Saturday, September 3, 2011

Dozens Of NYC Seniors To Get The Boot After Non-Profit's Insider Pulls Off Lucrative Deal In Nursing Home Buyout

In New York City, the New York Post reports:

  • The oldest-running nursing home on the Lower East Side is shutting its doors for good even as residents protest a pricey property deal struck by one of its board members.

  • About 95 seniors are getting the boot from the Bialystoker Center -- a kosher nursing home that many have lived in for over a decade, including Catherine McDonald, a 107-year-old woman from the neighborhood. She and others like Mildred Mondshein, 88, and Annie Green, 85, have to find new digs at nursing homes elsewhere in the city.

  • But the demise of the Bialystoker Center has been a boon for one of its board members -- real-estate magnate Ira Meister picked up a four-story commercial building owned by the nursing home last year in a no-bid insider deal.(1)

  • Meister is the chairman of the Bialystoker board that's charged with keeping the senior center financially sound. But that didn't stop him from buying the commercial property at 232 East Broadway for $1.5 million in an all-cash deal that never was up for bid on the open market.

  • The insider sale infuriated Bialystoker residents, family members and staffers, who only learned of it last month after being told the home is shutting and the Bialystoker building, at 228 East Broadway, is going up for sale.

  • "I was shocked when I heard about it. It's a dirty thing. We're out, the nursing home building is being sold and he winds up with the property next door," said Denise Perez, who visits her grandmother Miguela Candelaria, 88, daily.

  • The Bialystoker board said Meister's purchase was made as a last-ditch effort to help save the nonprofit nursing home, which is $8.5 million in debt and hemorrhaging $100,000 a month, according to board spokeswoman Virginia Lam.

  • Meister plans to lease it to a community group for two years while renovating it, she said. Then he'll move his private real estate company -- Matthew Adam Properties in Midtown -- to the Lower East Side.

  • That news doesn't sit well with the nursing-home seniors being forced to leave. "If I'm not in the Lower East Side, nobody will be able to come visit me," said Green, who wants to stay in the neighborhood where she grew up.

  • The residents are also miffed no local pols spoke up for the fabled Jewish institution, built in 1928 and later a haven for many Holocaust survivors. "I think all the politicians have forgotten us -- they only remember us when it's time to vote," said Mondshein.

Source: Sale rakes in 'old' money (Real-estate meanie to close senior home).

(1) See The Real Deal: Bialystoker nursing center hits market for residential conversion.

Cops: Foreclosed Owners' Home-Trashing Escapade Leaves Them Facing Five Years In Prison; Couple Declined 'Cash for Keys' Offer: Investor

In Tampa, Florida, ABC Action News reports:

  • When real estate investor Jon Spinks walks into a foreclosure property, he is never sure what he'll find. One month ago, he found a big mess. "The house was totally trashed," he said.

  • Photos show the New Tampa house in a gated community littered with trash when the former owners moved out. Deputies say when the married couple took off, they also stripped $10,000 worth of property and took it with them.

  • "All the cabinet doors were missing. Of course, the refrigerator was gone," said Jon Spinks. The ceilings fans, fixtures, bathroom vanities, water heater and more were also missing, according to Spinks.


  • Spinks says he offered the couple cash to leave their keys and the house intact. He also says they refused the offer.

  • Now the couple is dealing with foreclosure and criminal charges. "That was our intent at first, to try to recover the property," said Sergeant Joel Masci with the Hillsborough County Sheriff’s Office. Sergeant Masci says they arrested the couple, who now face five years' prison time if convicted.

  • "If it was something you would normally purchase a house that you expect it to be included with the house, then that's what we look at. If those items were taken, we can actually file grand theft charges," he said.

For the story, see New Tampa couple accused of stealing $10,000 of goods from foreclosed home (Deputies say couple stripped front door, cabinets).

Ex-Homeowner Squats Her Way Into Loan Modification, 18 Months After Losing Home To Foreclosure

In Alameda County, California, The Bay Citizen reports:

  • It's hasn't been easy, but nearly a year and a half after Wells Fargo foreclosed on her home of 27 years, Tanya Dennis has finally convinced the lender to modify her mortgage.

  • "They had to deal with me to pacify me and get me out of their hair," joked Dennis, who made headlines earlier this year by hiring a locksmith and breaking into her South Berkeley home after Alameda County sheriff's deputies evicted her.

  • Since then, Dennis, a short, 63-year-old woman who was once vice principal of Oakland's Castlemont High, has been a thorn in the side of the nation's largest mortgage originator.

  • Wells Fargo spokesman Tom Goyda said the deal — which Dennis said reduces the amount of money she owes on her home from $484,000 to $365,000 — occurred not because of Dennis' persistence, "but because we want to keep homeowners in their homes."


Here are some of the steps Dennis took after breaking back into her home in January:

  1. Representing herself, she sued Wells Fargo in federal court. When U.S. District Judge Claudia Wilken dismissed her suit, Dennis appealed her case to the 9th Circuit — all without the help of a lawyer.

  2. On May 3, Dennis was carted away in handcuffs after disrupting Wells Fargo's annual shareholders meeting.

  3. On May 24, she confronted Jim Foley, the bank's regional president for the San Francisco Bay Area, at Wells Fargo's Oakland office. The meeting was arranged by Oakland's teachers' union. (The union's president, Betty Olson Jones, was also among those who disrupted Wells Fargo's shareholders meeting).

  4. In June, three members of the state Legislature — state Sen. Loni Hancock (D-Berkeley) and East Bay assemblymembers SandrĂ© Swanson and Nancy Skinner — wrote to Wells Fargo on Dennis' behalf.

  5. On June 17, with another eviction from the sheriff looming, the Alliance of Californians for Community Empowerment, an advocacy group founded by former employees of the now-defunct ACORN, sent an email asking its supporters to contact Foley and Leesa Whitt-Potter, the bank's senior vice president for consumer operations.

For more, see Squatting Homeowner's Persistence Pays Off (Breaking into her own home was just the beginning of Tanya Dennis' campaign to convince Wells Fargo to modify her mortgage).

Law School Clinic Scores 3-Year, State AG Grant To Fund Unit Defending Homeowners Facing Wrongful Foreclosure, Victims Of Mortgage Fraud

From Arizona State University School of Law:

  • Distressed homeowners have a new advocate in their corner as the Homeowner Advocacy Unit in the Civil Justice Clinic at ASU's Sandra Day O'Connor College of Law opens its doors this month.

  • In response to the foreclosure crisis, student attorneys enrolled in the new program will start working with clients who have been victims of mortgage fraud or are facing a wrongful foreclosure. The unit is made possible through a three-year grant from the Arizona Attorney General’s Office.

  • This is an excellent opportunity for the law school to provide a valuable public service while training up to 90 new attorneys over the next three years in the skills needed to become effective advocates on behalf of distressed homeowners,” said Douglas Sylvester, interim dean of the college.

  • We are grateful to the Attorney General’s Office for funding this project. It comes at a time when the community is in desperate need of professionals with training in the complex legal and social issues created by the mortgage crisis."

For more, see Distressed homeowners to receive assistance from ASU law school.

Squatter Movement Begins To Gain Steam In Detroit As Local Laws Leave Complaining Residents Frustrated, Cops With Hands Cuffed

In Detroit, Michigan, The Detroit News reports:

  • The foreclosure crisis has led to a surge of complaints about squatting in Detroit, and city officials acknowledge they're not sure what they can do about the problem.

  • In a city with more than 100,000 vacant properties, city officials and residents say they're increasingly seeing people take over empty houses and call them their own. Once they're in, it's tough to get rid of them: Michigan law places the burden of proof on rightful owners, and the eviction process can take months.


  • Squatting isn't new, and its secretive nature makes it tough to track. But city officials say it's spiking as one in every 339 city homes received foreclosure notices last month, according to RealtyTrac, an industry marketer. City ombudsman Durene Brown points to a thick stack of complaints about squatting she's received over the past two years. A few years ago, about 100 people a year called about the issue. Now, 300 do.


  • Squatting laws present a major challenge in ridding someone who illegally possesses a home. Legally, only the homeowner or banks can seek remedies to remove squatters. And under a loophole, a squatter can gain possession of a home if he or she openly lives in it uninterrupted for 15 years, according to state law.

  • No real moves have been made to change squatting laws by the state Legislature, but some community groups and city officials said the loopholes need to be closed.


