Saturday, January 1, 2011

Virginia AG Squeezes Settlement From Loan Modification Outfit Allegedly Making Bogus Guaranties To Stop Foreclosure In Exchange For Upfront Fees

The Washington Post reports:

  • A mortgage modification company that had been illegally charging customers fees before providing emergency foreclosure help has agreed to refund customers and pay a $5,000 fine, [Virginia] Attorney Gen. Ken Cuccinelli (R) said.

  • In November, Cuccinelli filed suit against the American Neighborhood Housing Foundation, a Chesapeake-based company that also operated a Richmond office for three years, charging that the fees violated the Virginia Foreclosure Rescue and the Virginia Consumer Protection Act, by guaranteeing the company could halt foreclosures.

  • In a statement, Cuccinelli said the company has agreed to refund more than $94,000 to 273 customers nationally, as well as pay the fine and $10,000 to cover attorney fees. The company has also agreed to stop charging $1,500 in advance of providing foreclosure services and to stop guaranteeing that it can save people's homes.

Source: Mortgage company to pay fine for illegal fees, Cuccinelli says.

City Of Cleveland, Local Non-Profit Target Lenders, Loan Servicers In Amended Federal Suit Over Blighted Foreclosures

In Cleveland, Ohio, WCPN Radio 90.3 FM reports:

  • A local nonprofit and the city of Cleveland are asking a federal judge to force nearly a dozen financial institutions and loan servicers to take care of the houses they took back in foreclosure or pay to knock them down.


  • Two years ago, a nonprofit affiliated with Neighborhood Progress Inc, an umbrella organization for Cleveland’s community development corporations, sued [Deutsche Bank and Wells Fargo] arguing the houses they had taken back in foreclosure were becoming public nuisances.The cases bounced around the courts and Deutsche Bank and Wells Fargo ultimately paid to demolish the properties named in that suit.

  • But, the plantiffs say, the problem continues with yet more properties, and so the nonprofit Cleveland Housing Renewal Project and the city of Cleveland have refiled an amended suit in federal court. The defendants include not just Deutsche Bank, says attorney Thomas C Wagner, but also nine loan servicers including big Wall Street names like JP Morgan Chase.

For more, see Cleveland, Nonprofit Sue Deutsche Bank, Loan Servicers Over Bills for “Dangerously Blighted” Houses.

Friday, December 31, 2010

California Attorney In Hot Water For Advising Foreclosed Homeowners To Break In & Reoccupy Former Homes

In Southern California, the North County Times reports:

  • The real estate attorney who recommended that families break into homes they'd lost to foreclosure will be meeting with investigators from the state bar association in January, the attorney's assistant confirmed.

  • Encinitas lawyer Michael T. Pines made news in October when he advised four Southern California families, including two in Escondido, to hire locksmiths and break into their homes, which banks had repossessed. He argued that their lenders had granted the families mortgage loans under fraudulent conditions and had no right to foreclose.

  • Local legal experts found his theories dubious, and judges agreed. Pines himself is in a complicated bankruptcy liquidation proceeding and may soon lose his office building.

For more, see Bar complaint filed against foreclosure attorney Pines (Attorney advised clients to break into foreclosed houses).

See also: Ventura County Star: DA files complaint against lawyer of family who broke into home.

Florida Appeals Court OKs Property Tax Homestead Exemption For Non-Permanent Resident Alien Couple Where Their Three Minor Children Are U.S. Citizens

Abstract Appeal reports:

  • If two parents are not legal residents of Florida(1) but they own a home in which they and their minor children reside, can the parents claim a homestead exemption for the property under Florida law? Yes they can, said the Third District [Court of Appeal] in this case.

  • The decision quotes portions of the father’s affidavit, in which he explains that he and his wife live on the property and that, for their three children, the property is their permanent residence.

  • The decision then observes: “Although one might wonder whether his assertions are congruent with the laws of nature, we apply in this court the constitution and laws of the State of Florida.”

Source: Third District: Homestead and Legal Residency Status.

For the court's ruling, see De La Mora v. Andonie, No. 3D09-3427 (Fla. App. 3d DCA, December 15, 2010).

(1) The homeowners in this case are a married couple who are citizens of Honduras, lawfully residing in the United States pursuant to temporary visas issued by the United States Department of Homeland Security. It was undisputed that the couple themselves (as opposed to their three minor children who are all U.S. citizens) are legally incapable of qualifying as “permanent residents” of Miami-Dade County. See Juarrero v. McNayr, 157 So. 2d 79, 81 (Fla. 1963) (finding that a non-citizen present in the United States under a temporary visa “cannot ‘legally,’ ‘rightfully’ or in ‘good faith’ make or declare [himself]” a “permanent resident” of this state for purposes of Article VII, section 6(a) of the Florida Constitution dealing with the property tax exemption for homesteads (the constitutional provisions dealing with the property tax exemption for homesteads under Florida law is to be distinguished from Article X, Section 4 of the Florida Constitution, which deals with the exemption for homesteads against forced sale by judgment creditors)).

Bay State Homeowners Sans Filed Homestead Declaration Now Entitled To Automatic $125K Home Equity 'Shield' Against Forced Sale By Judgment Creditors

In Boston, Massachusetts, The Patriot Ledger reports:

  • Massachusetts homeowners stand to receive new protections from creditors under a bill that was recently enacted by the state legislature. The bill would automatically protect the first $125,000 of equity on a primary residence from creditors.

