Saturday, June 19, 2010

Man Gets 20 Months For Use Of POA In Ripping Off Elderly Mother; State Steps In, Picks Up Nursing Home Bills To Avoid Mom's Eviction

In Denbighshire County, UK, the Daily Mail reports:

  • A man who took out 'power of attorney' over his elderly mum's financial affairs cheated her of £86,000, a court heard []. Stephen Moss' spending spree also jeopardised his ailing mother's placement at a residential nursing home in North Wales.


  • Mr Moss pleaded guilty to the theft [] in court and received a jail sentence of 20 months. His mother's mental health, however, is in such a condition that she is unaware of the scandal.


  • The family home was sold in March 2006 and her bank balance at that point stood at £111,000. But arrears of £4,000 quickly built up in payments for her placement. Payments were sporadic and communication with the defendant difficult. Correspondence was not answered.


  • Following a threat of legal action, Mr Moss agreed to pay £200 a month but by then the arrears reached £13,000. In view of the worsening situation, the care home contacted Denbigshire County Council in July 2008 and the council took over the funding at £500 a week. No further payments were made by the defendant after August last year.

For the story, see Thieving son uses 'power of attorney' to cheat ailing mother out of £86,000.

Move To Cheaper Nursing Home Probable For 82-Year Old Woman After Niece's Hubby Forged POA That Led To £200,000+ Ripoff

In St Albans, Hertfordshire (UK), The Jewish Chronicle reports:

  • A 59-year-old man who forged a legal document to obtain thousands of pounds of his elderly relative's savings has been jailed for three years. The fraudulent document made by Malcolm Laster, of Edgware, gave him control of more than £200,000 belonging to his wife's aunt, 82-year-old Sadie Joseph.

  • Over a two-year period Laster spent £218,208 on holidays to America and gifts for friends and family, St Albans Crown Court heard. The former taxi driver even paid for haircuts for friends, while saving cash by cancelling Mrs Joseph's own hair appointments at the Sunrise Care Home in Elstree.

  • Laster was married to Mrs Joseph's niece Shirley, but she was too ill with motor neurone disease to accept power of attorney over her aunt's affairs. She died two years ago. Mrs Joseph has been left with just £10,000 and will probably have to move to a cheaper care home.

For the story, see Cabbie stole £200,000 of aunt's savings.

Beauticians' Tipoff To Cops That Elderly Customer Was Urged To Refi Home Triggers Probe Leading To Scammer's Guilty Plea; Swindle Estimated At $180K+

In Montgomery County, Maryland, The Washington Post reports:

  • The scheme got its start, Montgomery County prosecutors said [], when an 87-year-old woman pulled into a gas station 3 1/2 years ago looking for directions home. A man playing Keno, James Brian Gendimenico, offered to help, and led her and her husband to their nearby house in his own car.

  • During the next 2 1/2 years, according to prosecutors, he engaged in a crime that is expected to increase nationwide as the population grows older: He won her confidence, helping her with errands, bills and chores. And stole her money.

  • Gendimenico, 48, pleaded guilty to a theft scheme []. He could face 15 years in prison when he is sentenced Aug. 9, but he is likely to get less because of state sentencing guidelines. How much he took remains unclear and is expected to be determined at a hearing before sentencing.

  • Prosecutors say he stole at least $180,000 from the couple, who had no children and lived modestly on fixed incomes in the Glenmont area. As the husband's health deteriorated, Gendimenico persuaded the wife to grant him power of attorney and received more than 350 checks from the couple's bank accounts, according to prosecutors. By the time her husband died, she could no longer afford to bury him. "He picked her clean," said Robert McCarthy, a lawyer appointed by the court to manage the widow's finances.

  • Montgomery County is seeing more cases like this. In early March, Roger Greenberg, 68, was convicted of swindling more than $100,000 from an 84-year-old woman whom he persuaded to marry him in a ceremony in the front seat of his car. "People are figuring out we've got a bunch of rich old people here," said McCarthy, who also is involved in the Greenberg case. "I'm seeing too many of these cases," Montgomery District Court Judge Gary Crawford said last year at an early hearing in the Gendimenico investigation. "It's a huge problem," said Peggy Odick, an attorney for the county. "We're seeing tons of them, but he's actually wiped her out. There's nothing left."


  • One of the few trips she makes every week is to Ruffles of London, a salon near her home. It was there that beauticians started noticing her showing up with Gendimenico about three years ago. They said they got concerned when she told them that Gendimenico was advising her to take out a loan against her house. "She's so naive and innocent, and things weren't adding up," beautician Tina Becker said. "She's just a very sweet lady who didn't have anyone to care for her." The beauticians decided to call the county authorities, which led to an investigation.

For the story, see Man pleads guilty in swindle of elderly Montgomery County woman.

Friday, June 18, 2010

Chicago Homeowner In 3-Unit Condo Depletes Savings After Footing Bill To Carry Entire Building As Others Lose Title To Foreclosure, Deed Forfeiture

In Chicago, Illinois, the Chicago Tribune reports:

  • It is hard to tell whether Traci Hargrove is moving on or staying put. On one day she tends the garden at her Rogers Park three-flat, preparing to plant impatiens. But the next day she removes the drapes in her den and takes down her ceiling fans, because she fears losing her home.

  • Hargrove is caught in the middle. Below her is a foreclosed property and above her is a unit whose owner has stopped paying assessments. Like a lot of condo owners in Rogers Park, she has paid her mortgage and assessments on time, but has been forced to foot the heat, water and other maintenance bills for the building. "If it were my fault, I could handle it. But my livelihood and happiness is dependent on other owners in the building," she said. "I pay what I have, but it's not enough."


  • "I had no clue what I was getting into," said Traci Hargrove, a part-time driver for Pace, who now acts as the building's handyman and manager. "I pay the utilities, take care of the lawn, electrician work and extermination. I don't want this job. I'm not a landlord. Those aren't my tenants."

  • The unit upstairs is owned by the federal government as part of a deed forfeiture. The former owner no longer lives there, and Hargrove is trying to evict the tenant to gain possession of the condo. If she succeeds, she will be able to rent the unit for up to 13 months and collect unpaid assessments.