  • As the head of the mobile patrol for the nearby Grandmont Association, Muhsin Muhammad said the group has fought against people who have taken over eight homes in the past year. Rosedale-Grandmont, a larger contingent of seven associations, has dealt with about 30 homes, he said.

  • They ranged from a family just finding a place to stay for the children, to a group of about 30 young people who took over a house. At that home, there was gambling on the street, illegal drug use, incidents of the inhabitants urinating on nearby properties and loud music playing until 3 or 4 a.m., Muhammad said.

  • "The homeless and criminals have been wise as to how the system protects them. They go through the neighborhood shopping for nice homes to move into," said Muhammad, the father of the former Michigan State University and professional football star who shares his name.

For the story, see Squatter problem balloons in Detroit (State law makes it hard to evict illegal residents, city claims).

NYC Congressman, Other Queens Pols Could Feel The Squeeze After Indictment Of Suspect Accused Of Falsifying $50M In Home Loan Applications

In New York City, the New York Post reports:

  • The walls may be closing in on Rep. Gregory Meeks with the indictment of a real-estate broker pal who gave him $40,000. Edul Ahmad faces up to 30 years in prison if convicted of mortgage fraud in an indictment Friday.

  • Though the indictment makes no mention of his political ties, the threat of a lengthy sentence could give the feds leverage to question Ahmad about Meeks and other Queens pols.(1)

  • Ahmad, 43, is accused of falsifying $50 million in loan applications for borrowers who lacked the means to pay them back and pocketing "fees and commissions in excess of those permitted by the lenders," the indictment says.

  • His relationship with Meeks has been under intense scrutiny since the Queens Democrat revealed the $40,000 payment last year. Earlier this month, a House ethics panel announced that it would investigate Meeks over the 2007 payment.

  • Meeks has said that the $40,0000 was a loan from Ahmad, but he did not report it on his personal financial disclosure forms until 2010, after the FBI questioned Ahmad about it.

Source: Meeks' mortgage 'lender' indicted.

(1) As has been observed by at least one learned federal judge:

  • "When a conspiracy is exposed by an arrest or execution of search warrants, soon-to-be defendants know that the first one to "belly up" and tell what he knows receives the best deal. The pressure is to bargain and bargain early, even if an indictment has not been filed." United States v. Moody, 206 F.3d 609, 617 (6th Cir. 2000) (Wiseman, J., concurring) (referring to the not-uncommon 'race to the prosecutor's office' that breaks out among participants in an uncovered criminal conspiracy).

Whether Ahmad, if guilty, considers to "belly up" and "sell out" others on whom he may have some 'dirt' remains to be seen.

Roof & Sinkhole Foreclosures May Be On Horizon As Changes In One Insurer's Underwriting Guidelines May Squeeze Some Florida Homeowners Onto Street

In Central Florida, The Tampa Tribune reports:

  • Homeowners across Florida who are up for an insurance policy renewal with the state's insurer of last resort are receiving letters about their roofs. Anyone with a home 25 years old or older must get an inspection and prove to Citizens Property Insurance Corp. that their roof is expected to last at least three more years.

  • Robert Brown says he thought he had a few more years to save money to put new roofs on his rental homes. But Citizens told him the roofs must be replaced now, or it won't renew his policies.

  • "They're forcing people to put on a new roof, even if you have a few years of life left on the roof," Brown said. "This could force a lot of people into foreclosure, if they can't afford the roof and then lose their insurance." Replacing a roof on a typical home can cost several thousands of dollars.

  • The relatively new requirement for the roof inspection comes on the heels of another controversial Citizens policy. The company recently said it's raising its rates for sinkhole coverage by 400 to 2,000 percent in some Bay area locations.(1)

  • When it comes to the roof policy, some customers can't afford a new roof now and say they're letting their insurance lapse, local insurance agents said. "This couldn't come at a worse time," said Laura Hart, of Florian Insurance Inc. in Hudson. "This is the worst economy most of these people have seen in their lives." Hart said some customers are angry that their insurance company is taking away their chance to save longer for a new roof.

For more, see Citizens policy pushes some homeowners to add new roofs.

(1) See Residents rally in Pasco against sinkhole coverage hike:

  • Al Kutchera said he'll be one of many residents abandoning their homes and leaving the state if Citizens Property Insurance fulfills its proposal to raise rates for optional sinkhole coverage. The plan increases rates by more than 400 percent on average statewide and more than 2,000 percent in some Bay area locations.

  • "Nobody will buy the house, so I'll just let the bank have the house and look for a Realtor in South Carolina or Alabama or something," said Kutchera, who owns a home in Hernando County.


  • State Sen. Mike Fasano, R-New Port Richey, organized the rally with consumer advocacy group Policyholders of Florida. Fasano said the issue is bringing together people from all over the Bay area and from all walks of life that wouldn't be able to afford the increased rates.

  • He said a senior citizen came to his office because her mortgage company told her she had to have sinkhole coverage. The woman was in tears because she can't afford the coverage under the proposed rate hikes.

Friday, September 2, 2011

Law "Was Designed To Be A Noble Profession," Says Cal. AG In Announcing Civil Action Against 3 Firms Bringing 'Mass Joinder' Foreclosure Relief Suits

In San Francisco, California, The Bay Citizen reports:

  • California Attorney General Kamala Harris stood before a bank of news cameras [one recent] morning and declared war on unscrupulous lawyers. The occasion: a new lawsuit against three Southern California law firms, who stand accused of taking millions of dollars from homeowners who expected the lawyers to help them get mortgage relief. But the attorneys simply pocketed the money, Harris said.

  • Law "was designed to be a noble profession," Harris told reporters. Instead, she said, the accused attorney, Philip Kramer, and lawyers at two other firms took advantage of borrowers who were already "deeply disappointed, frustrated and hurt."

  • According to officials, the defendants extracted retainer fees of up to $10,000 from each of 2,500 homeowners to participate in lawsuits that actually hurt their chance of staying in their homes. Because these homeowners gave their meager savings to Kramer and his associates, they were less able to make their mortgage payments and more likely to lose their home to foreclosure.

For mor, see State Cracks Down on Unscrupulous Mortgage Lawyers (Law "was designed to be a noble profession").

Westchester DA: Pair Used Escrow Acct. Holding Clients' Home Refi Proceeds As Personal 'Piggy Bank;' Alleged Scammer's Elderly Dad Among Those Screwed

From the Office of the Westchester County, New York District Attorney:

  • From April 2009 to June 2009, operating under the home mortgage closing company Settle One Corporation, with an office located at 428 Main Street in Armonk, New York, the defendants, Loronda Murphy and real estate attorney Scott Forcino, engaged in what amounted to a home mortgage fraud "Ponzi" scheme.(1)

  • The targeted homeowner/victims each took out a new mortgage on their home through Settle One Corporation with the understanding that real estate attorney Scott Forcino would oversee their closing and that money from their new mortgage would pay off their pre-existing mortgage.

  • However, Forcino instead allowed Murphy to fraudulently assume the role of attorney for each closing, and, much to the homeowner's surprise, rather than paying off their pre-existing mortgage, Murphy instead stole portions of their new loan money and left their pre-existing mortgage unpaid.(2)

  • Murphy's theft then left the homeowner with the unsustainable burden of having multiple mortgages on their family home at one time. Over this time period the pair defrauded five victims including Murphy’s father.

  • In addition to skimming money out of the Settle One Corporation bank account for her own personal benefit, Murphy also attempted to conceal her crimes by using money left in the Settle One bank account to make monthly mortgage payments on various unpaid mortgages and, in some cases, Murphy even stole one homeowner's new mortgage loan money and used it to pay off another homeowner's previously unpaid mortgage.

  • In the three months, beginning in April of 2009 and ending in June of 2009, Murphy orchestrated the preparation and submission of a series of false mortgage documents in connection with five mortgage loan closings that resulted in her, through the Settle One bank account, receiving over one million dollars from two home mortgage lenders: Wells Fargo Bank and Live Well Financial.

  • In turn, Murphy then stole over fifty thousand dollars in loan money from each of five Westchester County homeowners, including her own elderly father, all for her own personal financial gain and to cover up her continuing criminal activity.

For the Westchester County DA press release, see Former North Castle Republican Chairwoman Indicted For Mortgage Fraud.