  • Currently, only homeowners who file a “declaration of homestead” form with the Registry of Deeds enjoy such protections. A spokesman for the Patrick administration said Gov. Deval Patrick signed the bill into law on Thursday night. “This is really going to protect people who find themselves with their backs to the wall,” said Susan Grossberg, a Boston bankruptcy attorney.

  • The protections would apply both to new transactions and existing homes. Homeowners still would have the option of filing a declaration of homestead, which increases the exemption to $500,000. The legislation is designed to deter creditors from foreclosing on the homes of delinquent debtors, even if they have filed for bankruptcy.

  • Under the current law, if a homeowner does not have a declaration of homestead, a creditor could place a lien on the home and begin foreclosure proceedings. “They could turn around the next day and give you a notice that they’re going to foreclose to satisfy their lien by selling this house,” Grossberg said.

  • Massachusetts is one of a dwindling number of states without an automatic homestead provision, said Kathleen Joyce, director of government relations for the Boston Bar Association. The group lobbied for the expanded protection for several years without success. To file a declaration of homestead, homeowners fill out a signed, notarized one-page document declaring a property as their primary residence and pay a $35 fee to file it with their local Registry of Deeds. These are typically filed at the time of a home’s purchase, but can be done at a later date as well.

Source: New law would protect homeowners’ equity (Designed to deter creditors’ foreclosures). homestead exemption

Thursday, December 30, 2010

Mortgage Broker/Real Estate Agent Gets 30 Months For Running Home Equity Refinancing Ripoff; Ordered To Cough Up $200K+ In Victim Restitution

In Greeneville, Tennessee, the Knoxville News Sentinel reports:

  • A Florida man convicted of a nearly two-year mortgage fraud and money laundering scheme in Greene and Cocke counties was sentenced Thursday to more than three years in prison. Thomas Duane Roderick, 44, of Wesley Chapel, Fla., not only received 37 months in prison he was also ordered to pay more than $200,000 in restitution to his victims. Roderick had previously pleaded guilty to charges of wire fraud, mail fraud, bank fraud and money laundering in U.S. District Court in Greeneville.

  • According to an indictment, Roderick, a mortgage loan broker and real estate agent in Greeneville, devised a scheme to defraud clients. He worked with Premier Mortgage from 2005 until 2007 in Greeneville and used various real estate closing agencies in Greene County. At the closings, Roderick would provide fraudulent legal documents for the signature of the clients seeking loans, and the closing agency would disburse funds as required by the lending institution.

  • He set up a sham investment company, entitled MSI Inc., and used a bogus checking account to capture money from clients. Roderick caused one victim to wire $20,000 to MSI, falsely telling her that she would owe taxes on the $20,000 equity she received from the refinancing of her home mortgage. He convinced her that if she turned the funds over to him, he would invest the money to avoid taxes.

  • Roderick never invested the funds and immediately withdrew them after the wire transfer, and spent them for his own benefit.

Source: Florida man gets 3 years in mortgage fraud scheme.

Missouri AG Obtains $338K+ Judgment In Suit Against Alleged Contract For Deed, Payment Skimming Racket That Left Would-Be Homebuyers In Foreclosure

In Jefferson City, Missouri, Legal Newsline reports:

  • Missouri Attorney General Chris Koster announced [...] that he has obtained a summary judgment against a real estate company and two of its operators for allegedly defrauding consumers.

  • Greenleaf and The Real Estate Company, as well as business operators Scott Dasal and Eric Gagnepain, allegedly defrauded consumers by selling them homes that were already owned by investors that they had solicited. Under terms of the judgment, the defendants are permanently barred from engaging in any home sales or rentals in the state. They must also provide more than $308,000 in restitution to customers. Another $30,000 will be paid to the state.

  • According to the suit, the defendants would allegedly take out mortgages on homes without the consumers purchasing the homes knowing. Koster says while consumers were led to think they were purchasing the homes from Greenleaf and were buying an ownership interest in the home, the money the consumers then paid to Greenleaf, which they were told was for the mortgage, was then allegedly used for the defendants' operating expenses. Consumers learned the truth the hard way, when banks foreclosed on the loans, Koster says.(1)

Source: Koster gets judgment against real estate company.

(1) For earlier posts on this contract for deed, home-flipping racket, see:

Title Insurance/Closing Agent Cops Guilty Plea For Swiping Million$ From R/E Escrow Accounts; Resorted To "Playing The Float" To Keep Racket Running

From the Office of the U.S. Attorney (NYC/Manhattan):

  • PREET BHARARA, the United States Attorney for the Southern District of New York, announced [] that BRIAN H.MADDEN, the former president and co-founder of Liberty Title Agency, LLC ("Liberty Title"), one of the largest independently-owned title insurance agencies in New York State, pled guilty in Manhattan federal court to defrauding his clients by misappropriating and embezzling millions of dollars of escrow and other client funds entrusted to Liberty Title and two other entities controlled by MADDEN.(1)

For the U.S. Attorney press release, see Former President Of Title Insurance Agency Pleads Guilty In Manhattan Federal Court To Misappropriating Millions Of Dollars Of Client Funds.

(1) From the press release:

  • According to the Indictment and Complaint and statements made during the plea proceeding:

    MADDEN’s company, Liberty Title, sold title insurance to purchasers of property or lenders financing the purchase of property. [...] MADDEN also controlled and operated two other title insurance agencies: Skyline Title, LLC, and GNY Liberty Abstract, LLC. [...] In addition to issuing title insurance policies, MADDEN’s three companies also provided escrow services to clients, and collected and paid taxes and fees.

