Saturday, November 12, 2011

No Prompt Help Seen For Struggling Sarasota Condo As Judge Green-Lights Suit Charging Insurer w/ Stiffing HOA On Indemnification Over Bldg. Defects

In Sarasota, Florida, the ABA Journal reports:

  • In the midst of a terrible real estate market, the owners of the 117 units at the Dophin Tower condominium in Sarasota, Fla., have a bigger problem to worry about than most.

  • In addition to owning homes that are probably worth only a fraction of what they paid, their units have been uninhabitable for a year and a half and aren't likely to be occupied again anytime soon, due to a failed concrete slab.

  • Although they won a legal victory in federal court this week, when a judge ruled in their favor in a declaratory judgment action concerning insurance coverage for the design and construction defects that allegedly caused the concrete damage, the condo association for the approximately 35-year-old building is struggling to stay afloat financially as it pursues the case, according to the Sarasota Herald-Tribune.

  • Meanwhile, there's no guarantee that the association will persuade Great American Insurance Co. of New York to pay its repair costs or win enough at trial to reimburse residents, even though a judge has given the case a green light to proceed.

  • Due to a high delinquency rate on assessment payments, the association can't get a loan to pay for repairs while it argues with Great American.

  • In an effort to get the association's finances under control, the condo board is instituting what some consider draconian collection measures, including an 18 percent interest rate on delinquent balances and threatened foreclosure. A number of residents also complain that the board is unduly harsh and unfeeling in the tone it takes with owners who have been dealt a severe financial blow in the form of repair bills that could top $10 million.

  • "At times, the board has had an absolute air of superiority," said former 10th-floor resident Sarita Roche. "A lot of people in the building now are destitute—some people are losing everything—and it's uncalled for."

  • An earlier Herald-Tribune article details what is wrong with the building and a planned fix, which involved jacking the 15-story building up like a car with a flat tire.

Source: Will Insurer of Uninhabitable Fla. Condo Building Have to Pay to Repair Defects?

See also, Sarasota Herald Tribune:

  • Dolphin Tower condo board facing more criticism (Dolphin Tower owners won a legal victory this week against their insurance company, but the troubled downtown condominium faces a growing exodus of paying residents and its board is fielding expanding criticism of its handling of the crisis and dwindling resources to deal with it),

  • Fix calls for jacking up high-rise (To fix severe design and construction flaws that have caused a key concrete support to fail, engineers plan to jack up the 15-story Dolphin Tower like a car with a flat tire).

Vacant, Abandoned Foreclosed Homes Continue Killing Quality Of Life In Some Chicago Neighborhoods

In Chicago, Illinois, Chicago News Cooperative & The New York Times reports:

  • Thomas Burton remembers exactly when he closed on his West Wilcox Street home. It was Sept. 6, 1962, at 3 p.m. Eager to begin a homeowner’s life with his wife and their six children, he got off early from his shift as a driver for C&K Snacks to make the closing.

  • This was my first house,” he said. “I couldn’t forget that date.” Decades later, his children are grown and the 30-year mortgage has been paid off. But the neighborhood is a far cry from what it used to be.

  • The street has been transformed — six foreclosed and abandoned homes now sit on Mr. Burton’s block. There are 28 vacant buildings on West Wilcox, which is less than a mile long.


  • According to city data, there were nearly 15,000 abandoned buildings in Chicago as of Oct. 20, most of them a result of foreclosures. Three neighborhoods account for 20 percent of the total: Englewood, West Englewood and Austin.

  • The city lost 200,000 residents from 2000 to 2010, according to census data. In the area immediately surrounding Mr. Burton’s house, population has dropped by 26 percent. And though some residents are gone, those who remain do not necessarily want to raze the vacant buildings left behind.

  • The empty buildings are magnets for gang activity, depressing the value of nearby properties. Drug abuse violations and burglaries are the most common crimes taking place in abandoned properties, police report. In Austin, burglaries and illegal drug use make up 74 percent of the 66 incidents reported in the past three months. In Englewood, those crimes were 58 percent of the 85 reported cases of illegal activity. In West Englewood, drugs and burglaries constituted 43 percent of 78 incidents.

  • Vacant homes create so many risks to a neighborhood,” said Charles Brown, a retired Chicago police officer living in Englewood. “Murders — we’ve found people dead in them. Attempted murder, rape, all kinds of things. They catch on fire and burn up the house next door — firemen get hurt.”

For more, see Foreclosures Leave Pockets of Neglect and Decay.

Ruptured Propane Line Suspected In Blast That Blew Vacant Home In Foreclosure 60 Feet In Air; Leads To Local High School Lockdown

In Council Bluffs, Iowa, Radio Iowa reports:

  • Investigators say an explosion that destroyed a vacant house in Council Bluffs was caused by a ruptured propane line that let the gas leak into the basement. Tuesday afternoon’s explosion in a neighborhood just south of Interstate 80 blew the house 60-feet into the air and spread debris blocks away.

  • No one was injured. Council Bluffs Fire Chief Alan Byers says the extent of the damage has made the investigation difficult. “Somehow, propane was leaked into the basement, filled the house and there was an ignition source. With the amount of damage and the way the debris was spread out, we’re probably never going to know exactly what happened,” Byers said.

  • Although the house was vacant, there was still propane in a tank and electric service hooked up to the home. Byers said the last known occupant vacated the home three weeks ago.

  • We don’t know if someone got in the house and was using it, was trying to steal something, broke the (propane) line…we’re just not going to know,” Byers said. “Again, we had debris 60 foot up in the trees and scattered out over an almost 2,000 foot diameter area, so it’s just going to be impossible to tell.”

  • The house was in foreclosure and just passed a city inspection in recent weeks. Byers said neighbors were asked about activity at the home. “We had reports of cars in the area the night before, but no license numbers or anything like that,” Byers said. “We’re probably never going to figure out what really happened.”

  • The loud blast led to numerous 9-1-1 calls. Officials locked down the nearby Council Bluffs Abraham Lincoln High School for about 20 minutes as a precaution because the source of the explosion was not immediately known.

Source: Council Bluffs explosion linked to broken propane line.

Consumer Anger Against Banksters Continues; Homeowner Targeted By BofA Foreclosure Action Accused Of Torching Home

In Brown County, Wisconsin, the Green Bay Press Gazette reports:

  • A Pulaski man was accused [] in Brown County Circuit Court with setting fire to his home, which was in foreclosure. Timothy Porter, 46, faces one count of arson, a charge carrying up to 40 years in prison, for allegedly setting the [] fire that damaged his home at 320 W. Pulaski St.

  • The $69,300 home is in a foreclosure action by Bank of America, according to a criminal complaint.

  • Firefighters responded to a fire there about 6:25 p.m. Wednesday. A neighbor said Porter had been removing items from the house earlier in the day and left shortly before smoke and flames started pouring from a basement window, the complaint says.

For the story, see Timothy Porter of Pulaski charged with arson in house fire.

Friday, November 11, 2011

Texas Homeowner, Chase Settle Suit Over Improperly-Filed Mortgage Lien Release That May Have Led To 'Free House'

In San Antonio, Texas, the San Antonio Express News reports:

  • Chase bank has dropped its lawsuit against a San Antonio couple who in 2002 were mistakenly released from having to make any more house payments. The bank and Ramiro and Delia Guerrero Jr. have reached a settlement that will require the couple to pay a portion of their $86,750 mortgage note. Stephen Cochran, the couple's lawyer, declined to disclose the amount.

  • The Guerreros will not have to pay any late fees, penalties or taxes, he added. “What we're going to do is renew, extend and modify that original note and lien so it will be a different number (with) longer terms,” Cochran said.