(1) According to the press release, a nineteen count indictment against Loronda Murphy charges her with:

  • one count of Residential Mortgage Fraud in the First Degree, a class “B” Felony,
  • one count of Residential Mortgage Fraud in the Second Degree, a class “C” Felony,
  • five counts of Grand Larceny in the Second Degree, class “C” Felonies,
  • ten counts of Falsifying Business Records in the First Degree, class “E” Felonies,
  • one count of Scheme to Defraud in the First Degree, a class “E” Felony,
  • one count of Conspiracy in the Fifth Degree, a class “A” Misdemeanor.

In addition, a three count indictment against Scott Forcino charges him with:

  • one count of Scheme to Defraud in the First Degree, a class “E” Felony,
  • one count of Conspiracy in the Fifth Degree, a class “A” Misdemeanor,
  • one count of Criminal Facilitation in the Fourth Degree, a class “A” Misdemeanor.

(2) To the extent attorney Forcino is found guilty of playing a role in this ripoff and fails to cough up restitution, The Lawyers’ Fund For Client Protection Of the State of New York may find itself being asked by the victims to step up and cover at least some of the losses they suffered. The Fund exists to protect legal consumers from dishonest conduct in the practice of law in the state, to preserve the integrity of the bar, to safeguard the good name of lawyers for their honesty in handling client money, and to promote public confidence in the administration of justice in the Empire State. It attempts to secure these goals by, among other things, reimbursing client money that is misused in the practice of law.

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

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

Questions Surrounding Applicability Of State Consumer Protection Law To Mortgage Servicer Activities To Be Decided By Ohio Supreme Court

From the Supreme Court of the State of Ohio:


Certified Question of State Law, United States District Court, Northern District of Ohio, Western Division, Case Nos. 3:10-cv-02537-JZ and 1:10-cv-02709-JZ. On review of preliminary memoranda pursuant to S.Ct.Prac.R. 18.6. The court will answer the following questions:

1. "Does the servicing of a borrower's residential mortgage loan constitute a `consumer transaction' as defined in the Ohio Consumer Sales Practices Act., R.C. 1345.01(A)?"

2. "Does the prosecution of a foreclosure action by a mortgage servicer constitute a `consumer transaction' as defined in the Ohio Consumer Sales Practices Act., R.C. 1345.01(A)?"

3. "Is an entity that services a residential mortgage loan, and prosecutes a foreclosure action, a `supplier . . . engaged in the business of effecting or soliciting consumer transactions' as defined in the Ohio Consumer Sales Practices Act., R.C. 1345.01(C)?'"

O'Donnell, J., dissents.

Source: 08/24/2011 Case Announcements, 2011-Ohio-4217 (State ex rel. DeWine v. GMAC Mtge. L.L.C.).

Woman Gets 11 Years For Swindling Elderly Couple In Foreclosure Rescue Ripoff Perpetrated While On Bail On Earlier Housing Scam Charge Targeting Nuns

In Santa Barbara, California, KEYT-TV Channel 3 reports:

  • A local woman who stole money from an elderly Montecito couple was sentenced to state prison Monday. The Santa Barbara District Attorney's Office says a judge sentenced Denise D'Sant- Angelo, 56, to 11 years in state prison.

  • D'Sant-Angelo was found guilty of financial elder abuse, grand theft and unauthorized practice of law in March 2010 while out on bail for stealing nearly $3,000 from a group of elderly nuns.

Source: Woman Sentenced In Elder Abuse Case.

See also, The Santa Barbara Independent: Nun Scammer Found Guilty of Financial Elder Abuse (Jury Convicts Denise D'Sant Angelo on 12 Felony Counts):

  • 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.

Thursday, September 1, 2011

Michigan AG: Upfront Fee F'closure Rescue Ripoffs Not A 'Civil Matter' As Prosecutors Score Criminal Convictions On False Pretenses, Conspiracy Counts

In Allegan County, Michigan, The Holland Sentinel reports:

  • A Fennville woman was convicted Thursday on nine charges relating to a mortgage fraud rescue scheme, according to the state attorney general’s office.

  • Tonia Raisbeck, 36, was accused of collecting upfront fees of $795 to $1,500 from homeowners with the promise of securing new mortgages with lower interest rates. She never secured the mortgages, however, and several victims lost their money and their homes to foreclosure, authorities said.

  • Raisbeck was found guilty on nine counts Thursday, including false pretenses and conspiracy to commit false pretenses, as well as for violating the Credit Services Protection Act and conspiracy to violate the Credit Services Protection Act.

  • Raisbeck will be sentenced at 9 a.m. Sept. 23 before Circuit Court Judge Marge Baker in Allegan County Circuit Court.

Source: Fennville woman convicted for mortgage scheme.

Miami Outfit Among Three Alleged Upfront Fee Loan Modification Rackets Shut Down By Feds In Civil Lawsuits

In Miami, Florida, the South Florida Sun Sentinel reports:

  • Federal regulators have shut down three mortgage modification operations nationwide, including one in South Florida. The operations took millions in upfront fees while falsely telling homeowners they could get their loans reduced or stop their foreclosures, but then did little or nothing to help them, according to the FTC.

  • Two of the owners of Truman Foreclosure Assistance of Miami were ordered, as part of a settlement with the Federal Trade Commission, to pay $1.8 million toward consumer restitution. They also were banned from marketing, or helping others to market, mortgage modification or foreclosure relief services, the FTC said Thursday. Truman Foreclosure could not be reached for comment despite several attempts by phone.

  • Federal officials allege Truman salespeople took $1,500 to $3,000 in upfront fees, a violation of federal law, and falsely claimed a 90 percent success rate and a full money back guarantee. In most cases, the company either didn't contact the homeowners lenders, refused to tell their clients what was going on with their modifications, or refused to grant refunds, according to court documents.

  • Owners Eli Hertz and Benzion Jack Itzkowitz were prohibited, under the agreement, from sharing or using their customers' personal information and ordered to destroy those records. Richard Zafrani also was named in the action.Truman Foreclosure also did business as Truman Mitigation Servcies and Franklin Financial Group US.

  • The two other settlements reached included: One for multiple companies based in California that marketed debt relief and mortgage modification services under a web site called; and another for multiple defendents that federal regulators say set up false web sites that impersonated the government-backed site, which helps distressed homeowners refinance their properties.

Source: FTC shuts down Miami mortgage loan modifiers.

See also Marketers Falsely Claimed to Be Affiliated with Federal Assistance Programs, Agency Alleges; Operators in One Case Required to Pay $1.8 Million for the Federal Trade Commission press release and links to related court documents.

Virginia AG Cuts Loose Suspected Upfront Fee Loan Modification Racket By Signing Off On $6,500 Civil Suit Settlement

In Virginia Beach, Virginia, The Virginian Pilot reports:

  • A Virginia Beach-based company has agreed to pay more than $6,500 to settle allegations that it charged homeowners facing foreclosure illegal upfront fees to help save their homes, Virginia Attorney General Ken Cuccinelli announced Thursday.

  • Cuccinelli filed a lawsuit in Virginia Beach Circuit Court a little more than a year ago against Real Estate Resolutions LLC. The suit alleged that the company had illegally demanded money upfront for services and, in some cases, never performed. Virginia law prohibits a company that provides foreclosure-prevention services from charging a fee upfront.


  • This is the third settlement the attorney general's office has reached with a mortgage loan-modification company related to illegal upfront fees. Last month, Virginia Beach-based Nationwide Loan Modification Bureau LLC agreed to pay a total of $54,200 to settle similar allegations; and in December, Chesapeake-based American Neighborhood Housing Foundation agreed to pay more than $109,000.

For more, see Va. Beach company agrees to repay homeowners.

For the Virginia Attorney General press release, see Attorney General Cuccinelli announces settlement and permanent injunction against third mortgage loan modification company.

Indiana AG Tags Two More Loan Mod Outfits w/ Suits; Says Out-Of-State Operators Failed To Post Surety Bonds, Stiffed Homeowners On Promised Refunds

From the Office of the Indiana Attorney General:

  • Indiana Attorney General Greg Zoeller filed a lawsuit [] against two out-of-state credit services and foreclosure consultant companies that were operating illegally in Indiana.

  • Zoeller said Hoosiers in 13 Indiana counties - including Porter, Kosciusko and St. Joseph - signed contracts with Community One Law Center based in Florida and National Law Partners based in Florida and California. The lawsuit alleges both companies collected money up front and failed to provide refunds to customers after services were not provided.


  • Community One Law Center and National Law Partners are accused of violating Indiana's consumer protection laws by not registering $25,000 surety bonds with the Office of the Attorney General. Indiana law requires credit service organizations and foreclosure consultants to register bonds prior to performing any services, including collecting money up front. Zoeller said the bond acts as an insurance policy for consumers in the event a company fails to perform.

