Saturday, August 20, 2011

Mobile Home Residents Face Homelessness As New Buyer Of Park In Foreclosure Wants Everyone Out

In Niagara Falls, New York, WIVB-TV Channel 4 reports:

  • A local mobile home park in Niagara Falls has been sold and residents are left with a lot of questions that aren't being answered. It's one of the downsides of owning a home in a mobile home park. You put your life into living there, but if the park owner decides to use the property for something else, you, in effect, could become homeless.

  • Homeowners at Sabre Park are furious. They have spent thousands of dollars on their mobile homes, kept them up, made improvements, and now, they're finding out the park owner is selling the place and interested buyers want the trailers out.


  • Many of the homeowners found notices taped to their doors, purportedly from an attorney for the Sabre Park's owner, saying the new owners will pay $25,000 for the entire park and assume their $6 million mortgage. The park is apparently in foreclosure and a management firm has been hired by a court-assigned receiver to run things. Kathleen Graham said, "Everybody's going to be homeless."

  • A chilling thought for Joyce and Jim O'Donnell, who have lived in their double wide for more than 25 years. Joyce said, "We just don't know where we're going to go at our age, you know? We'd hate to give up this; we put our money in this. Where do we go?" "We can't sell it. Nobody's going to buy it because they're going to have to take it out of here. It'd cost us a small fortune to move one of these double-wides," said Jim.

  • The O'Donnells are not alone. Many of the residents wanted these to be their retirement homes.

For more, see Mobile home residents booted from park.

Scam Suspect Faces Bail Bond Revocation As Home Securing His Freedom Faces Foreclosure

In Pinellas County, Florida, News Channel 8 reports:

  • Pinellas County prosecutors say when Jeffrey Maricle ran a company called Global Funding LLC, he stole a fortune from more than 50 independent truckers across the nation in an equipment-leasing scheme that turned sour three years ago. Now, because of his own failing finances, Maricle could lose his freedom while awaiting trial.

  • Maricle's attorney says the home Maricle used as collateral for his jail bond is in foreclosure. If he loses the home, the bondsman could revoke his bail. "It depends on the bonding agency," said John McGuire who represents Maricle in his ongoing criminal case.

For more, see Suspect in equipment scheme could be jailed before trial.

Court Grants Some Relief For Deceased Left In Limbo By Complications Arising From Revoked Operator's License For Cemetary In Foreclosure

In Calvert County, Maryland, NBC Washington reports:

  • Some families waiting to put loved ones to rest at a Calvert County, Md., cemetery facing foreclosure can finally move forward. Southern Memorial Gardens in Dunkirk had its license revoked by the state after legal problems with the cemetery’s former owner.

  • A Calvert County judge ruled on Wednesday that those who pre-paid for a plot can proceed with burial plans, News4's Melissa Mollet reported. However, the complication for families is far from over. The cemetery is not allowed to help with the burial process in any way, and those who were not able to pre-pay for arrangements are left trying to figure out how to proceed with their loved ones’ remains.

  • Criminal charges were brought against the current owner and manager for trying to help families with burials before the license situation could be resolved. Southern Memorial Gardens is still working to resolve the foreclosure issue. The cemetery is scheduled for auction at the end of the month.

Source: Foreclosed Cemetery Ruling Gives Relief to Some Maryland Families (Burials approved for those who had pre-paid for services).

In a related story, see WUSA-TV Channel 9: Woman Dead For 33 Days Still Not Buried Due To Cemetery Controversy.

Friday, August 19, 2011

Showdown Looms In Elderly Predatory Loan Victim's Decade-Plus Battle To Hang On To Brooklyn Home Of 44 Years

In Bedford Stuyvesant, Brooklyn, the New York Daily News reports:

  • Feisty great-grandmother Mary Lee Ward has been battling to keep her modest Brooklyn house since the late 1990s.(1) The victim of a predatory subprime mortgage lender that went bankrupt in the housing crash four years ago, Ward has nearly lost the Bedford-Stuyvesant home a number of times - and faces eviction yet again on Friday. "There is no way I'm going to leave this place. Not alive," said a teary-eyed Ward. "This is my home for 44 years. I've put everything into it."

  • Ward, 82, was desperate for extra money back in 1995 to pay for a lawyer to help keep her great-granddaughter from being adopted. Ward found a flyer in her mailbox from Delta Funding, a subprime mortgage lender, promising her a cash advance of $10,000 if she borrowed against her one-family frame house on Tompkins Ave.

  • Ward signed. She said she has seen only $1,000 of the cash she was promised and has been in and out of courtrooms battling banks - and even her own lawyers - for more than a decade. She thought her home was safe after Delta Funding sent her a letter in 2001 saying they would cancel the loan. Ward says what she didn't know was that Delta Funding never rescinded the loan, and that banks have been playing hot potato with her mortgage for years.

  • The company was sued by the feds in 1999 for civil rights violations for targeting minority-group members - especially black women - in Queens and Brooklyn. The company went bankrupt in 2007, along with many other subprime lenders. But Ward's house remained in limbo.

  • She says the latest owner, 768 Dean Inc., bought her home at a foreclosure auction last September. "They're trying to throw me out and I have nowhere to go," Ward said. She said she received 18 eviction letters in the mail just on Aug. 6. Representatives of 768 Dean Inc. could not be reached for comment.

  • Ward, who lives on $840 a month from Social Security, says her $82,000 loan has now morphed into a debt of $200,000.

  • She huddled with her new legal team, lawyers for the grass-roots group Common Law, late last week to talk strategy. Legally, there's nothing they can do, but they're hoping they can rally people together for next Friday's showdown with city marshals, representatives of the group said.(2)

  • "We're hoping that with the support of her neighbors and fellow New Yorkers, she'll be able to get some bargaining power back," said Common Law lawyer Karen Gargamelli. Ward said she tosses and turns every night and looks forward to the day when she can rest easy. "Just let me have a little peace," she said.

For the story, see Great-granny, facing eviction from Brooklyn home, to fight in court for right to live in peace.

(1) See:

  • The Village Voice: Foreclosing on Bed-Stuy (Predatory Loans Have Residents Seeing Red),
  • The Village Voice: Liberals On Loan (Lender that preys on poor fights the state­ with help from leading democrats).

(2) In addition, housing advocates at Organizing 4 Occupation are working to block the eviction of Ms. Ward. The showdown with city marshals is set for Friday, August 19, 2011 at 9:00 am at 320 Tompkins Avenue, Brooklyn, USA.

Suspect Gets 24 To 102 Months In Mtg Payment Hijacking Scam; Sent Letters To Borrowers Falsely Advising That His Outfit Obtained Loan Servicing Rights

From the Office of the Nevada Attorney General:

  • The Office of the Nevada Attorney General announced [] that a local man was sentenced to prison in connection with a mortgage scam involving Nevada homeowners. Judge Linda Bell sentenced Joseph Lawrence Yorkus, age 50, to a maximum of 102 months with a minimum of 24 months in the Nevada State Prison and ordered him to pay restitution to the victims in the amount of $346,155.15 for schemes relating to mortgage fraud, mortgage rescue fraud, credit repair and collection enterprises.

  • "Mr. Yorkus took advantage local homeowners who were already struggling to make their monthly mortgage payments," said Attorney General Catherine Cortez Masto. "He stole those payments and placed these homeowners in peril of losing their homes."

  • Yorkus created several businesses including Great Western Business Services, Sundance Consulting, BAC Collections, Learn Your Rights and Fresh Start Consulting and used them to obtain money from unsuspecting homeowners, placing them in jeopardy of losing their residences.

  • He pled guilty to one count of Mortgage Fraud for his part in sending correspondence to local homeowners advising them that their mortgages, which were legally held by Bank of America, had been transferred to his company, Great Western, and advised them that future mortgage payments should be made to Great Western.

For the Nevada AG press release, see Local Man Sentenced In Connection With Mortgage Scam.

