Foreclosed, Short-Selling Arizona Homeowners Face Deficiency Judgments When Property Size Exceeds 2.5 Acres

In Cave Creek, Arizona, KTVK-TV Channel 3 reports:

• Kimberly and her husband decided to short sale their home and after securing a buyer, Kimberly's lender, M & I Bank, sent a letter saying the short sale and purchase amount were approved. "They just recently, in the last couple of weeks, they approved the short sale and we were like "Yeah!"
• But inside the approval letter was a little paragraph from M & I Bank stating they had the right to sue Kimberly and her husband for the rest of the money reportedly being forgiven.
• In Kimberly's case, her $500,000 mortgage was approved to be short sold for around $250,000 but M & I claims it would sue Kimberly for the remaining $250,000 short fall.
• Dean Wegner has been in the real estate industry for years and is a frequent contributor to 3 On Your Side. He says Kimberly's problem lies in a little-known clause in the [Arizona] state law that says if property is more than 2.5 acres then the lender can and will sue homeowners for any balance left over. Kimberly's property is five acres.

***

• Remember, it’s not just for homeowners who are short selling. If you own more than 2.5 acres and are losing the home to foreclosure, financial institutions will probably sue you for the balance after the auction.

For the story, see Short selling: You better not own more than 2.5 acres.

NYC Pols, Housing Officials, Advocates Express Ire As Local Bank Continues Dumping Delinquent Debt Secured By Violation-Riddled Apartment Bldgs

In The Bronx, New York, Crain's New York Business reports:

• In the latest in a series of note sales on distressed properties by New York Community Bank, it has unloaded the mortgage on three foreclosed Bronx buildings riddled with code violations, and once again drawn the ire of city officials, politicians and housing advocates.
• In the last year, the bank has sold the mortgages on three dozen buildings “that had significant distress on them,” said RuthAnne Visnauskas, deputy commissioner for development at the city's Department of Housing Preservation and Development.
• “There's obviously nothing wrong with a bank selling a mortgage, but to have 36 buildings with significant code violations have mortgages sold…there should be more involvement on the side of bank to make sure violations are getting corrected and that they don't let it slide just to get it off their books,” Ms. Visnauskas said. “It doesn't feel like the right responsibility nexus.”

For more, see Bronx debt sale triggers storm of protest (Sale of notes on three foreclosed Bronx buildings riddled with code violations blindsides city officials who had been working to find buyer able to fund repairs).

Foreclosure Fraud Complaints Targeting Attorneys Flood Florida Bar

The South Florida Sun Sentinel reports:

• Complaints about foreclosure fraud are pouring into The Florida Bar, with four times more cases pending today than six months ago, as property owners trying to save their homes increasingly take on their banks and their lenders' lawyers.
• The Bar, which regulates lawyer conduct in Florida and most states, has opened 202 foreclosure fraud grievance investigations since November, with 226 now pending. Such complaints target lenders' attorneys, some of whose practices process thousands of foreclosures a month.
• These practices, nicknamed "foreclosure mills," have faced accusations by homeowners and state regulators of allegedly submitting false or misleading paperwork, and having employees "robo-sign" piles of documents without verifying them.

***

• Yet among the 46 foreclosure fraud cases closed so far, none have resulted in any sanctions against attorneys — including David J. Stern, whose Plantation operation once employed more than 1,000 people. Stern, who is the target of a civil investigation by the Florida attorney general, also has a Bar complaint against him that was opened last year.

***

• Bob Jarvis, a law professor at Nova Southeastern University, said the lack of Bar disciplinary action — such as disbarments and suspensions regarding foreclosure fraud — will "lend credence to those who say the Bar is incapable and someone else should regulate lawyers."

For more, see Foreclosure fraud complaints flood Florida Bar but no lawyer reprimands so far.

Chicago-Area Lawmaker Suspects House Speaker's Procedural Move To Kibosh Automatic Homestead Property Tax Exemption Renewal For Cook County Seniors

In Chicago, Illinois, the Chicago Tribune reports:

• A measure to save senior citizens in Cook County the hassle of reapplying each year for a property tax break is languishing at the Capitol, and its fate may be sealed because House Speaker Michael Madigan opposes it.
• Senior homeowners used to get the special tax exemption automatically renewed, but the General Assembly ended that practice last year as part of a broader tax relief package.
• This year, some lawmakers tried to go back to the old way, allowing nearly 300,000 homeowners 65 and older to get the benefit without filling out a form every year. The idea passed the Senate 54-0.
• But when the bill made it to the House, it got shunted into a three-member subcommittee. There, two of Madigan's top lieutenants — downstate Democratic Reps. Frank Mautino, of Spring Valley, and John Bradley, of Marion — voted against it. That was a partisan political maneuver aimed at smothering the legislation, according to sponsoring Rep. Sidney Mathias, R-Buffalo Grove. "I suppose that way only two people have to say they voted 'no.' And they were, if I recall, not from Cook County. So, yes, that's why they have all revenue bills in subcommittee rather than have the full committee to vote on it," Mathias said.

***

• New county Assessor Joe Berrios, who fears up to 90,000 seniors are on the verge of losing tax breaks because they haven't reapplied this year, said he will try to persuade Madigan, a longtime political ally, to change his mind. Berrios, who doubles as county Democratic chairman, said he plans this week to lobby Madigan, the longtime Illinois Democratic Party chairman who usually can pass or kill a bill at will.

For more, see Push to make senior tax break automatic stalls in House (Speaker Michael Madigan opposes benefit for Cook County seniors).

Ex-Foreclosure Mill King Says Servicers Stiffed Him Out Of $34M+

Housing Wire reports:

• Foreclosure king no more, David J. Stern is fighting back against former clients whose business once elevated him to one of the richest and most well-known default services lawyers in the country.
• The fight is taking place largely in state and federal courtrooms via 25 lawsuits where Stern alleges that the biggest names in the mortgage industry owe him more than $34 million in unpaid invoices. The fight includes at least two major mediation cases, as well.

For more, see David J. Stern launches legal battle against nation's biggest mortgage servicers.

See also, Broward/Palm Beach New Times: David J. Stern Employs Gigantic Balls and Asks for Money in Possibly Shady Cases his Firm Handled.

DC Feds Pinch Escrow Agency Owner In Alleged Serial Refinancing Scam; Accused Of Failing To Terminate Existing HELOC, Then Borrowing Against It

From the Office of the U.S. Attorney (District of Columbia):

• Ronald Johannes Sneijder, 48, a former owner of a title and escrow company based in the District of Columbia, has been indicted on federal charges relating to mortgage fraud. The total amount of loans was approximately $1,829,000.

***

• According to the indictment, Sneijder was the manager and majority owner of a title and escrow company known as Red Box Settlements [in] Washington, D.C. On about January 13, 2004, Sneijder purchased a residence at 1325 Independence Avenue SE. About a month later, he refinanced the loan through Wells Fargo Bank, obtaining a home equity line of credit with a maximum credit limit of up to $575,000.
• In February 2005, the defendant sought a $581,000 refinance loan from First Savings Mortgage Corporation, using as collateral his house at 1325 Independence Avenue SE, which was already encumbered with the home equity line of credit from Wells Fargo. First Savings Mortgage Corporation approved the loan on the condition that the Wells Fargo line of credit would be paid off and closed and the lien in the public record be “released” so that no additional money could be borrowed on the Wells Fargo line of credit, and so that there would be no other loans that would take precedence over the First Savings Mortgage Corporation loan.
• After settlement, Sneijder paid off the Wells Fargo line of credit but did not close it. Thereafter, from March 2005 to November 2006, he again borrowed money against the Wells Fargo line of credit. He obtained cash advances up to approximately $558,000 by the end of November 2006.
• The indictment further alleges that in November 2006, Sneijder sought a $675,000 loan from Wachovia Bank using as collateral 1325 Independence Avenue SE, which was already encumbered with the Wells Fargo home equity line of credit and the First Savings Mortgage Corporation loan.
• Wachovia approved the loan on the condition that the Wells Fargo line of credit would be paid, closed, and the Recorder of Deeds be notified of the closure so that no additional money could be borrowed on the Wells Fargo line of credit. The defendant paid down less than half of the line of credit, and again failed to close the Wells Fargo account.
• From January to August 2007, Sneijder again continued to borrow money against the Wells Fargo line of credit for a total amount due and owing of approximately $573,000.


