Saturday, November 13, 2010

Convicted Ex-Car Mogul's Girlfriend Using Foreclosure Eviction Protection Law In Attempt To "Dodge The Boot" From $1.8M Home 'Rented' From Boyfriend?

In Medina, Minnesota, the Star Tribune reports:

  • As disgraced businessman Denny Hecker sat in federal custody awaiting sentencing,(1) his girlfriend, Christi Rowan, fought eviction Thursday from the $1.8 million Medina home the two shared with her children. Palladium Holdings LLC claims that Rowan's lease deal with Hecker on the property is a sham.


  • [Rowan's attorney] also said Rowan is entitled to a 90-day eviction notice under her lease. [Housing Court referee Mark] Labine said, "It has to be a bona fide lease."(2)

For the story, see Hecker's girlfriend fighting eviction from Medina home (Christi Rowan claims she has a valid lease on the house; a holding company wants her out).

(1) Until he filed for bankruptcy in June 2009, listing $767 million in debt, Hecker ran an ubiquitous auto empire, the story states. Reportedly, he is now in the Sherburne County jail, facing up to 10 years in prison for fraud and conspiracy and Rowan pleaded guilty earlier this year to bank and bankruptcy fraud.

(2) The Federal Protecting Tenants at Foreclosure Act of 2009 provides important federal protections for tenants in foreclosed properties, including the right to receive 90 days' notice before being required to leave the property, but applies only to bona fide tenants under any bona fide lease entered into before the notice of foreclosure. With regard to its applicability, the law make no distinction between expensive, luxury mansions and lower-cost 'non-mansions' that have been foreclosed upon.

Probe Into Alleged Atlanta-Area Loan Modification Scammer Expands Into Missouri As St. Louis Pastor Loses Church, Day Care, Home To Foreclosure

In St. Louis, Missouri, KMOV-TV Channel 4 reports:

  • A businessman who offers customers help with their mortgages, but fails to get the job done is under investigation by police in Dekalb County Georgia - and officials there say the investigation is expanding to more states, including Missouri.

  • Rev. Glen Allen of North County called Fred Lee in early 2010 looking to rework the loan on his church, home, and daycare. Allen says he paid Lee's company nearly $9,000, but still lost everything to foreclosure on September 8th. "Fred Lee has cost me my life," said Allen. Allen says he met Lee at a large African American church in St. Louis, but declined to name the church. He says Allen was offering loan modifications to church members. Allen also said he should not pay his mortgage while the loan was being reworked.

  • In Georgia DeKalb County, police say they are investigating up to 150 similiar stories, and so far they haven't located one customer who's had a successful loan modificiation with Fred Lee.(1) Lee's offices were raided by Dekalb County Police in early October. [...] If you have have dealth with Fred Lee let us know about your experience. Email Investigative Reporter Chris Nagus at

For the story, see Businessman offers help with mortgages, fails to get job done.

(1) See DeKalb Cops, Feds Raid Suspected Loan Modification Scam Operation; Walk Off With Four Car Loads Of Records, Dozens Of Computers for more on Fred Lee.

Lee County Cops Probe Tenant's Rent Skimming Allegation Against Landlord In Foreclosure; Renter Booted Prematurely, Left $5K Poorer

In Lee County, Florida, The News Press reports:

  • The Lee County Sheriff’s Office is investigating a complaint a landlord collected $5,000 in rent from a tenant despite knowing the home being rented was in foreclosure and the tenant would be evicted. Joseph Harp, 56, and Karen Adams, 61, told investigators Harp leased the residence [...] in Cape Coral in July for six months.

  • Harp told investigators the rent was paid in advance in three installments of $2,800, $1,400 and $3,300. Harp and Adams were forced to leave the residence on Oct. 18, because the house was foreclosed on, according to a Lee County Sheriff’s Office report.

  • Harp told investigators he learned the landlord knew of foreclosure proceedings on June 20 but never disclosed that information to Harp. Harp said he has tried to recoup $5,000 for four months he paid for but didn’t get to reside in the home but to no avail.(1)

Source: Man accused of collecting rent from Cape tenant while house was in foreclosure.

(1) In what sounds like a similar case, DeKalb County, Georgia police this summer arrested a property owner on a charge of theft by deception for pocketing upfront rent from an unwitting tenant for renting a home two weeks before the owner lost the home to a foreclosure sale. See Arrest Warrant - State of Georgia v. Harrison. For the media report, see WXIA-TV Channel 11: Dangers of Renting a Foreclosed House.

Nevada AG: Indicted Trio Ran Upfront Fee Loan Modification Foreclosure Rescue Ripoff

From the Office of the Nevada Attorney General:

  • Three people, including a local attorney, were indicted today for allegedly operating a foreclosure rescue scam in Las Vegas during 2008 and 2009. The indictment alleges that Nevada attorney Ramon Dy-Ragos, along with his partners Jesus Baca a.k.a Jesse Baca, and Luis O. Baca operated a foreclosure rescue scam under the business name of "Save Your House."(1)

  • Save Your House is alleged to have lured customers to pay large up-front fees - ranging from $1000.00 to $3995.00. The defendants informed the victims they could prevent foreclosure by having customers stop paying their mortgage and ceasing all contact with the bank holding their mortgage. The defendants falsely claimed they would modify mortgages through negotiation with the mortgage holders or suing the mortgage holders.

For the Nevada Attorney General press release, see Nevada Attorney And Two Others Indicted In Foreclosure Scam.

(1) According to the press release, Attorney Dy-Ragos and Jesus Baca are indicted on two (2) B felony counts of Theft – Obtaining Money in Excess of $2,500 by material misrepresentation in violation of NRS 205.832(1)(c) and NRS 205.0835; (2) C felony counts of Theft – Obtaining Money of $250.00 to $2,500.00 by material misrepresentation in violation of NRS 205.832(1)(c) and NRS 205.0835 and one (1) Gross Misdemeanor count of Conspiracy in violation of NRS 199.480. Luis O. Baca is indicted on one (1) Gross Misdemeanor count of Conspiracy in violation of NRS 199.480.

Trump Yanks Name From Defunct Beach Tower In F'closure; Says He's Not The Developer - He Only Licensed Out His Name As Stiffed Buyers Demand Deposits

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

  • Real estate mogul Donald J. Trump said he's no longer affiliated with the unfinished luxury condo-hotel tower on Fort Lauderdale beach that was to carry his name and now faces foreclosure.

  • "We have nothing to do with the building. We had a licensing deal, and we terminated the licensing deal a long time ago," Trump told the Sun Sentinel late Tuesday. "We're not involved with the foreclosure."

  • The statement comes nearly eight months after the new loan holder filed to foreclose on what was to be the Trump International Hotel & Tower, a $200 million project that was supposed to bring cachet to Fort Lauderdale as one of the area's most glamorous addresses.

  • More than 100 people plunked down 20 percent deposits to buy condos in the 24-story tower, with studios and one- and two-bedroom units priced from about $500,000 to more than $3 million each. Now, most of those buyers are suing, trying to get their deposits back or place liens on the 298-unit project that was to be finished by 2009.

  • Many buyers charge that developers misrepresented Trump's involvement. Some suits name Trump personally and charge deceptive advertising. They point to promotional literature that states "Trump is committed to personal and direct involvement in everything his name represents" and describe the project as a "signature Trump development."

  • "To come and say now 'I only had a licensing agreement and wasn't the developer' is a fraud on the public," attorney Jo Altschul of Fort Lauderdale, who represents buyers of about 50 condo units, said Wednesday. "That's not what the developers said to potential purchasers to buy units at inflated prices because of Donald Trump being actively engaged in the development."


  • The Fort Lauderdale case is not the only headache for Donald Trump and his New York-based Trump Organization. Similar lawsuits are under way over Trump condo projects that stalled in Tampa and Mexico, with Trump claiming he only licensed his name and buyers alleging that sales materials suggested a greater role for Trump in the developments.

