Saturday, May 7, 2011

Owner Of Vacant House Under Renovation Needs Assist From Local Cops To Extract Brazen Squatter From Premises In Failed Attempt To Hijack Home

In Portland, Oregon, The Oregonian reports:

  • When Tyler Combs and a plumber showed up at Combs' Southeast Portland house that's under remodel, they were surprised to find the lockbox on the front door gone and metal shavings on the porch. The plumber jiggled the knob. Suddenly a strange man opened the front door and stuck his head out.
  • "Who are you?" Combs asked. "I live here," the stranger replied. "My jaw dropped, and I said, 'No you don't. This is my house.'" The stranger replied, "I live here now. I own this house."
  • Thus began a frightening but eye-opening ordeal for Combs, who had bought the foreclosed house in July 2009. He had it under renovation and planned to put it back on the market. But now a stranger had moved in, changed the locks and had even persuaded PGE to put the electricity account in his name.

***

  • Combs, 29, expected the man to pack up his belongings and move on, once caught. But the man didn't budge. [...] Combs called the police. When officers arrived, the stranger continued to block the door. After checking with detectives, East Precinct officers arrested Alexis Marie Logsdon that day, April 13. On Friday, Logsdon, 39, pleaded not guilty to second-degree burglary and criminal mischief. During his arraignment, he continued to argue the house was his.

***

  • "He took possession of my account for that address, and PGE never notified me," Combs said. "In his mind, he had actually commandeered the house." [...] "He truly believed he had figured out a way to beat the system and literally take this house from me. I just felt so exposed," Combs said. "His confidence is what rattled me."

For the story, see A homeowner startled to find squatter living in the Portland house he bought out of foreclosure.

(1) Reportedly, a local group called Reclaim! Portland Real Estate Listings has a website that details how to illegally occupy a building, with tips to make the place look as "homey" as possible before police arrive, even suggesting the squatter make brownies for the neighbors. There are other websites that do the same, such as Squat2Own.com, which suggests squatters "dare the cops to intervene," the story states.

According to the story, various websites instruct squatters to change utility bills to their names, all a strategy to garner what is legally called adverse possession and has its roots in English common law. Under Oregon law, a squatter must show he has maintained open, exclusive and continuous use of the property for at least 10 years, and to have honestly believed he owned the property, and can't be conferred to people who know they are trespassing or, as in Logsdon's case, breaking and entering, the story states.

1000+ Tenants In 10 Dilapidated Bronx Bldgs Get New Hope As City Squeezes Bank To Sell Sour Loans To Responsible Landlord; Deal To Affect 548 Units

In The Bronx, New York, the New York Daily News reports:

  • Mayor Bloomberg's administration pressured banks holding mortgages on foreclosed properties to sell them to responsible landlords, and not let them rot into slums. The Bloomberg administration is finally stepping in to protect New Yorkers in foreclosed apartment buildings that are turning into slums.
  • The city pressured the bank that held a $35 million mortgage on 10 Bronx buildings to sell them to a responsible landlord, even if it meant losing money. That new landlord, Steven Finkelstein, stood alongside Mayor Bloomberg and City Council Speaker Christine Quinn Tuesday at one of the buildings getting repairs - as residents cheered wildly.
  • "In six to eight weeks, we will have 80% of the violations corrected," said Finkelstein, new windows his crews have already installed clearly visible. "Once I get them up to par, I'm going to be able to provide affordable housing to people and, you know, keep things going in a very positive manner."
  • Finkelstein's firm paid $27.75 million for the buildings and expects to spend another $7 million to fix 548 apartments. The buildings seem to have been falling apart after California-based Milbank Real Estate bought them in 2007 at the height of the housing bubble, then lost them when the market crashed.
  • Tenants' lives have been hell since LNR Partners of Florida, which ended up with the mortgage, stopped taking care of the properties. The city has written more than 4,000 housing code violations as more than 1,000 people suffered through leaky roofs, backed-up sewers, winters without heat or hot water and prostitutes and drug dealers roaming their halls.
  • "It was a state of hopelessness," said Malikah Rasheed, president of the tenants association at one of the rotting buildings. "We had mushrooms growing in people's apartments. That's how bad it was."
  • City officials hope to bring the new aggressiveness to thousands more apartments endangered by landlords caught up in the housing crunch - and the banks that hold the mortgages.
  • "If you are a bank who held a mortgage and the building is in foreclosure, wake up - you own the building now," Quinn said. "You will be held accountable. That is the message today."

Source: City pressures bank holding mortgage on Bronx buildings to sell to responsible landlord.

See also, The Wall Street Journal: NYC: Deal will fix buildings ailing in foreclosure (More than 1,000 tenants who lived in declining conditions as their buildings fell victim to the foreclosure crisis now have a new landlord who is promising to make millions of dollars in repairs, city officials announced Tuesday).

Pressure On Sour-Loan-Holding Lenders To Cough Up Repair Cash Continues As Code Violations In Multi-Unit Apartment Buildings In Foreclosure Stack Up

In New York City, The Wall Street Journal reports:

  • Housing advocacy groups and the Bloomberg administration are asking bank regulators for help in fixing up deteriorating apartment buildings. Advocates say that hundreds of buildings in New York City are falling into disrepair because their owners took on too much debt to buy them in the boom years leading up to the recession.
  • With many of these properties now in foreclosure proceedings and building-code violations stacking up, banks and other debtholders will help decide their future.
  • Housing advocates, who used to target landlords and opportunistic buyers to fix up aging buildings, have been pressuring lenders in recent months to sell troubled mortgages at discounts so the new owners will be able to afford repairs. They've also been pressuring lenders to fix up properties themselves.

For more, see Tenants Turn to Lenders to Repair Buildings.

Water Shutoffs Major Problem For Miami Renters w/ Landlords In F'closure; County To Vote On Rule Change Allowing Tenants' Payments To Restore Service

In Miami, Florida, The Miami Herald reports:

  • Whenever Michel Joseph wants to shower, cook or use the bathroom, he has to leave his Little Haiti apartment and drop in on a neighbor who has running water. Water has not run in Joseph’s derelict apartment since his landlord abandoned the four-unit building to foreclosure, and skipped town in November.
  • The landlord’s absence led to a water shutoff, and for the past four months, Joseph has not been able to turn it back on because of a long-standing rule at the Miami-Dade Water & Sewer Department.
  • That rule — which restricts renters from re-opening a closed account — has come under increased scrutiny as more landlords have fallen prey to the foreclosure crisis, some leaving tenants without basic utilities.(1)
  • The tenants have become the hidden victims of the foreclosure crisis,” said Purvi Shah, a Florida Legal Services(2) attorney who defends tenants of foreclosed properties. “There are hundreds of tenants in Miami-Dade County living in really serious conditions.”

***

  • For Shah’s team at Florida Legal Services, getting to this point has been a long, difficult battle. Her team defends tenants going through foreclosure, and has litigated issues like water and electricity shutoffs, illegal evictions, tenant intimidation and landlord abandonment. Of the various issues that tenants face during foreclosure, water shutoff has been the most problematic, Shah said.

***

  • Water service was discontinued at Hilda Bustos’ North Miami-Dade rental last year before Legal Aid lawyers filed suit in order to force the landlord to pay the bill. However, after the property went into foreclosure, the bank repossessed it and shut off the water, sparking another lawsuit from Legal Aid. The water was eventually turned back on, but tenant advocates do not have the resources to litigate against every landlord that abandons a property, Shah said.
  • In the past three years, more than 400 multi-family properties have had water service discontinued because a landlord defaulted on payments, county statistics show. Most of these properties have less than 15 units.

For the story, see Collateral damage: Tenants of foreclosed properties (Tenants of properties in foreclosure have to deal with water shutoffs, landlord disappearances and sudden evictions, all side effects of South Florida’s mortgage crisis).

(1) According to the story, the Miami-Dade County Infrastructure and Land Use Committee voted to create a bridge account program that would allow tenants to open a temporary Water & Sewer account earlier this month. The full county commission is set to vote on the bridge account next month. Tenants in the property would have to pay a deposit equal to 2.5 times the average water bill to set up the account and can only keep it open for six months. Broward County does not have a tenant payment program.