  • Chase sued the couple on Sept. 16 in U.S. District Court in San Antonio seeking to rescind the mortgage-lien release that was recorded in error nine years ago. The bank voluntarily dismissed the suit last week.


  • In an Oct. 11 Express-News story, Cochran said the couple stopped making their payments after a 2001 refinancing.(1) He cited the lender apparently losing the note at the time and the couple's confusion over where to send their payments as reasons why they stopped making payments.

  • Nevertheless, Cochran said, a lawsuit seeking to rescind the mortgage-lien release needed to be filed within four years of the recording of the release under the statute of limitations.

  • Cochran said he believed he had a strong case, but he said fighting Chase's suit would be “kind of like betting the farm.” “If you win, you win, but if you lose, you lose big,” he said.

  • He added that a judge could have ruled in Chase's favor and declared the Guerreros owed the money, raising the prospects of a possible foreclosure. Plus, he said, it was never the Guerreros' intent to try to get afree house.”

For the story, see Settlement reached in mortgage case.

(1) See Chase Sues To Collect On Erroneously-Released M'tgage; Homeowner Admits Owing Money, But Leans On Statute Of Limitations To Tell Bankster To Get Lost.

Atlanta Woman Gets 3+ Years For Using Forged Deeds, Phony 'Gift' Letter, Inflated Property Value To Fraudulently Obtain Reverse Mortgage

From the Office of the U.S. Attorney (Atlanta, Georgia):

  • GIA JOY GLASSE-HARRIS, 27, of Atlanta, Georgia, was sentenced to prison early this evening by United States District Judge Amy Totenberg on charges of conspiring to commit mortgage fraud.(1)


  • According to United States Attorney Yates, the charges and other information presented in court: From May 2009 through February 2010, GLASSE-HARRIS engaged in a conspiracy to defraud that involved reverse mortgages.


  • GLASSE-HARRIS, who is not a senior citizen, attempted to take advantage of the reverse mortgage program by using forged deeds to transfer property into the name of a senior citizen, while fraudulently inflating the value of the property by more than five times the true value.

  • GLASSE-HARRIS then attempted to “sell” the property at the inflated value to a second senior citizen, using fraudulent “gift” letters to create a down payment, so that the senior citizen would appear to have equity in the property. GLASSE-HARRIS’ attempt to obtain this reverse mortgage was declined by the lender, and her subsequent efforts at additional reverse loan fraud in the name of another senior citizen were thwarted by a government sting that implicated GLASSE-HARRIS and others.

For the U.S. Attorney press release, see Atlanta Woman Sentenced for Committing Mortgage Fraud (Gia Joy Glasse-Harris Tried to Profit from Reverse Mortgages Intended to Benefit Senior Citizens).

(1) GLASSE-HARRIS was sentenced to three years and one month in prison, to include the final six months in home confinement, to be followed by three years of supervised release, and ordered to pay restitution in the amount of $174,000. GLASSE-HARRIS pleaded guilty to the charges on August 24, 2011.

Attorney Gets Eight Years On Deed Forgery, Charging Clients For Unperformed Services

The Cincinnati Business Courier reports:

  • Northern Kentucky attorney Patrick Moeves will serve eight years in prison after pleading guilty to charges of theft and forgery.

  • reports that Moeves charged clients fees for work he didn't perform and forged the name of state Sen. Jack Westwood on a deed. In addition to the prison term, Moeves was ordered pay restitution.

Source: N. Ky. attorney gets 8 years in prison.

Suit: Investment House Biggie Played Role In Deed Forgery In Effort To Thwart $25.3M Creditor From Attaching Interest In Ranch From Dying Cousin

In New York City, Reuters reports:

  • Herbert A. Allen, founder of an annual business conference that draws a host of media moguls, is accused in a lawsuit of aiding a family fraud to stop a dying cousin's creditor collecting $25.3 million.


  • The plaintiff, Excelsior Capital LLC, said Herbert A. Allen and others "forged or arranged for the forgery" of his cousin's signature on a deed for his interest in a family ranch in Arizona. It said the forgery took place on March 2 while he was on his deathbed in a hospital on New York's Long Island while the notarization indicated he signed in Manhattan on that day. He died in hospital seven days later.


  • The complaint said that a close family friend and Allen & Company executive, Terence McCarthy, fraudulently notarized the signature. McCarthy was out of the office on Wednesday and unavailable to comment, the company said.

For the story, see NY investment house CEO Allen sued over "forgery".

Thursday, November 10, 2011

Sentencing Begins For S. Florida Quartet Convicted In Mortgage Fraud Scam Involving Bogus Docs & Appraisals, Escrow Cash Ripoffs, Phony Short Sales

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

  • Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, [and a cast of others] announce that defendants Kimberly Mackey, 46, of Pittsburgh, Pennsylvania, and Marcos Echevarria, 29, of Palm Beach, Florida, were sentenced [] before U.S. District Court Judge William P. Dimitrouleas. Defendants Louis Gendason, 42, of Delray Beach, Florida, and John Incandela, 24, of Palm Beach, Florida, will be sentenced on December 16, 2011.


  • According to the Information and statements made in court, from May 2009 through November 2010, the defendants engaged in a reverse mortgage scheme that defrauded unwitting borrowers, Genworth Financial Home Equity Access, Inc. (Genworth), and the Federal Housing Administration (FHA).


  • To qualify the borrowers for the loans, Gendason altered real estate appraisals to fraudulently inflate the value of the borrowers properties. In fact, however, none of the borrowers had sufficient equity in their properties to qualify for a reverse mortgage.


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


  • Between May 2009 and November 2010, Mackey received loan proceeds from Genworth totaling $2,572,813.19. Mackey fraudulently diverted at least $988,086.33 to a bank account controlled by Incandela and Gendason, who used this money for their personal benefit.

  • Thereafter, to perpetuate the fraud, the defendants engaged in a loan modification scheme to conceal the existence of the Genworth reverse mortgage transactions from the original mortgage lenders, whose loans remained unpaid.

  • To this end, Gendason, Incandela, and Mackey conspired to create fictitious offers to buy some of the borrowers properties, in the form of short sales. [...] In other instances, to hide the existence of the Genworth reverse mortgage loan from the original lenders, the defendants made monthly mortgage payments to the borrowers original lenders.

For the U.S. Attorney press release, see Loan Officer And Title Agent Sentenced For $2.5 Million Reverse Mortgage And Loan Modification Scheme.

(1) Defendant Echevarria was sentenced to 24 months in prison, to be followed by five years of supervised release. Defendant Mackey was sentenced to 60 months in prison, to be followed by five years of supervised release. Restitution was ordered in the amount of $1,654,805.36.

All of the defendants, including Louis Gendason, 42, of Delray Beach, FL, previously pled guilty to a Criminal Information charging them with one count of conspiracy to commit wire fraud, in violation of Title 18, United States Code, Section 1349, for their participation in a $2.5 million Home Equity Conversion Mortgage (a.k.a. reverse mortgage) fraud scheme. Sentencing for Gendason has been scheduled for December 16, 2011 at 1:45 PM before U.S. District Court Judge William P. Dimitrouleas.

Boston Feds Pinch Closing Attorney For Allegedly Pocketing $400K+ In Real Estate Escrow Cash; Closing Proceeds Meant To Pay Off Existing Mortgages

In Boston, Massachusetts, the Eagle Tribune reports:

  • Attorney Daniel S. Braese, who once aspired to be a town selectman, misappropriated more than $400,000 that was supposed to pay off mortgage payments in real estate closings he handled, federal prosecutors allege in court documents filed this week.