  • Hargrove would use that money, in part, to pay off the $8,122.82 Peoples Gas bill. She has kept the gas company from cutting off service by paying the association's bill out of her personal checking account. "We have depleted our entire savings to hold on to our house," Hargrove, 47, said. "If I leave my home, I want to leave because I'm ready to go, not because someone is forcing me or intimidating me into leaving."

For the story, see The hidden housing crisis (Rogers Park hit hard by condo foreclosures).

Bill Collector's Recorded Threat To Blow Up Their House Over $300 Cell Phone Bill Forces Couple To Move 500+ Miles Away, Says Verizon Customer

Inside Edition reports:

  • A New Mexico couple has been living in fear ever since receiving a terrifying phone call."I'm going to blow your [expletive deleted] house up," said the caller. The threatening call is allegedly from a debt collector calling about a $300 cell phone bill! "It was scary, very scary," says Al Burrows.


  • Burrows called Verizon, and he says he was shocked by their response. Burrows tells INSIDE EDITION, "He said to me, 'You might as well tell me to turn on the TV, that aliens have landed if you expect me to believe a story like that.'" But Burrows says he had the voicemail as proof. He and his family found the incident so upsetting they moved over 500 miles away to Denver, Colorado.

  • Attorney Jim Sherr is representing the family. "Recording the conversation is evidence that you cannot dispute, it's there," says Sherr.

For more, see Family Says They Were Terrorized by an Overzealous Debt Collector.

Landlord Charged With Using "911" Call & Making False Report To Cops In Attempt To Give Delinquent Renters The Boot

In North Lauderdale, Florida, the South Florida Sun Sentinel reports:

  • A landlord was arrested after she tried to evict tenants from a North Lauderdale apartment by calling 911 and falsely reporting them as intruders, authorities say. Mable Henry-Morgan, 54, of West Palm Beach was taken into custody Saturday night on one count of misusing the 911 service, according to a Broward Sheriff's Office arrest report.

  • Authorities said she reported a break-in at one of her rental apartments in the 7700 block of Southwest 10th Street. Henry-Morgan told a 911 dispatcher the residence should be vacant, but later admitted to deputies she knew the occupants and that there had not been a burglary, the report said.


  • When deputies arrived and spoke with a couple inside the apartment, the pair said they have lived there since last year, the report said. The couple, Salvador Postilla, 34, and Mercedes Aparicio, 33, showed a receipt that they received in April for paying that month's rent. They told deputies that they had not paid their rent recently and that their landlord was trying to kick them out, the report said.

For the story, see North Lauderdale landlord accused of misusing 911 in bid to evict tenants (Mable Henry-Morgan, of West Palm Beach, falsely reported break-in, authorities say).

Texas Couple Files Suit Saying Insurance Company Stiffed Them On Claim For Flood Damage Caused By "Ike" Storm Surge

In Beaumont, Texas, The Southeast Texas Record reports:

  • When their property in Bridge City was flooded by Hurricane Ike's storm surge on Sept. 13, 2008, Milton and Mary Perio believed the flood insurance they had purchased just a month before would cover their damage claim. However, the insurance company denied their claim stating that the flood insurance was not in effect on the date of the loss.


  • According to the complaint, the Perios claim that when they paid for the flood policy on Aug. 27, 2008, an employee of the insurance company told them the flood insurance "would in fact take full force and effect immediately upon the closing of the property."

  • However, National Lloyds told them the flood insurance policy did not go into effect on the date of closing, Aug. 29, 2008, because it was not purchased while "making, increasing, extension or renewal of a loan, as required by the federal statutes, to allow the flood coverage be effective as of the date of closing." Claims against Lloyds include violations of the Texas Deceptive Trade Practices Act, fraud and negligent misrepresentation.

For the story, see Flood insurance did not cover flooded home, Bridge City couple's lawsuit claims.

(1) Possibly in an attempt to make the litigation more costly for the homeowners, and/or possibly in an attempt to shop for a friendlier litigation forum, the insurance company reportedly had the case, initially filed in state court, removed to a Beaumont, Texas Federal court.

Thursday, June 17, 2010

NY AG Slams Manhattan Developer With Suit Alleging He Screwed Buyers By Looting $7.4M From Battery Park City Condo Reserve Fund

From the Office of the New York Attorney General:

  • Attorney General Andrew M. Cuomo [] filed a lawsuit charging the developers of the Rector Square Condominium in Battery Park City with defrauding purchasers out of approximately $7.4 million by raiding a reserve fund meant to ensure the health and safety of residents and instead using the money for personal and unrelated business purposes.

  • The Attorney General’s investigation revealed that while developers YL Rector Street, LLC and its principal, Yair Levy, had promised tenants and owners that the reserve fund would be set aside for making repairs, improvements and replacements necessary for their health and safety, they instead depleted the fund leaving residents with a mere $70. A review of the Condominium’s financial records uncovered that Levy misused millions of dollars of the residents’ money for personal and general business expenses, including making credit card payments and writing checks to himself and relatives.

For the entire New York AG press release, see Attorney General Cuomo Sues NYC Developer For Illegally Raiding Condominium's Reserve Fund (Lawsuit Seeks $7.4 Million in Restitution and to Bar Developer from Future Sales).

Feds, Others Continue Bringing Attention To Increase In Short Sale "Flopping" Scams

Bloomberg News reports:

  • Two Connecticut real estate agents found a way to profit in the U.S. housing bust: Buy low, sell fast. Their tactic was also illegal. Sergio Natera and Anna McElaney are scheduled to be sentenced in Hartford’s federal court in August after pleading guilty to fraud. Their crime involved persuading lenders to approve the sale of homes for less than the balance owed -- known as a short sale -- without disclosing that there were better offers. They then flipped the houses for a profit.

  • The Federal Bureau of Investigation, the California Department of Real Estate and mortgage finance company Freddie Mac have warned that such schemes may be spreading after a plunge in values left homeowners owing more than their properties are worth. The scams threaten to deepen losses for lenders that are increasingly agreeing to short sales as an alternative to more costly foreclosures.