• According to the indictment, Sneijder failed to repay the approximate $573,000 Wells Fargo line of credit, the $581,000 First Savings Mortgage Corporation loan, and the $675,000 Wachovia loan, resulting in foreclosure of 1325 Independence Avenue SE, the proceeds of which were insufficient in value to repay the approximate $1,829,000 loaned to the defendant.
• The indictment further alleges that the defendant took about $216,000 from client escrowed money from May to November 2006.

For the U.S. Attorney press release, see Former Title and Escrow Agent Indicted for Mortgage Fraud (Case Involves More Than $1.8 Million in Loans).

Southern California Homeowner Boots MERS In Illegal Foreclosure

In Calexico, California, the Imperial Valley Press reports on the victorious homeowner in the recent U.S. Bankruptcy Court ruling in In re Salazar:

• Calexico resident Eleazar Salazar built his home in 2001 using a loan and received a loan modification in 2009. He was making steady payments when in December 2009, after just making a payment, he received a notice saying his home was being foreclosed on. The family was shocked. They contacted The Advocates’ Law Firm LLP, and were assured by firm partner Francisco Aldana that everything would be all right.
• In the case, the U.S. Bank National Association had foreclosed on Salazar’s home by exercising the power of sale under the deed of trust.Salazar filed to invalidate the foreclosure sale and seek damages while U.S. Bank filed to regain possession of the home through an unlawful detainer action against Salazar.
• On April 11, Judge Margaret Mann of the U.S. Bankruptcy Court for the Southern District of California, ruled on the case, saying, among several points, that the bank’s use of Mortgage Electronic Registration System couldn’t replace statutory foreclosure laws.
• “This is an important decision — today we helped kick open the door in our ongoing efforts to stop wrongful foreclosures,” Aldana wrote in a press release after the decision.

For more, see Homeowner wins foreclosure fight against bank.

Would-Be Buyers Under Rent-To-Own Program Threatened With Foreclosure Over Landlord's Failure To Pay Real Estate Taxes

In Cleveland, Ohio, The Plain Dealer reports:

• Dozens of renters in Cleveland's Glenville neighborhood, whose dreams of home ownership have been threatened by tax delinquencies that are not their fault, received foreclosure letters this week.
• Huntington National Bank moved last month to foreclose on a loan to Northeastern Neighborhood Homes Limited Partnership II because more than $95,000 in taxes and penalties going back to 2007 had not been paid. The loan is secured by 46 homes built or rehabbed in the 1990s as part of a rent-to-own program that is now in shambles.
• A letter about the foreclosures from Cleveland Housing Court Judge Raymond Pianka was mailed to the homes, creating panic in the minds of some renters who interpreted the notice to mean they could be evicted or possibly thrown in jail if housing or building codes are violated.

For more, see Foreclosure letter concerns rent-to-own residents in Cleveland's Glenville neighborhood.

BofA Refuses To Cancel Foreclosure Sale Despite Losing Homeowner's Certified Check To Reinstate Loan; Forces Borrower To Scramble To Save Home

In Sacramento, California, The Consumerist reports:

• CBS 13 has the story of a man who fell behind on his mortgage payments who was told by Bank of America that unless he sent them $4,175 he would lose his house that he had spent years putting work into. So he managed to put together the money and sent it in as a cashier's check. Then the bank lost his check.
• They told him to just cancel the check and send a new one, but the cashier's check wouldn't become void for 90 days. The foreclosure was scheduled to happen well before then. He had sent the check in by certified mail and so he had proof that Bank of America got it, but they just said, "whoops."
• Bank of America said they lost the check because it didn't have his loan number on it. But the man says he gave the teller payment instructions when he had them make out the check. The teller was a Bank of America teller.
• The man was able to send in a new check from a friend and get the foreclosure action stopped, no thanks to BofA.

Source: BofA Loses Check That Would Have Saved House From Foreclosure.

For the CBS 13 story, see The Bank Lost My Mortgage Check And Is Auctioning Off My House.

County Official Agrees To Comply With Colorado Law In Handling Left Over Surplus Cash From Foreclosure Sales Belonging To Ex-Homeowners

In Arapahoe County, Colorado, The Denver Post reports:

• Despite a law that dictates otherwise, Arapahoe County for years has not told homeowners who lost their property to foreclosure that they are entitled to money left over from the sale.
• Instead, tens of thousands of dollars in overbids that belong to homeowners have sat in a county-controlled account. The money is from funds remaining after the house was sold in foreclosure and the bank note and liens were satisfied.
• State law says counties must publish notice that they have the money so it can be claimed. If it isn't claimed after five years, the county can keep it.

***

• Arapahoe County has published almost none of the required notices since the law took effect in 1990. The county published a notice once, in early 2009, for a foreclosure with an overbid of $6,600, but Treasurer Sue Sandstrom said it's unclear why only that one was handled properly. The money remains unclaimed.
• State law requires county treasurers to take out five weeks of newspaper ads shortly after a foreclosure sale to announce it has the leftover money.

***

• Sandstrom said notices were published properly last week on 15 properties, a practice that will continue. Arapahoe County recently doled out more than $165,000 in overbids to seven homeowners who have lost their property to foreclosure since 2006. That was the result of a Denver Post story last month about how few people know about the money and how counties sometimes do little to find them.
• Sandstrom, in office since Jan. 1, said her plan now is to also publish the names from the entire five-year period on the county's website as well as in a local newspaper.

For more, see People foreclosed on in Arapahoe County might be owed money and not know it.

Sacramento DA: Local Man Pocketed Illegal Upfront Fees In Running Loan Modification Racket

From the Office of the Sacramento County, California District Attorney:

• District Attorney Jan Scully announced [] the arrest of 56 year-old Rodney Andrews of Elk Grove. Andrews operated Andrews Investment Group, which offered loan modification services. It is alleged that in conducting loan modification services, Andrews collected illegal upfront fees.
• In 2009, the California Legislature passed a law prohibiting this type of conduct to prevent individuals from preying on vulnerable borrowers facing foreclosure or unaffordable mortgage payments.
• Anyone with further information regarding Rodney Andrews and Andrews Investment Group is asked to contact the Sacramento County District Attorney’s Office Real Estate Fraud Unit at (916) 874-9045.

Go here for the Sacramento County DA press release - Rodney Andrews.

Jury Slaps S. California Woman With Financial Elder Abuse, Felony Grand Theft, UPL Convictions In $30K Foreclosure Rescue Ripoff Of Senior Couple

In Santa Barbara, California, the Santa Barbara Independent reports:

• A Santa Barbara jury [] found Denise D'Sant Angelo guilty of embezzling $30,000 from an elderly couple whose home was about to go into foreclosure. The bespectacled fraudster, convicted last year of lining her pockets with money meant to save housing for a group of nuns, convinced the husband and wife she was skilled in the ways of financial and legal maneuvering and could save their home if they paid her.
• She didn't, and Deputy District Attorney Brian Cota proved in court that D'Sant Angelo used the money to pay for her rent and other personal expenses.(1)

***

• Judge Frank Ochoa granted Cota's request that D'Sant Angelo's bond be forfeited and she be immediately taken into custody. He argued she's a threat to the public and showed herself willing to continue scamming people while out on bail. Ochoa agreed, and D'Sant Angelo was lead out of the courtroom in handcuffs shortly after the jury was dismissed.
• Cota said immediately after the verdicts were read it was telling that the jury, after deliberating for only three hours, reached a unanimous decision after listening to D'Sant Angelo tell her side of the story on the stand for four days. During closing remarks, Cota called D'Sant Angelo a “textbook case of a con artist, plain and simple,” and that she “gained [the victims'] confidence in order to steal their money.”

For the story, see Nun Scammer Found Guilty of Financial Elder Abuse (Jury Convicts Denise D'Sant Angelo on 12 Felony Counts).

