Fla. Rocket Dockets' Use Of Retired Judges To Steamroll Homeowners In Foreclosure Leave Advocates Crying Foul As "Standing" Issues Are Often Ignored

The New York Times reports:

• No one disputes that foreclosures dominate Florida’s dockets and that something needs to be done to streamline a complex and emotionally wrenching process. But lawyers representing troubled borrowers contend that many of the retired judges called in from the sidelines to oversee these matters are so focused on cutting the caseload that they are unfairly favoring financial institutions at the expense of homeowners.

• Lawyers say judges are simply ignoring problematic or contradictory evidence and awarding the right to foreclose to institutions that have yet to prove they own the properties in question. “Now you show up and you get whatever judge is on the schedule and they have not looked at the file — they don’t even look at the motions,” says April Charney, a lawyer who represents imperiled borrowers at Jacksonville Area Legal Aid. “You get a five-minute hearing. It’s a factory.”

***

• The [Rodney] Waters case offers an example of how wrong things can go in complex foreclosure cases. While AmTrust, a failed Ohio bank that is now a division of New York Community Bank, said it owned the note and could foreclose, Mr. Waters’s lawyer produced documents showing that Fannie Mae, the taxpayer-owned mortgage finance giant, was really the owner. In spite of the conflicting evidence, Aaron Bowden, the retired judge overseeing the case, made a summary judgment on Aug. 3, ruling that the property should go back to AmTrust. Mr. Bowden did not return phone calls seeking comment.

• Chip Parker, managing partner at Parker & DuFresne in Jacksonville, which represents Mr. Waters, said: “The threshold issue in any foreclosure case is who has the right to foreclose. We presented evidence to the judge that Fannie Mae owns the note and mortgage, and yet the judge ignored this crucial evidence.”

• Mr. Parker is concerned that some homeowners are victimized by the system. “What we are talking about is railroading homeowners through the rocket docket,” he added. When contacted by a reporter on Thursday, a spokeswoman for Fannie Mae confirmed that it owned the note. David Tong, the lawyer representing AmTrust in the case, declined to comment on the matter. But on Friday, he did an about-face, filing papers with the court acknowledging that Fannie Mae owns the note.

***

• Setting up discrete foreclosure courts statewide was seen as a way to help deal with the issue; consumer law experts say they aren’t aware of any other state that has set up a temporary court to work down such a backlog.

• But it is paradoxical, say lawyers representing homeowners in the cases, that Florida’s attorney general acknowledges problems in the cases while retired judges, intent on reducing caseloads, seem unconcerned about those same problems — like flaws in the banks’ documentation of ownership.

For more, see Florida’s High-Speed Answer to a Foreclosure Mess.

Convicted Foreclosure Rescue Scammer Could Face Life Sentence On New Charges In Alleged Sale Leaseback, Equity Stripping Ripoff That Fleeced 5 Victims

In Los Angeles, California, The Los Angeles Times reports:

• Timothy Barnett spent nearly five years in state prison for a 1990s foreclosure rescue scam in which he conned homeowners out of tens of thousands of dollars. Now, prosecutors say, he has been at it again, targeting residents in the same South Los Angeles neighborhood he fleeced before.

• But this time, the state is unleashing one of its more powerful weapons against him. The Los Angeles County district attorney's office has charged Barnett under California's much-debated three-strikes law. Usually aimed at offenders with a history of violent crime, it is rarely used for white-collar offenses such as fraud.

• Arrested in April, the 47-year-old Barnett is charged with 23 felonies — including theft from the elderly, identity theft and real estate fraud — for allegedly tricking five people into unknowingly granting him title to their homes.(1) He has pleaded not guilty. Some experts said the case would be one of the first times a person charged with a white-collar crime was prosecuted under the state's three-strikes law. If convicted, Barnett could face life in prison.

***

• He is charged with tricking victims — who said they thought they were refinancing their delinquent mortgages — into selling him their homes for a fraction of their value.(2) By the time prosecutors began looking at Barnett again, he had bought a $3.1-million home in Orange County and three Mercedes-Benz vehicles.

***

• In addition to the five cases that are the subject of the criminal case, several others are described in civil lawsuits filed against Barnett. [...] "He'd look for homes that had a lot of equity and people that were vulnerable," said Patrick Dunlevy of the Los Angeles-based Public Counsel Law Center,(3) which has filed lawsuits on behalf of several people who said they had lost their homes to Barnett. "He would bill himself as a Christian, say he was doing God's work. That resonated very well with the people he was approaching.... It was all a con, just a way to get them to trust him."

For more, see Man accused of fraud may get life in prison under California's three-strikes law (The stiff penalty is rarely used against white-collar criminals. Timothy Barnett is charged with 23 felonies for allegedly tricking five people into unknowingly granting him title to their homes).

(1) According to the story, prosecutors also charged him with burglary because he met with his victims in their homes. Under California law, a person can be convicted of residential burglary for entering someone's house with the intent to commit a felony, even if he or she enters with the homeowner's permission, the story states.

(2) California case law appears to clearly support the proposition that, at least in the context of a criminal prosecution, tricking people into unknowingly signing over the title to their homes constitutes the crime of forgery. See:

Buck v. Superior Court, (1965) 232 Cal.App.2d 153 (case law links may require free registration at Findlaw.com):

• Where a person who has no intention of selling or encumbering his property is induced by some trick or device to sign a paper having such effect, believing that paper to be a substantially different instrument, the paper so signed is just as much a forgery as it would have been had the signature been forged. (Conklin v. Benson, 159 Cal. 785, 791 [116 P. 34, 36 L.R.A. N.S. 537]; Wright v. Rogers, 172 Cal.App.2d 349, 362 [342 P.2d 447].) An encumbrance may be the subject of forgery. (Conklin v. Benson, supra, page 792.) The crime of forgery is complete when one makes or passes an incorrectly named instrument with intent to defraud, prejudice, or damage, and proof of loss or detriment is immaterial. (People v. McAffery, 182 Cal.App.2d 486, 493 [6 Cal.Rptr. 333]; People v. Morgan, 140 Cal.App.2d 796, 800 [296 P.2d 75].) Whether the instrument forged has independent value is unimportant; the crime is complete when the act is done with the requisite intent.

People v. Martinez, (2008) 161 Cal. App. 4th 754; 74 Cal. Rptr. 3d 409:

• [A] a forgery conviction can be based on a document with a genuine signature.

See More On Property Owners Being Tricked Or Deceived By Scammers Into Signing Documents for a sampling of additional California case law in this regard.

Further, California case law has clearly addressed the notion some scammers appear to operate under in that they can insulate themselves from criminal prosecution when targeting their victims simply by entering into legitimate-looking business contracts when screwing them over. See (bold text is my emphasis, not in the original text; case law links are found at Findlaw.com - may require free registration):

People v. Frankfort, (1952) 114 Cal.App.2d 680, 700; 251 P.2d 401:

• The simple answer to this argument is that "The People prosecuting for a crime committed in relation to a contract are not parties to the contract and are not bound by it. They are at liberty in such a prosecution to show the true nature of the transaction." (People v. Chait, 69 Cal.App.2d 503, 519 [159 P.2d 445]; People v. McEntyre, 32 Cal.App.2d Supp. 752, 760 [84 P.2d 560]; People v. Jones, 61 Cal.App.2d 608, 620 [143 P.2d 726]; People v. Pierce, supra, p. 605.)

People v. Jones, 61 Cal.App.2d 608, 620 [143 P.2d 726]:

• Defendant argues that the deal with each "seller" was a civil transaction; [...] Cloaked in the draperies of his corporation and pretending to act in its behalf, he boldly approached his unsuspecting victims.

***

• Although each deal in its incipiency bore the color and trappings of a normal, civil contract, yet when subjected to a postmortem it exhaled the stench and disclosed the carcass of a fraud. (People v. Epstein, 118 Cal.App. 7, 10 [4 P.2d 555].) There appears no sign of good faith at any turn. Each taking and appropriation was a grand theft.