(2) Florida Legal Services (FLS) is a nonprofit organization founded in 1973 to provide civil legal assistance to indigent persons who would not otherwise have the means to obtain a lawyer. A statewide support center, FLS fulfills its mission primarily by working with local legal aid and legal service programs to improve their ability to provide legal assistance to those in need in their communities.

Tenant Suffers Service Shutoff As Landlord In F'closure Pockets Rent, Stiffs City On Water Bill; Lack Of Running H2O May Lead To Health Dept. Boot

In West Jordan, Utah, the Deseret News reports:

  • If you rent your home and your landlord stops paying the mortgage and the water bill, you just might get a rude surprise, rather than a fair warning. That's the predicament facing renter Annette Bell. "With no funds available, what do I do?" she said.
  • The West Jordan woman is discovering the mortgage crisis not only affects homeowners, it also creates crises for renters who may be victims of the cascading financial problems of their landlords.
  • She discovered her landlord is headed toward foreclosure. Her water was shut off two weeks ago, and she's scrambling to figure out her rights. "I'm not the homeowner, and the water has already been shut off," she said Friday. "So, they won't make payment arrangements with me."
  • A neighbor lets Annette Bell fill water containers so she can manually flush toilets and wash. "As far as moving, that's not an option right now because I don't have the funds to do so," she said.

***

  • When the city shut off the water early this month, she found out that her landlord, who lives out of state, had not paid the water bill in nearly a year. [...] West Jordan officials said they only contract with the owners, not renters, on residential water bills.

***

  • The health department could also force Bell out of the house any day, because it has no running water, and the department considers that an unsanitary, unlivable situation.

For the story, see West Jordan renter without water and options after landlord stopped paying bill.

Cops: Fla. Man Hijacked Possession Of F'closed Home & Used It As Rooming House; Pocketed Rent From At Least 5 People, Stole Water, Electrical Service

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

  • A 47-year-old Air Force veteran faced a judge [...], after being arrested for allegedly stealing utilities and for "acting as the proprietor" of a foreclosed home in the Village of Palm Springs.
  • Glenn Garlington Dewey, whose last known address was in Palm Springs, was taken into custody after a Palm Springs Public Safety investigator determined Dewey had been collecting $600 in rent from at least five people, who were living in the spare rooms of 2903 Appalachee Road, according to the arrest report.
  • That house, however, was determined to have been foreclosed on in 2010. The investigator also discovered that the last owner of the house, who now lives in Texas, was Cobb Scott - not Dewey, the report stated.
  • The investigator noted in the report that Dewey had also replaced the house's water and electrical meters with that of a neighboring home in foreclosure.

For the story, see Palm Springs man charged with bilking renters with foreclosed home.

Early Morning Bronx Fire In Illegally Converted Rooming House Leaves 3 Dead, 8 Injured; Firetrap Lingered In Foreclosure Since 2008

In The Bronx, New York, the Daily News reports:

  • A fast-moving fire ripped through an apartment in the Bronx on Monday, killing a mother, father and their 12-year-old son who neighbors say were squatting in the building. While the cause of the blaze was under investigation, residents and city records paint a disturbing picture of conditions that may have contributed to three deaths and eight injuries.
  • Residents said the floors of the three-story building had been illegally carved into single-room apartments. Con Ed shut the power off on April 14, prompting some residents to stretch extension cords from another power source.
  • Buildings Department records confirm numerous complaints dating to 2009 about jury-rigged electrical wiring, illegal subdivisions and a lack of secondary exits from apartments at the Prospect Ave. building. The records show inspectors tried to gain access to the building many times but were unable to get inside.
  • About 3:30 a.m. Monday, the building was a virtual firetrap. "It's all rooms," said Eduardo Sanchez, 25, whose second-story apartment was destroyed. "There's like four rooms to a floor - all separate doors."
  • A police source identified the victims as construction worker Juan Lopez, 36; his wife, Christina, 43, and their son Christian Garcia. The parents had two other children who survived the fire after their uncles, who live in the building, pulled them to safety. One of the uncles tried to run back into the building but was repelled by the flames. He then ran to the roof of a neighboring building and tried calling out to his trapped brother but got no response. "He never answered; he never came out," said witness Delsa Martinez. "It happened so fast. They were good people. I can't believe they died in seconds like that."
  • Neighbors said the family moved into the apartment just over a year ago. Some described the family as squatters who shouldn't have been in the building.
  • The two-story blaze quickly spread from the second floor to the third, where the family lived. It took more than 100 firefighters about an hour to stop the flames.
  • Property records show the Belmont building had slipped into foreclosure in [2008] and that ownership had passed through several banks since then. Neighbors said squatters soon began taking over.
  • "It's been like that for a year. The place went into foreclosure, and people kept going in there," said neighbor Mike Lopez. "There's been 10 different families that moved in and out of there, easily."
  • The last owner of record, Domingo Cedano - who runs a used-car dealership on Park Ave. in the Bronx - said he had spoken to fire officials, but he insisted he had nothing to do with the building. "I feel bad, but I am not the owner anymore," he said. "I don't want to give any information because the building is under investigation."

Source: Early morning Bronx fire leaves 3 dead, including child; Building had history of complaints.

See also, The New York Times: Bronx House Fire Kills Boy, 12, and His Parents:

  • Gayla Marsh, 58, a nurse who owns the home next door, said squatters had moved in and even started charging others rent. [...] Neighbors said they had seen residents use a generator and hastily rigged-up wiring to power the building.

For follow-up stories, see:

Friday, May 6, 2011

Suit: Broker, Agent, Seller Unloaded Home Onto 1st Time Buyer w/o Disclosing Presence Of Contaminated Federal 'Superfund' Site Less Than 100 Feet Away

In Gainsville, Florida, The Gainsville Sun reports:

  • In 2004, Carla Melgarejo bought her first property, an 1,100-square-foot home at 444 NW 30th Ave. advertised as a "GREAT INVESTMENT" for a first-time buyer. For five years, her attorneys say, she and her daughter lived there without knowing that less than 100 feet to the east was the northwestern boundary of a federal Superfund site, a designation reserved for some of the most contaminated spots in the country.
  • On Tuesday, Melgarejo filed a lawsuit against Bosshardt Realty Services, the real estate agent who worked on the sale and the couple who sold the property, alleging they did not disclose any information about the property's proximity to the Cabot-Koppers Superfund site.(1)

***

  • In comments at local meetings in recent years, residents have made accusations of "unscrupulous" real estate agents selling properties in the Stephen Foster neighborhood without disclosing the proximity to the Superfund site, which they say has crippled property values. But Springfield said she thought Melgarejo's suit was the first of its kind to be filed.

For more, see Homebuyer near Koppers sues real estate agency, ex-homeowners.

(1) In addition to Bosshardt Realty, one of its agents, David Ferro, and the previous owners of the property, Robert and Robin Evans, were named in the suit, the story states.

Out-Of-Town Investor Gets Rude Surprise After Getting 'Good Deal' On Tax-Foreclosed Vacant House Purchase

In Syracuse, New York, The Post Standard reports:

  • Toronto real estate investor David Ayanoglou thought he found a good deal in Syracuse: a vacant two-family house at 209 Columbus Ave. Ayanoglou visited the boarded-up structure, in a low-income area on the East Side. It needed work, but he decided it had a lot of potential.
  • The house was available because the previous owner had not paid the taxes, giving the city of Syracuse the right to foreclose. The city sold that right in 2006 — along with tax liens on hundreds of other properties — to American Tax Funding LLC, a private company in Florida. American Tax Funding foreclosed in 2007 and sold the property in 2008 to Ayanoglou and a partner.
  • A few months after Ayanoglou paid $13,000 for the house, his property manager called from Syracuse with bad news. The house had been demolished by the city.

For more, see Tax liens cause disputes for Syracuse, a Florida firm and long-distance homeowners.