  • According the suit, these companies are separate entities, but both worked interchangeably on files and shared employees. Zoeller said deposit amounts illegally collected from Hoosiers range from $499 to $2,699.

  • This lawsuit alleges both organizations violated the Credit Services Organization Act, the Mortgage Rescue Protection Act, the Home Loan Practices Act and Deceptive Consumer Sales Act. Community One and National Law Partners also failed to obtain a certificate of authority from the Indiana Secretary of State's Office to conduct business in Indiana.

For the Indiana AG press release, see Zoeller files suit against out-of-state foreclosure consultants (Two for-profit companies illegally operating in Indiana failed to pay refunds).

Wednesday, August 31, 2011

Wisconsin Attorney Pinched In Alleged Foreclosure Surplus Snatching Scam; Illicitly Scored $542K In Unclaimed Net Proceeds On 43 Sales: Investigators

In Milwaukee, Wisconsin, the Wausau Daily Herald reports:

  • A Brookfield attorney is accused of stealing $542,000 in unclaimed foreclosure funds by falsely claiming that he represented the rightful owners, prosecutors in Milwaukee County said Wednesday.

  • Thomas E. Bielinski, 52, was charged Tuesday with theft of at least $10,000 by fraud. The charge carries a maximum sentence of five years in prison and a $25,000 fine. He is scheduled to make an initial court appearance on Wednesday.

  • According to the criminal complaint, Bielinski targeted mortgage-foreclosure cases in which the owners of surplus funds had failed to file claims for the money. Prosecutors said he claimed that he represented the owners, filed claims on their behalf and kept the money.

  • In a five-year period, he filed 47 fraudulent claims and got paid out on 43, according to the complaint.


  • Prosecutors said Bielinski had crafted what amounted to an elaborate identity-theft scheme. They accused him of forging claimants' signatures and notary stamps, and then covering his tracks by removing the subsequent court documents from official files.

  • Authorities executed a search warrant on Bielinski's home last month. They said they found a list of civil cases in Milwaukee County Court that included the dollar amount of unclaimed funds and handwritten notes identifying people who were dead.

  • Investigators contacted the people in whose names Bielinski had collected money. Although some were dead, others weren't and generally said they did not know they were owed any surplus funds. None of them knew Bielinski or had hired him to represent them.

For the story, see Brookfield attorney charged with stealing $542,000.

Clerk Of Court Issues Plea To Foreclosed Cook County Property Owners To Come Forward, Claim Their Cash; Says $16M In Sale Surplus Sits Unclaimed

In Chicago, Illinois, the Chicago Sun-Times reports:

  • About $16 million is sitting in a Cook County court fund, just waiting for the rightful owners — namely home and business owners who lost their property to foreclosure, officials said Thursday.

  • The money is part of a mortgage foreclosure surplus fund — profits generated when foreclosed property is sold for more than what the original owner owed the bank.

  • Nearly 2,000 property owners have an average of $2,000 coming to them from foreclosures that date back to the 1990s. Amounts range from 13 cents to $460,000 owed to a business, Brown said.

  • For two years, Clerk of the Circuit Court Dorothy Brown has been trying to get the word out to former property owners to call her office or go to her website and use the search engine to see if they have money coming to them.

  • By state law, her office maintains the account. But having had only marginal success in finding those to whom money is due, she announced Thursday that a task force of city, county and state officials is working on a better marketing strategy. “We need to find a better way, even a more effective way to get the word out,” Brown said Thursday at a news conference with other elected leaders.


  • A lot of people just don’t look back” once they lose a property, she said. “They don’t leave a forwarding address because they have creditors” seeking payment.

  • To see if you are owed mortgage surplus funds, call Brown’s office at (312) 603-5030 or go to [Cook County Mortgage Foreclosure Surplus Search].

For more, see Property foreclosed? Cook Co. hold $16M in fund waiting to be claimed.

See also, Chicago Tribune: Cook Co. reaching out to those due money after property foreclosure ("Brown noted that her office contacted one homeowner who was owed a $200,000 surplus. The homeowner never returned the call.").

Suit: Woman Married Dying 87-Year Old Tenant To Inherit Succession Rights In Low-Priced, Rent-Controlled Apt; Landlord To Judge: Give Her The Boot!

In New York City, the New York Post reports:

  • The object of this woman's love was really a rent-controlled apartment, a frustrated West Village landlord says. Sarah Berman wed ailing 87-year-old Stanley Lowell last September and inherited his cheap digs at 302 W. 12th St. when he died just a month later.

  • The landlord is now trying to evict Berman, saying it's not fair for her to take over the apartment after such a brief period of wedlock. And at age 63, Berman could be paying his cheap rent for many years to come.

  • Court papers don't disclose Berman's rent, and neither she nor the landlord could be reached for comment. But a neighbor guessed her monthly payment could be as little as $400, in a building where market rents can run to more than $5,000.

  • The building's owner, Fourth FGP LLC, doesn't believe the grieving newlywed married for love, accusing her of using "gamesmanship, seduction and artifice" to get her man and his bachelor pad.

  • The company wants a Manhattan Supreme Court judge to give Berman the boot, arguing in legal papers that she tricked the vulnerable Lowell into wedded bliss "to wrongfully procure succession rights to the apartment."


  • The landlord, which wants "immediate possession" of Lowell's unit, insists in court papers that Lowell would have "lacked the mental capacity to understand the nature, effects and consequences of the purported marriage."

For the story, see Gal got a groom for rent (Landlord's claim in evict bid).

Sale Leaseback Peddler Throws In Towel, Cops Guilty Plea For Running Foreclosure Rescue, Equity Stripping Racket That Left Victims Without Homes

From the Office of the U.S. Attorney (Norfolk, Virginia):

  • Kathleen Harps, 51, of Chesapeake, VA, pleaded guilty [...] in Norfolk federal court to conspiring to commit mail and wire fraud in connection with a scheme to fraudulently obtain mortgage loans.


  • According to court documents, during 2006 Harps operated the New Beginnings Group in Hampton Roads and engaged in the business of “foreclosure rescue.” Harps and another conspirator solicited homeowners in financial distress and facing foreclosure, to sell their homes to Harps or other buyers that she located.

  • To induce participation in the program, Harps promised homeowners that:

    (a) they could remain in their homes and live “mortgage free” for one year;
    (b) during the one year period, they would receive credit repair assistance to put their financial house in order; and
    (c) at the end of the year they could buy back their homes.

  • In furtherance of the conspiracy, then Harps and other straw buyers made assorted false statements to fraudulently obtain mortgage loans. At the real estate closings on these loans, all or most of the homeowners’ equity in their homes was paid out to Harps’ business, the New Beginnings Groups.

  • Harps used these sales proceeds to, among other things, pay kickbacks to straw buyers and a loan officer, to make payments to and for the benefit of her and her companies, and to make mortgage payments for a period of time upon the fraudulently obtained mortgage loans.

  • After one year, when homeowners could not afford to buy back their homes or to pay the rents charged by Harps’ businesses, Harps and the straw buyers defaulted on the loans and they fell into foreclosure, causing the lenders to suffer losses and the homeowners to lose their homes.(1)

For the U.S. Attorney press release, see Chesapeake Woman Pleads Guilty to Committing Foreclosure Rescue Loan Fraud.

(1) Undoing cases like these in an attempt to recover the homeowner's ripped-off equity, particularly if a related criminal prosecution fails to yield any restitution from the scammer (many of these scammers are lowlifes who live from scam to scam, and who commonly wind up broke by the time they're frog-marched off to prison) would require the filing of a civil lawsuit alleging that the lender that financed the equity stripping deal had either actual or constructive knowledge of the underlying fraud.

Virginia case law, like the case law in many other states, appears to have enunciated the rule that a purchase or lender dealing in real property could possibly have a duty to physically inspect the premises prior to purchasing or taking a mortgage to secure a loan and, failing that, it takes its interest subject to any of the rights and equities of the occupants in possession.

See, for example, Brooks v. Lum, Case No. (Chancery) 00-13, 52 Va. Cir. 390; 2000 Va. Cir. LEXIS 301; Circuit Court of the City Of Winchester, Virginia (2000):

  • When the purchaser has actual knowledge that there are persons in possession of the property being purchased who dispute the seller's title, he has a duty to inquire about the circumstances of that possession. Ely v. Johnson, 114 Va. 31, 75 S.E. 748 (1912) (purchaser on notice as to possession and use of land by another).