• The use of the corporate name and the promises made in accomplishing his purpose were a camouflage of such common variety that no excess of genius was required to discern the fraud. Parol evidence of all that occurred was admissible to show the intention of defendant. (People v. Robinson, 107 Cal.App. 211, 221 [290 P. 470].)

(3) Public Counsel is a Los Angeles-based, pro bono public interest law firm that, according to their website, delivers free legal and social services to the most vulnerable members of our community, including abused and abandoned children, homeless families and veterans, senior citizens, victims of consumer fraud and nonprofit organizations serving low-income communities. They are the public interest law office of the Los Angeles County and Beverly Hills Bar Associations and the Southern California affiliate of the Lawyers' Committee for Civil Rights Under Law.

F'closure Rescue Operator At It Again As DC AG Slams Sale Leaseback Peddler w/ Suit Seeking To Void Title Transfers Violating Consumer Protection Law

From the Office of the District of Columbia Attorney General:

• Attorney General Peter Nickles announced [] that the District has filed a Superior Court enforcement action against Vincent L. Abell, charging that he engaged in foreclosure rescue transactions that violated the District’s consumer protection law. The District’s complaint asks the Court to rescind the unlawful transactions.

• According to the District’s complaint, Abell misled homeowners into believing that they were being offered loans that would prevent them from losing their homes to foreclosure. Instead, Abell had the homeowners sign documents that transferred the homes’ titles to him and converted the homeowners into Abell’s tenants.

• Through these transactions, Abell obtained all of the equity in the homes for only a small fraction of its value. The homeowners victimized by Abell’s practices have typically been financially unsophisticated and desperate to save their homes from foreclosure. “We will not allow District homeowners to be preyed upon in this way,” Attorney General Nickles said.(1)(2)

• The District has also alleged that Abell sold condominium apartments in DC without posting the bonds or letters of credit required by District law.

For the DC AG press release, see Attorney General’s Office Files Action Against Foreclosure Rescue Scam.

See also WTTG-TV Channel 5: DC Files Enforcement Action Against Foreclosure Rescue Scam, which also includes the story of DC resident Maria-Theresa Wilson, who was screwed over by Abell a couple of years back. She ended up suing him and scored a $3.3 million judgment against him, his company and a confederate named Calvin Baltimore. The judgment was upheld on appeal in a recent ruling. See Modern Mgmt Co. v. Wilson, 997 A.2d 37; 2010 D.C. App. LEXIS 283 (D.C. June 3, 2010).

(1) A 1988 ruling of the District of Columbia Court of Appeals lends support to the proposition that a home equity ripoff involving a sale of real estate with a contemporaneous leaseback of the premises to the seller, coupled with a right to buy back the property may be nothing more than a disguised usurious equitable mortgage masquerading as a true sale. See Browner v. Dist. of Columbia, 549 A.2d 1107 (D.C. 1988)(bold text is my emphasis, not in the original text; [alterations] added:

• Moreover, if the transactions were in fact sales, as [the foreclosure rescue operators] contend, they were surely most extraordinary ones. When a homeowner sells his home, which is usually his most valuable possession, one would expect at least some measure of bargaining over the sales price. Here, there was none. In each instance, what the [foreclosure rescue operators] characterize as the "sales" price bore no relation whatever to the value of the equity. It is absurd to suggest that Mrs. Carroll would knowingly sell her home, in which she had an equity of more than $36,500.00, for $8,100.00. None of the "sellers" had placed his or her home on the market or expressed the slightest interest in selling it. Each "seller" remained in possession after the purported sale, and [the foreclosure rescue operators] were indeed depicting their service as one that would enable their clients to "save" their homes from foreclosure. Although the transaction also lacked one of the common characteristics of a loan -- an evaluation of the borrower's credit -- no such investigation was needed because the home itself, which in each case was worth far more than the amount expended by the [foreclosure rescue operators], served as their security.

• It was therefore altogether reasonable for the trial judge to find that the depiction of each of these transactions as a sale and lease back was a transparent sham which masked an unlawful loan.

(2) For other stories on Vincent Abell and his foreclosure rescue racket, see:

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

Sentencing Postponed For Head Of Southern California Land Patent Foreclosure Rescue Scam

In San Diego, California, KGTV-TV Channel 10 reports:

• Sentencing was delayed Thursday for a man convicted of defrauding homeowners by falsely telling them that for a price, he could provide them with "land patents" that would protect their properties from foreclosure. Larry Smith, 62, was found guilty in June of 21 felony counts, including grand theft and unlawful practices by a foreclosure consultant.

• After the trial, Smith fired his attorney and hired another to consider seeking a new trial, according to Deputy District Attorney Marlene Coyne. [...] Smith -- who has prior convictions for second-degree murder, robbery and burglary -- faces a "very lengthy" prison term when he is ultimately sentenced, the prosecutor said. Smith and others tricked homeowners into paying them thousands of dollars for land patents that in fact did not stop their homes from being foreclosed on.

Source: Sentencing Delayed For Foreclosure Protection Scammer (Larry Smith Was Convicted Of 21 Felony Counts).

Florida Court Clobbers Foreclosure Mill With $49K Contempt Citation; Continuous Failure To Appear At Hearings w/out Giving Notice Raises Judge's Ire

In Manatee County, Florida, the Sarasota Herald Tribune reports:

• A circuit judge singled out a Fort Lauderdale foreclosure firm on Monday, finding its business model violates legal ethics and leveling a $49,000 fine for scheduling hearings and then not showing up in court.

• In a judicial district that has taken a hard line on fraudulent or messy foreclosure filings, the judge's ruling is the first time a court officer has openly attacked the methods of one of the firms responsible for thousands of foreclosures statewide.

• Circuit Judge Janette Dunnigan scolded five lawyers from the Smith, Hiatt and Diaz firm in connection with a Manatee County foreclosure case filed in 2007. The firm is one of several "foreclosure mills" filing thousands of foreclosure cases monthly. The firm's attorneys filed what amounted to "sham" paperwork setting seven hearings over two years, and then failed to appear in court or tell the judge or other parties when they were canceled. The case is still unresolved.

***

• Dunnigan brought the contempt of court herself, and threatened to push forward on a criminal contempt of court against the attorneys. [...] The firm will be fined $7,000 a day until [the firm] provides Dunnigan with a description of a new policy that attorneys cannot set hearings without having all documents ready. Also, every lawyer in the firm must sign documentation that they understand the new policies. The firm must also review all cases scheduled in Manatee County and have the attorney that will appear at that hearing sign a paper that they will do so.

***

• The case turned out well for the homeowner. The law firm voluntarily dismissed the case, and must pay the owner $450 in lost wages for showing up at the last hearing.(1)(2)

For more, see Judge fines major legal firm for foreclosure conduct (Lawyers to pay $49,000 for not showing up at scheduled hearings).

(1) The homeowner may also be able to recover any legal fees paid or due to his/her attorney by asking the judge to order the foreclosing lender to cough up the cash. See Landry v. Countrywide Home Loans, Inc., 731 So. 2d 137 (Fla. 1st DCA 1999):

• The general rule is that "when a plaintiff voluntarily dismisses an action, the defendant is the prevailing party." See Thornber v. City of Ft. Walton Beach, 568 So. 2d 914, 919 (Fla. 1990). Further, "it is well established that attorney's fees are properly awarded after a voluntary dismissal where such award is provided for by statute or agreement of the parties." See Century Construction Corp. v. Koss, 559 So. 2d 611, 612 (Fla. 1st DCA 1990), review denied, 574 So. 2d 141 (Fla. 1990). See also Boca Airport, Inc. v. Roll-N-Roaster of Boca, Inc., 690 So. 2d 640, 641 (Fla. 4th DCA 1997), review dism'd, 698 So. 2d 543 (Fla. 1997)("for purposes of a prevailing party attorney's fees statute, a voluntary dismissal by the claimant makes the opposing party a 'prevailing party' as to the issue of entitlement to fees").