R/E Brokers Lose Licenses Over Allegations Of Encouraging Clients To Stiff Lenders Out Of House Payments, Listing Homes At Artificially Low Prices

In Pierce County, Washington, Real Estate Today reports:

  • A well-known Pierce County husband and wife team specializing in short sales has been barred from practicing real estate for 10 years by the Washington Department of Licensing (DOL) for multiple violations of the state's licensing code.

  • Bonny Lake broker Michael Hellickson, his wife Tara Hellickson, also a broker, and their brokerage, Inc., were scrutinized after the state received more than two dozen complaints about their practices. Their licenses were suspended in September 2010, then reinstated in October pending a hearing.


  • Among the charges brought against the Hellicksons were listing homes at artificially reduced prices; misrepresenting and advertising that the Hellicksons were the No. 1 agent in Washington, Oregon and Hawaii and would purchase a home listed with them if it had not sold in 30 days, and encouraging clients to stop making payments on their home loans.

For more, see State yanks license of 'Northwest's No.1 real estate agent'.

Court To Housing Authority: Tenant's Monthly Section 8 Subsidy To Rent-Skimming Landlord To Be Paid Directly To HOA Until Unpaid Dues Are Fully Paid

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

  • A Palm Beach County homeowner renting to Section 8 tenants will lose the federal housing supplement after a court ruled the money should be used to pay his delinquent HOA fees.

  • Circuit Court Judge John Hoy ordered the West Palm Beach Housing Authority on July 19 to divert future rent payments from the owner of the suburban Lake Worth home to the Willoughby Estates Homeowners' Association, Inc., until late dues and legal fees are paid. Attorneys for the association say the ruling gives guidance for future cases on how federal housing money should be used to settle homeowner debt.

  • "State statute doesn't specifically address how the (U.S. Department of Housing and Urban Development) should handle this kind of situation," said attorney Michael Bender, whose Pompano Beach-based firm Kaye & Bender represents the association. "Hopefully this will assist the housing authority in going forward and they will no longer challenge these cases." A message left at the housing authority was not returned.

  • A new Florida law allows homeowner associations to collect rent directly from tenants who are living in homes where the owner is not paying dues. The law also allows associations to evict those tenants.

For the story, see Judge says Section 8 funds should pay off HOA dues rather than go to delinquent owner of West Palm Beach home.

Interest, Activity Ramps Up For Investors Buying Deeds To Underwater Homes For Small Cash Outlays

In St. Petersburg, Florida, ABC News reports:

  • At the Hillsborough County, Fla., courthouse bidders line up twice a day to buy distressed properties, including homeowner association foreclosures. HOAs foreclose on homes after the owner fails to pay association fees.

  • The HOA foreclosures are attracting investors who often take temporary ownership of the property and rent it out until the bank gets around to foreclosing on its mortgage. One group of investors has purchased 71 properties valued at $8.2 million for $220,000, according to the St. Petersburg Times. The group's big purchase this year: A four-bedroom bay-front home in Apollo Beach, Fla., valued at nearly $1.2 million sold for $10,010 to FYM Inc.


  • Investors purchase the deed or title to the property and are able to rent the property until the lender forecloses, which can take up to two to three years. In the meantime, investors are able to recoup the price paid to the HOA and make a profit, sometimes in a matter of months. The story was first reported in the St. Petersburg Times.(1)

For more, see Investors Purchase $1.2 Million Home for $10K.

(1) Some real estate brokerages have also begun offering their own "Cash For Keys" programs in search of underwater homeowners willing to sign over the deed to their homes and give the buyer immediate possession in exchange for a couple of thousand bucks. See e.g. CASH FOR KEYS OF YOUR HOME - Even if you Owe More Than It’s Worth!:

  • "Why let your property go to foreclosure auction and have the bank take possession of your property? With our Cash for Keys program you will get paid to sell your property to a buyer who will work with the bank and lien holders to settle via cash payment(s), all debts related to the home."

Gulf War Vet Kicked Out Of Home & Living In His Car After Foreclosure Told To Move Back In After Discovery Of Robosigned Paperwork

In Dayton, Ohio, WDTN-TV Channel 2 reports:

  • Eddie Miller fought for his country in the Gulf War, but now he's battling just to keep his home. "When you're in a position that you're losing everything, you have a feeling that it's your fault, that you've done something wrong," Miller says. Miller was kicked out of his home and lived out of his car for a month until those at Miami Valley Fair Housing discovered that his foreclosure case involved a practice known as robo-signing.

  • Robo-signing is when a someone signs off on a foreclosure without reviewing it first, or when someone forges a signature to approve a foreclosure.

  • Miami Valley Fair Housing has since helped Miller move back into his home. "It's a wonderful feeling to have your house again and to know someone is there to help you with it," Miller says.


  • Miller may be back in his home, but he's not sure if he'll be able to keep it. He's still trying to work out a deal with the bank.

For more, see Robo-signing their lives away.

Thursday, August 18, 2011

Indiana AG Lawsuit: Fla. Attorney-Owned Loan Modification Outfit Failed To Register Bond While Stiffing 22 Hoosiers Out Of Loan Modification Refunds

In Hendricks County, Indiana, The Indianapolis Star reports:

  • Indiana Attorney General Greg Zoeller on Wednesday filed a lawsuit against a Florida-based mortgage foreclosure assistance company he says operated illegally in 15 counties.(1)

  • The lawsuit filed in Hendricks County alleges the company -- which goes by several names, including Legal Home Loan Solutions and Federal Home Loan Solutions -- did not give refunds to 22 Indiana residents after failing to provide services for them.

  • The companies collected thousands of dollars from homeowners before any services were provided and did not register a required bond with the attorney general's office before setting up shop in Indiana, the lawsuit alleges.

  • Several other laws also were violated, according to the lawsuit, including one that requires foreclosure assistance companies to notify homeowners of various legal rights or the availability of nonprofit credit counseling.

  • Florida attorney Thomas C. Matevia is named as the owner of the companies. Phone numbers listed for the companies and for Matevia were not in service Wednesday.

For more, see State attorney general sues foreclosure-aid company (Florida concern violated laws, lawsuit alleges).

(1) See:

Pair Gets 90 Days For Running Upfront Fee Loan Modification Swindle; Unauthorized Practice Of Law Conviction Tacked On To Ex-Lawyer's Rap Sheet

In Santa Clara County, California, the Morgan Hill Times reports:

  • Two real estate foreclosure consultants convicted of defrauding 14 people, including some from Morgan Hill, were sentenced to 90 days in jail, according to the Santa Clara County district attorney's office.

  • Cary Jay Silberman, 53 of San Jose, and Robert Francis Childs, 44 of Dublin, were each convicted of one felony count of foreclosure consultant fraud, a press release from the D.A.'s office said. Silberman was additionally convicted on a misdemeanor count of unauthorized practice of law.

  • The defendants were sentenced Aug. 5 in Santa Clara County Superior Court, authorities said. In addition to 90 days in Santa Clara County Jail, they were sentenced to three years probation and full restitution to the victims. Silberman paid $16,745 and Childs paid $23,345 to a total of 14 victims.


  • Silberman operated a business called "Loan Deal," which sold loan modification services, and held himself out as a lawyer despite having resigned from the California State Bar in 1997, the D.A.'s office press release said.


  • The foreclosure fraud case was investigated by the D.A.'s Office real estate fraud unit and the San Jose Police Department. The D.A.'s Office advises homeowners to never pay an advance fee for loan modifications.

  • The Foreclosure Consultants Act makes it a crime for anyone, even an attorney or real estate agent, to collect advance fees to perform loan modification services on a mortgage secured by the borrower's primary residence, the press release said.

For the story, see Consultants sentenced for scamming MH residents.