  • A prevalent scam involves a practice called “flopping,” [special inspector general for the Troubled Asset Relief Program Neil] Barofsky said. In that scheme, investors or home buyers hire brokers to assess a home for less than its market value and convince banks to accept a sale at that level.(1) The buyer conceals from the lender that he has lined up a higher offer and then quickly resells the property for a profit, as in the Connecticut case.(2)(3)

For more, see Banks Face Short-Sale Fraud as Home ‘Flopping’ Schemes Spread.

(1) For an instructional video on how one company goes about convincing lenders to take lower prices on their approved short sales, see How To Influence A Broker Price Opinion - BPO, So They Consider Your Low Price.

(2) Jumana Bauwens, a spokeswoman for Bank of America Corp., reportedly said ““We have language in our short sale approval letter that prohibits the flipping of a property and after closing we will audit transactions to identify ‘flips’ or ‘flops.’ It’s not in the best interest of our investors or communities at large to encourage or allow flipping.”

Morgan McCarty, executive vice president for mortgage servicing at Birmingham, Alabama-based Regions Bank reportedly added that his company company requires a full appraisal before a resale, and also demands short-sale buyers sign statements affirming the transactions are arms length, with no hidden buyer-seller relationships, and that there are no agreements to resell the property.

(3) For other stories on alleged short sale flipping scams, see:

New Report Addresses Lack Of Enforcement Of Federal Law Protecting Tenants Against Illegal Foreclosure Evictions

The National Law Center on Homelessness and Poverty recently announced:

  • Despite a federal law enacted in 2009(1) to protect renters living in foreclosed properties, many tenants across the country are still being threatened with eviction and are being forced to leave their homes on short notice. A report released [] by the National Law Center on Homelessness & Poverty, Staying Home: The Rights of Renters Living in Foreclosed Properties, explains the impact of the new law and discusses problems with its implementation, and summarizes the results of a 50-state survey of developments in state laws protecting tenants living in foreclosed properties since early 2009.

  • The report reveals that while progress has been made at both the federal and state levels to protect the rights of renters living in properties subject to foreclosure, further protections for renters - and better enforcement of existing protections - are needed.

For the entire announcement, see Staying Home: The Rights of Renters Living in Foreclosed Properties.

(1) In May 2009, the federal government enacted the Protecting Tenants at Foreclosure Act of 2009 ("PTFA"), which provides important federal protections for tenants in foreclosed properties, including the right to receive 90 days' notice before being required to leave the property and, in many cases, the right to remain for the length of the tenant's existing lease term. Unless the Protecting Tenants at Foreclosure Act is extended, it will expire on December 31, 2012.

Arizona AG Releases Free Video Warning Against Foreclosure Scams

From the Office of the Arizona Attorney General:

  • Stepping up his efforts to prevent home loan rescue scams, Arizona Attorney General Terry Goddard [] announced the release of a free, five-and-half-minute educational video that provides useful information about home foreclosure and tips to avoid becoming a victim of scam artists.


  • The video will be distributed across Arizona to housing counseling offices, faith-based organizations, corporations and non-profit organizations. Residents can also contact the Attorney General’s Office at 602.542.2123 to request a copy. Goddard also noted that a new state law, which takes effect July 29, will assist efforts to stop housing scam artists. The new law prohibits "foreclosure consultants" from charging upfront fees for their services.

For the Arizona AG press release, see Terry Goddard Releases Video to Help Stop Mortgage Scams.

For the video, see Facing the Foreclosure Crisis.

Wednesday, June 16, 2010

NYS High Court Chief Continues Pounding The Pavement With Upstate Tour In Ongoing Push To Ensure Adequate Legal Help For Poor In Civil Cases

In Rochester, New York, the Democrat and Chronicle reports:

  • New York's top judge stumped Thursday in Rochester on behalf of an effort to ensure adequate legal representation for the poor in civil proceedings. Chief Judge Jonathan Lippman of the state Court of Appeals, who appointed a task force Wednesday to find a reliable way to pay for civil legal services, said the recession has forced hundreds of thousands of poor people to appear in court without lawyers for such matters as foreclosure, eviction, child custody and physical abuse.

  • Although civil legal services for the poor have been paid for years through a fund paid by interest earned on escrow accounts set aside by lawyers on their clients' behalf, lower interest rates have caused the fund to shrink from $31 million to $8 million, he said in an interview with the editorial board of the Democrat and Chronicle. As a result, agencies that provide legal services to the poor have had to turn away eight potential clients for every client they've served, Lippman said.

  • He said the task force's mission will be to find a permanent, comprehensive funding mechanism that isn't affected by interest rates and could involve money provided through the state budget's general fund. The present diminished fund could be part of the new mechanism, he said.

For the story, see Cause brings state's top judge to Rochester.

D.C. High Court Boots Lawyer From Bar For Criminal Convictions Involving Ripoffs Of Landlords, Tenants

In Washington, D.C., Washington City Paper reports:

  • After introducing us to foreclosure scammers, the District of Columbia Court of Appeals gifted us with another tale of malfeasance []. This time: the case of Kim E. Hallmark, a crooked lawyer, permanently disbarred for an “offense involving moral turpitude.”(1)

  • Over a period of two years in the early 1990s, Hallmark swindled a series of landlords and tenants out of a total $40,000, racking up eight misdemeanor charges for theft, fraud, and contempt of court. In one “typical” case from 2000, Hallmark leased an apartment on New Jersey Avenue, first tried to pay rent with a faulty check, and then paid for two months rent while occupying the place for ten months. In the mean time, while the owners tried to evict her, she sublet the apartment for two months—her subletters left upon realizing she wasn’t the landlord.

For more, see Crooked Lawyer Finally Disbarred After Swindling Landlords, Tenants out of $40K.

(1) For the ruling of the D.C. Court of Appeals formally (and finally) giving her the boot from the D.C. Bar, see In re Hallmark, No. 03-BG-762 (D.C. June 10, 2010).

