Saturday, October 15, 2011

Cop Pinched For Allegedly Selling Trailer Home He Didn't Own; Pocketed $8K From Unwitting Buyer Plus $1K In Unremitted Lot Rent

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

  • A Palm Beach County Sheriff's deputy was arrested and charged with three counts of grand theft [...] for allegedly selling a trailer home that didn't belong to him.

  • Sheriff's deputy Jose Antonio Claudio, 47, who was named Deputy of the Month in February 2010, is being held at the Palm Beach County Jail in lieu of $9,000 bond. He is charged one count of grand theft at a value of no more than $10,000 and two counts of grand theft at a value of no more than $5,000.


  • The investigation would later reveal that Claudio allegedly sold a trailer home [...] to Myra Longoria on Aug. 7, 2008 for $8,000 and kept the money even though he never held the title to it, the affidavit said.

  • Claudio allegedly bought the same property from Riverstone Communities for $6,000 a week after he sold it to Longoria, the affidavit stated. He also collected $525 rent for the lot twice without the company's authorization and did not give the checks to the company.

For the story, see Grand theft charges filed against Palm Beach County sheriff's deputy.

Ohio AG To Pursue Home Improvement Ripoffs As Criminal Prosecutions When Appropriate; Norm Has Been To Treat Cases As 'Civil Matters'

From the Office of the Ohio Attorney General:

  • A home-improvement scam prosecuted as a criminal offense led to a guilty plea by James Burchett of Amelia, Ohio, who was sentenced today in Hamilton County Court to 18 months in prison.

  • Such scams were normally handled as civil matters, but Ohio Attorney General Mike DeWine has made it a priority to treat these cases as criminal when appropriate.

  • "We have added additional people and resources to aid in the investigation and prosecution of these consumer protection cases," said Attorney General DeWine. "Working with local prosecutors' offices and law enforcement, we want to send the message to scammers that Ohio is not a good place for them to do business."

  • Burchett pled guilty to two counts each of theft and theft from the elderly. His crimes cost consumers $17,000 and included:

    1) Accepting almost $13,000 from an 87-year-old woman to install a fence. The job was partially done but the workmanship was shoddy.(1)

    2) Taking more than $1,000 for a concrete porch installation. The job was not done.

For the Ohio AG press release, see Home-Improvement Scammer Receives 18 Months in Prison.

(1) There seems to be a misconception among many cops, investigators and others in law enforcement that the only time you can prosecute a home improvement scam is if the scammer pockets the cash from the victim and does no work at all. The erroneous view is that if the scammer performs some work of value, the case falls outside the scope of criminality and the victims' only recourse is to go after scammers themselves by suing them in court.

The Ohio AG's action in this case is proof that such a view is erroneous, and is evidence that any cop or investigator who advises a victim that the case is a 'civil matter' is either clueless or someone who just doesn't feel like investigating the case.

Minimizing Impact Of 'Transfer Trauma' To Residents Of Nursing Homes Facing Closure Among Benefits Of New California Elderly Abuse Prevention Laws

In Sacramento, California, The Associated Press reports:

  • Gov. Jerry Brown signed a series of bills into law Friday designed to protect elderly people, including two that require care facilities to notify their residents of possible closures and another intended to expedite reporting of suspected elder abuse.

  • AB313 by Sen. Bill Monning, D-Santa Cruz, requires residential facilities to conspicuously post notices for at least 30 days and provide written notices to residents and their responsible parties if the facility's license is in jeopardy. The bill was introduced after a nursing home in Santa Cruz was ordered to close last year and residents were only given two weeks of notice.

  • "These protections will ensure residents have enough time to prepare for a move and minimize the impact of transfer trauma," Monning said.

  • A similar bill by Sen. Mark Leno, D-San Francisco, also requires such facilities to provide notices to residents of possible closures. SB897 would protect residents from abruptly have to relocate by requiring facilities to notify them in writing of possible foreclosure or severe financial distress.

  • Other legislation is aimed at protecting the elderly from financial theft or abuse. SB718 by Sen. Juan Vargas, D-San Diego, would establish a confidential Internet reporting system for elder abuse. The bill was written in response to budget cuts that decreased the number of personnel able to handle calls from mandated reporters or the general public about elder abuse.

  • The Internet system requires that people provide the same information they would over the phone but without having to wait to report abuse over the elder abuse phone line. "This effective reporting system will ensure that our seniors' voices are heard and abuses are not overlooked," Vargas said last month.

  • A bill by Bob Blumenfield, D-Van Nuys, protects elderly people during financial abuse trials. AB1293 would give courts the ability to seize and freeze a defendant's assets in cases where $100,000 or more is suspected of being stolen or embezzled from an elderly person's property.

  • Blumenfield says the bill will prevent people accused of stealing from seniors from using those assets to fund their own defense. It also ensures the seniors have the opportunity for receiving restitution.

  • A law passed in 2005 mandating that financial institutions, such as banks, report elder financial abuse has now been made permanent. SB33, by Sen. Joe Simitian D-Palo Alto, eliminates the 2013 sunset date of SB1018 and continues to require loan or credit employees to report financial abuses if they notice them in contracts involving a senior's financial matters.

  • The bills are among eight, some technical in nature, that Brown signed relating to elder abuse.

Source: Governor signs bills intended to protect elderly.

BofA To Consider Rebranding Effort? Possible Name Change Seen By Some To Be In Alignment With Recent Behaviors By Bankster Giant

In Harfold, Vermont, The reports:

  • Insiders in the banking industry confide that Bank of America is currently considering a name change to Bank Against America, a change which would certainly be in alignment with recent behaviors by the banking[ster] giant.

  • Bank of America announced [last] week that they would begin penalizing customers who left home without enough cash to pay for their purchases. Long seen as the wave of the future, the safe, responsible debit card now itself carries a price tag. A five-dollar fee will now be assessed to those account holders who dare to enter the 21st century.

  • "I guess we need to turn back the clock," said Harfold resident and Bank of America customer, Silvia Niell. "I guess everybody has carry around a wad of bills in their pockets like gas station attendants."

  • This press comes fresh on the heels of the arrests of two dozen protesters in Boston. Demonstrating against Bank of America's foreclosure practices at the bank'a offices, police obliged the hard-done-by citizens by throwing them into the slammer.

  • Bank of America spokesperson Crawford Tejay dismissed the protest as small potatoes. "Bank of America feels it's time America woke up. Gone are the days when your friendly, neighborhood banker was there to help you start a business or buy your first home. That same banker is there to make money for the bank. End of story."

Source: Bank of America to consider name change: Bank Against America (One insider claims that B. of A. will soon replace their ATM machines with rigged slot machines).

Friday, October 14, 2011

Freddie Slams Brakes On Foreclosure Of Home Allegedly Ripped Off By Victims' Grandson With Forged Deed, POA, Leaving Elderly Couple Facing The Boot

In Ramsey County, Minnesota, the Pioneer Press reports:

  • Stella and Joseph Hernandez dodged an eviction bullet Friday. On Thursday, the Ramsey County sheriff's office delivered the elderly St. Paul couple an eviction notice that gave them until 3 p.m. Friday to vacate their home of nearly 35 years.

  • The couple, whose plight was detailed in this column Sunday, say a grandson had them sign a quitclaim deed without their knowledge. In addition, they say, he forged their signatures on power-of-attorney forms to obtain more than $300,000 in mortgage loans that were never repaid.