    As stated in 58 Am. Jur. 2d, Notice, § 21: Possession of land is notice to the world of every legal or equitable right that the possessor has therein. It is a fact putting all persons on inquiry as to the nature of the occupant's claims, as well as the claims under whom he occupies.

    "Under the [recording] statute, only purchasers without notice can take advantage of a failure to record."
    National Mutual Building & Loan Association v. Blair, 98 Va. 490, 498, 36 S.E. 513. "Such a failure cannot affect a purchaser who has actual notice." Chavis v. Gibbs, 198 Va. 379, 383, 94 S.E.2d 195 (1956).

    Chavis v. Gibbs, 198 Va. 379, 385, 94 S.E.2d 195 (1956), the Supreme Court stated "whatever fairly puts a person on inquiry is sufficient notice where the means of knowledge are at hand; and if he omits to inquire, he is then chargeable with all the facts which, by a proper inquiry, he might have ascertained."

For other states, see Bona Fide Purchaser Doctrine, Possession Of Property By Occupants Other Than The Vendor & The Duty To Inquire.

Title Search Failure To Disclose Subordinate Lien Leaves Lender Holding The Bag With Foreclosed Home Subject To Junior Lienholder's Claim

The following facts have been taken from a recent court ruling from a Memphis, Tennessee Federal Court:

  1. Bank, a 1st mortgage holder, initiates foreclosure process against homeowner.

  2. At the sale, Bank is the successful bidder and takes title to home.

  3. At some point subsequent to the foreclosure sale, Bank discovered that a junior lien on the premises was not included in the title report prepared prior to the foreclosure sale.

  4. Because Bank was unaware of the existence of the junior lien prior to the foreclosure sale, it failed to give the junior lienholder proper notice of the sale.

  5. Because junior lienholder failed to receive proper notice of the sale, its lienholder's interest in the premises was not extinguished - it survived the sale.

  6. Upon said discovery, Bank went to court and sought to rescind the foreclosure sale; to void the deed recorded pursuant to that sale; and to reinstate the foreclosed mortgage (actually, it was a deed of trust) and other liens as to the subject property.

  7. In effect, Bank requested a chance for a 'foreclosure do-over' to undo the mess it now found itself in, holding title to a home encumbered by a lien that, prior to the foreclosure sale, was junior in priority to its own mortgage.

For the reasons set forth in his ruling, U.S. District Judge S. Thomas Anderson told Bank, in effect, 'tough luck' and refused to set aside the foreclosure sale, and left Bank holding the bag with a foreclosed home subject to the 'now-no-longer junior' lienholder's interest.

For the ruling, see Nationstar Mortgage, LLC v. Humphrey, No. 11-2185-STA (W.D. Tenn. July 29, 2011).

Tuesday, August 30, 2011

Federal Appeals Court Reinstates Reversed Ruling Hammering Foreclosure Mill For Littering Courtroom With Robosigned Docs; Bankruptcy Judge Vindicated

In Philadelphia, Pennsylvania, Dow Jones Daily Bankruptcy Review reports:

  • A federal appeals court has reinstated sanctions against a New Jersey law firm and attorney for attempting to foreclose on a suburban Philadelphia couple using "robo-produced" mortgage data that was fraught with errors.(1)

  • In a case that was one of the first to expose trouble in the high-tech, high-volume mortgage foreclosure industry, the Third U.S. Circuit Court of Appeals sided with a bankruptcy judge who punished the Udren law firm and attorney Lorraine Doyle for showing up in court with unverified, computer-generated mortgage data that was wrong.


  • The Udren case highlights the role of foreclosure law firms, whose lawyers walk the robo-produced mortgage data into court, without checking whether it is correct or not. The law firm said it was not able to verify the data under the system established by client HSBC, using technology from Lender Processing Services Inc.


  • The appeals court and the bankruptcy judge found the flawed high-volume system that handles mortgage data does not excuse an attorney's failure to verify information before presenting it to a court.

  • "Where a lawyer systematically fails to take any responsibility for seeking adequate information from her client, makes representations without any factual basis because they are included in a 'form pleading' she has been trained to fill out, and ignores obvious indications that her information may be incorrect, she cannot be said to have made reasonable inquiry," the court of appeals wrote.


  • The case began in January 2008, when the Urden firm presented a bankruptcy judge with the wrong mortgage note, wrong monthly payment information and wrong value for the home of Niles and Angela Taylor, and sought permission to foreclose.


  • The decision is a vindication for Judge Diane Weiss Sigmund, a veteran bankruptcy judge who became irritated when a young attorney sent to court by the Udren firm couldn't answer basic questions about the Taylor's Loan and couldn't get an answer from the client.

  • She summoned the firm and others to answer for falsehoods about the status of the Taylors' mortgage and wrote a detailed opinion about the technology-heavy system that made it impossible to pin down and correct errors.

  • A district court judge overturned her ruling, saying Sigmund was more concerned about "sending a message" to the foreclosure firms than seeing justice done in the Taylor case.(2) The appeals court disagreed, finding her detailed conclusions were supported by the evidence.

  • It's also a victory for the U.S. trustee's office, an arm of the Department of Justice that monitors the bankruptcy courts. The bankruptcy watchdogs appealed the district court decision overturning the sanctions, noting that the sanctions imposed were "lenient," and educational in nature. The Udren firm and Doyle were not fined.

For the story, see Appeals Court Restores Sanctions Against Foreclosure Law Firm (may require paid subscription; if no subscription, TRY HERE).

For the ruling of the 3rd Circuit Court of Appeals, see In Re Taylor, No. 10-2154 (3d Cir. August 24, 2011).

(1) It should be noted that the appeals court did, in fact, sustain the reversal of the sanctions originally imposed on one of the attorneys involved, Mark J. Udren.

(2) For Judge Sigmund's original 58-page ruling, see In re Taylor, 407 B.R. 618 (Bankr. E.D. Pa. 2009).

See also, Data Management Firm, Assembly Line Law Firm Scorched By Scathing Court Ruling That Shines Light On Filing Screw-Ups In Consumer Foreclosure Cases.

BofA Drags Feet On Undoing Screw-Up After Driving Terminally Ill Senior, Sole-Caregiver Spouse Into Foreclosure For Making House Payment Too Early

In New Port Richey, Florida, the St. Petersburg Times reports:

  • It appears Sharon and James Bullington will have to wait a little longer to learn how Bank of America plans to modify their mortgage. The couple's anxiety hasn't diminished since the bank apologized this week for mistakenly pushing their home into foreclosure despite the couple making their mortgage payment early.

  • Shawn Yesner, the Bullingtons' attorney, said bank officials told him they will call him daily until a resolution is reached. Bank officials told him "they are aggressively working the Bullingtons' file at the highest level … and may not have an answer by week's end."

  • State Sen. Mike Fasano, R-New Port Richey, started calling bank officials about the case Monday. An official told him he'd get an answer Wednesday. No call came. On Thursday, the bank assured Fasano the couple would have details by Friday.

  • "It's concerning and frustrating that it has taken this long to get a simple answer," Fasano said.

  • James Bullington, 78, is terminally ill and bedridden. Sharon, 70, is his sole caregiver.

For more, see Bank of America still working on case of Pasco couple who paid mortgage early.

NY AG Gently 'Flips Bird' At Antagonists; Vows To Continue Forward In Bankster Probe

Based on a recent post in The Journal News' Politics on the Hudson blog, it appears that New York Attorney General Eric Schneiderman has gently 'flipped the bird' at his antagonists in connection with his recent ouster from a committee of the 50-state foreclosure fraud probe:

  • Attorney General Eric Schneiderman is reacting to his removal from a committee negotiating a huge foreclosure settlement with U.S. banks as a badge of honor, saying he will continue to press for a full investigation into the banks’ misconduct.

  • In a email(1) today through his campaign account titled “Standing Up For You,” the first-year Democratic attorney general says it would be wrong to settle with the banks and give them a pass on any further legal action.

For more, see Schneiderman Vows Full Investigation Into Banks’ Foreclosure Practices.

(1) The full text of AG Schneiderman's email, as reported by Politics on the Hudson, follows:

  • You might have been following the latest developments related to the national settlement of the mortgage probe, including this story in today’s Huffington Post about our tough fight for a comprehensive resolution to this crisis.