Maryland, DC Bars Boot Attorney For Role In $35M Metropolitan Money Store Sale Leaseback, Equity Stripping Foreclosure Rescue Ripoff

In Baltimore, Maryland, The Daily Record reports:

  • A Camp Springs lawyer who pleaded guilty in a $35 million scheme to defraud homeowners facing foreclosure has been disbarred in Maryland. The Court of Appeals ordered Richard Wayne Allison II to be removed from the register of attorneys [] as a reciprocal sanction, following Allison’s disbarment by the District of Columbia Court of Appeals ...

Source: Camp Springs foreclosure-scheme lawyer disbarred.

State Bar Boots Lawyer For Role In Combined Straw Buyer/Flipping, Rent Skimming Racket Targeting Novice Investors, Would-Be Buyers In Rent-To-Own Scam

In Providence, Rhode Island, The Providence Journal reports:

  • Attorney Jon A. Mills, of Lincoln, has been disbarred by the Rhode Island Supreme Court. The court released an order [] authorizing the disbarment after Mills agreed to voluntarily give up his law license and cooperate with authorities in the prosecution of a wide-ranging $16-million mortgage-fraud case.

  • He was charged last year in Superior Court in connection with a wide-ranging $16-million mortgage-fraud case, a scheme that involved defrauding six banks, 25 investors, dozens of renters, and involved 73 properties.(1) Court records show that Mills, 61, [...] pleaded no contest on April 12 to aiding and abetting in obtaining money under false pretenses. He was given a deferred five-year sentence, which essentially means he is on probation for five years, said Attorney General spokeswoman Beryl Kenyon.

For the story, see Lincoln lawyer disbarred in mortgage-fraud case.

(1) An earlier story (see Two enter pleas in mortgage fraud case) reported the racket, allegedly headed by accused mastermind Pierre “Peter” Chabot, 75, of North Providence, as follows:

  • The state police say the complex plan began five years ago, when Chabot placed newspaper advertisements inviting people to invest with him and make money. He attracted 25 amateur investors to fund $16.7 million into 73 rental properties, the state police say, and told them that their money would be protected by a lease-purchase agreement that renters would sign. The renters would use their lease payments as part of the down payments.

  • However, the state police allege that Chabot was buying the properties for less than he told the investors and was pocketing the difference. Although Chabot was supposed to be making the mortgage payments on behalf of the investors, the state police say that he failed to make payments on most of the loans. The banks foreclosed, the investors lost their money, and the renters ended up without homes.

Tuesday, June 15, 2010

PA Couple Current On House Payments Found Themselves Facing Foreclosure Anyway; Media Intervention Needed To Straighten Out Lender's Attorney Screw-Up

In Chester County, Pennsylvania, CBS 3 reports:

  • Living in the woods of Chester County, Judi and Ed Worrall are used to peace and quiet. But a piece of mail that landed in their mailbox this winter changed all that.It told them their house was in foreclosure and would be put up for sheriff's sale. The only problem: the Worralls aren't behind on their mortgage payments. It's their neighbor who has a problem. But nonetheless, the legal notice listed their address under their neighbor's name.


  • [Judi] was told numerous times the problem would be addressed. "Our office is already aware of the situation," an attorney for the [Phelan, Hallinan and Schmieg law] firm wrote her on March 1. On April 23: "The issue has been addressed," the attorney wrote.

  • Yet by May, the Worralls' address was still listed, and the sheriff's sale was scheduled that month. [...] The sale was postponed and again, she was promised a correction. But the June listings showed their address again. That's when Judi called Eyewitness News.

  • We called Phelan, Hallinan and Schmieg four times without a call back. So we went there. We were turned away; told all the partners were out. But an e-mail we sent apparently finally got their attention. After a week, a representative told us the sale is cancelled. The incorrect paperwork has been recalled from the sheriff, and the law firm called Judi Worrall to apologize. He could not tell us, however, why it took so long.


  • After three months of trying, and numerous phone calls and e-mails, Judi Worrall still can't believe it took the involvement of Eyewitness News to clear their address.

For the story, see Chester Co. Couple Endures Foreclosure Nightmare.

Three More Bagged In Alleged Bait & Switch Refi Scam; Suspects Acccused Of Replacing Key Pages In Loan Docs After Being Signed By Unwitting Homeowners

From the Office of the California Attorney General:

  • In a continuing probe into a defunct Southern California mortgage brokerage, Attorney General Edmund G. Brown Jr. [] announced the arrests of president and co-owner Sean McConville and two associates who used "deceptive promises and forged documents" to steal almost $1 million from homeowners falsely guaranteed attractive home loan refinancing packages.(1) "These criminals employed a classic bait-and-switch in their refinance scheme," Brown said.


  • When homeowners were presented with closing documents, they bore the terms promised, but which the lenders never approved. After homeowners signed the closing documents, key pages were removed and replaced with pages bearing the terms that the lender had actually agreed to. The homeowners' signatures were then forged on the replacement pages, and ALG forwarded the forged documents to the escrow company.

  • Homeowners only discovered they had been defrauded when they received the final loan documents with the true terms and their signatures forged on closing cost disclosures, Truth-in-Lending disclosures, loan applications and other documents. Additionally, ALG collected almost $1 million in undisclosed fees, charging homeowners up to $57,000 in broker fees.

  • In total, dozens of homeowners were locked into almost $30 million in loans with terms they did not agree to. As a result of this scheme, many homeowners were forced to sell their homes, come out of retirement, or tap retirement savings. Others paid significant prepayment penalties, including over $21,000 in one case. Borrowers also rarely received the large cash-outs they were promised as part of the refinance.

For the entire California AG press release, see Three More Suspects Nabbed in Million-Dollar Bait-and-Switch Home Refinance Scam.

(1) In addition to Sean McConville, 30, of Austin, Texas, president and co-owner of the now-defunct ALG Capital, Inc., others arrested in the AG's most recent bust are: Matthew Bourgo, 27, of Thousand Oaks, and Joseph Nguyen, 37, of Woodland Hills. The suspects are each being held on $29.5 million bail. In September 2009, Brown's office arrested three others involved in the bait-and-switch scam, including Michael McConville, 32, of Simi Valley, Sean's brother and co-owner of the brokerage, Alan Ruiz, 29, of Huntington Beach, and Garrett Holdridge, 24, of Palmdale, who was convicted of seven felonies in March for his involvement in the scam.