County Bar Association Scores TRO In Illinois Lawsuit Accusing 'Land Patent' Foreclosure Rescue Peddler Of Practicing Law Without A License

In Kane County, Illinois, the Daily Herald reports:

  • The Kane County Bar Association has succeeded in getting a temporary restraining order against a Carpentersville man who the bar association has accused of practicing law without a license. Judge Robert Mueller issued the order against Robert Sperlazzo in response to a lawsuit filed by the bar association.
  • Sperlazzo is accused of acting as an attorney last December while advising two men going through foreclosures while they were at the Recorder’s Office.
  • According to the bar association’s complaint, Sperlazzo was advising two men on Dec. 1 about a “land patent processon how to keep their property even if they were in foreclosure.
  • The complaint states that Sperlazzo took payment in cash and told the men to avoid the court system and not to talk to other attorneys because it would ruin the process. Sperlazzo has not returned phone calls from the Daily Herald. He was due in court last week but was a no-show.

For the story, see Carpentersville man a no-show in attorney case.

Kentucky High Court Nixes Attorney Lawsuits Alleging Defamation, Slander Against Those Making Unfounded Claims About Them In Official Bar Complaints

The Associated Press reports:

  • Statements made in official complaints about attorneys cannot be used as the basis for a civil suit alleging defamation or slander, a split Kentucky Supreme Court ruled Thursday. The court, in a 4-3 vote, ruled that anything said in an official complaint to the bar association is protected speech and the person filing the complaint cannot be sued for the comments.
  • Justice Bill Cunningham, writing for the majority, said protecting such comments creates an atmosphere where people do not have to worry about being sued or attacked for making a complaint.
  • It is the threat and potential for retaliatory litigation — of any kind — that serves as a disincentive to filing a bar complaint,” Cunningham wrote. “We must encourage persons with complaints against attorneys to submit such information to the KBA for proper investigation and examination.”

***

  • The case arose out of a bar complaint filed by GMAC Mortgage Corp., against attorney Noel Mark Botts. The complaint concerned Botts’ handling of a foreclosure. The opinion doesn’t give details of the complaint. A trial commissioner dismissed the complaint after determining the Kentucky Bar Association failed to prove any misdeeds.
  • Botts sued GMAC and the law firm of Morgan & Pottinger, alleging wrongful use of civil proceedings, defamation and slander, abuse of process, fraud and outrageous conduct.
  • Cunningham noted that at least 28 states have rules banning civil suits based on the contents of a bar association complaint. The concept is to allow bar associations to be “self-regulating” by protecting complaintants from civil liability, Cunningham wrote.
  • A lesser grant of immunity would have a chilling effect on the reporting of attorney misconduct,” Cunningham wrote.
  • The majority sent the case back to Mercer Circuit Court so the judge can determine if any of Botts’ complaints are based on statements made outside the bar complaint process.

For the story, see Lawyers may not sue complaining clients.

For the ruling, see GMAC Mortgage Corporation v. Botts, ___ S.W .3d ___ (Ky. April 21, 2011).

Now-Disbarred Bay State Attorney Charged In Alleged $900K Ripoff Of Elderly, Dead Clients' Cash

From the Office of the Massachusetts Attorney General:

  • A now-disbarred attorney has been indicted in connection with allegedly stealing a total of nearly $900,000 dollars from an estate she represented, a beneficiary of that estate whose funds were in a trust she managed, and an elderly client, Attorney General Martha Coakley’s Office announced [].
  • Maureen F. Pomeroy, age 44, of Bedford, has been indicted by a Middlesex Grand Jury on the charges of Larceny over $250 from a Person 60 or Older (2 counts), Larceny over $250 and Embezzlement by Fiduciary.

***

  • After receiving a complaint from Pomeroy’s elderly client,(1) the Massachusetts Office of Bar Counsel began an investigation into Pomeroy’s alleged activities. Following Bar Counsel’s investigation, a justice of the Supreme Judicial Court ordered Pomeroy’s temporary suspension from practice in October 2009. Pomeroy later resigned, and was disbarred in February 2010.
  • A Middlesex Grand Jury returned indictments against Pomeroy on March 31, 2011. She will be arraigned in Middlesex Superior Court at a later date.(2)

For the Massachusetts AG press release, see Disbarred Attorney Indicted in Connection with Stealing Nearly $900,000 From Elderly Client, Estate, and Trust.

(1) According to the press release, one of her clients was an 85 year-old man who had retained Pomeroy’s services in order to prepare a will and other estate planning documents for him, and to assist him in obtaining funds from several online bank accounts a relative had set up for him. Authorities allege that Pomeroy stole over $810,000 from this client by securing these funds, but concealing from the client the amount she had received from the accounts, and keeping a portion for herself instead of paying all of the funds to the client.

It is also alleged that she used some of the elderly client’s funds to repay two clients from whom she had earlier misappropriated money. During the investigation, authorities allegedly discovered that Pomeroy had defrauded the estate of a Waltham man and the man’s son.

(2) The Massachusetts Clients' Security Board Of The Supreme Judicial Court was established to manage and distribute the monies in the Fund to members of the public who have sustained a financial loss caused by the dishonest conduct of a member of the bar acting as an attorney or a fiduciary.

For similar "attorney ripoff reimbursement funds" that sometimes help cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:

Maps available courtesy of The National Client Protection Organization, Inc.

Bank Apologizes Profusely After Changing Locks On Foreclosed Home In Violation Of Court Order

In Milwaukee, Wisconsin, the Milwaukee Journal Sentinel reports:

  • Keon Williams' fight to keep his house has taken another strange twist: The Milwaukee man arrived home Monday night to find that the locks had been changed on one of his doors on orders from Harris Bank, even though a court order says he can stay in the house for now.
  • "They admitted they had sent somebody to change the locks," Williams' lawyer, Geoffrey Gnadt, said after an emergency court hearing Tuesday. "They did apologize profusely - but there are costs."

***

  • Completion of [the foreclosure] sale was stayed by a Milwaukee County Circuit Court judge until May 12 after Williams explained the situation in court. Yet when he got home early Monday evening, he was stunned to find new locks and a note from a property management company on the side door of the house. The front door was inexplicably left unlocked.

***

  • Harris Bank's lawyer told Milwaukee County Circuit Judge William Brash at Tuesday's hearing that the locks had been changed in error, Gnadt said. Harris' lawyer apologized for the snafu and agreed to cover the cost for Williams to have a new lock installed. The bank will also pay Williams' attorney fees and any other costs incurred because of the mistake, according to Gnadt and court records.

For the story, see Harris Bank mistake results in replaced locks (Man fighting to keep house after Central States' collapse left him with 2 mortgages).

Thursday, May 5, 2011

Orlando-Area Court Clerk Begins Crackdown On F'closure Auction Buyer Doc Stamp Overpayment Scam Designed To Artificially Inflate Recorded Sale Prices

In Orlando, Florida, the Orlando Sentinel reports:

  • The Orange County Clerk of Courts office took a definitive step Tuesday in preventing investors buying up foreclosure properties from overpaying documentary stamp taxes on their new properties and artificially inflating the sale prices of the real estate.
  • The inflation of foreclosure auction purchase prices appeared to be a common practice among a small group of investors. But the short-term fix seems simple enough: Clerk of Courts Lydia Gardner's office started writing the winning bid amounts on property title certificates Tuesday.
  • That action came after the Orlando Sentinel identified dozens of cases in which the clerk's office listed one foreclosure sale price while the Orange County Property Appraiser's Office listed a higher price – often tens of thousands of dollars more than the high bidders actually paid.

For more, see Clerk's Office aims to stop bogus foreclosure sale prices.

More Spotlight For Iowa Couple Who Used State Homestead Loophole To Scored 'Free House'

In Des Moines, Iowa, ABC News reports:

  • The Iowa Attorney General's office is reviewing the case of a couple who paid virtually nothing for their home because of a century-old Iowa law.
  • The $320,000 mortgage of Matthew and Jamie Danielson was voided on their home in a suburb of Des Moines because of the "Spousal Homestead" statute, as first reported by the Des Moines Register. That statute, which dates back to the 1880s, requires that both spouses sign a mortgage agreement.(1)

For more, see Iowa Attorney General Reviewing Case of Couple who Got Free Home.

