credit Solutions is accused of being paid and doing nothing by hundreds, if not thousands of [homeowners]. The department of real estate gave the company's officers a cease and desist order in June 2009 about a month after the Action News investigation into the company aired. As a result, Green Credit's officers voluntarily surrendered their real estate licenses in the last month.

  • In late December, the State Bar searched its offices in Irvine, saying the company did nothing to help clients while also misleading them to believe that services would be performed or supervised by an attorney. "Green Credit Solutions had a loose affiliation with a few lawyers. Never really had a lawyer on staff handling the loan modifications. And the one lawyer they did hire to work with them was a suspended Tennessee attorney," said state bar investigator John Noonen.

  • The 6,000 plus Green Credit customers came from sales people, called brokers, all across California; including San Joaquin Real Estate and Financial Services in Clovis. [...] Workers [there] collected the personal information from at least 650 clients and sent it to Green Credit in Southern California. San Joaquin Real Estate was paid between $1,500 to $2,000 dollars per client. That's more than a million dollars since they started in August 2008.


  • The State Bar is collecting the files from Green Credit and seized its assets. The State Bar does not have the authority for criminal charges but can forward the results of any investigation to the proper jurisdiction for prosecution. Action News talked with the Fresno County District Attorney's Office.

For the story, see Loan Modification Scams.

NJ Consumer Says Texas-Based Debt Workout Outfit Pocketed Thousands In Fees While Failing To Negotiate Satisfactory Settlements

In Nutley, New Jersey, The Star Ledger reports:

  • Sharon Lemma Bozza charged her way to big-time debt. [...] Nearly $60,000 in debt and 12 delinquent credit cards later, Bozza decided to get help. In July 2008, she found Texas-based American Financial Concepts (AFC), a debt-settlement company that promised to negotiate lower payoffs for her debt. It didn’t exactly work out that way, and by the time she was through, Bozza was sued by creditors and she was out thousands of dollars in fees to AFC with nothing to show for it.


  • Here was the deal: Bozza would deposit money into a bank account from which AFC would take its fees. Eventually, she’d pay the negotiated debts from that account. After 48 months, she should be debt-free — as long as AFC could negotiate good deals and as long as she kept paying. On Aug. 11, 2008, AFC took its first of four monthly fees of $733 from the account. Those would be followed by 18 payments of $310. All fees to AFC, no debts paid yet.(1)

For more, see After hiring debt-settlement firm, Nutley mom found bills piling higher.

(1) According to the story, Bozza started with a Citi card on which she owed more than $23,000. AFC records said that on Feb. 3, 2009, it negotiated a payoff of $10,530, called Bozza at home and left a message on her cell phone. It said it renegotiated on April 13, 2009, for a settlement of $9,503. But not according to Citi, she said. "(Citi) had no indication that there were ever, ever any figures talked about, nothing broken down or offered on the account," Bozza said, adding the account was sent to a collections company.

She then contacted her Chase card, to which she owed more than $20,000, the story states. It, too, had no record of negotiations with AFC, she said, although it had been notified the company would be her debt-settlement firm.

Reportedly, at Sears, there was no record of contact by AFC, Bozza said.

BofA Continues Pocketing Mortgage Workout Payments While Refusing To Recognize Predecessor's Loan Mod Deal, Says Kentucky Couple Now Facing F'closure

In Louisville, Kentucky, WAVE-TV Channel 3 reports:

  • Jason and Melissa Mattingly are finding out that mortgage modifications can become nightmares. Two years ago they fell behind on a couple of mortgage payments and received a mortgage modification through their lender, Countrywide Homes. Shortly thereafter, Countrywide was acquired by Bank of America and the Mattingly's had to file the paperwork again - but now Bank of America is taking steps to foreclose on the home. "We've never gotten anything like this, we've made our payments, they've accepted (them)," said Melissa Mattingly. "So I just don't see how they can foreclose on us if we've honored our payments every month."

  • The Mattingly's receive up to a dozen phone calls a day from Bank of America saying they are only making 'partial' payments on their home mortgage. When Melissa or Jason bring up the home mortgage modification they sent in, bank representatives say there's no reference to a modification in their computer records. The bank admits they're receiving the Mattingly's payments, but refuses to recognize the modification.

For more, see Bank refuses to recognize loan modification.

Another One West Bank / IndyMac Horror Story: Lender Approves Loan Modification For Couple Several Months After Foreclosing & Giving Them The Boot

In Las Vegas, Nevada, KLAS-TV Channel 8 reports:

  • One local family believes what happened to them may be happening to others facing foreclosure. The Stelton family tried for months to get a home loan modification after they fell on tough times but it didn't work and they were evicted. [...] IndyMac foreclosed on them and auctioned off the house. The Steltons now rent a home. What they didn't expect, was a call from IndyMac this week, congratulating them on being approved for a loan modification, several months after IndyMac kicked them out.

For more, see Family Approved for Loan Modification After Eviction.

Arizona Couple Seeking Help With House Payments Accuse Loan Modification Outfit Of $2500 "Hit & Run" Fleecing

In Sun City West, Arizona, KNXV-TV Channel 15 reports:

  • A Sun City West couple trying to get help with their mortgage was apparently scammed out of $2500 by a company they thought was legit. Noah and Joan Adams said they paid a company called Choice out of Mesa to help them negotiate they're mortgage. But several months later the company that promised "to make things less scary" is no where to be found. "What did they do with the $2500?" asked Noah. "[I] told Joan my wife that they're scamming us."