In Florida, where an agreement allows for an attorney fee award to one of the contracting parties, state statute mandates an award of prevailing party attorney's fees to the other party under the reciprocity provisions of section 57.105(7), Florida Statutes; Landry, supra. (Mortgages almost always contain a provision that allow a lender to tack on its legal fees to the amount owed by the borrower when bringing litigation to enforce its rights. Accordingly, by reason of section 57.105(7), the homeowner likewise would be entitled to a recovery of his/her attorney's fees from the losing lender).

See also Attorney Fee Awards For Successful Foreclosure Defense In Florida.

In addition, in this case, the law firm possibly may also be ordered to ante up part of the homeowner's legal fees by reason of section 57.105(1), Florida Statutes:

• Upon the court’s initiative or motion of any party, the court shall award a reasonable attorney’s fee, including prejudgment interest, to be paid to the prevailing party in equal amounts by the losing party and the losing party’s attorney on any claim or defense at any time during a civil proceeding or action in which the court finds that the losing party or the losing party’s attorney knew or should have known that a claim or defense when initially presented to the court or at any time before trial:
  
  (a) Was not supported by the material facts necessary to establish the claim or defense; or
  
  (b) Would not be supported by the application of then-existing law to those material facts.

In a peripherally related article (added 9-22-10), see The Florida Bar Journal: Pleading Requirements for a Claim for Attorneys' Fees.

(2) The Court reportedly awarded Barrington Ridge Homeowners Association, Inc., the association in which the property in foreclosure is a part of and which presumably holds a lien (subordinate to the foreclosing lender's mortgage) for unpaid HOA fees, its attorneys' fees from the filing of its Motion to Compel the Bank to Proceed with Foreclosure to the present, according to a press release issued by the association's law firm. See Becker & Poliakoff Applauds Manatee County Circuit Court Judge's Order Imposing Fines Against Bank's Foreclosure Law Firm.

Mortgage, Consumer Fraud Litigation To Skyrocket With Passage Of Wall Street Reform Act?

LegalNewsLine.com reports:

• Homeowners gained leverage for litigation against mortgage lenders through the financial reform law Congress passed this summer. The Dodd-Frank Wall Street Reform and Consumer Protection Act not only tightened mortgage rules, but it also multiplied potential damages against rule breakers.

***

• Along with mortgage litigation, the bill invites consumer fraud litigation. Any state attorney general can enforce the state's consumer fraud law against a national bank or a federal thrift, the authors wrote. "This will subject national banks to state law requirements they otherwise would not be subject to," Taft said. "If they do not comply, there would be penalties under state and possibly federal law." [...] Whether a private citizen can pursue a cause of action for consumer fraud could depend on state or federal law, he said.

For more, see Dodd-Frank reform law invites new litigation opportunities against mortgage lenders.

See also Lexology: Mortgage Reform and Anti-Predatory Lending Act for an overview of this new consumer protection law (requires subscription; if no subscription GO HERE; or TRY HERE - then click link for the story).

Labor Day "Greetings" To The Clerks Toiling In Anonymity At The Various Document-Manufacturing, Foreclosure Mill Factories

Sarasota Herald Tribune's Tom Lyons sends a "friendly" Labor Day greeting to all the overworked clerks at Florida's foreclosure mills in a column this weekend. He also comments on the mill bosses, and highlights his column with observations on one recent case where a judge hammered a law mill with a $49,000 fine with a promise to tack on an additional $7,000/day if the law firm/paperwork factory doesn't come up with a plan to clean up its sloppy practices.

For the column, see Lyons: Overworked clerks of foreclosure mills.

S. Florida Lawyer Gets Jail Time For Hijacking $1.6M In Real Estate Closing Funds Earmarked For Mortgage Loan Payoffs; Title Insurer Left Holding Bag

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

• Hollywood title attorney Peter N. Price has been sentenced to almost four years in jail, and ordered to pay $1.7 million to Stewart Title Guarantee Inc. regarding allegations that he embezzled $1.6 million in loan proceeds.

• Federal and state investigators said Price took the money, earmarked for paying off mortgage loans for clients, from his Intracoastal Title Services Inc. escrow account for real estate closings he was handling. Instead of doing the payoffs, Price prepared and sent false federal real estate forms, stating the loans had been paid, according to court documents.

• Price was charged with making false statements to the U.S. Department of Housing and Urban Development, and sentenced by U.S. District Judge James Cohn in Miami.

Source: Hollywood title attorney gets four years after embezzling $1.6 million.

Media Probe Spurs Texas AG Lawsuit Alleging That Unlawful Servicer Collection Tactics Squeezed Late Fees From Homeowners, Driving Them Into F'closure

In Dallas, Texas, KDFW-TV Channel 4 reports:

• Just two weeks after a FOX 4 investigation, the Texas Attorney General is cracking down on a local mortgage servicing company. In our investigation, FOX 4 showed how the AG's office told complaining consumers it was too busy and they should hire their own attorneys to fight American Home Mortgage Servicing, Inc.

• But that has suddenly changed. Now, the Texas Attorney General has sued the Coppell-based company, accusing AHMSI of aggressive and unlawful tactics to collect mortgage payments from Texas homeowners and has filed suit.

For more, see Texas Attorney General Sues Mortgage Servicing Company.

*****************

From the Office of the Texas Attorney General:

• Texas Attorney General Greg Abbott [] charged Coppell-based American Home Mortgage Servicing Inc. (AHMS) with using illegal debt collection tactics and improperly misleading struggling homeowners.

• According to state investigators, AHMS collections agents used aggressive and unlawful tactics to collect payments from Texas homeowners who had difficulty meeting their payment obligations. The defendant also failed to credit homeowners who properly submitted their payments on time.

***

• In other cases, AHMS agents falsely claimed that homeowners did not make payments so the agents could justify profitable late fees or escrow accounts. The defendant also failed to properly credit homeowners after AHMS agents withdrew funds from the homeowners’ checking accounts. Because of the defendant’s unlawful conduct, homeowners defaulted on their loans, leading to foreclosure proceedings.

For the Texas AG press release, see Attorney General Abbott Charges Home Loan Servicer With Violating State Debt Collection Laws (American Home Mortgage Servicing Inc. failed to properly process requests).

For the lawsuit, see State of Texas v. American Home Mortgage Servicing Inc.

Cops: "Owner-Finance" Home Seller Pocketed Buyer's Monthly Payments & Stiffed Bank Holding Existing Mtg After Screwing Earlier Victim In Similar Scam

In West Palm Beach, Florida, The Palm Beach Post reports:

• Michael Chinloy, detectives allege, bought an Acreage home, sold it to someone, waited for her to move out, sold it to another couple, and then let it foreclose. And, in the process, pocketed at least $86,000.

• Now Chinloy, 46, booked into the Palm Beach County Jail [...], is charged with grand theft more than $20,000 and organized scheme to defraud more than $50,000. He's being held in lieu of $20,000 bail.

• According to a Palm Beach County Sheriff's report, the couple believed they'd bought the home from Chinloy in June 2007. The deal: $30,000 down plus a monthly mortgage payment of $3,290.42. Over two years, the couple claimed, they paid Chinloy more than $120,000 before they started getting foreclosure notices.

• It turned out Chinloy had bought the Acreage home in July 2006 for $360,905. Three months later, he sold it for $384,000 to a woman in Palm Beach Gardens. The woman, who had just gone through a divorce and had credit problems, said Chinloy kept jacking up her mortgage payments until she could no longer pay and she moved out in May 2007.

• A month after that, Chinloy sold the house to the couple for $354,983. Then he stopped paying the mortgage and the home was foreclosed on in January 2008.

For more, see West Palm Beach man charged with grand theft, real estate fraud; allegedly sold same house twice.

Bank Returns Possession Of Prematurely Padlocked Home In Foreclosure To Ailing Senior Who Spent Winter In Homeless Shelters; Slept In Parked Car Since

In Schaumburg, Illinois, the Daily Herald reports:

• A Schaumburg man who was living in his own yard after being padlocked out of his house during foreclosure proceedings was able to move back inside [last week]. John Wuerffel, 62, [...] was returned access to his home by representatives of HSBC Mortgage Corp., which is handling the foreclosure case on behalf of Freddie Mac.