    Beginning around early 2008, MADDEN misappropriated millions of dollars of escrow and other client funds by transferring and commingling those funds among various bank accounts held by Skyline Title, GNY Liberty, and Liberty Title. MADDEN then used the misappropriated funds to sustain Liberty Title’s operations and to make significant withdrawals of monies for his personal use. In particular, between January 2008 and April 2009, MADDEN took more than $2 million in cash draws from Liberty Title. [...] To sustain Liberty Title’s operations in the face of such withdrawals and to pay current client debts, MADDEN misappropriated escrow and client funds of other clients, essentially using new funds from clients to pay off debts on behalf of other clients -- a practice called "playing the float." In addition, because MADDEN misappropriated the funds of title insurance agencies, he failed to timely and properly record and pay taxes on dozens of mortgages and other real estate transactions, further exposing his clients to loss.

Fleeing Florida Title Insurance Agents Accused Of Ripping Off $10M+ From Escrow Accounts Bagged In Colorado After 30 Months On The Lam

In Durango, Colorado, The Palm Beach Post reports:

  • Accused of stealing $10 million from clients of their title insurance company, Roger and Peggy Gamblin spent more than two years running from the FBI before agents cornered them [...] at a hospital in Durango, Colo. The couple, who mysteriously vanished in May 2008,(1) were taken into federal custody and most likely will be returned to Florida to face charges of conspiracy and wire and mail fraud.


  • In an eight-count superseding indictment handed up in October 2009, a federal grand jury charged the Gamblins with financing their lifestyle with stolen money. The indictment said the couple raided client escrow accounts reserved for buying houses or paying off mortgages and used the money to pay business and personal bills.


  • Underwriters for Flagler Title, which now is in receivership, won lawsuits against the Gamblins' company in August, and a judge ordered the couple to pay the underwriters, Lawyers Title Insurance and Chicago Title Insurance Company, more than $10.2 million.

  • In Durango, the Gamblins indicated they were short on cash. [...] Roger and Peggy Gamblin asked for, and were granted, a court appointed attorney, a move reserved for people who can't afford to hire their own lawyers.

For the story, see Title firm's owners, missing for 2 years, captured in Colorado.

(1) See The Palm Beach Post:

  • Millions missing at title company (Before his disappearance plunged employees and customers of one of Florida's largest independent title companies into chaos [...], Flagler Title founder Roger Gamblin dipped into millions of dollars his company held in escrow for clients, according to testimony),
  • Title firm owner had been fined.

Wednesday, December 29, 2010

Private Investors Score Big Profits In Tax Lien Ripoffs As County Process Allows For One Homeowner's $291 Delinquent Tax Bill To Grow To $8,200

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

  • Robin Gordon didn’t know about the tax lien Fulton County placed against her apartment until the county sold the lien to a private company, foreclosed and sold the property at a sheriff’s auction.
  • Now, to keep her property, she must pay $8,200 to satisfy the $291 she initially owed in delinquent taxes and penalties. “It’s just seems too ludicrous to be true,” Gordon said. That’s a profit of 2,700 percent for Vesta Holdings and KOR Holdings, the sister companies that purchased Gordon’s lien, ordered the sheriff’s office to auction her apartment and then bought her property at the auction.
  • While most Georgia counties prohibit this practice, Fulton and Gwinnett counties routinely sell tax liens to private third parties who can pump up the lien value and use foreclosure to collect the debt.
  • Proponents say selling tax liens to private businesses lowers counties’ collection costs. But critics say the tactic is an abdication of a county’s tax collection responsibility, removes due process protections for homeowners and places unnecessary financial burdens on taxpayers. Putting the process in private hands, critics say, flips the creditor’s incentive at the property owner’s expense.
  • County tax collectors are interested in efficient, quick revenue collection, they argue. For-profit businesses make more money by delaying, running up the debt with penalties or foreclosing on the property and selling it at auction.
  • The imposition of taxes is one of the most feared powers of government, and when that power is transferred to a private entity, not only are they not accountable like the government, but their incentives are entirely different,” said Frank Alexander, a law professor at Emory University who specializes in Georgia real estate and foreclosure law. "The investor’s only incentive is to maximize profits.”
  • That is why DeKalb County does not sell tax liens, said Andrew Booth, deputy tax commissioner and director of delinquent collections division. “There’s no accountability to taxpayers and residents by the purchasers of the tax lien,” he said.(1)
For more, see Tax lien sales 
shock, dismay.
(1) For similar "tax lien-inflating" rackets reportedly going on elsewhere, see:

Seattle-Area Man Faces Felony Attempted Theft Charge For Allegedly Trying To Sell Foreclosed House After Filing Phony Claim In Home Hijacking Racket

In King County, Washington, the Seattle Post Intelligencer reports:

  • A former real estate agent who landed in the news for assisting squatters who'd taken over a Kirkland mansion(1) may be headed to the big house, after prosecutors filed felony charges against him.

  • Filing attempted-theft charges earlier this month, King County prosecutors contend Edmonds resident James C. McClung tried to use a bogus legal action to sell a home he didn't own to a young couple. Prosecutors claim the move by McClung came to light in October when one of the Shoreline home's new owners stopped by and found McClung's "tenants" around the house.


  • In the current case, prosecutors claim McClung acted as an intermediary for the Shoreline home's former owner, who lost the house through foreclosure earlier in the year. McClung, prosecutors claim, filed a false claim to the house and began renting out the residence.