St. Louis Feds Pinch Local Woman For Allegedly Running Loan Modification Foreclosure Rescue Ripoff Targeting Hawaiian Homeowners

In St. Louis, Missouri, KMOX NewsRadio 1120 AM reports:

  • The United States Attorney’s Office announced [] that Marien Brown allegedly falsely represented that she operated a “mortgage rescue” or “foreclosure rescue” service. According to the indictment, Marien Brown, a/k/a Marien White, owned and operated both 1st Financial Resource, LLC, (First Financial) and 1st Federal Resource, LLC, (First Federal). [...] She registered the business as 1939 Wentzville Parkway, Suite 178,Wentzville, Missouri, which is actually a UPS store which provides commercial mailbox services. She actually allegedly conducted the business from her residence on Ivy Brook Court in Wentzville.

  • The indictment alleges that she researched and identified groups of homeowners in the state of Hawaii that were one or more mortgage payments behind, or were in imminent risk of home foreclosure then targeted that group of vulnerable home owners, and sent out a large number of unsolicited mailings to prospective clients representing that she operated a “mortgage rescue” or foreclosure rescue” service.

  • More than eighty clients responded to her mailings and wired funds to First Financial and to First Federal. Marien Brown converted these funds to her own use. None of the client funds were ever sent to lenders.

For more, see Wentzville Woman Indicted For Credit Repair Scam.

Boston Feds Pinch Four Floridians Accused Of Ripping Off Homeowners Through Upfront Fee Loan Modification Racket

In Boston, Massachusetts, The Palm Beach Post reports:

  • Four Palm Beach County men were arrested [] after federal investigators said their loan modification company - called HOPE - took $3 million from thousands of homeowners facing foreclosure. The men are Christopher S. Godfrey, 42, of Delray Beach, Dennis Fischer, 40, of Highland Beach, Vernell Burris Jr., 51 of Boynton Beach and Brian M. Kelly, 34 of Boca Raton.

  • A 20-count indictment unsealed [] in federal court in Boston alleges that between January 2009 and May 2011, the company contacted struggling borrowers and falsely stated they had a 98 percent success rate in obtaining loan modifications. According to the indictment, an upfront fee of between $400 and $900 was charged for the company's services.

  • But in exchange for the fee, the company would send homeowners an application package nearly identical to what is available for free online from the federal Home Affordable Modification Program. The HOPE acronym is also widely used by the federal program and the indictment says the company wrongly used the government seal to mislead homeowners.

For more, see Four Palm Beach County men indicted in Mass. in alleged loan modification scheme.

State Regulator Fines Miami Loan Modification Outfit $60K For Operating Without License

The South Florida Business Journal reports:

  • The owner of the Foreclosure Center in Miami agreed to pay a $60,000 fine after state regulators caught her performing loan modifications without a license. The Florida Office of Financial Regulation issued the order to “cease and desist with sanctions” against Yusmila Castellanos and the Foreclosure Center on Tuesday. It stems from an administrative complaint the OFR filed against them in February.

  • Even though Castellanos did not have a mortgage broker license, an OFR examination of her business in August 2010 found that it originated 51 loan modification files that year and two in 2009. The company collected about $57,000 from its clients. The Foreclosure Center has since closed.

Source: Foreclosure Center owner fined for unlicensed loan modification.

NJ AG Seeks Cash, Issues C&D Order Against Seven Loan Modification Outfits Over Unlicensed Activity

From the Office of the New Jersey Attorney General:

  • Continuing the State’s on-going efforts to thwart fraudulent “mortgage loan modification” enterprises, Attorney General Paula T. Dow and the State Division of Consumer Affairs filed administrative actions against seven businesses(1) for illegally offering mortgage modification services to homeowners in dire financial straits. State law requires that anyone providing these services in New Jersey be licensed as a Debt Adjuster by the Department of Banking and Insurance, or be otherwise authorized.

  • The Division of Consumer Affairs filed Notices of Violation against the illegitimate businesses, which offered mortgage loan modification services even though they were not licensed to do so in New Jersey. The State is seeking $35,000 in civil penalties and $49,434 in consumer restitution from the companies. The amounts sought in consumer restitution represent the fees paid by approximately 10 consumers for mortgage loan modification services.

  • The Notices of Violation also provide that the companies, cited for violating the state’s Consumer Fraud Act and Debt Adjustment and Credit Counseling Act, must cease and desist from offering debt adjustment services. The companies have the option of contesting the Notice of Violation and requesting a hearing.

For the NJ AG press release, see New Jersey Division of Consumer Affairs Takes Action Against Seven Illegal “Mortgage Loan Modification” Providers and Seek Restitution for Consumers.

(1) The seven companies served with a Notice of Violation are:

  • Dunwell Financial Services, LLC - Jersey City,
  • Home Mitigation Group - Matawan,
  • Loss Mitigation Consultant Services - Paulsboro,
  • Rose MM, LLC - Newark,
  • Save Americas Mortgages Corp. - Fort Lee,
  • TWI Corp. - Winter Garden, Fla.
  • Continental Associates, Ltd. - Commack, N.Y.

Bankster Stiffs Another Victim: Uses Loan Mod Lure To Get Struggling Homeowner To Empty Bank Account, Then Denies Permanent Payment Workout Anyway

In Rush City, Minnesota, the Minneapolis Star Tribune reports:

  • When Mardee Jerde's bank threatened to foreclose on her house if she didn't immediately make up nearly $50,000 in overdue mortgage payments last year, she paid up -- even though it left her virtually penniless.

  • Two days after J.P. Morgan Chase acknowledged receipt of Jerde's $49,825 money order, however, the bank told her she didn't qualify for the one thing that would have made it possible for Jerde to remain in her home in Rush City, Minn.: a permanent loan modification.

  • Jerde said she feels betrayed by the banking giant. She said she did everything demanded by Chase, including making partial mortgage payments for 11 months after a car accident left her unable to work. To satisfy the bank, she wound up using the entire settlement she won from her lawsuit over the crash.

  • "If I had known that [the bank would foreclose anyway], I never would have sent that money," said Jerde, 68. "I would have been out of my mind. That was given to me to live on. Now I have nothing."

For more, see $49,825 didn't satisfy lender (Homeowner emptied bank account for her house, but it wasn't enough to stop Chase from foreclosing).

Wednesday, August 17, 2011

Minn. Regulator: Loan Mod Racket Clipped Dozens Out Of $360K In Upfront Fees, Then Stiffed Them Out Of Refunds For Promised But Undelivered Services

From the Minnesota Department of Commerce:

  • The Minnesota Department of Commerce has charged Eden Prairie-based Modify My Loan US, LLC, its owners and principals with allegedly defrauding approximately 200 homeowners, mostly from Minnesota, charging them a collective $362,203 in advance fees.

  • The company, which began operations in Minnesota without a license, also allegedly used false advertising, failed to disclose to customers its precarious financial condition, charged customers fees for loan modification services which were ultimately not provided, and failed to make promised refunds.

  • According to the department, Modify My Loan US, LLC (MML) charged many Minnesota consumers advance fees ranging from $2,000 to $2,950 for loan modification services, even though the company's contracts with those customers promised no such fees would be charged. Roughly 200 homeowners paid a collective $362,203 in fees.

For the Minnesota Department of Commerce press release, see Commerce Charges Loan Modification Firm with Scamming 200 Homeowners Out of $362,000.

Fair Housing Group Effectively Employs Use Of 'Testers' In Undercover Loan Modification Scam Project

A recent report from the National Fair Housing Alliance reports the results of a recent investigation conducted(1) into the tactics of upfront fee loan modification scam artists. The evidence gathered by this project documents, obtained through the use of "testers" who contacted the loan modification rackets inquiring of the services offered, details the devious practices that appear to be common to many mortgage scammers.

For the report, see Have I Got a Deal for You! An Undercover Investigation of Mortgage Loan Modification Scams.