  • The grandson denied the allegations, but meanwhile, the 91-year-old Tudor home near the Cathedral of St. Paul underwent foreclosure and was sold this year to the Federal Home Loan Mortgage Corp. However, U.S. Sen. Amy Klobuchar, who read about the couple's housing woes, contacted Freddie Mac officials and persuaded them to put the eviction on hold. "They feel for the couple and think it's tragic," Klobuchar told me Friday. "Right now, the eviction is temporarily on hold until we come up with a permanent solution."

  • Stella Hernandez, 83, said she received the sheriff notice shortly after she returned from cancer treatment at a clinic near her home. She cares for her 93-year-old husband, a decorated World War II veteran who suffers from dementia and underwent a quintuple bypass surgery six years ago.

For more, see Aging St. Paul couple's eviction put off after Klobuchar intervenes.

Title/Closing Attorney Enters Guilty Plea In $1M+ Escrow Funds Ripoff; Surrenders Law License, Ends 44-Year Career With Thud

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

  • A Henrico County lawyer pleaded guilty Wednesday to embezzling more than $1 million in Bank of America mortgage and foreclosure funds and will be sentenced in January.(1) In a brief hearing, William Orr Smith, 71, appeared in Henrico Circuit Court and pleaded guilty; Smith's lawyer has said for months that Smith would not contest the charges and that he has cooperated with authorities.

  • Smith also cooperated with Virginia State Bar investigators in a separate investigation and surrendered his law license in June.

  • Special Prosecutor Tracy Thorne-Begland said Wednesday that Smith's law practice and his Montbrook Title LLC grew rapidly five years ago during the housing boom, at one point swelling to as many as a dozen employees.

  • That growth found Smith with shortages of cash as the business grew, and Smith began using money from different accounts to make payments on immediate obligations, Thorne-Begland said. The scheme lasted about five years and began to collapse as the housing market collapsed.

  • Thorne-Begland said there is no evidence that Smith diverted embezzled funds into his private holdings or to embellish his lifestyle, but he said he will ask for a sentence above sentencing guidelines, which could come in under less than a year.

  • Smith, of [...] western Henrico, had practiced law for 44 years. Also charged is Donna M. Allen, 37, of Dinwiddie County, a secretary to Smith, who is accused of extorting about $20,000 from him by threatening to tell authorities about his scheme.

Source: Henrico lawyer pleads guilty to theft.

(1) The Virginia State Bar's Clients' Protection Fund was established to reimburse clients who have suffered a loss due to misappropriation or embezzle­ment by a Florida-licensed attorney.

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

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

NY Judge Orders Halt Of City Of Buffalo Garbage Fee Foreclosures; Homeowners Still On Hook For Administrative Fees

In Buffalo, New York, WIVB-TV Channel 4 reports:

  • Hundreds of Buffalo homeowners who hadn't paid their garbage or sewer fees had their homes saved from auction by a judge on Monday. A judge's intervention has spared hundreds of Buffalo residents from losing their homes, but they're still stuck paying hundreds of dollars in foreclosure fees. All of this, over $50 or $100 in back-owed sewer or garbage bills.

  • Half of the houses that were supposed to be part of this year's foreclosure auction in the city of Buffalo belong to people whose only crime was being late to pay garbage fees or sewer taxes.

  • WNY Law Center supervising attorney Lauren Breen said, "Out of the, I think it was 5,600 properties on the list in January, 52 percent of those properties -- or more than 2,900 of those properties -- were on the list for just owing the garbage fee."

  • In some cases, the residents owed the city less than $50. Erie County Judge Thomas Franczyk yanked the properties off the foreclosure list, after the WNY Law Center filed a class-action lawsuit on behalf of the homeowners last Wednesday.

For more, see Foreclosures over garbage fees halted.

See also, Judge Makes Dramatic Ruling on Buffalo’s Tax Foreclosures.

Homeowner Scores Foreclosure Win Against HOA Over Unpaid $4.70 Charge That Ballooned To $3K

In Melbourne, Florida, Florida Today reports:

  • For Geeta Ramcharitar, the ordeal began with a past due balance of $4.70 owed to her condominium association in Melbourne’s Venetian Village — and ballooned from there. The threatened end: foreclosure on her two-bedroom condo.

  • The 56-year-old grandmother got lucky. County Court Judge William McLuan tossed out the foreclosure case brought by her condo association, ordering each side to pay their own attorney’s fees.

  • But while Ramcharitar’s situation sounds extreme — a foreclosure case that began over what initially was such a paltry sum — she’s hardly alone. [...] Marlene Kirtland, the attorney representing Becker & Poliakoff, the law firm representing the condo association, also declined to comment.

  • The exact origins of Ramcharitar’s dispute are unclear, but records show she owed a past due balance of $4.70 to the association in August 2009 and became subject to monthly late fees.

  • By November of that year, certified letters sent by Becker & Poliakoff said the association intended to foreclose for nonpayment of dues. At the time, her total outstanding fees were $1,248.89. Of that total, $760 were for attorney fees. By the middle of 2010, the attorney fees for all the paperwork sent to her had ballooned to about $3,000.

  • An effort at mediation failed. That led to a non- jury foreclosure trial this summer. “This was completely unnecessary,” said Ramcharitar’s lawyer, Ken Weaver, who disputed the charges against her.

  • Primarily a criminal defense lawyer, he had never defended a foreclosure case, but “I was compelled by a sense of justice, this woman needed a defense.”

  • Weaver said he’s grateful the case was tossed out, and complained that the practice that started the problem is predatory. He said: “She is relieved that the court was able to understand the issue and apply the rules so that this lady could keep her house.”

For the story, see Grandmother nearly loses condo to foreclosure after $4.70 fee balloons to nearly $3,000.

Thursday, October 13, 2011

Dyck's Deeds Drive Homeowners, Recording Officials 'Wild' In Sovereign Citizen Title Snatching Scam; 'Paper Terrorist' Responsible

In Osceola County, Florida, the St. Petersburg Times reports:

  • Last year, Olga Aponte sold the New York home she'd owned for 32 years and paid cash for a foreclosure house in Kissimmee. The 67-year-old wanted a solid retirement investment. For months, she lived in peace.

  • That was, until she learned about the intruder. It happened this summer, when her son saw the name of a stranger on her property records, on a deed filed one month after she bought her house: Jacob Franz Dyck.

  • But Aponte had never met Dyck, or agreed to sign anything. And she wasn't the only one. Dyck, the Times has learned, has filed more than 100 "wild deeds" laying claim to properties in Osceola county. The deeds bear no signatures of the rightful homeowners or any evidence of their consent.

  • What is he doing and what does he stand to gain? It's unclear. Authorities can't find him to answer that question, but his track record gives them cause for concern.

  • Dyck, 72, is a self-proclaimed "sovereign citizen," purporting to be above the laws of government. He's also a felon. The St. Petersburg Times wrote about him in August after homeowners said he misled them into thinking they could avoid foreclosure by deeding their houses to him to put into a "pure trust." For this, he charged a fee. Owners lost their homes anyway.

  • "Sovereign citizens" have declared themselves free from government and believe banks don't have a right to foreclose on properties; they often flood the courts with documents, a practice known among critics as "paper terrorism."

  • The theories for Dyck's actions matter less than the implication: There is little to stop this from happening to you.

For more, see Jacob Dyck's wild deeds perplex homeowners.