(1) According to the story, the jury convicted D'Sant Angelo on:

• six counts of felony financial elder abuse,
• six counts of felony grand theft,
• one count of misdemeanor unlawful practice of law,
• the special allegation that she committed the crimes – spread out over the course of a year-and-a-half – while she was out on bail during her prior embezzlement case.

If she receives the maximum sentence this time, D'Sant Angelo faces 11 years in prison.

Texas Man Bagged For Allegedly Pocketing Cash, Passing Himself Off As Lawyer Providing Foreclosure Rescue Services

In Williamson County, Texas, KXAN-TV Channel 36 reports:

• A Williamson County man is arrested after allegedly fraudulently posing as an attorney. The Williamson County Sheriffs office was contacted after Ray Echavez filed several documents with the Williamson County Clerk’s Office. Clerks in the office did not believe that Echavez was a lawyer.
• Deputies contacted the man named in the document. According to the affidavit, the victim said that he met Echavez through a realtor and agreed to pay $2,500 for help in stopping the foreclosure of his Cedar Park home. The victim said he received legal advice and even appeared in court with Echavez, where a judge refused to grant an application for a restraining order against the foreclosure company.
• The victim also said there was paperwork where his signature was forged. Investigators also believe that Echavez at one point called deputies attempting to impersonate the victim. Echavez is charged with falsely holding oneself out as a lawyer, a third degree felony.

Source: Man posing as attorney arrested (Man allegedly paid $2500 for legal advice).

Sacramento-Area Foreclosure Rescue Operator Gets 32 Months For Role In Fractional Interest Deed Transfer Bankruptcy Scam

In Sacramento, California, The Sacramento Bee reports:

• Charles C. Jamison assured potential customers he was a foreclosure stopper, someone who could, for a fee, save their homes from trustee sales. It worked for a while, until federal fraud stoppers stepped in. The 30-year-old Citrus Heights resident pleaded guilty in February and was sentenced Tuesday to two years and eight months in prison.

This is the scheme to which he admitted:

1. Distressed homeowners in the Sacramento region received fliers in which Jamison, using an alias, promised he could, through a program he called "Stop Now," halt an impending sale.


2. The charge: $1,000 a month, and he claimed that included mortgage payments.


3. Between July 2007 and May 2009, he persuaded desperate people to take desperate measures. Via notarized and recorded grant deeds, they transferred partial interests in their homes to fictitious entities created and controlled by Jamison.


4. Under the names of those entities, he then filed petitions in the U.S. Bankruptcy Court in Sacramento, resulting in automatic stays of foreclosure proceedings.


5. The lenders were delayed in foreclosing on properties in default, while being forced to pay lawyers to contest the sham bankruptcies.


6. According to a written plea bargain, "a reasonable estimate of the loss to the financial institutions cannot … be determined." Prosecutors and Jamison agreed his gain from the rip-off was between $120,000 and $200,000.

Source: Man gets prison term in foreclosure rip-off.

See Final Report Of The Bankruptcy Foreclosure Scam Task Force for a discussion of fractional interest deed transfer scams and other foreclosure rescue rackets involving the abuse of the bankruptcy courts.

Go here for other posts on fractional interest deed transfer, foreclosure rescue bankruptcy scams.

Rockland County Clerk Offers Free Scam Alert In Move To Minimize Use Of Forged Land Documents To Steal Houses, Equity Out From Under Local Homeowners

In Rockland County, New York, The Journal News reports:

• A new program can help alert Rockland County residents about potential scams that target their home and property. Called PropertyCheck, the software program is available through the County Clerk's Office. It works by alerting residents via email whenever a property transaction is recorded in their name, County Clerk Paul Piperato said.
• "It's about trying to protect our residents," Piperato said. "A person may be unaware that this is going on. This helps them find out."
• Rockland County District Attorney Thomas Zugibe said the new program could have helped prevent recent incidents when forged deeds and mortgages were filed in an unsuspecting property owner's name.
• "All too often, property owners are unaware or surprised when a lien is filed on their property, or other illegitimate documents are filed in their name," Zugibe said. "Had this tool been in place over the past few years ... that never would have happened."
• Rockland County Executive Assistant District Attorney Gary Lee Heavener said there are dozens of types of property scams. A lot of scams can be prevented if a property owner quickly finds out about a transaction in his name, which can also allow authorities to get involved sooner, Heavener said.
• In some cases, a scammer will apply for and receive a mortgage and even pay the mortgage for several years to prevent discovery of the crime, Heavener said. Years can go by until the unsuspecting property owner receives a lien or foreclosure notice. "No one knows about it until someone knocks on the door," Heavener said.
• But it can take months or years to straighten out all the legal paperwork in such cases as the rightful property owners work to clear their name and credit with banks and other lenders, even though they did nothing wrong, Heavener said.(1)

For more, see Rockland offers free scam-alert service for property owners.

(1) Typically, it's up to the victimized homeowner to file a civil lawsuit known as a quiet title action, in which he/she has the burden of proving that the rogue land documents are forgeries, in order to remove any 'clouds', or claims (either legitimate or purported) on the title and otherwise clear up the mess and reclaim his/her home title.

"See No Evil, Hear No Evil" Broward County Chief Judge Knew Exactly What He Was Doing After All!

In Fort Lauderdale, Florida, Broward/Palm Beach New Times reports:

• If you're a foreclosure defense lawyer doing work in Broward County, there are lots of reasons to think Chief Judge Victor Tobin doesn't side with homeowners. In his tenure at the top of the county's legal system, he has instituted rules that make it tougher on homeowners to fight foreclosures and resisted changes that would protect them from cases being rushed through the system.
• The widespread belief that he's biased toward banks seemed supported this week when Tobin announced that he'll be leaving the bench for a job at the law offices of Marshall C. Watson, one of the largest foreclosure firms in the state. It's a move that angers foreclosure defense lawyers who say it appears as if Tobin established a system that will favor his new position. Worse, Tobin may have been negotiating his new job while creating rules that will benefit him later.(1)

***

• Tobin's reign at the top of the judiciary included several "administrative orders" changing the way the county handles foreclosures, many of them favoring lawyers representing the banks. The most contested of them forbids foreclosure sales from being cancelled ten days before the auction is set to take place. That means homeowners who strike a last-minute deal with the bank to save their home have no choice but to watch their house go to the highest bidder. [Foreclosure defense attorney Mike] Wasylik says the rule solidified "the perception that Broward is a place where it's easier for banks to litigate."
• Last summer, Tobin added to the pro-bank rules by instituting what's referred to as the "rocket docket." It requires foreclosure judges to move hundreds of cases a day with almost no discussion. Judges simply have no time to consider complex paperwork filed by foreclosure defense attorneys, says Fort Lauderdale lawyer Jason Weaver.

***

• And just two weeks ago, Tobin instituted another rule hampering homeowners who want to fight foreclosures. Previously, attorneys representing homeowners could schedule online what's called a "special set" hearing. The hearing allows homeowners' attorneys to make complex legal arguments that can't be heard during the rocket docket. Tobin's new rule required that a hearing be set during the rocket docket in which attorneys must ask for a longer hearing.
• Homeowners typically have little money to fight foreclosures, and the extra bureaucracy means they must pay their attorney to appear at a hearing simply to ask for another hearing, says lawyer Margery Golant. "In Broward, defendants have fewer rights and fewer due process options," Golant said.

***

• Judges in Palm Beach and Miami-Dade counties have worked to protect homeowners facing bogus foreclosures, attorneys say. Miami-Dade Circuit Judge Jennifer Bailey, for instance, famously threw out 15,000 foreclosure cases for filing irregularities, served on a statewide taskforce on mortgage foreclosures, and was recognized with a community service award for her work protecting homeowners from bogus cases.

For more, see Before Joining Foreclosure Firm, Broward's Chief Judge Created a System That Favors Banks.

For earlier posts on Judge Victor Tobin, see:

• "See No Evil, Hear No Evil" Broward County Court Chief Quits Post; Follows The Money By Hopping Aboard Recently-Slammed Foreclosure Mill,
• Fort Lauderdale-Area Court System Not Immune To 'Kangaroo-Itis' In Foreclosure Actions As Local Chief Judge Takes "See No Evil, Hear No Evil" Posture.