  • Braese, 47, [...] faces two counts of bank fraud and one count of making a false statement in a Federal Housing Administration transaction — charges stemming from an investigation by several agencies into his alleged mortgage loan fraud. U.S. Attorney Carmen M. Ortiz's office filed the charges against Braese Wednesday in Federal District Court in Boston.

For more, see Feds say attorney obtained more than $400,000 illegally.

For the U.S. Attorney press release, see Woburn Attorney Charged With Fraud In Real Estate Closings.

Sticky-Fingered Title Agents Continue Getting Hammered; Suspect Cops Plea To Mortgaging Home Out From Under Unwitting Owner, Diverting Closing Cash

From the Office of the U.S. Attorney (Baltimore, Maryland):

  • Gary Pierce, age 44, of Edgewater, Maryland, pleaded guilty [] to conspiracy to commit wire fraud in connection with a five year scheme to divert or hold mortgage payoff funds from clients’ closings on 17 Maryland properties.


  • In 2007, Pierce applied for and received a mortgage on a property in Edgewater that he did not own. Pierce used funds obtained from the lender to perpetuate the scheme and diverted $50,000 from the funds provided by the mortgage lender to himself. The true owner of the property had no knowledge that documents were created that purported to show that he had sold the property to Pierce.

  • Beginning in 2007, Pierce and his co-conspirator diverted or held mortgage payoff funds from clients’ closings for a matter of days, weeks and sometimes years. Pierce falsely represented on HUD-1 forms sent to the borrower’s lender that the payoff was made, when in fact Pierce intended to divert the funds.

  • Pierce and his co-conspirator fabricated wire confirmation reports, which purported to be a bank record of the transfer, to include in loan files. These were created in advance of audits by the title insurers in order to deceive the title insurers.

  • Additionally, to forestall discovery by the lenders, Pierce and his co-conspirator contacted the mortgage lender who should have been paid off and posed as the borrower/homeowner. Pierce’s co-conspirator would either create an on-line profile for the borrower and stop any mail from being sent to the borrower, or he would tell the lender that his, the borrower’s, address had changed and he would re-direct the lender to send all correspondence to a post office box owned by Pierce. The co-conspirator would then make monthly mortgage payments to the existing lender. With no delinquency in the account, the scheme went undetected.

  • Because the existing mortgages were not paid off, the liens against the property were not removed and clear title could not be passed to the new lender and borrower. The total amount of diverted or otherwise improperly obtained funds totals $4,971,380.

For the U.S. Attorney press release, see Owner of Gambrills Title Agency Pleads Guilty to Stealing Approximately $5 Million in Mortgage Pay-offs from Closings (Attempted to Conceal the Fraud Scheme by Making Monthly Mortgage Payments to the Original Lenders Whose Mortgages Should Have Been Paid Off).

Feds Score Guilty Verdict As Title Agency Owner Goes Down On RICO Charges; Co-Defendant Who Pocketed Kickbacks Cops Plea, Cooperates w/ Prosecutors

In Cleveland, Ohio, the Plain Dealer reports:

  • A jury yesterday found 34-year-old title company owner Donna Sherman guilty of corrupt activity, theft by deception, money laundering, tampering with records and telecommunications fraud -- a total of 23 counts.

  • Sherman Title Agency was convicted of the same crimes. It's the first case in which a Cuyahoga County jury found the owner and title company guilty under RICO, the Racketeer Influenced and Corrupt Organizations Act.

  • Sherman, of Middleburg Heights, will be sentenced Dec. 1 by Judge Jose Villanueva for fraudulently closing $1.4 million in loans from People's Choice Home Loans to sell 21 houses in Cuyahoga County between 2002 and 2005. Seventeen of the homes fell into tax or mortgage foreclosure.

  • The fraudulent activity began when Sherman worked as an escrow officer for Titles, Etc. in 2002 and 2003. She started her company the following year. Titles, Etc. and one of its owners, Mitchel Petti, were found guilty in January after a bench trial.

  • Sherman received down-payment kickbacks upon closing the homes. And she sent documents to the sellers that showed actual purchase prices, while sending documents to People's Choice that showed higher prices. People's Choice issued the loans at the higher prices.

  • Sherman gave the kickbacks to co-defendant Fred Loewinger, who testified against her after pleading guilty to corrupt activity, money laundering, theft and tampering with records. He is serving six years in prison.

  • The case was investigated by the Cleveland office of the FBI and resulted in a 46-count indictment against her and 37 counts against her company.

Source: Middleburg Heights woman guilty of mortgage fraud, pattern of corrupt activity that led to 17 foreclosed homes.

Wednesday, November 9, 2011

Ohio Court: Improperly Notarized Mortgage Does Not Attach As Lien To Property, Leaving Earlier-Recording Lender In Lien Priority Dispute Holding Bag

Lexology reports:

  • The mortgage was not properly executed because the borrower / mortgagor’s signature was not notarized as required by Ohio Revised Code Section 5301.01. The mortgage was appropriately recorded despite the deficiency. With record notice of the current mortgage (and possibly actual notice too), a second lender advanced money to the same borrower and recorded a properly executed mortgage. The latter mortgage was recorded about two years after the first, improperly executed, mortgage was recorded.

  • When the owner of the mortgage recorded second filed for foreclosure and the two lienors decided to dispute priority, Lucas County Judge Frederick H. McDonald had to determine if Ohio Revised Code Section 5321.23 (the first-in-time is first-in-right statute) was applicable.

  • In OneWest Bank v. Dorner, 164 Ohio Misc.2d 63 (Lucas County 2011), he decided that the statute did not apply because the first filed mortgage was defectively executed.

  • Judge McDonald based that decision on: (i) an Ohio Supreme Court case which he said holds that a defectively executed deed does not transfer property such that a later creditor of the transferor cannot get that property, National Bank v. Denison, 165 Ohio St. 89 (1956); and (ii) an Ohio Appellate case that he said holds that a defectively executed mortgage does not create a lien on property that has priority over the subsequent lienor, MERS v. Odita, 159 Ohio App.3d. 1 (2004) (“Although a defectively executed mortgage is not entitled to record, even if it is recorded, the defective mortgage is treated as though it has not been recorded.”)

  • The holder of the first filed but defectively executed mortgage was an assignee. Asserting that the situation was not its fault and that fairness should place in first position the true first lienor, especially since the true second lienor had knowledge of the first lien, the first mortgagee asked Judge McDonald to do equity.

  • Judge McDonald declined the opportunity to apply equitable principals to correct the error made by the original should-have-been-first mortgagee despite the lament that the plaintiff / holder of the mortgage recorded second was allegedly unjustly enriched.

For the story, see Improperly executed but properly recorded mortgage isn't a lien (may require subscription; if no subscription, GO HERE; or TRY HERE - then click appropriate link for the story).

For the trial court ruling, see OneWest Bank v. Dorner, 164 Ohio Misc.2d 63 (Lucas County 2011).

BofA 'Coding Error' Leads To Flap Over $1 That Wrecked Former Borrower's Credit; Media Spotlight Needed To Spur Corrective Action

In Vernal, Utah, KUTV-TV Channel 2 reports:

  • In August, 2010, Shantell Curtis sold her Vernal, Utah house. But months later, when Shantell sat down to do her taxes, her accountant noticed a problem. She still owns that Vernal house. And worse, Shantell's credit score says she is now months behind on the payments.

  • Shantell says she called her former bank, Bank of America and they quickly noticed the error; a really small error. "They said, oh it's over one dollar," Shantell says. But for as quickly as Bank of America noticed they error, they have spent months not fixing it. For five months Shantell says the bank has promised to close the account and send her a letter. But it's never happened.