(1) The investigation was a joint project of the:

Recent Foreclosure Fraud Mess At Florida AG's Office Gets Messier

The Florida Times Union reports:

  • An assistant attorney general in the Tampa Economic Crimes Division has resigned the day after he wrote a 16-page memo criticizing the department. Andrew Bennett Spark said he didn't want to comment any further, but did acknowledge that he resigned on Wednesday.

  • Tuesday, he sent a memo to the state's media outlining a handful of complaints of the Economic Crimes Division. He said that an investigation into what he considered false advertising by a car dealer was cut short because the car dealer's attorney, Robert Shimberg, was on Attorney General Pam Bondi's transition team. The department would not open an investigation into a fitness chain, he said, because it was also represented by Shimberg.

  • Spark also complained that the department made it more difficult for him to investigate ProVest, a process server that has been the subject of a number of complaints in connection to foreclosures. Spark said he inherited the ProVest case when June Clarkson and Theresa Edwards were fired as the attorney general's lead investigators into foreclosure fraud.


  • [According to a statement from Florida AG Pam Bondi,] "Yesterday, we attempted to place Spark on administrative leave while the inspector general investigated the public dissemination of information on active investigations; however, before we could do so, he resigned."

For more, see Assistant attorney general resigns after blasting Tampa department.

See also, The Palm Beach Post: Assistant attorney general resigns after memo blasting Florida AG's office.

Florida Lawmakers Look To Jam Revolving Door Between State AG Office & Outfits Under Investigation

In Tallahassee, Florida, Sunshine State News reports:

  • A trio of Democratic state lawmakers say they'll file legislation to prevent lawyers who leave the attorney general's office or certain other agencies from going to work for a company that had been under investigation while they were there.

  • The move is in response to one former lawyer in the attorney general's office having done that, but there are at least two other lawyers who worked for the office who also worked for some of the foreclosure-related law firms and services companies that have been under investigation by the state.


  • In May, Joe Jacquot, who had worked on McCollum's leadership team, left the AG's office, now headed by new Attorney General Pam Bondi, and went to work for Lender Processing Services as a vice president of government affairs.

  • The bill was written primarily because of press reports about Jacquot, but he isn't the only lawyer who has made such a move.

  • In June, Mary Leontakianakos, who had headed up the economic crimes division under McCollum that oversaw the mortgage probe and left in January with the change in administrations, took a job with Marshall Watson. Leontakianakos, who had worked in the AG's office since 1992, had even been quoted in news reports when McCollum's office announced it was going after Marshall Watson.

  • And back in April, Bondi fired an assistant attorney general named Erin Cullaro, who also worked in the economic crimes unit and had previously worked for another of the firms the office investigated, Florida Default Law Group.


  • Jacquot didn't respond to a request for comment, nor did LPS. The mortgage news site HousingWire reported recently that Jacquot had recused himself last year from the LPS investigation, though it's not clear why.

For more, see Bill Aims to Close Revolving Door Between AG, Probed Companies.

Another High-Ranking Florida AG Official Flees To Join Foreclosure Mill; Joins Ex-Broward County Chief Judge As Recent Sweatshop Hires

The Palm Beach Post reports:

  • The former Economic Crimes Division director for the Florida Attorney General's office was hired this summer by a Fort Lauderdale law firm previously under investigation by the office for its foreclosure practices.

  • Mary Leontakianakos resigned from the attorney general's office in December with a Jan. 3 effective date. She joined the Law Offices of Marshall C. Watson in June. Marshall C. Watson was one of the original firms to be investigated in an inquiry started in August by former attorney general Bill McCollum. The firm, admitting no wrongdoing, settled with the state in March for $2 million.

  • The move by Leontakianakos was pointed out in a 16-page memo written by Andrew Bennett Spark, an assistant attorney general in the Tampa office of economic crimes.

  • Spark's memo, which he emailed to media outlets Tuesday, lists several concerns he has with the attorney general's office. He said he was motivated to write the memo by the publicity surrounding the forced resignations of former state foreclosure investigators Theresa Edwards and June Clarkson. He also mentions the June hiring of former deputy attorney general Joe Jacquot by Lender Processing Services, which is also under state investigation.

  • "The people of the State of Florida are entitled to fair and honest government, independent of personal connections and powerful interests," wrote Spark, who has worked for the attorney general for about seven years and is the subject of an internal investigation regarding possible misuse of office equipment to conduct personal business.

  • In May, former Broward County Chief Judge Victor Tobin announced he was resigning from the bench to work for the Law Offices of Marshall C. Watson. Tobin said his role at the firm was to be mostly supervisory, making sure appropriate practices are followed.(1)

For more, see Former state investigator takes job at foreclosure firm under office's investigation.

In a related story, see Sunshine State News: Bill Aims to Close Revolving Door Between AG, Probed Companies.

(1) Could it be that the generosity recently shown to those in (or running for) government positions by foreclosure mills/sweatshops is nothing more than payoffs masquerading as:

  • Political contributions?
  • Future lucrative employment opportunities?

Million$ In Political Payoff$ Passed Around In Effort To Paralyze Probe Into Banksters' Polluted Foreclosure Paperwork

The Center for Public Integrity's iWatch News reports:

  • As the financial markets roil, one of the critical factors weighing down the U.S. economy is the flood of home foreclosures. Thursday's crash underscores how difficult it will be for the economy to make significant strides while the housing market is still in tatters.

  • The pace of the housing market recovery may depend in part on the outcome of intense negotiations underway among state and federal authorities and the nation’s five largest mortgage servicers.

  • Government officials are negotiating with the firms — Bank of America, JP Morgan Chase & Co., Citigroup, Wells Fargo & Co. and Ally Financial Inc. — over allegations of widespread abuses in the foreclosure process. State attorneys general around the country have been investigating evidence that the big banks used falsified documentation to process foreclosures.

  • Four of the five companies under scrutiny—Bank of America, JP Morgan, Wells Fargo and Citigroup — are major donors for state and federal political campaigns. Between them, they have donated at least $8 million since the start of 2009 to candidates, party committees and other political action committees, according to an iWatch News analysis of campaign finance data.

For more, see As housing crisis festers, mortgage servicers spend $8 million on political contributions.

Tuesday, August 16, 2011

Title Agent Among Trio Copping Guilty Pleas In Refinance Racket That Illegally Diverted Mortgage Proceeds, Leaving Borrowers' Existing Loans Unpaid

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

  • Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, [and a gang of other law enforcement notables] announce [] guilty pleas by defendants Louis Gendason, 42, of Delray Beach, FL; Kimberly Mackey, 46, of Pittsburgh, PA; and John Incandela, 24, Palm Beach, FL.

  • The defendants were charged in a Criminal Information with one count of conspiracy to commit wire fraud, in violation of Title 18, United States Code, Section 1349, for their participation in a $2.5 million Home Equity Conversion Mortgage (a.k.a. reverse mortgage) fraud scheme. The remaining defendant, Marcos Echeverria, is scheduled to appear in court on August 10, 2011.


  • As a [] part of the conspiracy, defendant Kimberly Mackey, a licensed title agent and proprietor of Real Estate One Land Services, Inc. (REO), located in Pittsburgh, Pennsylvania, fraudulently closed the Genworth loans, failing to pay off the borrowers’ existing mortgage loans.

  • Genworth wired the loan proceeds to Mackey as the designated closing agent for 1st Continental. Mackey attempted to conceal the fraudulent loan closings by preparing false HUD-1 settlement documents that showed that the existing mortgages had, in fact, been paid off. Between May 2009 and November 2010, Mackey received loan proceeds from Genworth totaling $2,572,813.19.

  • Mackey fraudulently diverted at least $988,086.33 to a bank account controlled by Incandela and Gendason, who used this money for their personal benefit.

For the U.S. Attorney press release, see Two Loan Officers And A Title Agent Charged In $2.5 Million Reverse Mortgage And Loan Modification Scheme Plead Guilt.