(1) Tobin appears to be the latest addition to the line of judges of questionable conduct passing through the Broward County, Florida court system. See:

• South Florida Daily Business Review: Courts Answering ‘a Call for Help’, summarizing the recent alleged escapades of several Broward County judges,
• The Miami Herald: Is Dr. Phil the answer for errant judges in Broward? (Broward's judges are a dysfunctional family in need of treatment, according to a group of high-powered lawyers),
• CNN: If Anna Nicole Smith case is a circus, judge is ringmaster, on now-former Judge Larry Seidlin, the judge who humiliated himself by weeping on national television when presiding over a part of the late Anna Nicole Smith child custody proceeding several years ago.

See also, Victims-Of-Law: Judging the Judges, a summary of stories on the antics of some of the members of the judiciary throughout the State of Florida.

San Bernardino DA: Foreclosure Rescue Operator Took Illegal Upfront Fees, Duped Homeowners Into Signing Over Deeds, POAs In Sale Leaseback Ripoffs

From the Office of the San Bernardino County, California District Attorney:

• On Tuesday, May 10, 2011, Investigators from the San Bernardino County District Attorney’s Office Real Estate Fraud Prosecution Unit arrested Yunuen Medina, 26, of Corona, California near her residence.
• Medina worked for Home Recovery Trust, which operated an illegal loan modification business. The scheme involved taking upfront fees from the victims, having them sign Specific Power of Attorneys, in some cases Quitclaim Deeds, placing their properties into the Michael Martinez Trustee, and having the victims then make monthly payments, payable to "Home Recovery Trust."
• On Wednesday, April 20, 2011, the founder and owner, Luis Miguel Macias was arrested and currently remains in jail. Since his arrest, numerous victims have come forward from Riverside, Los Angeles, Ventura Counties, and from as far north as Reno, Nevada. This is an ongoing criminal investigation and more arrests are expected.
• Macias’ victims are usually Spanish speaking and unaware of the California Loan Modification Law, under California Civil Code, § 2944.7, which went into effect October 11, 2009. Medina has a no bail INS hold.

For the San Bernardino County DA press release, see Corona Woman Arrested for Real Estate Fraud.

NC AG Scores Temporary Halt Of Outfit Clipping Distressed Homeowners Out Of Upfront Fees For Foreclosure Help; Seeks Permanent Shutdown

From the Office of the North Carolina Attorney General:

• A Winston-Salem foreclosure rescue operation that targeted financially distressed homeowners with claims to help them save their homes from foreclosure is barred from collecting any money from consumers for foreclosure assistance or loan modifications, Attorney General Roy Cooper announced.
• “This kind of scheme robs struggling homeowners of valuable time and hard-earned money that could be used toward legitimate help that could put them back on their feet again,” Cooper said. “My office will continue to target outfits that violate the law by charging an upfront fee for their service.”
• Last week, Wake County Superior Court Judge Howard Manning agreed with Cooper’s request to temporarily bar Edward “Eddie” Phillip Long, Jr., doing business as Credit Enhancement Services, from offering foreclosure and loan modification services, and from charging advance fees for credit repair and credit score improvement services. Cooper is seeking to permanently shut down Long’s foreclosure assistance business and win consumer refunds and civil penalties.

For more from the North Carolina AG press release, see AG Cooper moves to stop phony foreclosure assistance scheme (Forsyth County operation makes promises to save homes but fails to deliver).

For the lawsuit, see State of North Carolina v. Long.

Foreclosure Rescue Operator Faces Arraignment For Allegedly Peddling Mortgage Elimination Racket Involving Phony Land Document Filings

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

• A Las Vegas man is scheduled to be arraigned this week on 29 counts of mortgage fraud. He has been indicted in Alameda County on charges of cheating distressed homeowners out of thousands of dollars. It's a story 7 On Your Side broke earlier this year, and now our investigation shows evidence the program extends far beyond the East Bay.

***

• [Alan David] Tikal[, owner of a so-called mortgage reduction company,] was extradited from Las Vegas where he was arrested and made his first court appearance in Alameda County late last month. He is charged with conspiring to commit real estate fraud, mortgage security fraud and filing false documents. Prosecutors say Tikal's mortgage rescue program promised to pay off a homeowner's mortgage and refinance at a 75 percent savings.

For more, see More homeowners claim mortgage rescue fraud.

For an earlier post on Tikal's indictment, see Bay Area Grand Jury Indicts Four In Alleged Foreclosure Rescue Racket; Filed Fraudulent Documents In Bogus Attempts To Stall Legal Process: DA.

Fed. Court Affirms 29+ Year Sentence For F'closure Rescue Operator In Rackets That Local Cops, DAs, Texas AGs Cluelessly Minimized As 'Civil Matters'

The 5th Circuit Court of Appeals recently affirmed a 350-month prison sentence for Texas woman Rosario Divins (aka Rosie Divins), a notorious upfront fee foreclosure operator who, by reason of the length of her sentence, has apparently reached the end of an inglorious, 30+ year career screwing financially distressed people by falsely promising to keep their homes out of foreclosure in exchange for exorbitant fees.(1)

Congratulations to the Texas Feds for properly pursing this racket that, according to a September, 2009 San Antonio Express News story, local cops, local DAs, and more than one Texas AG washed their hands of, dismissing the complaints as "civil matters."(2)

For the ruling, see U.S. v. Divins, No. 09-50855 (CA-5, May 16, 2011) (unpublished).

Go here for earlier posts on the now-defunct Rosie Divins.

(1) The 3-judge panel describes Divins and her conduct in these excerpts (bold text is my emphasis):

• For the past 30 years, Divins has made a living swindling financially distressed people by promising (falsely) to keep their homes out of foreclosure in exchange for exorbitant fees. She has been brought to court and sanctioned on four separate occasions for this conduct.
  
  Various court orders, issued in 1994, January 2000, June 2000, and September 2003, permanently enjoined Divins from the unauthorized practice of law, including offering or providing bankruptcy services, making representations to assist or stop foreclosure, and making representations to provide mortgage brokering services to assist or stop foreclosure.
  
  In February 2006, the district court learned that Divins was violating these orders. The court initiated criminal contempt proceedings, which the government supplemented with charges of mail fraud. The matter went to trial. At least eight individuals testified against Divins, including Jackie Guerrero, Guadalupe Dominguez, Stanley Miele, Tommy Bordelon, Lupe Monreal, Maria Martinez, Issac Vela, and Juana Anderson.
  
  Their stories were similar. Each had faced the possibility of foreclosure due to some sort of financial hardship brought about by an illness or a lost job. Divins had contacted them via mailed flyers promising that she could keep them out of foreclosure in exchange for thousands of dollars in up-front fees. In each case, Divins either had absconded with the money or refused to return it when she failed to secure the clients relief from foreclosure. Many of Divins' victims ultimately spent thousands more on real attorneys to undo the damage Divins caused.

***

• The evidence showed that Divins solicited vulnerable individuals facing foreclosure by mailing flyers to them to further her scheme. The flyers stated that she could stop foreclosure. Each individual contacted Divins based on the representations made in the flyers. The victims would then pay Divins sums of money, usually in cash, in exchange for promises from Divins that she would stop foreclosure, negotiate with the mortgage company, and sell homes or refinance mortgages.
  
  Though there was testimony that foreclosures were initially delayed, there is no evidence that Divins performed her promised actions. The evidence showed that she continually requested more money and then avoided contact with these individuals when her fraudulent actions were suspected or discovered. Mortgage companies never received the money on behalf of her "clients."
  
  Additionally, Divins did not inform any of these victims that she had been prohibited by the bankruptcy court from representing that she could assist in foreclosure or bankruptcy proceedings. Divins was repeatedly warned by the bankruptcy court of the consequences if she failed to comply with the court's orders. These warnings occurred in bankruptcy proceedings where it was apparent that the individuals involved had suffered loss as a result of her actions.