  • "They said that they had to keep reprocessing it and this has been game we've been playing ever since," Shantell says. "They just say they need to reprocess papers."

  • So, after months of fighting this battle with no results, Shantell called Get Gephardt. 2 News contacted Bank of America on Shantell's behalf and that got things moving. In an email the Senior Vice President of Media Relations writes it was "a coding error led to this issue." And she says that coding error has now been fixed.

  • Bank of America says they will also remove the negative report from Shantell's credit. But that could take up to 90 days. Shantell says she still has never received any communication from Bank of America.

Source: Get Gephardt: Home Foreclosure Over Missing $1.

Suspected Head Of N. California Foreclosure Rescue Racket Cops Plea; Accused Of Recording Bogus Land Documents In Attempt To Stall Foreclosure Process

In Alameda County, California, KGO-TV Channel 7 reports:

  • The focus of a 7 On Your Side investigation into a suspected foreclosure rescue scheme pleaded no contest [...] in an Alameda County courthouse. 7 On Your Side has been following this closely for 10 months.

  • Alan David Tikal entered his plea just hours before jury selection was to begin in his trial on a 29 count grand jury indictment on mortgage fraud. Prosecutors say this plea means the 15 victims it named in this case are now eligible for restitution.

  • Alan David Tikal has been in jail since being arrested in Las Vegas on a grand jury indictment in February. Prosecutors accuse him of posing as a private banker, then refinancing the mortgages of distressed homeowners.

  • The grand jury determined it was all part of a conspiracy to defraud people out of their property. On Monday, Tikal pled no contest to one felony count of filing false documents to transfer the property from the bank to himself. He also pled no contest to illegally accepting advanced fees for a loan modification.


  • Tikal agreed to pay any amount of restitution the judge ordered, but it also means the other 27 counts against Tikal have been dropped. [...] Only those victims in Alameda County specifically named in the indictment are eligible for restitution, but the prosecutor says the conviction shows this was all a scam.(1)

For more, see Man pleaded no contest to mortgage fraud scheme.

See Bay Area Grand Jury Indicts Four In Alleged Foreclosure Rescue Racket; Filed Fraudulent Documents In Bogus Attempts To Stall Legal Process: DA for an earlier post on this racket.

(1) In an earlier story (The Modesto Bee: Man jailed in Stanislaus realty scam (He awaits extradition; officials say he peddled phony foreclosure)), Tikal was once famously quoted as making this statement to the prospects to whom he peddled his phony foreclosure rescue scam:

  • "If there's a way for the bleeping banks to put me in jail, I would already be there."

BofA Reaches New High In Low; Takes Out Force Placed Insurance Policy On Empty Slab On 'Ike'-Demolished Home, Then Starts F'closure Over Hiked Premium

In Seabrook, Texas, KPRC-TV Channel 2 reports:

  • Hurricane Ike destroyed dozens of homes in Seabrook. Many families are just now rebuilding, but when Brad Gana tried to pick up the pieces, he learned that Bank of America was trying to take what little he had left. "I was shocked when they said they were foreclosing on it," Gana told investigator Amy Davis.

  • Gana was working overseas when the hurricane hit, destroying his home. But even then, he said he never missed a mortgage payment. It took him days to figure out why Bank of America was foreclosing.

  • "It wasn't until about 20 calls that someone said, 'We had a homeowner's policy on your home that you reside in, and your monthly payments have gone up,'" Gana explained. "But they never notified me that my monthly payments had gone up."

  • That's right. Bank of America took out a forced homeowner's policy on an empty slab.

  • Gana first learned of the foreclosure two days before his property was set to sell. He hired an attorney to stop the proceedings, but even after the foreclosure was halted, Bank of America removed Gana's personal effects from the property, including tools and collectibles that are now also gone.

  • Bank of America wouldn't comment on Gana's belongings, but in an email, a representative told Davis the bank "incorrectly placed insurance" on a home that didn't exist. It said it now has to audit Gana's account to make sure the bank corrects any discrepancies. "Bank of America is ruthless in their incompetency," Gana said.

  • A Bank of America representative said the bank did send multiple notices to Gana about the homeowner's policy and his new mortgage amount, but all of the notices were returned. Gana said that's because his mailbox was also destroyed in the storm. He claims he gave the bank an email address and two phone numbers where he could be reached overseas.

For the story, see Bank Forecloses On Home Destroyed By Ike.

Tuesday, November 8, 2011

Florida AG Takes Active Role In Vacant Home Hijacking Prosecutions As 'Adverse Possession' Rackets Span Multiple Counties

In Central Florida, the St. Petersburg Times reports:

  • Without permission, he went into vacant homes, changed the locks and rented out properties, authorities say. And in a odd twist, the Plant City man claimed what he was doing was allowed by an obscure legal concept called adverse possession.

  • Until now, authorities have battled this unusual practice with local prosecution, but on Thursday — for the first time — the Attorney General's Office announced plans to prosecute two of these cases, both in the Tampa Bay area. In a statement, Attorney General Pam Bondi called the practice "shameful."

  • Chris McDonald, 47, of Plant City was charged Thursday with organized scheme to defraud and booked into jail. He owned a company named Chateau-Lan Property Solutions.


  • Deputies also arrested Demetrius Lewis, 37, of Land O'Lakes, on a charge of organized scheme to defraud. His business — named Help is Here Foreclosure Prevention and Credit Repair — ran a little differently than McDonald's.

  • Lewis would gather the addresses of vacant homes and for $1,000 teach anyone how to occupy them using adverse possession, according to the Florida Department of Law Enforcement.


  • Because their dealings spread across five counties, the Attorney General's Office of Statewide Prosecution will try these cases. But McDonald and Lewis are not the first two to be arrested in connection with adverse possession.

  • George Williams, 41, faces organized fraud, burglary and grand theft charges in connection with several Hillsborough properties he rented. He has pleaded not guilty. Also, Joel McNair, the Sarasota man who told the St. Petersburg Times that it was his idea to take over empty houses and rent them out, was under investigation until he committed suicide in May.

For more, see Florida Attorney General's Office steps into prosecution of bay area adverse possession schemes.

Probe By Tarrant County Cops Into Over A Dozen Vacant Home Hijacking Complaints Ongoing As Adverse Possession Rackets Continue Proliferating

In Tarrant County, Texas, the Star Telegram reports:

  • Traveling nurse Agnes Edede was shocked in September to find a stranger living in her Mansfield home after she was away at work for three days. The man, Anthony L. Brown, had changed her locks, entered her house without permission and took two TVs and a lawn mower, she told police. Brown told her that the house was now his. To get it back, she'd have to pay him $2,000, police records say.

  • Similar seizures may be taking place all over Tarrant County, Mansfield Deputy Constable D. Garnett said. He said his office is investigating more than a dozen similar cases of people claiming ownership of what they say are abandoned homes. "It's an elaborate sham," Garnett said Friday. "These people just go to an empty house, change the locks, put up no-trespassing signs and move in.

For more, see Cases of people claiming squatter's rights in Tarrant County under inquiry.

Vacant Home Hijackers Keep Georgia Cops Busy As Three Cobb Men Get Pinched On Burglary, Forgery, Theft By Deception Charges In Rental Scam

In Marietta, Georgia, The Marietta Daily Journal reports:

  • Three Cobb men are accused of leasing out homes that they didn’t own, with nearly 20 people claiming to have been duped by just one suspect. Officer Mike Bowman with Cobb Police said 19 people have told police that Johnny Eugene Harris, 44, of Acworth rented them property he did not own.