Developer Gets 9 Years For Loans Obtained On Unbuilt Homes, Fictional Addresses; Failure To Record Liens Led To Multiple 'Reselling' Of Properties

From the Office Of The U.S. Attorney (Brooklyn, New York):

  • [I]n U.S. District Court in Brooklyn, Thomas Kontogiannis, a New York real estate developer who led a mortgage fraud conspiracy resulting in more than $98 million in losses, was sentenced to 108 months of imprisonment for conspiracy to commit bank fraud. United States District Judge Kiyo A. Matsumoto imposed the sentence pursuant to Kontogiannis’s October 2010 guilty plea. Seven co-defendants previously pleaded guilty.


  • Kontogiannis defrauded Washington Mutual Bank (WAMU) and DLJ Mortgage Capital, Inc. (DLJ), a subsidiary of Credit Suisse, in connection with his development of two tracts of land in Brooklyn and Queens. He purchased and subdivided Loring Estates, located in East New York, Brooklyn, and Edgewater Development, located in College Point, Queens, and then staged sales of the properties financed by mortgage loans to straw buyers. Kontogiannis directed others to prepare false loan files to create the appearance that the straw buyers were creditworthy homeowners.

  • The mortgages were supported by fraudulent appraisals depicting finished homes, when the buildings had yet to be built or had fictional addresses, and the mortgage files contained fraudulent title abstract reports and other documentation designed to indicate that the seller, a Kontogiannis-controlled entity, had clear title to convey and that the lender’s interest was protected by title insurance.

  • The loans were financed by lenders controlled by Kontogiannis, including Interamerican Mortgage Corp., later known as CIP Mortgage Corp. and Coastal Capital Corp. After the loans were closed, Kontogiannis ensured that the mortgages and deeds were not recorded, thereby permitting him to “sell” the same property repeatedly. Eventually, Kontogiannis sold the loans to WAMU or DLJ.

  • In an effort to conceal the multiple sales of the same properties, Kontogiannis changed the addresses of properties located in East New York, Brooklyn, to addresses in neighboring Howard Beach, Queens. In addition, he directed others to make monthly payments on the mortgages, ensuring that none of the mortgages became delinquent. The payments ceased in 2007, with approximately $98 million in principal outstanding on the fraudulent mortgages.

For the U.S. Attorney press release, see Leader Of $98 Million Mortgage Fraud Sentenced To 108 Months.

Trio Face Racketeering Charges In Alleged Vacant Foreclosed Home Hijacking Scam; Suspect: 'Nobody Told Me Snatching Empty Houses Was Illegal!'

In DeKalb County, Georgia, WSB-TV Channel 2 reports:

  • A DeKalb County grand jury has indicted three people on charges of racketeering, after a yearlong Channel 2 investigation exposed their alleged scheme to take over foreclosed homes. Decatur police arrested Susan Weidman, the woman at the center of the investigation, at a home on Champlain Street Tuesday morning.

  • A Channel 2 investigation in May revealed a bogus court document Weidman is accused of filing, claiming the home was abandoned and that she now owns it. It's actually a foreclosure owned by Chase Bank.


  • The indictment alleges Weidman recruited Ian Greye to pose as a renter at the home. Prosecutors said Greye and Weidman used a fake lease between them to keep law enforcement from forcing them out of the home for several months.

  • "When law enforcement would question why they were there, they would present the bogus lease and say, ‘Well, we have right to be here,’” DeKalb County District Attorney Robert James said.

  • He said Weidman ran the same scheme in Forsyth County. Matthew Lowery was charged as the alleged “renter” of a home on Shade Tree Way in Cumming. Another Channel 2 investigation exposed that portion of the story just last week, including questions as to whether Chase Bank wanted to pursue criminal action against Weidman for that case.

  • Chase Bank ultimately decided to allow DeKalb County to prosecute both cases together, along with a third property on Spalding Hills Drive in Sandy Springs. The racketeering indictment cites burglary, theft by taking, and mail fraud, among other charges. "That enterprise was for the purpose of taking homes. It's complicated, but it's simple," added James.


  • Even as officers led her away in handcuffs, Weidman insisted she thought what was she was doing was legal. "I feel a little bit entrapped, that if this was illegal, why didn't they put something in writing and explain that to me?” she told Fleischer.

For more, see Subject of Ch. 2 house-stealing investigation indicted on racketeering charges.

Elderly, Infirm St. Paul Couple Faces The Boot From Home Of 35 Years; Accuse Once-Trusted Grandson Of Duping Them In $300K+ Quit-Claim Deed Ripoff

In St. Paul, Minnesota, the Pioneer Press reports:

  • Joseph Hernandez, all of 93, is a decorated World War II combat veteran with two Purple Hearts and a nasty scar on his head from a bullet. His bride of 66 years, Stella Hernandez, 83, was a Rosie the Riveter during the war, over at St. Paul's Holman Field, and owns more colorful hats than Imelda Marcos owned shoes.

  • They are lifelong St. Paul residents who once lived on the West Side river flats and helped put a son and grandson through college. But neither their service and sacrifice nor their love for each other will save them from eviction this month from their St. Paul home of nearly 35 years.

  • Come Oct. 31, they will be evicted from their 91-year-old Tudor-style home, a holy water's sprinkle from the Cathedral of St. Paul. The foreclosed home's new owners, actually U.S. taxpayers through Freddie Mac, will then put it up for sale.


  • How this happened also serves as a cautionary tale. The couple maintain that their predicament stems from trusting a grandson who had them unknowingly sign a quitclaim deed and allegedly forged their signatures on power-of-attorney documents.

  • The paperwork was then used to obtain - without the couple's knowledge - more than $300,000 in loans that were never repaid.(1)

For more, see Aging St. Paul couple losing home to alleged family deceit.

(1) More from the story:

  • The couple approached the University of St. Thomas School of Law's Elder Law Practice Group for legal help on the alleged forgeries. Using certified law students, the program provides legal aid to elderly clients in long-term care and financial-abuse situations. They requested that the Minnesota Department of Commerce investigate the notaries public who stamped the power-of-attorney forms. The results were surprising.

  • The DOC investigators found there had never been a valid commission issued to one of the notaries. They located and interviewed the other, a court reporter.

  • "She has stated she has never notarized a signature for someone she does not personally know and did not notarize these documents," the agency stated in a 2009 letter sent to Jennifer Wright, then the supervising attorney at the elder law program and an associate professor at the law school.

  • The couple filed a civil complaint that same year against the grandson, as well as Freddie Mac, now the owner of the mortgages from the General Mills Federal Credit Union.

  • Citing the alleged forgeries and the contested quitclaim deed, the lawsuit sought to invalidate the mortgage security interests on the property and also reclaim title. An additional $100,000 loan Hernandez obtained from a private individual - who attached a lien to the property - was not part of the suit.

  • At the time of the suit, the defaulted loans had an outstanding balance of $310,928.14. Through attorneys, Michael Hernandez denied the allegations, as did Freddie Mac. But this is where Stella and Joseph Hernandez erred. They failed to appear for numerous pretrial conferences and refused to take part in court-ordered mediation.

  • As a result, the elder law group pulled out. Because of the lack of cooperation, Ramsey County District Judge Gregg Johnson dismissed the suit with prejudice, meaning that lawyers could go after the couple for attorneys' fees. Still, Johnson confirmed this week that the ruling did not go to the merits of the allegations raised by the couple.

  • Ditto the St. Paul police complaint. Officers interviewed the couple but closed the case months later because they did not receive documentation they requested. Stella cited medical reasons for not following through. [the couple's concerned niece Vicki] Giller believes the couple's age and lack of knowledge about court procedures and the anguish of it all also played roles.


  • Freddie Mac bought the home for $257,297.63 at a sheriff's sale Jan. 28. Eviction proceedings were launched last month after the grandson made no apparent attempt to pay off the loans during the six-month redemption period that follows a sale.