  • Writing the court, Senior Deputy Prosecutor David Seaver noted that McClung has cast himself in public statements as an enemy of the banks and a friend to the little guy. "The defendant has acknowledged to a number of media outlets that he is engaged in a self-proclaimed 'mission' to interfere with financial institutions," Seaver told the court.(2)


  • According to [King County Detective Robert Inn's] account, McClung said he was "taking advantage of confusion in the lending industry" and could sell the property. The Edmonds man offered that the foreclosure sale during which Chase bank bought the home was illegal, and suggested he had as much right to sell the house as the bank.(3)

For more, see Charge: Man who helped Kirkland mansion squatter tried to bilk Shoreline couple (Edmonds man claimed to be on a 'mission' to hurt banks, tried to break young couple, prosecutors claim).

(1) According to the story McClung, 42, had caught the attention of Kirkland police in June after they arrested a woman -- Jill Lane -- squatting in a bank-owned $3.2 million mansion. According to charging documents, McClung, a former real estate agent, had signed his name to a bogus claim filed by Lane.

(2) For earlier reports on this home hijacking racket, see:

(3) Reportedly, Detective Inn found, among other things, a self-titled 'deed of release' taped to a front window of the home McClung was allegedly trying to unload, purporting to identify him as the representative of the lawful owner of the property.

Tampa Feds Charge WV Woman With Allegedly Abusing POA To Obtain, Pocket Proceeds From Mortgage Loan On 80-Year Old Disabled Victim's Free & Clear Home

From the Office of the U.S. Attorney (Tampa, Florida):

  • United States Attorney Robert E. O'Neill announces the unsealing of an indictment and the arrest of Rebecca Moody, 61, of West Virginia and formerly of New Port Richey[, Florida].


  • According to the indictment, Rebecca Moody is alleged to have engaged in a scheme to defraud an eighty year old disabled woman by using a fraudulently obtained power of attorney to procure a fraudulent mortgage loan from Wells Fargo Bank on the victim's unencumbered residence without the victim's knowledge.

  • The indictment claims that Moody was also engaged in the theft of other funds from other accounts belonging to the victim in order to acquire money for Moody's personal use, and for the use of her daughter, all in contradiction of her fiduciary capacity to conduct the financial affairs in the best interest of the disabled and elderly victim.(1)

For the U.S. Attorney press release, see Woman Who Defrauded Disabled/Elderly Victim Arrested.

(1) Moody is charged with one count of wire fraud and one count of transportation of stolen property in connection with a mortgage, and other accounts, belonging to the victim who resided in New Port Richey, Florida at the time of the charged offenses.

Refinance Gone Haywire Leaves Virginia Couple Facing Foreclosure As Payoff Proceeds From Now-Defunct Lender Fail To Reach Existing Mortgage Holder

In Amelia County, Virginia, the Richmond Times Dispatch reports:

  • Terry and Donna Hunt have never missed a mortgage payment. But their original lender has tried to foreclose on their house in Amelia County three times.

  • The Hunts weren't involved in a loan modification, nor were they trying to take equity out of their house. Rather, things went awry when they refinanced their $211,000 mortgage in October 2009 to lower their interest rate from 7.8 percent to 5 percent. Now, no one knows who owns the loan, said Jason Krumbein, the couple's attorney.

  • The new loan servicer, a government-approved lender that took over the refinanced loan from the originator, says it owns the loan, Krumbein said. But CitiMortgage, the original lender, claims it never received the payoff from Lend America, once one of the largest originators of mortgages backed by the Federal Housing Administration but now banned by the FHA from doing business.


  • Jay Speer, an attorney with the Virginia Poverty Law Center, said that since hearing a few weeks ago about the Hunts' situation, he has been alerted to a few more cases in Virginia involving Lend America not paying off previous loans. "It's a big can of worms," Speer said.(1)

For more, see Amelia couple faces a refinancing gone bad.

(1) Reportedly, the Hunts would later learn that Lend America abruptly ceased operations within weeks after it closed on their refinance. The U.S. Attorney for the Eastern District of New York had filed a complaint in federal court, accusing Lend America of fraudulent lending practices that compromised the integrity of the FHA mortgage insurance program and contributed to increases in loan defaults and foreclosures, the story states.

Fear Of 'Flopping' Fraud Leads Loan Servicers Away From Short Sales, Opting To Foreclose Instead

The Boston Globe reports:

  • [A]s more homeowners attempt to stave off foreclosure by striking [short sale] deals, lenders are denying or delaying many of these transactions even when it appears the sales would be in their best interest, according to real estate agents and housing advocates.(1)

  • Eventually, some of the properties are sold at auction for less than the lender would have recouped through a short sale, they say. That not only costs banks, but it further damages homeowners’ credit and depresses overall property values.


  • Indeed, lenders are growing more cautious about short sales as evidence of fraud in the process escalates along with volume, said Frank McKenna, vice president of fraud strategy for CoreLogic, a California research company. Lenders are losing about $310 million annually in short-sale fraud, with about one in every 53 sales plagued by problems, according to CoreLogic.

  • Those problems include a fraudulent process known as flopping, through which an outside investor or buyer hires a real estate agent to assess a home for less than its true market value and then convinces a lender to sell at that price. The buyer then quickly resells the home at a higher price. “There is a fear of not getting the right valuation because you have some shady investors,’’ McKenna said.


  • [S]tories of botched short sales are becoming more common in Massachusetts. Tony Nakhle, a real estate agent in Stoughton, said he had two deals fall through last year after lenders foreclosed upon homes even after sales were approved. In one case, the lender foreclosed on a house after approving a $136,000 deal, he said. Instead, the home was sold at auction for just $109,000. The buyer then sold the property back to the former owner for $136,000, he said.(2)

For more, see Wary lenders denying short sales (Citing price concerns, many opt to foreclose).