(2) See Woman sentenced to almost 30 years for fraud (Besides ripping off homeowners, Divins had a long record of harassment and threats):

• The 350-month sentence imposed by U.S. District Judge Fred Biery was an exclamation point on a case that screamed a question even Biery asked: Where were state and local authorities when Divins was dishing out various forms of fraud for more than 30 years? The judge also ordered restitution, but acknowledged it wouldn't be likely any victim would be repaid.
• An investigation by the San Antonio Express-News found disinterested police agencies, Texas attorneys general, assistant district attorneys and others nudged aside complaints as civil matters between Divins, 55, and her victims. Some of the homeowners ultimately lost their houses while other managed to stave off foreclosure through no help from Divins.

***

• Biery noted that it wasn't until Divins' shenanigans spilled into federal bankruptcy court that she was finally caught. The FBI investigated her after she was found in contempt in bankruptcy court and violated orders to stop her misleading, direct-mail foreclosure-rescue ads. Biery also read her 32-year criminal record of harassment, stalking and threats, including one case where she called one person 50 times.
• "Other than that, you've been a model citizen," Biery said, sarcastically. [... B]iery said he admonished her for taking advantage of desperate people who shared her cultural, ethnic and religious background and trusted her.

Ohio Appeals Court Reverses Another Lower Court Error In F'closure Action; Nixes Bankster Affidavit Based On Computer 'Screenshot' Of Account Details

Lexology reports:

• In Deutsche Bank National Trust Company v. Hansen, 2011 WL 899625 (Ohio App. 5 Dist., 2011), borrowers defending a foreclosure action successfully challenged whether a bank's representative could testify in an affidavit concerning the amount due based on a screen shot when the bank's representative could not explain how such information was collected and compiled. Based on such facts, the borrowers argued the bank could not qualify the screen shot under the business record exception to the hearsay rule.
• The borrowers argued that the trial court erred in admitting the screen shot as evidence of the amount due and sought to strike the affidavit of the bank representative, asserting that it was not based on her personal knowledge.
• The bank representative testified at her deposition that she did not know who entered the information into the computer to generate the amount owed, nor did she know how such information was collected and compiled. The borrowers argued that while her affidavit states that it was based on personal knowledge, the bank representative's deposition testimony reflected that while she saw a screen shot of the balance due, she could not explain how that figure was arrived at by the bank.

***

• The Court of Appeals for Fairfield County determined that the bank's representative did not have personal knowledge as to how the bank arrived at the balance due as viewed on the screen shot. The borrowers argued the screen shot is hearsay and did not meet the exception for a business record because there is no evidence of its origins or the circumstances surrounding its existence.

For more, see Court erred in admitting screen shot as evidence of amount due for purposes of granting summary judgment (Rule 803(6) of the ohio rules of evidence, business records hearsay exception, construed) (requires paid subscription; if no subscription, GO HERE; or TRY HERE - then click the appropriate link for the story).

For the ruling, see Deutsche Bank Natl. Trust Co. v. Hansen, 2011-Ohio-1223 (Ohio App. 5th Dist. March 10, 2011).

Representing the homeowner were Benjamin D. Horne, Peggy P. Lee, and Luke Feeney of Southeastern Ohio Legal Services,(1) Lancaster, Ohio.

(1) Southeastern Ohio Legal Services is a non-profit law firm that, within its coverage area, gives legal help without attorney fees to people with low income and limited savings and assets, and also serves organizations of low-income people.

Option To Convert From Non-Judicial To Judicial Process Now Possible for Hawai'ian Homeowners Facing Foreclosure

From the Office of the State of Hawai'i Judiciary:

• In accordance with Act 48, which became effective May 5, 2011, the Hawaii Supreme Court today issued temporary rules establishing a process by which an owner-occupant of a residential property subject to a non-judicial foreclosure may convert the action into a judicial foreclosure.
• The Temporary Rules, a Certified Conversion Petition form, a form by which co-owners and co-signers may agree to submit the case to the courts, and form judgments are available on the Judiciary’s website. Because Act 48 became effective May 5, the rules are effective as of that date.

For more, see New Court Rules to Convert Non-Judicial Foreclosures to Judicial Foreclosures.

Defending A Foreclosure Defense Case Pro Bono? Don't Forget The Contingency Risk Factor When Sticking Losing Lender With Tab

A recent ruling by a Florida appeals court held that a homeowner successfully fending off a foreclosure action is entitled to clip the losing foreclosing entity for a recovery her attorney’s fees as a prevailing party under subsection 57.105(7), Florida Statutes (2009), after the lower court granted a motion to dismiss a mortgage foreclosure action and dismissed the case without prejudice. (Nudel v. Flagstar Bank, FSB, No. 4D10-3001 (Fla. App. 4th DCA, May 18, 2011).(1)

Although the ruling was silent on a sometimes-related point, a court case cited therein briefly addressed the issue regarding the application of a contingency fee multiplier (in those cases where winning counsel took the case on a pro bono or contingency fee basis) when calculating the amount of the homeowner's legal fee tab that the losing lender will ultimately be stuck with. This multiplier reflects "a contingency bonus to the basic fee award in cases that the [client] was unlikely to win, to give lawyers for non-paying clients an incentive to take risky as well as sure cases."(2)

In that case, the court approved the use of a contingency fee multiplier of 2.5 in determining the amount of the homeowner's legal fees that the improperly foreclosing lender was hammered with.

While this point only merited a brief mention in that ruling, I mention it here as a reminder to those private attorneys, non-profit law firms, and others who take, or are considering taking, foreclosure defense cases on a pro bono basis, that a mechanism exists in Florida law (by the way, Florida is not unique in this(3)) allowing winning counsel, not only to collect legal fees from the foreclosing lender in a successful foreclosure defense (generally based on the number of hours spent on the case multiplied by an hourly rate, subject to court approval), but to enhance the earned legal fee by a contingency fee multiplier, thereby potentially making it worth one's while taking on these types of cases, at least occasionally.(4)

While not a guarantee to make the winning attorney rich beyond his/her wildest dreams, I'm sure the extra cash will come in handy.(5)

For the court ruling, see Bank of New York v. Williams, 979 So.2d 347 (Fla. 1st DCA 2008).

Representing the homeowner in this case was James A. Kowalski, Jr., Jacksonville, Florida.

(1) See also, Fla. Appeals Court: Homeowner Entitled To Nail Bank For Prevailing Party Legal Fees After Lender Voluntarily Dismissed F'closure Case w/out Prejudice.

(2) The Yale Law Jounal: The Contingency Factor In Attorney Fee Awards.

(3) See, for example:

• Nebraska: Eicher v. Mid America Financial Investment Corp., 270 Neb. 370, 702 N.W.2d 792 (2005), where the Nebraska Supreme Court, in slamming an equity stripping, sale leaseback peddler with a prevailing party attorneys fee award of $378,000 payable to the lawyers representing a dozen homeowners who had their home titles ripped off in a foreclosure rescue scam, applied a multiplier of 1.3 in calculating the award (the foreclosure rescue operator was found to have violated the Nebraska Consumer Protection Act).


• Illinois: Gambino v. Boulevard Mortg. Corp., 398 Ill. App. 3d 21, 922 NE 2d 380 (Ill. App. 1st Dist., 6th Div. 2009) (Appeal denied by Gambino v. Blvd. Mortg. Corp. (W.W. Funding, L.L.C.), 2010 Ill. LEXIS 909 (Ill., May 26, 2010)), where an Illinois Court of Appeals approved use of a contingency multiplier of 3 to the lodestar attorney fee calculation to arrive at a total fee award of $595,574 in a case where an elderly property owner successfully sued in a quiet title / slander of title action in an effort to undo a real estate equity scam perpetrated by his nephew and a gang of others involving a purported sale leaseback (coupled with a repurchase option) of property and the recording of forged land documents. The appeals court noted that the trial judge found the use of a multiplier of 3 to be "imminently reasonable."