  • Wright, citing attorney-client privilege, would not discuss specifics of the suit the elder law program filed on behalf of the couple. But generally speaking, the allegation that a family member has committed fraud "has become a big part of our caseload," she said.

  • "Senior clients have lost titles to homes or life savings to someone they know or trusted, and often sign stuff they should not sign because they trusted and grew up in a more trusting age."

  • Stella said the couple is estranged from both the grandson and the man's father, who is their only child - a doctor who lives in Ohio. "We have not spoken to him (the grandson) in years, and we don't even know where he lives," Stella Hernandez said.

Wednesday, October 12, 2011

County Recording Official Discovers Robosigning Not Limited To F'closure Docs; Mortgage Release On His Own Home Signed By Notorious Signature Scrawler

In Fort Wayne, Indiana, The Journal Gazette reports:

  • Allen County Recorder John McGauley knew property documents with suspect signatures were prevalent. After all, there were so many that a year ago the nation’s largest banks had to halt foreclosures to deal with the sea of paperwork that could not be trusted.

  • The problem was so big it spawned a new word to describe it: “robo-signing,” meaning offices filled with low-paid workers signing documents they had never read, documents they were not qualified to sign and often signing someone else’s name.

  • Still, McGauley was surprised to hear that robo-signing was not limited to foreclosure documents but was being found on thousands of homeownership documents having nothing to do with seized homes.

  • He was even more surprised when a quick check of Allen County records revealed more than 8,000 suspect documents have been filed here since 2006 – records McGauley’s office is charged with preserving as the final word in property ownership. “It was just like reaching into a hat where your number was on more slips of paper than it wasn’t on,” McGauley said. “Everything you pulled out was another one.”

  • But the real surprise was when McGauley looked through the documents for his own home. The mortgage release on the house he and his wife sold in 2005 bears the signature of Linda Green – the most notorious robo-signer in the nation. “This is the kind of thing that can really upset people because the biggest investment most people will ever make is their home,” McGauley said. “It’s frustrating me.”

  • It could be frustrating millions soon and frustrating an already-battered real estate market. If invalid documents are discovered in the chain of ownership, it could delay a home sale or make it difficult for buyers to get a mortgage because title insurers will not write a policy for the property, said Justin Ailes, vice president of government affairs of the American Land Title Association, which represents the title insurance industry.

  • Banks and other mortgage lenders will not write a home loan without title insurance. That means your house – even if you’ve never missed a payment or had an ownership dispute – could be impossible to sell until the documents are verified, or it could be impossible to buy your dream home.(1)

For more, see Signing scandal hitting home (Dubious names affect verification of deeds).

(1) County Recorder McGauley had this observation on the state of affairs created by the robosigning scandal and its affect on all title to real estate, including those titles unaffected by foreclosure:

  • For a hundred years, the property ownership system in Indiana was based on trust. You assumed you could trust the documents recorded in the recorder’s office. That has deteriorated,” he said. “This is supposed to be the public record. It becomes history. … At best, it muddies that process; at worst, it turns it into garbage.”

5th Circuit Tells Judgment Creditor To 'Take A Hike!' Improper Attempt To Snatch Bankrupt Debtor's Home Sale Proceeds Violates Texas Homestead Law

Bloomberg Businessweek reports:

  • A creditor with a pre-bankruptcy judgment lien doesn't automatically have a secured claim in proceeds from the sale of a homestead in excess of the homestead exemption, the U.S. Court of Appeals in New Orleans ruled on Oct. 4.

  • The case involved an individual saddled with a pre- bankruptcy judgment for $538,000. The judgment was recorded before bankruptcy and became a lien on the home. After bankruptcy, the owner sold the homestead with approval from the court and the Chapter 7 trustee, generating over $500,000 in proceeds in excess of the mortgage.

  • The judgment creditor claimed to have a valid lien in the net proceeds in excess of the $125,000 limitation on the homestead exemption in Section 522(p) of the Bankruptcy Code.

  • Circuit Judge Priscilla R. Owen rejected the argument. She read from Texas law where a judgment lien creditor cannot enforce a lien against a homestead. Therefore, Owen said that the lien likewise was unenforceable against the property after bankruptcy.

  • She explained that Section 522(p) limits the amount of a bankrupt's exempt interest in property. The section “does not speak” to the judgment creditor's interest in the property.

  • Owen ruled that the lienholder “does not have a right specifically enforceable in the excess proceeds.” Nonetheless, Owen said that the appeals court was not ruling on whether the creditor “has an otherwise enforceable interest in the estate.” The case was returned to the bankruptcy court for further proceedings.

Source: Homestead Limit Doesn't Make Judgment Enforceable (2nd story from the bottom).

For the ruling, see In re McCombs, 08-20171, (5th Cir. October 4, 2011).

Baltimore Feds Nail Two More Sale Leaseback Peddlers That Ripped Off Homeowners In Foreclosure Of At Least $1.2M In Equity Stripping Scam

In Baltimore, Maryland, The Baltimore Sun reports:

  • A Severna Park mortgage broker pleaded guilty Friday in a mortgage fraud case that left lenders with more than $940,000 in losses, robbed homeowners of at least $1.2 million in home equity and pushed 16 homes into foreclosure, the Maryland U.S. attorney's office said. Mary Anne Dean, 60, pleaded guilty to conspiracy to commit wire fraud. Charles Donaldson, a loan officer described as her co-conspirator, pleaded guilty last week.

  • The Maryland U.S. attorney's office said Donaldson, 57, recruited homeowners struggling with their mortgages for what he said would be a foreclosure rescue plan: They would sell their homes to investors, remain there as renters for a year or so and then buy the properties back after repairing their finances.

  • Dean brokered loans for the "investors" — Donaldson's relatives and acquaintances — by submitting mortgage applications with inflated income and other false information, according to their plea agreements. Donaldson promised participants that he would hold most of the homeowners' equity in an escrow account to help with the payments.

  • Instead, Donaldson spent much of the homeowners' equity, according to the plea agreement. That left both the investors and the former homeowners in dire straits, unable to make payments. Thirteen homes have been taken back by lenders and three more are tied up in foreclosure proceedings, the Maryland U.S. attorney's office said.

  • Dean and Donaldson are scheduled for sentencing in January. The maximum punishment is 20 years in prison and a $250,000 fine.(1)

Source: Broker, loan officer plead guilty in mortgage-fraud case (Mary Anne Dean pleads guilty to conspiracy to commit wire fraud).

For the U.S. Attorney press release, see Mortgage Broker and Loan Officer Plead Guilty in Fraudulent Mortgage Rescue Scheme Resulting in Losses of over $1.2 Million to Homeowners in Financial Distress.

(1) See Criminal Prosecutions Of Sale Leaseback Peddlers In Equity Stripping Foreclosure Rescue Deals for other prosecutions of the lowlifes that perpetrate this type of racket.

See generally, DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams.

Ex-Non Profit Employee Cops Plea To Pocketing Cash From Financially Strapped Homeowners Seeking Loan Mods To Prevent Foreclosure

In Dunkirk, New York, WIVB-TV Channel 4 reports:

  • DUNKIRK, N.Y. (RELEASE) - U.S. Attorney William J. Hochul, Jr. announced [] that Lori J. Macakanja, 35, of Dunkirk, New York, pleaded guilty to mail fraud and theft of government money [...].

  • Assistant U.S. Attorney Trini E. Ross, who is handling the case, stated that Macakanja, in her capacity as a housing counselor employed by HomeFront, Inc., inappropriately requested money from clients. The defendant told HomeFront clients that the money would be used toward loan modifications to prevent foreclosure on their homes.