Judge Slams S. Jersey Foreclosure Surplus Snatcher For $675K+ In Ex-Homeowner Ripoff; State AG Vows To Grab Scammer's Assets To Satisfy Court Judgment

From the Office of the New Jersey Attorney General:

  • A Superior Court Judge has determined that a Camden County businessman committed multiple violations of the state’s Consumer Fraud Act (“CFA”) when he misled homeowners in foreclosure into believing that they needed his help in obtaining surplus funds to which they were legally entitled.(1)


  • Filed in Gloucester County, the State’s two-count civil complaint alleged that Samuel E. Goodwin, III, 75, of Gloucester City, charged homeowners up to 65% of the total surplus funds remaining once the foreclosure process was completed. In June 2010, the State filed a Motion for Summary Judgment, which the court granted in part, finding that Goodwin violated the CFA by misrepresenting to consumers that surplus funds could be lost to the State. In March 2011, the State renewed its Motion for Summary Judgment.

  • In its Final Judgment and Order, the court granted the State’s renewed Motion for Summary Judgment:

    Finding that Goodwin engaged in unconscionable commercial practices in violation of the CFA by imposing fees ranging from approximately $5,300 to $56,540 for applying for surplus funds on behalf of consumers;

    Permanently enjoining Goodwin from advertising and otherwise soliciting consumers to submit surplus fund applications;

    Permanently enjoining Goodwin from retaining an attorney to file surplus fund applications on behalf of consumers; and

    Permanently enjoining Goodwin from receiving any monetary payment derived from any application for release of surplus funds

  • Goodwin took advantage of homeowners going through foreclosure, and attempted to enrich himself, by misleading consumers in order to charge outrageous fees,” Attorney General Paula T. Dow said. “We remain vigilant, and are ready to take action, against anyone who attempts to take advantage of homeowners facing foreclosure.”

  • In addition to paying $329,198.08 in restitution to 24 consumers, the court also ordered Goodwin to pay $225,000 in civil penalties to the State, plus $122,998 in reimbursement for the State’s attorneys’ fees and investigative costs.

  • The Final Judgment and Order has been entered as a statewide lien. The Division of Consumer Affairs will continue its efforts to identify any assets that Goodwin may have now, and in the future, to be applied to satisfy the Final Judgment and Order.

  • This defendant stole from the desperate and vulnerable – people suffering from the anguish of losing their homes,” said Thomas R. Calcagni, Director of the State Division of Consumer Affairs. “Our Financial Fraud Unit continues its fight to protect distressed homeowners from financial predation, and we intend to pursue Goodwin and his assets, so restitution is paid to those who were deceived.”

For the NJ AG press release, see Camden County Businessman Ordered to Repay $329,000 to Consumers Whose Homes Were Foreclosed Upon and Sold, Under Settlement with the New Jersey Division of Consumer Affairs.

Go here for Statewide Judgement and Lien.

(1) Surplus funds are the monies remaining after the foreclosure sale takes place and mortgage, tax, and other legal obligations have been paid. In August 2007, when the State Division of Consumer Affairs filed its lawsuit, homeowners in foreclosure could claim surplus funds by filing a simple form available from the Superior Court Trust Fund Unit and after paying nominal fees totaling less than $100. The process for obtaining surplus funds has since changed and the current process provides for a motion for release of surplus funds to be filed by the party named in the judgment of foreclosure with the Office of Foreclosure.

Sacramento Feds Continue Ringing Up Convictions In N. California Foreclosure Sale Bid Rigging Conspiracies

In Sacramento, California, The Modesto Bee reports:

  • A Tracy man on Friday pleaded guilty to conspiring with a group of real estate speculators who agreed not to bid against each other at public foreclosure auctions in San Joaquin County, the U.S. attorney's office in Sacramento reported.

  • Real estate investor Walter Daniel Olmstead, 39, pleaded guilty to federal charges of conspiring to rig bids and commit mail fraud at the real estate foreclosure auctions. Olmstead participated in the scheme from November 2008 to July 2009, according to his plea agreement.

  • "By rigging public auctions of foreclosed properties, the defendants who have pleaded guilty as a result of this investigation illegally manipulated the market for residential real estate," said U.S. Attorney Benjamin Wagner in a news release.

  • The conspiracy's primary purpose was to suppress and restrain competition and to obtain selected real estate at the foreclosure auctions at noncompetitive prices, according to court documents.

  • After the conspirators' designated bidder bought a property at a public auction, the conspirators would hold a private auction where they would bid a higher amount than the public auction price. The conspirator with the highest bid in the private auction got the property.

  • Federal prosecutors said the difference between the price at the public auction and at the private auction was the group's illicit profit. It was divided among the conspirators in payoffs.

  • As of Friday, seven people have pleaded guilty in connection with this investigation: Anthony Ghio, John Vanzetti, Theodore Hutz, Richard Northcutt, Yama Marifat and Gregory Jackson.

For the story, see Guilty plea in San Joaquin real estate fraud case.

NYC Non-Profit Law Firm Recognized In Local Battle Against 'Sewer Service,' Sleazy Process Servers

From the New York City-based non-profit law firm MFY Legal Services:

  • Clearinghouse Review: Journal of Poverty Law & Policy’s recent article, Public Interest Lawyers Are Key in Passage of Landmark Legislation to Stem “Sewer Service” in New York City shows how MFY’s groundbreaking report, “Justice Disserved,” was a critical step in raising awareness of the extent and disastrous consequences of “sewer service.”

For more, see Public Interest Lawyers Are Key in Passage of Landmark Legislation to Stem “Sewer Service” in New York City.

For the MFY Legal Services press release, see MFY’s Battle Against “Sewer Service”.

Criminal, Civil Charges Brought In Vacant Home Hijacking Scam; NC AG: Phony Deeds, Bogus Liens "Filled With Gibberish ... A Fraud On The Whole System"

In Raleigh, North Carolina, WRAL-TV reports:

  • The state Attorney General’s office is investigating a Wake County property deed scam ring(1) after authorities arrested a Raleigh man Tuesday who they say squatted at a foreclosed home [...] for more than a month. Shawn Adrian Pendergraft, 39, [...] faces breaking and entering, obtaining property by false pretenses and second-degree trespassing charges. He is being held in the Wake County jail under a $170,000 bond.

  • No one else has been charged, but Attorney General Roy Cooper says Pendergraft and five others(2) filed fraudulent paperwork to transfer foreclosed homes into their names and then set up bogus land trusts to place more than $1 million in property liens on the homes.

  • It’s a very bizarre occurrence,” Cooper said. “These people go in and file bogus liens on properties. They file bogus deeds to themselves.”

  • The liens, Cooper said in a news release, were “filled with phony legal language lifted from the Internet and designed to intimidate the true property owners and potential buyers into thinking that the property couldn’t be sold without paying the phony lien.”

For more, see One charged, five investigated in Wake County squatting scheme.

For the North Carolina AG press release, see AG unravels bogus property deed scam in Wake County (Scammers used fraudulent deeds, liens to try to claim foreclosed homes):

  • Pretending that you can own a home just by filing phony paperwork filled with gibberish is an insult to honest homeowners and a fraud on the whole system,” Cooper said.

(1) In addition to the criminal charges, the North Carolina AG has filed a civil lawsuit against this racket. See State of North Carolina v. Pendergraft, et al.:

(2) According to the story, at Cooper’s request, Wake County Superior Court Judge Henry W. Hight Jr. granted a temporary restraining order against the following allegedly phony land trusts:

  • Natural International Land Trust, ONCE International Land Trust and Nu Vision International Trust,

and the individuals believed to be behind them:

  • Shawn Adrian Pendergraft, Nathaniel John Church, Don Cornelius McCullers, Malandie Terrell Winston, Montreal Lee White and Lawrence Christopher White.