  • The lady who came to their home had the name Kay Henning. She had business cards and paperwork. Noah said the company had the fancy forms, made the couple fill out a ton of documents, but then they just stopped returning the calls.

For more, see Sun City West couple becomes victim of foreclosure scam.

Tuesday, March 23, 2010

Bank President Laments: "Never Do Business With Family!" As Improper Notarization Allows Brother-In-Law/Borrower To Successfully Void Lender Mortgage

The following facts have been extracted from a recent court ruling by a Federal Bankruptcy Court in Nebraska that resulted in a borrower successfully voiding a mortgage:

  • Businessman borrows approximately $8,000,000 from Bank.
  • Businessman signs all loan documents.
  • Bank President, who just so happens to be Businessman's brother-in-law, notarizes all loan documents signed by Businessman.
  • Businessman defaults on loan shortly thereafter.
  • Bank starts foreclosure action.
  • Businessman files Chapter 11 bankruptcy.
  • In the bankruptcy proceeding, Businessman attempts to void Bank's mortgage on the grounds of improper notarization by Bank President, his (probably now-estranged) brother-in-law.

According to the court (my emphasis added, not in the original text):

  • In this case, the issue is the validity of the notarization of the signatures on the deed of trust. Nebraska law plainly provides that "[a] notary public is disqualified from performing a notarial act as authorized by Chapter 64, articles 1 and 2, if the notary is a spouse, ancestor, descendant, or sibling of the principal, including in-law, step, or half relatives." Neb. Rev. Stat. § 64-105.01.


  • As Mr. Baer's brother-in-law, Mr. Maher [ie. Bank President] was disqualified from notarizing his signature. The exception at section 64-214 permitting bank officers or employees who are notaries public to acknowledge any written instrument given to the bank does not salvage this transaction because section 64-105.01 disqualifies a relative from performing the notarial acts authorized in article 2, which includes the exception for banks.


  • The bank's deeds of trust and modifications thereto were improperly acknowledged, were not lawfully recorded, and are therefore void. Separate judgment will be entered for the plaintiff [ie. Buisnessman].

For the ruling, see In re BowlNebraska, L.L.C. (USBC, D. Neb. March 15, 2010).

24-Story Pile Of F'closure Papers Threatens To Topple Miami Courthouse??? "We Have 125,000 Open Files!!!" Says Clerk Of Court As He Sends Out SOS

Over on West Flagler Street in beautiful downtown Miami, Florida, Miami New Times reports:

  • There was a time — say, last summer — when no clerk wanted to enter a certain room on the 15th floor of 140 W. Flagler St., a drab Miami-Dade County municipal building downtown. Inside lurked a multi-ton beast made of dead trees: the collection of pending foreclosure case files for the county. Since the economy began its nosedive, roughly 8,000 foreclosures have been filed per month, which is about the number the county used to have in a year, according to Clerk of the Courts Harvey Ruvin: "We have 125,000 open files. If you piled all of them on top of each other, it would make a 24-story building."

  • "You could hear the floors creaking under all the weight," says a female clerk who asked not to be named. "Everybody was joking about how if one of us fell through that floor, it would be the lawsuit of the century."


  • Nonetheless, last July, the clerk's employees began moving the files the half-block to a scavenged judge's quarters on the seventh floor of 73 W. Flagler St., a task they didn't complete until February. But the insatiable monster has continued to grow, and Shabazz says of the new file room: "It's getting unruly in there." "It's going to blow," says an older female clerk, who, like her colleague, requested anonymity. "You go in there? Do a Hail Mary first."(1)

For the story, see A pile of foreclosure papers threatens to topple a downtown Miami courthouse.

See also, "It's Going to Blow!": Miami-Dade's Leaning Tower of Debt Haunts Clerks' Dreams.

(1) Go here to view the foreclosure file room that the clerks are deathly afraid of entering.

NC Federal Bankruptcy Judge Rips Lawyer For Alleged Pattern Of Ripping Off Vulnerable Consumers Seeking Chapter 13 Protection & Other Rules Violations

In a recent ruling from a Federal bankruptcy court in North Carolina, bankruptcy attorney William T. Batchelor was called to the carpet by Judge J. Rich Leonard for allegedly engaging in a pattern of ripping off financially strapped consumers, primarily by charging more for his services in Chapter 13 proceedings than is allowable under local bankruptcy court rules.(1)

In addition, Batchelor was accused of making unprofessional comments to some of his clients, according to the following excerpts from the ruling:

  • Batchelor informed the debtors that in order to have work completed correctly they would have to "learn to kiss his secretary's [expletive]."


  • On one occasion in particular, Mr. Batchelor told the Boscos they, "were nag, nag nagging him [and that] he doesn't need any of this [expletive]."