For more, see Trump says his name is off Fort Lauderdale condo hotel (Real estate mogul's claim of lessened role called 'fraud on the public').

Victim Of Chicago-Area Refinance Racket Attributes Loss Of Four Properties To Convicted Deed Scammer

In Chicago, Illinois, myFoxchicago reports:

  • John Hemphill of Chicago is behind bars after a brazen attempt to swindle potential homeowners all over the South Side. Hemphill was caught on undercover cameras in a federal sting, claiming he held the deeds to homes all over the south side, and offering to sell those properties for just three or four thousand dollars apiece.


  • Prosecutors say Hemphill falsely claimed to be a federal agent. He even misspelled the word "government" on his phony I.D. badge. But that didn't keep customers, like Sabera Iqbaluddin, from dealing with him. "Because of him, I'm losing everything," she said.

  • Iqbaluddin is a postal worker who saved enough money to purchase several homes and a gas station on the south side. None of those properties were bought from Hemphill. But when times got tough, she said, Hemphill offered to help her refinance, but never passed along her payments to the lender. She lost all four properties. She's now represented by attorney Tony Peraica who says about Hemphill, "He got into their life and essentially ruined them financially."

  • Hemphill hasn't been charged with anything in connection with Iqbaluddin's case. He was eventually caught and convicted, after an alert employee at the Cook County Recorder of Deeds office noticed he was filing dozens of phony deeds to suggest he had taken title to properties that were not really his.

For the story, see Chicago Man Convicted in Mortgage Scheme.

For the U.S. Attorney press release announcing Hemphill's conviction in other deed scams, see Chicago Man Convicted Of Posing As Federal Official In Scheme To Obtain And Sell Area Properties He Did Not Own.

Friday, November 12, 2010

Wells Fargo OKs Repo On Fully Paid Car; Cops Tell Complaining Victim To "Take A Hike"; Owner Regains Possession Only After Media Intervention

In Tacoma, Washington, KING-TV Channel 5 reports:

  • "I don't know what's going on. I thought they couldn't take my car, but it's gone!" Yes, Adlantus Newton's car is gone. Long gone. It was repossessed. Now she and her kids are parked on the porch, with no ride in sight. "This was my only car," Newton said. "We're missing out on a lot of stuff, I can't take them to choir practice."

  • This sad song gets worse. Adlantus thought she had made every payment on the car. "I paid $299 monthly, by money order every month." Even though she has a clear title to the 1999 Chrysler LHS, Wells Fargo bank still took the car and dropped it off in a Kent auction yard. "I called the police, showed them my title, and they still let them take my car," Newton said.

  • That's right, the bank was moving towards selling the ride without having the title. "And they are telling me to make a payment, no!" So Adlantus called [KING-TV Channel 5 Investigative Reporter Jesse Jones].


  • Wells Fargo did resolve this situation quickly once we reached out to them. Remember, the Department of Licensing may be able to sort out any title trouble. If that doesn't work, call me. We've been hearing of similar cases in the area.

For the story, see She owns the car but the bank repossessed it.

Vegas "Sewer Service" Allegations Raise Concerns That Upwards Of 20,000 Court Cases May Be At Risk

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

  • There are new developments and a new arrest in the ongoing investigation into a process serving company and the court system. That company, On Scene Mediation, now has two employees under suspicion of falsifying court documents and putting upwards of 20,000 cases at risk. It could cost $150,000 in taxpayer money to sort through the cases involved.(1)


  • "This is a fraud of a wide-scale proportion," said Barbara Buckley who helps run the Legal Aid Center.(2) She says her hotline has been busy with calls from people saying they have been done wrong. She says the alleged tactics are disappointing. "Throwing the complaints down the sewer. That's what the lawyers call it -- sewer service."

For more, see I-Team: New Developments in Process Server Investigation.

(1) Reportedly, the company owner and employee are accused of saying they served papers but didn't. Maurice Carroll, a former Metro police officer, was running the company out of his North Las Vegas home, and now faces 35 felonies, the story states. Visalia Coleman, one of Carroll's employees, is also facing eight charges. Reportedly, Metro and the courts say the two and other workers at On Scene Mediation lied on court documents about serving papers.

(2) According to their website, Legal Aid Center of Southern Nevada is a private, non-profit 501 (c)(3) corporation which is a charitable organization and has been dedicated to providing free community legal services for Clark County, Nevada's low income residents since 1958.

Victim Of Sale Leaseback Foreclosure Rescue Scam Still Waiting For Installment Restitution Payments As County Falls Short In Enforcing Court Order

In Sacramento, California, The Sacramento Bee reports:

  • When he walked out of the Sacramento County courthouse nearly a year ago, Telesfor Lucero Jr. thought he'd won the battle. Three years after Lucero lost his North Highlands home through mortgage fraud, the man who defrauded him had entered a no-contest plea. Superior Court Judge Louis Mauro had ordered Timothy Hogue to pay Lucero $30,000 in restitution through the court's installment process, plus 10 percent annually in interest. "I thought, 'Wow, this is great!'" Lucero recalled.

  • But a year later, he says he is more victim than victor. "I thought that in a short time I would at least start receiving some sort of payments," Lucero said. To date, he has received only one payment, in March, for $53.12.

  • Although he has reason to believe that Hogue, who was under house arrest and on five years' probation, is gainfully employed, Lucero said county employees charged with enforcing the court order have told him their efforts are hampered by staff shortages and budget cuts.(1)


  • Hogue contacted him in 2006, and Lucero agreed to sign his house over to a woman, Kim Roth, who was to assume the payments and lease the house to Lucero with the understanding that he would buy it back when he received his workers' compensation. But Roth didn't make the mortgage payments and sold the title to someone else. The next thing Lucero knew, the three-bedroom house he had owned for 15 years was in foreclosure.(2)

For the story, see Three years after losing home, fraud victim waits for payment.

(1) In at least some jurisdictions, a convicted scammer out of jail on probation is typically required to make court-ordered restitution payments to his/her victim as a condition of probation. Any stiffing of the victim out of these payments should subject the convicted scammer to a revocation of his probation, and should be enough to get him thrown back into jail and face the prospect of spending the rest of his sentence in the can.

(2) Reportedly, Roth, under court order, coughed up $26,500 to the victim for her role in the ripoff.

Court Awards Florida Man Title To Home Lost In BofA Screw-Up; Foreclosure Sale Took Place Despite Homeowner Not Having A Mortgage

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

  • In the second South Florida foreclosure reversal this week, a Broward County court "vacated" the sale of a Fort Lauderdale man's home that had been sold out from under him, even though he bought the house with cash and never had a mortgage. The court order, made at the request of Bank of America, reversed the foreclosure sale of Jason Grodensky's house.

  • Grodensky was the subject of a Sun Sentinel article about wrongful foreclosures last month [see Lauderdale man's home sold out from under him in foreclosure mistake]. He and his father bought the house for cash and didn't owe money to Bank of America, but the lender had continued to pursue a foreclosure case that began with the previous owner. In July, Grodensky learned that his house had been sold in a foreclosure auction.

  • The news comes one day after Bank of America disclosed that the court had also vacated the foreclosure sale of a Miramar homeowner's property — even though the homeowner had secured a mortgage modification.(1)


  • Grodensky says he's not planning to go back to court to file a lawsuit against the lender to seek compensation for his four-month ordeal. "I hadn't planned on it," he said. "I'm not out to get anybody. I just want to get it fixed."(2) Grodensky bought the house for cash in December 2009 in a short sale. The seller was in foreclosure. Grodensky said he had no idea that the foreclosure process did not stop at that point.