  • However, after receiving the funds, Macakanja used the money for her own personal use, including gambling, and failed to obtain the loan modifications for the victims. A total of 136 HomeFront clients were defrauded with losses totaling $300,000.

  • In addition, Macakanja also obtained federal grant monies from the Buffalo Urban Renewal Agency (BURA) for HomeFront clients. On two occasions, she diverted $2,000 worth of BURA money to pay her own personal mortgage.

For more, see Housing counselor defrauded clients.

N. California Man Gets 70 Months For Running R/E Ponzi Scam, Foreclosure Rescue Ripoff Involving Fraudulent Bankruptcy Filings To Stall Legal Process

From the Office of the U.S. Attorney (Sacramento, California):

  • United States Attorney Benjamin B. Wagner announced that Royce Lee Newcomb, 49, of Roseville, was sentenced [...] to five years and 10 months in prison, to be followed by three years of supervised release for a real estate fraud scheme. The amount of restitution will be determined at a future hearing. Newcomb pleaded guilty to the charges on May 12, 2011.


  • [In addition to running a real estate Ponzi scheme investment racket that clipped 22 investors], Newcomb also violated Title 11 of the United States Code with respect to filing of bankruptcy cases.

  • Newcomb marketed himself as offering foreclosure “rescue” services through Paradigm Foreclosure Specialists, which Newcomb registered by using his middle name as his surname.

  • Newcomb solicited individuals to pay him between $1300 and $3800 to avoid or delay the foreclosure process by filing serial bankruptcy petitions without supporting documentation.

  • In one case, Newcomb accepted a woman's wedding ring, valued at $5000, in lieu of payment. Newcomb, through associates and friends, filed the bankruptcy petitions on behalf of individuals, on occasion without the knowledge of the individual.

  • Newcomb had previously been sanctioned by the United States Trustee for similar abuse of the bankruptcy process. Thus, he was aware that the filings were insufficient and in violation of bankruptcy law.(1)

For the U.S. Attorney press release, see Roseville Man Sentenced In $2.9 Million Real Estate Ponzi Scheme.

(1) See Final Report Of The Bankruptcy Foreclosure Scam Task Force for a description of various foreclosure rescue rackets involving the abuse of the bankruptcy courts.

Tuesday, October 11, 2011

Feds' Ongoing Crackdown On Upfront Fee Loan Modification Ripoffs Leads To Shutdown Of Two More Rackets

From the Federal Trade Commission:

  • At the Federal Trade Commission’s request, a U.S. district court has shut down two related operations as a result of settlements with defendants who allegedly failed to provide promised debt relief services and jeopardized their clients’ privacy by tossing their personal information into unsecured dumpsters. In addition, one of the operations allegedly charged consumers a $1,495 up-front fee based on phony promises that they would get mortgage relief assistance.

  • The settlements with Residential Relief Foundation, LLC; Silver Lining Services, LLC; Mitigation America, LLC; and their principal owners are part of the FTC’s ongoing crackdown on scams that target consumers in financial distress. The settlements ban the defendants from working in the mortgage assistance and debt relief business, prohibit them from the alleged privacy violations, and impose judgments totaling more than $11 million – the amount of consumer harm they caused.

For the FTC press release, see At FTC’s Request, Court Shuts Down Deceptive Mortgage and Debt Relief Operation (One Firm Charged $1,495 for Loan Modification Program, but Provided No Services).

See Federal Trade Commission v. Residential Relief Foundation, Inc., et al. for links to the lawsuit and the Stipulated Final Orders for Permanent Injunction and Settlement of Claims.

Indiana AG Tags Two More Out-Of-State Loan Modification Outfits With Civil Suits Alleging Upfront Fee Ripoffs, Failure To Register, File Bonds

In Lake County, Indiana, the Northwest Indiana Times reports:

  • Indiana Attorney General Greg Zoeller alleges two out-of-state firms targeting Hoosiers with mortgage foreclosure or credit problems are operating illegally in Indiana.

  • Zoeller personally filed court papers in the Lake County clerk's office here Tuesday morning naming the Florida-based Marucci Law Firm and Illinois-based EAC Financial in lawsuits alleging their "rescue" businesses violated several state laws including the Indiana's Deceptive Consumer Sales Act.

  • He is seeking injunctions to stop the firms from collecting upfront fees while failing to provide services. He wants court orders forcing them to pay restitution to their Hoosier customers as well as civil penalties and attorney fees. Zoeller said both firms failed to register with the Indiana Secretary of State or file a bond with the state.

  • He alleges a Lake County resident contacted Marucci through an online service and paid the law firm $2,600. He said EAC Financial contacted another local resident by telephone who paid them $750.

For more, see AG sues to stop 'rescue' firms from targeting locals.

Oregon AG Targets Outfit With Civil Suit In Alleged Upfront Fee Loan Modification Ripoffs That Pocketed About $90K From 30+ Homeowners

In Salem, Oregon, KTVZ reports:

  • Attorney General John Kroger announced a lawsuit Friday accusing California-based loan modification company NOD Consultants, LLC of illegally collecting about $90,000 in fees from nearly three dozen Oregon homeowners and then refusing to provide refunds after the company failed to obtain promised loan modifications. It was one of two actions he announced Friday involving loan modification scams.


  • The lawsuit was filed Sept. 29 in Clackamas County Circuit Court against NOD Consultants and the company’s two principals, Nicolas R. Godbout and Grant A. Gerhart. [...] According to the complaint, although most of the defendants' Oregon clients were current on their mortgage payments, the defendants encouraged them to skip at least one payment, claiming it would encourage their lender to re-negotiate.

  • Notwithstanding promises to obtain loan modifications, NOD Consultants allegedly failed to obtain a loan modification for 33 of its 34 Oregon clients. The complaint states that, despite the defendants' repeated failure to obtain loan modifications, they have generally refused to refund the fees paid by their clients.


  • Earlier Friday, Kroger announced an agreement that will provide restitution for more than two dozen Oregon homeowners who were promised loan modifications that were never delivered.

  • The agreement bans American Team Mortgage, Inc., dba American Mortgage Relief, and Steve Hufstedler from foreclosure counseling, credit/debt counseling, loan modification or mortgage origination in Oregon. Under the agreement, 28 homeowners will receive $67,000 in restitution. Oregon will receive an additional $65,000 for its consumer protection efforts.

  • The Department of Justice and the Department of Consumer and Business Services conducted a joint investigation into allegations that the companies took illegal upfront fees to provide loan modifications. The investigation determined that 28 Oregon homeowners received neither the loan modification they paid for nor a refund.

For the story, see Oregon AG Targets Loan Modification Scams (Sues One Firm, Shuts Another Down).

Financially Strapped Homeowner Victimized By Sewer Service In Foreclosure Action Involving Once-Prominent Florida Law Firm Sweatshop Operator?

In Cape Coral, Florida, The News Press reports:

  • Paula Dobberstein's story starts out like so many others who are in foreclosure. And unfortunately, it looks like it's ending up like many others, too - with attorneys for the banks and mortgage companies using falsified documents and fabrications to deny homeowners' rights.

  • "This is the most horrible thing I've been through in my life," she said. In 2007 Dobberstein took out a $544,000 loan to refinance her Cape Coral home. The interest rate on the loan was 8.375 percent and her monthly mortgage payment was $2,149.46.