Judge Leonard ordered Batchelor to refund all fees paid by the five clients who testified in court on this matter, and instructed the Bankruptcy Administrator to investigate all other of Batchelor's pending bankruptcy cases to determine if "further egregious billing practices have occurred," in which case the Administrator, "in her discretion may seek additional disgorgement."(2) Batchelor has also been barred from filing any new petition in this court until April 15, 2010, according to Judge Leonard's ruling.

For the ruling, see In re Daniels III (and other debtors).

(1) According to Judge Leonard (bold text is my emphasis added, not in the original text):

  • The evidence of record is clear that numerous violations of the Bankruptcy Code and the local rules of this court were committed. First and foremost, there appears to be a flagrant disregard of compensation and disclosure requirements. Pursuant to 11 U.S.C. §329, an attorney must file with the court a statement of the compensation agreed to be paid. Section 330(a)(4)(B) authorizes the court in a chapter 13 case to "allow reasonable compensation to the debtor's attorney for representing the interests of the debtor in connection with the bankruptcy case . . . ."

  • In furtherance of these Code sections, the local rules of this court have elaborately laid out the means by which a professional may charge fees. E.D.N.C. LBR 2016-1. The standard base fee in a chapter 13 case is $3,000.00. E.D.N.C. LBR 2016-1(a)(1). As proscribed by the local rules, the standard base fee is intended to cover all services that are reasonable and necessary for proper administration of a case in the first year.

  • While additional fees, known as non-base fees, may be required for services outside of that which is considered "standard," such compensation must be applied for, noticed to the parties, and awarded by the court. E.D.N.C. LBR 2016-1(a)(4)-(5). Even when a non-base fee is presumptively reasonable, it must be applied for and noticed to the debtors, trustee, and bankruptcy administrator before automatic court approval is granted. E.D.N.C. LBR 2016-1(a)(6). Each attorney who undertakes the representation of a debtor in a chapter 13 case is charged with the responsibility of disclosing to the debtor these procedures of awarding fees. E.D.N.C. LBR 2016-1(a)(7).

  • From the testimony of the former clients, it is evident that Mr. Batchelor routinely acted in contravention of one or more of the subsections under Local Rule 2016-1. Often, full disclosure was not made to clients regarding billing practices and procedures. In fact, the court finds that the proscribed billing structure of this court was generally ignored. Clients sought the services of Mr. Batchelor believing they would be charged the standard base fee, only to discover that additional monies were required before services were rendered. Disclosure statements filed with the court do not reflect these additional amounts, nor does it appear that the appropriate applications were filed to seek such compensation. Instead, Mr. Batchelor imposed his own renegade billing structure, which is entirely impermissible.

  • Moreover, based upon the testimony at the hearing, problems also exist with the lack of professionalism Mr. Batchelor exhibits. Such problems include the clients inability to access their attorney, the level and quality of advice being offered, inappropriate delegation of work to staff members, and an overall lack of professional demeanor. These actions and inactions are suspect, and cut across multiple rules of professional conduct. However, the serious problems posed by Mr. Batchelor's behavior can generally be labeled as a failure to "strive to attain the highest level of skill, to improve the law and the legal profession, and to exemplify the legal profession's ideals of public service." N.C. Rules of Prof'l Conduct R. 0.1[10] (2006).

  • The court finds that based on the incidents described, Mr. Batchelor has repeatedly acted in a manner that is unbecoming of a lawyer. In doing so, he has failed to improve the legal profession or exemplify this profession's mores. This court holds itself to the highest of standards. The members of the bar that appear before this court are generally exemplary. When one member of the bar acts in a way that tarnishes the established reputation of excellence, the court cannot sit idly by. Those problems illuminated by the motion to show cause and motion for examination under Bankruptcy Rule 2017 must be remedied.

(2) The Bankruptcy Administrator also chimed in on Batchelor, according to the following excerpt from Judge Leonard's ruling (bold text is my emphasis added, not in the original text):

  • The Bankruptcy Administrator also entered into evidence a reprimand issued against Mr. Batchelor by the North Carolina State Bar on August 6, 2007. The reprimand discusses fees that Mr. Batchelor charged in a case filed in Wake County. In that case, Mr. Batchelor quoted his client a flat fee of $1,250. As the case progressed, however, Mr. Batchelor charged his client an additional $4,450 to continue representation.

  • Due to the clients inability to acquiesce to the request for additional fees, Mr. Batchelor withdrew as counsel. The reprimand highlights Rule 1.5 of the Rules of Professional Conduct. Rule 1.5 states that once a fee agreement is reached between an attorney and a client, the attorney has an ethical obligation to fulfill the contract regardless of whether an unfavorable bargain was struck.

  • Furthermore, if an attorney renegotiates the fee agreement, the attorney may not abandon or threaten to abandon the client to coerce additional or higher fees.

NY Appeals Court Says "No Way!" To "Overage-Chasing Surplus Snatcher" In Attempt To Grab Excess Sale Proceeds From Jailed Homeowner Facing Foreclosure

From a recent ruling by a New York intermediate appeals court:

  • While incarcerated, Hernandez was visited by a retired New York City detective representing GALF [Gotham Asset Locators Fund, Inc.], who induced him to sign an agreement providing that GALF would receive 50% of any surplus obtained by Hernandez after the foreclosure sale of Hernandez's apartment located in plaintiff's condominium, even if it performed no services for Hernandez.