    Let me tell you directly: I am deeply committed to pursuing a full investigation into the misconduct that led to the collapse of America’s housing market, and to seeking a resolution that gives homeowners meaningful relief, allows the housing market to begin to recover, and gets our economy moving again.

    Our ongoing investigation into the housing crisis cannot be shut down to accommodate efforts to settle quickly and give banks and others broad immunity from further legal action. If you have any thoughts or concerns about this critical issue, please contact me at 1-800-771-7755, or send a message via Facebook or Twitter.

    Thank you for your support,

    Eric T. Schneiderman
    Attorney General

Florida HOAs Begin Scoring Big Wins Voiding Lender Mortgages; Banks Fail To Defend Suits, Claiming 'We're Only The Trustee, We're Not The Servicer'

Bloomberg reports:

  • Financially troubled condo associations are taking banks to court as foreclosure delays enable delinquent homeowners to stay in their buildings for years, often without paying dues that keep boards running. The groups start by pressuring lenders to speed up home seizures and take over payment of the monthly fees. In extreme situations, [...] , associations may force banks to give up rights to the property.

  • The lenders are stalling foreclosures,” Ben Solomon, the Miami Beach attorney for [one] association, said in a telephone interview. “Our complaints say the banks abandoned their interest and either need to accept responsibility for the title or walk away.”

    ‘Mortgage Terminator’

  • Solomon, whose Association Law Group represented homeowner boards in 16 Florida counties with 15,000 delinquent owners, also won what he calls “mortgage terminator” lawsuits in claims against Bank of America Corp., Citigroup Inc., Deutsche Bank AG and Wells Fargo & Co., according to court records.


  • To compel banks to act, Solomon’s lawsuits start by suing the homeowner for unpaid dues as a way of seeking title to the property. Then he files a claim against the bank, contending the non-performing loan restricts the association’s right to sell the property because the mortgage is worth more than the home.

  • The bank defendant is usually a trustee for the loan that was sold into a mortgage-backed security, a legal structure that can leave the party responsible for a mortgage unclear.

  • Citigroup and Deutsche Bank declined to challenge lawsuits brought by Solomon because both banks were trustees, not the servicers of the delinquent loans, bank representatives said.

  • In March 2010, Citigroup lost a lawsuit over a Miami Beach condo with a $136,000 mortgage, according to court filings. Danielle Romero-Apsilos, a spokeswoman for the New York-based bank, declined to comment, saying Citigroup wasn’t the servicer.

  • Deutsche Bank in September forfeited its right to a unit with a $149,300 mortgage to the Palm Aire Gardens Condominium Association Inc. in Pompano Beach, Florida.

  • Litton Loan Servicing, the loan servicer for the loan, and not Deutsche Bank as trustee, was responsible for all foreclosure activity relating to the loan,” John Gallagher, a Deutsche Bank spokesman in New York, said in an e-mail.

  • Donna Marie Jendritza, a spokeswoman for Litton in Houston, declined to comment on the lawsuit, citing privacy restrictions. Litton, which Goldman Sachs Group Inc. is selling to Ocwen Financial Corp., wasn’t named in the complaint or other court documents.

  • We sue whoever holds the mortgage,” Solomon said. “The bottom line is the bank had a loan and the mortgage got terminated.”

    No Defense

  • Palm Aire Gardens also won title to a unit with a $184,410 mortgage after Wells Fargo failed to mount a defense because it no longer owned the loan, a transfer that wasn’t reflected in property records, said Tom Goyda, a spokesman. The bank would have defended the mortgage if it hadn’t sold the loan, he said.(1)

For more, see Homeowner Associations in Need of Cash Sue Lenders to Force Foreclosures.

(1) The cavalier attitude that the banksters are exhibiting here will no doubt come back to haunt them in that the unwitting holders of the mortgage-backed securities (with the ever-diminishing value of their investment as each mortgage gets voided) are the ones getting hammered, and this gives them one more reason to sue the servicers and trustees to recover their losses.

Inasmuch as these suits are apparently going forward undefended by the trustees & servicers, it wouldn't surprise me if there is a mad rush by attorneys (or their 'runners & cappers') throughout Florida to solicit homeowner associations, offering to take on their collections work for unpaid maintenance dues with the view of ultimately voiding the existing delinquent mortgages on each home/condo held by foot-dragging banksters.

Feds To Sell Out Homeowners? Begin Arm-Twisting Campaign, Targeting NY AG, Others To Seek Support For Crappy, 50-State Foreclosure Fraud Settlement

The New York Times reports:

  • Eric T. Schneiderman, the attorney general of New York, has come under increasing pressure from the Obama administration to drop his opposition to a wide-ranging state settlement with banks over dubious foreclosure practices, according to people briefed on discussions about the deal.

  • In recent weeks, Shaun Donovan, the secretary of Housing and Urban Development, and high-level Justice Department officials have been waging an intensifying campaign to try to persuade the attorney general to support the settlement, said the people briefed on the talks.

  • Mr. Schneiderman and top prosecutors in some other states have objected to the proposed settlement with major banks, saying it would restrict their ability to investigate and prosecute wrongdoing in a variety of areas, including the bundling of loans in mortgage securities.

  • But Mr. Donovan and others in the administration have been contacting not only Mr. Schneiderman but his allies, including consumer groups and advocates for borrowers, seeking help to secure the attorney general’s participation in the deal, these people said. One recipient described the calls from Mr. Donovan, but asked not to be identified for fear of retaliation.

  • Not surprising, the large banks, which are eager to reach a settlement, have grown increasingly frustrated with Mr. Schneiderman. Bank officials recently discussed asking Mr. Donovan for help in changing the attorney general’s mind, according to a person briefed on those talks.


  • [A recent NY AG] lawsuit [to block a proposed $8.5 billion settlement involving the peddling of crappy mortgage-backed securities] angered Bank of New York Mellon, and as Mr. Schneiderman was leaving the memorial service last week for Hugh Carey, the former New York governor who died Aug. 7, an attendee said Mr. Schneiderman became embroiled in a contentious conversation with Kathryn S. Wylde, a member of the board of the Federal Reserve Bank of New York who represents the public.

  • Ms. Wylde, who has criticized Mr. Schneiderman for bringing the lawsuit, is also chief executive of the Partnership for New York City. The New York Fed has supported the proposed $8.5 billion settlement.

  • Other investors in the Countrywide mortgage pools who were not part of the settlement talks between Bank of New York Mellon and Bank of America have called the terms inadequate.

  • Characterizing her conversation with Mr. Schneiderman that day as “not unpleasant,” Ms. Wylde said in an interview on Thursday that she had told the attorney general “it is of concern to the industry that instead of trying to facilitate resolving these issues, you seem to be throwing a wrench into it. Wall Street is our Main Street — love ’em or hate ’em. They are important and we have to make sure we are doing everything we can to support them unless they are doing something indefensible.”

  • Mr. Schneiderman declined to comment on the encounter.

For more, see Attorney General of N.Y. Is Said to Face Pressure on Bank Foreclosure Deal.

See also, Editorial: It's A Flawed Settlement:

  • The Obama administration has turned up the heat on Eric Schneiderman, New York’s attorney general, to go along with a proposed settlement with the nation’s largest banks over dubious foreclosure practices.

  • Mr. Schneiderman should stand his ground in not supporting the deal. The administration says that a settlement would quickly deliver much needed relief to hard-pressed borrowers, but it’s doubtful it would provide redress on a par with the banks’ wrongdoing or borrowers’ needs.

Monday, August 29, 2011

Obama Administration 'All In' With Push To Let Banksters Off The Hook & Bulldoze Through Proposed 50-State AG Settlement In Foreclosure Fraud Probe?

Rolling Stone columnist Matt Taibbi chimes in with his views and observations on the $20 billion proposed foreclosure fraud settlement that appears to let the banksters off the hook for their dirty dealings in creating this mess:

  • The idea behind this federally-guided “settlement” is to concentrate and centralize all the legal exposure accrued by this generation of grotesque banker corruption in one place, put one single price tag on it that everyone can live with, and then stuff the details into a titanium canister before shooting it into deep space.

  • This is all about protecting the banks from future enforcement actions on both the civil and criminal sides. The plan is to provide year-after-year, repeat-offending banks like Bank of America with cost certainty, so that they know exactly how much they’ll have to pay in fines (trust me, it will end up being a tiny fraction of what they made off the fraudulent practices) and will also get to know for sure that there are no more criminal investigations in the pipeline.