  • According to a warrant issued Oct. 5, Harris removed the front and back door locks from a $220,000 home that was up for sale [...] in Mableton. He forged a lease agreement with a woman wanting to rent the home around Aug. 15 and allowed her to move in, police said.

  • The real homeowner told police he later went to check on his home and saw people living in it. When the homeowner asked the woman what she was doing in the house, she showed him the lease agreement she had signed with Harris and the keys he gave her.

  • Harris is also accused of taking $5,000 from the woman: $3,000 for a security deposit and two $1,000 rent payments. He remains in the Cobb County Jail on a $200,000 bond on charges of burglary, two counts of theft by deception and first-degree forgery, all felonies.

  • Two Powder Springs men accused of charges similar to Harris’ also remain in the Cobb County Jail on $35,000 bonds. According to warrants, the father and son team of Rodger Dudley Mason, 53, and Taylor Martin Mason, 19, are accused of changing the locks at a home [...] in Powder Springs. They hooked up utilities in their name, sold items in the house and rented a room to a man for $400 a month, police said.


  • The pair were arrested on Oct. 13 and each charged with three counts of burglary and theft by taking, both felonies, and theft by deception, a misdemeanor.

For the story, see 3 accused of renting out houses they didn’t own.

Cops: Cousin Of Two Autistic Men Took Out HELOC On Their Mortgage-Free Home, Used Proceeds For Herself; Bond Set At $75K As Residence Faces F'closure

In Palm Coast, Florida, The Daytona Beach News Journal reports:

  • The 59-year-old cousin of two disabled men became involved in their financial affairs after their mother died and stole more than $70,000 from them over several years, according to State Attorney's Office officials.

  • Robin Joan Carrig was charged Thursday with exploitation of a disabled person after investigators determined she took out a home equity loan on the paid-for house left to her cousins and used the money herself, reports state. The home on Cortes Court is now in foreclosure.

  • The case came to light in February when Denise Williams of Helping Hands in Flagler County told investigators she had been working with the brothers to ascertain why money kept disappearing from their accounts. Managers at Walmart, where the Carrig brothers work, put them in touch with Williams.

  • Robin Carrig was given limited power of attorney for her 56-year-old twin cousins, who both have a form of autism, in December 2004, two months after their mother died, a report states. She was also named their "designation of health care surrogate."

  • Her name was added to the property deed a year later via a quitclaim, according to the report. The next month, Carrig set up an equity line of credit and had her cousins sign the mortgage.

  • Michael Carrig did not know "why or how" his cousin was added to the deed and told investigators, "We must have did something stupid."


  • Robin Carrig was booked into the Flagler County Inmate Facility where she remained Friday on $75,000 bail.

For more, see Cousin accused of bilking disabled twins in Palm Coast.

Monday, November 7, 2011

Blown Title Work Leaves Missouri Couple Facing Possible Foreclosure On Purchase Of Lot Subsequently Improved With New Home

In Boone County, Missouri, the Columbia Daily Tribune reports:

  • Darrel and Mellony Melson bought the lot in the Brookfield Estates where they would build their home in May 2003. They built a house in the higher-end Southern Boone County subdivision that Boone County Assessor records value at $275,000. Four years later, they found out someone else had a right to it.

  • A decision handed down Tuesday in the Missouri Court of Appeals Western District ruled that an owner of the property who sold it in 2000 had the right to foreclose on it. The decision overturns a local court’s decision and marks the next step in a complicated suit over an unusual circumstance.

  • Before the Melsons built their home, Keith and Chastity Samuel owned it as part of a 94-acre tract. They bought it in 2000 from Carl and Martha Traxler. As part of the transaction, the Traxlers provided $388,180 in seller financing to cover the remaining purchase price of the land, putting a lien on it in their favor.

  • The Samuels then set about developing it, taking out a loan from Boone County National Bank. That gave the bank a lien against the land, too. From December 2001 to September 2004, the Samuels sold at least 14 residential lots to various buyers, court documents state. All the while, they were making loan payments to their two creditors — the bank and the Traxlers. As the lots were sold, the bank and the Traxlers issued partial deeds of release to the people who bought the lots.

  • When the Melsons bought their lot in 2003, they hired Boone-Central Title Company to locate existing liens against the property. Boone-Central obtained a partial release from the bank. For some reason, it didn’t get one from the Traxlers.


  • Unfortunately we’re human and sometimes mistakes are made,” said Karen Brown, president of Boone-Central Title Company, who added that title insurance will cover damages to the Melsons.(1)

For more, see Title firm error leaves family in limbo.

For the court ruling, see Melson v. Traxler, No. WD72795 (Mo. App. W.D. November 1, 2011).

(1) Title insurance will only indemnify for damages limited to the face amount of the title policy. It may be that, while obtaining an owner's title policy for the purchase price of the lot, the Melsons failed to subsequently update the policy to reflect the value of the improved premises, which would include the value of their new home after it was built. In that case, the title insurer will only be on the hook for the lesser value of the unimproved lot, leaving the Melsons in deep $#!t.

Zombie Debt Buyer Ordered To Release All Liens, Stop Collection Efforts Stemming From From Judgments Obtained Without Valid WV State License

In Charleston, West Virginia, The West Virginia Record reports:

  • Kanawha Circuit Court has entered an order preventing three Cavalry Company debt-buying businesses from collecting debts in West Virginia without a license.

  • The order also required Cavalry to stop all wage garnishments and to release all liens filed against West Virginia consumers' property stemming from judgments obtained by its companies before they became licensed.

  • The court granted West Virginia Attorney General Darrell McGraw's motion for a temporary injunction against Cavalry. It is also ordered the New York-based debt buyers-Cavalry SPV I, Cavalry SPV II and Cavalry Investments plus a collection affiliate, Cavalry Portfolio Services-to fully comply with the attorney general's investigative subpoena.

  • Testimony from McGraw's staff during a series of hearings disclosed that Cavalry debt buyers had filed at least 1,300 collections lawsuits prior to becoming licensed in October 2010. Of those lawsuits, 743 resulted in judgments totaling more than $3 million against West Virginia consumers, with 369 entered by default when the consumers failed to appear or contest the suit.

  • In conjunction with the attorney general, the circuit court also ordered Cavalry to send written notices to all consumers affected by the order. After the notices are sent, Cavalry may accept payments made voluntarily by consumers but must first place them into escrow and report all payments received to the attorney general's office. McGraw's office first subpoenaed Cavalry's West Virginia account records in January 2010.

  • Cavalry objected to complying with the records request and later asserted that the investigative subpoena could not be enforced once the lawsuit was filed. The circuit court disagreed. There has not been a trial date scheduled yet.(1)

Source: McGraw gets order to stop three debt businesses.

(1) Failure to register their business with the state appears to be a major 'Achilles' heel' for some of these zombie debt buyers. Earlier this year, a ruling by an Illinois appeals court indicated that a debt buyer's failure to register with the appropriate state administrative agency was enough to allow a debtor to undo the damage created by an improperly-obtained judgment, finding that said judgment was absolutely void, and not merely voidable. See:

See generally Repairing A Broken System: Protecting Consumers in Debt Collection Litigation and Arbitration for an FTC report on dealing with bill collectors & zombie debt buyers.

Six-Year Saga Of Long Island Couple Fighting Foreclosure Takes New Twist As Trial Judge Agrees To Reopen Foreclosure Judgment

In Riverhead, New York, Newsday reports:

  • A state judge Monday agreed to reopen the foreclosure judgment against an East Patchogue couple -- a year after his order to wipe out their mortgage was overturned -- in the latest twist in a six-year battle.