• Washington State: Pelascini v. Pace-Knapp, No. 63758-4-I (Wash. Ct. App. Div. 1, Feb. 14, 2011) (Reported at Pelascini v. Pace-Knapp, 2011 Wash. App. LEXIS 422 (Wash. Ct. App., Feb. 14, 2011)), where a Washington State appeals panel awarded $134,425 in attorney fees including a lodestar multiplier of 15 percent to a homeowner who successfully sued after getting ripped off in a sale leaseback, equity stripping racket. The sale leaseback peddlers were found to have violated the state Consumer Protection Act.


• New Jersey: Rendine v. Pantzer, 661 A.2d 1202 (N.J. 1995), where, in approving a one-third enhancement of the lodestar calculation (ie. a multiplier of 1.333), the New Jersey Supreme Court made this holding on the use of contingency fee enhancements, generally, in state court litigation in New Jersey (bold text is my emphasis):
  
  We hold that the trial court, after having carefully established the amount of the lodestar fee, should consider whether to increase that fee to reflect the risk of nonpayment in all cases in which the attorney's compensation entirely or substantially is contingent on a successful outcome. We understand and carefully have evaluated the various objections advanced to contingency enhancements, including the often-repeated admonition that "[t]hese statues were not designed as a form of economic relief to improve the financial lot of [attorneys]." Dague, supra, 505 U.S. at 563, 112 S.Ct. at 2642, 120 L.Ed.2d at 457 (quoting Delaware Valley I, supra, 478 U.S. at 565, 106 S.Ct. at 3098, 92 L.Ed.2d at 456).
  
  Both as a matter of economic reality and simple fairness, we have concluded that a counsel fee awarded under a fee-shifting statute cannot be "reasonable" unless the lodestar, calculated as if the attorney's compensation were guaranteed irrespective of result, is adjusted to reflect the actual risk that the attorney will not receive payment if the suit does not succeed. The reasoning underlying our holding often has been explained, and most effectively in simple terms. As the late Judge Charles Wyzanski once observed:
  
  No one expects a lawyer to give his services at bargain rates in a civil matter on behalf of a client who is not impecunious. No one expects a lawyer whose compensation is contingent upon his success to charge, when successful, as little as he would charge a client who in advance had agreed to pay for his services, regardless of success.
  
  [Cherner v. Transitron Elec. Corp., 221 F. Supp. 55, 61 (D.Mass. 1963).]
  
  See also Blum, supra, 465 U.S. at 903, 104 S.Ct. at 1551, 79 L.Ed.2d at 905 ("Lawyers operating in the marketplace can be expected to charge a higher hourly rate when their compensation is contingent on success than when they will be promptly paid, irrespective of whether they win or lose.") (Brennan, J., concurring); Berger, supra, 126 U.Pa.L.Rev. at 324-25 ("The experience of the marketplace indicates that lawyers generally will not provide legal representation on a contingent basis unless they receive a premium for taking that risk."); 2 Derfner & Wolf, supra, ¶ 15.01[2][c], at 15-16 ("Most courts realize that where payment of a fee is contingent on success an attorney should receive a larger overall fee than where payment is guaranteed regardless of outcome....") (footnote omitted).


• Texas: Dillard Department Stores, Inc. v. Gonzales, 72 S.W.3d 398 (Tex. App.-El Paso 2002), where, in doubling the attorney's usual rate (ie. a multiplier of 2), a Texas appeals court made the follwing observation on the use of fee enhancement multipliers in Texas litigation (bold text is my emphasis):
  
  Texas courts consistently allow the use of a multiplier based upon the contingent nature of a fee under Texas statutes allowing recovery of attorney's fees. Guity v. C.C.I. Enterprise Co., 54 S.W.3d 526, 529 (Tex.App.-Houston [1st Dist.] 2001, no pet.); Borg-Warner Protective Services v. Flores, 955 S.W.2d 861, 870 (Tex.App.-Corpus Christi 1997, no pet.); Crouch v. Tenneco, 853 S.W.2d 643, 648 (Tex.App.-Waco 1993, writ denied).
  
  Moreover, we note that at least one state court has specifically rejected the U.S. Supreme Court's ban on a contingency multiplier in interpreting its own state anti-discrimination statute. See Rendine v. Pantzer, 276 N.J.Super. 398, 648 A.2d 223, 254 (1994) (holding that trial judge correctly considered contingent nature of fee in doubling the lodestar, rejecting Dague after extensive discussion), aff'd as modified, 141 N.J. 292, 661 A.2d 1202 (1995). Considering this, we cannot find the trial court acted without reference to guiding principles.

(4) The appeals court's brief mention approving the use of the multiplier follows:

• Further, we find no abuse of discretion in the trial court's use of a multiplier of 2.5 in establishing the attorney's fees. In its order setting the attorney's fees, the trial court fully analyzed the factors under rule 4-1.5, Florida Rules of Professional Conduct, Florida Patient's Compensation Fund v. Rowe, 472 So.2d 1145 (Fla.1985), and Standard Guaranty Ins. Co. v. Quanstrom, 555 So.2d 828 (Fla.1990); and made detailed findings of fact which are supported by competent substantial evidence in the unrebutted testimony of both Williams' counsel and her expert witness.

(5) For those attorneys, law students, paralegals and other fans of the law who find something counterintuitive about an attorney for a prevailing party being able to score attorney fees from the losing litigant in pro bono cases (I suppose that refering to these cases as contingency fee, rather than pro bono, cases would be more apt), there's really nothing new about it, believe me. See, for example:

• New York Law Journal: NY BigLaw Leader Scores $1 Million Fee in Pro Bono Case,
• Another Law Firm Seeks Big Fees From Lawsuit Loser In Pro Bono Case,
• See also this legal fee 'rate sheet', appearing on the website of one prominent northeastern non-profit law firm, which discloses the hourly fees charged in connection with some of their pro bono cases (unadjusted, of course, for any applicable "contingency fee risk multiplier").

Recently-Elected Ohio AG Caves In Lawsuit With Mortgage Servicer; Settlement Requires Outfit To Do What It Should Have Already Been Doing Anyway

From the Office of the Ohio Attorney General:

• Ohio Attorney General Mike DeWine and Ohio Department of Commerce Director David Goodman [] announced an assurance of voluntary compliance (AVC) with Carrington Mortgage Services, LLC to resolve a 2009 lawsuit and to provide relief to Ohio homeowners facing foreclosure.

***

• The Attorney General, the Ohio Department of Commerce and Carrington Mortgage Services agreed to mortgage servicing standards that will apply to all Carrington Mortgage Services-serviced Ohio loans. The servicing standards include:
  
  1 - Borrowers who complete a loan modification application will be assigned a single point of contact with Carrington Mortgage Services.
  
  2 - Carrington Mortgage Services will implement a specific timeline for all loan modification requests.
  
  3 - Carrington Mortgage Services will temporarily suspend foreclosures when a borrower completes a loan modification application and will implement an internal review process for denied loan modifications.

For the Ohio AG press release, see Attorney General DeWine and Ohio Department of Commerce Announce Settlement with Carrington Mortgage Services.

Go here to view signed agreement.

Florida Rocket Dockets May Screech To A Halt As Statewide Court System Suffers From 'Empty Pockets'; Homeowners Rejoice, Blighted Communities Weep

The Palm Beach Post reports:

• Florida's courts are out $6 million after state lawmakers chose not to extend a one-time stipend aimed at reducing a foreclosure backlog. The reduction means less manpower to process foreclosure cases and is already having repercussions in Palm Beach County where Circuit Judge John Hoy canceled a July foreclosure hearing citing fiscal constraints.
• "Because of the lack of funding by the Florida Legislature, judges are unavailable to preside over foreclosure trials beginning July 1, 2011," Hoy wrote in a May 11 order. Court budgets operate on a fiscal year that runs July 1 through June 30.

***

• While homeowners in foreclosure may rejoice at having more time to negotiate a loan modification, attempt a short sale or just go mortgage-free, communities struggling with abandoned and run down homes may have to wait longer for relief.

For the story, see Fewer judges will be hearing Florida foreclosures as state money runs out.