  • At the time, Hernandez already had counsel who was acting on his behalf. The agreement required that Hernandez consent to be represented by GALF's in-house counsel. Hernandez also signed a letter advising his counsel to cease all activity on his behalf.

  • Two days later, Hernandez wrote his counsel that he had signed the agreement because GALF's representative "bombarded" him with "doomsday scenarios," made false statements, and offered him cash and commissary packages. He stated that GALF was not authorized to act on his behalf. Hernandez moved to void the agreement and GALF cross-moved to enforce it and for sanctions against Hernandez's counsel for certain statements in her affirmation in support of the motion.

  • The contract is unenforceable since it was entered into under false pretenses (see generally King v Fox, 7 NY3d 181, 191 [2006]).(1) It is also unconscionable in that it provides for the payment of a substantial sum of money to GALF even though GALF has provided no services to Hernandez.

  • There is no ground for an award of sanctions. There was no showing that the statements of Hernandez's attorney were completely without merit, were made primarily to harass or maliciously injure, or falsely asserted a material fact (see 22 NYCRR 130-1.1[c]). GALF's counsel admitted a close association with his client, and even if this was overstated, intervenor [ie. GALF] has demonstrated no prejudice.

For the ruling, see Parkchester S. Condominium Inc. v. Hernandez, 2010 NY Slip Op 02008 (NY App. Div., 1st Dept. March 16, 2010).

(1) In King v Fox, the New York Court of Appeals was asked to address three questions:

  • whether New York law permits a client to ratify an attorney's fee agreement during a period of continuous representation;
  • whether such ratification is possible if attorney misconduct has occurred; and
  • whether a client can ratify an unconscionable fee agreement.

Creditor's Failure To Record Request For Notice Allows Ex-Homeowner To Snatch Away Surplus Out From Under Subordinate Lienholder After F'closure Sale

In Southern California, Lexology reports:

  • In Banc of America Leasing & Capital, LLC v. 3 Arch Trustee Services, Inc. (2009) 180 Cal.App. 4th 1090, defendant 3 Arch Trustee Services (“Arch”) properly conducted a nonjudicial foreclosure. After Arch recorded notices of default and sale, a creditor recorded an abstract of judgment against the property owner. The creditor later transferred the judgment to Banc of America Leasing & Capital (“BofA”).

  • A month later, the property was sold at a foreclosure sale, conducted by Arch, and there were excess sale proceeds. Three months later, Arch remitted the excess proceeds to the former property owner.(1)

  • BofA filed suit claiming Arch owed a duty to pay excess proceeds to junior lien holders. The trial court agreed with BofA and awarded it damages in the amount of the excess proceeds, plus interest. Arch appealed claiming it had no duty to BofA. The appellate court agreed, and reversed the judgment, holding Arch had no duty to search out junior lien holders to remit excess proceeds.

  • The court reasoned that, “[t]he rights and powers of trustees in nonjudicial foreclosure proceedings are ‘strictly limited and defined by the contract of the parties and the statutes.’ Thus, a trustee owes no duty to provide notices to any person unless the trust deed or the statute specifically provides for such notice.” The court went on to hold that under Civil Code section 2924b, BofA, as a judgment lien holder, was not entitled to automatically receive a notice of default or notice of sale. Additionally, BofA did not record a statutory request for notice.

  • Further, the court stated that under section 2924j, when there are excess sale proceeds, a trustee must notify those persons who would have been entitled to receive a copy of the notice of default; i.e., those that are automatically entitled to receive such notice and those that recorded a statutory request for notice. Anyone who receives a notice from the trustee, must submit a written claim to the trustee and the trustee distributes the excess proceeds in order of priority of the claims.

For more, see Trustee has no duty to seek out junior lien holders following foreclosure sale (requires registration; if no registration, go here, then click link for the story).

(1) According to the court ruling, the excess sale proceeds generated by the foreclosure sale which the ex-homeowner successfully snatched away from BofA Leasing by reason of the latter's failure to record a statutory request for notice was $114,797.77.

Monday, March 22, 2010

Use Of Low-Ball Property Appraisals, "Double Escrow" Flipping Arrangements Lead To Massive Ripoffs Of Underwater Lenders In Short Sale, REO Deals

In Stanislaus County, California, The Modesto Bee reports:

  • The hottest form of mortgage fraud in the Northern San Joaquin Valley involves bogus property valuations. [Interthinx vice president of industry relations Anne] Fulmer said a lot of the fraud involves the resale of foreclosed bank-owned homes and "short sales," in which homes facing foreclosure are sold for less than their outstanding mortgage. [...] Fulmer said there are "flopping" schemes going on involving short sales and bank-owned homes. These essentially trick banks and lenders into agreeing to sell homes for substantially less than what they're worth.

Here's one way that scheme works, according to Fulmer:

  1. A bank repossesses a home, then hires a real estate agent to resell the property.
  2. That agent secretly creates a limited liability corporation that offers to buy the property for a very low price.
  3. Meanwhile, other interested buyers also submit bids for the home, offering considerably more than the LLC's bid.
  4. But the dishonest agent tells the seller (which in this case is the bank) only about the low bid from the LLC. It illegally keeps the other bids secret.
  5. Figuring that the LLC's bid is the best deal available, the bank agrees to sell for the low price just to get the foreclosed home off its books.
  6. Then the agent immediately resells the house on behalf of the LLC to one of the other bidders for the house.
  7. Say the home's fair market value is $150,000. The agent and LLC persuade the bank to sell it for $100,000. Then the legitimate home buyer pays the agent and LLC $150,000, netting the agent and LLC a quick $50,000 at the bank's expense.