  • Judge Jeffrey Arlen Spinner in Riverhead signed an order to temporarily bar IndyMac Mortgage Services from auctioning off the home of Gregory Horoski and his wife, Diana Yano-Horoski.

  • A few weeks ago the couple and their attorney, Ivan Young of Bohemia, accused IndyMac and its former law firm, Steven J. Baum in Amherst, of deception on several key details. They're also suing for $10 million in fraud damages. IndyMac hasn't responded in court yet. "The anxiety that has been caused over the years is much more than the value of the mortgage," Greg Horoski said in an interview.

  • The central allegation is that IndyMac has no right to foreclose because it does not own the mortgage note. The couple alleges in court documents that IndyMac representatives "did actually slip up" in court by admitting the investor owner was Deutsche Bank.

  • Both IndyMac's parent company, One West Bank, and a spokesman for Baum declined to comment. A Deutsche Bank spokesman said the new filing will be reviewed.

  • IndyMac started foreclosure against the couple in 2005 and won the case in 2009. The couple fought the judgment, and in recent years the case has been closely watched by attorneys and lenders.

  • Two years ago Spinner voided the couple's $300,000 mortgage debt.(1) Last year an appellate division of the state Supreme Court reinstated the foreclosure judgment, saying there was no legal basis to erase the debt.(2)

Source: Judge to reopen Patchogue foreclosure judgment.

(1) IndyMac Bank F.S.B. v Yano-Horoski, 26 Misc 3d 717, 890 N.Y.S.2d 313 (NY Sup. Ct. Suffolk Cty. 2009).

(2) IndyMac Bank, F.S.B. v. Yano-Horoski, 78 A.D.3d 895, 912 N.Y.S.2d 239 (App. Div. 2nd Dept., 2010).

See also NY Appellate Court Tells Trial Judge: Cancelling Mortgage, Note Because Of Lender's "Repugnant, Shocking & Repulsive" Conduct Goes A Bit Too Far.

Bay State Appeals Court: Failure To Record Loan Extensions, Passage Of Time Fatal To Mortgages; Lenders Left Holding Bag With Voided Lien Interests

Lexology reports:

  • The Massachusetts Appeals Court recently issued two separate decisions interpreting Massachusetts General Laws c. 260, § 33, the Obsolete Mortgages statute. The result, in both cases, was a finding that each lender's mortgage had been discharged, notwithstanding the fact that the party seeking to obtain the benefit of the discharge had actual knowledge that there was an off-record extension of the mortgage.


  • In Harvard 45 Associates, LLC v. Allied Properties and Mortgages, Inc., & others, 80 Mass. App. Ct. 203 (2011), the plaintiff, Harvard 45 Associates, LLC ("Harvard 45"), brought a quiet title action in the Land Court after acquiring title to property in Westwood, Massachusetts at a sheriff's sale. The complaint alleged that a mortgage granted to Allied Properties and Mortgages, Inc. (the "Allied Mortgage") on May 31, 2001 had been discharged under G.L. c. 260, § 33, due to the fact that it had been greater than five (5) years from the August 31, 2001 term stated in the Allied Mortgage and no extension of the mortgage had been recorded.


  • In Housman v. LBM Financial, LLC, 80 Mass. App. Ct. 213 (2011), the plaintiff, Charles J. Housman, Trustee of Pine Banks Nominee Trust ("Housman"), was the successful bidder at a foreclosure sale of a second mortgage. Subsequent to the foreclosure of the second mortgage, the first mortgagee, LBM Financial, LLC ("LBM"), moved to foreclose a mortgage (the "LBM Mortgage") dated May 9, 2003 and containing a term of four months. While the parties to the LBM Mortgage had executed an extension of the LBM Mortgage prior to the expiration of its original term, the extension was never recorded. The foreclosure sale of the LBM Mortgage was held seven (7) days after the LBM Mortgage would have been discharged based on G.L. c. 260, § 33 and assuming the unrecorded extension of the term of the LBM Mortgage was not recognized. Housman filed an action in the Superior Court, alleging that the foreclosure sale of the LBM Mortgage was a nullity. The Superior Court granted LBM's motion to dismiss, holding that Section 33 did not apply due to Housman's actual knowledge of the extension of the first mortgage. Housman appealed the Superior Court decision.

  • On appeal, the Appeals Court, in two separate decisions rendered on August 25, 2011, held that the Allied Mortgage and the LBM Mortgage had been discharged as a matter of law. In reaching this conclusion, the Appeals Court focused on the issue of whether actual knowledge that a mortgage has been extended is sufficient to prevent the mortgage from being discharged in the absence of a recorded extension.(1)

For more on the appeals court's reasoning on why it left the mortgage lenders holding the bag in each case, see The Importance Of Recording Mortgage Extensions (may require subscription; if no subscription, TRY HERE - then click appropriate link for the story).

(1) In Housman v. LBM Financial, LLC, the court made this observation:

  • We conclude that the meaning of the statute is clear on its face. The language of the statute plainly discharges as matter of law all mortgages five years after the date on which they became due, unless an extension, acknowledgment, or affidavit is recorded within that period of time. The requirements of the statute are clear and must be strictly satisfied.

    Our reading of the statute finds support in Federal court decisions interpreting the same language. Rejecting the argument that § 33 applies only to defunct or inactive mortgages, the United States Bankruptcy Court concluded, "[t]he language of the Obsolete Mortgages [s]tatute is unambiguous and contains no exceptions. A mortgagee's actions, short of timely recording an appropriate document, are ineffective to extend an expired mortgage. Had the legislature intended the Obsolete Mortgages [s]tatute to have a more narrow application, ... it was certainly capable of drafting the statute accordingly."
    In re 201 Forest St., LLC, 404 B.R. 6, 10 (Bankr.D.Mass.2009).

    Reversing on other grounds, the reviewing court agreed that "[t]he effect of the Obsolete Mortgages [s]tatute is to extinguish the mortgagee's rights as mortgagee."
    LBM Fin., LLC v. 201 Forest St., LLC, 422 B.R. 888, 893 n. 7 (B.A.P. 1st Cir.2010).

    The Bankruptcy Court also considered LBM's attempted foreclosure of another property owned, for a period, by Pine Banks, subject to LBM's mortgage on it, and reached the same conclusion we adopt today, finding that a purported extension is invalid if not recorded pursuant to the requirements of § 33. See
    In re Shamus Holdings, LLC, 409 B.R. 598, 602 (Bankr.D.Mass.2009). See also Motta v. Andre, 434 B.R. 193, 201 (Bankr.D.Mass.2010).

    We also find support for our approach in the decisions of other states, which have strictly construed the recording requirements of mortgage extensions.

    The Supreme Court of Iowa concluded that the failure to record an extension precludes an action between mortgagor and mortgagee to foreclose a mortgage that has been discharged pursuant to the state's "Foreclosure of Ancient Mortgages" statute. See
    Willow Tree Invs., Inc. v. Wilhelm, 465 N.W.2d 849, 850 (Iowa 1991).

    See also
    Pro-Max Corp. v. Feenstra, 117 Nev. 90, 95 (2001) (concluding similar statute in Nevada was unambiguous and operated to extinguish any debt on real property secured by a deed of trust ten years after the debt becomes due in the absence of a recorded extension).

Suit: Accused Murderer Swiped $2M Interest In Apt. Bldg. From Elderly Stroke Victim, Used Rent Cash To Pay Legal Fees, Planned To Cash In, Leave Town

In New York City and Morristown, New Jersey, The Star Ledger reports:

  • Accused murderer Kashif Parvaiz cheated an elderly friend recovering from a stroke by taking a $2 million real estate "gift" in 2009 and not paying his bills as promised, according to a complaint filed by the man’s attorney.