Vacant Home Hijackings Growing Throughout South Florida; 200 Adverse Possession Claims Filed In Recent Months In Broward, Palm Beach Counties

In South Florida, the Sun Sentinel reports:

  • Imagine going to a house or condo you own and finding a stranger living there who claims the property no longer belongs to you. It's happening across Florida and other parts of the country through what authorities say is abuse of a centuries-old concept known as adverse possession.(1)

  • Dating back to Renaissance England, adverse possession allowed people to take over abandoned cottages and farmland, provided they were willing to live there and pay the taxes. These days, officials say, the legal doctrine is being misused by squatters, trespassers and swindlers to claim ownership of vacant or foreclosed homes.

  • In Broward and Palm Beach counties alone, adverse possession claims have been filed on some 200 homes in recent months. Three of the four people behind the claims have been arrested, and police are investigating the fourth man, who along with his father, a convicted mobster, tried to take over properties in Hollywood.


  • [In one case] The occupant, Fitzroy Ellis, told [the owner of the vacant home] he was entitled to take over the home because it was abandoned. Police disagreed, and Ellis, 64, is now in the Broward County Jail charged with six counts of grand theft. Ellis tried to claim a total of 48 properties in Broward, including a $1 million house in Coral Springs, through a company he formed called Helping Hands Properties Inc., county official records show. He told a Plantation police detective he planned to rent out the houses and condos and could offer tenants a good price "since he didn't have to pay anything for the homes,'' according to a police report. Ellis, who is representing himself, wrote in court documents that the allegations against him are "false and an abuse of power.''

  • Another South Florida man, Mark Guerette of Wellington, filed notice in official county records that he was taking possession of 100 homes in Broward and three in the Palm Beach community of Lake Worth through Saving Florida Homes Inc. and two other companies. On one day last November, he filed takeover notices on 10 condos in the same North Lauderdale complex [...], records show. Police say Guerette, 46, rented out six of the properties and collected more than $20,000 from tenants before he was arrested in April. He has pleaded not guilty to a charge of organized scheme to defraud.

  • His lawyer, Robert Shearin, said Guerette is nothing more than a good Samaritan, rescuing blighted homes. "The banks are letting these properties go down the tubes,'' Shearin said. "Here's a guy trying to help out, and he ends up in jail.''

For more, see Squatters take over S. Fla. homes in what police call latest fraud in housing crisis.

Go here for a list & map of homes snatched through claims of adverse possession in Broward and Palm Beach Counties.

(1) Florida law requires a series of steps that must be taken before a non-owner can take ownership of a property. The state adverse possession law can be found in the Florida statutes at:

Florida Trial Judges Continue Getting Hammered In Foreclosure Cases As Appeals Court Reverses Another Screw-Up

In another, short and sweet, one paragraph ruling, a Florida appeals court, this time for the 4th appellate district, reversed a ruling, favorable to a foreclosing lender, of a state trial judge. This time, it's Broward County Circuit Court Judge Ronald J. Rothschild who apparently has yet to receive the memo about the assembly line foreclosure mill law firms flooding the courts with sloppy filings. Notable in this case is that foreclosure mill law firm David Stern, P.A. was also listed as a party in this appeal.

  • We reverse the circuit court’s final summary judgment of foreclosure against Stelian Lazuran (the “defendant”). Citimortgage’s complaint alleged that all conditions precedent to the mortgage note’s acceleration had been fulfilled, and Citimortgage’s affidavit in support of its motion for summary judgment stated “[t]hat each and every allegation in the Complaint is true.” Such a conclusory allegation is insufficient to refute the defendant’s affirmative defense that Citimortgage failed to provide him with notice of the acceleration pursuant to the procedures specified in paragraph 22 of the mortgage. Therefore, reversal is required. See Frost v. Regions Bank, 15 So. 3d 905, 906-07 (Fla. 4th DCA 2009) (“Because the bank did not meet its burden to refute the Frosts’ lack of notice and opportunity to cure defense, the bank is not entitled to final final summary judgment of foreclosure.”).


For the ruling, see Lazuran v. Citimortgage, Inc, David Stern, P.A. et al., No. 4D09-1340 (Fla. 4th DCA June 9, 2010).

Representing the appellant/homeowner was Mitchell Sens of Law Office of Mitchell Sens, P.A., Plantation, Florida.

Monday, June 14, 2010

Favorable Trial Court Ruling Allowing Florida Couple To Score "Free" House From Foreclosing Mortgagee Snatched Away By Appellate Court Reversal

The following facts are adapted from a recent ruling of Florida's 4th District Court of Appeal, reversing a lower court ruling in favor of a homeowner/couple facing foreclosure:

  1. Homeowners borrowed $200,000 from John Haner to purchase property in 2003, and executed a mortgage and a promissory note in favor of Haner to evidence and secure the loan.
  2. Subsequently, Haner died, and his estate assigned his interest in the note and mortgage, which was already in default, to one, Lizio.
  3. Lizio subsequently filed a foreclosure action against Homeowners, claiming they failed to make required payments on the mortgage.
  4. The trial court denied Lizio's motion for summary judgment, and this case proceeded to trial.
  5. At trial, the personal representative for Haner's estate, Jeffrey Selzer, testified that the original note and mortgage were executed by Homeowners in 2003.
  6. Personal rep Selzer stated that he executed an assignment of the mortgage to Lizio in October 2007; the assignment was recorded a few days later.
  7. Personal rep Selzer also testified that he received the original note and mortgage from Haner prior to his death, and the mortgage presented at trial was identical to the mortgage the now-deceased Haner gave Selzer.
  8. Finally, personal rep Selzer concluded from reviewing Haner's documents that Homeowner's defaulted on the note in January 2006.
  9. Lizio did not testify on his own behalf. Prior to resting, Lizio offered into evidence original copies of the assignment, note, and mortgage.
  10. Homeowners moved to involuntarily dismiss the case.
  11. Broward County Circuit Court Judge Richard D. Eade granted Homeowners' motion, finding that the assignment of the mortgage and note to Lizio did not constitute prima facie evidence that Lizio is the current owner and holder of the mortgage and note.
  12. Judge Eade dismissed Lizio's foreclosure action with prejudice, and ordered a cancellation of the lis pendens and a discharge/cancellation of the mortgage (go here, pp. 3-4 for court order).