(1) See also:

Loan Servicer: Return Of Home Title May Be In The Cards For Queens Widow Victimized By Scammers Using Forged Docs To Steal Home Out From Under Her

In Jamaica, Queens, the New York Post reports:

  • An elderly Queens widow whose house was stolen by scam artists may have finally won her three-year David-and-Goliath struggle against the bank that tried to seize her home. Dorothy Thomas' nightmare began in November 2007, when she went to pay her annual property taxes on the Jamaica home she's lived in since 1979.
  • She was stunned to learn that her home had been "sold" to a straw buyer by a man impersonating her husband, Eugene, who died in 1986 at age 55. The "buyer" was a mystery man who had pilfered the identity of another innocent woman -- an √©migr√© from Togo who was living in Irvington, NJ. The man, posing as the New Jersey woman, hoodwinked Wells Fargo into giving him a $533,850 mortgage in her name -- and promptly skipped town.
  • A probe by the Queens DA's Office found that Thomas was the victim of a scam, and eight people -- including two crooked lawyers and a CPA -- pleaded guilty in the case.
  • But that still didn't help. Wells Fargo filed a foreclosure order on Thomas' home. So Thomas went to court. But in August, Queens Civil Court Judge Allan Weiss affirmed Wells Fargo's right to try to seize the property. The judge ruled that even though Thomas' long-dead husband "clearly" couldn't have sold the home, someone obviously did.
  • But after multiple inquiries, Wells Fargo spokesman Jim Hynes told The Post, "We have decided not to pursue any legal action against . . . Ms. Thomas despite the rulings of the lower court. We are moving forward with dismissal of the foreclosure action."
  • Thomas' lawyer, Naved Amed, said nobody told that to him, but he hopes it's true. "We've been asking them to stop their action for three years and their answer has always been 'no,'" he said.

For the story, see Widow's ID-theft nightmare nears end.

Rogue Refinancing Lender Leaves Homeowner Facing Foreclosure By Diverting Loan Payoff Proceeds Away From Existing Mortgage Lienholder

In Milwaukee, Wisconsin, the Milwaukee Journal Sentinel reports:

  • Keon Williams is on the verge of being thrown out of his house - a startling turn of events, considering that for nearly three years since refinancing in 2008, he faithfully paid his monthly mortgage and his property taxes.

***

  • Williams, an ex-Marine and single father of three teenagers, finds himself caught up in the continuing fallout from America's mortgage meltdown. His right to continue living in the home he bought, the home he has been paying for, is in jeopardy in the aftermath of the collapse of Central States Mortgage Co., the now-shuttered firm that was once the largest mortgage broker in the state.
  • The problem: When Williams refinanced with Wauwatosa-based Central States in 2008, cutting his 12.5% interest rate nearly in half, Central States' affiliate, Interim Funding LLC, didn't pay off the original mortgage. [...] Williams - including one that he didn't know still existed. His small home at the corner of 44th and W. Keefe Ave., with a recent assessed value of $117,200, had become collateral for two loans totaling more than $265,000.

***

  • The closing statement for the refinancing shows that $130,444 of the proceeds were earmarked for paying off the existing loan - but none of the money was paid to Amcore [the existing mortgage lienholder], according to its foreclosure lawsuit. Williams says he didn't receive a dime from the refinancing.

***

  • Williams' case is not unique. Litigation pending in Milwaukee County Circuit Court details four similar cases involving mortgages written by Amcore with a total value of nearly $500,000. Also, in 2009, Associated Bank persuaded a Milwaukee County judge to freeze $2 million of Central States' assets when the bank charged that Central States borrowed money from Associated to finance 13 mortgage loans, and then sold 12 of those loans to investors - but didn't pay off the original loans after the mortgages were sold.

***

  • Williams recently filed a claim on the title insurance policy underwritten by Stewart Title Guaranty Co. in Houston, said Geoffrey Gnadt, Williams' lawyer. Gnadt said Flagstar Bank also filed a claim. [...] "This is essentially a business dispute between Central States, Amcore and Flagstar - they're big boys," Gnadt said, contending that the banks, not Williams, should be looking to title insurance for relief. "There are ways for the banks to be made whole, rather than going after the little guy."(1)
  • Central States is in receivership and at the center of a 2-year-old FBI investigation focusing on dealings between it and the credit unions that owned it and Interim Funding.(2)

For more, see Milwaukee homeowner paying on time, yet facing eviction (Refinancing, collapse of Central States leaves him with 2 mortgages).

(1) While this may sound unconventional, this story lends support to the proposition that homeowners should update their existing title insurance policies when refinancing their mortgages. This way, when a refinancing like this takes place, the homeowner need only file a claim with their title insurer over the unpaid existing mortgage and let the underwriter clean up the mess (An owner's title insurance policy purchased when a home is originally purchased only insures against title risks existing as of the date of purchase; in this case, the problems arose in connection with liens that did not exist prior to the original purchase date).

(2) See Subprime mortgage loan canceled (Man says he was duped into buying north side house) for another example of the dubious dealings in which the now-defunct mortgage banker Central States Mortgage Co. had its hands in.

Paralegal Cops 'No Contest' Plea To 21 Charges In Connection With Running Loan Modification Ripoffs, Unlicensed Practice Of Law

In Tulare County, California, The Porterville Recorder reports:

  • Porterville resident Joaquin Uriostegui was one of numerous victims of a local paralegal posing as a foreclosure consultant who promised he would help people save their homes from foreclosure, but instead swindled them of thousands.
  • Uriostegui — a single father of four — sought to modify his mortgage loan for a lower monthly payment, which led him to the offices of Albert Carazolez, owner of Quick Action Paralegal Services in Porterville.
  • Carazolez, 43, pleaded no contest to 21 separate charges pertaining to unlawful activities in conjunction with mortgage loan modification, collecting fees as a foreclosure consultant prior to providing all services and for the unauthorized practice of law.
  • He is out on bail, but as part of the sentence, he has been ordered to pay full restitution in the amount of $19,875 to the Tulare County Probation Department and is facing a sentence of felony probation and one year in county jail. Formal sentencing is scheduled for May 11 in Tulare County Superior Court in Visalia.

For more, see Victim of loan modification fraud speaks out.

Wednesday, May 4, 2011

Bay State Regulator Goes Undercover In Effort To Bag Illegal Loan Modification Rackets "Saturating The Airwaves" With Upfront Fee Come-Ons

In Boston, Massachusetts, the Boston Herald reports:

  • More than half of “foreclosure-prevention” companies that heavily advertise on local radio or other media allegedly demand upfront fees that Massachusetts law might prohibit, the state Office of Consumer Affairs says. “It’s really outrageous and it’s really despicable,” said Undersecretary of Consumer Affairs Barbara Anthony, whose office recently conducted an undercover probe of such firms.

***

  • Consumer Affairs staffer posing as a homeowner seeking a mortgage “modification” contacted 13 foreclosure-prevention firms that ran ads on WBZ-AM (1030), cable TV’s Travel Channel or Google.com. Five firms never responded, but six of eight that did allegedly told the tester he’d have to pay $500 to $750 up front.
  • That’s despite a state law that bans soliciting or accepting “an advance fee in connection with offering, arranging or providing foreclosure-related services,” although exceptions exist for some services provided by lawyers, lenders or mortgage brokers.
  • Anthony said she plans to refer the six firms — Creative Loan Modification, HomeRecovery.org, Massachusetts Home Loan Modification Center, Mass Home Relief, National Mortgage Help Center and US Mortgage Relief — to Attorney General Martha Coakley for further investigation.
  • The consumer-affairs chief said she ordered the undercover tests after getting fed up hearing the ads on her car radio. “I would practically go off the road sometimes listening to this stuff and calling the office to say: ‘Get this (advertiser’s) name down before I forget it,’” she said. “The ads on the radio are frankly terrible, and they’re saturating the airwaves.”