Monday, August 15, 2011

Fannie Mae To Banksters: OK To Continue Screwing Over Homeowners With Controversial 'Dual-Tracking' Loan Modification Racket

The South Florida Sun Sentinel reports:

  • Many South Florida homeowners facing foreclosure may believe getting a preliminary loan modification offer from their lender will save them from losing their home. But, in fact, new rules approved by Fannie Mae allow lenders to continue foreclosure proceedings on those who haven't made a mortgage payment in more than 120 days.

  • Those homeowners are safe only when they go back to regularly paying their mortgage, which typically happens only after a permanent loan modification is in place.

  • In June, Fannie Mae, which backs many mortgages in South Florida and across the country, ordered lenders not to start foreclosures on homeowners who are less than 120 days behind. Instead, lenders must offer loan modifications or other solutions.

  • But that's not the case for those who are at least four months behind in their payments. Lenders can continue with the controversial "dual tracking" for them, so struggling owners can be paying in a trial modification program while going to court to fend off foreclosure.

For more, see Under new rules, loan modification won't protect you from foreclosure.

Confidential Relationships, Statute Of Limitations & Sale Leaseback Peddler's Effort To Snatch Financially Strapped Couple's Home Equity

The following facts have been extracted from a recent ruling by the Kentucky Court of Appeals:

  1. Homeowners, hubby and wife, found themselves facing foreclosure.

  2. An evangelical preacher and his wife approach homeowners and talk them into a sale leaseback (the parties actually used a land sale contract (ie. contract/agreement for deed) rather than an actual leaseback) deal to save the home from foreclosure, with preacher's wife buying the home.

  3. On August 30, 2001, the parties consummate the deal, with the transaction yielding net cash proceeds for homeowners, which represented their equity in the property, of $22,581.

  4. As part of the deal, the check for said amount was endorsed by homeowner back to the preacher, with the understanding that the preacher would credit homeowner with said amount upon the repurchase of the premises.

  5. In November of 2001, homeowner-wife passes away.

  6. Subsequent thereto, preacher provided grief counseling sessions to homeowner-hubby after the loss of his wife.

  7. On November 7, 2002, after making installment payments to preacher throughout the next year in accordance with the land sale contract, homeowner-hubby repurchased the home with a mortgage brokered by preacher and preacher's wife.

  8. In consummating the buyback of the home, somebody apparently 'forgot' to credit the probably still-grieving homeowner-hubby for the $22,581 equity check that he endorsed back to preacher and his wife upon the closing of the initial deal on August 30, 2001.

  9. This oversight went undetected by homeowner-hubby at the November 7, 2002 closing.

  10. In October 2007, almost five years later, homeowner-hubby was attempting to refinance the home when he discovered that the $22,581 equity check he had endorsed back to preacher and wife had never been credited toward his repurchase of the home.

  11. Homeowner-hubby thereafter retained counsel and, on October 29, 2007, sued preacher, his wife and their company, alleging fraud.

  12. Rather than giving back the money rightfully belonging to homeowner-hubby, preacher and wife decided it would be better for them to simply keep the cash, and file a motion to dismiss the lawsuit, arguing that homeowner-hubby waited too long to ask for his money back, and asserting his claim was barred by the applicable Kentucky statute of limitations, which requires an action for relief or damages on the ground of fraud or mistake to be commenced within five years after the cause of action accrued, which, as far as preacher & wife were concerned, was August 30, 2001, the date of the initial deal.

  13. Because homeowner-hubby's suit was not filed until October 29, 2007 (over 6 years after the date of the initial deal) the applicable 5-year statute of limitations had expired as far as preacher & wife were concerned.

Question: Was preacher and wife entitled to keep the $22,581 that rightfully belonged to homeowner-hubby on the grounds of an expired statute of limitations?

Answer: No.

In reaching this conclusion (and affirming a lower court ruling reaching this result), the Kentucky Court of Appeals appears to take a 'belt and suspenders' approach in ruling favorably for homeowner-hubby.

  1. First, the appeals court agreed with the trial court's ruling that found that there existed a confidential relationship between homeowner-hubby and preacher, and accordingly (and pursuant to Kentucky state law), the statute of limitations did not begin to run until the date homeowner-hubby actually discovered the fraud (generally, the limitations period begins to run on the date the fraud took place ).(1)

    Regarding this point, the court made the following observation (bold text is my emphasis):

    "In this case, it was the Emersons who first approached Robertson about helping him and his wife to avoid foreclosure.

    Further, during the course of the transactions between the parties, Mr. Emerson, who was an evangelical preacher, provided grief counseling sessions to Robertson after the loss of his wife.

    As such, we are of the opinion that sufficient evidence was presented that a confidential relationship existed between the parties, and therefore, actual notice rather than constructive notice of the fraud was necessary.

    Consequently, the trial court properly found that the statute of limitations was tolled until Robertson's actual discovery of the fraud in 2007

  2. After agreeing with the trial court that the statute of limitations was properly tolled, the appeals court then went on to say that the actual date of the fraud suffered by homeowner-hubby was not the date of the initial deal (August 31, 2001), but was the date of the second deal (November 7, 2002), the date the 'oversight' in properly crediting homeowner-hubby with the $22,581 took place). Therefore, the filing date of the lawsuit (October 29, 2007) beat the expiring statute of limitations by nine days (November 7, 2007). Accordigly, the appeals court found that the lawsuit was filed before the expiration of the statute of limitations.

(It seems to me that either of these two rationales, standing alone, would have been sufficient to sustain the lower court ruling.)

For the ruling, see First Fidelity Mortgage, Inc. v. Robertson, No. 2010-CA-000990-MR (Ky. App. August 5, 2011).

(1) The appeals court discussed the applicable Kentucky law on the commencement of the applicable state statute of limitations below (bold text is my emphasis):

  • KRS 413.120(12) provides, "The following actions shall be commenced within five (5) years after the cause of action accrued: . . . (12) an action for relief or damages on the ground of fraud or mistake."

    The general rule is that an action "accrues" on the date of injury, and the limitations period begins to toll from that date. Caudill v. Arnett, 481 S.W.2d 668, 696 (Ky. App. 1972).

    Nevertheless, where it would not have been reasonable for the plaintiff to have discovered the injury on the actual date the fraud was perpetrated, the limitations period does not begin to toll until the date that the fraud was discovered or, through the exercise of reasonable diligence, should have been discovered.

    KRS 413.130(3); Hernandez v. Daniel, 471 S.W.2d 25, 26 (Ky. 1971). KRS 413.130(3) is only available where the plaintiff is able to demonstrate why the fraudulent act could not, through reasonable diligence, have been discovered sooner. McCoy v. Arena, 295 Ky. 403, 174 S.W.2d 726, 729 (1943).

    While the statute requires a plaintiff to meet a "reasonable diligence" test, Kentucky Courts have interpreted this demonstration rather expansively in certain circumstances. In Shelton v. Clifton, 746 S.W.2d 414, 415 (Ky. App. 1988), a panel of this Court noted:

    The courts have been willing to interpret this rule expansively when the "discovery" of fraud involved a fraud between persons in a confidential relationship.

    "When a confidential relationship exists between the parties . . . the statute does not begin to run until actual discovery of the fraud or mistake. Constructive notice such as the recordation of the instrument containing the mistake [or fraud] is not sufficient to commence the operation of the statute." Hernandez v. Daniel, 471 S.W.2d 25, 26 (Ky. 1971).

    The explanation for the actual notice is that, "[p]ersons in a confidential relationship do not have the reasons or occasions to check upon (sic) each other that would exist if they were dealing at arms length." McMurray v. McMurray, 410 S.W.2d 139, 142 (Ky. 1966).

Washington AG: BofA Affililiate Conducted Foreclosure Auctions In Non-Public Places, Used Mechanically-Reproduced Robo-Signatures, Notarizations, Etc.