  • Soon after, Dobberstein, a registered nurse, took a $10-an-hour pay cut, she said. She can rattle off all the loan modifications and foreclosure prevention programs she tried but failed to get. She would submit documents for months, believing things were working out, and then would learn she wasn't approved. This went on for more than three years.

  • While Dobberstein was working things out, the David J. Stern law firm in Plantation was stealthily foreclosing on her home.

  • Dobberstein wasn't served notice of the foreclosure. The law firm told the court it tried to serve her, but her home was unoccupied. The firm said she didn't have a phone number or a driver's license. In an affidavit that was not properly notarized, an attorney swore he was, "(u)nable to determine if Defendant(s) IS living or dead."

  • Public records show Dobberstein very much alive and living in Cape Coral since 1989. LexisNexis, a subscription database of public information, lists her home phone number. The Department of Highway Safety and Motor Vehicles records show Dobberstein has had a Florida license and renewed it twice at the same Cape Coral address the law firm said was an unoccupied home.

  • Stern's law firm has closed. Florida's attorney general's office is investigating the firm because it, "Appears to be fabricating and/or presenting false and misleading documents in foreclosure cases," the website states.

For more, see Woman in Cape faces loan nightmare.

Monday, October 10, 2011

NYC Feds Squeeze Foreclosure Mill Sweatshop For $2M In Fines, Agreement To Revamp Practices In Probe Into Filing Of Allegedly Misleading Pleadings

In New York City, the New York Law Journal reports:

  • One of New York state's biggest foreclosure law firms will revamp its practices and pay a $2 million fine to settle a six-month probe by the Southern District U.S. Attorney's Office that found it had filed misleading pleadings, affidavits and mortgage assignments in state and federal courts.(1)

  • In a settlement agreement announced yesterday, the firm, Steven J. Baum, P.C., of Amherst, will implement a series of internal controls including a pledge not to bring foreclosure actions without reviewing the original promissory notes or reviewing a copy of the note from its client or custodian of the document.

  • The thrust of that condition is similar to an order issued almost a year ago by Chief Judge Jonathan Lippman directing lawyers for lenders to file an affirmation that they have taken reasonable steps to verify the accuracy of papers they file to support residential foreclosures (NYLJ, Oct. 21, 2010).

  • The 12-page agreement also prohibits the firm's employees from executing mortgage assignments as officials or representatives of MERS, an electronic mortgage registry system.

  • "In mortgage foreclosure proceedings, there are no excuses for sloppy practices that could lead to someone mistakenly losing their home," Southern District U.S. Attorney Preet Bharara said today in a statement. "Homeowners facing foreclosure cannot afford to have faulty paperwork or inadequate evidence submitted, and today's agreement will help minimize that risk."

For more, see Upstate Foreclosure Firm Fined $2 Million, Agrees to Overhaul Its Filing Practices.

For the U.S. Attorney press release, see Manhattan U.S. Attorney Announces Agreement With Mortgage Foreclosure Law Firm To Overhaul Its Practices And Pay $2 Million Fine.

(1) Apparently, not everyone's happy with the settlement. See New York Post: Critics: Feds went easy on NY's largest foreclosure mill.

Bay State AG Gives 'Thumbs Down' On 50-State AG Foreclosure Fraud Probe; Begins Preparing Troops, Loading Up Litigation Artillery

Bloomberg reports:

  • Massachusetts Attorney General Martha Coakley said she may sue major banks after she “lost confidence” that they will reach an adequate agreement to resolve disputes over foreclosure practices.


  • I have lost confidence that the banks will bring to the table an agreement that properly holds them accountable for wrongful foreclosures,” Coakley, 58, said in a statement today. “Because our office for some time has anticipated that result, we have begun preparing for litigation.”

  • California Attorney General Kamala Harris said last week that she was rejecting a proposed settlement with the banks and would pursue her own mortgage investigation, according to a letter she wrote to the U.S. Justice Department and Iowa Attorney General Tom Miller, who is leading talks for the states.

    State Probes

  • New York Attorney General Eric Schneiderman, Delaware Attorney General Beau Biden and Nevada Attorney General Catherine Cortez Masto are also conducting mortgage-related investigations as settlement talks with the banks continue.

For more, see Massachusetts Attorney General Cites ‘Lost Confidence’ in Banks, May Sue.

Lack Of Government Oversight Of HAMP Program Allows Banksters To Go Unpunished For Mishandled Loan Mod Requests

ProPublica reports:

  • Why has the administration’s flagship foreclosure prevention program been so ineffective in helping struggling homeowners get loan modifications and stay in their homes? One reason: The government’s supervision of the program has apparently ranged from nonexistent to weak.

  • Documents obtained by ProPublica — government audit reports of GMAC, the country’s fifth-largest mortgage servicer — provide the first detailed look at the program’s oversight. They show that the company operated with almost no oversight for the program’s first eight months.

  • When auditors did finally conduct a major review more than a year into the program, they found that GMAC had seriously mishandled many loan modifications — miscalculating homeowner income in more than 80 percent of audited cases, for example. Yet, GMAC suffered no penalty. GMAC itself said it hasn’t reversed a single foreclosure as a result of a government audit.

  • The documents also reveal that government auditors signed off on GMAC loan-modification denials that appear to violate the program’s own rules, calling into question the rigor and competence of the reviews.

  • Some of the auditors’ mistakes are “appalling,” said Diane Thompson of the National Consumer Law Center, an advocacy group. “It suggests the government isn’t taking the auditing process seriously.”


  • The audits of GMAC, though revealing, give only a limited view into the program, because the Treasury has refused to release the documents for other servicers. For more than a year, through a Freedom of Information Act request, ProPublica has sought the audits of 10 of the largest program participants. The Treasury provided only GMAC’s audits, because the company consented to their release. ProPublica continues to seek all of the reports.

For more, see Secret Docs Show Foreclosure Watchdog Doesn’t Bark or Bite.

Fannie Continues Using Unnamed Florida Foreclosure Mill Sweatshop Despite It Being Fired By Freddie Earlier In Year; Says Files Transfer Too Costly

The Palm Beach Post reports:

  • Federal mortgage backer Freddie Mac fired a Florida law firm this year for "foreclosure processing abuses," but sister company Fannie Mae continues to use the firm because it's too expensive to transfer files to new attorneys.

  • A Federal Housing Finance Agency Inspector General report released Tuesday criticized the two entities for, among other things, a lack of communication about problems within law firms used to take people's homes.

  • But, even when Freddie Mac told Fannie Mae why it was firing the Florida firm, Fannie decided to retain the law firm's services, noting that the cost of moving cases "would be substantial."

  • According to the report, Fannie Mae is expecting a $5.5 million bill for transferring files from the Law Offices of David J. Stern to new attorneys. Both Fannie and Freddie fired the Plantation-based Stern firm in November.

  • The firm Freddie fired but Fannie retained handled 43 percent of Fannie Mae's foreclosure cases in Florida, the report notes. While the firm is not identified in the report, Freddie Mac cut ties with the Fort Lauderdale-based Law Offices of Marshall C. Watson in early March. The Watson firm remains on Fannie Mae's retained attorney network list.

For more, see Fannie Mae sticking with fired Florida law firm.

Law School Consumer Protection Clinic Moves To Strike Robosigner-Tainted Affidavits In Bill Collection Suits Filed By National 'Zombie Debt' Buyer

In Baltimore, Maryland, The Baltimore Sun reports:

  • The University of Maryland School of Law's consumer-protection clinic is trying to get key documents stricken from potentially hundreds of debt-collection cases over an issue more commonly thought of as a foreclosure problem — robo-signing.