JP Morgan Chase Breaks Into C. Florida Woman's Home A 2nd Time; Clueless Cops Refuse To Do Anything About It, Loan Servicer Dodges Media Phone Calls

MSNBC's The Dylan Ratigan Show reports on the ostensiby out-of-control JP Morgan Chase Bank which, for a second time, had one of its property preservation contractors break open the doors and change the locks on the home of Orange County, Florida homeowner Nancy Jacobini, despite the fact that Ms. Jacobini is apparently current on her loan modification payments.(1)

Among the highlights of the story is the claim that the local cops are so out-of-touch with the problem of banks prematurely breaking into homes that may be in or near some stage of foreclosure that they refuse to do anything about it, apparently taking the stance that the matter is nothing more than a 'civil matter.'(2)

According to MSNBC's Ratigan, JP Morgan Chase was called to participate in the interview, but they are dodging his staff's phone calls.

For the story, see Breaking In: Lenders Overstepping Their Bounds?

Go here for earlier posts on the plight of Nancy Jacobini in her relationship with her mortgage loan servicer, JP Morgan Chase.

(1) For examples of filed lawsuits involving illegal bank break-in, "trash-out" & lockout cases, see:

• Bank admits mistake on Willcox home foreclosure (involving an Arizona homeowner) (for a copy of the resulting federal lawsuit, see Newman v. Bank of America, N.A. and go here for the attached Exhibits),
• Couple: Bank Foreclosed On Wrong House (New Bedford Couple Suing Bank Of America) (involving a Massachusetts resident with a home in Florida) (for a copy of the resulting federal lawsuit, see Cardoso v. Bank of America, et al.),
• Family's recently purchased home, gutted by property removal service (involving a Michigan homeowner) (for a copy of the resulting federal lawsuit and accompanying Exhibits , see Rought v Deutsche National Trust Company, Trustee, et al.),
• In a Sign of Foreclosure Flaws, Suits Claim Break-Ins by Banks (involving a California homeowner) (for a copy of the resulting federal lawsuit, see Ash v. Bank of America).

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:

• Nevada High Court OKs $1M+ Damage Award To Homeowner Due To Mortgage Company Misidentification Of Home In Foreclosure (for the court ruling, see Countrywide Home Loans v. Thitchener, 192 P.3d 243; 2008 Nev. LEXIS 79; 124 Nev. Adv. Rep. 64 (September 11, 2008)),


• Long Island Judge Hammers Wells w/ $155K Tab For Oppressive, Heavy Handed, Egregious Conduct For Pre-Sale Lockout Of Homeowner In Foreclosure (for the court ruling, see Wells Fargo v. Tyson, 2010 NY Slip Op 20079 (Sup. Ct., Suffolk County, March 5, 2010)).

(2) This isn't the first time that cops have washed their hands when investigating real estate-related these crimes. See:

• Fed. Court Affirms 29+ Year Sentence For F'closure Rescue Operator In Rackets That Local Cops, DAs, Texas AGs Cluelessly Minimized As 'Civil Matters';
• Would-Be Buyers Screwed Over In Rent-To-Own Racket Involving Homes In F'closure Complain To Local Prosecutor; Ripoff Is Treated As A Civil Matter;
• Cops Accept "The Bank Sent Me!" Defense In Home Break-In Probe Targeting "Trash-Out" Agent; Say No Crime Was 'Intended' - "It's A Civil Matter!";
• Another F'closed Homeowner Illegally Driven From Home; Cops Decline To Pursue Criminal Charges; Call Premature, Unauthorized "Eviction" A Civil Matter;
• Suspected Home Hijacking Case Once Considered "Civil Matter" Will Now Be Treated As Criminal Trespass, Say Cops;
• Another Foreclosure Misidentification Screw-Up Results In Pair "Cleaning Out" Wrong Home; DA Declines Prosecution - Says It's A Civil Matter.

Foreclosure Judgment Vacated; AZ Appeals Court: Law Firm "Harmed The Integrity Of The Judicial Process & The Administration Of Justice"

A a 3-judge panel of the Arizona Court of Appeals recently vacated a judgment in a foreclosure action, pointing to the improper handiwork of Mesa, Arizona law firm Maxwell & Morgan in obtaining the judgment on behalf of its client, a homeowners' association, as one reason for its ruling.(1)

An excerpt:

• ¶44 Here, the HOA's attorneys committed a fraud upon the court that justified setting aside the default judgment under Rule 60(c)(6).
  
  First, the lien foreclosure complaint stated that there were two deeds of trust on the property but did not disclose that one of them was a first deed of trust. The complaint referred to § 33-1807(A) regarding creation of an assessment lien, and § 33-1807(H) regarding attorneys' fees but did not refer to § 33-1807(B)(2) which plainly subordinates the assessment lien to a first deed of trust. The complaint falsely stated that the assessment lien had priority over all other liens.
  
  Second, the judgment of foreclosure that the HOA lawyers presented to Commissioner McCoy to enter did not reflect that there was a first deed of trust on the property, nor did it refer to § 33-1807(B)(2) but merely stated that the assessment lien had priority over all other liens and falsely stated that the default judgment foreclosed all other liens, including the first deed of trust.
  
  Third, although the complaint alleged that the CC&Rs gave the HOA a lien on the property which was perfected upon recordation, it did not refer to section 7.9 of the CC&Rs, which gave the first deed of trust priority over the assessment lien.
  
  Finally, to obtain the default judgment, the attorney representing the HOA at the default hearing avowed to the court that the allegations set forth in the complaint and the proffered judgment of foreclosure were true and correct.
  
  These material omissions and misrepresentations made in an ex parte proceeding prevented the commissioner from reaching an informed and impartial decision regarding entry of the default judgment, made it impossible for the court to properly perform its function of adjudicating the case in a fair and lawful manner, and harmed the integrity of the judicial process and the administration of justice.

For the entire ruling, see Cypress On Sunland Homeowners Association v. Orlandini, Nos. 1 CA-CV 10-0142, 1 CA-CV 10-0235 (Consolidated) (Az. App. Div.1 Dept. B, May 19, 2011).

(1) According to footnote 3 of the ruling, the record reflected that the lower court judge provided a copy of his ruling to the State Bar of Arizona for consideration of possible ethical violations. Pursuant to their ethical obligations, the 3-judge appellate panel similarly are providing the State Bar with a copy of this opinion.

Criticism Of Florida's F'closure Rocket Docket, Jurists Called Out Of Retirement To Rubber-Stamp Judgments Brings Heat To Pair Representing Homeowners

The ABA Journal reports:

• Two Florida lawyers who criticized mass foreclosures found themselves under investigation by the state bar for their comments. The bar dropped one probe and was expected to drop the second after former ABA President Talbot "Sandy" D'Alemberte intervened on the lawyers’ behalf, the Daily Business Review reports. D’Alemberte is also a former president of Florida State University.
• "We saw possible implications for free speech," D'Alemberte told the publication.
• One of the complaints stemmed from a CNN interview with foreclosure defense lawyer Chip Parker of Jacksonville, the story says.(1) He told the network, "Foreclosure courts throughout the state of Florida have adopted a system of ramming foreclosure cases through the final judgments and sale—with very little regard to the rule of law." He also complained of "an attack upon the citizens of the state of Florida by retired judges."
• The other foreclosure lawyer, Matthew Weidner of Tampa, was investigated for “exercising free speech in the courtroom," the story says.
• So far the Florida Bar has received 58 complaints against foreclosure defense lawyers and closed 29 without charges. The bar has received 272 complaints against foreclosure plaintiff lawyers and closed 46 without charges.

Source: Criticism of the Foreclosure Process Brought Bar Probe of Two Fla. Lawyers.

(1) See Daily Business Review: Lawyers investigated for criticizing system:

• Parker learned he was under scrutiny in a letter from Bar counsel Shanell Schuyler last Dec. 3. The letter, obtained by the Review, includes a link to Parker's CNN interview and advises him to explain his on-camera statements in writing by Dec. 20 in light of The Bar's Rule of Professional Conduct 4-8.2 prohibiting lawyers from making false or reckless comments about court personnel.
• "I was shocked," Parker said. "I said, 'This is a joke, right?' I have a First Amendment right to free speech. I've said a lot worse and been more pointed in my speech in the past. CNN actually toned down my comments."
• Parker responded to The Bar by quoting Oliver Wendell Holmes Jr., the late associate justice of the U.S. Supreme Court, saying his criticism was "consistent with the great traditions of American lawyers."
• Parker said he hasn't been told who filed the complaint due to confidentiality rules, but he heard it was an offended judge.