Among the recent charges in a 'faulty foreclosure' lawsuit recently brought by the Washington State Attorney General against foreclosure trustee and Bank of America affiliate, ReconTrust, are (at paragraph 5.7 of the lawsuit):

  • a) Failing to maintain a physical presence with telephone service at that address,

    b) Failing to identify the actual owner of the Promissory Note in the Notice of Default,

    c) Failing to obtain proof that the beneficiary is the owner of the promissory note secured by the deed of trust,

    d) Failing to clearly and conspicuously identify in the Notice of Trustee's Sale the defaults, other than non-payments, that entitle the beneficiary to foreclose and which may be cured by the borrower. Instead, ReconTrust Notices identify every possible default and demand those defaults be cured whether those defaults have actually occurred or not,

    e) Conducting foreclosure sales in non-public places such as the garage of a private office building and a hotel ballroom;

    f) Creating or using documents essential to a valid trustee's sale, or to a reconveyance of the deed of trust, that are improperly executed, notarized or sworn to, including:

    i) documents that were not signed in front of a notary,

    ii) documents that had both the signature and notarization applied mechanically while claiming that the signatory personally appeared before the notary,

    iii) using signatories who simultaneously claim to be officers of the beneficiary, of MERS, and of a servicer, all while actuallybeing employees of ReconTrust [ie. multiple corporate hat-wearing officers], and

    iv) executing documents without direct knowledge of the facts contained therein.

    g) Conducting joint prosecution and/or defense of legal claims with the beneficiary or its agent on matters related to its duty of good faith to the borrower.

For the lawsuit, see State of Washington v. ReconTrust Company, N.A. (King County Superior Court No. 11-2-26867-5).

Infirm Elderly Iowa Homeowner Scores Win In Effort To Undo Home Equity Ripoff Perpetrated By Daughter's POA Abuse

A recent ruling from the Iowa Court of Appeals may provide some guidance (and ammunition, possibly) for those seeking to undo a fraudulent home equity ripoff involving an elderly victim whose mental stability is questionable, and particularly where the ripoff was perpetrated by a close family member purportedly acting under authority of a power of attorney.

The three issues addressed in this case were:

  1. The competency of the elderly victim to execute the documents that began her nightmare, and any right that the business community may have to rely on the legal capacity of adult persons who have not been adjudged incompetent without any further investigation;

  2. The applicability of the Iowa homestead exemption, whether any waiver of rights pursuant thereto was executed, whether the homestead could be deemed abandoned where an infirm victim needs to vacate because he or she needs care not available in his or her home, and what effect the timing of any abandonment can have on an earlier-executed mortgage; and

  3. The use of a Power of Attorney by an unscrupulous perpetrator to effecuate the ripoff.

The bottom line here was that a ripoff perpetrated by the sole adult daughter of an elderly, infirm homeowner was partially undone, and remanded back to the trial court to further develop the facts that could ultimately lead to the dubious deal being undone completely.

Regrettably, this case also serves as one more reminder that, winning and losing in court often depends, not only on the merits, but also on the skill and tenacity of counsel advocating on behalf of his or her client, including counsel's willingness to challenge an adverse trial court ruling by filing an appeal. The elderly victim here had earlier lost her battle in the trial court, and it took the filing of an appeal (and all the additional litigation that entails) to afford an appellate court an opportunity to review and reverse a lower court ruling on the above-referenced legal issues. Without the filing of the appeal, the elderly victim would have improperly gotten the boot from her home.

For the ruling, see Citizens State Bank v. Ruebel, No. 1-090/10-1028 (Iowa App. July 27, 2011).

Representing the homeowner was Jerrold Wanek of Garten & Wanek and Robert Gainer, Des Moines, Iowa.

Law Student's Winning Argument Marks Another Big Foreclosure Win In Bay State High Court For Harvard Legal Clinics

From Harvard Law School:

  • In the latest victory for the HLS Clinical Programs’ anti-foreclosure work, the Massachusetts Supreme Judicial Court ruled on Aug. 4 against lenders in a case argued by Harvard Legal Aid Bureau student Jennifer Tarr ’11.

  • In a 6-0 ruling, the state’s high court agreed with Tarr that lenders trying to evict someone after foreclosure carry the burden of proving the foreclosure was valid. It also held that the state housing court has jurisdiction to hear a challenge to an already-completed foreclosure when the challenge is brought in an eviction case. (See stories in the Boston Globe and

  • The SJC's decision represents a huge victory for the Bureau and housing advocates throughout Massachusetts,” said David Williams ’12, president of the Harvard Legal Aid Bureau (HLAB), which for several years has been aggressively fighting foreclosures in Boston through its Foreclosure Task Force and Project No One Leaves.(1)Because of Jen's successful advocacy, the Foreclosure Task Force will be able to continue the fight against foreclosures in Boston Housing Court."
  • The case has implications for anyone in Massachusetts living in a home that has been foreclosed on, [HLAB deputy director Esme] Caramello said. “It clarifies that those people can have their story heard before the housing court or whatever court is hearing the eviction case, and they can’t be evicted unless the bank can prove a valid foreclosure,” she said.
  • The Bailey case builds on another major win by the HLS clinics in the SJC last January, when the high court found that Wells Fargo and US Bancorp had wrongly foreclosed on two homes because the banks could not prove that they owned the mortgages at the time of the foreclosure sales.(2) Max Weinstein, a clinical instructor in the predatory lending practice at the HLS Wilmer Hale Legal Services Center, was co-counsel in the case, representing one of the mortgagers, Antonio Ibanez. The court’s decision received national attention.
For the story, see HLAB Wins Major Victory for Homeowners in Massachusetts High Court.

(1) See ‘Project No One Leaves’ keeps people in their homes:
  • [H]arvard Law students are racking up numerous victories, including the almost-unprecedented result of getting banks to reduce the principal amount on mortgages.
  • Students have also negotiated a string of five-figure and higher settlements against banks that don’t keep properties in good condition for tenants who live there, and in 2008, two students won a $54,000 jury verdict against the Bank of New York for turning off heat and water in a tenant’s home to try to force him out.
(2) See:

Victim Of Sale Leaseback Equity Stripping Racket Gets Reprieve As NJ Appeals Court Nixes Note-Lacking Lender's Foreclosure Action, Vacates Sale

The Star Ledger reports:

  • A New Jersey foreclosure by Deutsche Bank was overturned by a state appellate court panel yesterday because the bank could not show it possessed a debt note for the house when it moved to foreclose in 2008.

  • The case could impact the prospects of many state foreclosure cases, according to Peggy Jurow, a senior attorney for Legal Service[s] of New Jersey(1) who deals with foreclosure and predatory lending cases. "What today’s case does is say that the lender has to have had the assignment of mortgage and possession of the (loan) note before it files a foreclosure action," Jurow said yesterday. "They can’t fix up that sort of paperwork problem afterwards. They have to dismiss the case and start again."

  • In the case, Jacqueline Bethea said her two-family home in Plainfield was bought out by Elite Financial Services(1) with the promise that she could remain in her home.

  • Elite Financial Services sold Bethea’s property to a third party who got a new mortgage from Long Beach Mortgage Company. Eventually, the debt note and the mortgage backing it was transferred to Deutsche Bank.

  • The immediate result of the decision is Deutsche Bank must go back to court and prove it has the note for the debt before it can foreclose again, Jurow said. But she said the appellate court’s decision could have implications for other foreclosure cases in the state. As of May, the number of foreclosures filed in state Superior Court had reached about 62,000.

  • "Bethea could have been any homeowner," Jurow said. "In the vast majority of cases, stuff like this goes on. The paperwork is sort of an afterthought, and that’s what I think you see in this."

Source: Deutsche Bank foreclosure sale overturned by N.J. appellate court.

For the ruling, see Deutsche Bank National Trust v. Mitchell, Docket No. A-4925-09T3 (App. Div. August 9, 2011) (approved for publication) (if link expires, TRY HERE).