  • Grodensky filed a claim with his title insurance company and was working with that firm to try to resolve the issue. He hasn't yet been notified by the title insurer or Bank of America that the sale was vacated on Monday. "I'm happy it's over, but I am not holding my breath about it," he said. "I'm waiting to see if I actually get contacted."

For more, see Home returned to Fort Lauderdale man who lost property in foreclosure mistake (Wrongful foreclosure case the second in South Florida this week).

Go here for links to other reported Bank of America foreclosure screw-ups.

(1) See:

(2) Earlier media reports reveal that at least one Massachusetts law firm is apparently going around the country taking on these illegal foreclosure & lockout cases on behalf of screwed-over homeowners. See:

For those homeowners who've been screwed over by wrongful lockouts by foreclosing lenders (and their confederates) and seek some possible guidance on how much their cases might be worth if they seek to sue, see:

PA AG: Outfit Used Notices Hand-Delivered By Faux 'Sheriff Deputies', Fake 'Courtroom' & Mock 'Hearings' To Squeeze Debtors Out Of Cash, Car Titles

In Erie, Pennsylvania, WTAE-TV Channel 4 reports:

  • A sign in the front of a building on West 39th Street tells visitors that it's the Unicredit Debt Resolution Center in Erie. Once debtors got inside, they were fooled into believing they were in a courtroom with a judge, but the whole thing was a fake, according to a lawsuit filed by the Pennsylvania attorney general.

  • Team 4's Jim Parsons reported that Unicredit America is accused in the lawsuit of deceiving, misleading and coercing hundreds of consumers into paying off their debts. Inside the building is a pair of locked oak doors with brass handles resembling a courtroom entrance. The company is accused in the lawsuit of building a mock courtroom complete with a judge's bench and witness stand.(1)


  • The Attorney General's Office told Team 4 that Unicredit lured debtors to the building by sending employees who appeared to be sheriff's deputies to their homes, implying that they would be taken into custody if they failed to appear at the phony court hearings.

  • "It really galls me that someone would stoop that low," Erie County Sheriff Robert Merski said. "This certainly seems to be a scam, and it upsets me that they are trying to play on the integrity of this office, the office of sheriff. We've been here since the beginning of the United States."

  • The lawsuit accuses Unicredit of intimidating debtors into revealing their bank account numbers, even turning over the titles to their cars once they got them inside the building.

Source: Team 4: Debt Collectors Accused Of Fake Courtroom, Judge (Pa. Attorney General Sues Unicredit In Erie).

For the Pennsylvania AG press release, see Erie debt collection company sued; accused of using bogus "hearings" and fake "courtroom" to collect from consumers.

Thanks to Bill Roper for the heads-up on the story.

(1) According to the Pennsylvania AG press release, the fake courtroom allegedly contained furniture and decorations similar to those used in actual court offices, including a raised "bench" area where a judge would be seated; two tables and chairs in front of the "bench" for attorneys and defendants; a simulated witness stand; seating for spectators; and legal books on bookshelves. During some proceedings, an individual dressed in black was seated where observers would expect to see a judge. Consumers with complaints or questions related to Unicredit debt collection practices are urged by the Attorney General to call his Consumer Protection Hotline at 1-800-441-2555 or file an online consumer complaint.

Thursday, November 11, 2010

Indiana Appeals Court OKs Jury Trial For Homeowner In Foreclosure Case; Says Counterclaims Under Federal, State Statutes Are Distinct, Severable

Lexology reports:

  • The Indiana Court of Appeals recently held that a borrower is entitled to have claims based on consumer protection statutes and common law causes of action tried to a jury, even when those claims are asserted as counterclaims to a mortgage foreclosure action. Lucas v. U.S. Bank, N.A., 932 N.E.2d 239 (Ind. Ct. App. 2010).

  • In that case, the mortgage holder filed a complaint to foreclose on a mortgage executed by Mary Beth and Perry Lucas. In response, the Lucases filed an answer and counterclaims, alleging that the mortgage holder violated the Truth in Lending Act, the Real Estate Settlement and Procedures Act, and committed conversion and deception. The Lucases also filed a third-party complaint against the loan servicer alleging that it breached its contract with the Lucases, committed conversion, and violated Fair Debt Collection Practices Act and the Real Estate Settlement and Procedures Act.

  • The Lucases asked for a jury trial, but the trial court denied their request. On interlocutory appeal, the Court of Appeals reversed this decision, concluding that the Lucases had asserted legal causes of action distinct and severable from the equitable mortgage foreclosure action.


  • The court [] concluded that while foreclosure actions are essentially equitable, the Lucases were nonetheless entitled to a jury trial because the claims “grounded in federal and state statutory law and state common law . . . are legal causes of action.” Further, the majority of the relief the Lucases sought consisted of damages, a legal remedy.

Representing the homeowner was Christine M. Jackson, of Chris Jackson Law LLC, Indianapolis, Indiana.

For more, see Indiana Court of Appeals allows jury trial for counterclaims in foreclosure proceedings (requires subscription; if no subscription, GO HERE, then click appropriate link for story).

Foreclosure Environment "A Total Mess" As Loan Servicers Fail To Address Allegations Of Sloppiness, Fraud reports:

  • Revelations of bank errors and allegations of fraud have created a "total mess" surrounding today's foreclosures, says Walter Dees, a housing counselor for ClearPoint Credit Counseling Solutions in Los Angeles. "It's a huge paperwork problem," he says. "Banks are overwhelmed, and so are homeowners."

  • Overwhelmed might be an understatement. Lawyers who work with homeowners to fight foreclosure say there are more questions than answers right now. Problems with foreclosure documents run the gamut from mistakes to outright fraud, according to Chicago attorney Joseph McCaffery.


  • Lawyers say there are numerous other recurring issues. Bankrate spoke with nearly a dozen lawyers around the country, and they mentioned errors such as:

    a) Failure of the foreclosing party to show clear title to the note.
    b) Misapplication of funds submitted by homeowners.
    c) Mortgage notes without proper endorsements.
    d) Backdating of paperwork, especially with respect to assignments.
    e) Forging key documents, such as assignments and affidavits of bank officers.
    f) Filing affidavits without signatures.
    g) Inflated legal fees associated with foreclosure.
    h) Lost or missing promissory notes

  • Can you spot them? While some errors are relatively simple to spot, identifying others -- especially technical deficiencies -- will require a lawyer, McCaffery says. Nonetheless, homeowners can do preliminary assessments on their own -- and in many cases, they should be able to spot egregious errors.

For more, see Fighting common foreclosure errors (Homeowners should be able to spot egregious errors; Technical deficiencies, other errors require a lawyer's help; Foreclosure delays cannot solve bigger homeowner problems).

(1) And, at least in Florida, you can add to the list promissory notes intentionally destroyed by the lender after converting them into electronic form, according to this Florida Mortgage Bankers' 'confession' to the Florida Supreme Court (at page 4). See also Naked Capitalism: FUBAR Mortgage Behavior: Florida Banks Destroyed Notes; Others Never Transferred Them.

"Sewer Service" Allegations Earn Process Servers Their Share Of Spotlight In Nationwide Foreclosure Scandal

The South Florida Sun Sentinel reports:

  • The expanding investigation into Florida's foreclosure crisis has turned up a new problem that may involve a number of cases: Individuals hired by law firms to notify struggling homeowners when their foreclosure cases are to be heard in court may have filed faulty or false documents.

  • Foreclosure defense attorneys and consumer advocates say they have documented a number of foreclosure cases where "process servers" filed questionable paperwork. State investigators who are examining foreclosure documentation problems -- involving law firms that employed "robosigners" to rapidly process claims -- are also taking a close look at process servers, court documents show.

  • According to lawsuits filed on behalf of homeowners, some individuals appear to have violated the rules of process serving: the personal delivery of legal papers, required by law, notifying people that a foreclosure action has been filed against them. Like "robo-signing" -- the mass signing of foreclosure documents without review by loan servicers -- it's an alleged practice that is putting lenders, and the foreclosure law firms serving them, under fire.

