DC High Court Affirms Punitive Damages Award Slamming Sale Leaseback Peddlers For $3.3M In Equity Stripping Foreclosure Rescue Ripoff

In Washington, D.C., notorious foreclosure rescue operators Vincent Abell ($2 million), the sole owner of Modern Management Company ($1.1 million), and Calvin Baltimore ($200K) are back in the news(1) as the District of Columbia Court of Appeals recently affirmed a jury verdict that slammed them with punitive damages of $3.3 million for scamming a local homeowner dealing with family health problems(2) and facing foreclosure out of her home that she owned for twenty-two years in an equity stripping, sale leaseback ripoff.(3)

The court also affirmed a jury award to the homeowner of $60,000 in compensatory damages as the group's liablity for common law fraud and for violating the D.C. Consumer Protection Procedures Act ("CPPA") for their various misrepresentations and omissions of material facts and for including "unconscionable terms" in the transaction, and which the trial judge tripled to $180,000 pursuant to the CPPA, D.C. Code § 28-3905 (k)(1).(4)

For the ruling, see Modern Mgmt Co. v. Wilson, Case Nos. 08-CV-18, 08-CV-85 & 08-CV-187 (D.C. June 3, 2010).

(1) For other stories on this foreclosure rescue racket, see:

• Hogan & Hartson Wins $3.3 Million Verdict in Pre-Foreclosure Scam Case,
• Md. couple wins $1M in rescue-scam lawsuit (homeowners awarded $350,000 for their mental anguish, which was then tripled after a finding the defendants "willfully and knowingly violated" Maryland's Protection of Homeowners in Foreclosure Act)
• Prince George's County Circuit Court awards $500K to victim of foreclosure scam (for the related court order, see Smith v. Abell, (Prince George's County Cir. Ct., Feb. 7, 2006),
• Loan Scam Targets Seniors' Homes (Washington Con Artists Preyed On Elderly People In Financial Trouble) (go here to watch related CBS News' video),
• From Foreclosure to the Cleaners (Indebted Homeowners Say 'Rescue' Services Bilked Them),
• Foreclosure Rescue Scam, Businessman Vincent Abell pays five homeowners $120,000 settlement,
• Testimony of Mr. Walter Malone [foreclosure rescue victim] Before Senate Aging Committee (U.S. Senate, Feb. 13, 2008),
• Wilson v. Modern Management Co. (homeowner's brief in an appeal of a lower court eviction order),
• Bilaal v. Abell, et al., 983 A.2d 349; 2009 D.C. App. LEXIS 573 (2009),
• Media Coverage Not New For D.C.-Area Foreclosure Rescue Operator,
• Anatomy Of An Equity Stripping, Sale Leaseback Foreclosure Rescue Scam.

(2) A severe head injury at work prevented her from being able to work consistently. After her injury, she suffered two additional head injuries causing her to develop epilepsy and suffer seizures. She also spent much of her time caring for her elderly mother after the death of her father.

(3) The victimized homeowner filed suit alleging common law fraud, and statutory fraud pursuant to:

• the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C.A. §§1961-1964.;
• the District of Columbia Consumer Protection Procedures Act ("CPPA"), D.C. Code §§ 28-3901 to 3-905 (2001 & 2009 Supp.);
• the Truth In Lending Practices Act ("TILPA"), 15 U.S.C.A. §§ 1635-1640;
• the District of Columbia Loan Sharking Act, D.C. Code § 26-901 (2009 Supp.);
• the District of Columbia Consumer Credit Services Amendment Act, D.C. Code §§ 28-4601 to -4603 (2001);
• the Home Ownership and Equity Protection Act ("HOEPA"), 15 U.S.C.A. §§ 1602, 1639; and
• the District of Columbia Usury Statute, D.C. Code § 28-3301 (2009 Supp.).

(4) The legal issues contested on appeal involved assertions by the defendants that:

• the award of punitive damages against them was constitutionally excessive;
• the trial court erred in permitting the victimized homeowner to pursue her RICO claims and admitting evidence that appellants had completed one hundred similar transactions, which caused the jury to inflate the punitive damages awards;
• the compensatory damage award must be reduced by the amount of the settlement agreement the victimized homeowner reached before trial with appellants' former co-defendant;
• the trial court erred in submitting to the jury the issue of whether the victimized homeowner was a "consumer" as defined in the CPPA; and
• the jury verdict finding appellants liable for common law fraud and for violations of the CPPA was against the weight of the evidence.

The court affirmed on all points, except it did kick the case back to the lower court with directions to modify the compensatory damage award. The Court of Appeals ruled that the three co-defendants are entitled to a pro rata setoff against the $180,000 trebled compensatory award in the amount of $40,000, the amount a former fourth co-defendant, the law firm Houlon Berman, coughed up to "buy" its way out of this litigation pursuant to a settlement agreement with the homeowner before trial, thereby reducing the total compensatory damages award to $140,000.

Judge Halts All BofA Mortgage Foreclosures In Utah; Says Bank Failed To Register To Do Business & Lacks Offices Within State As Required By Law

In St. George, Utah, KCSG-TV reports:

• A court order issued by Fifth District Court Judge James L. Shumate May 22, 2010 in St. George, Utah has stopped all foreclosure proceedings in the State of Utah by Bank of America Corporation, ; Recontrust Company, N.A; Home Loans Serving, LP; Bank of America, FSB []. The Court Order if allowed to become permanent will force Bank of America and other mortgage companies with home loans in Utah to adhere to the Utah laws requiring lenders to register in the state and have offices where home owners can negotiate face-to-face with their lenders as the state lawmakers intended (Utah Code ' 57-1-21(1)(a)(i).).

***

• The lawsuit filed by John Christian Barlow, [...] has drawn the ire of the high brow BofA attorney and those on the case in the law firm of Reed Smith, LLP, the 15th largest law firm in the world. Barlow said Bank of America claims because it’s a national chartered institution, state laws are trumped, or not applicable to the bank. That was before the case was brought before Judge Shumate who read the petition, supporting case history and the state statute asking for an injunctive relief hearing filed by Barlow. The Judge felt so strong about the case before him, he issued the preliminary injunction order without a hearing halting the foreclosure process.

• The attorney’s for Bank of America promptly filed to move the case to federal court to avoid having to deal with the Judge who is not unaccustomed to high profile cases and has a history of watching out for the “little people” and citizen’s rights. The legal gamesmanship has begun with the case moved to federal court and Barlow’s motion filed to remand the case to Fifth District Court.(1) [...] Barlow said the Bank of America attorneys are working overtime filing motions to overwhelm him and the court. “They simply have no answer for violating the state statutes and they don't want to incur the wrath of Judge Shumate because of the serious ramifications his finding could have on lenders in Utah and across the nation where Bank of America and other financial institutions, under the guise of a mortgage lender have trampled the rights of citizens,” he said.

***

• The second part of the motion, Barlow filed, claims that neither the lender, nor MERS*, nor Bank of America, nor any other Defendant, has any remaining interest in the mortgage Promissory Note. The note has been bundled with other notes and sold as mortgage-backed securities or otherwise assigned and split from the Trust Deed. When the note is split from the trust deed, “the note becomes, as a practical matter, unsecured.” Restatement (Third) of Property (Mortgages) § 5.4 cmt. a (1997). A person or entity only holding the trust deed suffers no default because only the Note holder is entitled to payment. Basically, “[t]he security is worthless in the hands of anyone except a person who has the right to enforce the obligation; it cannot be foreclosed or otherwise enforced.” Real Estate Finance Law (Fourth) § 5.27 (2002).

For the story, see Judge James L. Shumate Orders Halt to Bank of America Foreclosures in Utah.