For an opposite viewpoint, see Housing Wire: Higher loss severities on foreclosures will push servicers to short sales in 2011: Fitch:

  • Loss severities are expected to increase between 5% and 10% on residential mortgage-backed securities in 2011 as loss mitigation costs and foreclosure expenses go up, according to Fitch Ratings. This, analysts said, will push servicers to short sales.

(1) In actuality, it is the loan servicer, not the lender/mortgage investor, that is denying or delaying many of these transactions. While it may appear that these short sales would be in the lender/mortgage investor's best interest, the loan servicer is the one calling the shots. Since the servicer isn't the one taking the financial hit, it apparently doesn't care one way or the other if the lender/mortgage investor loses money.

(2) See also NPR: Housing Nightmare Upends Family, Enriches Investor, for a story on loan servicer Wells Fargo who reportedly, unwilling to work out a deal with a homeowner, auctioned off a house at a foreclosure sale to a private investor for $115,000 — a fraction of the original $584,000 borrowed. The investor who bought the home at the auction then flipped the property to another investor two weeks later for $270,000, making a profit of $155,000. Michael DeVito, an executive vice president for Wells Fargo Home Mortgage, would not comment about this particular case, the story states.

Tuesday, December 28, 2010

Fla F'closure Mills Now Use 'Robo-Verifiers' As 'End Run' Around New State High Court Rules As Some Trial Judges Continue To Yawn & Snooze

The Daily Business Review reports:

  • Lenders and their law firms are violating new procedures implemented by the Florida Supreme Court intended to address a controversy over botched foreclosure cases, according to attorneys for homeowners.

  • After a national foreclosure scandal that resulted in a moratorium, new procedures implemented by lenders and their law firms are still falling short of requirements set by the state's high court, the defense lawyers say.

  • The attorneys for homeowners claim that so-called robo-signers, who signed off on foreclosure paperwork en masse, have been replaced by "robo-verifiers" in the wake of the new Supreme Court rules. They contend that lenders are still failing to ensure that the foreclosure cases they pursue are accurate and that they own the loan in question.


  • In a deposition conducted in early December by an attorney with the Ice Legal firm, a Wells Fargo employee detailed the bank's "verification" process. The employee, Alden Berner, said he and two other "legal process specialists" were in charge of verifying all of Wells Fargo's foreclosure cases filed in Florida. Berner declined to estimate how many cases he verified on a daily basis. "He got the message not to come out sounding like a robo-signer," said foreclosure defense attorney Thomas Ice.


  • Berner's role as a verifier differs from that of a robo-signer. Critics say robo-signers sign foreclosure documents without having knowledge of their contents. In Berner's case, he testified that he uses a computer only to verify the name of the lender or loan servicer against the name of the investment entity that owns the loan. That still falls short of the intent of the Supreme Court ruling, critics say.


  • Ice said he has encountered several cases in which foreclosure attorneys signed as verifiers of documents to "pretend" they were complying with the rule. "The purpose of this is for the lenders and servicers to check what the attorneys are doing," Ice said. "So in the end they will be responsible for mistakes and won't be able to say, 'I thought my attorney did it right.' " An attorney's signature on a complaint is already considered a verification, according to Florida Bar rules. "This was intended as an extra layer of precaution," he said.


  • While some judges have accepted complaints verified by attorneys, at least one judge in Pinellas County recently criticized the practice and dismissed a case because of what he considered to be an unverified foreclosure complaint. "The Supreme Court clearly indicates in its opinion that one of the primary purposes of the rule change is to have the plaintiff appropriately investigate and verify its allegations," according to 6th Circuit Court Judge Anthony Rondolino's ruling. "An attorney should not become a witness substituting for these essential client verifications."

For the story, see Defense lawyers raise new issue: 'Robo-verifiers'.

Florida Judiciary Unable To Keep Up With Out-Of-State Counterparts When Forcing Lenders To Comply With The Law In Foreclosure Actions

AOL's Daily Finance reports:

  • In the face of banks' rampant disregard for the law in pursuing foreclosures with false paperwork, the judiciary has started to emerge as the great defender of due process and the rule of law.

  • This list of judges standing up for the system is hardly exhaustive. In each case, the judges made clear they weren't picking sides. They were merely enforcing the rules, making sure the banks didn't get special exceptions unavailable to anyone else.

  • Unfortunately, not all judges are responding to the foreclosure mess this way. Those in Florida have been particularly notorious, and new rulings show at least some members of the Florida judiciary seem more committed to speeding foreclosures through to completion than anything else.

For more, see The Foreclosure Mess: Florida Judges Can Do Better.

SEIU's "Where's The Note" Campaign Meeting With Hostility By Note-Lacking Lenders?

A recent campaign by the Service Employees International Union ("SEIU") encouraging its homeowning members, whether facing foreclosure, having an underwater mortgage, or who are simply concerned over home lenders' rampant inability to account for the whereabouts of the original promissory notes, to contact their bank and demand to see the original note on their mortgage has apparently been met with a bit of hostility by the banks, as evidenced by this excerpt appearing on the SEIU website:

Source: Demand to see your mortgage note.

See also:

Reports Of Alleged Illegal Home Break-Ins By Lenders Continue; Deceased Owner's Cremated Remains Among Items Taken, Says One Lawsuit Against BofA

The New York Times reports:

  • When Mimi Ash arrived at her mountain chalet here for a weekend ski trip, she discovered that someone had broken into the home and changed the locks. When she finally got into the house, it was empty. All of her possessions were gone: furniture, her son’s ski medals, winter clothes and family photos. Also missing was a wooden box, its top inscribed with the words “Together Forever,” that contained the ashes of her late husband, Robert.