For more, see New questions being raised about court filings in foreclosure cases (Individuals hired by law firms to notify homeowners of pending foreclosure cases may have filed faulty or false documents).

Go here for more on process servers & "sewer service".

State AG To Missouri Homeowners In Foreclosure: Seek Competent Counsel & Make Loan Servicer Produce The Proper Paperwork

From the Office of the Missouri Attorney General:

  • Missouri law generally allows foreclosures to take place very quickly, relative to other states [Missouri is a non-judicial foreclosure state - no court action is needed to foreclose on a home]. It is important for homeowners to understand their rights concerning foreclosures and to recognize the need for legal representation at the earliest possible time.

  • In some instances, foreclosures may be stopped because lenders have failed to comply with legal requirements. Doing so will require the assistance of competent counsel. Below are some important questions and answers to help consumers understand foreclosures in Missouri.

For more, see The Mortgage Foreclosure Crisis: What You Need To Know.

Go here for more from the Missouri AG:

Wednesday, November 10, 2010

St. Louis Feds Squeeze Guilty Plea From Alleged Rent Skimming, Sale Leaseback, Foreclosure Rescue Peddler Accused Of Causing $439K In Losses

In St. Louis, Missouri, the St. Louis Post Dispatch reports:

  • Jeremy Beadle, president of Network Ventures, a real estate and mortgage company in St. Charles, pleaded guilty Wednesday of defrauding lenders and homeowners who were facing foreclosure.

  • Beadle, 37, of St. Charles, admitted to one felony count of wire fraud before U.S. District Judge Rodney W. Sippel, who set sentencing for Jan. 21. Beadle faces a maximum penalty of 20 years in prison and a fine of up to $250,000. Prosecutors said the case involved 10 properties with a total loss of $439,352.(1)

  • Beadle also was manager of Premier Mortgage Funding, owned by Network Ventures, prosecutors said. In September, Rebecca J. Domecillo, an officer with Network Ventures, was sentenced to 27 months in prison for mail fraud in the schemes. Domecillo, 48, is from Lake Saint Louis. She and Beadle were indicted together in February.

Source: Mortgage broker admits fraud.

(1) According to the following excerpt from a February, 2010 FBI press release announcing the indictment, the alleged real estate fraud included bogus sale leaseback arrangements:

  • Beadle also purchased properties from homeowners who were in financial difficulty and in danger of foreclosure. He falsely represented to these sellers that they could rent the property and remain in their homes, and that the mortgage would be paid using the rent payments made by the residents of the property. [...] However, he did not apply all the rent payments to the mortgage. Beadle failed to make the mortgage payments as agreed, and these properties were foreclosed, resulting in losses to the mortgage lenders.

NY AG Squeezes Guilty Pleas From 4 For Roles In Alleged Sale Leaseback, Equity Stripping Foreclosure Rescue Racket; 1 Awaits Trial On 23 Felony Counts

In Albany, New York, the Times Herald Record reports:

  • Members of an Albany-based company who ran a lease buyback program that cost several local homeowners their homes have admitted their roles in a mortgage-looting scheme in a deal with the state Attorney General's Office.

  • Four employees of Rivertown Financial pleaded guilty in Albany County Court last month to felony charges that included grand larceny, scheme to defraud and falsifying business records, after the Attorney General's Office filed criminal complaints. The company's lawyer, Kevin Wheatley, awaits trial after being indicted by an Albany County grand jury on 23 felony charges, including first-degree grand larceny and scheme to defraud.

  • Rivertown bought more than 100 properties, including several in Orange and Ulster counties, from homeowners threatened with foreclosure, offering to pay off their mortgages and let them remain in the homes as tenants until their credit improved. The company then took out new mortgages on the properties.

  • Most of the properties, which were in the names of Rivertown employees or other straw buyers, ended up in foreclosure and the company went bust in 2008. Here's what the four employees told investigators, according to court records:

    Rivertown CEO Geoffrey Goldman admitted he faked mortgage information, including using company money as assets for his straw buyers. His brother, company Vice President Jonathan Goldman, admitted the brothers used mortgage money for personal expenses, including cruises, casino gambling and personal trainers.

    Rivertown's sales director, Jessica Peryea, admitted she acted as a straw buyer.The company's loan officer, Jordan Laccetti, admitted he received the mortgage information from Geoffrey Goldman and knew the mortgages would never be repaid.

  • The four will have to pay restitution as part of their plea agreements, but sentencing dates haven't been set.

Source: Four guilty in scheme to profit from shaky mortgages.

Florida AG In Search Of Evidence Of Foreclosure Mill Kickbacks To Loan Servicers

The South Florida Sun Sentinel reports:

  • Follow the money. Florida Attorney General Bill McCollum's office is looking for it, in its investigation of the foreclosure law firm of David J. Stern. What's at the bottom of the AG's investigation was almost a throw-away line in a recent hearing in Fort Lauderdale. Assistant Attorney General Theresa Edwards, in her very last response to a question from Judge Eileen M. O'Conner, says that yes, the AG's office did receive thousands of documents from Stern's firm but not the documents it wanted.

  • The documents it wanted "may involve kick backs (sic) to the servicers who are hiring them, which surprisingly weren't included in the documents. So that's why we want to keep looking." Thanks to attorney Matt Weidner, who posted the transcript on his blog []. Here's a link to it.

Source: Foreclosure investigation: AG is looking for evidence of kickbacks.

Fresno Couple Among Many Alleging To Be Screwed Over By Forensic Loan Audit Outfit The Target Of $60M California AG Lawsuit, Separate Class Action

In Fresno, California, The Fresno Bee reports:

  • Patty and Jody Farmer were hooked when a Rancho Cordova-based company offered to help refinance their adjustable-rate mortgage, which was about to become unaffordable. But after paying the company nearly $8,000 -- and following its advice to stop making mortgage payments -- the Farmers didn't get a new mortgage.

  • Instead, their lender foreclosed on their Fresno home of 11 years, and they were forced to move out. Now the state is suing the company that authorities say scammed the Farmers.(1)

For more, see Mortgage fraud strikes Valley homeowners (But state and federal law enforcement agencies fight back with lawsuits).

(1) The company, US Loan Auditors Inc., a loan-auditing company based in Rancho Cordova, is now part of a $60 million lawsuit that the California Attorney General's Office filed Oct. 6 (go here for press release, lawsuit) in Sacramento County Superior Court on behalf of California residents to seek restitution for all victims, including the Farmers, the story states.

In the California AG's lawsuit, the defendants are accused of using non-lawyers without any attorney supervision to prepare these forensic audits, and filing "cookie-cutter" lawsuits for hundreds of clients which "have overwhelmingly been dismissed at the pleading stage, have failed to result in any favorable settlements or adjudications, and would not, in any event, entitle consumers to the sweeping relief promised by Defendants." See lawsuit, at paragraph 2. The AG's office has described the defendants' actions as having "littered both state and federal courts with hundreds of lawsuits that have little or no chance of affording consumers any meaningful relief." See lawsuit, at paragraph 7.

The company also faces a separate class action lawsuit. See Ma, etal. v. U.S. Loan Auditors, LLC, et al.

See also Cal. AG Tags Forensic Loan Audit Firm, Others w/ $60M Suit; Says Litigation Mill "Littered Courts w/ 100s Of Suits That Have Scant Chance Of Success".