(1) For a Willamette Law Review article that addresses the apparent abuse by some corporate defendants in civil cases of removing state court cases to Federal court (which imposes a cost in time and money on plaintiffs and the court system) in an attempt to shop for a friendlier litigation forum, see Erroneous Removal As A Tool For Silent Tort Reform: An Empirical Analysis Of Fee Awards And Fraudulent Joinder (article also available at http://ssrn.com/abstract=1073402).

Ponzi-Scheming Boyfriend's $300K+ Cash Gift Leads To Florida Woman's Loss Of Home, Despite No Knowledge Of Fraud; Used Loot To Pay Off Mortgage

The following facts have been taken from a recent ruling from the U.S. Court Of Appeals - 5th Circuit:

• One, Hudgins, engages in Ponzi scheme, screwing investors out of a ton of loot.

• Hudgins gives Florida woman (presumably his girlfriend, mistress, etc.) cash gifts of $368,500, which came from the proceeds of his illicit business activities.

• Florida woman was unaware of the fraud.

• She used part of the money to pay off a $328,000 mortgage on her Florida condo, which was her homestead.

• A federal regulatory agency brought a legal action against Hudgins to enjoin his scheme and seek civil penalties and other relief.

• A U.S. District Court appoints a receiver to reclaim Hudgins's assets for the benefit of the defrauded investors.

• The receiver demanded that Florida woman return the loot gifted to her by Hudgins.

• Florida woman refused, responding that she used the money to pay off her mortgage.

• The receiver petitioned the district court to require Florida woman to turn over the condominium because it was purchased with fraudulently obtained money.

• Florida woman contended that the condominium was her homestead and protected by the Florida constitution's liberal homestead exemption.

• The district court rejected Florida woman's argument, holding that while Florida's homestead exemption did apply, state law nonetheless allowed the imposition of an equitable lien because the homestead was purchased with fraudulently obtained money.

• The court then directed that the woman turn over title to the condo to the receiver and gave her 30 days to vacate the premises.

• Florida woman appeals the ruling.

The 5th Circuit Court of Appeals interpreted Florida case law to conclude that Florida woman, although innocent of any fraud, was not entitled to the protection of the Florida homestead exemption from forced sales set forth in Article X, Section 4 of the Florida Constitution.(1) Accordingly, the lower court order directing her to turn over title to her homestead to the receiver and move out was affirmed.(2)

For the ruling, see Crawford v. Silette, No. 09-40641 (5th Cir. June 3, 2010).

(1) Not to be confused with Article VII, Section 6 of the Florida Constitution which, among other things, deals with the entitlement to a $25,000 real estate tax exemption available to Florida homeowners, and has absolutely nothing to do with the application of the exemption from forced sales under Article X, Section 4 (Contrary to what some in Florida mistakenly believe, the local County Property Appraiser has nothing to do with granting homestead exemptions from forced sales under Article X, Section 4. He/She merely approves applications for the tax exmption under Article VII, Section 6.).

(2) In interpreting Florida case law, the Federal appeals court made these observations:

• In Palm Beach Savings & Loan Ass'n v. Fishbein, the Florida Supreme Court held that, when imposing equitable liens, courts should focus on whether the party claiming the homestead exemption would be unjustly enriched. 619 So.2d 267, 270 (Fla. 1993).

***

• [U]nder Florida law, to impose an equitable lien on a homestead, three conditions must exist: (1) the owner used fraudulently obtained funds to purchase or retire a mortgage interest in the homestead; (2) the owner was unjustly enriched; and (3) the owner would be no worse off if the court imposed an equitable lien in favor of the fraud victim. Each prong is met here. The funds were fraudulently obtained by Hudgins. Silette did not earn the money and was unjustly enriched. Silette will not be worse off; imposing an equitable lien for $328,000 puts Silette in the same position as if she had never met George Hudgins.

***

• The Florida Supreme Court could not be clearer: a party's innocence in the fraud is not relevant to whether the court can impose an equitable lien. The only relevant factor is whether the party is unjustly enriched by fraudulently obtained funds. The Eleventh Circuit reached the same conclusion. In re Financial Federated, 347 F.3d at 890 ("Unjust enrichment can be the basis for the assertion of an equitable lien."). If the court does not impose an equitable lien, Silette will receive a $328,000 windfall. As Florida has not chosen to protect the innocent beneficiary of fraudulently obtained proceeds, the federal court may not do so.

***

• The key factors, we believe, are that the fraudulently obtained funds can be traced directly into the homestead. Havoco carefully identified this situation — the Fishbein case — as the paradigmatic narrow exception to Florida's otherwise generous homestead laws. See Havoco, 790 So.2d at 1024-28 (discussing cases). This case is an application, not an expansion, of Havoco's principles.

Go here for links to all briefs filed in Palm Beach Savings & Loan Ass'n v. Fishbein, 619 So.2d 267 (Fla. 1993).

Go here for links to all briefs filed, and video of oral argument, in Havoco of Am., Ltd. v. Hill, 790 So.2d 1018 (Fla. 2001).

Florida Supremes Issue Rule Clarification Targeting Mess Created By Foreclosure Mills' Sloppy Paperwork

In Central Florida, the Sarasota Herald Tribune reports:

• The Florida Supreme Court has reaffirmed its fight against the sloppy legal work being used to retake homes in thousands of foreclosure cases across the state.

• A review of Manatee and Sarasota county cases showed attorneys for banks and lenders had widely ignored a new high court rule that requires them to verify -- under penalty of perjury -- the accuracy of allegations and paperwork in the foreclosure case. When local judges started throwing out the foreclosure cases for that reason, some attorneys for lenders contended that the rule, created in February, was not yet in effect.

• But the top court this week clarified that attorneys must immediately follow its verification rule as part of its overall battle against the flood of foreclosure cases clogging the court system when the housing market crashed.

• The uncertainty over the high court ruling illustrates the chaos in foreclosure courts across the state. The vast majority of the state's housing lawsuits come from Florida's five so-called foreclosure mills, where attorneys can each handle thousands of cases. Sloppy paperwork could mean banks and lenders foreclose on properties they are not legally entitled to retake, unfairly forcing homeowners out of their properties, attorneys say. The shoddy and incomplete filings also waste judicial resources.

***

• Thursday's ruling clears the way for a local court-sponsored program -- unofficially dubbed "Stop the Slop" -- to once again review all foreclosure filings and dismiss those that are incomplete. Of the 52 cases in the first round of review in Sarasota, all lacked the new verification requirement or other proof the bank is entitled to take the property, an attorney who reviewed the cases says. The vast majority reviewed since then have also failed to meet the requirements.

For more, see Florida Supreme Court tightening foreclosure rules.

NC Appeals Court: Lender's Failure To Provide Sufficient Evidence That It Was "Holder" Of Promissory Note Precludes Foreclosure

Another trial court screw-up in a foreclosure action was recently reversed - this time by the North Carolina Court of Appeals, which ruled that a lender seeking to foreclose on a mortgage had failed to properly provide sufficient competent evidence that it was the holder of the promissory note secured by the mortgage. Accordingly, it ruled that the lender was not entitled to go forward with a foreclosure sale.(1)

For the ruling, see In re Foreclosure of Adams, No. COA09-1455 (N.C. App. June 1, 2010).

(1) An excerpt from the ruling (bold text is my emphasis, not in the original text):

• [S]ince the photocopies of the Note and Deed of Trust presented to the trial court indicate that the original holder of both instruments was Novastar, not Deutsche Bank for Soundview, and since these photocopies do not indicate that Novastar negotiated, indorsed or transferred the Note to Deutsche Bank for Soundview, respondents contend the photocopied instruments alone were not sufficient to establish that Deutsche Bank for Soundview is the current holder of the Note.

***

• We recognize that, in the present case, the testimony by affidavit from Ms. Smith, the assistant secretary of Deutsche Bank for Soundview——an out-of-state entity——as well as the in-person testimony offered by Ms. Cole indicated that Deutsche Bank for Soundview is the current holder of the Note and Deed of Trust. However, neither the in-person testimony from Ms. Cole nor the testimony by affidavit from Ms. Smith expressly showed that Novastar transferred or assigned its interest in the Note and Deed of Trust to Deutsche Bank for Soundview.