In reversing Eade's ruling against the foreclosing mortgage holder, the appellate court applied this relatively basic rule of law to the facts in this relatively simple case (bold text is my emphasis, not in the original text):

  • Where the defendant denies that the party seeking foreclosure has an ownership interest in the mortgage, the issue of ownership becomes an issue the plaintiff must prove. Carapezza v. Pate, 143 So. 2d 346, 347 (Fla. 3d DCA 1962).

  • In the present case, appellant possessed the original note, mortgage, and assignment executed by the personal representative of Haner's estate. The note was payable to the late John Haner, and the assignment granted Haner's rights under the note and mortgage to appellant. Thus, appellant "held" the note, which granted him standing to seek foreclosure of the mortgage. Mortgage Elec. Registration Sys., Inc. v. Revoredo, 955 So. 2d 33, 34 n.2 (Fla. 3d DCA 2007).

  • Appellees argued that the testimony of the personal representative demonstrated only that the note and mortgage was assigned by the estate of Haner but that Selzer's testimony did not foreclose the possibility that appellant, who did not testify, may have executed a subsequent assignment of that same note and mortgage.

  • Although appellees raise a point that the trial court may consider as part of appellees' defense, we find, nonetheless, that the trial court erred in granting appellees' motion for involuntary dismissal at that particular juncture. Appellant met his burden of providing a "prima facie case"; therefore we reverse and remand for further proceedings.(1)

For the ruling, see Lizio v. McCullom, No. 4D09-1149 (Fla. 4th DCA June 9, 2010).

(1) This case provides evidence that, while the ridiculous rulings of some trial judges in foreclosure actions typically seem to favor the foreclosing lenders, every once in a blue moon, a crazy ruling will sometimes improperly favor the homeowner. What Judge Eade was thinking in ruling in favor of the homeowners in this case is beyond me. Maybe Judge Eade is a good judge who simply had a bad day when making his ruling. It could also be that he slept through the trial, missing the live, in-person testimony of the personal representative (a Florida attorney) for the original, subsequently-deceased mortgage holder, who actually saw and physically handled the originals of the loan documents at issue and who personally executed the assignment of mortgage. I also suppose it's possible that Judge Eade was up for re-election, and saw a cheap opportunity to garner support from financially strapped homeowners by ruling in favor of the delinquent borrowers in this case, at a somewhat minimal risk of having his ruling appealed (keep in mind, the foreclosing lender here was not some giant, institutional lender or loan servicer using "manufactured" assignments and affidavits executed by multiple corporate hat-wearing vice presidents in far away places to make their case, and who have the wherewithal to appeal a dopey ruling like this one; the foreclosing lender here, albeit by assignment, was a private individual (possibly a real estate investor) who apparently saw an opportunity to potentially profit by purchasing a mortgage - presumably at a discount - that was already in default, from the estate of the original lender, who also was a private individual).

Rulings like this one serve only to give the apologists for the institutional mortgage lending and loan servicing industries, as well as the assembly line foreclosure mill law firms, support for claims that judges are unfairly favoring delinquent homeowners in foreclosure actions. Trial judges should not lose sight of their sworn duty to simply apply the law and let the chips fall where they may. Based on some of the rulings that are coming down, however, that is apparently a lot easier said than done for some of our esteemed jurists.

Federal Judge Gives BofA & Affiliates The Go-Ahead On Foreclosures Throughout Utah; Issues Order Dissolving State Court Directive Halting Sales

In Salt Lake City, Utah, The Salt Lake Tribune reports:

  • A federal judge on Friday dissolved a court order that had stopped one of the country's largest banks from selling foreclosed homes in Utah. U.S. District Court Judge Clark Waddoups, after hearing legal arguments Thursday, has granted a Bank of America request a to cancel the preliminary injunction against its trustee sales in the state.

  • Waddoups' decision wipes out the injunction issued May 22 by 5th District Court Judge James L. Shumate. That order had halted hundreds of Utah foreclosure sales by Bank of America and its subsidiary ReconTrust.


  • Judge Waddoups also turned down a motion by Cox's attorney, J. Christian Barlow of St. George, to have the case transferred back to state courts. The issue of state vs. federal jurisdiction was a major issue of contention Thursday. Bank lawyers argued they were governed by the federal National Bank Act and not state law. [...] In his order, rendered early Friday afternoon, Waddoups said he would file a memorandum shortly explaining his legal reasoning.

For the story, see BofA can resume Utah foreclosure sales (Reversal » Federal court judge dissolves an order issued last month in a 5th District ruling).

See also, KCSG-TV Channels 14, 16: Bank of America Foreclosure Injunction Dissolved by Federal Judge.

Appeals Court Tags Another Florida Trial Judge With "Abuse Of Discretion" In Case Involving Two Lenders Simultaneously Foreclosing On Same Mortgage

Another Florida trial court gets tagged for "abuse of discretion." This time it was Miami-Dade County Circuit Court Judge Mark King Leban being held accountable by Florida's 3rd District Court of Appeal. The case apparently involved a situation where two different mortgage lenders were foreclosing on the same mortgage in two separate actions occurring simultaneously in different divisions of the trial courts in Miami. The ruling was limited to one, short & sweet, paragraph (bold text is my emphasis, not in the original text):

  • Based on the unique circumstances of this case,(1) we conclude that the trial court abused its discretion by denying the motion to continue the final summary judgment hearing and by failing to grant the motion to transfer the foreclosure action to the division where a separate foreclosure action was pending in which another bank was simultaneously seeking to foreclose the same mortgage. Accordingly, we reverse the final judgment of foreclosure and remand with instructions to reinstate the foreclosure action filed by plaintiff, HSBC Bank USA, and to allow the defendants, Glazy Ruscalleda and Jose Ruscalleda, to answer the complaint and assert affirmative defenses.