  • Parvaiz, 26, of Brooklyn, is accused of conspiring with Antoinette Stephen, 27, of Billerica, Mass., in the Aug. 16, 2011 shooting death on a Boonton street of his wife, Nazish Noorani, 27, who was the mother of his two children.

  • Parvaiz was planning to sell the $2 million stake 74-year-old Martin Ragusa gave him in a Queens apartment building and then "disappear" with Stephen, his "alleged paramour," according to Ragusa’s attorney, James Gavin.

  • Parvaiz, who was granted power of attorney by Ragusa in 2007, failed to pay Ragusa’s mortgage and credit card bills as promised, Gavin said. Ragusa presently owes $100,000 on his credit cards and "pre-foreclosure proceedings" have started on his Manhattan co-op, Gavin said.

  • Ragusa’s legal action, filed in a Queens court, seeks to void the real estate gift on the grounds Parvaiz "wielded improper influence" over Ragusa when he was "a stroke victim confined to a wheelchair" and "dependent" on Parvaiz.(1)

  • The real estate complaint was attached to a motion filed in Superior Court in Morristown earlier this month by Parvaiz’s attorney, Mitchell Ansell. who sought to reduce Parvaiz’s bail from $3 million to $1 million.

  • Ragusa’s legal action will "tie up" the Queens property indefinitely, Ansell said. Thus, Parvaiz cannot sell it and lacks "the economic means to flee" cited by prosecutors when they requested the $3 million bail, Ansell said.

  • Ansell’s brief said that if released, Parvaiz would live in Brooklyn with his parents, who have owned a grocery business there since 1986. Parvaiz would agree to house arrest with electronic monitoring that he would pay for himself, Ansell said.


  • Ragusa’s attorney, Gavin, said yesterday Parvaiz continues to collect $9,000 a month in rent from the Queens apartments while he is held at the Morris County jail and he uses the money to pay his legal expenses.

  • The two men became friends when Parvaiz was about 20 and was doing construction jobs in Ragusa’s Manhattan building, Gavin said. "It was a scam from the start," Gavin said. "My client had no family, was lonely and (Parvaiz) took advantage of him."

  • Ragusa "felt he was supporting him in his endeavors, trying to do good in his life," Gavin said. "To this day, he can’t believe Parvaiz wasn’t at Harvard getting his Ph.D." Parvaiz falsely told friends and family members he was studying architecture at Harvard and told Ragusa he needed money to pay for his education and rent in Boston, Gavin said.

  • Meanwhile, he was taking $10,000 to $15,000 a month from Ragusa’s bank accounts, accoding to the attorney. "He was setting him up to file for bankruptcy and Medicaid," Gavin said.

For the story, see Complaint: Accused Boonton murderer cheated elderly N.Y. man who gave him $2 million real estate gift.

See also, Man accused of killing his wife in Boonton made $2M real estate deal hours before shooting.

(1) There is a long history of civil lawsuits by or on behalf of vulnerable individuals who were allegedly taken advantage of by someone having a confidential relationship with them.

See Sepulveda v. Aviles, 308 AD 2d 1, 762 N.Y.S.2d 358 (NYS Sup. Ct. App. Div. 1st Dept. 2003) for one example in New York, where the co-executors of the estate of a vulnerable victim (elderly, disabled and near death) sucessfully set aside a jury verdict in favor of the alleged scammer in a dubious real estate transfer:

  • Preliminarily, we note that the parties and the trial court erroneously assumed that plaintiffs bore the burden of proof on their equitable claim to rescind the transfer as the product of fraud or undue influence. "Normally, the burden of proving undue influence rests with the party asserting its existence (see, Allen v La Vaud, 213 NY 322).

    However, if a confidential relationship exists, the burden is shifted to the beneficiary of the transaction to prove the transaction fair and free from undue influence (see, Matter of Gordon v Bialystoker Ctr. & Bikur Cholim, 45 NY2d 692, 699; Cowee v Cornell, 75 NY 91, 99-100; McClellan v Grant, 83 App Div 599, 602, affd 181 NY 581)." (Matter of Connelly, 193 AD2d 602, 602-603 [1993], lv denied 82 NY2d 656 [1993].)

    In Matter of Gordon v Bialystoker Ctr. & Bikur Cholim (45 NY2d 692 [1978]), the Court of Appeals held that in light of the fiduciary relationship between the 85-year-old donor and the defendant nursing home-donee at the time of the donor's gift of funds, the burden shifted to the home to establish that it did not acquire the donor's property by fraud, undue influence or coercion, a burden that the nursing home failed to meet. As the Gordon Court (45 NY2d at 698) explained:

    "[W]here a fiduciary relationship exists between parties, `transactions between them are scrutinized with extreme vigilance, and clear evidence is required that the transaction was understood, and that there was no fraud, mistake or undue influence. Where those relations exist there must be clear proof of the integrity and fairness of the transaction, or any instrument thus obtained will be set aside or held as invalid between the parties' (Ten Eyck v Whitbeck, 156 NY 341, 353)."

    Appellate courts in this state have, time and time again, applied this burden-shifting mechanism to evaluate transactions which, at least on the surface, appear to involve the exploitation of elderly or mentally incapacitated persons by those intent on violating the trust reposed in them (see
    Matter of Mazak, 288 AD2d 682, 684 [2001] [no basis to disturb Surrogate's finding that respondent failed to rebut presumption that conveyance by 80-year-old decedent three weeks before her death was result of controlling or undue influence]; Peters v Nicotera, 248 AD2d 969, 969-970 [1998] [nephew failed to meet burden of showing that 80-year-old aunt's execution of deed transferring house to him was not product of undue influence or coercion]; JML Invs. Corp. v Hilton, 231 AD2d 493, 493-494 [1996] [home health aide failed to meet burden of showing that 80-year-old decedent's conveyance of home to aide was not product of undue influence]; Matter of Connelly, 193 AD2d at 602-603 [beneficiary of certificate of deposit failed to sustain burden by clear and convincing evidence that creation of certificate in favor of beneficiary by decedent, who had suffered stroke only months before, was fair and free from undue influence]; see also Matter of Greiff, 92 NY2d 341, 345-347 [1998] [Appellate Division incorrectly placed burden on wife to show that prenuptial agreement was procured by fraud or overreaching; case remanded to consider whether relationship between parties was the type that requires a shifting of burden to the proponent of agreement]).

    In any event, even under the erroneous burden of proof applied in this case, the jury's finding that Aviles did not obtain the property by fraud or undue influence was against the weight of the evidence. It is well settled that a jury verdict may be set aside as against the weight of the evidence only where "the jury could not have reached the verdict on any fair interpretation of the evidence" (Jamal v New York City Health & Hosps. Corp., 280 AD2d 421, 422 [2001]; see also Matter of Clines, 226 AD2d 269, 269-270 [1996], lv dismissed 88 NY2d 1016 [1996]).

    The jury's verdict here was completely at odds with any fair interpretation of the evidence.


Editor's Note: It appears obvious that when attempting to undo any real estate equity ripoff (including sale leaseback equity stripping ripoffs), it could be quite helpful (if not 'near crucial') in a lawsuit to void/set aside a transfer to establish the existence of either a fiduciary relationship, or a confidential relationship (the two are not the same, folks), between the victim and the scammer in order to shift the burden onto the beneficiary of the transaction (ie. the scammer) to prove the transaction was fair and free from undue influence, and consequently, not a ripoff disguised as a legitimate conveyance.