• Moreover, as we discussed above, the photocopied Note and Deed of Trust, which were described in Ms. Smith's affidavit as "exact reproductions" of the original instruments, do not show that the Note was indorsed, transferred, or otherwise made payable by Novastar, the original holder of the instrument, to Deutsche Bank for Soundview.

• Thus, whereas the record in In re Foreclosure of Brown, 156 N.C. App. 477, 577 S.E.2d 398 (2003), also included an Assignment of Deed of Trust as evidence showing that the original holder of the note and deed of trust had assigned its interest in said instruments to the party seeking to foreclose on the respondent—borrowers, the record before the trial court in the present case contained no such additional evidence.

• Accordingly, because a foreclosure under a power of sale is not favored in the law and must be "watched with jealousy," see In re Foreclosure of Goforth Props., 334 N.C. at 375, 432 S.E.2d at 859 (internal quotation marks omitted), we must conclude that the evidence presented to the trial court was not sufficient to establish that the Note was payable to Deutsche Bank for Soundview, and so was not sufficient to support the trial court's finding of fact that "Novastar Mortgage, Inc., . . . transferred and assigned its interest in the Note and Deed of Trust to Deutsche Bank National Trust Company, as Trustee for Soundview Home Loan Trust 2005-4 (`Lender')."

Loan Modification Scam Awareness Events Featured During Nat'l "NeighborWorks Week"

In Dover, New Jersey, the Daily Record reports:

• The Housing Partnership will fight loan modification scams in Dover by distributing Loan Scam Alert literature to 2,000 households in Dover. The event is one of more than 150 loan modification scam awareness events held during national NeighborWorks Week, June 5 to 12. It alerts homeowners on how to avoid and report loan modification scams.

• Eight volunteers will be canvassing Dover in bright yellow Loan Scam Alert T-shirts. Other events being held around the country include hundreds of volunteers canvassing neighborhoods also distributing tip sheets and fliers, dozens of one-on-one and group workshops about reputable loan modification programs, and more.

Source: Loan scam fliers will be distributed in Dover.

Foreclosure Scam Prevention Day Coming Up In Chattanooga

In Chattanooga, Tennessee, WDEF-TV Channel 12 reports:

• Each day, an average of six Chattanooga homeowners face foreclosure. As the number of homeowners who need help keeping their homes increases, so does the number of foreclosure prevention scams. To arm area homeowners with information to prevent them from becoming victims of foreclosure scams, Chattanooga Neighborhood Enterprise (CNE) will kick off a community outreach initiative, Foreclosure Scam Prevention Day, on Tuesday, June 8.

For more, see CNE to Commerate Foreclosure Scam Prevention Day.

Mess Caused By Sloppy Lenders, Foreclosure Mills Deepens In Florida As Ambiguity In Recent State High Court Ruling Adds Confusion To Legal Process

In Central Florida, the Sarasota Herald Tribune reports:

• An attempt to fix the sloppy legal work plaguing thousands of foreclosure cases in Florida has been ineffective, and has now caused a legal mess of its own. The Florida Supreme Court got tough on attorneys for banks and lenders in February, responding to stories of homeowners losing their property based on shoddy or incomplete paperwork. The incomplete filings also wasted judicial resources and clogged up the courts.

• To combat that, a new rule enacted by the high court requires the attorney or bank filing a foreclosure to verify -- under penalty of perjury -- that the allegations and paperwork are accurate when a residential property is at stake. But attorneys have not followed the rule. Some contend they do not have to, arguing that the Supreme Court said the rule was not in effect yet.

***

• A court-sanctioned review of hundreds of residential foreclosure filings in Sarasota and Manatee counties -- unofficially dubbed "Stop the Slop" -- found that nearly all the lawsuits lacked basic documentation. Of the 52 cases in the first round of review in Sarasota, all lacked the new verification requirement or other proof the bank is entitled to take the property, an attorney who reviewed the cases says. Backed by local Chief Judge Lee Haworth, who served on the state task force that recommended the new rule, judges in Manatee and Sarasota counties used the new rule to throw out dozens of foreclosure complaints in the past month.

• But Miami attorney [Gerald] Richman, who represents banks and lenders, contacted Haworth last week and told him he and the other judges were jumping the gun. The confusion results from the wording of the Supreme Court's ruling. [...] The confusion sent Haworth backpedaling last week, after Richman said his client would appeal the tossing of the cases. Haworth temporarily suspended that part of the "Stop the Slop" program Friday, saying he was not alone in having questions.

***

• Foreclosure defense attorneys had already pointed to Haworth's "Stop the Slop" program as an example that should be followed across the state. Haworth said he will continue policing foreclosure documents aside from the Supreme Court verification requirements.

For the story, see Legal mess over foreclosures deepening.

Hawaii Condo Associations Feel Pinch From Non-Maintenance-Fee-Paying Owners; Some Use Utility Shut-Offs To Persuade Delinquents Into Coughing Up Cash

In Maui, Hawaii, The Maui News reports:

• Psst! Hey, buddy. Wanna buy a foreclosed condo in Wailea? One dollar! Believe it or not, it happens - but it can be a bad bargain. As more and more financially strapped apartment owners fall behind on their common area maintenance fees, condo associations find themselves feeling the pinch. The quitclaim foreclosure auction is just one of several unpleasant choices facing association boards when members quit paying their fees, which at upscale projects can easily run $1,000 a month.

***

• Another tactic is to try to pressure the delinquent by shutting off the water, cable television or even electricity. Robert Miskae, past chairman of the Condominium Council of Maui, said that his group has been advised by one of Maui's leading condo law attorneys to avoid shutoffs, because of potential health and safety issues.

For more, see Isle condo boards get creative to obtain fees (As more financially strapped owners becoming delinquent, associations feel the pinch).

City Threatens "Drowning" Residents In 76-Unit South Florida Condo Complex With Water Shut-Off Followed By Eviction Over Unpaid Bill

In Margate, Florida, the South Florida Sun Sentinel reports:

• Dozens of residents at the Atlantic Palms condominium complex could be evicted from their homes within two weeks if they're unable to pay a city utility bill of more than $7,000. Margate officials say more than 60 of the 76 units at Atlantic Palms, [...] are in different stages of foreclosure, and their homeowners association can't afford to pay the water bill.

• Now, the city has posted notices on residents' doors saying they have until 6 p.m. June 3 to pay their water and sewer fees. If residents don't pay, their water service will be shut off June 7, and they will be forced to leave because of health concerns.

For more, see Margate condo residents face eviction over unpaid water bill.

Hundreds Of Mobile Home Residents May Face The Boot As County Pulls Plug On Waste Water Treatment Services; Park Owner Silent On Plans

In Scott County, Illinois, WHBF-TV Channel 4 reports:

• Hundreds of Quad Citians may be forced to move as the future of one mobile home park is up in the air. For decades, Scott County has been treating the waste water at Lake Canyada Mobile Home Park. However in August that contract is up and the Scott County Conservation Department says it can't afford to cover the costs anymore.

• Karen Constantino has lived at Lake Canyada for two and a half years. When she got the letter from Scott County last week telling her the waste water would no longer be treated, she panicked. "I think it's horrible," says Constantino, "especially if we can't get any straight answers on whether we need to find a place to live or if we're able to stay here."

***

• The Scott County Conservation Department says it can't afford to treat the waste water. The only thing residents can do is build their own plant. "Our plant just can't handle the amount of waste going there and we can't handle the project cost to upgrade it," explains Scott County Conservation Director Roger Kean. Ohio based I & R properties, which owns Lake Canyada, hasn't told residents how it plans to fix the problem. Their silence doesn't surprise Constantino. "Anytime somebody tries to contact them, they never get back."