  • The culprit, Ms. Ash soon learned, was not a burglar but her bank. According to a federal lawsuit filed in October by Ms. Ash, Bank of America had wrongfully foreclosed on her house and thrown out her belongings, without alerting Ms. Ash beforehand.(1)

  • In an era when millions of homes have received foreclosure notices nationwide, lawsuits detailing bank break-ins like the one at Ms. Ash’s house keep surfacing.(2) And in the wake of the scandal involving shoddy, sometimes illegal paperwork that has buffeted the nation’s biggest banks in recent months, critics say these situations reinforce their claims that the foreclosure process is fundamentally flawed.


  • In Washington, Celeste Butler went to check on her father’s house after he spent months in the hospital and ultimately died. “The house was ransacked,” Ms. Butler said, adding that it had been neatly maintained beforehand. “They had destroyed furniture, broken into china cabinet. They had looted jewelry.”

  • In her lawsuit, Ms. Butler is accusing Safeguard, a contractor for JP MorganChase, of breaking into her father’s house. Ms. Butler asserts that Chase failed to properly credit payments made when she switched to an automatic system in June 2009, but that she and the bank worked quickly to rectify the problem.

  • Officials at Chase said its contractors, dispatched to inspect the house when payments were late, found it in disarray. When no one responded to a letter asking if the property had been abandoned, Chase said, its crews went back in the house to put antifreeze in the pipes.

For the story, see In a Sign of Foreclosure Flaws, Suits Claim Break-Ins by Banks.

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

(2) For the lawsuit in this case, filed in California, see Ash v. Bank of America.

Earlier media reports reveal that the same Massachusetts lawyers representing Ms. Ash in this case has filed similar illegal foreclosure & lockout cases on behalf of screwed-over homeowners in other parts of the country. 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:

Wells Agrees To $2B+ In Loan Mods On "Pick-A-Pay" ARMs In Settlement Of California AG's Civil Lawsuit; Will Pay Add' $32M To Foreclosed Ex-Homeowners

From the Office of the California Attorney General:

  • Attorney General Edmund G. Brown Jr. announced [] that Wells Fargo has agreed to provide loan modifications worth more than $2 billion to thousands of California homeowners with "pick-a-pay" loans and to pay an additional $32 million to thousands of borrowers who lost their homes through foreclosure.

  • None of the loans were made by Wells Fargo. All were originated by World Savings and Wachovia, banks Wells Fargo acquired. "Customers were offered adjustable-rate loans with payments that mushroomed to amounts that ultimately thousands of borrowers could not afford," Brown said. "Recognizing the harm caused by these loans, Wells Fargo accepted responsibility and entered into this settlement with my office."

For the California AG press release, see Brown Reaches Settlement With Wells Fargo Worth More Than $2 Billion to Californians With Risky Adjustable-Rate Mortgages.

Monday, December 27, 2010

Ex-Chase Mid-Level Exec Files Whistleblower Complaint Alleging Robosigner, Other Illegal Practices Involving Its Credit Card Debt Processes

AOL's Daily Finance reports:

  • Linda Almonte, a former employee of JPMorgan Chase who is suing the bank for wrongful termination, has just upped the ante: She has now also filed a whistleblower complaint with the Securities and Exchange Commission. The core allegations add context to her lawsuit, and they charge Chase with grotesque and illegal practices involving its credit card debt processes, including robo-signing. Chase denies her claims. Almonte's allegations are detailed in the Nov. 30 letter sent to the SEC.


  • Concerning robo-signing, Pressly wrote:

    "On numerous occasions, Ms. Almonte witnessed these Affidavit Signers work through at times 3-feet tall stacks of Judgment Affidavits at once during weekly multi-hour long, non-related company meetings. The notaries were not present at these meetings. The Affidavit Signers simply relied on hourly workers to reconcile amounts owed and then treated the actual execution of the affidavits as busy work to be performed while the Affidavit Signers could focus on other matters."


For more, see Chase Hit With SEC Whistleblower Complaint Over Credit Card Practices.

Go here for Ms. Almonte's SEC Complaint.

Alabama Woman Files Federal Suit Accusing BofA Of Jerk-Around In Loan Mod Process; Action Joins Others Transferred To Boston For Pre-Trial Proceedings

In Mobile, Alabama, the Mobile Press Register reports:

  • A Mobile woman is suing Bank of America and its home lending service, claiming it wrongfully attempted to foreclose on her house after breaking an agreement to modify her loan.


  • Kimberley George filed suit in U.S. District Court in Mobile last month. According to the lawsuit, George began discussing a loan modification agreement with Bank of American in January 2009, reaching an agreement that summer. It required her to make three monthly "trial" payments of $648 before the bank would permanently modify her loan.

  • She made those payments for September, October and November, completing the trial program, according to the lawsuit. She paid the same amount in December, the lawsuit states, then was told by a bank representative to stop making payments so that the bank could "process the permanent modification and calculate a new mortgage payment based on current balance."

  • In June, Bank of America told George that it would not approve a modification of her loan, and said that she was in default of her mortgage, according to the lawsuit. "The gist of the suit is, she made her trial period payments, and they didn't give us the permanent modification," said Earl P. Underwood Jr., one of her attorneys. "It's a breach of contract."