Southern California Homeowner Scores TRO Stalling Foreclosure Sale; Lender Duped Borrower Into Defaulting On House Payments: Judge

In San Diego, California, Courthouse News Service reports:

  • A La Jolla man can keep his home for now, after a federal judge granted his motion for a temporary restraining order blocking Washington Mutual and JP Morgan from foreclosing on his house because the banks misled him into defaulting on his mortgage. Kaveh Khast claimed the banks instructed him to stop making his mortgage payments so he could qualify for a loan modification.(1)


  • Because the bank told him to stop making his payments and to default on his loan, [U.S. District Judge Irma] Gonzalez found that Khast was irreparably harmed and entitled to an order temporarily halting foreclosure proceedings. "If the sale of plaintiff's property proceeds as scheduled, plaintiff will lose his home," Gonzalez wrote. "Even if defendants were ultimately to prevail, a temporary restraining order will only force them to delay the sale of the property by a matter of days."

For more, see California Man Gets to Keep His House, for Now.

For the court's ruling, see Khast v. Washington Mutual Ban, et al.

(1) Earlier this year, a California appeals court applied the doctrine of promissory estoppel against a foreclosing lender in a case in which a borrower relied on the verbal promise of a bank's employee to do something he wouldn't otherwise have done in the hope of stalling a foreclosure sale. See Garcia v. World Savings FSB, 183 Cal. App. 4th 1031 (2010):

  • "Under this doctrine a promisor is bound when he should reasonably expect a substantial change of position, either by act or forbearance, in reliance on his promise, if injustice can be avoided only by its enforcement." (Youngman v. Nevada Irrigation Dist., supra, 70 Cal.2d at p. 249.)

  • "'The vital principle is that he who by his language or conduct leads another to do what he would not otherwise have done shall not subject such person to loss or injury by disappointing the expectations upon which he acted.'" (Wilson v. Bailey (1937) 8 Cal.2d 416, 423, quoting Carpy v. Dowdell (1897) 115 Cal. 677, 687.)

  • "'In such a case, although no consideration or benefit accrues to the person making the promise, he is the author or promoter of the very condition of affairs which stands in his way; and when this plainly appears, it is most equitable that the court should say that they shall so stand. [Citations.]'" (Wade v. Markwell & Co. (1953) 118 Cal.App.2d 410, 420.)

See also:

Foreclosure Mill Hires Fannie Associate GC As General Counsel; Could Be Move To Snag Recently 'Orphaned' Stern's Florida Case Files?

From a recent McCalla Raymer, LLC press release:

  • McCalla Raymer, LLC [] announced the appointment of [ex-Fannie Mae associate general counsel] Susan Reid as General Counsel. [...] Most recently, she concentrated on foreclosure related issues in the state of Florida including mandatory mediation and other legal strategies for managing the residential default loan portfolio in various states.


  • [M]cCalla Raymer is Fannie Mae retained counsel in Alabama and Georgia and Freddie Mac designated counsel in Georgia.

For the press release, see Former Fannie Mae Associate General Counsel Joins McCalla Raymer, LLC (Susan Reid Named General Counsel of Mortgage Banking Firm after Fifteen Year Tenure with Fannie Mae).

Tuesday, November 9, 2010

Four Central Florida Homeowners Seek Class Action Status In Federal Lawsuit Targeting GMAC In Robosigner Scandal

In Tampa, Florida, the St. Petersburg Times reports:

  • Four Tampa Bay area homeowners are suing what used to be GMAC, claiming the company used "robo-signers" to foreclose on their homes illegally. [...] Their $5 million lawsuit was filed Thursday in U.S. District Court in Tampa. It seeks class-action status for "tens of thousands" of Florida homeowners with mortgages serviced by GMAC, now known as Ally Financial.

  • The suit accuses the company of an "abusive, fraudulent, deceptive and unfair scheme" to obtain the plaintiffs' homes "by systematically fabricating evidence in the form of fraudulent affidavits" used in foreclosure cases.


  • In two of the foreclosures in question, the lawsuit said the affidavits were signed by GMAC executive Jeffrey Stephan, who has testified in a deposition that he signs 6,000 to 10,000 such statements a month. Stephan testified that he spends five to 10 minutes with each file, but the new lawsuit said that's impossible unless he works days 37 to 50 hours long. Rather, it contends Stephan would have to spend less than a minute on each case to keep that pace.

For more, see Tampa Bay homeowners claim GMAC 'robo-signers' drove their foreclosures.

"Produce The Note" Success Story Featured In Media Report Describing Foreclosure Scandal As "Clash Over Who Gets Stuck With $1.1 Trillion In Loss"

In Boca Raton, Florida, BusinessWeek reports:

  • In 2002, a Boca Raton (Fla.) accountant named Joseph Lents was accused of securities law violations by the Securities and Exchange Commission. Lents, who was chief executive officer of a now-defunct voice-recognition software company, had sold shares in the publicly traded company without filing the proper forms. Facing a little over $100,000 in fines and fees, and with his assets frozen by the SEC, Lents stopped making payments on his $1.5 million mortgage.

  • The loan servicer, Washington Mutual, tried to foreclose on his home in 2003 but was never able to produce Lents' promissory note, so the state circuit court for Palm Beach County dismissed the case. Next, the buyer of the loan, DLJ Mortgage Capital, stepped in with another foreclosure proceeding. DLJ claimed to have lost the promissory note in interoffice mail. Lents was dubious: "When you say you lose a $1.5 million negotiable instrument—that doesn't happen." DLJ claimed that its word was as good as paper. But at least in Palm Beach County, paper still rules. If his mortgage holder couldn't prove it held his mortgage, it couldn't foreclose.

  • Eight years after defaulting, Lents still hasn't made a payment or been forced out of his house. DLJ, whose parent, Credit Suisse, declined to comment for this story, still hasn't proved its ownership to the satisfaction of the court. Lents' debt has grown to about $2.5 million, including unpaid taxes, interest, and penalties. As the stalemate grinds on, Lents has the comfort of knowing he's no longer alone. When he began demanding to see the I.O.U., he says, "I was looked upon like I had leprosy. Now, I have probably 20 to 30 people a month come to me" asking for advice. Lents is irked when people accuse him of exploiting a loophole. "It's not a loophole," he says. "It's the law."(1)

  • The Lents Defense, as it might be called, doesn't work everywhere.(2) Thousands of Floridians have lost their homes in lightning-fast "rocket dockets." In 27 other states, judges don't even review foreclosures, making it harder for homeowners to fight back. Now, though, allegations of carelessness and outright fraud in foreclosures has become so widespread that attorneys general in all 50 states are investigating. So are the feds.

For more, see Mortgage Mess: Shredding the Dream (The foreclosure crisis isn't just about lost documents. It's about trust—and a clash over who gets stuck with $1.1 trillion in losses).

(1) Lents' story has also been reported in a February, 2008 Bloomberg News article. See Banks Lose to Deadbeat Homeowners as Loans Sold in Bonds Vanish.

(2) Not only that, but a "produce the note" victory by another Boca Raton, Florida homeowner in State St. Bank & Trust Co. v. Lord, 851 So. 2d 790 (Fla. App. Ct. 4th Dist., 2003) (litigation in which the losing lender was represented by the foreclosure mill, Law Office of David J. Stern) led to a change in the applicable statute (section 673.3091, Florida Statutes - Enforcement of lost, destroyed, or stolen instrument) (no doubt lobbied for by the financial industry) to make it easier to foreclose in Florida without having physical possession of the promissory note.

The 1999 version of Sec. 673.3091(1)(a), Florida Statutes (the statute at the time State St. Bank was originally filed in a Palm Beach County Circuit Court) read as follows:

  • (1) A person not in possession of an instrument is entitled to enforce the instrument if:

    (a) The person was in possession of the instrument and entitled to enforce it when loss of possession occurred.

The 2004 version of Sec. 673.3091(1)(a), Florida Statutes (after the change in the statute), read (and now read - see current section 673.3091, Florida Statutes) as follows:

  • (1) A person not in possession of an instrument is entitled to enforce the instrument if:

    (a) The person seeking to enforce the instrument was entitled to enforce the instrument when loss of possession occurred, or has directly or indirectly acquired ownership of the instrument from a person who was entitled to enforce the instrument when loss of possession occurred.