• HSBC spokesman Neil Brazil said the house was padlocked last fall to protect its value after it appeared to have been abandoned by Wuerffel, who couldn't be found. Wuerffel said he was living out of state when the house was padlocked, and he returned to find it in that way. He spent the winter living in homeless shelters and took to sleeping in one of his several vehicles parked in the driveway when the shelters closed in the spring.

***

• Wuerffel said he is supposed to be on medication for bipolar disorder and a heart condition, but that his financial situation has sometimes kept him from affording either one. In fact, Wuerffel said medical bills are to blame for the threatened foreclosure of the home he's owned since 1971.

For more, see Schaumburg man regains access to padlocked home.

Chicago Man Guilty Of Creating Phony Land Documents To Sell Homes Out From Under Real Owners To Unwitting Buyers While Posing As Federal Official

From the Office of the U.S. Attorney (Chicago, Illinois):

• A Chicago man was convicted of federal charges for posing as a federal government official in a scheme to sell properties he did not own out from underneath the real owners. The defendant, John Hemphill, was found guilty [] of mail fraud and false impersonation of a federal official following a week-long trial in U.S. District Court, [...].

***

• According to the evidence at trial, since 2008, Hemphill engaged in a scheme to defraud property owners and prospective purchasers of property by creating and recording fictitious deeds with the Cook County Recorder of Deeds, posing as the property owner selling the property in question.

• Hemphill typically filed a fictitious deed with the county recorder that purported to convey title to a parcel of property from its lawful holder to one of Hemphill’s businesses, and then filed a second fictitious deed purporting to convey title to the same property from his business entity (the new purported owner) to a third party. Hemphill also falsely represented to prospective purchasers of properties that he and his business entities held title to these properties in their capacity as a "federal receiver" or had other lawful authority to convey the properties to third parties. Under these false pretenses, Hemphill purported to sell these properties to third parties, usually for cash payments.

***

• Two witnesses at trial — a La Grange police officer and a victim who bought a home Hemphill did not own — testified that when they challenged Hemphill over his fraudulent representations, he produced a bogus badge indicating that he was a federal agent.

For the U.S. Attorney press release, see Chicago Man Convicted of Posing As Federal Official in Scheme to Obtain and Sell Area Properties he Did Not Own.

Rogue Public Official Gets 17 Years In Prison For Assorted Corruption; Bad Acts Include Sales Of Land He Didn't Own To Church, Elderly Woman

In New Orleans, Louisiana, The Times Picayune reports:

• Jonathan Bolar upset an incumbent in 2001 to gain a seat on the Gretna City Council, in great part because voters believed his promises to work hard and to put their interests first. Mr. Bolar worked hard all right -- but to put his office up for sale.

• He extorted thousands of dollars from constituents who needed city permits. He twice sold land he did not own, to a church and to an elderly woman. He evaded paying taxes for a decade. In April, a jury convicted Mr. Bolar on 13 charges. The heavy price for such a resume of corruption came [last week], as U.S. District Judge Lance Africk sentenced Mr. Bolar to 17 years in prison. He also will have to pay $174,000 in restitution to his victims, in addition to $85,700 he already was ordered to forfeit.

For the story, see Former Gretna Councilman Jonathan Bolar, rogue public official, goes to jail.

Seattle Feds Bag Woman In Alleged Scam That Placed Title To Homes Bought By Novice Homebuyers Into Other Clients' Names & Pocketed Their Loan Payments

From the Office of the U.S. Attorney (Seattle, Washington):

• LIZA BAUTISTA, 50, of Tukwila, Washington, was arraigned [] in U.S. District Court in Seattle on charges of mail fraud, wire fraud and misuse of a Social Security Number, in connection with a scheme to defraud lenders and line her own pocket.

***

• According to the indictment, BAUTISTA held herself out as someone who could help first time buyers with bad credit purchase their first home. According to the indictment, she took advantage of these purchasers naivete—they trusted BAUTISTA when she told them the paperwork was all in order, and that they had purchased their first home.

• In reality, BAUTISTA had obtained the home loans and placed title to the properties in the names of past clients who had better credit. These past clients were shocked when lenders started contacting them about homes they had never purchased. The naive buyers could not understand why lenders kept mailing information to their home in the names of other people.

• Some of these new purchasers made their mortgage payments to BAUTISTA who pocketed the payments instead of passing them on to the lending institutions. When the young purchasers learned they had not really purchased their dream home, they had to move out, and the lending institutions lost thousands as the homes were foreclosed and sold at a loss. BAUTISTA pocketed about $20,000 on six loans worth over $800,000.

For the U.S. Attorney press release, see Former Mortgage Originator Indicted for Scheme Misusing Former Clients’ Personal Information (Woman Allegedly Obtained Loans in the Names of Past Clients for New Novice Purchasers).

16 Tenants In Dilapidated Apartment House Get The Boot w/ No Prior Notice; Dangerous Conditions Force City To Shut Down Premises On Eve Of F'closure

In Salisbury, Massachusetts, The Daily News of Newburyport reports:

• The Salisbury Beach apartment building at 14 Ocean St. deemed uninhabitable by town inspectors will be up for sale in a foreclosure auction Sept. 15, as its owners Jack and Marina Kitzis walked away from it, leaving five families homeless.

***

• After nearly 30 calls from town inspectors since May concerning the unsafe state of the building's staircase, its electrical and plumbing systems, as well other code violations, Kitzis told Salisbury building inspector David Lovering on Aug. 10 if his insurance company won't pay to fix what's wrong with the building, he was going to forfeit the property to the bank.

***

• Town Manager Neil Harrington has since Aug. 16 tried unsuccessfully to make contact with the bank that now has control of the buildings. Harrington and selectmen had hoped the bank would make the needed improvements to the buildings, allowing the 16 displaced tenants to return to their homes. "Right now, I think it's fairly clear that the families who once lived there won't be returning," Harrington said.

***

• The electricity was turned off, and firefighters tore down the stairs as a precaution. Although firefighters helped residents out via ladders, tenants left most of their food and belongings behind and were out on the street with no shelter.

***

• Kitzis was called to the scene that night [of the eviction], agreeing to put up the tenants for one night at a Salisbury motel, but since then the families -- most with young children -- have had to shift for themselves. Kitzis has not returned security deposits or rents for the month of August, leaving the families cash strapped as well. [...] The foreclosure may let Kitzis wiggle out of his responsibilities to his mortgage holder and his tenants, but Harrington hopes there's a way to move legally -- even criminally -- against him in weeks to come.(1)

For more, see Auction set for 'slumlord' apartments, leaving tenants homeless.

(1) For one thing, he can be charged with theft of entrusted funds for refusing to return the tenants' security deposits that he pocketed (and that he should have kept in a segregated bank account).

"Sovereign Citizen" Bail Set At $100K In Alleged Deed Ripoff Racket; Judge Refuses To Recognize Suspects' Claims Of "Diplomatic Immunity" From Arrest

In Conyers, Georgia, the Rockdale Citizen reports:

• Rockdale County Superior Court Judge David Irwin ordered a $100,000 bond for charges relating to foreclosure fraud for an Atlanta man who claimed to be a sovereign citizen and apparently “no team player in the World Cup,” the judge said.

• Akeem Kwame, 48, of Atlanta appeared before Irwin on Monday in connection with a May incident in which Kwame allegedly identified himself as a private banker and offered a Lions Gate Drive homeowner a quit claim deed so he could try to gain ownership of her home. The homeowner told authorities that someone, claiming to be her husband, called her mortgage company and did a loan modification on the foreclosure of the home, according to law enforcement reports. The Realtor selling the home called authorities when all the locks to the house had been changed and Kwame was seen leaving the residence in a Porsche. Kwame told responding deputies that he was buying the house from the bank. Kwame was arrested shortly afterward.