For the story, see Money Issues Could Force Community Out.

Managing Agent Faces Seven Felony Charges In Alleged $30K Rental Ripoff From Two Landlord/Clients

In Shasta County, California, The Redding Searchlight reports:

• A former real estate agent accused of felony grand theft and conducting real estate business without a license pleaded not guilty last week during her arraignment in Shasta County Superior Court. Tina Marie Horan, 43, of Redding, who was arraigned on Friday, is scheduled to have her preliminary hearing on May 20.

• Horan, who is free of custody without bail, is charged with seven felony counts of grand theft, grand theft of an elder and writing checks without sufficient funds. She’s also accused of conducting business as a property manager without a real estate license, a misdemeanor.

• It’s alleged that Horan took more than $30,000 from two clients for whom she was managing residential properties, including an elderly Vallejo woman, said Bob Angulo, a real estate fraud investigator with the Shasta County district attorney’s office.

Source: Ex-real estate agent accused of grand theft.

Pair Charged In Ripoff Of Elderly Woman; Abused POA To Take Title To Home, Drain Bank Account, Say Investigators; Stiffed Nursing Home Triggers Probe

In Washoe County, Nevada, The Reno Gazette Journal reports:

• Two Reno women in their 60s, including a real estate broker, are facing an August trial for alleged financially exploitation of an elderly woman. Peggy Viola Six, 63, an artist, and Robin Lee Benjamin, 64, a real estate broker who operates Market and Match home buying and selling system, pleaded not guilty Thursday morning to an indictment charging them with exploitation of an older or vulnerable person.

***

• A Washoe County grand jury in March indicted the women on a charge of exploiting an 87-year-old woman. Six had the woman’s power of attorney due to her failing mental capacities, according to cout documents. Six and Benjamin are accused of draining the woman’s bank account and defrauding the woman of her home. Benjamin allegedly transferred ownership of the woman’s home to her name, and then tried to sell it for a $100,000 profit. [...] Officials estimate the woman was defrauded of hundreds of thousands of dollars.

• Authorities say the woman was placed in a local elder care facility until Six stopped paying for her care.(1) Ultimately, the woman became a ward of the state and currently resides at a group home in Carson City.

For more, see Two Reno women arrested on suspicion of bilking elderly woman.

(1) Reportedly, Washoe Deputy District Attorney Dania Reid, a civil prosecutor who represents the county’s public guardian office, said the case was referred to her office once Six stopped paying for the woman’s care facility. During an investigation, it was discovered Six had allegedly used the woman’s money to buy a motor home and a car, and fraudulently transferred the woman’s home to Benjamin, the story states. Reid reportedly said her office is working to sell the woman’s home so that she can receive the proceeds.

Cops: Man's $315K Swindle Of Elderly, Dementia-Stricken Mom Leads To Eviction From Nursing Home & "Basically Put Her In The Poor House"

In Eden Prairie, Minnesota, the Eden Prarie News reports:

• An Eden Prairie man was recently charged with stealing more than $315,000 from his elderly mother’s retirement accounts over the course of five years. The incident “is not a unique case,” noted Sgt. Bill Wyffels, who advised that older residents should never, never put only one person in charge of their assets. “This is an example of a mother putting faith into one of four children,” he noted. “That one child basically put her in the poor house.”

• According to a criminal complaint, Terry Lee Carr, 66, has been charged three counts of theft by swindle over $35,000. In 1999 Carr was given power-of-attorney over his mother’s assets. By 2002, his mother was losing her memory and moved to Emerald Crest, a long-term care facility in Shakopee. Prudent investments and funds from long-term health insurance meant that his mother’s care should have been covered for the rest of her life.

• However, in 2008 the victim’s three other children began to suspect that Carr was taking heir mother’s money. The woman was evicted from her care facility and one of her other children eventually looked to find her a less expensive care facility. In the process of that, Carr’s theft was uncovered. Over the years, the vast majority of the withdrawals were made at Mystic Lake Casino.

For the story, see Fraud involving elderly parent, ‘not a unique case’.

Texas Woman Accuses Sister Of Pocketing Rent From, Conspiring With Nieces To Use Forged Deed In Swiping Title To, Rental Property

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

• A Jefferson County woman claims her sister stole money and property from her while serving as her property manager. Lieu Pham filed a lawsuit May 10 in Jefferson County District Court against her sister, Dieu Pham; her nieces, Lan Nguyen and Bong Nguyen; and Johnathan V. Tat. Lieu Pham claims she owns Gulfway Washateria [...] and entrusted management of the business to her sister, Dieu Pham.

• As part of her responsibilities, Dieu Pham was supposed to collect rent from tenants who leased Lieu Pham's building, according to the complaint. However, Lieu Pham has not received any revenue or rent from her tenants, the suit states. When she pressed her sister for an accounting of business transactions, Dieu Pham refused to provide the requested data, the complaint says.

***

• Not only did Dieu Pham hide records from her sister, but she also conspired with her daughters to steal her sister's land and building by forging Lieu Pham's signature on warranty deed purporting to transfer the property to the Nguyens from Lieu Pham, she claims. [...] Lieu Pham alleges breach of fiduciary duty against her sister, theft of property against her sister and nieces, conversion against her sister and nieces and negligence per se against [notary Johnathan V.] Tat for allegedly "fail[ing] to act as a reasonably and prudent notary would" in connection with notarizing the allegedly forged deed.

For the story, see PA woman in dispute with sister over property management.

Pennsylvania AG Indicts Attorney In Alleged $550K+ Ripoff Of 90-Year Old Woman; Victim Gave Lawyer POA, Then Named Him Her Estate Executor

In Harrisburg, Pennsylvania, The Delaware County Daily Times reports:

• Agents from the attorney general's office [] arrested a Montgomery County attorney for stealing nearly $555,000 from an elderly woman and, after her death, from her estate. He allegedly used the money to refinance his North Carolina beach house and to pay his credit card debt, authorities said. Attorney General Tom Corbett identified the defendant as Frank H. Morgan, Jr., 63, [...] a partner in the Norristown law firm of McTighe, Weiss, O’Rourke, Troncelliti and Morgan. Evidence and testimony regarding Morgan’s alleged illegal activity was presented to a statewide investigating grand jury, which recommended the criminal charges being filed.

• The grand jury found that in February 2006, Rita Trish, a 90-year women living in a Gladwyne assisted living facility, gave Morgan power of attorney, which authorized him to act on her behalf in legal and business matters. Trish gave Morgan her power of attorney three weeks after her husband died. In April of 2006, Trish signed a will naming Morgan the executor of her estate, which gave him the authority upon her death to administer her will and to ensure that her final wishes were respected.

For more, see Montco attorney busted in $550G scam on senior citizen.

See also, Attorney accused of embezzling once again:

• A Montgomery County attorney arrested [] for allegedly stealing nearly $555,000 from an elderly woman and her estate was once accused of similar crimes in Delaware County. In a 1992 civil suit, Frank H. Morgan Jr. was accused of funneling $152,000 from the estate of a New York man to Villanova University to cover his son’s tuition.

Texas Woman Unwittingly Buys Home Slated For Tear-Down; Sues Firm For Subsequent Demolition After Deal Reached w/ City To Halt Action Pending Repairs

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

• A Beaumont woman claims a demolition company razed a home she purchased despite an addendum ordering the company to refrain from such an action. Sandra Ledesma filed a lawsuit May 5 in Jefferson County District Court against Albert Dill doing business as Jay Dill Trucking.

• Ledesma claims she purchased a home [...] in Beaumont on June 24 from Carl Adams for $15,000. Although she knew the home needed significant repairs, Ledesma did not realize the city of Beaumont had scheduled it for demolition until she attempted to obtain a permit for electrical work from the city on Sept. 21, according to the complaint.