By the way, the Florida Bankers Association appears to tacitly acknowledge their role in lobbying for the statutory change arising out of the State St. Bank case (at pages 4 thru 6 of their comments to the Florida Supreme Court made in connection with Emergency Rule and Form Proposals of the Supreme Court Task Force on Residential Mortgage Foreclosure Cases), when it "confesses" that it is common for lenders to deliberately destroy the promissory notes not long after the real estate closing, after converting them into electronic form. See also Naked Capitalism: FUBAR Mortgage Behavior: Florida Banks Destroyed Notes; Others Never Transferred Them.

Louisiana Couple To Chuck Payment Book, Scores $10K For Sloppy Citi's Harrassment In Attempting To Collect Lost Promissory Note

In Chalmette, Louisiana, The Associated Press reports:

  • CitiMortgage Inc. lost its right to collect from a Chalmette couple who defaulted after Hurricane Katrina because it lost their mortgage - and must pay them $10,000 for years of harassing phone calls, a state district judge has ruled. Company phone logs and the testimony of David Michael Cefalu and Rebekah Anna Cantrell Cefalu "clearly establish a pattern of continued, persistent and excessive phone calls" even after they told CitiMortgage to call their lawyer, Judge Robert Buckley wrote.


  • The Cefalus got the $66,462 mortgage in August 2000 from Hibernia National Bank, which transferred servicing rights on the loan to CitiMortgage on March 1, 2005, according to a post-trial memorandum filed by CitiMortgage.

  • Even though the Cefalus acknowledged their debt, CitiMortgage still had to prove its case and didn't have the records needed to do that, Buckley wrote.

  • Its "sloppy record keeping ... seemed to eerily presage" recent allegations about sloppy paperwork and legal procedures nationwide as mortgage lenders foreclosed on millions of homes, the Cefalus' attorney, John Redmann, wrote in an e-mail.

For more, see Judge: $10K for post-Katrina debt harassment.

MD High Court Rules Panel: "Use Of Bogus Affidavits" To Support Foreclosures "Constitutes An Assault On The Integrity Of The Judicial Process Itself"

The following gems were reported in a recent story in The Baltimore Sun on the Maryland Court of Appeals' recent action to approved emergency rules authorizing reviews of foreclosure documents througout Maryland (a non-judicial foreclosure state) in response to the national scandal involving the use of robosigner-executed affidavits, and the subsequent use of "corrective affidavits" by foreclosure mill attorneys seeking a "do-over" after being nabbed for their illicit handiwork when processing foreclosures:

  • The false signings so alarmed Maryland's highest court that it passed an emergency rule last [month] authorizing wide-ranging reviews of foreclosure documents. The Court of Appeals' rules committee, which recommended the change, did not mince words.

  • "In the Committee's view, the use of bogus affidavits to support actions to foreclose … constitutes an assault on the integrity of the judicial process itself," committee chairman Alan M. Wilner, a retired judge, wrote in a letter to the court.

  • Mortgage servicers nationally have said repeatedly that the issue is a technicality that distracts from the fact that they're foreclosing on people who really did get behind on their loans. But regulators say that doesn't give firms a pass to circumvent state law.


  • After the corrective affidavit [in one case] was brought to [Prince George's County Judge Thomas P.] Smith's attention, the judge went digging. When he found more in other Prince George's foreclosure cases, he called judges elsewhere in the state, who in turn discovered similar affidavits from the two attorneys — hundreds so far. The Court of Appeals quickly approved emergency rules authorizing reviews of foreclosure documents. Some courts have already begun examining cases.

For the story, see Homeowners' cases bring foreclosure irregularities to light (False signatures on foreclosure documents prompt court review).

Zombie Debt-Buying Rackets Also Bear Blame For Flooding Court System With Robosigner Affidavits; Cheap Pens A Complaint For One "Autograph Marathoner"

The New York Times reports:

  • When Michael Gazzarato took a job that required him to sign hundreds of affidavits in a single day, he had one demand for his employer: a much better pen. “They tried to get me to do it with a Bic, and I wasn’t going — I wasn’t having it,” he said. “It was bad when I had to use the plastic Papermate-type pen. It was a nightmare.”

  • The complaint could have come from any of the autograph marathoners in the recent mortgage foreclosure mess. But Mr. Gazzarato was speaking at a deposition in a 2007 lawsuit against Asset Acceptance, a company that buys consumer debts and then tries to collect. His job was to sign affidavits, swearing that he had personally reviewed and verified the records of debtors — a time-consuming task when done correctly. Sound familiar?

  • Banks have been under siege in recent weeks for widespread corner-cutting in the rush to process delinquent mortgages. The accusations have stirred outrage and set off investigations by attorneys general across the country, prompting several leading banks to temporarily cease foreclosures.

  • But lawyers who defend consumers in debt-collection cases say the banks did not invent the headless, assembly-line approach to financial paperwork. Debt buyers, they say, have been doing it for years.


  • Nobody knows how many debt-collection affidavits are filed each year, but a report by the nonprofit Legal Aid Society found that in New York City alone more than 450,000 were filed by debt buyers, from January 2006 to July 2008, yielding more than $1.1 billion in judgments and settlements.


  • Lawyers for consumers, [...] contend that few debtors ever learn about the legal action until it is too late, often because the process server charged with alerting them never actually delivered a notification [ie. sewer service].


  • But what people don’t realize,” said Daniel Edelman, a plaintiff’s lawyer in Chicago, “is that the mortgage issue and debt collections are intimately connected. The millions of default judgments out there — you better believe that’s one reason that homeowners can’t afford their homes.”

For more, see Debt Collectors Face a Hazard: Writer’s Cramp.

Monday, November 8, 2010

Fannie, Freddie Dump Stern; Earlier Suspension Of Case Referrals To South Florida Foreclosure Mill Now Permanent As Loan File Removals Begin

The Wall Street Journal reports:

  • Fannie Mae and Freddie Mac have terminated their relationships with a top Florida foreclosure law firm and began taking possession of loan files on Monday afternoon from the firm, which processes evictions on behalf of the mortgage-finance giants. Fannie and Freddie had previously suspended all foreclosures that had been referred to the law offices of David J. Stern in Plantation, Fla., a suburb of Fort Lauderdale.

For more, see Fannie, Freddie Take Loan Files From Florida Law Firm.

Failure To Dismiss 100s Of Faulty Foreclosures Involving Robosigners Will Lead To Huge Problem w/ Crappy Home Titles, Says MD Non-Profit In Lawsuits

In Maryland, The Baltimore Sun reports:

  • Attorneys for Maryland homeowners are asking the courts to dismiss hundreds of foreclosure cases that depended on paperwork submitted by so-called robo-signers on behalf of mortgage servicers.

  • Civil Justice, a Baltimore nonprofit that specializes in foreclosure issues, made the request in motions filed last week in two cases. One motion asks that all Maryland foreclosure cases with documents signed by Jeffrey Stephan of GMAC Mortgage — including the Baltimore case in question — be tossed out. The other asks for the same treatment of all Maryland cases with documents signed by Xee Moua of Wells Fargo.


  • Phillip Robinson, an attorney and executive director of Civil Justice, believes the two employees from GMAC and Wells Fargo are each responsible for documents in hundreds of pending foreclosure cases in Maryland.

  • If the courts allowed the mortgage servicers to repossess these homes and resell them, true ownership of the properties would be thrown into question because the cases were filed with "defective" paperwork, he said.

  • The motions contend that failing to dismiss the cases "would further harm our housing recovery by allowing years and years of litigation concerning the title to properties." "We have a huge title problem that needs to be solved," Robinson said. "The only way to clear title is to dismiss cases and make [mortgage servicers] do it the right way."