***

• Irwin questioned if Kwame needed psychiatric evaluation, based on Kwame’s claims to sovereignty. “Because when they write me letters ... and say ‘I’m sovereign and not governed by anybody’ ... it causes me to wonder about one’s sanity,” Irwin said.

***

• As a special condition [to allow for a bail bond], Irwin also ordered Kwame to surrender any passport and any ID card “saying he is a diplomat in his own mind or a diplomat for the country of whatever his country is.” Kwame is charged with first-degree forgery, financial identity fraud, theft by deception, criminal trespass, second-degree forgery and financial identity fraud.

• Kwame’s case is the second local case involving sovereign citizens that has popped up in Rockdale County. Authorities in DeKalb County arrested Ivan Willis Taylor, 47, and Princess Donya Taylor, 41, of Stone Mountain on Aug. 19 on Rockdale County warrants relating to a July incident in Magistrate Court. Ivan Taylor was accused of making identification cards that claimed he was an ambassador of a sovereign state and had diplomatic immunity from arrest.

For the story, see Bond set in foreclosure fraud case (48-year-old suspect claims he is a sovereign citizen).

Judge Gives Foreclosure Action The Go-Ahead; Refuses To Give Weight To Crackpot-Created Promissory Notes & Deeds In Home Rescue Racket

In Cobb County, Georgia, WSB Radio reports:

• A Cobb County man says he can save your house from foreclosure. All you have to do is sign it over to him! Joseph Jones III has been busy explaining this procedure to a judge. Somewhat incredibly, 13 homes in four metro counties have been signed into his name.

• Jones says banks are "stealing" and committing "fraud". So he prints his own promissory notes, posting deeds in the window in his name. He insists he's not breaking any laws and isn't counterfeiting. Nor is he one of the "sovereign citizens" we've heard about recently. Jones simply claims there's no difference between a bank note, and his.

• "Everything I do is according to law," Jones tells Channel 2 Action News. "And if I'm not doing anything according to law, then call the police and have them come arrest me." A judge late Thursday disagreed, ruling foreclosure proceedings against one of Jones' properties can proceed.

Source: Cobb County Home Buying Scam.

More On "Sovereign Citizens" Racket Using Phony Deeds, Fraudulent Liens To Stake Claims To Real Estate, Harass Enemies Of The Movement

In DeKalb County, Georgia, The Atlanta Journal Constitution reports:

• When a new family moved into the mansion on South Goddard Road in south DeKalb County, residents just assumed they were “city folks” too busy to meet neighbors. Georgia Power and the water company came out, but 87-year-old Helen Goddard never saw the residents. “We know everyone around here. But they were quiet, no knocking on the door to introduce themselves,” said Goddard, whose husband’s family has lived in the area for centuries and are the namesake for the road.

• The only time Goddard saw her next-door neighbors was when they were being led off in handcuffs. Prosecutors say the $1 million brick home next to the Goddards’ farmhouse is one of at least 19 properties that have been taken over by a sect of anti-government extremists involved in criminal behavior.(1)

• They call themselves “sovereign citizens” and believe they are immune to state and federal laws. They assert, among other things, that banks can’t own land and that any home owned by a bank – including the thousands throughout Georgia – is free for the taking. Police and prosecutors take a different view.(2)

For more, see DA: Paper terrorists stealing homes (S. DeKalb home is one of 19 Ga. properties usurped by 'sovereign citizen' group).

(1) According to the story, local investigators have tied the sovereign citizens to at least 19 property thefts in DeKalb, Fulton, Gwinnett, Henry, Spalding, Newton and Richmond counties, including mansions – some still under construction – and a shopping center in Buckhead valued at $13 million. Police have reportedly charged six suspects – including Goddard’s two neighbors Linda and Gregory Ross – with violating the Racketeer Influenced and Corruption Organizations Act, with warrants having been issued for another five suspects.

For a similar racket being alleged in New York, see Feds Indict Trio In Alleged $1.24 Trillion Bogus Lien Extortion Racket Targeting Government Officials, Bank Executives; and for a related civil lawsuit filed in this NY case, see County of Ulster, New York, et al. v. Ulloa, et al.

(2) In a related item, see Anti-Government "Sovereign Citizen" Movement Exploits Economic Climate, Engages In Scams And Criminal Acts:

• [Among the] troubling developments in the sovereign citizen resurgence include:
  
  · Exploiting the mortgage/foreclosure crisis. Sovereign citizen adherents are promoting a variety of scams that falsely claim to save people's homes from foreclosure. Other sovereign citizens are even brazenly seizing foreclosed homes for their own use.
  
  · Engaging in "paper terrorism." At alarming rates, sovereign citizens are placing fraudulent liens on the property of perceived enemies as a highly effective means of harassment and retaliation. Some even do it from prison cells.

Judge Kiboshes "Secession" Defense; Rejects Native American Property Owner's Attempt To Form His Own Indian Reservation To Dodge City "Fix-Up" Order

Attorney/columnist John G. Browning writes in The Southeast Texas Record:

• Sometimes, I get the feeling that judges are placed in the position of being like a game show host dealing with a particularly dense contestant giving an incorrect answer - "No, so sorry, but thanks for playing and we have some lovely parting gifts for you." When litigants come up with some of the most bizarre theories and defenses imaginable, some judges have to wonder, "Did you really think I was going to buy that?"

• Take William Bowersock, for example. The Lima, Ohio, man was facing violations of the city's nuisance laws for two run-down houses he owns, and which the Lima property authorities had ordered him to clean up and repair. Bowersock's defense was to contend that he had seceded from the city and, by virtue of his Native American ancestry, had formed his own Indian reservation - making him exempt from the city's property code.

• But Judge Richard Warren said not so fast, Cochise; he rejected the whole "I am my own reservation" argument and ordered Bowersock to fix up the two homes. It just goes to show you - no man is an island, and no man is an Indian reservation either.

For other bizarre legal theories and defenses from litigants in lawsuits, see "Nice Try, But ... No."

Homeowners Say Chase Pocketed Insurance Payment w/out Promptly Crediting Account; Sue Servicer For Credit Rating Damage, Inflated Fee Clip

In Galveston, Texas, The Southeast Texas Record reports:

• A Galveston County couple accuses Chase Home Finance LLC of mishandling a house payment made after Hurricane Ike and providing false information to credit bureaus, recent court documents say. According to a lawsuit filed July 20 in Galveston County Court No. 3, Sam and Jennifer Finegan informed the defendant that they will pay off a loan for their Hurricane Ike-damaged residence when they receive their insurance claim.

***

• The plaintiffs issued Chase a check for $20,000 in November 2008. They claim the defendant, however, did not properly apply the payment, but submitted negative credit information to various credit reporting agencies instead.

• Chase continued to hold on to the funds without crediting the account, the suit says. The plaintiffs argue that they tried to address the situation, but were unsuccessful in reaching an authority. Chase's errors and lack of response inflicted damage to the Finegans' credit rating, the suit states.

For more, see Couple claims finance company ruined their credit.

BofA's Failure To Promptly Post $53K Payment Leaves Homeowner Facing Imminent Foreclosure Hanging In The Wind; Media Help Needed To Cancel Sale

In Campbell, California, KGO-TV Channel 7 reports:

• A homeowner days away from foreclosure thought he had finally dug himself out of trouble, but that's not what happened, at least until he called 7 On Your Side. Nicholas Hatt is enjoying a rare moment of quiet after months of not knowing if he would lose his home.

***

• His grandfather offered to loan him $53,000 to get his mortgage current, but giving that money to Bank of America proved difficult. "They told me until they received the money, they would have the foreclosure date set for Monday, and this was a Friday and I'm asking for the money to be transferred from one account to the other. They told me I had to mail it," says Hatt.

• He showed 7 On Your Side a copy of the cashier's check and a tracking confirmation showing Bank of America received his check, but days went by without the payment being posted - not knowing if he would lose his home. "At that point, I just kept calling. I kept calling every day. They didn't post anything," says Hatt.