  • This deal will also submarine efforts by both defrauded investors in MBS and unfairly foreclosed-upon homeowners and borrowers to obtain any kind of relief in the civil court system. The AGs initially talked about $20 billion as a settlement number, money that would “toward loan modifications and possibly counseling for homeowners,” as Gretchen Morgenson reported the other day. The banks, however, apparently “balked” at paying that sum, and no doubt it will end up being a lesser amount when the deal is finally done.

  • To give you an indication of how absurdly small a number even $20 billion is relative to the sums of money the banks made unloading worthless crap subprime assets on foreigners, pension funds and other unsuspecting suckers around the world, consider this: in 2008 alone, the state pension fund of Florida, all by itself, lost more than three times that amount ($62 billion) thanks in significant part to investments in these deadly MBS.

  • So this deal being cooked up is the ultimate Papal indulgence. By the time that $20 billion (if it even ends up being that high) gets divvied up between all the major players, the broadest and most destructive fraud scheme in American history, one that makes the S&L crisis look like a cheap liquor store holdup, will be safely reduced to a single painful but eminently survivable one-time line item for all the major perpetrators.

  • But Schneiderman, who earlier this year launched an investigation into the securitization practices of Goldman, Morgan Stanley, Bank of America and other companies, is screwing up this whole arrangement. Until he lies down, the banks don’t have a deal. They need the certainty of having all 50 states and the federal government on board, or else it’s not worth paying anybody off.

  • To quote the immortal Tony Montana, “How do I know you’re the last cop I’m gonna have to grease?” They need all the dirty cops on board, or else the whole enterprise is FUBAR.

For more, see Obama Goes All Out For Dirty Banker Deal.

Buffett Sees Buffet In Ever-Rotting BofA Carcass; Opportunistic Financier To Feast Off Recent $5B Investment In Beleagured Bankster?

Fox Business reports:

  • Berkshire Hathaway’s investment of $5 billion in Bank of America comes with a costly price tag for a bank that has a host of real estate problems, as did Berkshire’s $5 billion investment in Goldman Sachs at the height of the financial crisis (even though Berkshire’s warrants in this deal would create losses for Buffett’s company if exercised today).

  • The way the Bank of America deal is structured, Warren Buffett’s Berkshire will get 50,000 preferred shares in a private offering that carries a sweet dividend of 6% a year; Bank of America can buy those shares back at any time by paying Berkshire a 5% premium.

  • Along with that, Berkshire gets warrants to buy 700 million shares in Bank of America at an exercise price of $7.14 each. The warrants may be exercised in whole or in part over a very long 10 years, following the close of the deal.

  • The shares are moving higher on the news, and Berkshire had a $546 million paper profit based on BofA’s share price of $7.92 by late morning. Fully exercised, the warrants would give Berkshire an estimated 7% stake in the company.

  • A 6% dividend is a high price to pay, and along with the 5% premium, is expensive capital on any measure. The deal is a red flag that Bank of America is struggling through a portfolio of mortgage, home equity, and commercial real estate loans it is having difficulty getting out from under.

  • The Bank of America deal is similar to a $5 billion investment Berkshire made in Goldman in September 2008, at the height of the financial crisis. Goldman paid a rich 10% dividend, or interest, on those preferreds to Berkshire. Goldman had to get Federal Reserve approval to buy back Berkshire’s $5 billion in preferreds this past March, and it did so by also paying a $500 million fee.

For more, see Buffett’s Big Bet Comes at a Hefty Price for Bank of America.

(1) In a possibly related story (one I'm sure is pure concidence, right?), it's been recently reported that, according to two Democratic officials not authorized to speak publicly about the event, billionaire Warren Buffett plans to hold a Sept. 30 fundraiser in New York City to help beef up President Barack Obama’s campaign chest (possibly to 'grease the wheels' of communication btween Buffet & the administration? Possibly as an 'insurance policy' on his $5B BofA deal?). See Bloomberg: Buffett to Host Obama Fundraiser in New York.

Bankster Lawsuit Tags Foreclosure Document Sweatshop; Servicer Says 'We Only OK'd Use Of Robosigners, Not Sub-Robosigners!'

The Wall Street Journal reports:

  • One of the nation's largest mortgage servicers filed a lawsuit on Tuesday against Lender Processing Services Inc., a top mortgage industry technology and services vendor, alleging that the firm improperly signed mortgage documents on its behalf and triggered millions of dollars in legal expenses as a result.

  • American Home Mortgage Servicing Inc. said in the lawsuit that it had incorrectly processed more than 30,000 mortgage assignments when seeking foreclosure on properties in all 50 states as a result of the work by an LPS subsidiary.

  • The lawsuit was filed Tuesday in a state court in Dallas County, Texas, and seeks unspecified damages worth millions of dollars. LPS, based in Jacksonville, Fla., does business with many of the nation's largest mortgage servicers.


  • American Home alleged in the lawsuit that LPS didn't dispute that it had improperly executed, notarized, and recorded thousands of assignments that American Home used to process foreclosures. But American Home said that LPS has refused to indemnify the servicer for millions of damages that resulted from the shoddy work by arguing that it wasn't under an enforceable contract when the breaches occurred.


  • Tuesday's lawsuit is one of the first by a servicer to attempt to put back losses for certain document-handling improprieties on an outside vendor. It concerns the use of "surrogate signers," or employees that weren't authorized to sign documents on behalf of the company.

  • American Home designated certain LPS employees as "special officers" [ie. robosigners] of the company in 2009 to process certain foreclosures, according to the lawsuit. But American Home said that LPS then allowed other unauthorized employees to sign the names of the approved "special officers" on foreclosure filings [ie. sub-robosigners]. The company also alleged that LPS had proposed steps that would have retroactively allowed the improper signatures.

For more, see American Home Mortgage Files 'Robo-Signing' Suit (requires subscription; if no subscription, TRY HERE, or GO HERE - then click appropriate link for the story).

"Sima Schwartz Saga" Continues; Bay State Homeowner Scores Big Win In Continuing Battle With Banksters To Hang Onto Home As Court Voids F'closure Sale

A U.S. Bankruptcy Court in Worcester, Massachusetts has recently issued a ruling in the ongoing saga (at least five years, based on the filing of the initial bankruptcy petition in this case) of local homeowner Sima Schwartz and her battle against foreclosing international bankster giant Deutsche Bank in her battle to hang on to her home.

Primarily on the basis of the Massachusetts Supreme Judicial Court ruling in U.S. Bank Nat. Ass'n v. Ibanez, 458 Mass. 637, 941 N.E.2d 40 (2011), the court found that that Deutsche Bank inexcusably screwed up in bringing a foreclosure where, while holding the promissory note, it failed to acquire the mortgage from MERS and, consequently, U.S. Bankruptcy Judge Melvin S. Hoffman declared the foreclosure sale of Ms. Schwartz void.(1)

For the ruling, see In re Schwartz, Case No. 06-42476-MSH, Adversary Proceeding No. 07-04098 (Bankr. D. Mass. August 22, 2011).

For most recent prior post on the ongoing "Sima Schwartz Saga," see 'Ibanez' Issue Compels Bay State Bankruptcy Court To Vacate Unfavorable Earlier Ruling Against Homeowner Fighting Foreclosure.

(1) The court concluding its opinion with this nutshell:

  • Having determined that MERS, and not Deutsche, held legal title to the mortgage on Ms. Schwartz's home mortgage as of May 3, 2006, when the notice of the foreclosure sale of her home was first published, it follows that Deutsche did not have the right to exercise the statutory power of sale and to foreclose the mortgage. See, e.g., Novastar Mortgage, Inc. v. Safran (may first require free registration to LexisOne Free Case Law; if not registered, TRY HERE) 79 Mass.App.Ct. 1124, 948 N.E.2d 917 (2011) (finding, in a post-foreclosure eviction proceeding, that the foreclosing entity had the burden to prove its title to the property by establishing that the mortgage had been assigned to it by MERS "at the critical stages of the foreclosure process.").

    By publishing notice of the foreclosure sale when it was not the mortgagee, Deutsche failed to comply with Mass. Gen. Laws ch. 244, § 14, and thus its foreclosure sale is void. Ibanez, 438 Mass. at 646-47.

    A declaratory judgment to that effect shall enter on count I of the complaint.


Congratulations to Ms. Schwartz on this, and hopefully future success in this matter.

Freddie's Friendly, Subtle 'Warning' To Real Estate Agents On Short Sale Fraud: 'Don't Play A Role, Don't Look The Other Way!'