  • "We call that double escrow," said Craig Lewis, president of Prudential California Realty in Modesto. "It is happening. ... These listing agents are not disclosing all the offers to the seller." Or at least that's the widespread suspicion.

For more, see Stanislaus County tops for cheaters targeting lenders.

Loan Officer Gets Five Months In Sale Leaseback, Foreclosure Rescue Scam; Equity Stripping Victim Hopes To Recover Title To Home

In Honolulu, Hawaii, KITV-TV Channel 4 reports:

  • It’s been nearly five years since the Fagaragan family of Ewa Beach realized that the people who promised to save their home from foreclosure had actually stolen it. Thursday, one of the people involved in that mortgage fraud case was sentenced to prison while the Fagaragans still hope to regain full ownership.

  • The family was nearly evicted by the mortgage con, and has been living in limbo ever since. Theirs was one of the first homes stolen in what became a common scheme. Mortgage companies promising to save a family from foreclosure actually fooled them into signing title over to a straw buyer and then sucked out the equity with more loans against the property.

  • Debbie Aurelio Fagaragan was in court Thursday as one of the thieves, 31-year-old Vance Yukio Inouye, was sentenced to five months in prison with four months of the time to be served on weekends.(1)


  • Debbie Aurelio didn't comment to reporters Thursday. Her Legal Aid attorney hopes the defendants will pay enough restitution to satisfy the banks. The judge Thursday ordered Inouye to pay $274,000. Of that, $200,000 will go to GMAC to pay off a loan the Inouyes took out on the house, the other $74,000 for the Fagaragan family. “They want their home back is what they really care about,” said Legal Aid attorney Russ Awakuni.(2)

For the story, see Mortgage Fraud Defendant Gets 5-Month Sentence (Vance Inouye Brokered Mortgage And Put Wife On Title).

(1) According to the story, Inouye’s wife, Patricia Inouye, who is still the official title holder of the Fagaragan home, has never been charged. Still be to be sentenced are Inouye's bosses, John and Julie Dimitrion, owners of "Mortgage Alliance." They pleaded guilty to the Fagaragan fraud and two other similar straw buyer schemes.

(2) Awakuni said the family still must negotiate with the Inouyes' attorneys to get Patricia Inouye to sign the home's title back to the Fagaragans and negotiate with banks to arrange affordable loans, the story states.

FHLB Of San Francisco Sues To Void $19.1B+ Purchase Of Crappy Mortgage-Backed Securities; Says Dealers BS'd About Quality Of Underlying Home Loans

The Federal Home Loan Bank of San Francisco announced:

  • [T]he Federal Home Loan Bank of San Francisco(1) (Bank) filed complaints in the Superior Court of California, County of San Francisco, against nine securities dealers in relation to certain of the Bank’s investments in private-label residential mortgage-backed securities (PLRMBS). The Bank is seeking to rescind its purchases of 134 securities in 113 securitization trusts, for which the Bank originally paid more than $19.1 billion. The Bank’s complaints allege that the dealers made untrue or misleading statements about the characteristics of the mortgage loans underlying the securities. All of the PLRMBS in the Bank’s mortgage portfolio, including those identified in the complaints filed today, were rated AAA when purchased, based on the information provided by the securities dealers.

For the entire press release, see Statement Regarding PLRMBS Litigation.

See also, The New York Times: Pools That Need Some Sun.

Thanks to Rob Harrington for the heads-up on the press release.

(1) According to its website, the Federal Home Loan Bank of San Francisco helps meet the borrowing needs of communities by providing wholesale credit products and services to member financial institutions. The Bank is privately owned by its members, which include commercial banks, savings institutions, credit unions, thrift and loan companies, and insurance companies headquartered in Arizona, California, and Nevada. We are part of a network of 12 regional Federal Home Loan Banks chartered by Congress in 1932 to provide low-cost credit to residential housing lenders.

NY Feds Bag Two In Alleged Upfront Fee Foreclosure Rescue Scam Using Bogus Bankruptcy Filings On Behalf Of Strapped Homeowners To Delay Loss of Homes

In White Plains, New York, Courthouse News Service reports:

  • Two New Jersey residents took nearly $400,000 in a foreclosure protection scam, federal prosecutors said. Andrew Bartok of Clifton and Kathleen Addario aka Kathy Adams [aka Kathleen Kelly, aka Kate Adams] of Saddle River raked in $44,000 a month for 9 months last year through their business, Revelations Consulting, prosecutors said. Clifton and Addario ran their scam in Dutchess and Westchester Counties, N.Y., according to the complaint. They not only bilked people up front, they charged monthly fees for "services" such as "foreclosure delay," and banked the money, prosecutors said.

Source: Foreclosure Scam Raked It In, Feds Say.

For the criminal charges, see U.S. v. Bartok, et ano.