• After two weeks, his anxiety had become unbearable. He turned to 7 On Your Side for help. We called Bank of America and within two days, the funds were posted to his account and Nicholas' home came out of foreclosure.

For the story, see Homeowner avoids foreclosure with last minute payment.

Bank Attempts F'closure After Jacking Up Fees On Loan That Was Fully Paid w/ Satisfaction Recorded 5 Years Earlier; Backs Down After Media Intervenes

In Lawrence County, Pennsylvania, WPXI-TV Channel 11 reports:

• A Lawrence County man said his bank began foreclosing on his home, even though he paid his mortgage off. Richard Leaghty said in 2004 he sold his business and then paid his mortgage off in full at National City Bank. Three months later, the bank filed a document with Lawrence County that showed the mortgage was paid off.

• But five years later, after National City was purchased by PNC Bank, Leaghty began receiving bills that said he owed $1,200 on his mortgage that Leaghty and National City said he paid off.

***

• Leaghty said the bill was increased from $1,200 to $3,000 to $6,000. After the bill reached its highest, PNC began foreclosing on his home. Leaghty said he turned to Linda Thomas, a housing counselor, for help. Thomas said it looked like an open and shut case. She said all she had to do was show PNC Bank the documents from Lawrence County that showed Leaghty paid his mortgage off, but Thomas said the bank never responded.

• "According to state records the home has been paid for," said Thomas. "The mortgage was fully satisfied. This is a gentleman who is in ill health. He doesn't need this kind of stress and we can't get a response from the lender."

• Thomas said she was able to put a temporary stop to the foreclosure, but the bills and the penalties kept coming. Thomas said she got "fed up" and filed a complaint with the Pennsylvania Attorney General's office and contacted Target 11.

• Target 11 verified the information with Lawrence County and contacted PNC Bank about the situation. A few days later consumer investigator Robin Taylor received an e-mail from PNC that said the situation was resolved. Leaghty said that the same day Target 11 received the e-mail; he received a call from the bank saying that he no longer owed PNC any money. Thomas told Taylor that, "You accomplished in three days what we couldn't do in six months."

For the story, see Target 11 Helps Man Fight Bank's Mortgage Mistake.

Contractor, Attorney Consent To $104K+ Restitution, $550K Civil Penalties In Alleged Mechanics Lien Racket That Threatened Seniors With Foreclosure

From the Office of the Florida Attorney General:

• Attorney General Bill McCollum [] announced his office has obtained a judgment against a South Florida plumbing company, resolving allegations that Tri-County Plumbing Services sent salesmen posing as plumbers to mislead consumers into paying exorbitant prices for plumbing work. The terms of the judgment provide consumer restitution of more than $104,000.

• The Attorney General’s Economic Crimes Division began investigating the company after receiving multiple consumer complaints, including some complaints from senior citizens who reported they felt they were targeted because of their age. Not only did consumers complain about dramatically inflated prices, some were threatened with the loss of their homes and liens against their property if they didn’t pay the company. Some consumers complained that salesmen had used sledgehammers to gouge holes in their walls, driving up the cost of repairs.

• In addition to obtaining restitution for victims, the Attorney General’s Office also obtained a judgment against the company for $550,000 in civil penalties, which if collected will go to the state’s General Revenue fund, to the benefit of Florida taxpayers. The consent judgment names Tri-County Plumbing, along with Randall Gilbert, Leslie Gilbert and Susan Gilbert. Randall Gilbert, a South Florida attorney, is also prohibited from lecturing to members of the construction or plumbing industry.

Source: Attorney General Obtains More Than $104,000 for Consumers From South Florida Plumbing Company.

For the consent judgment, see State of Florida v. All-In-One Enterprises, Inc., et al.

Tenant Who Allegedly Targeted His Landlord In Real Estate Equity Refinancing Ripoff Tracked Down In Canada; Feds Seek Extradition

Buried in a recent story on mortgage fraud in The Wall Street Journal is this excerpt on a recent indictment of a tenant who attempted to rip off the equity in the house he was renting from his landlord:

• [T]he Federal Bureau of Investigation in June indicted a Phoenix man for mail and wire fraud among other alleged crimes when the agency says he tried to steal a house from his landlord.

***

• Fraudsters have adapted to the new restrictions. With banks less apt to lend to borrowers with shaky finances, criminals rely more on falsifying documents, recruiting loan officers and other bank insiders to work for them, and stealing identities to get loans, federal investigators and mortgage industry research reports.

• In the Phoenix case, prosecutors allege, Jose Victor Buencamino did all three. Some people who knew Mr. Buencamino describe him as a large, friendly man devoted to his children, the life of many a party and a passionate golfer. Gary Weaver, who rented a home to Mr. Buencamino last year, has a different impression. He said the Arizona businessman tried to snare him in an elaborate mortgage scheme.

• According to a federal indictment unsealed in June, while Mr. Buencamino was renting Mr. Weaver's house on the golf course at Moon Valley Country Club, he intercepted mail intended for Mr. Weaver and obtained his social security number, then applied for a driver's license in Mr. Weaver's name.

• Then, the indictment alleges, with the help of a friend who worked as a loan officer at a local branch of Compass Bank, a unit of Spanish bank Banco Bilbao Vizcaya Argentaria SA, Mr. Buencamino obtained a $245,000 cash-out mortgage on the property. A homeowner using a cash-out mortgage refinances the home loan for more than the mortgage is currently worth and pockets the difference in cash.

• A Compass Bank spokesman didn't respond to requests for comment. Mr. Buencamino, who couldn't be located for comment, has not responded to the charges. A federal agent said he had been tracked to Vancouver, where the agent said he is applying for Canadian residency. Prosecutors involved in the case said he didn't have an attorney on whom they could serve court papers. U.S. authorities said they were seeking his extradition.

Source: Mortgage Fraud Is Rising, With a Twist (Adapting to Tighter Rules After Collapse, Scammers Turn to More Complex Plots).

Cops Probe Squatters' Alleged Attempt To Snatch Three Vacant Seattle-Area Mansions; "Mortgage Note Elimination Program" Peddler Suspected

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

• Detectives believe squatters are attempting to take possession of three separate mansions on the Eastside, each worth more than a million dollars. And detectives say they're investigating ties between these latest squatting cases and a man connected to the squatters, who set up shop in a $3.2 million Kirkland mansion back in June.

• These latest cases first caught the attention of realtors, who found letters posted on three vacant properties in Kirkland and Bellevue earlier this week. The letters tell occupants "to surrender possession within three days of serving this notice" on August 17. Two of the properties are bank-owned; the third, listed at $2.1 million, is in foreclosure.

***

• Realtors say red flags were raised when they saw the name James McClung at the bottom of the letters. McClung, a former Bothell-based realtor, is also listed on state records as the owner of NW Note Elimination, which bills itself as a mortgage elimination company.

For more, see Police investigating man claiming million dollar Eastside mansions.

See also: Kirkland Reporter: Man connected with Kirkland squatter targets more Eastside homes.

Phoenix Jury Finds Man Peddling "Mortgage Elimination" Racket Guilty On Ten Fraud Counts; Scammer Pocketed $250K+, Say Prosecutors

In Phoenix, Arizona, KSWT-TV Channel 13 reports:

• A Phoenix mortgage broker has been convicted on 10 charges of fraud for scamming some homeowners into filing bogus foreclosure paperwork. Maricopa County prosecutors say 52-year-old Edward L. Carpenter was found guilty by a jury Wednesday after a 6-day trial. He faces an Oct. 7 sentencing.

• Authorities say Carpenter contacted homeowners and claimed he ran a "mortgage elimination" business that could legally remove their names from their mortgages, giving them free and clear ownership of the properties.

• They say Carpenter charged upfront fees of $1,000 or more and got the homeowners to file fraudulent foreclosure paperwork with the Maricopa County Recorder's Office. The filings were designed to cloud the title, confuse title companies and cause mortgage companies to fund loans. Prosecutors say Carpenter received more than $257,000 in illegal proceeds from the scheme.

Source: Phoenix man convicted of mortgage fraud.