For the story, see Attorneys ask courts to toss out foreclosure cases (Motions focus on 'robo-signers' with GMAC, Wells Fargo).

Wells Fargo's Moua Attracts Spotlight, National Recognition For Career As Prolific Robosigner; Claims Credit For Banging Out 500 Affidavits In 2 Hours

Bloomberg News reports:

  • A Maryland homeowner asked a court to dismiss any Wells Fargo & Co. foreclosure actions in the state that involve affidavits given by a bank employee who said she signed documents without completely checking their accuracy.

  • Susan Saidman asked a Montgomery County court to recognize as a class all defendants in Maryland cases with foreclosure papers signed by Xee Moua for Wells Fargo. In a March deposition in a Florida case, Moua said she didn’t verify all the information in filings she signed, sometimes processing as many as 500 in two hours. [...] Saidman raised the defense against members of Shapiro & Burson LLP, a law firm that she said brings foreclosure actions on behalf of Wells Fargo and other secured lenders.


  • Marysville, Ohio, homeowner Ann Piwinksi brought a suit today accusing Wells Fargo of violating the state’s Consumer Sales Practices Act, according to court filings. Her suit is the first civil case in the state against Wells Fargo involving the use of so-called robo-signers, according to her lawyer, John Sherrod of Dublin, Ohio. Piwinski said documents in her foreclosure case were signed by China Brown, Moua’s supervisor. She’s seeking civil penalties and punitive damages.

For the story, see Wells Fargo Foreclosure `Robo-Signer' Draws Maryland Dismissal Motion.

Investigators Use "Well-Tested Approach" In Criminal Probe Into Robosigner Scandal As They Put Squeeze On Low-Level Workers For Info To Bag Execs

The Washington Post reports:

  • [A]mid reports of shoddy and possibly fraudulent paperwork, [Jacksonville, Florida foreclosure document Processor Lender Processing Services](1) as well as a handful of other document processors and law firms are coming under scrutiny for the criminal investigations into the foreclosure debacle.

  • Law enforcement authorities on both state and federal levels are probing whether individuals at these foreclosure companies and at the banks that hired them committed an array of possible crimes - mail and wire fraud, money laundering, conspiracy and racketeering. No charges have been filed.

  • These officials say they are taking a well-tested approach in their investigations: press low-level employees to implicate higher-up executives.(2) Already, investigators have obtained in sworn testimony detailed descriptions of what took place inside the foreclosure companies.


  • The Justice Department's U.S. attorney in central Florida has launched a criminal probe into whether LPS manufactured fake assignments of mortgage. [...] A challenge law enforcement officials face is that LPS and other foreclosure businesses are just one part of a chain of companies that handle different aspects of a single foreclosure.

For more, see U.S. probing foreclosure processing firms.

(1) Formerly a branch of Fidelity National Financial - the nation's largest title insurer - LPS was spun off in 2008, but the outfit and its 8,900 employees are still housed in the same complex as the title company, the story states.

(2) See United States v. Moody, 206 F.3d 609, 617 (6th Cir. 2000) (Wiseman, J., concurring) for one Federal judge's observation, made in the context of drug conspiracy cases, on the so-called "race to the courthouse/prosecutor's office" that frequently takes place during the early stages of these "multi-target" criminal investigations:

  • In practical terms, drug conspiracy cases have become a race to the courthouse. When a conspiracy is exposed by an arrest or execution of search warrants, soon-to-be defendants know that the first one to "belly up" and tell what he knows receives the best deal. The pressure is to bargain and bargain early, even if an indictment has not been filed.

These lower-level employees may be well-advised to retain competent defense counsel and "belly up and tell what he or she knows" as the criminal investigation continues (and minimize the risk of being "thrown under the bus" by a colleague/competitor also finding himself in the same "race to the prosecutor's office." Like in any other race, the fruits to be snagged by rolling first usually goes to the swift).

State AG To Wells Fargo: Vacate Any Ohio F'closure Judgment Obtained Through Faulty Affidavits; Asks Judges For Docs Involving One Specific Robosigner

Bloomberg News reports:

  • Ohio Attorney General Richard Cordray asked judges in his state for copies of foreclosure affidavits filed in their courts that are signed by a woman he identified as a “robo-signer” for Wells Fargo Bank NA. Cordray sent a letter to 133 judges asking for information on any cases that involved Xee Moua, a Wells Fargo vice president of loan documentation. Cordray sent a separate letter to Wells Fargo & Co. asking the bank to vacate any foreclosure judgment in Ohio involving incorrect affidavits.

  • Moua gave a deposition in a Florida case in March in which she testified that “statements made by her in sworn affidavits were false,” Cordray said in the letter. Moua said she wasn’t familiar with the books and records related to the transactions an affidavit covered, according to Cordray.

  • These are crucial misstatements that are an affront to our legal system,” he wrote. “If you become aware of affidavits Ms. Moua signed in any foreclosure cases filed in your court, I would appreciate receiving copies of such affidavits.”

For more, see Ohio’s Cordray Asks for Affidavits by ‘Robo-Signer’.

State Law Forcing A Waiver Of Counterclaims In Foreclosure Actions For Failure To Pay $1,900 Fee Unconstitutional, Say 3 Florida Homeowners In Lawsuit

In Fort Myers, Florida, The Tampa Tribune reports:

  • Cash-strapped homeowners shouldn't have to pay to fight foreclosure, according to three Lee County homeowners who are suing the state. Fees of up to $1,900 to file a counter claim is unconstitutional, says the lawsuit, filed last week in the Middle District of Florida, Ft. Myers Division.

  • "This is a cruel hardship imposed on the weakest members of our society," said Marcus Viles, a Ft. Myers lawyer representing the homeowners. Viles said he seeks a class-action suit to represent hundreds of thousands of homeowners hit by foreclosure since the new rules started in June 2009.


  • The fees are based on a sliding scale, depending on the value of the mortgage. "Everyone I've seen is $1,900, and I don't represent rich people with really expensive homes," he said. Lenders who file foreclosures have to pay the same fees, and Viles says it was a way to build up the state's revenue. The money is used for roads, health care and education. The fees are essentially a tax now, Viles said, and it's unconstitutional to tax people for access to the court system.

  • Fees should be reasonable, and the money should go to the cash-strapped courts. But homeowners, he said, shouldn't have to pay "just to get to defend themselves in court." When homeowners are sued in a foreclosure suit, they have 20 days to respond. If they don't file a counterclaim at the same time, Viles said, they waive their right to do so.

For more, see Lawsuit seeks to end consumer foreclosure fees.

Sunday, November 7, 2010

Notorious S. Florida Foreclosure Mill Gives Hundreds Of Employees The Boot As Storm Clouds Continue To Darken Over Alleged Robosigning Racket

In Plantation, Florida, The Miami Herald reports:

  • The Law Offices of David J. Stern laid off hundreds of employees on Thursday, the latest sign that a state investigation, the loss of major clients amid scandal and the incriminating testimonies of former employees are bringing the foreclosure-processing giant to its knees.

  • Jeffrey Tew, a lawyer for the firm, confirmed the layoffs Thursday. [...] Tew would not say how many employees were let go on Thursday, but said the firm has shrunk to about 400 employees, a decrease of about 50 percent in the past 10 days. Earlier this year, the firm had more than 1,100 employees. An e-mail memo sent out Thursday morning advised the employees of the layoffs.

  • On Thursday afternoon, an employee for a document management and shredding company was unloading hundreds of empty boxes from a truck and carting them into the office complex at 900 S. Pine Island Dr. in Plantation, where Stern's firm occupies four floors.


  • On Monday, the stock price for DJSP [Enterprises, the public spinoff firm handling foreclosure document processing launched last year by Stern] closed below $1 for the first time. It had been trading at $13.65 in April. It closed at 77 cents on Thursday.(1)

For more, see Foreclosure law firm cuts staff (Hundreds of employees were laid off at the Law Offices of David J. Stern on Thursday, as the embattled company struggles amid the foreclosure document scandal).