  • Midland Funding, which buys old consumer debts and sues to collect, filed affidavits signed by representatives who swore they had personal knowledge of the debts even though they did not, a federal court in Ohio found as part of an August class-action settlement.

  • Midland employees daily signed 200 to 400 of such "false and misleading" affidavits for years, according to an order by U.S. District Judge David A. Katz. Though it insisted the facts in the affidavits were accurate, Midland agreed as part of the settlement to change its practices.

  • But the University of Maryland consumer-protection clinic says the company and affiliate Midland Credit Management have more than 400 active cases in Maryland that rely on affidavits filed during the period covered by the class-action settlement — January 2005 through mid-March of this year.

  • Some of the cases have not been ruled on by a judge, while others are still active because Midland was awarded a judgment that hasn't been fully paid off. Midland's parent, the publicly traded Encore Capital Group, said it would stand by its affidavits in Maryland.


  • Industry critics say the companies typically purchase scant information about the debts and are sometimes several purchasers removed from the credit-card company or other creditor that originally sold it.

  • "A fifth-generation purchaser of debt cannot possibly have personal knowledge of what happened when the account was created and what happened with each prior generation of debt buyer," said Peter A. Holland, an attorney who runs the University of Maryland clinic.

  • Last week the clinic began filing motions in several Midland cases to get the affidavits stricken from the record in those lawsuits. The clinic also asked the District Court to take note of "fraudulent, robo-signed" affidavits in all of Midland's 2005 through mid-March cases in Maryland.


  • Lindsay Warnes, a staff attorney for Maryland Legal Aid, which represents low-income Marylanders, said she has been seeing debt-buyer affidavits that seem to dance around the lack-of-knowledge problem.

  • "Some of them say, 'I have been told … that this piece of information is accurate,' and then they swear," she said. "They're trying to get more creative in the way they write them. But there's still no personal knowledge whatsoever."

For the story, see Consumer advocates want affidavits pulled in Md. debt-collection cases (Ohio class-action settlement has implications for Maryland consumers, attorneys say).

Sunday, October 9, 2011

Federal Agency Inspector General: Fannie, Freddie Knew Of Dubious Foreclosure Mill Sweatshop Practices & Dragged Feet In Taking Appropriate Action

Housing Wire reports:

  • A Fannie Mae shareholder sounded the alarm on foreclosure abuses at law firms handling foreclosures for the government-sponsored enterprises back in 2003, but it took regulators seven years to aggressively tackle the problem, the Federal Housing Finance Agency Office of Inspector General said in a report.

  • The report highlights concerns industry insiders had for years about the practices of default servicing firms in a network of firms handling Fannie Mae and Freddie Mac foreclosures.


  • One of the major cases breaking last year involved the Law Offices of David J. Stern, a Florida firm that ended up under investigation for its foreclosure practices. The inspector general's report said, "There were indicators prior to August 2010 that could have led FHFA to identify the heightened risk posed by foreclosure processing within Fannie Mae’s attorney network. These indicators included significant increases in foreclosures, which accompanied the deterioration of the housing market; consumer complaints alleging improper foreclosures; contemporaneous media reports about foreclosure abuses by Fannie Mae’s law firms; and public court filings in Florida and elsewhere highlighting such abuses."

For more, see GSEs knew of foreclosure attorney abuses in 2003: FHFA-OIG.

For the OIG's reports, see FHFA’s Oversight of Fannie Mae’s Default-Related Legal Services (AUD-2011-004, September 30, 2011).

New Yorkers Continue Getting Screwed In Court Over Baseless Foreclosure, Debt Collection Lawsuits Due To Inability Afford Adequate Defense: State AG

In Albany, New York, the Albany Times Union reports:

  • Scores of low-income New Yorkers have unjustly lost court battles -- and their homes -- because they could not afford lawyers to fight often baseless legal actions, a top aide to Attorney General Eric Schneiderman told a special panel Monday.

  • "The lack of individual representation in foreclosure actions is one reason we have seen systemic abuses of the legal system by lenders and debt collectors," Martin J. Mack, the state's executive deputy attorney general, testified to the Task Force to Expand Access to Civil Legal Services, headed by Chief Judge Jonathan Lippman.

  • The top judge created the panel to aid the estimated 2.3 million and growing number of low-income New Yorkers who have no legal representation in civil cases ranging from child custody matters to home foreclosures. Monday's testimony, heard in the state Court of Appeals, was the third of four hearings the panel is holding across the state.

  • Mack noted that even with a surge in pro bono representation -- lawyers working free of charge -- more than 44 percent of New Yorkers facing foreclosure have had no lawyers.

  • "We've all heard harrowing tales of abuses, including foreclosure actions brought against homeowners who are actually up to date on their mortgage payments," Mack testified. "For every abusive case uncovered, there are dozens upon dozens of homeowners and, sad to say, former homeowners who have been steamrolled because they did not have adequate representation."

  • Abuses such as improper legal documentation "only happen because lenders and debt collectors are able to assume that the overwhelming majority of homeowners won't have attorneys to fight back."

For more, see Abused for lack of a lawyer (Top AG aide says low-income New Yorkers have suffered due to lack of representation).

State Racketeering Law Invoked By Multiple Homeowners In Suit Alleging Chase Illegally Foreclosed On Mortgage Loans Once Held By WaMu

In West Palm Beach, Florida, the Daily Business Review reports:

  • Most lawyers who represent homeowners in foreclosures use defensive strategies in their efforts to hold off the lender, but not W. Jeffrey Barnes. The Boca Raton lawyer has launched an offensive against JPMorgan Chase using state racketeering law.

  • Barnes filed a state civil RICO action in Palm Beach Circuit Court against Chase claiming the lender engaged in a national pattern of "fraudulent foreclosure proceedings based on false and fraudulent misrepresentations."


  • The latest lawsuit, Linda Zimmerman et al v. J.P. Morgan Chase and Chase Home Finance, represents his alliance with the Washington Mutual Homeowners Support Group, a grassroots organization of former WaMu mortgage customers.

  • The lawsuit is not intended to save anyone's home, Barnes explained. It is a counter-punch intended to hurt the bank by exposing its alleged fraud. "This was never intended to be arm-twisting to get the bank to do loan modifications," he said. "These are damages claims."

    Foreclosure Rights

    The alliance had its genesis in how Chase claimed the right to foreclose on the defunct WaMu's home loans. When WaMu failed in 2008, the Federal Deposit Insurance Corp. sold certain assets to Chase. But in filings submitted in Deutsche Bank v. FDIC and Chase, Chase said it "did not become WaMu's successor in interest," Barnes cited in the lawsuit.

  • Despite that admission, Barnes said Chase — through its servicer Chase Home Finance — instituted foreclosure proceedings nationally on WaMu mortgages, listing itself as successor in interest to carry forward WaMu's ownership interests.

  • The lawsuit claims Chase and Chase Home used the electronic clearinghouse Mortgage Electronic Registration Systems and bogus assignments to improperly pursue foreclosures. The bank also allegedly ignored state laws, such as required certifications in New Jersey and mandatory good faith pre-foreclosure resolution efforts in California.

  • "This pattern of filing false declarations ... and failure to provide proof of legal ownership in Florida and other jurisdictions is consistent with Chase's pattern of falsely misrepresenting the legal scope of the FDIC affidavit," Barnes said. Chase has received a 30-day filing extension, delaying its answer to the Palm Beach Circuit lawsuit, Barnes said. Chase representatives did not respond to calls for comment by deadline.