Homebuying Couple Claim Attorney/Closing Agent Failed To Pay Off Undisclosed Lien; Discover Problem 10+ Years Later When Hit w/ Foreclosure

In Canton, North Carolina, the Smoky Mountain News reports:

• A Canton couple has sued town Alderman Eric Dills and three attorneys after learning their home was unknowingly being used as collateral by Dills’ for a revolving loan.

• For more than 10 years, Carol and Joseph Hannah were unaware that their home was tied up in Dills’ equity line of credit — until May when they received a baffling notice of foreclosure from Champion Credit Union after Dills defaulted on his loan. Dills claims innocence in the mixup, however. He argues that lawyers botched delivery of the loan payoff to the bank.

• Carol and Joseph Hannah had bought the home from Dills in March 2000 for $85,000. They made a down payment of $8,500 and Dills financed the remainder. Asheville lawyer Richard Maita inked the real estate deal on behalf of both parties. A year earlier, Maita had arranged for Dills’ loan, which used the same home as collateral. The couple claims that at no point during the property transfer did Maita inform them of Dills’ prior loan.

• Maita charged the couple for a title search — which makes sure the property is free and clear of any encumbrances — and for title insurance — which provides protection in case the title search fails to turn up a hidden claim against the property. The couple accuses Maita of never carrying out the title search and failing to take out a title insurance policy despite charging them for both.

For more, see Unsuspecting couple faces foreclosure after chain of events.

Felony Theft Conviction For DE Man Who Pocketed R/E Sale Proceeds w/out Paying Off, Disclosing Existing Liens; Unwitting Buyers Left In Foreclosure

In Bridgeville, Delaware, The Daily Times reports:

• Sussex County businessman James Tennefoss, [...] has been convicted of felony theft in two property sales cases. Prosecutors charged that Tennefoss used properties near Bridgeville and Georgetown as collateral in loans in 1999 and 2001, totalling $97,500.

• But in 2005 and 2006, his companies sold the properties, without Tennefoss disclosing that their uses as collateral. Tennefoss eventually stopped paying on the loans, and the lender began foreclosure proceedings against the new owners, which are still pending. Tennefoss' two corporations, Jim Lee Inc., and Southern Delaware Developers Inc., were together paid more than $251,000 for the two properties.(1)

For the story, see Former Sussex restaurateur convicted of felony theft.

(1) The story is silent as to whether:

• the new buyers possibly paid all cash for the properties and failed to obtain a title search and purchase title insurance protection, or
• in the event title work was performed on the properties, the title agent either screwed-up or played a role in the fraud, thereby possibly leaving the title insurance underwriter issuing the policy as an additional victim of the scam.

Home Purchaser Loses Life Savings After Seller Pledges Property As Loan Collateral After Pocketing Buyer's Cash & Failing To Give Recorded Title

In Sullivan City, Texas, KRGV-TV Channel 5 reports:

• A father used his life savings to buy a home for his daughter. He was hoping she would never have to worry about a mortgage. Now, they've learned they don't own the home.

• Frank Gonzalez made a deal directly with the owner of the house on Alamo Street four years ago. [...] He paid $68,000 cash. It was money he saved over 30 years of working construction jobs. Gonzalez says he signed some papers, got a deed, and a receipt. He thought he was finally a homeowner.

• A few months ago, Gonzalez became concerned when he never got a property tax bill. He learned through the Hidalgo County Tax Assessor's Office, the house was not in his name. It was still under Hernandez Homes, owned by a man named Frank Hernandez. Hernandez is the same man who Gonzalez made the deal with. The house was thousands of dollars behind in taxes.

• Soon after, Gonzalez and his daughter got a foreclosure notice. Turns out, Compass Bank now owns the house. The lawyer representing the bank told them Frank Hernandez took out a loan for $78,000 after he made the deal with Gonzalez.(1) He never paid it back and the bank foreclosed on the home.

***

• The bank says they must be out of the home by September 15. Gonzalez is back where he started, looking for a place to live. This time, it's a struggle because his entire life savings is gone.

For the story, see Man Loses Home He Spent Life Savings On.

For a similar Texas story, see More Contract For Deed Horror Stories - Texas Homebuyers Lose Home To Foreclosure Despite Making All Payments As Seller Pockets Cash & Stiffs Bank.

(1) A prospective purchaser of, or lender proposing to take a mortgage on, real estate generally has a duty not only to examine defects in the record chain of title but, also, to discover anyone who is in open possession of land.

If, as reported in this story, the seller pledged the home as collateral after the sale to Gonzalez and after the latter took possession of the premises, said possession, if "visible, open, exclusive, and unequivocal possession -- affords notice of title equivalent to the constructive notice deed registration affords" under Texas case law to subsequent purchasers and lenders proposing to take a mortgage as collateral for a loan, even though the occupant's deed is otherwise unrecorded. Madison v. Gordon, 39 S.W.3d 604 (Tex. 2001) (citing Strong v. Strong, 128 Tex. 470, 98 S.W.2d 346, 348 (Tex. 1936).

The Texas Supreme Court, in Madison, made these statements regarding the application of the bona fide purchaser doctrine to subsequent purchasers and lenders in situations like those described in this story (some citations omitted, bold text is my emphasis, not in the original text):

• Status as a bona fide purchaser is an affirmative defense to a title dispute. A bona fide purchaser is not subject to certain claims or defenses. To receive this special protection, one must acquire property in good faith, for value, and without notice of any third-party claim or interest. Notice may be constructive or actual. Actual notice rests on personal information or knowledge. Constructive notice is notice the law imputes to a person not having personal information or knowledge.

• One purchasing land may be charged with constructive notice of an occupant's claims. This implied-notice doctrine applies if a court determines that the purchaser has a duty to ascertain the rights of a third-party possessor. See Collum v. Sanger Bros., 98 Tex. 162, 82 S.W. 459, 460 (Tex. 1904); American Surety Co., 82 S.W.2d at 183. When this duty arises, the purchaser is charged with notice of all the occupant's claims the purchaser might have reasonably discovered on proper inquiry. Dixon v. Cargill, 104 S.W.2d 101, 102 (Tex. Civ. App.--Eastland 1937, writ ref'd); see also Flack, 226 S.W.2d at 632. The duty arises, however, only if the possession is visible, open, exclusive, and unequivocal. See Strong v. Strong, 128 Tex. 470, 98 S.W.2d 346, 350 (Tex. 1936).

***

• In Strong, we described the kind of possession sufficient to give constructive notice as "consisting of open, visible, and unequivocal acts of occupancy in their nature referable to exclusive dominion over the property, sufficient upon observation to put an intending purchaser on inquiry as to the rights of such possessor." Strong, 98 S.W.2d at 350. Possession that meets these requirements--visible, open, exclusive, and unequivocal possession -- affords notice of title equivalent to the constructive notice deed registration affords. Strong, 98 S.W.2d at 348.

See Bank of Am., N.A. v. Schwartz (In re Hayes), 194 Fed. Appx. 217; 2006 U.S. App. LEXIS 21139 (5th Cir. 2006) (affirming In re Hayes, Case # SA-03-CA-1228, 2004 WL 2926006 (W.D. Tex. San Antonio Div. 2004)) for a relatively recent Federal appeals court case that is substantially on point - where a homebuyer's equitable title to a purchased home in an arrangement where no deed was recorded was found to have priority under Texas law over a mortgage loan subsequently placed on the property by the seller after the sale to the homebuyer (the lower court's 23-page ruling in In re Hayes gives an extensive analysis on the Texas law involving the effect of the bona fide purchaser doctrine to subsequent purchasers and mortgage lenders where one is in possession of land under an unrecorded instrument and how it was applied to the facts in this case).

Based on the reported facts in the KRGV-TV Channel 5 story, above, assuming the foreclosing lender failed in its duty to ascertain the rights of the occupants, and possession was visible, open, exclusive, and unequivocal, the homeowner's rights in the home are superior to those of the lender and, accordingly, has no business being booted out of his home.