***

  • Hub lawyer Richard Ravosa of the Massachusetts Loan Modification Center said he charges up to a $2,500 advance retainer, but said that’s to counsel homeowners about filing for bankruptcy.
  • However, Anthony countered that her undercover tester specifically asked all the companies for help modifying a mortgage, not for assistance filing a lawsuit or declaring bankruptcy. “The regulation (does not include) a blanket exemption for attorneys,” said Anthony, a lawyer herself.

For the story, see State raises red flags over ‘foreclosure-prevention’ companies.

Title Insurance: Preliminary vs. Full Coverage Reports - What You Need To Know When Buying Real Estate At Foreclosure Auctions

A recent story at FXstreet.com describes the importance of understanding a property profile report(1) when buying real estate, the difference between a preliminary (also known as a non-insured) title report and a "full coverage" title report, and alludes to the practice by real estate investors of relying on the preliminary (non-title insured) report as a basis for purchasing real estate at foreclosure auctions.

From the story:

  • There has been litigation in the last few years related to the non-insured often free reports that investors have been given and use when purchasing foreclosure properties. These investors have relied on these reports to document all of the liens against the property.
  • What has been happening is that after property has been purchased (often on the courthouse steps), the investor finds out that there are additional liens on the property. The investor is now responsible for those liens.
  • Investors have tried suing title companies for misinformation. The cases don't have merit because the title company never provided a guarantee as they do with the "full coverage title search."(2)

For the story, see Property Profile and Title Report: What You Need to Know and Why.

(1) A property profile report will help you determine three things about a prospective real estate purchase:

  • Who the legal owner of the property is and do they have the right to sell the property,
  • The loans and liens that exist on the property,
  • The restrictions related to use of the land.

(2) In a related story, see Lexology: Title information: you get what you pay for (requires paid subscription; if no subscription, GO HERE, or TRY HERE, then click appropriate link for the story), which describes the recent case, Soifer v. Chicago Title Co., 187 Cal. App. 4th 365 (Cal. App. 2nd Dist., Div. 3, 2010), where an experienced investor in distressed real estate who was the winning bidder at a foreclosure sale, and who relied on a preliminary (non-insured) title report, was left holding the bag on a $1 million loss when the report failed to disclose an existing lien.

  • In Soifer, a court held that a title insurer could not be held liable for providing free, yet erroneous, email advice about loan seniority to a bidder who relied on the advice when purchasing a property at a foreclosure sale.
  • The court reasoned that if, under long-established California law, a title insurer cannot be held liable for mistakes in a preliminary title report, it certainly could not be held liable for more informal advice sent in an email message.
  • While consistent with existing statutes and legal precedents, this holding may come as a surprise to many in the real estate industry who, over time, have come to rely heavily on informal opinions of title and preliminary title reports from their local title company.

Another Adverse Possession-Claiming Crackpot Bagged For Changing Locks & Moving Into Vacant Home; Faces Charges Of Grand Theft Of $100K+, Burglary

In Tampa, Florida, The Tampa Tribune reports:

  • For the second time in recent months, Yvette Swain moved into a vacant Hillsborough County home without the property owner's permission, authorities said. Deputies arrested Swain, 41, late Tuesday on warrants for grand theft of $100,000 or more and burglary of an unoccupied dwelling.
  • In the first instance, Swain moved into a Dover house after a company called Chateau Lan took possession of it, citing Florida's adverse possession law. That law allows a person to take possession of abandoned property if he lives on it and pays taxes on it for seven years. Homeowner Danuta Brown moved back into that four-bedroom, three-bath house property after a costly, four-month ordeal.
  • After the legal battle, Swain moved out of Brown's home in December and into an apartment, Hillsborough Sheriff's Office spokeswoman Debbie Carter said.
  • Months later, Swain and her family moved into a vacant Valrico house, Carter said. Just one problem, authorities say — Swain did so without permission and without owning the property, investigators say. Carter said Brown moved in and changed the locks after seeing the home for sale.
  • A real estate agent had "For Sale" sign in front of the house at 13409 Sydney Road. Neighbors told the agent in April that someone had moved in. The agent went to the property, saw the sign was missing and that the home's locks had been changed. On April 10, he contacted deputies.
  • He told authorities the home wasn't being foreclosed upon and was in the process of a short sale. No one was home when deputies responded April 10, but 10 days later deputies spoke to Swain. She said she had lived in the home for three weeks and had been in the process of legally claiming the property under adverse possession, Carter said.
  • After deputies spoke with the state attorney's office, a warrant was issued for Swain's arrest. She was charged because the home wasn't in foreclosure, it had a rightful property owner and was in the process of being sold, Carter said.

Source: Move into vacant house results in arrest. home hijacking

Recent 60 Minutes' Story Having An Impact On Spreading Word On Foreclosure Fraud

In Charleston, West Virginia, a recent op-ed piece in The Charleston Gazette that, in urging homeowners facing foreclosure throughout West Virginia to examine their court papers carefully, makes reference to the recent 60 Minutes' story describing the forgeries and other fraudulent conduct in the robosigning scandal engaged in by the mortgage industry and its confederates when illegally booting people out of their homes and onto the streets.

From the column:

  • Amid the orgy of home foreclosures, banks made an embarrassing discovery: Bundlers who packaged the derivatives often failed to prepare records switching the mortgages into the worthless bundles. "60 Minutes" explained:

    "Wall Street cut corners when it created those mortgage-backed investments that triggered the financial collapse. Now that banks want to evict people, they're unwinding these exotic investments to find that, often, the legal documents behind the mortgages aren't there. Caught in a jam of their own making, some companies appear to be resorting to forgery and phony paperwork to throw people -- down on their luck -- out of their homes."
  • Various foreclosures stalled when banks couldn't find records showing that they actually owned the mortgages. However, after months of delay, the banks miraculously "found" the missing documents.
  • But they made a fatal mistake when they tried to seize the home of Lynn Szymoniak, a lawyer who specializes in forgeries.

For the rest of the editorial, see Forgeries by banks are outrageous.

MI County Officials Gain Attention From FBI, State AG, Other Law Enforcement Agencies After 60 Minutes Story On Forged, Robosigned F'closure Documents

The Michigan Messenger reports:

  • Curtis Hertel Jr., Register of Deeds for Ingham County, says that a discovery he made involving alleged fraudulent mortgage documents is now being investigated by both the Ingham County Sheriff’s Department and the FBI.

***

  • As Register of Deeds, Hertel is responsible for overseeing all the documentation of property sales in the county, including mortgage assignments. Mortgage assignments are documents that transfer ownership of a mortgage from one lending company to another. Hertel says he was tipped off to the alleged fraud when he saw a report on CBS’ 60 Minutes.

***

  • Hertel tells Michigan Messenger that he has spoken with registers of deeds from at least half of the state’s 83 counties. Each register told Hertel they found allegedly fraudulent documents. In Hertel’s case, he has already identified 60 such cases in Ingham county and he has barely begun to dig through the thousands of documents being held in his office.
  • In addition to the investigations by the Ingham County Sheriff’s Department and the FBI, the story has also gotten the attention of Michigan State Sen. Steve Bieda. He serves on the Senate Judiciary Committee. “I will be requesting that the Senate Judiciary Committee conduct an investigation on this,” Bieda tells Michigan Messenger.

For the story, see FBI investigating possible mortgage fraud in Ingham County.

In related stories, see:

Benzinga: Michigan AG Schuette Probing Questionable Mortgage Documents:

  • Michigan Attorney General Bill Schuette announced [] that he is working with Oakland County Register of Deeds Bill Bullard, and other local and federal authorities, to look into questionable mortgage documentation filed with Michigan's Register of Deeds offices during the current foreclosure crisis.

Housing Wire: Michigan AG to probe DocX signatures.