National Call For Loan Documents Signed By Multiple Corporate Hat-Wearing Vice Presidents

From Florida Attorney Lynn E. Szymoniak, Esq.(1) in the March 12, 2010 entry on Fraud Digest:

Action Date: March 12, 2010
Location: WEST Palm Beach, FL

  • Researchers at Fraud Digest are comparing the job titles on Mortgage Assignments and Affidavits of the individuals listed below. If you have any Mortgage Assignment or Affidavit in Support of Summary Judgment in a Foreclosure action signed by any of the following individuals, please scan the document(s) and send it as a pdf. attachment to This request is for research regarding mortgage-related documents. The individuals named below are not accused of wrong-doing or fraudulent activity: Christina Allen; Scott Anderson; Brent Bagley; China Brown; Eric Friedman; Linda Green; Ely Harless; Korell Harp; Laura Hescott; Erica Johnson-Seck; Dennis Kirkpatrick; Topako Love; Jessica Ohde; Shelly Scheffey; Keri Selman; Kathy Smith; Roger Stout; Eric Tate; Tywanna Thomas; Linda Thoresen.

For other postings by attorney Szymoniak on suspected muiltiple corporate hat-wearing vice presidents, see:

  • TOO MANY JOBS: A report that lists the names Linda Green, Tywanna Thomas, Korell Harp and Shelly Scheffey that frequently appear on so-called "Docx-prepared" documents and some of the many job titles used by Green, Thomas, Harp and Scheffey.

  • MORTGAGE ASSIGNMENTS AS EVIDENCE OF FRAUD: Highlights the apparent manufacturing & use of "backdated" and "retroactive" assignments of mortgage by foreclosing entities to satisfy paperwork requirements in foreclosure actions.

  • AN OFFICER OF TOO MANY BANKS: Addresses some legal issues arising when multiple corporate hat-wearing vice presidents hold themselves out as acting as officers of multiple companies.

  • SIGNATURE COMPARISONS: A collection of copies of the signature section from legal documents that aids in the comparison of signatures from the same small group of suspected multiple corporate hat-wearing vice presidents.

Much of the information set forth in the above links are also set forth in greater detail in a class action complaint filed in a Miami Federal Court in February that alleges document manufacturing practices by lenders, servicers, and others in foreclosure actions (as I understand it, the suit has been withdrawn, subject to refiling in the future).

Sunday, March 21, 2010

Failure To Inspect Property & Inquire Into Rights Of Parties In Possession Prior To Making Loan Leaves Indiana Lender With Voided Mortgage

The following facts have been extracted from a recent ruling by the Indiana Court of Appeals:

  1. Benjamin purchased his home in Gary, Indiana in 1965 and has lived there ever since.
  2. In July of 1987, as part of his retirement planning, Benjamin conveyed his home to son David Thomas by quit claim deed with the understanding that it remained Benjamin's home and that he could recover title at any time upon request.
  3. In October of 1995, David conveyed Benjamin's home by quit claim deed to another of Benjamin's sons, Richard Thomas.
  4. Benjamin and Richard agreed that Richard would return title to the home to Benjamin upon request.
  5. At no time did Benjamin relinquish possession of the home.
  6. In June of 2001, following a family dispute, Benjamin requested that Richard convey title of the home back to him, but Richard refused to do so.
  7. On August 1, 2001, Benjamin filed a notice of intention to hold a mechanic's lien on the home for $200,000.
  8. On September 12, 2001, Benjamin filed a quiet title suit against Richard but did not record a lis pendens notice at the time or at any time thereafter.
  9. On December 6, 2001, Richard obtained a $118,000 loan from Trustcorp in exchange for a mortgage on the home. Richard was unemployed and living in Georgia at the time and, in connection with the loan application process, submitted a release of mechanic's lien that bore what purported to be Benjamin's signature but was not.
  10. Additionally, the release instrument indicates only the presence of Richard as signatory and refers to the lien instrument as bearing the designation "2001 003334" when the actual designation on the notice was "2001 060516."
  11. Trustcorp did not contact Benjamin regarding the purported release, and the loan agreement was completed.
  12. As it happened, Richard never made any payments on the mortgage loan.
  13. On July 3, 2002, Benjamin filed suit to foreclose his mechanic's lien on the home, a suit that included Trustcorp as a defendant.

Does Trustcorp's recorded security interest in Benjamin's home as a mortgagee have priority over Benjamin's unrecorded interest in the home that he has occupied since 1967 (remember that Benjamin is not the owner of record, and he failed to record a lis pendens against the home when he initiated an action to quiet title in order to recover the title from his deadbeat son, Richard, who was the title holder of record)?

Even though Trustcorp presumably had no actual knowledge of the oral understanding between Benjamin and his sons about the ownership of the home, and presumably had no actual knowledge of Richard's intent to drain the equity out of the home by pocketing the proceeds of the mortgage loan from Trustcorp. (and thereby screwing over his father out his home of 35+ years), the Indiana appeals court affirmed the lower court in ruling that Benjamin's earlier-acquired, but unrecorded, ownership rights in the home pursuant to the oral understanding he had with his sons trumped Trustcorp's later-acquired recorded mortgage, and further, ruled that Trustcorp's mortgage was invalid.