• "After talking with Quentin D. Price, the assistant city attorney for the City of Beaumont, Plaintiff entered into an agreement with the City of Beaumont wherein the City agreed that it would not demolish the structure located at 4070 Harding if a Certificate of Occupancy was obtained by November 22, 2009," the suit states. "This agreement was extended until December 22, 2009. On September 24, 2009, Plaintiff began repairs on the home."

• Meanwhile, the city placed a notice for bids of the demolition of the home, which Dill accepted on Sept. 15, the complaint says. The city notified Dill on Sept. 22 that it could not demolish the structure pursuant to an injunction, Ledesma claims. Despite the notification, Dill demolished the home on Oct. 1, 2009, according to the complaint.

For the story, see House demolished despite injunction, lawsuit claims.

Property Seller Accused Of Allowing Would-Be Buyer To Take Possession Of "Ike-Damaged" Home & Make Repairs, Then Refusing To Transfer Title

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

• A Port Arthur man claims he cannot rent out property he rightfully owns because its former owner refuses to transfer the deed. Raymond McClain filed a lawsuit [...] against Linda Garrison. McClain claims he bought property located [...] in Port Arthur from Linda Garrison for $4,000. The property formerly belonged to Linda Garrison's father, Oneal Garrison, but became hers after he died in August 2006, according to the complaint.

• After purchasing the property, which had been damaged in Hurricane Ike, McClain claims he made significant improvements to it, believing that Linda Garrison would transfer the deed to him. However, Linda Garrison has failed to perform acts required of her, such as filing an inventory, appraisement and list of claims, and the court removed her as executor of her father's estate in March, the suit states. Still, McClain has attempted to get the deed transferred into his name, the complaint says.

• "McClain has contacted the Defendant by phone and in writing several times, and even provided her with a deed to sign, but to date the Defendant has not signed the deed to the Property," the suit states. "As a result, record title to the Property still shows to be held by the estate of Oneal Garrison, and McClain is unable to rent the Property as section VIII housing." In his three-count complaint, McClain alleges breach of contract and specific performance and trespass to try title against Linda Garrison.

Source: PA man claims property owner failing to provide deed.

"We Are Not Bound By State Borders!" Proclaims Indiana AG In Launching Attack On Alleged Ohio-Based Loan Modification Racket

In Fort Wayne, Indiana, The Indianapolis Star reports:

• The Indiana attorney general's office claims a Cincinnati-based loan modification firm signed fraudulent agreements to help nearly 600 Hoosier homeowners avoid foreclosure. Foreclosure Assistance USA told the homeowners they would help prevent foreclosure in claims made on websites and radio and in direct-mail advertisements and phone solicitations, the attorney general's office said in a statement.(1)

***

• "The suit also claims FA USA violated Indiana law by failing to have a $25,000 surety bond while accepting money up front from customers for services that had not yet been performed," the statement said. "The company is also accused of deceptive acts including misrepresenting to consumers that the consultants were experts in the area of foreclosure prevention or possessed in-depth knowledge of the industry."

***

• "Out-of-state companies often don't believe the Indiana attorney general's office has jurisdiction over their practices," Attorney General Greg Zoeller said in the statement. "That's simply not true. The vast majority of foreclosure consultant scams originate outside Indiana and this enforcement action reflects that we are not bound by state borders."

For the story, see Suit: Ohio foreclosure firm scams 600 Indiana homeowners.

For the Indiana AG press release, see Out of state but not out of reach, Attorney General goes after Ohio-based foreclosure consultant company.

(1) The Ohio attorney general filed a similar lawsuit against Foreclosure Assistance USA in 2009 in a Hamilton County, Ohio, court, the story states.

Wisconsin AG Files Civil Suit Against California Outfit For Alleged Misrepresentations Made In Offering Loan Modification Services

From the Office of the Wisconsin Attorney General:

• The Wisconsin Department of Justice filed suit [] against a company doing business as "USA Loan Auditors" for engaging in deceptive practices in the course of selling purported "loan modification" services to Wisconsin homeowners.

• The complaint alleges the California-based company, Relief Law Center (d/b/a "USA Loan Auditors") has engaged in deceptive practices by sending homeowners mailings that suggest the homeowner's mortgage lender is under investigation for predatory lending abuses. The mailings falsely claim that as a remedy for the supposed-abuses, the homeowner may be entitled to a loan modification. The Idaho Attorney General issued a Cease and Desist Order against the company earlier this year.

For the entire press release, see Van Hollen sues loan modification company.

Kern County Deputy DA On Loan Modification Rackets: "They Are People Very Worthy Of Criminal Prosecution!"

In Bakersfield, California, KBAK-TV reports:

• When the economy and real estate market went south, many families went to home loan modification companies to save their homes. But, more than a dozen Kern County families contacted Eyewitness News after one modification company took their money and didn't do anything it promised. Each family paid Los Angeles-based Loan Modification Group ["LMG"] $3,000 to get a home loan modification, and each family had their own reason for wanting a modification.(1)

***

• Eyewitness News went to Kern County Deputy District Attorney Gordon Isen, who specializes in real estate fraud, to ask about home loan modification scams. Isen said, "When there's a downturn in the real estate market this type of crime has arisen in the past, but it's now reached proportions I've never seen before and I don't think anyone's seen before." He added that not only is it a serious crime, but an intentional one. "It's not a crime of passion, it's not a crime of the moment. People doing this type of criminal conduct think about their crimes, they prepare for their crimes, they consult with others and conspire. I think they are people very worthy of criminal prosecution."

For the story, see Home loan modifiers scam families out of $3,000 each.

(1) According to the report:

• Eyewitness News decided to ask LMG what happened to our homeowners' money, but that was easier said than done. When Eyewitness News went to the address where our homeowners mailed their payments and paperwork, it didn't exist. The search took us all over Los Angeles and we finally found the company in Chatsworth. When Eyewitness News asked an office employee if the company's name was Loan Modification group, she said it was Balboa company. Turns out, Loan Modification Group is also known as MBM and Balboa Law Group. [...] Since the encounter, Eyewitness News learned that the company is no longer offering home loan modifications.

Recently Enacted New Mexico Anti-Loan Modification Scam Law Calls For Prison, $10K Fine For Violators

In Santa Fe, New Mexico, The Associated Press reports:

• A New Mexico law that went into effect [last week] is aimed at companies that charge homeowners and make fraudulent promises to help them get their loans modified to protect their homes against foreclosure. Attorney General Gary King says there's been an alarming increase in mortgage rescue scams as a result of the U.S. housing crisis.

• He says many of the companies targeted by the Mortgage Foreclosure Consultant Fraud Prevention Act operate from outside the state. The law applies to people offering services to stop or postpone foreclosure. It requires companies to provide a written contract disclosing their services and charges and prohibits firms from charging fees until the services have been provided. The law calls for up to a year in prison and-or a $10,000 fine for a violation.

Source: New Mexico law targeting foreclosure scams.

Ocwen Throws In The Towel; Gives Back Title To Home To Owner After Foreclosing On Fully Paid Off Mortgage

In Greenfield, Indiana, WRTV-TV Channel 3 reports:

• A woman who said she had no idea that her house had been put up for foreclosure even though the mortgage was paid off is relieved that a loan servicing company has backed off after years of struggle.

***

• The Army veteran said she didn't know that Florida-based Ocwen Financial Corporation had sought foreclosure. The company was given the deed to the home and asked a court to remove Elliott and her family in June 2007. In November 2006, a court had sided with Ocwen, and the home was sold in a sheriff's sale in February 2007.

***

• Elliott filed a complaint with the Indiana Attorney General's Office and the Comptroller of the Currency, which regulates national banks. "She stayed in the home and defended it," said Tom Williams, Elliott's lawyer.