Housing Wire reports:

  • Freddie Mac recently began reaching out to real estate associations and fielded more calls on a rising rate of fraudulent short sales. [...] Shelley Poland, a vice president at Freddie, and Robert Hagberg, the associate director of fraud investigations, said in a blog post Monday the mortgage giant sees short sale fraud on the rise as well — especially when real estate agents fail to disclose other parties involved in the transaction, who will rig sales at a low price and hide better offers from Freddie and the distressed homeowner.

  • "Then, after the house is sold, the fraudster can flip it a few hours later for the better price and walk away with the profitable difference," the Freddie executives said.


  • Short sales fraud is now the top priority for Hagberg's investigation unit. It began working with these real estate agents and law enforcement to detect suspicious activity before a deal closes. The unit also built an exclusionary list of companies and individuals who will can no longer do business with Freddie.

  • The unit soon began seeing trends. Some agents provide false offers on a property to discourage legitimate bids and ensure accomplices get the property for a planned low bid. Others manipulate the listing price to make the house seem more problematic than it is by inflating repair costs and obtaining an artificially low broker price opinion.


  • Others even skew the HUD-1 settlement statement, which itemizes fees, charges and other funds, to skim away proceeds from the short sale.

  • Freddie now requires all parties in a short sale to sign an affidavit, holding them liable if investigators find the transaction wasn't done at arms-length.

  • "There are many conscientious real estate professionals who want to do the right thing. We often receive calls in our servicing, quality control, fraud investigation, outreach, and HomeSteps divisions from real estate agents who know they've seen something inappropriate and won't look the other way,"(1) the executives said. "They understand that real estate fraud turns a shortsighted profit at the cost of the public's long-term confidence in homeownership and the housing industry."

For more, see Freddie Mac alerts real estate agents to rising short sale fraud.

See also, Freddie Mac: Teaming Up to Fight Short Sale Fraud.

(1) Real estate agents may want to note that, as a practical matter, they legally can't look the other way, at least not without opening themselves up to potential criminal exposure for misprision of a felony, a federal crime. See 18 U.S.C. §4:

  • Whoever, having knowledge of the actual commission of a felony cognizable by a court of the United States, conceals and does not as soon as possible make known the same to some judge or other person in civil or military authority under the United States, shall be fined under this title or imprisoned not more than three years, or both.

A couple of dozen court cases decided in 2011 alone is an indicator that the Feds don't take too kindly to those who, when witnessing a felony, simply look the other away and engage in willful ignorance in an attempt to establish plausible deniability in the event law enforcement investigators question them in the future about their knowledge of a crime they've witnessed (this seemingly-convenient 'lapse' into a state of willful ignorance by those witnessing a bad act is referred to by some as 'pleading the dummy defense').

Sunday, August 28, 2011

Michigan Deed Recording Official Tags Banksters w/ Suit Alleging Improper Exemption Claims To Dodge Local Taxes On F'closure-Related Realty Transfers

In Coldwater, Michigan, WTVB Radio 1590 AM reports:

  • The County of Branch and Branch County Register of Deeds Nancy Hutchins have filed suit in Circuit Court, alleging that nine separate mortgage companies and their business service providers have failed to pay appropriate fees and taxes on property transfers in the County.

  • Hutchins says review of county real estate records has shown a pattern of inappropriate claims for exemptions to state and county transfer taxes, primarily on sheriff’s deeds on foreclosure and the subsequent sale of those foreclosed properties. Hutchins is questioning the validity of claimed exemptions.

  • Transfer taxes are the monies paid when a new deed is recorded in the county’s Register of Deeds office. The taxes apply to the sale price of the property being transferred, unless it falls under $100. Many large-scale banks have used Fannie Mae and Freddie Mac to claim an exemption to pay the taxes by identifying Fannie Mae and Freddie Mac as government entities.

  • Hutchins says the issue has seriously affected the County Revenue stream, jeopardizing services that taxpayers rely on. She says it’s time for some of the banks and mortgage companies responsible for the nation-wide foreclosure mess to pay their fair share, instead of making county’s taxpayers bear all of the burden.

Source: Branch County Register Of Deeds Files Suit.

SEC & 'Deep-Sixed' Docs: Have Records Gathered In Probes Of Subsequently Unprosecuted Cases "Disappeared Forever Into The Wormhole Of History?"

Records gathered in fraud probes by the U.S. Securities & Exchange Commission that reportedly appear to have been 'deep-sixed' is the issue investigative reporter Matt Taibbi writes about in a recent article in Rolling Stone:

  • Imagine a world in which a man who is repeatedly investigated for a string of serious crimes, but never prosecuted, has his slate wiped clean every time the cops fail to make a case.

  • No more Lifetime channel specials where the murderer is unveiled after police stumble upon past intrigues in some old file – "Hey, chief, didja know this guy had two wives die falling down the stairs?" No more burglary sprees cracked when some sharp cop sees the same name pop up in one too many witness statements. This is a different world, one far friendlier to lawbreakers, where even the suspicion of wrongdoing gets wiped from the record.

  • That, it now appears, is exactly how the Securities and Exchange Commission has been treating the Wall Street criminals who cratered the global economy a few years back. For the past two decades, according to a whistle-blower at the SEC who recently came forward to Congress, the agency has been systematically destroying records of its preliminary investigations once they are closed.

  • By whitewashing the files of some of the nation's worst financial criminals, the SEC has kept an entire generation of federal investigators in the dark about past inquiries into insider trading, fraud and market manipulation against companies like Goldman Sachs, Deutsche Bank and AIG.

  • With a few strokes of the keyboard, the evidence gathered during thousands of investigations – "18,000 ... including Madoff," as one high-ranking SEC official put it during a panicked meeting about the destruction – has apparently disappeared forever into the wormhole of history.

For more, see Is the SEC Covering Up Wall Street Crimes? (A whistle-blower claims that over the past two decades, the agency has destroyed records of thousands of investigations, whitewashing the files of some of the nation's worst financial criminals).

See also, S.E.C. No Evil: Matt Taibbi on SEC covering up Wall Street crimes (interviewed on Countdown with Keith Olbermann).

Media Scores Again; Report Forces BofA Into Quick Backpeddle After Filing Foreclosure On Terminally Ill, Bedridden Senior, Spouse For Paying Too Early

In New Port Richey, Florida, the St. Petersburg Times reports:

  • It looks like Sharon and James Bullington might be able to stay in their home — for now at least. The retired couple faced foreclosure after paying a January mortgage payment one week early in December to Bank of America. The following month, the bank rejected their payment because it was made electronically without a signature. The bank then kicked them out of a loan modification plan and filed to foreclose on the home they have lived in for 15 years.

  • On Monday, two days after the St. Petersburg Times published an article detailing the saga, Bank of America admitted it made a mistake and said it was putting the couple back into the program.

  • James Bullington, 78, is terminally ill and bedridden. Sharon, 70, is his sole caregiver.

For more, see Bank of America admits error in foreclosure case.

See also, BofA Begins F'closure On Elderly Couple For Paying Too Early On Loan Mod Payments After Telling Them Default Required For Payment Workout Eligibility.

NY AG Gets The Boot From Executive Committee Of Multi-State Foreclosure Fraud Probe As Iowa AG Joins Feds In Move To Continue Screwing Over Homeowners

Reuters reports:

  • New York Attorney General Eric Schneiderman was removed on Tuesday from a committee of state attorneys general probing mortgage abuses, Iowa's attorney general said.

  • Schneiderman's removal follows his statements in recent months voicing concerns over a proposed deal between major banks and a coalition of federal and state officials over claims of foreclosure abuses.

  • "Effective immediately, the New York Attorney General's Office has been removed from the Executive Committee of the Robosigning multistate," an attorney in the Iowa Attorney General's office, which is leading the investigation, said in an email on Tuesday to other lawyers involved in the probe.

  • The removal is the latest sign of discord between Schneiderman and the state and federal coalition on mortgage abuses. On Monday, the New York Times reported that the federal government was pressuring him to agree to a settlement with the banks over abuses such as submitting allegedly false documents to remove borrowers from their homes.

For more, see Schneiderman removed from committee (Iowa says New York has "undermined" gov't coalition).

See also, Feds To Sell Out Homeowners? Begin Arm-Twisting Campaign, Targeting NY AG, Others To Seek Support For Crappy, 50-State Foreclosure Fraud Settlement.