See also, South Florida Sun Sentinel: Mass layoffs at Stern as foreclosure law firm loses top clients (Plantation attorney eliminates 560 jobs —70 percent of staff — citing 'recent turbulence in the mortgage industry').

(1) According to this story, a Chinese-American investment banking firm named Chardan Capital acquired a controlling interest in what is now a DJSP subsidiary on Jan. 15 for $64.8 million in cash and the assumption by the subsidiary of about $3.4 million in DJSP expenses.

Void vs. Voidable Deeds - Actions to Undo A Deed Scam; OK To Plead Inconsistent Facts - No Need To "Gamble", Says California Appeals Court

In a recent ruling addressing various issues raised in a lawsuit filed by apparent victims of an alleged deed ripoff, a California appeals court said, among other things, that there was nothing disqualifying, as one Defendant asserted, for the Plaintiffs to plead alternative facts in an attempt to undo both the deed ripoff itself, and the mortgage that was placed on the subject properties subsequent thereto. (This appeal involved a reversal of a trial court's judgment of dismissal after sustaining one defendant's demurrer. The ruling, although unpublished, may nevertheless be instructive for those in the legal profession looking to unwind or undo a wide variety of deed ripoffs, particularly, as in this case, the attorney representing one of the defendants attempts to trip up his/her adversary on a "pleading technicality.")

In addressing what the court referred to as one defendant's mischaracterization of the rules of pleading, the court stated that "where the exact nature of the facts is in doubt, or where the exact legal nature of plaintiff's right and defendant's liability depend on facts not well known to the plaintiff, the pleading may properly set forth alternative theories in varied and inconsistent counts." It went on to make this observation (all citations, internal quotations, etc. omitted for ease of reading, bold text is my emphasis, not in the original text):

  • In such situations, the facts are inconsistently alleged because the plaintiff does not know which of the alternatives is true or can be established by the evidence. Tolerance for such pleading rests on the principle that uncertainty as to factual details or their legal significance should not force a pleader to gamble on a single formulation of his claim if the facts ultimately found by the court, though diverging from those the pleader might have considered most likely, still entitle him to relief.


  • At this early stage of the proceedings, Plaintiffs cannot be faulted for failing to know exactly what occurred in this case.

In addition to the foregoing point,(1) the balance of the ruling may contain some valuable insight to anyone (primarily those in the legal profession or real estate business) seeking a starting point in commencing the arduous process of undoing or unwinding a deed ripoff (ie. whether it be through forged deeds & other land documents, forged or improper use of powers of attorney, sale leaseback foreclosure rescue scams, or the otherwise duping of a property owner into signing over deeds and other land documents), including the voiding of any mortgage or other encumbrance placed on the property simultaneously with, or subsequent to, the deed ripoff.

For the ruling, see Casonhua v. Wash. Mut. Bank, B218606, B218608, 2010 Cal. App. Unpub. LEXIS 8486 (Cal. App. 2nd Dist. Div. 7, October 26, 2010) (when link expires, TRY HERE).

(1) The portion of the court's ruling on this point follows (omitting the court's footnote 7; bold text is my emphasis, not in the original text):

  • 2. The Plaintiffs Were Entitled to Plead Alternative Facts

    Washington Mutual argues that, even if the trial court's ruling was erroneous, the demurrers should be sustained on the ground that the Plaintiffs' verified complaints contain inconsistent factual assertions that preclude them from alleging that Berry procured her deed through fraud. Specifically, Washington Mutual contends that because the fourth cause of action in the Florence Sims Complaint (which is pleaded against Berry only) alleges that Berry induced Florence to sign the grant deed through undue influence, Plaintiffs may not allege in the alternative that the deed was forged or that Florence lacked the mental capacity to sign the deed.7 Stated more simply, Washington Mutual argues that because Plaintiffs assert in one claim that the deed was procured through undue influence, which would render the deed voidable, we must ignore Plaintiffs' alternative claim that the deed was procured through fraud, which would render the deed wholly void.

    Washington Mutual's argument mischaracterizes the rules of pleading. The traditional rule is that "[w]here the exact nature of the facts is in doubt, or where the exact legal nature of plaintiff's right and defendant's liability depend on facts not well known to the plaintiff, the pleading may properly set forth alternative theories in varied and inconsistent counts." (Rader Co. v. Stone (1986) 178 Cal.App.3d 10, 29.) In such situations, "[t]he facts are inconsistently alleged because the plaintiff does not know which of the alternatives is true or can be established by the evidence." (4 Witkin, Cal. Procedure (4th ed. 1997) Pleading, § 364, p. 467.) "Tolerance for such pleading rests on the principle that uncertainty as to factual details or their legal significance should not force a pleader to gamble on a single formulation of his claim if the facts ultimately found by the court, though diverging from those the pleader might have considered most likely, still entitle him to relief." (Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 886.)

    In this case, the complaints plainly acknowledge that Plaintiffs pleaded alternative factual theories because they were not present when Berry's grant deed was executed, and, as a result, are uncertain what occurred. The Plaintiffs' first claim alleges that Berry forged the deed and describes circumstantial evidence that, in Plaintiffs' view, support their contention.8 Plaintiffs' additional claims, which allege that Berry procured the deed through other fraudulent means or undue influence, were pleaded "in the event the Court determines that Florence signed the [grant deeds."]. At this early stage of the proceedings, Plaintiffs cannot be faulted for failing to know exactly what occurred in this case. It would therefore be improper to limit Plaintiffs' factual allegations in the manner Washington Mutual proposes.

    Washington Mutual correctly asserts that if a party verifies a specific factual allegation in a complaint, it cannot simultaneously plead an inconsistent fact in the same pleading. (Alfaro v. Community Housing Imp. System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1381 (Alfaro) ["[a] plaintiff may plead inconsistent counts or causes of action in a verified complaint, but this rule does not entitle a party to describe the same transaction as including contradictory or antagonistic facts"]; see also Beatty v. Pacific States S. & L. Co. (1935) 4 Cal.App.2d 692, 697 (Beatty).) The rules of pleading do "not permit the pleader to blow both hot and cold in the same complaint on the subject of facts of which he purports to speak with knowledge under oath." (Beatty, supra, 4 Cal.App.2d at p. 697; see also Manti v. Gunari (1970) 5 Cal.App.3d 442, 449["[t]o verify inconsistent facts alleged in a complaint indicates perjury in the matter"].) In this case, however, the operative complaints are verified only on information and belief. Therefore, although the Plaintiffs have verified that they believe the alleged information to be true, they have not claimed personal knowledge of the truth of the matters asserted. (See Black's Law Dictionary 795 (8th ed. 2004) [defining information and belief allegations as being "based on secondhand information that the declarant believes to be true"].) Moreover, as discussed above, the complaints repeatedly emphasize that because the Plaintiffs are unsure exactly what occurred when the deed was executed, they have pleaded alternative facts to encompass all possible theories of liability. As a result, the rule barring plaintiffs from pleading inconsistent facts that are based personal knowledge is inapplicable here.


footnote 8: The complaints contend that there is "strong circumstantial evidence" indicating that Berry forged the deeds, including the fact that: (1) Berry recorded the deeds two years after Florence purportedly signed them and seven months after Florence died; (2) the notary's journal does not contain Florence's thumbprint, as required under California law; (3) the notary's journal has an entry dated January 2, 2002, for a "Power of Attorney for Decedent," which is crossed out and interlineated with "Grant Deed" in a different type of ink; (4) during deposition testimony, the notary stated that he notarized a power of attorney and the two grant deeds on January 2, 2002, but his journal only shows that one document was notarized on that date.


Go here for more on void and voidable deeds. DeedVoidVoidable