  • The bank began a foreclosure proceeding in August, but later canceled it after her attorneys told the bank that she planned to seek an injunction, according to the lawsuit. Bank of America has not responded to the lawsuit, according to court records.

  • The case has been transferred to U.S. District Court in Massachusetts. Pre-trial proceedings for this and similar cases will be conducted there, and then the cases will be returned to their original districts, according to Underwood.(1)

Source: Mobile woman sues Bank of America over foreclosure.

See also, Mobile-Baldwin Consumer Law Firm files Mortgage related Class Action.

(1) According to the law firm's press release, it has associated the National Consumer Law Center as co-counsel in the George case. For similar HAMP-related lawsuits brought by the National Consumer Law Center with its co-counsel, see:

NJ High Court Chief Justice Declares War On Robosigner Practices, Rogue Foreclosure Filings

In Trenton, New Jersey, The Newark Star Ledger reports:

  • Citing a staggering increase in filings and voicing fears of inaccurate applications, New Jersey’s top judge announced a series of initiatives Monday to combat rogue foreclosure filings.

  • "It’s our hope that these three steps will provide greater confidence" in the foreclosure process, Chief Justice Stuart Rabner said in a conference call with reporters. "It is important the judiciary ensures that judges are not rubber-stamping questionable documents that may not be reliable."

  • This practice of rubber stamping is known as "robo-signing," and refers to mortgage lender and service employees who sign hundreds, if not thousands, of affidavits submitted in support of foreclosure claims but without any personal knowledge of the information included in the application. This year, there were more than 65,000 applications filed statewide, up from nearly 22,000 four years ago. And the vast majority of foreclosure actions – 94 percent – are uncontested, Rabner said.

  • The judge ordered six mortgage lenders, including Bank of America, JPMorgan Chase and Citibank, to file to the court by Jan. 19 documents proving their internal foreclosure application processes are up to standards, or the applications will be suspended. The other companies are the mortgage divisions of Wells Fargo, OneWest Bank and Ally Financial. Rabner appointed General Equity Judge Mary Jacobson, who sits in Trenton, to oversee foreclosure matters in the state.

  • The announcement comes after a report prepared by Legal Services of New Jersey alleged industry-wide deficiencies in foreclosure filings, according to court documents. "The mortgage servicing and foreclosure industry really is rife with this certification without personal knowledge," said Melville Miller, president of Legal Services. The group published a 28-page report detailing information found in depositions and testimony about foreclosure proceedings in November, which was presented to Rabner. "From the best we can tell, at a national level and also in New Jersey, it’s a widespread practice."

  • Other states have issued similar orders, according to the order. In October, New York directed attorneys filing residential foreclosure actions to certify they have personally reviewed the documents’ accuracy. And at least four state attorneys general and the attorney general for Washington D.C., have required certain lenders, including those named in New Jersey’s order, to prove the validity of their residential mortgage foreclosure processes, the order states.

Source: N.J. top judge pushes for measures to target bad foreclosure practices.

For the New Jersey Supreme Court press release, see New Jersey Courts Take Steps to Ensure Integrity of Residential Mortgage Foreclosure Process.

Go here for links to the three orders issued in his matter.

Affidavit-Signing Vice Presidents Now Required To File 'Mini-Resume' In Foreclosure Actions In One Long Island Judge's Courtroom

A recent story in Daily Finance notes how one Suffolk County, New York judge is imposing additional requirements on foreclosing lenders to that contained in State Chief Judge Jonathan Lippman's recent order requiring a special affirmation from the banks' attorneys when pursuing foreclosure actions:

  • While all the cases can be refiled once the banks documents are in order, Cohalan's order requires the banks to go beyond the Lippman affirmation. In his court at least, a bank employee is going to have to sign an affirmation even more detailed than what Judge Lippman ordered for lawyers.

  • The bank affirmation comes from Cohalan's concern with robo-signing, explains Daniel J. Murphy, Judge Cohalan's chief law assistant. Going forward, banks that want to foreclose in Cohalan's court will have to have "whoever is looking at the documents provide an affidavit that the amounts are correct, the mortgage is present, the assignments of mortgage have been correctly signed and dated and the paperwork before court is accurate."

  • To prevent robo-signing of those affidavits, Cohalan also requires bank representatives to list every document they reviewed for the affidavit. That list must include the note, and they must explain who they are, how long they've been at the bank and what their educational background is.

  • Murphy explains the purpose of that mini-resume is to make sure these employees understand what they're looking at and that any "person claiming he is the vice president of the bank is in fact a vice president of the bank."

  • While that sounds silly -- why would someone sign a document with an inaccurate title -- the robo-signing scandal has exposed the practice of people signing as a vice president who have no link to the financial institution except for a resolution authorizing them to sign.

For the story, see Why New York Foreclosures Are Grinding to a Halt.

Sunday, December 26, 2010

WV High Court OKs Use Of Misrepresentations Where Plaintiff Fails To Prove Reliance On Bad Acts In Suits Brought Under State Consumer Protection Law

In Charleston, West Virginia, The West Virginia Record reports:

  • West Virginia consumers looking to sue for misrepresentation under the state's Consumer Credit and Protection Act now must show proof of reliance, according to an opinion released Friday by the state Supreme Court of Appeals. Previously, state consumers only had to prove misrepresentation to seek damages. Following the Court's ruling in White vs. Wyeth, plaintiffs now must show a causal connection between their individual claims of injury and any alleged unfair or deceptive conduct.