Virginia F'closure Defense Advocates Take Issue With Bogus F'closure Docs As Dubious 'App'ts of Substitute Trustee' Begin Popping Up Throughout State

In Richmond, Virginia, Public News Service reports:

  • The tale of bogus Virginia bank documents used to kick people out of their homes after foreclosure reads like a mystery novel, with a very unhappy ending. The document in question in Virginia is called an Appointment of Substitute Trustee.
  • Tom Domonoske with the Virginia-based Legal Aid Justice Center(1) says documents are surfacing that have clearly been "robo-signed" at a document mill that churned out thousands of bogus signatures. These helped "foreclosure mill" attorneys process the paper in assembly-line fashion, without asking a lot of questions.
  • "It means that their home was never foreclosed on, and the person who bought at the foreclosure auction didn't actually buy anything."
  • A video investigation of the document fraud by "60 Minutes" is [available here].

***

  • In some cases, Domonoske adds, the people signing these documents as "bank vice presidents" were working for a signature mill at $10 an hour, signing hundreds a day.

For more, see How Many VA Foreclosures...are Frauds?

(1) The Legal Aid Justice Center provides legal representation for low-income individuals throughout Virginia. Legal Aid Justice Center's staff of 40 work from offices in Charlottesville, Falls Church, Petersburg and Richmond.

Tuesday, May 3, 2011

Approach To Criminally Prosecuting Players In Subprime Scandal; Go After The 'Low-Hanging Fruit' - Leave The Big Guys Alone

A recent story on the PBS TV program Need To Know probes into the state of criminal prosecutions of those involved in the the subprime mortgage fraud scandal, and questions why the "big fish" on Wall Street appear to be swimming away scott free, while the government seems content to go after the "little fish."

Interviewed for the story in New York Times columnists Joe Nocera (he caught some people's attention earlier this year with his column, Biggest Fish Face Little Risk Of Being Caught) and Louise Story (she chimed in with her recent article, A.I.G. to Sue 2 Firms to Recover Some Losses), who gives their observations based on their earlier reporting .

Nocera describes for Need To Know the story of Charlie Engle and the effort the government sank into bagging him for lying on a liar loan, while allowing the likes of Angelo Mozilo (Countrywide) and others with the resources, good lawyers, and willingness to put up a fight to skate free. This story was the subject of a March, 2011 column, In Prison for Taking a Liar Loan.

Story points out that during the savings and loan crisis of the 1980's, government regulators referred criminal cases to the Justice Department on average ov 1700+ per year, while during the current fiasco, they have only referred on average of about 70 per year.

For the Need To Know story (approx. 24 minutes), see Big Fish - Little Fish.

Lawsuit: Countrywide, GMAC Duped Investor Out Of Hundreds Of Million$ In Exchange For Crappy Mortgage Securities

In Hennepin County, Minnesota, the Minneaplois Star Tribune reports:

  • Thrivent Financial for Lutherans has sued Countrywide Financial Corp. and GMAC Mortgage over what it describes as "massive frauds" in which it says it was duped into buying hundreds of millions of dollars in mortgage-backed securities.
  • Thrivent says it wanted conservative, low-risk investments and believed it was buying only those mortgages that carried the highest, AAA investment-grade ratings. But because Countrywide and GMAC failed to follow their underwriting guidelines, Thrivent says, it ended up holding higher-risk mortgages and has suffered huge losses amid the housing market collapse.
  • Between 2005 and 2007, the suit says, Minneapolis-based Thrivent and its affiliates paid hundreds of millions of dollars for 20 mortgage-backed securities offerings from Countrywide and for seven offerings from GMAC. The suit says that two firms either knew or recklessly disregarded the fact that the securities failed to meet the criteria for the AAA ratings they carried.

***

  • [I]n the rush to increase market share, the suit says, Countrywide disregarded its underwriting guidelines, pressured appraisers to provide inflated valuations, and made more loans to higher-risk borrowers. Thrivent says Countrywide kept the best-quality mortgages for itself and dumped the riskier loans onto Thrivent and others.
  • Thrivent made similar allegations against GMAC, citing a number of confidential witnesses who had worked for the company. Thrivent seeks unstated compensatory and/or rescissionary damages, punitive damages and costs.

For more, see Thrivent sues lenders for 'massive frauds' (Countrywide and GMAC both say that Thrivent should have understood the risks of the mortgage-backed securities it bought).

AIG To Begin Firing Off Lawsuits Targeting Banksters Over Insurance Deals Involving Crappy Mortgage Securities

The New York Times reports:

  • The American International Group, the giant insurer rescued by the federal government during the financial crisis, on Thursday will file the first of what could be a series of lawsuits against Wall Street firms, contending that it was the victim of fraud.
  • The initial suit, against ICP Asset Management and Moore Capital, will claim that A.I.G. suffered losses insuring mortgage securities created by ICP. The suit says ICP manipulated those securities in a way that benefited itself and Moore Capital, which is not accused of fraud, but harmed A.I.G.
  • Though the insurer received a hefty bailout, much of that money ultimately flowed to banks. Now, A.I.G. is trying to “recoup potentially billions of dollars from the fraudulent conduct of these defendants and other parties,” according to a copy of the suit obtained by The New York Times. Because A.I.G. is still largely owned by the government [reportedly 92%], taxpayers would share in any recovery.

***

  • A.I.G. is preparing several suits against banks, like Bank of America and Goldman Sachs, that created the $40 billion in mortgage bonds, according to the person with knowledge of the litigation, who was not authorized to talk about it publicly. The company says it believes the banks issued misleading statements about the quality of the mortgages within those bonds, the person said.

***

  • A.I.G.’s suit against ICP mirrors a lawsuit filed by the Securities and Exchange Commission last summer [story, SEC lawsuit]. The commission cited four mortgage securities, including two deals known as Triaxx, that were insured by A.I.G. ICP caused Triaxx to overpay for mortgage bonds to benefit itself and a favored client, the commission said.

For more, see A.I.G. to Sue 2 Firms to Recover Some Losses.

2nd South Florida Foreclosure Mill Bites Dust; Outfit Cuts Loose Another 146 Employess As State Bar Confirms Pending Probe Into Firm's Partners

In Fort Lauderdale, Florida, The Palm Beach Post reports:

  • A second South Florida law firm is shuttering its foreclosure business following a three-month fall from grace marked by a contempt of court charge against the firm's co-founder and loss of major clients. The Fort Lauderdale-based firm of Ben-Ezra & Katz gave layoff notices to 146 employees Thursday, with another eight from its title agency receiving the same news, said a spokesman, Ray Casas.
  • Once one of the larger so-called "foreclosure mills" in Florida with nearly 600 employees, Ben-Ezra & Katz has been cutting staff since February when it was fired by federal mortgage backer Fannie Mae. Before Thursday's announcement, the firm had already laid off 280 employees, according to records filed with the state.

***

  • A day after the Fannie Mae announcement, a Miami-Dade circuit judge found the firm's founding partner, Marc Ben-Ezra, in contempt of court for a shoddily handled foreclosure case.(1) The judge has yet to release a final written order and the firm has filed affidavits in its defense hoping to soften the blow.
  • Kenneth Marvin, director of lawyer regulation for the Florida Bar, said Thursday it has open investigations into both Ben-Ezra and firm partner Marvin Katz.

For more, see Ending foreclosure business, Ben-Ezra lays off 154.

(1) See:

Fed. Court Grants TRO After Homeowner Alleges Violation Of Loan Mod Agreement; Goal Is To Slam Brakes On All Nonjudicial Hawaiian F'closures: Attorney

In Maui, Hawaii, The Maui News reports:

  • Amid the many foreclosure actions and auctions on Maui, one has come to a halt, after a federal judge in Honolulu granted a temporary restraining order. The order itself does not address the borrower's big argument - which is that the bank pursuing her cannot prove it has any real ownership interest in her Kihei home(1) - but the restraining order was temporary. Since it expired a week ago, the lenders have not yet made any effort to resume the process of taking Watoshina Lynn Compton's house.
  • Compton's lawyer, James Fosbinder, said Thursday that the significance of the case is not about Compton herself, but that "there is a very similar fact pattern" with the experience of many other borrowers in trouble. Fosbinder said he has about 300 clients with mortgage troubles, "and about 70 percent" are in the same boat as Compton.