'Go Forward' Says Utah Federal Judge In Order Denying Bankster Attempt To Dismiss Homeowner Foreclosure Challenge As Lawyers Don't Know Who Owns Note

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

• U.S. District Judge Dee Benson left open a legal window Wednesday for two South Jordan residents facing the loss of their house, one of the first cracks in federal court for Utahns trying to save homes from the wave of foreclosures swamping the state.
• Benson declined to grant a motion to dismiss the lawsuit brought by Michael and Dana Geddes to halt the foreclosure on their home while they try to negotiate a loan modification. That means the couple and their attorney can proceed with gathering testimony and documents to try to prove their contention that the foreclosure process to which they’re being subjected does not comply with Utah and federal laws.

***

• Federal judges in Utah have generally been hostile to lawsuits by homeowners who say that, in the process where mortgages were packaged and resold to groups of investors, traditional property recording practices and laws were bypassed and that, as a result, foreclosures were proceeding illegally.
• Benson conducted a 90-minute hearing in the Geddes lawsuit in which he intently grilled both sides over various legal questions. But what seemed to sway him was the admission by attorneys for the foreclosing entities that they were not sure who actually owned the couple’s mortgage note.

For more, see Judge sides with homeowners in foreclosure suit (Federal court: Judge rules owners can seek evidence to halt loss of S. Jordan home).

Fla. Appeals Court: Homeowner Entitled To Nail Bank For Prevailing Party Legal Fees After Lender Voluntarily Dismissed F'closure Case w/out Prejudice

In a relatively short and sweet ruling reversing another lower court screw-up in a foreclosure case, a Florida appeals court held that a defendant is entitled to recover her attorney’s fees as a prevailing party under subsection 57.105(7), Florida Statutes (2009), after the court granted a motion to dismiss a mortgage foreclosure action and dismissed the case without prejudice.

While, on its face, there doesn't seem to be anything particularly ground-breaking about this ruling in that it appears to merely reaffirm and reinforce long-standing law in Florida,(1) it nevertheless serves as a valuable reminder that:

• Homeowners should not hesitate to hammer lenders with a claim for reimbursement of their legal fees after being forced to defend themselves in a foreclosure action where he/she successfully fends off a foreclosure action - particularly if the foreclosing plaintiff lacked standing to file the lawsuit in the first place,


• Foreclosure defense attorneys who are not already seeking reimbursements from banks for their legal fees on behalf of their clients after successfully scoring a dismissal of a foreclosure action (either with or without prejudice) had better start doing so, if for no other reason, to minimize their malpractice exposure for failing to assert all possible claims their clients may have against the rogue lender/loan servicer, and


• Non-profit law firms which take these cases on a pro bono basis should also submit a claim for legal fees (if they are not already doing so), applying a reasonable hourly billing rate to the amount of time spent defending these cases (hopefully, this could provide a modest source of revenue to help keep their operations going, in light of the budget cuts being made by the Federal and state governments and others who provide sources of funding for their operations). Further, they should also seek approval of the use of a contingency fee risk multiplier in calculating their fees (see Bank of New York v. Williams, 979 So.2d 347 (Fla. 1st DCA 2008), approving a contingency fee multiplier of 2.5 in determining the tab for homeowner's legal fees that the improperly foreclosing lender was belted with).

Representing the homeowner was Enrique Nieves, of Ice Legal, P.A., Royal Palm Beach, FL.

For the ruling, see Nudel v. Flagstar Bank, FSB, No. 4D10-3001 (Fla. App. 4th DCA, May 18, 2011).(2)
(1) See Landry v. Countrywide Home Loans, Inc., 731 So. 2d 137 (Fla. 1st DCA 1999) (bold text is my emphasis):

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

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

Further, foreclosure mill law firms and other attorneys bringing foreclosure actions on behalf of lenders that get summarily kiboshed due to a lack of standing could be ordered to ante up part of the homeowner's legal fees out of their own pockets by reason of section 57.105(1), Florida Statutes:

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

This tool could possibly act as a deterrent to foreclosure mills and other attorneys bringing cases when they lack the proper paperwork at the time they file their legal actions.

(2) From the court ruling (bold text is my emphasis):

• Additionally, Nudel was entitled to recover her attorney's fees. The mortgage between Nudel and Flagstar entitled Flagstar to reasonable attorney's fees for enforcement. By operation of subsection 57.105(7), the contractual provision also allows attorney's fees to Nudel if she is the prevailing party. See § 57.105(7) ("If a contract contains a provision allowing attorney's fees to a party when he or she is required to take any action to enforce the contract, the court may also allow reasonable attorney's fees to the other party when that party prevails in any action, whether as plaintiff or defendant, with respect to the contract.").
  
  Nudel is the prevailing party within the meaning of subsection 57.105(7). This court has held that a plaintiff's voluntary dismissal makes a defendant a "prevailing party" in the dismissed action even where the plaintiff refiles the case and prevails. In Alhambra Homeowners Ass'n v. Asad, 943 So.2d 316, 317-18 (Fla. 4th DCA 2006), an association sued some of its homeowners, but voluntarily dismissed its lawsuit without prejudice before a summary judgment hearing. The association subsequently re-filed the suit after unsuccessful mediation talks. Id. at 318. In the other, dismissed action, the homeowners moved for prevailing party attorney's fees. Id. The circuit court found the homeowners to be the prevailing parties and awarded them fees. Id.
  
  Following Thornber v. City of Fort Walton Beach, 568 So.2d 914 (Fla. 1990), this court affirmed. Id. at 318-20. We held that the homeowners were "entitled to recover attorney's fees under a statute awarding fees to the prevailing party in litigation after the plaintiff took a voluntary dismissal without prejudice." Id. at 317. This was so "even though the plaintiff subsequently refiled the identical lawsuit and ultimately prevailed." Id.
  
  For the purpose of determining a "prevailing party" under section 57.105(7), we see no reason to distinguish between a voluntary dismissal without prejudice and a court's involuntary dismissal without prejudice. This same conclusion was reached in Bank of New York v. Williams, 979 So.2d 347 (Fla. 1st DCA 2008), where the first district affirmed an award of prevailing party attorney's fees on facts similar to those in this case. There, the bank sued the defendant to foreclose a mortgage. Id. at 347. The defendant moved to dismiss because the bank failed to show that it owned the mortgage and promissory note and, thus, it lacked standing to sue. Id. The court dismissed a complaint and amended complaint without prejudice; "[w]hen the Bank declined to file a second amended complaint, the trial court dismissed the amended complaint with prejudice." Id. The bank did not appeal this order, but instead instituted a new foreclosure action. Id. In the first action, the court awarded the defendant prevailing party attorney's fees and costs. Id.
  
  On appeal, the bank argued that, "because the same factual and legal issues raised in the dismissed action [were] also the subject of the new litigation, [the defendant] [could] [not] be the prevailing party." Id. at 347-48. Relying on a voluntary dismissal without prejudice case, State ex rel. Marsh v. Doran, 958 So.2d 1082 (Fla. 1st DCA 2007), the first district rejected the bank's argument. Id. at 348.
  
  "The refiling of the same suit after the voluntary dismissal does not alter the appellees' right to recover prevailing party attorney's fees incurred in defense of the first suit." Id. (quoting Doran, 958 So. 2d at 1082 (citing, inter alia, Alhambra Homeowners Ass'n, 943 So. 2d at 319)). Accordingly, the court held that the defendant was the prevailing party and affirmed her award. Id. We agree with Williams and conclude that Nudel was a prevailing party entitled to recover attorney's fees.

(It should be noted that, in Bank of New York v. Williams, 979 So.2d 347 (Fla. 1st DCA 2008), noted above, the court also approved the use of a contingency fee multiplier of 2.5 in determining the amount of the homeowner's legal fees that the improperly foreclosing lender was hammered with.)