(1) Legal Services of New Jersey coordinates the statewide Legal Services system, which provides free legal assistance to low-income New Jerseyans for their civil legal problems.

(2) Elite Financial Services was a notorious, Northern New Jersey equity stripping foreclosure rescue racket until it found itself in criminal hot water with the Newark Feds. See:

The New Jersey appeals court, in the first entence of its ruling, describes homeowner defendant Jacqueline Bethea as "a victim of a buy-lease-back "mortgage rescue scam[.]"

Sunday, August 14, 2011

Feds' Lawsuit: 'Georgia Attorney's Screw-Up In Prepping Mortgage Document Left Us Holding The Bag On Unenforceable $2.8M Loan'

In Fulton County, Georgia, the ABA Journal reports:

  • A Georgia law firm and one of its partners has been sued for malpractice by the Federal Deposit Insurance Corp. over a bad $2.8 million loan.

  • Because a security deed prepared by Jampol, Schleicher, Jacobs & Papadakis for a 2005 loan closing to an investment company was defective, the FDIC has been unable to foreclose on collateral for the loan, it alleges in a lawsuit filed in federal court in Atlanta, the Fulton County Daily Report reports.

  • The suit contends that the deed incorrectly lists the corporate owner of property used as security for the loan and omitted one of the lots to be used as security from a legal description.

Source: FDIC Sues Law Firm, Says Security Deed Errors in $2.8M Loan Closing Bar Foreclosure.

For the Fulton County Daily Report story, see FDIC Targets Lawyer in Bad Loan Suit.

Goldman Sachs Added To Credit Union Regulator's Hit List Of MBS Peddlers That Unloaded Crappy Paper On Now-Defunct, Federally-Backed Institutions

From a press release from the National Credit Union Administration:

  • The National Credit Union Administration filed suit [Tuesday] in California against New York firm Goldman Sachs & Co. alleging violations of federal and state securities laws, as well as misrepresentations in the sale of securities to now-failed U.S. Central and Western Corporate federal credit unions.


  • This action seeks damages in excess of $491 million from Goldman Sachs, bringing the total sought in the four lawsuits filed to date to nearly $2 billion. NCUA’s new suit against Goldman Sachs claims the sellers and underwriters of the questionable securities made numerous material misrepresentations in the offering documents. These misrepresentations caused the corporate credit unions to believe the risk of loss associated with the investment was minimal, when in fact the risk was substantial.

  • The mortgage-backed securities experienced dramatic, unprecedented declines in value, effectively rendering five corporates insolvent. The combined suits are the culmination of lengthy investigations into the circumstances surrounding the purchases of these securities.

  • This law suit follows three similar legal proceedings, two filed in the Federal District Court of Kansas June 20 against J.P. Morgan Securities, LLC, and RBS Securities, and one in the Federal District Court in Central California also against RBS July 18. Anticipating a total of five to 10 actions, additional lawsuits may follow in order to recover losses from the purchase of securities that caused the failures of five, large wholesale credit unions.(1)

For the press release, see NCUA Files Fourth Suit in String Against Securities Firms to Recover Billions (Recoveries Will Benefit All Federally Insured Credit Unions).

For the lawsuit, see National Credit Union Administration v. Goldman, Sachs & Co. et al.:

(1) Lawsuits by federal regulators against MBS-peddling banksters accusing them of knowingly unloading crappy mortgage-backed investments on federal agencies (e.g. credit unions, Fannie Mae, Freddie Mac) appear to be picking up steam. See:

Title Agent: Some Lenders Cough Up Cash To Clear Title To Foreclosed Homes 'Slandered' By Self-Proclaimed Sovereign Citizen's Recorded 'Wild Deeds'

In Central Florida, the Sarasota Herald Tribune reports:

  • There is an air of mystery surrounding the eight "wild deeds" filed by self-proclaimed sovereign citizen Jacob-Franz Dyck in Sarasota and Manatee counties. All of the deeds, which claim ownership to properties in the name of trusts Dyck controls, were filed after banks already had won foreclosure judgments against the former owners.

  • An Orlando title agent familiar with Dyck's filings across the state suggested the deeds were Dyck's attempts to cloud the title to the properties and force banks to pay him to remove his claim.

  • "Within 90 days of a Certificate of Title(1) being recorded, Mr. Dyck and his 'army' of accomplices create a Warranty Deed transferring title to the property from himself to one of many trusts in which he is the trustee," David Heine, vice president of Orlando-based PCS Title, wrote in a warning letter to clients.

  • "Costs him 70 cents to record, then he waits for someone from a title company, who is trying to close a sale on this same property and issue a title insurance, to send him a letter requesting he sign a quit claim deed to clear title. He agrees. However, it will cost the selling bank $1,500 to $2,000, even though he has no legal right to the property," Heine wrote.

  • The worst part, Heine said, is that banks often pay the money because its cheaper and quicker than having to take Dyck to court for "slandering title."

For more, see Unanswered questions left by Dyck's 'wild deeds'.

(1) 'Certificate of Title' is the term used in the State of Florida to refer to the deed issued by the Clerk of the Court to convey title to property sold pursuant to a court-ordered foreclosure sale.

Bailed-Out Banksters Nix Giving Homeowners Foreclosure Assistance; Prefer Directing Sneaky Efforts, Loot To More Profitable Tax Lien Investing Instead

In Pima County, Arizona, the Arizona Daily Star reports:

  • Banks that took bailout money were supposed to use part of the taxpayer-provided cash infusion to help customers avoid foreclosure, but instead, many of them are buying up struggling homeowners' tax debt.

  • The tax liens earn banks up to 16 percent interest, and if homeowners don't repay their debt within three years the banks can foreclose on their homes. Since the bailout in 2008, major banks have bought nearly 6,000 tax liens in Pima County that total at least $15.8 million.


  • Many banks dabbled in delinquent tax liens before the bailout, but they have ramped up their purchases many-fold since the housing market collapse and bailout money became available.

  • In the two years before the bailout, banks bought about $3.9 million in tax liens at Pima County's annual tax auction. At the last two auctions they bought $10.3 million. Additionally, they bought $4.1 million in liens outside the auction since the bailout.


  • Trusts and limited liability corporations owned by three banks - JPMorgan Chase, Bank of America and BankAtlantic Bancorp - have been the most active in buying tax-lien certificates in Pima County since the bailouts. Together they bought nearly $11 million of tax-lien certificates in the three years since the bailout.

  • In addition, Wells Fargo and US Bank set up private trusts for clients - likely institutional clients such as hedge funds - to buy another $5 million in tax liens here since 2009.

  • BankAtlantic, Bank of America and JPMorgan Chase would not comment for this story. Wells Fargo and US Bank said they bought the liens through a trust set up with money from a third party - so they didn't actually buy the liens, don't own them, didn't make the investment decisions to purchase them and don't profit from them.

  • They do, however, get a fee for managing the trust, which allows their clients to securitize and sell the tax liens to other investors, similar to how banks securitized and sold mortgages during the housing boom.


  • Bank purchases of tax liens have ramped up quietly. Other bidders know banks are involved but don't know exactly who they all are, said Bill Schumacher, who has bought nearly $1 million in tax liens in Pima County since 2009.

  • Most of the liens are purchased through trusts or LLCs that have to be traced through paperwork to banks. Bidders at the auction don't identify who they represent. Schumacher suspects banks really don't want people to know they are buying tax liens. If customer knew they were buying up tax liens after they took bailout money, banks could suffer a public relations hit, he said.


  • Because of the secrecy surrounding bank purchases, bank liens may exceed the nearly $16 million the Star has verified as coming from banks - either from direct purchases or trusts set up for clients.

For more, see Bailed-out banks snap up tax liens (Banks were bailed out by taxpayers, but instead of helping homeowners avoid foreclosure, banks have instead bought up tax liens, sometimes on the same street where they foreclosed on homes).