The Trial Court Ruling

The trial court concluded that Trustcorp's mortgage was a product of a fraud (specifically, the forged mechanic's lien release) and therefore invalid. The trial court also concluded that, despite Benjamin's failure to file a lis pendens, Trustcorp had constructive notice of his claims due to Benjamin's pending litigation with Richard and the irregularities in the mechanic's lien release.
The Appeals Court Ruling
In affirming the lower court ruling, the Indiana Court of Appeals possibly could have focused on the fact that the forged release of the mechanics' lien was absolutely void, a nullity (ie. void ab initio), and support its ruling that Trustcorp's mortgagee's interest was void on that basis.

Instead, the appeals court attacks the forged mechanics' lien release by ostensibly treating it as a voidable instrument (in which case it then becomes necessary to attack Trustcorp's claimed status as a bona fide purchaser in order to void its interest as a mortgagee in Benjamin's home) as opposed to an absolutely void instrument (in which case the bona fide purchaser doctrine is inapplicable, which consequently leaves subsequent purchasers without the recording statute protection).

In doing so, the appeals court appears to take a "belt & suspenders approach" in upholding the lower court ruling.

First, it focuses on Benjamin's continued possession of his home while his son went behind his back and obtained the mortgage loan from Trustcorp to rule that Trustcorp is not entitled to the protection of the state recording statute as a bona fide purchaser.

Next, it focuses on the irregularities that appeared on the face of the forged mechanics' lien release that enabled Benjamin's son Richard to go forward and pocket the proceeds from the mortgage loan from Trustcorp. On this basis, it ruled (again) that Trustcorp had constructive notice of Benjamin's ownership interst and accordingly, was not entitled to the protections afforded by the recording statutes to bona fide purchasers.

(While the court could have found support for the lower court's decision to void Trustcorp's mortgage on either basis to find that Trustcorp was not a bona fide purchaser, I guess it just wanted to be extra sure that it isn't overruled in a possible appeal of its ruling should the case be appealed further. Accordingly, it used both approaches to invalidate the mortgage - hence, a "belt & suspenders approach," so to speak.)

Benjamin's Continued Possession Of His Home

With regard to Benjamin's continued possession of the home and its effect on Trustcorp being placed on notice of his ownership interest in it, the Court of Appeals made this statement [bold text is my emphasis, not in the original text; text broken up for ease of reading]:
  • "[T]o qualify as a bona fide purchaser,[Footnote 1: The law regarding bone fide purchasers applies with equal force to mortgagees. See, e.g., Weathersby v. JPMorgan Chase Bank, N.A., 906 N.E.2d 904, 910 (Ind. Ct. App. 2009).] one has to purchase in good faith, for a valuable consideration, and without notice of the outstanding rights of others." Kumar v. Bay Bridge, LLC, 903 N.E.2d 114, 116 (Ind. Ct. App. 2009) (citation omitted). "The theory behind the bona fide purchaser defense is that every reasonable effort should be made to protect a purchaser of legal title for a valuable consideration without notice of a legal defect." Id. (citation omitted).
  • There is no dispute that Benjamin failed to file a lis pendens notice when he filed his quiet title action against Richard on September 12, 2001. The trial court, however, concluded that Trustcorp did not qualify as a bona fide mortgagee because it did not act in good faith and had constructive notice of Benjamin's lawsuit. Trustcorp contends that these conclusions were erroneous.
  • The record supports conclusions that Trustcorp did not act in good faith and can be imputed with notice of Richard's fraud and Benjamin's lawsuit. The Indiana Supreme Court has squarely held that "one who fails to examine land which he is about to purchase, and to inquire as to the rights of one in possession, is not acting in good faith and will not be treated as a bona fide purchaser." Mishawaka-St. Joseph Loan & Trust Co. v. Neu, 209 Ind. 433, 443, 196 N.E.2d 85, 90 (1935).
  • Regarding notice of competing claims, the Court also held that "means of knowledge, with the duty of using them, are equal to knowledge itself." Id. The Indiana Supreme Court has also held that possession of land puts the world on notice that the possessor may have a claim of ownership and right to possession. See Olds v. Hitzemann, 220 Ind. 300, 308, 42 N.E.2d 35, 38 (1942) ("[Appellees] were still in possession of their land, and their possession was notice to the world of their claims to ownership and right to possession.").
  • Quite simply, it is undisputed that Benjamin was in possession of the property in question and that Trustcorp nonetheless did nothing to ascertain his rights to it. It is apparent that even a cursory investigation would have quickly uncovered both Richard's fraud and Benjamin's claims on the home. Under the circumstances, Trustcorp cannot have been a bona fide mortgagee, and we therefore affirm the trial court's judgment in this regard.
Irregularities Appearing on Face of Forged Mechanics' Lien Release