  • Justice Thomas McHugh, who authored the Court's opinion, wrote that the Court did its own study of other states. Its research revealed that the private cause of action provisions of 28 states contain the "as a result of" language. Eleven states and the District of Columbia, it said, have statutes containing the "whether or not any person has in fact been misled, deceived or damaged" language. Only five states have both statutory provisions, it found.(1)

  • "Our review of the diverse cases and numerous authorities addressing the issue of reliance in the context of private consumer protection causes of action leads us to the conclusion that courts are struggling to arrive at a way to be faithful to the purposes of consumer protection statutes -- promoting fair and honest business practices and protecting consumers -- without inviting nuisance lawsuits which impede commerce," McHugh wrote for the Court.

  • "In determining the meaning of the phrase 'as a result of' in the WVCCPA, we find the decisions from other jurisdictions which are most reasonable, practical and fair to all relevant purposes and interests are those which have concluded that proof of a causal nexus between the deceptive conduct giving rise to the private cause of action and the ascertainable loss may require proof of reliance in some but not all instances."

For more, see Supreme Court tightens control on consumer protection act.

For the ruling, see White vs. Wyeth, No. 35296 (W.Va. December 17, 2010).

(1) See generally, Consumer Protection In The States: A 50-State Report on Unfair and Deceptive Acts and Practices Statutes for a survey on the various state consumer protection statutes throughout the U.S.

Frank "Appalled By The Insensitivity & Cruelty" Of Some Republicans As Congress Stiffs Non-Profit Law Firms Out Of TARP Cash For Foreclosure Defense

The Wall Street Journal reports:

  • U.S. House Republicans on Friday blocked a last-minute effort to allow foreclosure-prevention funds to be directed to legal aid groups, arguing it was an inappropriate use of financial rescue money. Lawmakers failed to pass a bill sponsored by Rep. Marcy Kaptur (D., Ohio) that would allow those groups to receive money through a federal program to assist homeowners on the verge of foreclosure.


  • Rep. Barney Frank (D., Mass.), the outgoing chairman of the House Financial Services Committee, said recent revelations of sloppy foreclosure practices at large banks underscore the need for homeowners to receive professional legal assistance when facing foreclosure.

  • Frank said he was “appalled by the insensitivity and the cruelty” of Republicans opposing the measure, and said it “does not extend the TARP in any way.”

  • But Rep. Steven LaTourette (R., Ohio) spoke in favor of the measure, saying he was disappointed that a partisan fight had broken out on the issue. “The money is already out there,” he said. “We should stop the nonsense, approve the bill and move on.”

For the story, see Lawmakers Reject Legal Aid Money for Troubled Borrowers.

Philly Federal Judge Grants TRO Delaying Foreclosure Of Homes Involved In Recent Sale Leaseback Foreclosure Rescue Indictment

In Philadelphia, Pennsylvania, The Philadelphia Inquirer reports:

  • A federal judge [Friday] morning granted a temporary restraining order in the U.S. Attorney's civil case against Anthony J. DeMarco, who was also charged criminally Tuesday in a mortgage foreclosure rescue scheme involving $31 million in fraudulent loans on 120 properties.(1)

  • The restraining order shields an unspecified number of properties from sheriffs' sales until at least February. A hearing on a longer-term preliminary injunction was scheduled by U.S. District Judge Michael M. Baylson for Feb. 2.

For the story, see Sheriff sales blocked in alleged foreclosure fraud.

(1) See Philly Feds Continue Attack On Equity Stripping Sale Leaseback Peddlers; Indict 4, File Civil Suit In Alleged Racket Involving 120 Properties.

Accused Central Florida Vacant Home Hijacker Bagged Again On New Charges; Vows To Continue Snatching Homes, Claiming Adverse Possession Defense

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

  • At lunchtime Wednesday at the Royal Lanes bowling alley, fugitive task force deputies and U.S. marshals moved in on their suspect: 60-year-old Joel McNair, a smooth-talking felon who, authorities say, just can't quit the con. McNair had warrants out for scheme to defraud and grand theft in Sarasota and Manatee counties, where he's accused of finding empty homes in foreclosure and renting them out — even though he didn't own the properties.

  • The Sarasota Sheriff's Office said McNair cited a centuries-old legal concept called adverse possession. Chapter 95 of Florida Statutes spells out how someone can take possession of a property through squatter's rights.(1) The law requires that a person occupy the property for at least seven years and fulfill other legal requirements, such as paying taxes on the property, in order to obtain ownership.

  • "I will continue until someone can show me that I'm breaking the law," McNair told the Sarasota Herald-Tribune earlier this week while he was out on bail from a November arrest on similar charges. "But until then," he said, "I'm going to keep on going."


  • McNair told the Herald-Tribune his company has at least 11 houses in Sarasota County and about 60 in counties from Pasco to Charlotte. Kevin Doll, spokesman for the Pasco Sheriff's Office, said the agency is investigating the matter. As of Thursday, McNair faced no charges in Pasco.

  • "We have had that same scam tried in our county before," Doll said, referring to the February arrest of Stephen Bybel, a 49-year-old who set up a company called Real T Solutions LLC, with the listed purpose of being a "short sale specialist; legally and ethically working with distressed home owners."

  • Bybel is accused of claiming squatter's rights on 72 properties in Pasco. When he was arrested and charged with scheme to defraud, Bybel was actively renting 31 homes, authorities said. His trial is slated for March 21.

For more, see Felon accused of home fraud in Florida squatter's rights case.

(1) See:

  • Ch. 95.16, Florida Statutes: Real property actions; adverse possession under color of title, and
  • Ch. 95.18, Florida Statutes: Real property actions; adverse possession without color of title.