• Elliott's case advanced to the Indiana Court of Appeals, where the court gave a stinging response to the companies for their actions and questioned their motivation. “The Kafkaesque character of this litigation is difficult to deny,” the judges said in their opinion. The foreclosure remained on hold, and the case was sent back for a trial.(1) [...] Ocwen Financial Corporation dropped its lawsuit a couple of weeks ago.

For the story, see Woman Celebrates End Of Foreclosure Fiasco (Loan Servicer Sought Foreclosure Despite Proof Mortgage Was Paid).

(1) For the ruling of the Indiana Court of Appeals, see Elliott v. JPMorgan Chase Bank, 920 N.E.2d 793; 2010 Ind. App. LEXIS 99 (Ind. Ct of App., February 3, 2010) (case also available here).

BofA Continues Out-Of-Control Seizing Of "Mortgage-Less" Homes; Refuses To Correct Screw-Up Until Media Intervenes

In Tuolumne, California, KCRA-TV Channel 3 reports:

• Nancy Willmes paid cash for her Tuolumne home in 2001. So she was quite surprised when Bank of America send her a notice of default on the property in February. "I honestly felt like Bank of America was trying to steal my property," Willmes said. She contacted Bank of America to try to find out why the bank believed it could foreclose on property she had purchased outright.

• Willmes has chain-of-ownership records, which show Bank of America had sold the property to Fannie Mae years earlier. Fannie Mae foreclosed on the previous owner, and Willmes purchased the property with cash from Fannie Mae. But Willmes said Bank of America did not care about the documentation. The bank proceeded with the foreclosure, placing ads in the local paper and nailing a foreclosure notice to her door.

• "I called the title company, the title company called B of A, and they refused to rescind it," Willmes said. Fearful she would lose her home to the bank, Willmes called KCRA Call 3, and a Call 3 volunteer contacted Bank of America. Willmes said that's when Bank of America began returning her phone calls. The bank rescinded the notice of trustee sale, stopping the foreclosure. In a statement to KCRA 3, Bank of America said the problem was a system error. It said it updated its records and canceled the sale.(1)

For more, see Bank Tries To Foreclose On Owned Home (Tuolumne Woman Owns Home Outright).

(1) For other posts on Bank of America's seemingly relentless pursuit of homes that they have no legal claim to, see:

• BofA Pocketed Insurance Proceeds From Gas Explosion, Then Attempts Foreclosure On Home Anyway, Says Now-Deceased Homeowner's Son In Lawsuit,
• The BofA Apologies Continue For Wrongfully Seizing Homes,
• BofA Strikes Again; Hits Central Florida In Its Relentless Seizures Of Wrong Homes Followed By An Apology,
• BofA's Recent Illegal Padlocking Of Home Not In Foreclosure, Coupled With Abduction Of Homeowner's Pet Parrot Hits Major National News Media,
• BofA, Countrywide Strike Again; Mistakenly Seize Another Home Misidentified As A Foreclosure, Says Homeowner,
• BofA Mistakenly Seizes Home, Says Suit; 75 Lbs. Of Rotten Fish Leaves "Gooey Mess" Says Owner After Power Shutoff Creates "Halloween Horror,"
• Man sues after bank takes wrong house.

Lenders To Find Themselves In Crosshairs Over Premature, Illegal Evictions Of Foreclosed Homeowners

In Chicago, Illinois, Chicago Public Radio reports:

• [Sam] Frazier's house had been sold at a foreclosure auction just the day before he was locked out of it. But in Illinois, that sale doesn't automatically transfer ownership of a house. A judge still has to issue an order that confirms the sale was done properly, and also to say how much longer the homeowner may continue to live there -- usually 30 days.

***

• Kelli Dudley has been practicing consumer and foreclosure law for nearly a decade. She and two other attorneys have taken on Frazier's case, and they say they're seeing a number of similar stories. They're trying to identify common threads in these cases to mount a class-action lawsuit. Right now, their big target is U.S. Bank, based in Minneapolis. Dudley says it probably wasn't anyone from US Bank who boarded up Frazier's home, but she asserts the bank is ultimately responsible when any of its agents, or agents of its agents, do something illegal.

***

• Dudley says there's another thing about these cases they're seeing. "Even if there is an order of possession, we've still got the hurdle to get over that only the sheriff or the authorized person can do the eviction." Frazier says the man who locked him out of his home wouldn't give any ID, but Frazier says he certainly wasn't from the Cook County Sheriff's department.

For more, see Homeowners Struggle to Challenge Premature Evictions.

Idaho Couple Gets Back Home Sold Out From Under Them In Foreclosure While Loan Modification Agreement In Effect; Trustee Agrees To Rescind Sale

In Boise, Idaho, The Idaho Statesman reports:

• A West Boise family has gotten their home back after it was sold in March in a foreclosure sale, said their attorney, Richard Eppink of Idaho Legal Aid(1) in Boise. Zijad and Hata Rudan had formally entered and were complying with a federal loan modification trial period before the home was sold.

• Eppink said Gorilla Capital of Oregon, the company that purchased their home, has relinquished all interest in the home. The trustee who conducted the sale has agreed to rescind the foreclosure sale. Zijad Rudan said he is happy about the agreement and feels that justice was done. The Rudans are waiting to see if their loan servicer MetLife will negotiate with them regarding the Making Home Affordable program and their mortgage.

Source: Boise family retains home sold in foreclosure.

(1) Idaho Legal Aid Services is a nonprofit law firm dedicated to providing representation for low income people throughout Idaho.

Couple Says They Followed All Bank Instructions Given At Lender-Sponsored, Traveling Loan Modification "Carnival Show" & Are Still Facing Foreclosure

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

• A Valley couple is about to lose their home to foreclosure and they claim their bank scammed them. Keven and Linda Harper, of Phoenix, said they were strung along by Wells Fargo Bank and promised a loan modification that never happened. Now, they said they're about to lose their home to foreclosure.

• In September, the couple said they went to Wells Fargo's Loan Modification Workshop in downtown Phoenix.(1) The Harpers said they were promised a loan modification and told that all they'd have to do is go through a trial period, make their new lower payments on time and they'd be approved. "We did everything they asked," said Linda Harper.

• According to the Harpers, they were told a few days ago that there would be no loan modification and they owed $9,200 in missed payments. They said they were also told if they didn't pay the amount in five days, the house would go into foreclosure. [...] A representative with Wells Fargo Bank told CBS 5 News they are looking into the Harpers' situation.

For the story, see Valley Couple Claims Bank Ran Scam (Couple: Promised Loan Modification Never Happened).

(1) Wells Fargo's traveling loan modification carnival show hit Miami Beach last weekend for a 3-day extravaganza.

Brooklyn Judge Journeys Through "The Twilight Zone" In Recent Ruling Slamming Standing Lacking Lender, Notorious Foreclosure Mill Law Firm

In Brooklyn, New York, The Wirenius Report Blog reports on Kings County Supreme Court Justice's Arthur M. Schack (a judge which, it points out, has "earned fame just by making banks follow the rules applied to ordinary litigants") and his most recent journey through the "The MERS Mortgage Twilight Zone," and which features notorious Western New York assembly line, foreclosure mill law firm operator, Steven J. Baum, P.C.

One excerpt from his recent court ruling, in which Justice Schack denies, with prejudice, a standing-lacking lender's request to move forward with a foreclosure action, follows (bold text is my emphasis, not in the original text):

• Plaintiff made its renewed motion for an order of reference 204 days late, in violation of the Court's May 2, 2008 decision and order. Moreover, even if the instant motion was timely, the explanations offered by plaintiff's counsel, in his affirmation in support of the instant motion and various documents attached to exhibit F of the instant motion, attempting to cure the four defects explained by the Court in the prior May 2, 2008 decision and order, are so incredible, outrageous, ludicrous and disingenuous that they should have been authored by the late Rod Serling, creator of the famous science-fiction televison series, The Twilight Zone.(1)

• Plaintiff's counsel, Steven J. Baum, P.C., appears to be operating in a parallel mortgage universe, unrelated to the real universe. Rod Serling's opening narration, to episodes in the 1961 - 1962 season of The Twilight Zone (found at www.imdb.com/title/tt0052520/quotes), could have been an introduction to the arguments presented in support of the instant motion by plaintiff's counsel, Steven J. Baum, P.C. - "You are traveling through another dimension, a dimension not only of sight and sound but of mind. A journey into a wondrous land of imagination. Next stop, the Twilight Zone."