***

  • On April 4, U.S. District Judge Susan Oki Mollway granted a temporary injunction against U.S. Bank, the supposed trustee of her mortgage after it was engrossed in a mortgage-backed security; and BAC Home Loans Servicing. [...] Mollway found that a scheduled sale of Compton's property would breach the [loan] modification agreement "and cause Compton irreparable harm."
  • "The big question," said Fosbinder, is whether a similar strategy would work in the hundreds of other cases he is prepared to file.
  • He said he believes that once the court hears the evidence, "it would support stopping all nonjudicial foreclosures in Hawaii, and that is our ultimate goal."

For more, see Judge halts foreclosure; others vulnerable? (Loss of woman’s home prevented — for now — in modification struggle).

(1) The main gist of the homeowner's lawsuit yet to be addressed by the court, according to the story, is that the original loan, made by Countrywide, was purportedly transferred into a trust for the purpose of bundling it with other mortgage loans and selling bonds based on those assets. U.S. Bank is supposed to be the receiving bank for the asset. Fosbinder, through discovery, learned that the mortgage documents were never physically transferred, as he believes the law requires, but - as related by a Countrywide representative - were kept with the servicer: Countrywide/BofA, not U.S. Bank, the story states. Furthermore, he said, Hawaii trust law requires that assets in a trust be put there before a closing date, which, he alleges, was missed by years. Therefore, he said, there is a question of whether U.S. Bank has the legal authority to foreclose.

A third argument implicates the involvement of Mortgage Electronic Registration System, the alleged racket by which the big banks assign mortgages without recording them at the Bureau of Conveyances in the usual way.

Ohio Couple Clips Loan Servicer For Actual, Punitive Damages In Suit Alleging Unnecessary Real Estate Tax Escrow 'Squeeze' Pushed Them Into F'closure

In Warren, Ohio, the Tribune Chronicle reports:

  • In the midst of a soaring caseload that amounts to about 1,500 foreclosure cases a year in Trumbull County alone, it was the little guy who scored a recent victory over a mortgage holder, who even got hit with punitive damages on a counter claim.

***

  • Trumbull County Magistrate Jason Earnhart found in favor of Eric and Tami Freeman of Fowler Street, Cortland, against Equity One Inc., awarding the local couple $2,000 in compensatory damages, $500 for nominal damages, $2,500 for attorney fees and $10,000 in punitive damages.

***

  • According to his decision based on facts that came out in a trial last month, the Freemans borrowed $57,600 from Equity One in May of 1999. The Freemans paid monthly installments faithfully until July 2007, when their payment was returned.
  • Equity One demanded $724 instead of $596, which was the normal payment. Since 2003, the couple had been paying their real estate tax on a tax installment plan with the Trumbull County treasurer because they had fallen behind, but they also informed Equity One that the payment plan was set up. By July of 2007, the Freemans were nearly done with the repayment installment plan, but Equity One continued to insist on the higher payments.
  • Payments sent by the Freemans were returned. ''Instead of working with the Freemans, Equity One initiated the suit in February of 2008,'' Earnhart wrote. The Freemans filed a counter claim.

For more, see Owner wins mortgage case.

Monday, May 2, 2011

Ohio Supremes To Decide Whether Foreclosing Party Must Own Both Note, Mortgage At The Time Complaint Is Filed

In connection with foreclosure actions in the State of Ohio, the Ohio Supreme Court has agreed to decide the following question:

  • "To have standing as a plaintiff in a mortgage foreclosure action, must a party show that it owned the note and the mortgage when the complaint was filed?"

This issue comes to the state high court upon review of a state intermediate appeals court ruling in U.S. Bank Nat'l. Assn. v. Duvall, 2010 Ohio 6478 (Ohio App. 8th Dist. Cuyahoga County), which held that a lender holding a secured promissory note did not have standing to foreclose a mortgage where the mortgage was in the name of another party.(1)

In deciding to address the issue, the state high court reviewed an order by the 8th District Court of Appeals certifying conflict in the case law from various intermediate appellate districts, and found that a conflict exists.(2)

As it appears that the cases having to address the mess created by the fraudulent conduct of the banksters have sufficiently percolated up the Ohio judicial system, one looks forward to the Ohio Supreme Court putting some order in this area of law both by answering the certified question, and, hopefully and albeit through (authoritative?) dicta, by establishing some guidepost by which the courts can be guided when addressing related bankster-created foreclosure messes not specifically addressed by the certified question here (see, for example, Deutsche Bank Nat'l. Trust Co. v. Greene, 2011 Ohio 1976 (Ohio. App. 6th Dist. April 22, 2011).

For the Ohio Supreme Court's ruling finding the existence of a conflict in the current case law, see U.S. Bank Nat'l. Assn. v. Duvall, 2011 Ohio 1618 (April 6, 2011).

Thanks to Ohio FRAUDClosure for the heads-up on the recent Ohio Supreme Court ruling.

(1) In reaching its conclusion, the 8th District Court of Appeals in Duvall ruled:

  • {¶ 13} Ohio law holds that "[a]n action on a note and an action to foreclose a mortgage are two different beasts." Gevedon v. Hotopp, Montgomery App. No. 20673, 2005-Ohio-4597, ¶28. See, also, Third Fed. Savs. Bank v. Cox, Cuyahoga App. No. 93950, 2010-Ohio-4133; Fifth Third Bank v. Hopkins, 177 Ohio App.3d 114, 2008-Ohio-2959, 894 N.E.2d 65.

    {¶ 14} In Jordan, supra, this court held that "[t]he owner of rights or interest in property is a necessary party to a foreclosure action. * * * Thus, if plaintiff has offered no evidence that it owned the note and mortgage when the complaint was filed, it would not be entitled to judgment as a matter of law." Id., ¶¶22-23.

    {¶ 15} Accordingly, we conclude that plaintiff had no standing to file a foreclosure action against defendants on October 15, 2007, because, at that time, Wells Fargo owned the mortgage. Plaintiff failed in its burden of demonstrating that it was the real party in interest at the time the complaint was filed. Plaintiff's sole assignment of error is overruled.

(2) The conflict cases are:

An interesting piece of trivia here is that the Bayless, Marcino, and Thomas cases all involved self-represented, pro se homeowners. The Cox and Jordan cases referred to in footnote 1, above, also involved self-represented, pro se homeowners.

Ohio Appeals Court: Sloppy Mortgage Assignments In Foreclosure OK Where Note, Mortgage Contain Interlocking References

A recent ruling by an Ohio appeals court held that an assignee of a mortgage had standing to foreclose, despite the fact that it had not also acquired, by formal assignment, the promissory note secured thereby. In this case, the court concluded:

  • that the assignment of the mortgage, in conjunction with interlocking references in the mortgage and the note, transferred the note as well. See Restatement of the Law 3d, Property – Mortgages (1997) 380, Section 5.4(b); Bank of N.Y. v. Dobbs, 5th Dist No. 2009-CA-002, 2009-Ohio-4742, ¶ 17-41, appeal not allowed, 124 Ohio St.3d 1444, 2010-Ohio-188.

For the court ruling, see Deutsche Bank Nat'l. Trust Co. v. Greene, 2011 Ohio 1976 (Ohio. App. 6th Dist. April 22, 2011).

California Bankruptcy Court: Mortgage Assignments Must Be Recorded Before Assignee Exercises Power Of Sale In Deed Of Trust

Lexology reports on the recent In re Salazar case, in which a U.S. Bankruptcy Court in California gave MERS the boot in a foreclosure action:

  • MERS was the original named beneficiary in the DOT securing the borrower’s loan and, despite the assignment of the original lender’s interest in the note and DOT, MERS remained the named beneficiary of record on the DOT when the assignee foreclosed. The Bankruptcy Court, in In re Eleazar Salazar, issued on April 11, 2011, held that MERS’ recorded interest did not allow the assignee to bypass the California Civil Code Section 2932.5 requirement that an assignment be recorded before the assignee exercises the power of sale under a DOT.