Sunday, November 6, 2011

Feds Seek Triple Damages, Fines In Suit Alleging Bankster Duped HUD/FHA Into Insuring Crappy Home Mortgage Loans

In New York City, Reuters reports:

  • Prosecutors sued a large U.S. mortgage broker and two top executives for an alleged decade-long fraud that cost the government hundreds of millions of dollars on risky home loans.

  • The lawsuit seeks triple damages and civil fines against Allied Home Mortgage Capital Corp, which once billed itself as the largest privately held U.S. mortgage broker; Jim Hodge, its founder and chief executive; and Jeanne Stell, an executive vice president and compliance director.

  • It contended that Allied violated the federal False Claims Act by misleading the government into believing its loans qualified for federal insurance, when its mortgages were so poor nearly one in three went into default.

  • This "reckless" lending, it said, cost the Department of Housing and Urban Development (HUD) $834 million in insurance claims and forced thousands of homeowners out of their homes.

For more, see U.S. sues Allied Home Mortgage for lending fraud.

For the U.S. Attorney (Manhattan) press release, see Manhattan U.S. Attorney Sues Allied Home Mortgage, CEO, And Executive Vice President For Fraudulent Lending Practices Currently Associated With $834 Million In Insurance Claims Paid By HUD (One of the Nation's Top Privately Held Mortgage Lenders Operated 'Shadow Branches' and Allegedly Lied About Its Compliance With HUD Regulations).

Another Federal F'closure Relief Program Goes Into Effect; Will Purportedly Give Some Borrowers Chance To Have Cases Reviewed For Bankster Wrongdoing

The Washington Post reports:

  • More than 4 million borrowers who have faced foreclosure since early 2009 will have the chance to have their cases reviewed for potential wrongdoing, federal regulators and some of the nation’s largest mortgage servicers announced Tuesday.

  • The reviews stem from a deal forged earlier this year in which 14 servicers agreed to hire independent consultants to evaluate whether borrowers suffered financial injury during the foreclosure process. If a review finds errors or abuses by the financial firms, the consultants will determine what recompense wronged homeowners deserve.

  • On Tuesday, servicers began mailing letters to the estimated 4 million borrowers whose loans were in the process of foreclosure between Jan. 1, 2009, and Dec. 31, 2010, detailing how to request a review of an individual case.

  • Officials at the Office of the Comptroller of the Currency, which crafted the April servicer agreement along with the Federal Reserve, said the mailings would continue through the end of the year and be accompanied by a large-scale marketing campaign to make borrowers aware of the effort. Additional information is available at or 1-888-952-9105. Requests for review must be received by April 30, 2012.

  • There is no cost to the borrower for this review,” Joe Evers, deputy comptroller for large banks at the OCC, said in a call with reporters Tuesday.

For more, see 4 million borrowers eligible for foreclosure review.

Clueless Upstate New York Foreclosure Mill Sweatshop Operator Makes Laughable Attempt To Media-Spin Way Out Of 'Halloween' Fiasco

In Buffalo, New York, Buffalo Business First reports on the attempt attorney and foreclosure mill sweatshop operator Steven J. Baum has made to 'positive-spin' his way out of the mess he finds himself in after the columnist Joe Nocera's story (with pictures) of his tasteless 2010 Halloween party was published in The New York Times:

  • The Baum story has gone worldwide. Yahoo, Huffington Post, cable news, everyone is jumping on the chance to vilify a firm that certainly seems anything but sympathetic. I reached back out yesterday for comment from Baum. Sure, I knew he wouldn’t talk to me, but how about a statement?

  • As I was writing this, the statement arrived. Allow me to share it with you, in its entirety so that you can judge it for yourself:

    The images in the photographs that were published in The New York Times obviously were in very poor taste. In fact, we had our annual Halloween party last week at our various locations and we reiterated our company policy as it pertains to wearing appropriate costumes. No one is permitted to wear a costume that could be interpreted as being offensive.

    At this year’s party we raised money for the American Red Cross. Our office continues to be active in the community and has donated to Habitat for Humanity, Hospice of Buffalo and the Ronald McDonald Foundation among others. We have held various fund raisers for our servicemen and women. We are also involved in the Military Warriors Foundation, in having our clients donate foreclosed homes to soldiers in need.On behalf of the firm, I sincerely apologize for what happened last year at our Halloween party

  • Really? All that mortgage money piled up to spend and this is what you came up with? Is it me, or is this statement more about how the firm is donating to charity and less about the act? Using servicemen and women to spin is in poor taste at best and disgraceful at worst.

  • It gets worse. Baum issued a second letter to his clients in which he blames the New York Times for essentially being out to get his firm. I could offer my thoughts on how silly that is, but instead, take a look at the article and photos and decide for yourself.

  • Finally, you know you are fast becoming a pariah when other attorneys turn on you. Western New York is a close-knit legal community so when I logged into my LinkedIn account this morning and saw highly respected attorney Jeffrey Freedman dropping the hammer on Baum, I knew things had reached the point of no return.

  • Your colleagues are turning their backs on you, the media is churning the blood in the water and the sharks are circling the boat. Yet for the law firm of Steven J. Baum, it is Tuesday morning and it is business as usual. And that, I suspect, is the problem.

For the story, see Attorney Steven J. Baum just doesn't get it.

Elderly Owners Of Mortgage-Free Home Face Eviction After Missing $2500 Tax Payment As City Peddles Real Estate Tax Lien To 3rd Party Investor

In Worcester, Massachusetts, the Worcester Telegram & Gazette reports:

  • Jadwiga Ortiz, owner of a three-family dwelling at 71 Harrison St., has lost that property, with an assessed valued of almost $200,000. That is not so unusual these days, given the high rate of foreclosures brought on by the big banks that saddled some homebuyers with exorbitant and unconscionable mortgages.

  • Ms. Ortiz’s case is different, however. She is not indebted to any big banks. In fact, she had no mortgage on her property. She and her 65-year-old husband have occupied the three-family home since 1971, along with another on Columbia Street bought by her parents, both of whom have passed away.

  • Ms. Ortiz, however, had fiscal 2009 back taxes amounting to $2,533.58 on the Harrison Street property. This amount essentially represented her missing one of four payments that tax year and not settling water and sewer tax liens totaling $900.

  • But having a city lien these days is akin to being indebted to a predatory credit card company, now that the city is selling those liens to third parties. Those third parties are able to hike the interest rates on the debt, or, as happened in Ms. Ortiz’s case, seize your property.

  • Some will put all the blame on Ms. Ortiz, a 62-year-old crossing guard for the city, for losing her mortgage-unencumbered $200,000 property for the nonpayment of a mere $2,500 debt. They will say that the city and the individual who bought Ms. Ortiz’s lien, Gary Glusgol of Lynnfield, did nothing untoward; that everything was done by the books.


  • Registry of Deeds records show that after securing the lien, Mr. Glusgol, as is customary, filed a foreclosure notice on the property in December 2010. According to a City Hall document, a son of Ms. Ortiz on March 12, 2011, signed for a certified letter addressed to her disclosing the foreclosure proceeding.

  • On July 21, 2011, having not heard from Ms. Ortiz, the court granted Mr. Glusgol the property. Mr. Glusgol has since taken out a $75,000 mortgage on the property and, according to City Hall records, is now the assessed owner.

  • Meanwhile, Ms. Ortiz, who shares the home with five others, including her husband, a daughter, a son and two grandchildren, has been served with an eviction notice.

For more, see Home is gone after missing tax payments.