For more, see "The MERS Mortgage Twilight Zone."

For the court ruling, see HSBC Bank USA, N.A. v Yeasmin (aka "Yeasmin II"), 2010 NY Slip Op 50927 (NYS Sup. Ct. Kings County, May 24, 2010).

For "Yeasmin I", see HSBC Bank USA, N.A. v Yeasmin, 19 Misc 3d 1127, 2008 NY Slip Op 50924 (NYS Sup. Ct. Kings County 2008).

Thanks to Catherine Isobe of Bedford Stuyvesant Community Legal Services, Brooklyn, NY for the heads-up on the ruling.

(1) The Twilight Zone was a TV series that ran between 1959 and 1964, and is described by The Internet Movie Database ("IMDb") as (bold text alterations added, not in the original description):

• Rod Serling's seminal anthology series focused on ordinary folks [ie. In the MERS Mortgage Twilight Zone, that would be Justice Schack, other judges presiding over foreclosure actions, homeowners facing foreclosure and their foreclosure defense attorneys] who suddenly found themselves in extraordinary, usually supernatural, situations. The stories would typically end with an ironic twist that would see the guilty punished [ie. standing-lacking lenders, assembly-line foreclosure mill rackets, and the multiple corporate hat-wearing vice presidents that carry out their employers' illicit handiwork].

The "extraordinary, usually supernatural, situations" would be a reference to the creation of the "fictional chains of assignment upon assignment, by entities in which the same people appear as lawyers and principals, agents and employees."

Retired Lawyer Summoned To Undo Bad Deed That Victimized Elderly Homeowner; Unwinds Home Title Ripoff, Forces Bank To Restore Cash From Drained Acct.

Buried at the end of a recent New York Law Journal story on the push to advance attorney pro bono efforts to represent the poor in civil cases is this excerpt on one retired lawyer who became involved in the program:

• Roger Hawke, 74, began volunteering for Legal Aid in Brooklyn the day after he retired as a partner for Sidley Austin, for which he handled litigation worth billions of dollars. "I just couldn't see myself getting up every day and saying, 'what am I going to do today?'" he said.

• Two and sometimes three days a week, he advocates for the elderly in cases where $10,000 can determine a major change in the quality of a person's life. In one case, someone forged an elderly client's power of attorney, transferred ownership of his house and cleaned out his bank account. Hawke brought successful actions to quiet title and force the bank to restore the funds.

Source: N.Y. Chief Judge Boosts Efforts to Tap Retired Lawyers for Pro Bono (Judge Jonathan Lippman said that the graying of the bar presents a 'window of opportunity' for encouraging pro bono).

Judge Awards Free & Clear Title To Homeowner After Lender Carries Out Foreclosure Sale w/out Posting "Lost Note" Indemnity Bond, Violating Court Order

In Miami, Florida, The Daily Business Review reports:

• All Orlando Eslava wanted from his lender was a loan modification to make his payments affordable. Instead, he got his $207,000 mortgage wiped out — and a crash course in the confusing way foreclosures are unfolding in a court system chock-a-blocked with cases.

• The teacher was Miami-Dade Circuit Court Judge Jennifer Bailey, who cancelled Eslava’s debt after lender HSBC Bank USA ignored her previous order to post a $414,000 bond. Bailey said the actions of William Huffman, HSBC’s lawyer from Tampa-based Florida Default Law Group, were “contemptuous,” according to a court hearing transcript.

• HSBC’s run-in with Bailey began in December 2009 when she granted the lender’s motion for the foreclosure sale of Eslava’s one-bedroom unit at El Dorado Tower in Aventura. But HSBC lost the note on Eslava’s property. So the judge ordered the lender to post a $414,000 bond to indemnify Eslava in case another lender filed a claim against the unit.(1) According to court records, HSBC and Florida Default did not post the bond and proceeded with an April 9 foreclosure sale that gave the lender title to the condo.

• Eslava and his lawyer, Sheleen Khan, sought to overturn the sale, claiming the lender violated Bailey’s court order. At a May 6 hearing, Bailey dismissed the foreclosure case with prejudice, which prevents the lender from suing Eslava again. The judge also canceled the mortgage and ordered HSBC to return title of the condo to Eslava. “None of us is above the law,” Khan said. “This is a landmark ruling.”

• In addition to canceling the mortgage, Bailey chastised Huffman, according to a transcript of the hearing obtained by The Daily Business Review. “When the order is simply ignored … at the end of the day, you’re the lawyer, you’re responsible,” she said. Bailey did not sanction Huffman but said he should consider her order a “wake-up call.”

• “Some day, this foreclosure crisis is going to be over, and you need to decide what kind of lawyer you are going to be,” Bailey told him. “Because at the end of the day, you are responsible for your client’s compliance with court orders.” Huffman apologized. He said his client failed to post bond because he had misunderstood the order, according to the transcript. “I don’t want apologies,” Bailey replied. “I want performance. I want responsible attorneys who meet the basic standards of knowing what … is going on in their files.” Huffman did not return a telephone call or e-mail seeking comment.

• Bailey’s frustration with the lender and Florida Default weren’t limited to Eslava’s case. She complained about the general “chaos and disorganization” of lenders and their lawyers.

***

• Initially, Judge Bailey sided with Florida Default’s request to proceed with the sale but ordered HSBC to post the bond by April 2. On April 9, the bank sold the condo without posting the court-ordered bond. Kahn. Eslava’s lawyer, filed an objection to the sale. At the May 6 hearing, Judge Bailey expressed disbelief that HSBC had opposed canceling the sale when Eslava was still in the middle of a loan modification trial. She called the bank’s opposition “idiotic,” according to the transcript.

• “You are filing pleadings in court every day and you don’t even know what’s going on with the case,” she told Huffman, the HSBC lawyer. “In no other species or kind of law would that be remotely acceptable, or frankly, anything short of malpractice. But somehow in Foreclosure World everybody thinks that is just fine, that you can know absolutely nothing about your files and walk in here and ask judges for things left and right without even knowing what’s going on.”

For the entire story, see Judge wipes out homeowner’s $207,000 mortgage (requires paid subscription; if no subscription, TRY HERE, TRY HERE, or TRY HERE).

Thanks to Deontos .is for the heads-up on this story.

(1) Section 673.3091(2) of the Florida Statutes ("Enforcement of lost, destroyed, or stolen instrument") states the following with regard to a lender's attempt to enforce a lost, destroyed, or stolen promissory note or other negotiable instrument (bold text is my emphasis, not in the original text of the statute):

• The court may not enter judgment in favor of the person seeking enforcement unless it finds that the person required to pay the instrument is adequately protected against loss that might occur by reason of a claim by another person to enforce the instrument. Adequate protection may be provided by any reasonable means.

In this case, Judge Bailey complied with this statute by requiring the posting of a "lost note" indemnification bond in the amount of double the homeowner's $207,000 mortgage to adequately protect the homeowner against loss that might occur if, in the future, someone else comes along with the actual note that was purportedly lost and attempts to enforce it against the homeowner. (I wonder how many judges have granted foreclosure judgments where purportedly lost promissory notes were involved without complying with this requirement in the Florida statute).

By the way, a question for all my friends in the Florida title insurance industry who are being asked to insure the (potentially crappy) title to real estate that has recently gone through a foreclosure proceeding. Does a judge's failure to comply with this statute in a foreclosure action involving a lost promissory note make a foreclosure judgment absolutely void (ie. void ab initio), or is the foreclosure judgment merely voidable??? (and how do you insure over this risk???).