***

  • In rejecting the assignee’s argument that MERS’ recorded interest as beneficiary of the DOT was sufficient to satisfy Section 2932.5, the Court noted that it was joiningthe courts in other states that have rejected MERS’ offer of an alternative to the public recording system.” Among such courts was the U.S. Bankruptcy Court for the Eastern District of New York, which held in In re Agard that MERS lacked authority to assign mortgages. (Click here to read an earlier legal alert summarizing Agard.)

For the story, see California bankruptcy court: state foreclosure law trumps MERS (requires paid subscription; if no subscription, GO HERE; or TRY HERE, then click appropriate link for the story).

Appeals Court Kiboshes Fla. AG's Civil Probe Into F'closure Mill Over Deceptive Trade Practices; Says Criminal Investigation May Have Been Appropriate

The Palm Beach Post reports:

  • Florida's attorney general has no authority to investigate a Boca Raton-based foreclosure law firm under a civil unfair trade practices statute, an appeals court ruled Wednesday.(1) In siding with the Shapiro & Fishman law firm, the 4th District Court of Appeal likely ended the state's pursuit of subpoenas against other so-called "foreclosure mills," including the Law Offices of David J. Stern in Plantation.
  • Judge Spencer D. Levine wrote in Wednesday's ruling that the state's subpoena was not connected to "trade or commerce," a requirement when using Florida's Deceptive and Unfair Trade Practices Act to investigate. Spencer wrote that the attorney general could have proceeded with "a criminal investigative subpoena if other relevant criteria were satisfied."

For more, see Appeals court rules for 'foreclosure mill' firm.

(1) State of Florida, Office of the Attorney General v. Shapiro & Fishman, LLP, No. 4D10-4526 (4th DCA, April 27, 2011).

Recognizing that the court's ruling may not appear to yield a fair, reasonable result, Judge Levine implied that the Florida Deceptive and Unfair Trade Practices Act (FDUTPA), as written, may have left the court's hands tied, giving it no choice but to rule in the way it did. Writing for the 3-judge appellate panel, Judge Levine concluded the ruling with this observation:

  • We are compelled to require that the subpoena issued pursuant to a specific statute be connected to that particular statute. As Justice Cardozo once wrote: “We do not pause to consider whether a statute differently conceived and framed would yield results more consonant with fairness and reason. We take the statute as we find it.” Anderson v. Wilson, 289 U.S. 20, 27 (1933). Similarly, we take FDUTPA as we find it, and we affirm the trial court’s order to quash the subpoena.

Baltimore Finally Gets Green Light To Continue Against Alleged "Ghetto Loans" Peddler In Reverse Redlining Suit; Ruling May Help Similar Memphis Case

In Memphis, Tennessee, The Memphis Daily News reports:

  • The city of Baltimore’s mortgage discrimination lawsuit it filed three years ago against San Francisco-based Wells Fargo can go forward now that it has survived Wells’ motion to dismiss the case. The federal judge presiding over the case published an opinion Friday that gave the green light to Baltimore’s fourth iteration of its suit.(1)
  • The suit claims Wells pushed black borrowers into high-cost subprime loans and targeted homeowners for burdensome refinance and home equity loans.
  • The same day that opinion was published, meanwhile, lawyers representing Memphis and Shelby County government filed a copy of it in federal court in Memphis to make U.S. District Judge S. Thomas Anderson aware of the news.
  • They believe the Baltimore decision bolsters the same thing they’re trying to prove here. On substance, there’s barely any daylight between the two lawsuits. Both allege similar claims against Wells and frame their arguments in nearly identical ways.(2)
  • The lawsuit on behalf of Memphis and Shelby County governments even relies on lawyers from the same Washington-based firm of Relman, Dane & Colfax PLLC.

For more, see Baltimore Wells Fargo Ruling Helps Local Cause.

(1) Baltimore's earlier complaints included testimony from two former high-ranking Wells Fargo employees stating that Wells Fargo intentionally made bad loans to African-Americans. The employees, who worked out of Virginia and Maryland but knowledgeable about the company's national lending practices, according to the complaints, said Wells Fargo marketed subprime loans to predominantly African-American ZIP codes and churches, used software to "translate" marketing materials into African-American vernacular, and that company officials referred to the loans in minority communities as "ghetto loans" and to borrowers as "mud people." See The Daily Record: Ex-workers allege race-based loan approach at Wells Fargo.

(2) Go here to read more about the Baltimore case, and here to read more about the Memphis case, and here for earlier posts on the "ghetto loans" allegations made against Wells Fargo.

Alleged Robosigner/Process Server Says Signature Was Forged On F'closure Docs, Employer "Screamed" At Her For Slow Service; Outfit Probed By State AG

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

  • West Palm Beach resident Liz Mills learned she was a robo-signer when a friend suggested she search her own name online. On foreclosure blogs and in at least one newspaper article, the 51-year-old process server was singled out for the numerous and varying styles of her signatures on summons paperwork used to prove her efforts in locating home­owners in foreclosure.
  • Now Mills is coming forward in affidavits filed in three foreclosure cases, saying she didn't sign the paperwork and never signed in front of a notary despite notary stamps affixed to the documents.
  • In one case, Mills allegedly signed a return of non-service, meaning the homeowner could not be found, for a foreclosure in Lehigh Acres near Florida's west coast - a town where Mills said she has never been.

***

  • Service of process is sometimes the first notice a homeowner has that the bank has filed for foreclosure. Sloppy service or "sewer service," as some defense attorneys call bad service of process, can leave a homeowner in the dark and defenseless until after the final judgment and a notice of sale is sent out.

***

  • With the crush of foreclosures statewide, process service has become big business. Once entrusted only to sheriff's deputies, summonses may now be handled by special process servers certified by the court. The servers often work for larger companies that dole out the legwork. Mills worked for several process service companies, including Miami­-based Gissen & Zawyer Process Service Inc.
  • The Florida Attorney General's Office is investigating the company after allegations of backdating returns of service, improper billing practices and filing questionable affidavits with the courts.
  • Mills said she believes her signatures were forged on documents because she has a short name that's easy to sign.

***

  • The typical charge for process service is $45, about $10 of which goes to pay Mills, who may have to make several visits to a home. When Gissen & Zawyer didn't think she was working fast enough, she said, she was called to Miami for a conference. "They stood there and screamed at me that I was not serving their work fast enough," said Mills, who worked for the company about 10 months.

For more, see Local 'robo-signer' alleges her signatures were forged.

Sunday, May 1, 2011

IRS Jumps Into F'closure Fraud Fray; Paperwork Transfer Screw-Ups May Doom Favorable Tax Treatment For Securitized Mortgage Interest Trusts

Reuters reports:

  • The Internal Revenue Service has launched a review of the tax-exempt status of a widely-held form of mortgage-backed securities called REMICs. The IRS confirmed to Reuters that the review comes in response to mounting evidence that banks violated tax requirements by mishandling the transfer of mortgages to REMICs, short for Real Estate Mortgage Conduits.
  • Should the IRS find reason to take tough action, the financial impact could be enormous. REMIC investments are held by pension funds, in individual retirement plans such as 401(k)s and by state and local government entities. As of the end of 2010, investments in REMICs totaled more than $3 trillion, according to data supplied by the Securities Industry and Financial Markets Association.

***

  • The review, however, is a sign that the widespread bank misdeeds in home foreclosure cases are spilling over to threaten the interests of investors in mortgage-backed securities. The banks originated the mortgages and packaged them into securities.
  • These banks' transgressions, confirmed in court decisions and through recent action by federal bank regulators, include the failure to formally transfer ownership of mortgages to the trusts that invested in them and the subsequent creation of fraudulent mortgage assignments and other false documents.

***

  • For the IRS, one of the main issues will be whether REMICs actually owned the mortgages from which they received income. If not, for tax purposes they wouldn't qualify as REMICs, and the income would become taxable.

For more, see IRS weighs tax penalties on mortgage securities.