  • The lawsuit seeks an injunction to stop to all Chase foreclosure activity in eight states: California, Florida, Massachusetts, New Jersey, New York, Tennessee, Washington and Wisconsin. They are home to the 32 homeowners suing Chase individually, not as a class. "We expect that there are going to be more," Barnes said.

  • One of the reasons the suit was filed in Florida is the operations of the servicer, Chase Home Finance, he said. "I termed it nationalized mail fraud in the lawsuit because of the generation of documents out of (Chase Home's) nerve center in Jacksonville," he said.

For more, see Boca lawyer goes on offensive against Chase.

Florida Lower Court Ruling Reversals In Foreclosure Cases Continue; Appellate Court Review Appears Necessary As Trial Judges Continue Getting It Wrong

A Florida appeals court recently reversed another lower court screw-up in a foreclosure case. The guilty judge in this case, Marion County Circuit Court Judge Frances King:

  • Here, the record does not contain the original Mortgage. To prove its ownership, U.S. Bank filed a copy of the Mortgage as well as two assignments. The first assignment transferred the Mortgage from Advent Mortgage, the original mortgagee, to Option One. The second assignment purported to transfer the mortgage from American Home, as successor in interest of Option One, to U.S. Bank. However, and significant to our consideration, U.S. Bank provided nothing to demonstrate how American Home came to be the successor in interest to Option One.2

    Incredibly, U.S. Bank argues that "[i]t would be inequitable for [Ms. Gee] to avoid foreclosure based on the absence of an endorsement to [it]." But that argument flies in the face of well-established precedent requiring the party seeking foreclosure to present evidence that it owns and holds the note and mortgage in question in order to proceed with a foreclosure action. See Verizzo, 28 So. 3d at 978; Philogene v. ABN Amro Mortg. Group Inc., 948 So.2d 45, 46 (Fla. 4th DCA 2006). When Ms. Gee denied that U.S. Bank had an interest in the Mortgage, ownership became an issue that U.S. Bank, as the plaintiff, was required to prove. See Lizio, 36 So. 3d at 929; Carapezza v. Pate, 143 So.2d 346, 347 (Fla. 3d DCA 1962).

    As U.S. Bank failed to offer any proof of American Home's authority to assign the Mortgage, we conclude that it failed to establish its standing to bring the foreclosure action as a matter of law.
    3 See Servedio v. U.S. Bank Nat'l Ass'n, 46 So.3d 1105, 1107 (Fla. 4th DCA 2010) (explaining that plaintiff may submit evidence of assignment from payee to plaintiff or affidavit of ownership to prove its status as holder of note); see also Khan v. Bank of Am., N.A., 58 So.3d 927, 928 (Fla. 5th DCA 2011) (holding that bank failed to establish it had standing to foreclose mortgage as matter of law where copy of note attached to amended complaint bore endorsement assigning note to another bank); Verizzo, 28 So. 3d at 977 (finding genuine issue of fact as to whether bank owned and held note where record did not reflect assignment or endorsement of note to bank). Cf. Isaac v. Deutsche Bank Nat'l Trust Co., 36 Fla. L. Weekly D727 (Fla. 4th DCA Apr. 6, 2011) (holding that assignee of promissory note and mortgage adequately established its ownership of note and mortgage, as necessary to confer standing to bring foreclosure action, where assignee filed original note and mortgage, along with allonge payable to bearer, and affidavit from representative of successor in interest to previous assignee); Taylor v. Deutsche Bank Nat'l Trust Co., 44 So.3d 618 (Fla. 5th DCA 2010) (holding that written assignment of promissory note and mortgage from nominee of original lender to bank was sufficient to confer upon bank authority to foreclose mortgage, even though nominee had no beneficial interest in note and note was not endorsed by original lender; mortgage gave nominee explicit power to enforce note by foreclosing note and nominee assigned that right to bank).

    Ms. Gee also asserts that the trial court improperly entered summary judgment on the reestablishment and reformation claims when these claims were not raised in U.S. Bank's summary judgment motion.

    We agree. A motion for summary judgment must "state with particularity the grounds upon which it is based and the substantial matters of law to be argued . . . ." Fla. R. Civ. P. 1.510(c). The burden to conclusively establish the nonexistence of a disputed issue of material fact and entitlement to judgment as a matter of law rests squarely with the movant. See Holl v. Talcott,
    191 So.2d 40, 43-44 (Fla. 1966); Bloch v. Berkshire Ins. Co., 585 So.2d 1137, 1138 (Fla. 3d DCA 1991). The purpose of this rule is "to prevent `ambush' by allowing the nonmoving party to be prepared for the issues that will be argued at the summary judgment hearing." City of Cooper City v. Sunshine Wireless Co., 654 So.2d 283, 284 (Fla. 4th DCA 1995). "It is reversible error to enter summary judgment on a ground not raised with particularity in the motion." Williams v. Bank of Am. Corp., 927 So.2d 1091, 1093 (Fla. 4th DCA 2006).

    As Ms. Gee contends, U.S. Bank's summary judgment motion made no mention of its claim to reestablish the lost Mortgage and identified no evidence to support its claim that these documents were lost. Instead, the motion declared the opposite—that "[t]he original promissory note, mortgage and assignment of mortgage will be filed on or before the hearing."

    Yet, the court considered a lost documents affidavit at the summary judgment hearing and reestablished the Mortgage in the final judgment. Similarly, the summary judgment motion made no mention of U.S. Bank's claim to reform the legal description in the deed and mortgage, nor was the issue discussed at the summary judgment hearing. Still, the court reformed the original mortgage and deed, and modified the legal description.

    Because U.S. Bank's motion did not address any facts or law pertaining to its entitlement to summary judgment on its claims to reestablish the lost instruments and reform the deed and mortgage, the trial court erred in entering summary judgment on these grounds. By failing to state with particularity the grounds upon which its summary judgment motion was based, U.S. Bank failed to provide Ms. Gee with proper notice of the separate issues to be resolved and why U.S. Bank was entitled to summary judgment.
    4 See Locke v. State Farm Fire & Cas. Co., 509 So.2d 1375, 1376-77 (Fla. 1st DCA 1987) (holding that summary judgment motion was insufficient to place non-moving party on notice of issues to be argued at hearing as motion merely stated that no material issues existed and movant was entitled to judgment); see also State Farm Mut. Auto. Ins. Co. v. Mashburn, 15 So.3d 701, 706 (Fla. 1st DCA 2009) (reversing summary judgment entered against insurer based on notice issue, which was not raised with particularity in summary judgment motion; raising issue in attached affidavits was insufficient); Deluxe Motel, Inc. v. Patel, 727 So.2d 299, 301 (Fla. 5th DCA 1999) (reversing summary judgment that was based on arguments made at hearing but not in motion); Sunshine Wireless Co., 654 So. 2d at 284 (reversing summary judgment for insufficient notice of issues to be addressed and noting that particularity rule was designed to prevent "ambush" by allowing nonmoving party to be prepared for issues that will be argued at summary judgment hearing); Boucher v. First Cmty. Bank of Orange City, 626 So.2d 979, 982 (Fla. 5th DCA 1993) (reiterating that on summary judgment, court is limited to grounds raised in motion).

    For these reasons, we reverse the final summary judgment of foreclosure entered in favor of U.S. Bank, and remand for further proceedings

For the ruling, see Gee v. U.S. Bank National Association, Case No. 5D10-1687 (Fla. App. 5th DCA, September 30, 2011).

Representing the homeowner in this case was Enrique Nieves, III, of Ice Legal, P.A., Royal Palm Beach, Florida.