Unfortunately, the combination of unaffordable legal representation to some homeowners, and the fact that this area of law (ie. bona fide purchaser doctrine) is regrettably beyond the scope of many attorneys' expertise, this homeowner stands to wrongfully lose his home.

See this post, footnote 2 more on the duty to inquire into the rights of occupants in possession of land when applying the bona fide purchaser doctrine under Texas law.

For other states, see Bona Fide Purchaser Doctrine, Possession Of Property By Occupants Other Than The Vendor & The Duty To Inquire.

California AG Scores $1.1M Judgment Against Attorney In Alleged Foreclosure Rescue Racket That Screwed 2,000 Desperate Homeowners Out Of Thousand$

From the Office of the California Attorney General:

• Attorney General Edmund G. Brown Jr. [] announced a $1.1 million judgment against longtime Los Angeles attorney Mitchell Roth after he conned 2,000 desperate homeowners into paying him thousands of dollars to file "frivolous and phony" lawsuits that didn't reduce a penny of mortgage debt for a single client.(1)

***

• In 2008, Roth, a seasoned Los Angeles attorney, joined with Nevada-based United First, Inc. and the company's owner, Paul Noe, to provide foreclosure relief services to homeowners struggling to pay their mortgages.(2)

***

• United First charged homeowners some $1,800 in up-front fees, plus at least $1,250 each month, and 50 percent of the cash value of any settlement. If a homeowner's debt was eliminated altogether, the homeowner was required to pay United First 80 percent of the value of the home.

• After collecting up-front fees, Roth filed lawsuits on behalf of homeowners, pushing a novel legal argument that a borrower's loan could be deemed invalid because the mortgages had been sold so many times on Wall Street that the lender could not demonstrate who owned it. Once the lawsuit was filed, Roth did next to nothing to advance the case and often failed to make required court filings, respond to legal motions, comply with court deadlines or appear at court hearings. Instead, Roth tried to extend the lawsuits as long as possible to collect additional monthly fees from clients. This approach did not generate a single victory in court and did not lower or eliminate the mortgage debt for a single one of the 2,000 homeowners who hired Roth and United First.

For the entire California AG press release, see Brown Wins $1 Million in Restitution for Victims of Attorney-Backed Foreclosure Rescue Scam.

Go here for the California AG lawsuit against Roth and here for the $1.1 million judgment against Roth.

(1) AG Brown's lawsuit contended that Roth and others:

• Violated California's credit counseling and foreclosure consultant laws, Civil Code sections 1789 and 2945;
• Inserted unconscionable terms in contracts;
• Engaged in improper running and capping, meaning that Roth improperly partnered with United First, Inc. and company owner Paul Noe, who were not lawyers, to generate business for his law firm violating Section 6150-6156 of the California Business and Professions Code, and
• Violated Section 17500 of the California Business and Professions Code.

(2) In addition to the hot water they got into in this case, Paul Noe reportedly was convicted of wire fraud in 1989 and the subject of a California Department of Insurance Cease and Desist Order in 2004; and Mitchell Roth resigned from the California State Bar in late May 2009, after the State Bar closed his law firm (see SF Weekly: State Bar Takes Over 'Son of Super Swindler' Law Firm -- 2,000 Con Jobs Too Late).

California Homeowner Finally Gets Loan Modification After Year & A Half Struggle As Media Exposure Apparently Lights Fire Under Mortgage Servicer

ProPublica reports:

• Wells Fargo finally gave a loan modification to a long frustrated homeowner—after we profiled her last week. After ProPublica first contacted Wells Fargo about her, [Californian Suzanna] Wertheim received a call denying her a modification because of insufficient income. Then, after we published our story and Wertheim appeared on "The Rachel Maddow Show," Wells Fargo called her again. Wertheim feared bad news—that the bank was proceeding with foreclosure. Instead, Wells Fargo offered her a modification, bringing her payment down to an amount she says she can afford. Wertheim says the bank also eliminated over $20,000 in fees.

For more, see Profiled Homeowner Gets a Mortgage Modification.

State Prosecutors Offer Plea Deal, Seek $25K+ From Pair Accused Of Peddling Illegal Loan Modification Services

In Livingston County, Michigan, the Livingston Daily reports:

• There is a potential plea deal for two women accused of illegally charging customers money upfront for loan-modification services. An assistant prosecutor with the Michigan attorney general's office made the announcement Monday in Livingston County District Court, but he declined afterward to provide details. The defendants, Michelle Rene Garbuschewski and Lisa Marie Joboulian, have until Sept. 13 to ponder the prosecutor's offer. If accepted, they will return to District Court that day to enter the plea.

***

• Garbuschewski, of Howell-based business Elite Mortgage Relief, and Joboulian are both charged with violating the Credit Services Protection Act for allegedly illegally charging homeowners facing foreclosure upfront fees for mortgage-modification assistance. The charge carries a penalty of up to 93 days in jail and up to $1,000 fine.

***

• Joy Yearout, a spokeswoman with the attorney general's office, earlier confirmed that there are eight complaints against Garbu-schewski, Joboulian and Elite Mortgage. There are two complaints named in the current charges, but Yearout said her office will seek restitution — estimated at more than $25,000 — for all eight complainants.

For the story, see Women in illegal-charging case could get plea deal.

Loan Mod Scammer "Buys Out" Of Jail Time; Gets Suspended Sentence, Probation After Agreeing To Cough Up Half Of Required Restitution Before Sentencing

From the Office of the Nevada Attorney General:

• Michael Sinclair was sentenced in Las Vegas [] connection with his involvement with a mortgage foreclosure rescue company, Federal Housing Aid, whose operation included a call center in the Philippines.

• District Court Judge Michael Villani imposed a sentence of 30 to 90 months in the Nevada State Prison, but suspended the sentence and placed Sinclair on probation for a period not to exceed five years. Sinclair entered a plea to one count of Mortgage Lending Fraud and is required to pay half of the restitution owed prior to sentencing. He is required to pay restitution in the amount of $29,853.56 to the victims of his crime as well as another $300 for the cost of his extradition from the Philippines.(1)

For the Nevada AG press release, see Defendant In Mortgage Rescue Scam Operated from The Philippines Sentenced.

(1) According to the Nevada AG press release, Sinclair would contact homeowners facing foreclosure and offer to stop the foreclosure proceeding and save their credit. The victims entered into an agreement to pay an up-front fee ranging from $700.00 to $1,500.00 as compensation for affecting a solution to the foreclosure. Once the victims forwarded these fees to Federal Housing Aid, no further action was taken. The homeowners, some of whom were over the age of 60, were never provided with assistance in resolving their problems and, in fact, ended up losing their homes.

Attorney Gets 8 Months For Pocketing Rent From Dead Client's Condo After Knowingly Failing To Locate Deceased's Heirs

From the Office of the U.S. Attorney (Louisville, Kentucky):

• David J. Hale, United States Attorney for the Western District of Kentucky, announces that Ronald Snyder, age 71, of Fisherville, Kentucky was sentenced to 8 months imprisonment followed by 3 years of Supervised Release. The defendant was also ordered to pay restitution in the amount of $15,000 and a $5,000 fine.

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• In the Information and Plea Agreement, Snyder admitted that from March 2, 1998 until August 2009 he fraudulently and illegally exercised dominion and control over a condominium [in] Louisville, Kentucky. The condominium was owned by R.C. until his death on March 2, 1998. Following R.C.'s death, Snyder knowingly failed to locate the heirs of R.C. or cede control of the condominium to the state of Kentucky. Instead, Snyder rented out the condominium and kept the rental payments for his own benefit. The value of the condominium as of the 2006 appraisal was $91,060. Snyder received at least $15,000 in rental payments during this period.

Source: Louisville Attorney Sentenced To 8 Months Imprisonment (Ronald Snyder sentenced for stealing condominium of a deceased man).

(1) Because the rental payments were sent by U.S. mail from the tenants to Snyder, the Feds had jursidiction over this case and enabled them to secure a conviction on one count of mail fraud.