    Reversed and remanded.

For the ruling, see Ruscalleda v. HSBC Bank USA, Case No. 3D09-997 (Fla. 3rd DCA, June 9, 2010).

Representing the appellant/homeowners were Miami's John H. Ruiz and Karen Baker. For the lender was Boca Raton's own Shapiro & Fishman and Heidi J. Weinzetl.

(1) I wonder how unique the circumstances of this case actually are, given the light being shined on the sloppy (and possibly fraudulent) work being churned and cranked out by the assembly line, foreclosure mill law firms.

Illinois Supremes: Courts Lack Jurisdiction In F'closure Actions Against Dead Homeowners; Banks Must Name Estate's Personal Rep Before Going Forward

The Illinois Supreme Court recently decided the legal question whether a mortgagee must name a personal representative for a deceased mortgagor in a mortgage foreclosure proceeding in Illinois in order for the circuit court to acquire subject matter jurisdiction. For the reasons the court sets forth in its ruling, it concluded that naming a personal representative for a deceased mortgagor is required.

The ruling has been summarized as follows (bold text is my emphasis, not in the original text):

  • In Cook County, mortgage foreclosure actions were filed in 2006 against two property owners, one in Chicago and one in Bellwood, who were deceased. In each case, the circuit court held that a personal representative must be named by the mortgage lender for the court to have subject matter jurisdiction. For failure to do this, both suits were dismissed. The lenders appealed and the causes were consolidated in the appellate court. No one appeared for the appellees, but an amicus brief was filed in support of the trial court’s decision.

    The appellate court reversed, holding that mortgage foreclosures are in rem actions in which no personal representative has to be named.

    In this decision, the supreme court disagreed with the appellate court, holding that a mortgage foreclosure is properly characterized as quasi in rem. Although the Mortgage Foreclosure Law does not deal with this issue, the Code of Civil Procedure provides for substitution of a deceased party’s personal representative. Otherwise, a lawsuit against a decedent is a nullity.(1)

    The circuit court was affirmed as to both cases and the appellate court was reversed.

(The Illinois high court granted a motion by the Chicago Volunteer Legal Service Foundation(2) for leave to file a petition for leave to appeal, as amicus curiae, the intermediate state appellate court ruling, and later granted the Office of the Cook County Public Guardian leave to file an amicus brief.)

Source: Illinois Supreme Court Summary (ABN AMRO Mortgage Group, Inc. v. McGahan).

For the text of the ruling, see ABN AMRO Mortgage Group, Inc. v. McGahan, Docket No. 107954 (Ill. June 4, 2010).

(1) I wonder how many void, already-conducted foreclosure sales in Illinois this ruling will result in. If the lawsuit is a nullity, the foreclosure judgment arising from the lawsuit, the subsequent foreclosure sale, and any subsequent sales of the foreclosed property thereafter will presumably also be nullities.

(2) According to their website, the Chicago Volunteer Legal Services Foundation was formed to coordinate, promote and support the involvement of the legal community in the voluntary pro bono representation of individual clients from the ranks of Chicago area's poor and working poor, resolving non-fee-generating family, consumer, probate, tort, government benefits, immigration and miscellaneous cases.

Florida Appeals Court Reverses Another Lower Court Screw-Up; Calls Denial Of Lender's Request To Cancel F'closure Sale "A Gross Abuse Of Discretion"

A recent ruling from Florida's 5th District Court of Appeal brings continued attention to a foreclosure case emanating from Volusia County involving rubber-stamped denials of motions to cancel foreclosure sales filed by plaintiff/lenders, allowing foreclosure sales to take place, and then refusing lenders' requests to vacate the sales.

A May 26, 2010 post(1) addressed three cases from the same judge which were kicked back to him by the appeals court which, due to a procedural technicality, lacked jurisdiction to hear the appeal until the lower court complied with the court's direction.

The story now continues with respect to one of the cases (bold text is my emphasis, not in the original text):

  • When Wells Fargo initially appealed the denial of these motions, we were compelled to relinquish jurisdiction to the trial court because the trial court's action did not constitute "rendition" of a final order so as to permit appellate review. Wells Fargo Bank, N.A. v. Lupica, 17 So. 3d 864 (Fla. 5th DCA 2009). We further directed the trial court to provide the basis for its denials of Wells Fargo's motion to cancel sale and subsequent motion to vacate sale. Id. at 866.

  • The trial court then entered a final order denying the motions. The purported basis for the denial of Wells Fargo's two unopposed motions was the failure to attach a stipulation and/or a copy of the loan modification or forbearance agreement signed by all parties. The trial judge further suggested that the parties should have discussed the modification of the loan prior to entry of the final judgment "which could have avoided unnecessary consumption of the time of two courts."

  • Foreclosures are equitable proceedings under Florida law and settlements between litigants are favored. The trial court's denial of Wells Fargo's unopposed motions flies in the face of these principles. Furthermore, it was not necessary for Wells Fargo to have attached a stipulation and/or copy of a signed loan modification or forbearance agreement.(2) There was no basis for the trial court to reject Wells Fargo's counsel's representation, as an officer of the court, that an agreement had been reached between the parties — particularly where the Lupicas never disputed such representation. The trial court's actions constituted a gross abuse of discretion. See, e.g., Opportunity Funding I, LLC v. Otetchestvennyi, 909 So. 2d 361 (Fla. 4th DCA 2005).


For the entire ruling, see Wells Fargo Bank, N.A. v. Lupica, Case No. 5D09-2902 (Fla. 5th DCA, June 4, 2010).

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

(2) The appellate court noted, in a footnote, that subsequent to the trial court's entry of its final order, the Florida Supreme Court approved a form motion for the cancellation of a foreclosure sale and pointed out that the form motion does not reference the attachment of a stipulation or copy of a forbearance agreement.

Sunday, June 13, 2010

100s Of FBI Mortgage & Foreclosure Scam Arrests To Begin Next Week???

The Financial Times reports:

  • The Federal Bureau of Investigation is preparing a nationwide crackdown on mortgage fraud, the latest in a series of efforts to curb lending practices that contributed to the housing meltdown, according to people familiar with the matter.

  • The FBI is preparing to arrest hundreds of people across the US as early as next week for offences including encouraging borrowers to falsify income on mortgage applications, misleading home owners about foreclosure rescue programmes, and inflating home appraisals, said two people with knowledge of the operation. An FBI spokesman declined to comment. [...] A multi-agency effort is also expected to be behind the latest crackdown, said a person familiar with the operation.

For more, see FBI to target mortgage fraud.

"It's Like The Wild West Out There" Says Lawyer As F'closing Banks Skip Eviction Process When Snatching Homes, Grant Salvage Rights To Trash-Out Crews

In Detroit, Michigan, the Detroit Free Press reports:

  • Some Michigan residents have returned home to find their windows broken, houses ransacked and valuables missing. Not from burglars, but overzealous mortgage lenders and their trash-out teams: unlicensed crews hired to clean out and secure property during foreclosures. Lawsuits filed across Michigan and the nation paint an ugly picture of impersonal foreclosures bent on speed that cut legal corners without concern for homeowners who have paid up.


  • Lawyers in [some] suits contend that some lenders, their lawyers and property management firms are granting salvage rights to trash-out crews, who then take TVs, furniture and other personal property. "It's like the Wild West out there," said attorney William Yochim, representing a Royal Oak homeowner whose residence was trashed out even after he paid it off.(1)


  • Although evictions require court orders -- even on foreclosed homes -- the Free Press found several cases in which court orders for evictions were never sought, including the Powelson case. One legal step that could have prevented the Powelson trash-out was an eviction proceeding. Real estate law experts say it's a necessary step before entering someone's home.

  • "Just because you have a foreclosure and just because the redemption period has expired doesn't mean that the lender has the right to go in and seize personal property," said Lawrence Shoffner, a Detroit lawyer who specializes in real estate and has written educational materials on the matter for the Michigan Bar Association. "You still have to go to court and get an eviction order."

  • Shoffner said the eviction process is straightforward. The lender seeks an eviction order from the local district court, which typically schedules a hearing within 10 days. If no one contests the order, it's usually granted through a summary judgment. With the court order in hand, the lender can then go to the property, typically with a court officer or bailiff, to enforce it. Any personal belongings remaining in the property are supposed to be left at the curb for the owner to reclaim.

For more, see Foreclosures go wrong as lenders, cleanup crews cut legal corners.

For a Detroit Free Press editorial, see Prosecute lenders responsible for gross foreclosure abuses.

(1) "They are like vultures," another attorney said. "Whoever gets in there first takes the possessions."

Home Improvement Contractor Gets 8 Months For Pocketing Customer Deposits & Failing To Deliver Promised Services

From the Office of the Santa Clara County, California District Attorney:

  • Peter Be, age 42, was convicted of four felony counts of Diversion of Construction Funds and a misdemeanor of Contracting Without a License. Be was CEO of Beohana Solar Corporation, a company advertising for the sale and installation of solar systems. Many homeowners were lured by Be’s advertisement for a unique way to receive a “Free Solar Program” to qualified homeowners. The advertising claimed that after a 12 year lease term, the solar system was “FREE.” After paying huge deposits, the homeowners were given a written contract which stated in small print that the solar systems were not free at the end of the lease, but the homeowners were required to pay for the equipment at fair market value. Be failed to return many deposits or install the homeowners’ equipment. Be also represented himself as a licensed contractor, which he was not.


  • Peter Be was sentenced last week to 8 months in county jail and ordered to pay restitution of $178,146.90 to the victims.

For the Santa Clara County DA press release, see Unlicensed Contractor Convicted of Diversion of Construction Funds and Contracting Without a License.

Long Foreclosure Process Makes "Free Rent" Option Appealing To Some Financially Strapped, "Underwater" Homeowners

In Grand Junction, Colorado, KJCT-TV Channel 8 reports:

  • Foreclosure rates in Mesa County continue to be well below the national rate, but people are staying longer than ever in houses they're no longer making payments on. A look at the latest numbers shows people in foreclosed Colorado homes are staying in their houses for an average of 331 days before being forced out. That's nearly a year with no payments. But the banks are the ones telling them to stay. It's a mix between an investment to keep the property in good shape, and a hope that the owners will find a way to afford to live there.

For the story, see People staying for free in foreclosed homes.

BofA Wakes Up To Realities Of Offering Sustainable, Good Faith Loan Mods; Acknowledges That "Free Rent" Option Is Huge Incentive For Many Homeowners

CNBC's Reality Check blog reports:

  • [Recently] executives at Bank of America rolled out their new "Principal Reduction Enhancement" program, which is an earned principal forgiveness plan for borrowers behind on their mortgages and whose loans are at least 20 percent underwater in value.


  • Why are they getting more aggressive on modifications? Because more borrowers are walking away. Yes, I know we've talked about this forever on this blog and on CNBC, and the New York Times did a piece [] on it, and 60 Minutes did a piece on it a few weeks ago.(1) The fact of the matter is it's getting worse, and B of A execs are acknowledging that openly.

  • On the conference call to announce the program this morning, BofA's credit loss mitigation executive, Jack Schakett, said the amount of strategic defaulters (those who can pay their loans but opt not to) are "more than we have ever experienced before." He went on to say, "there is a huge incentive for customers to walk away because getting free rent and waiting out foreclosure can be very appealing to customers."(2)

For the story, see BofA: Mortgage Walkaways Have Huge Incentive.

In a related story, see The Huffington Post: Bank Of America Executive Acknowledges Poor Service In Mortgage Mod Program.

(1) For the CBS' 60 Minutes' piece, see Mortgages: Walking Away (or for the 60 Minutes' transcript, see Strategic Default: Walking Away from Mortgages (60 Minutes: A Million Have Walked Away; Trend Could Undermine the Fragile Economic Recovery).

(2) Especially if the lenders and the sloppy (and allegedly sometimes-fraudulent) paperwork-producing foreclosure mills can't establish that they have legal standing to carry out the foreclosure process.