Chronic, Rubber-Stamping Florida Judge Once Again Draws Appellate Court Attention For Denying Plaintiff/Lenders' Motions To Cancel Foreclosure Sales

A recent ruling from a Florida appeals court brings renewed attention to the conduct of now-ex-Volusia County Circuit Court Judge John V. Doyle for issuing rubber-stamped denials of motions to cancel foreclosure sales filed by plaintiff/lenders and allowing foreclosure sales to take place (against the wishes of both the lenders and the homeowners).

Doyle's rubber-stamped denials of these motions have been the subject of three recent appeals heard by Florida's Fifth District Court of Appeal. An excerpt from the most recent case (bold text is my emphasis, not in the original text):

• On May 12, 2009, LaSalle filed a motion to cancel/vacate foreclosure sale, stating: "Since the date of the entry of the Final Judgment of Foreclosure and the notice of sale, the borrowers have entered into a Non-FNMA Home Affordable Modification Program in an effort to retain their home and avoid the sale of their home."

• The trial court denied the motion without a hearing, using a "DENIED" stamp with a handwritten date of May 13, 2009. LaSalle then filed a renewed motion to cancel/vacate foreclosure sale, providing: "Since the date of the entry of the Final Judgment of Foreclosure and the notice of sale, the borrowers have entered into arrangements with the Plaintiff for a short sale of the property, which sale is scheduled to take place on May 20, 2009."

• A docket entry indicates that the trial court denied the renewed motion. On May 14, 2009, the foreclosure sale took place as scheduled, at which "Equitable Gain Inc." purchased the property for a bid of $8,000.00.

LaSalle then filed an objection to the sale and an emergency motion to vacate summary final judgment and to vacate foreclosure sale and to return funds to the third party purchaser. The trial court again denied LaSalle's objection and motion without a hearing, using the "DENIED" stamp with a handwritten date of May 20, 2009. LaSalle's subsequent motion for rehearing or in the alternative motion to vacate certificates of sale and title met with the same, rubber-stamped fate.

In addressing this problem, the 5th District Court of Appeal stated (bold text is my emphasis, not in the original text):

• This case is virtually identical in all material respects to two other cases recently before this Court. U.S. Bank Nat'l Ass'n v. Bjeljac, 17 So. 3d 862 (Fla. 5th DCA 2009) and Wells Fargo Bank, N.A. v. Lupica, 17 So. 3d 864 (Fla. 5th DCA 2009). The trial judge was the same in all three of these cases and the procedure he consistently followed is the problem.

• In the U.S. Bank case, the lender sought to cancel and to reset a scheduled foreclosure sale, which the court denied without a hearing using a "DENIED" stamp. The lender's subsequent Objection to Sale, Motion to Return Third Party Funds, to Vacate Certificate of Sale and to Set Aside Foreclosure Sale met the exact same fate.

• In the Wells Fargo case, the lender initially sought to cancel the foreclosure sale before it occurred, representing to the court that a modification agreement had been reached with the defendant homeowners. This motion was denied without a hearing, using a "DENIED" stamp. Thereafter, Wells Fargo filed a Motion to Vacate the Foreclosure Sale, again attempting to enter into a forbearance agreement with the defendant homeowner that would provide them with the opportunity to save their home. As with all the other motions, no hearing and a simple "DENIED" stamp disposed of the motion.

• In this case, as in the Wells Fargo and U.S. Bank cases, there is nothing establishing that the documents bearing these executed "denied" stamps were filed with the clerk of the court or when they were filed. As with the Wells Fargo and U.S. Bank cases, these orders cannot be considered properly rendered or final. We elect to treat this matter as a premature appeal and relinquish jurisdiction to the trial court for a period of thirty days for properly rendered orders.(1)

• Because the trial judge involved in these cases is no longer on the bench, the successor judge will necessarily have to consider the motions de novo.

• In this case, as in the Wells Fargo and U.S. Bank cases, there is also no reason we can discern why denial of the plaintiff lender's repeated motions to cancel the foreclosure sale should not have been granted, and the procedure followed by the trial judge leaves us in doubt that the motions were given any merits consideration. Accordingly, in order to enable meaningful appellate review, if the trial court again denies LaSalle's motions, it must provide reasons.

For the latest of the three rulings, see LaSalle Bank National Association v. Alicea, Case No. 5D09-2129 (Fla. 5th DCA, May 21, 2010).

(1) The appeals court expressed some empathy in their ruling in the U.S. Bank case for overworked trial judges, but stressed the importance of jurists refraining from the use of their rubber stamps when ruling on motions (bold text is my emphasis, not in the original text):

• We are mindful of the significant workload faced by Florida’s trial judges, particularly with the flood of foreclosures inundating the court system and the staff reductions necessitated by budget shortfalls. Nonetheless, for an appellate court to provide meaningful review of a trial court order, particularly when the trial court possesses significant discretion, some indication of the reasons underlying the trial court’s ruling is helpful. “It is not the function of an appellate court to cull the underlying record in an effort to locate findings and underlying reasons which would support the order.” Jacques v. Jacques, 609 So. 2d 74, 75 (Fla. 1st DCA 1992). Here, the trial court’s “denied” stamp does not help us determine if the trial judge abused his discretion or not. Some basis for the ruling would be instructive both to the parties and this Court.

Lack Of Evidence Of Individual's Authority To Execute Assignment Of Mortgage Sinks Foreclosing Assignee In Attempt To Lift Stay In Ch. 13 Proceeding

In a recent ruling by a U.S. Bankruptcy Court in Boston, Massachusetts, a foreclosing lender was denied relief from an automatic stay to foreclose on a mortgage. As the basis for its ruling, the court pointed to the failure of the foreclosing lender, Property Asset Management, Inc. ("PAM"), who purportedly acquired its interest in the mortgage via an assignment, to prove that the multiple-corporate-hat-wearing individual who executed the assignment on behalf of the assigning company had authority to do so.(1) Accordingly, the court found that the foreclosing lender failed in its burden of proving that it had authority to foreclose, standing to move for relief from the automatic stay, and therefore denied the lender's motion for relief from the stay, without prejudice to renewal upon proper proof.

For the ruling, see In re: Moreno, Case No. 08-17715-FJB (Bankr. D. Mass., Eastern Div. May 24, 2010).

(1) In denying the lender's motion for relief from the automatic stay, the court made the following analysis (bold text is my emphasis, not in the original text):

• As the party seeking relief from stay to foreclose a mortgage on the debtor's property, PAM bears the burden of proving that it has authority under applicable state law to foreclose the mortgage in question and, by virtue of that authority, standing to move for relief from the automatic stay to foreclose.

***

• To show that it presently holds the mortgage, PAM must show a valid assignment of the mortgage from MERS to itself. PAM contends that it holds the mortgage by assignment from MERS. Accordingly, PAM must show that the assignment, which was executed for MERS by Denise Bailey, was within the scope of Bailey's limited authority to act for MERS.

• Ms. Bailey's authority to act for MERS is defined in the MERS Authorization in seven enumerated paragraphs. In each, Ms. Bailey's authority to act is dependent on the existence of a specified relationship of Litton, the MERS member by whom she is employed, to the loan in question. PAM has submitted no evidence of the existence of any such relationship. The beneficial owner of the loan at the time of the assignment was Aurora Bank FSB, but there is no evidence that Litton was at the time the servicer of the loan for Aurora Bank FSB or was registered with MERS as such.

• The Court does not find that Aurora Bank FSB had not retained Litton as its servicer; there is simply no evidence on the issue. But the burden is on PAM to prove that it had, and PAM has not adduced evidence to that effect.

• Accordingly, by a separate order, the Court will deny PAM's motion for relief from the automatic stay without prejudice to renewal upon proper proof.