The court said the following in this respect [bold text is my emphasis, not in the original text; text broken up for ease of reading]:
  • Moreover, even in the absence of a duty to inspect the property, we believe that irregularities on the face of the forged release of mechanic's lien would have put a reasonably prudent person on inquiry notice that something was amiss.
  • The law recognizes two kinds of notice, constructive and actual. Constructive notice is provided when a deed or mortgage is properly acknowledged and placed on the record as required by statute. However, an otherwise valid instrument which is not entitled to be recorded, improperly recorded, or recorded out of the chain of title does not operate as constructive notice, although binding upon persons having actual notice. Notice is actual when notice has been directly and personally given to the person to be notified. Additionally, actual notice may be implied or inferred from the fact that the person charged had means of obtaining knowledge which he did not use. Whatever fairly puts a reasonable, prudent person on inquiry is sufficient notice to cause that person to be charged with actual notice, where the means of knowledge are at hand and he omits to make the inquiry from which he would have ascertained the existence of a deed or mortgage. Thus, the means of knowledge combined with the duty to utilize that means equates with knowledge itself. Whether knowledge of an adverse interest will be imputed in any given case is a question of fact to be determined objectively from the totality of the circumstances. Keybank Nat. Ass'n v. NBD Bank, 699 N.E.2d 322, 327 (Ind. Ct. App. 1998) (citations omitted).
  • As an initial matter, it is clear to us that the trial court, although purporting to find that Trustcorp had constructive notice of Richard's fraud and Benjamin's quiet title lawsuit, actually found that it had inquiry notice of those things. Trustcorp cannot have had constructive knowledge of the quiet title action because Benjamin never filed his lis pendens notice. Nonetheless, we will affirm the trial court's judgment on this point if the record contains sufficient evidence to support a finding of inquiry notice. "The Court of Appeals may affirm the trial court's ruling if it is sustainable on any legal basis in the record, even though it was not the reason enunciated by the trial court." Moore v. State, 839 N .E.2d 178, 182 (Ind. Ct. App. 2005), trans. denied.
  • As for the purported lien release, first, the instrument was improperly notarized in that it indicates that only Richard was present when it was notarized, even though it was supposedly executed by Benjamin. A notary public is prohibited from acknowledging any instrument unless the person executing it signs it in her presence or affirms to her that the signature on the instrument is the person's own, and there is no indication that either of those things happened in this case. Ind. Code § 33-16-2-2 (2001) (now Ind. Code § 33-42-2-2 (2009)). Indeed, it occurs to us that the whole purpose of a notary public acknowledgment is to prevent just the sort of forgery and fraud that occurred here.
  • Second, and perhaps even more compelling, was the fact that the lien the instrument was purporting to release was designated "2001 003334" when the actual notice of intention to hold mechanic's lien filed by Benjamin was designated "2001 060516." Plaintiff's Exs. 3, 4. Trustcorp clearly had the means to discover that the lien the forged instrument purported to release did not exist under that designation, and yet did not use those means. In light of the amount of the loan, $118,000, we believe that a reasonably prudent lender would have taken the simple steps necessary to verify that a superior $200,000 mechanic's lien had indeed been released, especially when the release instrument had been improperly notarized.
The Court of Appeals concluded its opinion as follows:
  • The trial court specifically found that the mechanic's lien release Richard provided to Trustcorp was forged, a finding that has ample support in the record. Benjamin contended below that Trustcorp's mortgage was rendered invalid by virtue of Richard's fraud, and the trial court agreed. "It is a fundamental principle, worthy of the rank of a maxim, that what fraud creates equity will destroy."[Footnote 2: The version of this citation found in the database places quotation marks around the phrase "what fraud creates equity will destroy." While this error does not seem to alter the meaning of the citation, we will continue to exercise caution in citing to non-official authorities.] Ralph v. George, 78 Ind. App. 491, 495, 136 N.E. 44, 45 (1922) (citation omitted).
  • On appeal, Trustcorp counters that Indiana courts have recognized a bone fide purchaser exception to the above rule, and we agree that this is indeed the case. See, e.g., Scott v. Davis, 117 Ind. 232, 233, 20 N.E. 139, 139-40 (1889) ("A purchaser who buys land and pays a consideration for it will hold the land against the creditors of the vendor, unless the creditors affirmatively show that the purchaser had notice of the intention of the vendor to defraud his creditors, or that he participated in his grantor's fraud. It is not enough to show fraud on the part of the vendor, where the purchaser is not a mere volunteer, but pays a consideration for the land. To set aside the conveyance as fraudulent, much more must be shown.") (citations omitted). As in the lis pendens context, the question here is whether Trustcorp qualifies as a bona fide mortgagee. As we previously decided, however, Trustcorp could not have been a bona fide mortgagee due to its failure to investigate Benjamin's interest in the home. Consequently, we affirm the trial court's judgment in this respect as well.
For the court ruling, see Thomas v. Thomas, 923 N.E.2d 465 (Ind. App., 2010).(1)

For case law in other states addressing the effect of possession and a real estate purchaser's or lender's duty to inquire into the rights of the occupants when seeking the protection of the recording statutes as a bona fide purchaser, see Bona Fide Purchaser Doctrine, Possession Of Property By Occupants Other Than The Vendor & The Duty To Inquire.

For some of the basics on the bona fide purchaser doctrine, generally, see The Bona Fide Purchaser for Value of a Legal Estate Without Notice.

(1) For other court cases on the application of the bona fide purchaser doctrine where real estate buyers/lenders end up screwing themselves by failing to inspect the subject property and inquiring into the rights of persons in possession prior to closing on the purchase/mortgage loan (and risked having their interests ultimately voided), see: