Saturday, November 19, 2011

Recently Widowed Woman Fleeced For $500K, Loses Home After Falling For Lonely Hearts Ripoff; Scammer Said He Was Military Man

In Castle Rock, Colorado, the Daily Mail reports:

  • A grieving widow has lost $500,000 of her life savings and her home after being taken in by an Internet dating scam. Esther Ortiz-Rodeghero, 55, decided to look for love online after she lost her husband and thought she had hit the jackpot with a suave military man on the website,

  • Instead it was a fraudster who convinced her to continually fork out money which Mrs Ortiz-Rodeghero wired all over the world from her home in Castle Rock, Colorado.

  • She had started to look for love online last October after her husband David Rodeghero died of pancreatic cancer at the age of 52. She told 'After seeing a therapist I was advised maybe I should go on a dating website and meet new people ... because I was depressed.'

For more, see 'I was blinded by his romantic emails': Widow loses $500,000 after falling for fake 'military lover' in internet dating scam.

Bronx Landlord Vows Appeal Of Ruling To Cough Up $33K In Refunds, Punitive Damages For Squeezing Single Mom With Illegal Rent Overcharges

In The Bronx, New York, the New York Daily News reports:

  • A Bronx single mother could soon be collecting more than $33,000 from her landlord, after the state Department of Housing and Community Renewal found that she was charged excessive rent for her Norwood apartment. Iris Vega-Ortiz, 41, was charged $400 more every month for her one-bedroom apartment, according to a ruling.


  • Meanwhile, local housing advocates said it’s the largest award they've ever seen by the state for an individual tenant in the neighborhood. “In the years that I’ve been doing this work, I’ve never seen a settlement, a ruling this high,” said Sally Dunford of the nonprofit West Bronx Housing and Neighborhood Resource Center. “It was just really good to see the system work the way it’s supposed to work.”


  • The state HCR department told Vega-Ortiz that the rent for her apartment was supposed to be $554.75 a month, not $975. According to the state, Vega-Ortiz is owed more than $33,000, including more than $10,000 in overpaid rent and nearly $22,000 in punitive charges for intentionally jacking up the rent. According to city records, there are 31 open violations for [the buliding], including six severe hazards.

For the story, see Bronx mom awarded $33,000 from landlord after state agency rules she was overcharged for rent (Landlord vows appeal of HCR ruling).

Unwitting Homeowner Finds Tenant In Former Home After Signing Away Deed Three Days Before Auction To Outfit Promising Relief From Foreclosure Issues

In Ione, California, reports:

  • A homeowner who tried a creative approach to avoid a foreclosure on his credit report was surprised to see a tenant in his house complaining about the pending auction. "It seems kind of weird," said Phil Scantling, who sold his house in September for $10 to a "walk away" company with the understanding the company would attempt to negotiate a settlement with the lender, GMAC.

  • The new owner, Home Advocate Trustees, placed a tenant in the Lake Camanche home in October, three days before an auction notice was posted on the door. Tenant Stephanie Swisher paid more than $1,200 to Home Advocate Trustees for a deposit and pro-rated October rent, and contacted News10 because she was worried the foreclosure auction would lead to her eviction.

  • Scantling saw the story and called to say he had been unable to get any information from Home Advocate Trustees on the status of the negotiations, and was concerned the company was more interested in collecting rent than resolving his mortgage problem.

  • "They pitched it as this would pretty much fix your foreclosure issues," Scantling said. According to the company's website, Home Advocate Trustees uses "aggressive legal tactics" to achieve high quality results for sellers.

  • Home Advocate Trustees obtains houses from distressed homeowners through its sister website,

For more, see Foreclosed homeowner surprised to see house on TV.

Future Bright For Bronx Hip-Hop Birthplace As Housing Group Takes Over F'closed 102-Unit Complex Victimized By Wall Street/Predatory Equity 'Geniuses'

In The Bronx, New York, The New York Times reports:

  • After a long struggle, ownership of a Bronx building known as the birthplace of hip-hop, which had fallen into neglect and foreclosure, was taken over on Monday by a group that specializes in preserving working-class housing.

  • The building at 1520 Sedgwick Avenue in the Morris Heights neighborhood was, in the early 1970s, the home of D.J. Kool Herc, whose community room parties were pivotal to the early development of hip-hop.

  • But in recent years, the 102-unit complex had become a symbol for aggressive investment practices and property neglect, so much so that Senator Charles E. Schumer recently called it “the birthplace of predatory equity.” It was sold in 2008 before the real estate bubble burst to a real estate group that defaulted on the building’s mortgage within two years. The building fell into disrepair and foreclosure.

  • On Monday, Workforce Housing Advisors, a group focused on salvaging working-class housing in buildings that have been overleveraged, became the building’s owner. In 2010, it bought the building’s mortgage for $6.2 million, with help from the city, and because no bidders came forward on Monday, it will keep the building. A bid of at least $7.9 million at the auction would have been required for another party to take control.

  • Several residents, accompanied by an advocacy group that supported them through a long struggle, were at State Supreme Court in the Bronx on Monday and broke into cheers and “hallelujahs” when the auctioneer announced that no bidders had registered.

  • Geraldine Davis, 72, a resident of the building for 37 years, hugged her neighbors and dried a few tears. “I always thought positive,” she said. “We prayed so hard and worked so much to save this building.”

For more, see For Birthplace of Hip-Hop, New Life.

See also Crain's New York Business: Sold! Birthplace of hip-hop beats the rap (A Bronx building famed for its role in the origins of the musical phenomenon escapes the clutches of a “predatory equity” scourge that tenants feared would lead to its demise).

Friday, November 18, 2011

Suit: Loan Servicer Used Deceptive Correspondence, Illegal Demands In Effort To Intimidate Tenants Out Of Foreclosed Homes In Violation Of Federal Law

In Brownsville, Texas, Foreclosure Buzz reports:

  • Loan servicers and their henchmen (attorneys and real estate brokers) continue to ignore the requirements of the Protecting Tenants at Foreclosure Act. Many take the position that tenants’ leases do not have to be honored, and instead only provide a 90 day notice to vacate. Some decide to advise tenants of their “rights” expressly.

  • On October 28, 2011, American Home Mortgage Servicing, Inc. (AHMSI) was sued for issuing a letter to a tenant that said as much, and refusing to change its letter in the future despite numerous requests. Without any basis in the law, AHMSI’s representatives also demand extensive documentation within a short time frame in order to get the 90 days.

  • AHMSI even said for the tenant to not be concerned with an eviction. It appears that loan servicers hope to take advantage of tenants as much as possible and hope the law is not extended past December 2014.

Texas Housing Justice League, a Texas non-profit corporation and membership organization that is operated under the Texas Non-Profit Corporation Act to serve the housing interests of low-income Texans, is a co-plaintiff in this case.(1)

For more, see AHMSI Sued for Misleading Tenants per PTAF.

For the lawsuit, see Davis v. AHMSI et al., Civil Action No. 1:11-cv-219, US District Court, S.D. Tex., Brownsville Division.

Thanks to Deontos for the heads-up on the story.

(1) According to their website, Texas Housing Justice League was formed to address housing problems associated with:

  • abusive homeowner association rules,
  • improper eminent domain efforts,
  • oppressive property tax schemes,
  • severe housing conditions,
  • predatory lending practices,
  • improper evictions,
  • illegal foreclosures,
  • lease-to-own scams,
  • defective titles from contracts for deed, and
  • a host of other housing problems.

Rent Skimming Suspected As New Haven Landlords Allegedly Pocket Section 8 Rent Subsidies While Stiffing Banks On Mortgage Payments

In New Haven, Connecticut, the New Haven Independent reports:

  • Poverty landlords Janet Dawson and Michael Steinbach found a way to make money in the recession—stop paying the bank, let properties deteriorate, but continue collecting tens of thousands of dollars a month in checks from New Haven’s housing authority.

  • The Housing Authority of New Haven (HANH) is sending Section 8 federal rent subsidy checks to Dawson’s and Steinbach’s various corporate entities for at least 73 rental apartments, according to HANH. That amounted to nearly $80,000 paid out by HANH to the two for the month of October alone.

  • Meanwhile, lenders are foreclosing on their homes across town. And even though Dawson and Steinbach stopped paying their mortgages on the properties, that hasn’t stopped New Haven’s housing authority from continuing to send them rent checks.

For more, see Slumlords Stiff Banks—& Rake In Sec. 8 Bucks.

S. Fla. Town Mayor Faces Probe Into Homestead Exemption Claim On Condo She Didn't Reside In; Prosecutors Mull Grand Theft, Scheme To Defraud Charges

In Miami, Florida, SunPost reports:

  • North Bay Village Mayor Corina Esquijarosa is once again in trouble, this time via a criminal investigation started by Miami-Dade prosecutors. According to records, Esquijarosa claimed a homeowner’s tax break on a condominium where she did not reside.

  • Prosecutors have filed a search warrant and are looking into charges of grand theft and scheme to defraud, but as of today, no charges have been filed.

  • Esquijarosa’s problems stem from a 2009 and 2010 claim of a 50,000 homestead exemption for a condominium. She was however not living in the property in Miami, but was living in North Bay Village.

  • Last week, her records were seized from the Miami-Dade property appraiser’s office and she was also hit with a $500 fine by Miami-Dade’s Commission on Ethics and Public Trust for not publicly disclosing her income on her campaign disclosure forms.(1)

For more, see Prosecutors Open Investigation on North Bay Village Mayor Corina Esquijarosa.

(1) I guess possibly from rental income from the condo she claimed as her homestead that she may have been renting out to a tenant.

Desperate Bankster Turns To Facebook To Salvage What's Left Of Reputation From Toilet

CBS News reports:

  • Bank of America has a reputation problem the way Bernie Madoff does, in the sense that the injury was entirely self-inflicted. Whether robosigning illegal or questionable mortgage foreclosures, performing so poorly that Warren Buffett dumped his holdings in the company, charging consumers a $5 monthly fee to use their debit cards, or turning to a hefty federal bailout to get themselves out of the trouble they themselves created, BofA should have found it difficult to make itself look worse.

  • However, difficult is not the same as impossible. BofA has decided to redeem itself through the power of Facebook. It has been running ads asking people to agree that "community is important in America." However, the ads don't show the name of the company, even though clicking like supports "an official Bank of America Facebook page." Yup, BofA has just invented robo-liking.

For more, see BofA turns to Facebook to win back public.

Thursday, November 17, 2011

Cops: Prosecutors Likely To Get Case Against Local Man Suspected Of Renting Out Vacant Foreclosures To Unwitting Tenants

In Albuquerque, New Mexico, KOB-TV Channel 4 reports:

  • The Albuquerque Police Department is investigating a possible rental scam using foreclosed and abandoned properties. APD’s White Collar Crimes Unit has been investigating Shaun Anaya who owns Olive Tree Property Management out of Albuquerque.

  • According to police reports, Anaya is suspected of putting people in foreclosed and abandoned homes to be a caretakers of the house during the foreclosure process. According to the renters statements to police, Anaya charges the renter just a couple hundred dollars a month while they live in the house.

  • When police contacted the banks they said no one should be in the homes and they'd never had contact with Anaya or Olive Tree Property Management.

  • Neighbors in a recent incident tipped off police when someone moved into a nearby home that wasn't supposed to be occupied. "Olive Tree is coming in and saying they own property that the don't. I think they're forging something. Something not right," said Tina Conary, a neighbor in southwest Albuquerque. Anaya wouldn't give KOB Eyewitness News 4 an interview but over the phone he denied all the accusations.

  • Police warn if you have an abandoned or foreclosed house in your neighborhood and someone moves in that you don't think should be there, call police. Officers say they're seeing this growing problem in Las Vegas, Nevada and Phoenix.

  • Albuquerque Police officer say they'll likely submit a case against Anaya to the Bernalillo District Attorney's Office by the end of November. Officers say Anaya has an extensive criminal record.

Source: Rental scams hits Albuquerque foreclosed homes.

BofA Bagged For Charging $39 Interest On $0 Balance; Insists It Was Right, But Refunds Cash Anyway "As A Courtesy" After Media Begins Asking Questions

In Jacksonville, Illinois, the Chicago Tribune reports:

  • Roger Greenwood thought he had heard of every conceivable bank fee. Then he received his September credit card bill.

  • Bank of America charged the Jacksonville, Ill., man $39.23 in interest — on a $0 balance. Greenwood was convinced it was a mistake. In August, he charged a vacation rental to his credit card, resulting in a $5,734.13 balance. Weeks later, he received $1,450 in credits from two merchants, lowering his balance to $4,284.13.

  • He paid the remainder of what he owed with an electronic transfer Sept. 6, three days before it was due, bringing his balance to zero. His statement clearly showed that between the credits and his payment, Greenwood paid off the entire $5,734.13. So why, he wondered, had he been charged interest?

  • Greenwood emailed Bank of America, and quickly received a response. An online representative agreed that between the credits and his Sept. 6 payment, Greenwood had paid his balance in full.

  • "However, we need to inform you that credits are not considered as payments on credit accounts," the representative wrote. "Therefore, the credits (of $1,450) were not considered as payments on this account, and the interest charges were applied correctly."

  • The representative told Greenwood Bank of America would not erase the $39.23 in interest. "We regret we are unable to remove the interest charges at this time," the representative said. "Therefore, this transaction will remain part of your account balance."

  • Greenwood emailed Bank of America again and received the same reply from a different representative — the $1,450 in credits weren't considered payments, and thus he was charged interest on that amount.

  • Flummoxed, Greenwood emailed What's Your Problem?

For more, see Problem Solver: Numbers don't add up on credit card charge (Jacksonville, Ill., man charged interest even though he showed zero balance).

Player In Upfront Fee Loan Modification & Foreclosure Rescue Racket Cops Felony Grand Theft Plea; Restitution Could Amount To $150K

In Monterey County, California, The Salinas Californian reports:

  • A Gonzales woman pleaded guilty to felony grand theft on Monday in connection with a foreclosure rescue scam that targeted Latino homeowners. Maria Ponce, 55, will be sentenced in January and could serve one year in jail as well serving five years probation and paying about $150,000 in restitution, said a news release from Monterey County District Attorney Dean Flippo.

  • Ponce convinced homeowners that she could have their mortgage payments lowered or their foreclosures reversed and she was paid as much as $4,500 but none of her clients ever got a refund or reduced loan payments.

  • The investigation began in 2008 after Gonzales police started getting complaints. Victims told authorities that Ponce and Melissa Garcia hosted sales meetings in Ponce's home, according to the release.

  • The rescue scam unraveled in June 2008 after Garcia was arrested on felony elder abuse and grand theft charges in Santa Cruz County, the news release said. Garcia previously pleaded guilty to felony conspiracy and awaits sentencing, according to the release.

Source: Woman pleads guilty in foreclosure scam.

F'closed Home Found Missing So Bankster Improperly Snactches House Next Door Instead, Changing Locks & Removing $14K In Owners' Belongings In Process

In Effingham, New Hampshire, The Conway Daily Sun reports:

  • A major Wall Street bank is apologizing to a Maine couple who allege that the bank wrongfully claimed ownership of their second home on Green Mountain Road in Effingham. But the apology rings hollow for the Drew family.

  • Apparently, J.P. Morgan Chase & Co. confused a little red house, owned by Travis and Paula Drew, at 529 Green Mountain Road, for a no-longer-existent mobile home at 519 Green Mountain Road.

  • The structures were owned by different people even though they once shared the same lot. The confusion led the bank's agents to change the locks on the Drews' home and remove $14,000 worth of belongings from the property. The Drews don't live in the Effingham house. They live in Stow, Maine.

  • Another entity, called EMC Mortgage, had foreclosed on a mobile home in 2002. The bank-owned mobile home burned down in 2007. EMC Mortgage became a part of Chase when Chase acquired Bear Stearns in 2008.

  • The bank, which was apparently under the impression it owned the mortgage on the Drew house, sent a contractor to maintain the property. "We apologize for the error and have reached out to the homeowner to resolve the issue," said Chase spokesman Michael Fusco to The Conway Daily Sun on Wednesday. Fuscos' written statement doesn't specifically state what the error was or how it happened.

  • The Drews aren't impressed with Chase's admission of an error. As of Wednesday afternoon, Chase still hadn't explained itself to them. Bank employees told the Drews that a representative named Michelle would be in contact with them when the bank's investigation is complete.

For more, see Bank admits error after couple claims home was illegally taken.

Wednesday, November 16, 2011

Florida Bar Issues Quarterly 'Gossip Sheet'

From a recent issue of The Florida Bar's quarterly 'gossip sheet':

  • The Florida Bar, the state's guardian for the integrity of the legal profession, announces that the Florida Supreme Court in recent court orders disciplined 24 attorneys, disbarring 12 and suspending 10. Some attorneys received more than one form of discipline. Two attorneys were placed on probation; two attorneys were publicly reprimanded and two were ordered to pay restitution.

Among those making the 'honor roll' specifically for playing fast and loose with their clients' cash, and, in a couple of cases, for improper conduct in holding themselves as providing foreclosure defense and loan modification services are listed below. Also indicated is the appropriate hammering, commensurate with their handiwork, that each was belted with:

  1. Paul Francis Angueira, 1808 NW 126th Ave, Pembroke Pines, disbarred effective immediately, following an Aug. 25 court order. (Admitted to practice: 1997) Further, Angueira shall pay restitution of more than $11,000 to two clients. In several instances, Angueira misappropriated and misused client funds. (Case No. SC11-92).

  2. Thomas W. Dvorak, 633 S. Andrews Ave., Suite 402, Fort Lauderdale, suspended for one year, following an Aug. 25 court order. The suspension shall run consecutive to the one-year suspension ordered in June 2010 and is effective retroactive to July 24, 2011. Further, as a condition of his eligibility to apply for reinstatement, Dvorak shall pay restitution totaling approximately $125,000 to clients in both cases and enter into an agreement with Florida Lawyers Assistance Inc. (Admitted to practice: 2002) Dvorak is the subject of seven Bar investigations. After collecting legal fees from several clients in mortgage loan modifications and real estate foreclosure defense cases, Dvorak failed to keep the clients informed of their cases, failed to competently and diligently represent them and failed to communicate with them. He took little or no action in their cases. (Case No. SC11-1499).

  3. David Eric Hammer, 1005 N. Marion St., Tampa, disbarred, effective retroactive to Sept. 22, 2010, following an Aug. 30 court order. (Admitted to practice: 2006) Hammer misappropriated client trust funds for his personal use. (Case No. SC10-2029).

  4. Larry Elliot Klayman, 2929 Pennsylvania Ave. N.W., No. 35, Washington, D.C., publicly reprimanded following an Aug. 29 court order. (Admitted to practice: 1977) Klayman agreed to submit to mediation through The Florida Bar's Grievance Mediation Program after a former client filed a complaint alleging that he had failed to provide services in a criminal case for which he was paid a $25,000 retainer. After entering into a mediation agreement, Klayman failed to repay the money in full within the specified time. (Case No. SC11-247).

  5. Denise Letizia, P.O. Box 7256, Wesley Chapel, disbarred effective 30 days from an Aug. 10 court order. (Admitted to practice: 1993) Letizia engaged in dishonest conduct by using an invalid power of attorney to withdraw more than $100,000 from bank accounts bearing her developmentally disabled brother's name. She also demonstrated a pattern of misconduct regarding the representation of her brother and in the subsequent disciplinary proceedings. (Case No. SC09-1308).

  6. James Robert Mann, 1220 16th Street, Miami, disbarred effective immediately, following an Aug. 12 court order. (Admitted to practice: 1997) In several instances, a Bar auditor found trust account irregularities because of misuse of client funds. In one case, a client gave Mann $5,000 to fund a settlement agreement. Instead of holding the funds in his trust account as required, Mann used the money to satisfy his own unrelated personal and business obligations. (Case No. SC10-2318).

  7. William Timothy O’Toole, 1489 W. Palmetto Park Road, Suite 494, Boca Raton, suspended until further order, following a July 25 court order. (Admitted to practice: 1992) O’Toole is the subject of 20 Bar disciplinary matters. According to a petition for emergency suspension, O’Toole appeared to be causing great public harm by failing to properly communicate with clients and failing to diligently handle their cases. O’Toole allowed nonlawyers to improperly solicit clients on his behalf for loan modifications and foreclosure defense on a nationwide basis, despite the fact he can only practice law in Florida. He also split fees with nonlawyers, a violation of Bar rules. (Case No. SC11-1384).

  8. Jeffrey Alan Schwarz, 801 N.E. 167th Street, North Miami Beach, suspended until further order, following a Sept. 27 court order. (Admitted to practice: 1976) After being retained for $8,500 to represent two clients on charges of drug trafficking charges, Schwarz failed to adequately represent them. Schwarz neither met nor communicated with clients while they were in custody. Schwarz also allowed a non-lawyer assistant to communicate with the clients’ families and accept money for representation. The clients testified that the paralegal told them he was their lawyer and they believed that he was representing them. (Case No. SC09-766).

For the entire gossip sheet, see Supreme Court Disciplines 24 Attorneys (October 31, 2011).(1)

(1) The Florida Bar's Clients' Security 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.

Arizona AG: Loan Modification Racket Targeted Spanish-Speaking Victims With Verbal Promises That Were Then Disclaimed In English-Text Contracts

In Pima County, Arizona, The Arizona Republic reports:

  • Arizona Attorney General Tom Horne's office has filed a consumer-fraud lawsuit against a mortgage loan-modification assistance company that targets Spanish-speaking homeowners in Phoenix, Tucson and Las Vegas.

  • A civil complaint filed Monday in Pima County Superior Court accuses Las Vegas-based Mortgage Capital USA Inc., Phoenix-based American Mortgage USA Inc. and affiliated businesses, all owned by Las Vegas resident Gustave "Gustavo" Anaya, of violating the Arizona Consumer Fraud Act.

  • According to the complaint, Anaya and his companies charge struggling homeowners from $500 to $3,500 to help them avoid foreclosure but provide little or no assistance in return.


  • The companies, which advertise through Spanish-language media, instruct clients to stop paying the mortgage and cut off all communication with loan servicers, which actually hastens foreclosure of their homes, the complaint states.


  • According to the complaint, Mortgage Capital and American Mortgage follow a strategy of making verbal promises of success in Spanish while requiring clients to sign service contracts in English that contain no such promises.

  • "Defendants verbally and routinely guaranteed consumers specific results from the negotiation process in Spanish while defendants' working agreement, written in English, disclaimed any guarantee or promise of a specific result," the complaint says.

For more, see Mortgage loan-aid company accused of fraud (Suit: Spanish-speaking homeowners targeted).

For the Arizona Attorney General press release, see AG Horne Files Complaint in Pima County Alleging Consumer Fraud Violations Against Mortgage Capital USA, Inc.

For the lawsuit, see State of Arizona v. Mortgage Capital USA, Inc., et al.

Foreclosure Surplus Snatching Rackets Extending To Local Gov'ts? "City Of Brotherly Love" Stiffs Hapless Homeowners, Makes Major Move At Greedy Grab

In Philadelphia, Pennsylvania, The Philly Post reports:

  • The news that nearly $56 million had been recovered from the bowels of the sheriff’s office’s sloppy bookkeeping was welcomed by government officials. However, the former owners of properties sold at sheriff sale—who are due much of that money—continue to be victimized by government ineptitude.

  • City officials announced that the funds–including unclaimed proceeds of sheriff sales over the last dozen years when property sales generated more than the amounts owed for past-due mortgages, taxes, and utilities–would be transferred to the City’s General Fund and State Treasury.

  • But, that money was not just misplaced, it was misappropriated; taken from those who were lawfully due the funds. Unless they act deliberately and quickly to return the money to the rightful recipients, the sheriff, controller and the mayor are working to benefit government balance sheets instead of helpless property owners.(1)

For more, see "Misplaced" Funds From Sheriff's Office Legally Belong to Victimized Property Owners in Philadelphia (The mayor, sheriff and city controller have no right to give this money to the government).

(1) The City of Philadelphia is not the first government entity suspected of getting funny ideas when it comes to handling the surplus loot, which represents some of the foreclosed owner's home equity, that was commonly generated by foreclosure/sheriff's sales during the boom real estate market. See, for example, Colorado Law Incentivizes Foot Dragging By County Officials When Returning Surplus Sale Proceeds To Foreclosed Homeowners After Public Auctions.

Recent Foreclosed Home Purchaser Discovers Title To Wooden Shed On Property Belongs To Another; Judge Says Cough Up $1,800 Or Kiss It Goodbye!

In Bristol, Virginia, reports:

  • The property seemed ideal: a tidy white house with blue trim, complete with a small yard, garage and wooden shed. A bank had foreclosed on the house, which sat empty for a few months in late 2010, until Linda Shelton bought it and happily settled into her new home on Nevada Street in December. That new-home bliss was short-lived, however.

  • Shelton soon found herself at the business end of a lawsuit: A company claimed ownership of the wooden shed in her yard, which Shelton believed to be hers.

    A side effect

  • Unfortunately, law professors said, issues like this – disputes over ownership of property either attached to or sitting on a foreclosed piece of land – are not uncommon, and, are likely to increase as more homeowners lose their properties to foreclosure.

  • The question of whether sheds, trailers or aboveground pools are real or personal property is a common one, said George Kuney, the W.P. Toms Professor of Law and Director of the Clayton Center for Entrepreneurial Law at the University of Tennessee in Knoxville.

    Real vs. personal

  • The debate at Shelton’s home, and similar disputes, hinges on this: Is the shed real property or personal property? “It comes up the most with trailers,” Kuney said. “If you just plop it on the land it doesn’t become part of the property.”

  • The problem with Shelton’s shed is that it is on cinderblocks, and therefore considered portable. “If she or her predecessor had bolted it to the ground or mounted it to a foundation it would become part of the real estate,” Kuney said.

  • But her predecessor hadn’t bolted it to the ground, because that action would have interfered with his agreement with the leasing company, the same company currently suing Shelton over ownership.


  • Shelton said she doesn’t understand why the shed issue wasn’t settled long before she bought the property. [...] She said no liens against the house or the property were found before she bought the land. Her granddaughters had already started decorating the inside for a playhouse, she said.

  • Shelton’s real estate agent, Mike Mumpower, went to court with her the first three of the six times she’s been there over the shed. The judge ruled the building was the personal property of the management group, and gave the company an indefinite amount of time to pick it up. Or, Shelton was to pay the company $1,800 for the shed. The management company immediately filed a judgment of $1,800 on Shelton’s credit report, she said.

  • Mumpower said he thought the judge’s ruling might set a precedent regarding personal property ownership, and he had never heard of such a situation. Shelton just thinks the whole thing is unfair.

For the story, see Buyer beware has new meaning in foreclosure flood.

Tuesday, November 15, 2011

Texas Homestead Claim Fails To Fully Protect Sale Proceeds For Homeowner Who Unloaded Moldy Home Onto Unwitting Homebuying Couple

The following facts have been taken from a recent court ruling from a U.S. Bankruptcy Court in Dallas, Texas:

  • Home seller, Chastain, sells home to a homebuying couple, netting Chastain $482,718.14 in cash which she deposited in her bank accounts.

  • Later that month, Chastain used $72,028.39 of this amount for a down payment and closing costs on another home, financed the balance with a $161,000 mortgage, and subsequently used about $80,000 of the remaining cash to remodel and improve the new home.

  • Later that year, Chastain used some of the remaining proceeds to pay off her $161,000 mortgage.

  • Concurrently with the foregoing, the unwitting couple discovered that the home Chastain unloaded on them was a mold trap, that Chastain knew about it, and that she did nothing to disclose that fact to them.

  • The unwitting couple then obtained a judgment against Chastain for approximately $200,000, plus pre-judgment and post-judgment interest, plus costs of the damages lawsuit they brought against Chastain over the sale of the moldy home.

  • Chastain then filed for bankruptcy.

  • She sought to dodge the liability of the debt represented by the unwitting couple's judgment, and attempted to invoke the provisions of the Texas homestead exemption law to protect the loot she scored from the dirty deed she perpetrated on the unwitting couple from the claims of her creditors.

After taking testimony, the court sorted out this mess by ruling as follows:

  1. Upon Chastain's acquisition of the replacement home as her homestead within weeks of the sale of her moldy home, using $72,028.39 for the downpayment, the remaining proceeds of the sale of the home unloaded onto the unwitting couple—$410,689.75—immediately lost its homestead protection, even though the six-month transfer period allowed under Texas law had not expired. In re England, 975 F.2d 1168, 1174 (5th Cir. 1992); In re Presto, 376 B.R. 554 (Bankr. S. D. Tex. 2007).

  2. The $200, 000 judgment owed by Chastain to her two victims is a debt nondischargeable in bankruptcy, pursuant to the provisions of 11 U.S.C. § 523(a)(2)(A), in Chastain's bankruptcy case, because it is a debt that is the result of Chastain obtaining money from the unwitting couple based upon false pretenses, false representations, fraudulent omissions, and actual fraud concerning the condition of the moldy home.

  3. With regard to Chastain's expenditures of $80,000 in home improvements and $161,000 to pay off the mortgage used to financed her replacement home, the court believed that these expenditures constituted a conversion of nonexempt property into exempt property—spent to hinder and delay the unwitting couple in the collection of their judgment and, consequently, ruled that the value of Chastain's homestead exemption from creditors' claims for her replacement homestead must be reduced by $241,000 ($161K + $80K).

For the ruling, see In re Chastain, Case No. 10-37341-SGJ, Adversary No.: 11-03164-SGL (Bankr. N.D. Tex., Dallas Div. October 28, 2011).

Dubious Contract Clauses Not Uncommon In Attorney/Client Retainer Agreements

Buried in a recent story in the Orlando Sentinel is a reference to a clause in a retainer agreement used by a foreclosure defense attorney when taking on the representation of a client needing foreclosure assistance. The clause relates to fees charged by the lawyer:

  • In denying [the homeowner/client] a full refund, it also cited her contract with [the foreclosure defense attorney], which states that the original fee was a "flat, nonrefundable rate earned upon acceptance."

Notwithstanding the actual quality of the services that may be offered by the attorney, attempting to assert that the legal fee is a "flat, nonrefundable rate earned upon acceptance" appears to be, at a minimum, a bit of an overreach, and worse, a possible unfair or deceptive trade practice on the part of the attorney, and even worse yet, could make the entire retainer agreement void as against public policy if it is found to fail to comply with the Florida Bar lawyer disciplinary rules.(1)

Florida case law appears to make clear that attorneys practicing in the Sunshine State "are not free to negotiate just any fee" with their clients.(2)

Further, one can reasonably construe the clause to mean that, once the fee is paid, a client's change of heart and desire to withdraw from the agreement shortly thereafter and without the attorney doing any work will leave the client out the entire fee. Such a end result could be found to be the charging of a fee that is "clearly excessive."(3)

In conclusion, even if attorneys fully and in good faith intend to refund any part of the fee that may be unearned, such good intentions won't necessarily stop some "greedy, good-for-nothing, contingency fee class action consumer protection lawyer" (I hear there are a few out there) from trying to make an example out of them for slipping an arguably unenforceable clause into all of their retainer agreements, such clause having the capacity for potentially creating a false or misleading impression in the mind of the consumer (ie. the client) that the 'non-refundable fee, earned upon acceptance' is truly non-refundable, earned at acceptance. Such a practice could be found to be an unfair or deceptive trade practice and, consequently, make the foreclosure defense attorney a nice, juicy target for litigation.(4)

For the story, go here.

(1) See:

  • Rule 4-1.5, Florida Rules of Professional Conduct:

    (a) Illegal, Prohibited, or Clearly Excessive Fees and Costs
    : An attorney shall not enter into an agreement for, charge, or collect an illegal, prohibited, or clearly excessive fee or cost, or a fee generated by employment that was obtained through advertising or solicitation not in compliance with the Rules Regulating The Florida Bar.A fee or cost is clearly excessive when [...]. [Go here for more of Rule 4-1.5, Florida Rules of Professional Conduct].

  • Chandris, S.A. v. Yanakakis, 668 So.2d 180 (Fla.1995), where the Florida Supreme Court held that fee contracts that do not comply with the lawyer disciplinary rules are subject to being held void as against public policy. See also American Casualty Co. v. Coastal Caisson Drill Co., 542 So.2d 957, 958 (Fla.1989); City of Miami v. Benson, 63 So.2d 916 (Fla. 1953); City of Leesburg v. Ware, 113 Fla. 760, 767, 153 So. 87, 90 (1934).

(2) Franklin & Marbin, PA v. Mascola, 711 So. 2d 46 (Fla. App. 4th DCA 1998): Commenting on attorneys fee contracts with clients and their enforceabilty, generally, a state intermediate appeals court observed:

  • Of course, the supreme court has also long held that attorney's fee contracts are infused with the public interest and that attorneys are not free to negotiate just any fee. In Baruch v. Giblin, 122 Fla. 59, 164 So. 831 (1935), the court said:

    "Lawyers are officers of the court. The court is an instrument of society for the administration of justice. Justice should be administered economically, efficiently, and expeditiously. The attorney's fee is, therefore, a very important factor in the administration of justice, and if it is not determined with proper relation to that fact it results in a species of social malpractice that undermines the confidence of the public in the bench and bar. It does more than that; it brings the court into disrepute and destroys its power to perform adequately the function of its creation."

    164 So. at 833. To meet this public interest, the supreme court has adopted specific rules regulating attorney's fees.[7],[8] The issue of enforceability of lawyer fee contracts is set out in a specific rule that states:"Contracts or agreements for attorney's fees between an attorney and client will ordinarily be enforceable according to the terms of such contracts or agreements, unless found to be illegal, obtained through advertising or solicitation not in compliance with the Rules Regulating The Florida Bar, prohibited by this rule, or clearly excessive as defined by this rule."[9]

(3) See generally:

  • The Florida Bar v. Moriber, 314 So. 2d 145 (Fla. 1975):

    Few, if any, areas of attorney discipline are as subject to differing interpretations as the matter of what constitutes an excessive attorney's fee. See The Florida Bar v. Winn, 208 So.2d 809 (Fla. 1968), cert. den., 393 U.S. 914, 89 S.Ct. 236, 21 L.Ed.2d 199. The answer turns upon multiple factors including the difficulty of the case; the contingencies, if any, upon which the fee is based; the novelty of the legal issues presented; the experience of the attorney; the quality of his work product; and the amount of time spent in preparation and litigation.

Go here for approximately 100 or so links to Florida cases addressing the issue of attorneys' fees that are 'clearly excessive.'

(4) For more, generally, on the Florida Deceptive and Unfair Trade Practices Act ("FDUPTA" - F.S. Ch. 501, Part II), see The Florida Bar Journal:

BofA To Cough Up $116K + Lost Equity To Each Servicemember/Borrower Who Lost Home To Unlawful Foreclosure Over Alleged SCRA Violations

From the U.S. Department of Justice:

  • The Justice Department announced [] that, as part of its settlement with BAC Home Loans Servicing LP, a subsidiary of Bank of America Corporation, servicemembers whose homes were unlawfully foreclosed upon will each receive a minimum $116,785 plus compensation for any equity lost to compensate them for the bank’s alleged violation of the Servicemember Civil Relief Act (SCRA).

  • Bank of America agreed to pay $20 million to approximately 160 servicemembers who were illegally foreclosed on between 2006 and the middle of 2009. Under the agreement, Bank of America agreed to provide information about its foreclosures from mid 2009-2010 and will pay damages in the same minimum amount to those servicemembers whose homes were illegally foreclosed upon to compensate for the loss of their homes. The review is on-going.

For the entire press release, see Department of Justice Announces Compensation for Servicemembers as Part of Settlement with Bank of America.

Maryland Ground Rent System Continues Drawing Attention As Investors, State AG Wrangle Over Process That Allows Locals To Lose Homes Over Minimal Sums

In Baltimore, Maryland, The Baltimore Sun reports:

  • Another challenge by ground rent holders to Maryland's 2007 reform laws has been revived, with lease holders claiming that a state law unconstitutionally diminished the value of their property by making collection of payments costly and difficult to enforce.

  • Attorneys for ground rent holders in a pending class action lawsuit say that a recent ruling by the Maryland Court of Appeals(1) dooms the law being challenged, according to a recent motion. They are asking a judge in Anne Arundel County Circuit Court to invalidate the law.

  • But in a newly filed motion, the attorney general's office says otherwise. It contends that the recent ruling strengthens its position that laws for enforcing collections are valid. State lawyers maintain that because the laws provide ground rent holders with ways to collect past-due payments, the new law should be upheld.


  • [L]ast month, the state's highest court delivered a significant blow to the legislative reforms, which called for ground rents to be registered. Even as the court upheld the registry that was created in 2007 — and that has about 85,000 properties — it said unregistered ground rents could not be canceled, or extinguished. That revived an estimated 30,000 to 40,000 unregistered ground rents.

  • In the pending challenge, ground rent owners argue in court papers that the new process is "a costly and complicated lien and foreclosure process, forcing ground lease holders to spend thousands of dollars in an effort to collect at most a couple hundred dollars of delinquent ground rent."

  • That, they contend, is unconstitutional for the same reasons the Court of Appeals decided to erase the cancellations of the thousands of unregistered ground rents. In asking the judge to uphold the law, the Attorney General's Office maintains that lease holders have "at least two remedies" for seeking past-due ground rents. In addition to the lien and foreclosure, they can sue the renter.

  • In about two weeks, lawyers for lease holders and the attorney general's office are expected to meet with Anne Arundel County Circuit Judge Paul F. Harris Jr., who halted the case while waiting for the appeals court to rule on unregistered ground rents.

  • However, the case may not be resolved in a courthouse. State legislators plan to meet in about two weeks with an eye toward new ground rent laws, addressing concerns raised in the Court of Appeals decision and in the Anne Arundel case.

For the story, see Ground lease holders challenge state law (Issue in class action suit focuses on payment collection).

(1) Muskin v. State Department of Assessments and Taxation, No. 140, September Term, 2010, ___ Md. ___, 141, ___ A.2d ___ (Md. October 25, 2011).

Lawsuits: Missouri Homeowners Facing Foreclosure Squeezed By Lenders For Illegal Attorney Fees; Complaints Seek Class Action Status

In Clayton, Missouri, Courthouse News Service reports:

  • Four companies, including GMAC Mortgage and BAC Home Loans charge illegal attorneys fees during foreclosures, according to two class actions in St. Louis County Court. Lead plaintiff Mimi Fowler filed both class actions, one against BAC Home Loans Servicing, Kozeny & McCubbin LC and Kozeny Lenders, the other against GMAC Mortgage, South & Associates PC and South Lenders.

  • Fowler says Missouri law limits compensation for a trustee's services to a commission on the amount of sale: 2 percent of the first $1,000, 1 percent of the next $4,000 and 0.5 percent of any amount over $5,000.

  • She says the defendants charged attorney's fees for legal work connected with the foreclosures. She says she paid $650 in attorney's fees in November 2009 and another $520 in attorney's fees in December 2010 to reinstate her mortgage.

  • The class consists of all Missourians who reinstated their mortgage loan and paid attorney's fees in foreclosure proceedings for Missouri real estate from Nov. 7, 2006 to the present. Fowler seeks actual damages and $3,000 in punitive damages for each class member. She estimates that both classes number in the thousands.

For the story, see Classes Claim Illegal Fees in Foreclosures.

For lawsuits, see:

Monday, November 14, 2011

Arkansas Federal Judge To 'Non-Judicial' Foreclosing Banksters Unauthorized To Do Business In State: 'Take A Hike!'

Self-described rogue journalist and recovering attorney Ethan C. Nobles writes in First Arkansas News:

  • The U.S. Bankruptcy Court for the Eastern District of Arkansas, Jonesboro Division, ruled on a case at the end of September that may well have a substantial impact on non-judicial foreclosure proceedings in the state.

  • Before getting into that, it’s worth mentioning that Arkansas is one of about half of the state in the Union that allow non-judicial foreclosures. All states, of course, allow a creditor to foreclose on a home through the courts system, but not all of them have non-judicial procedures in place.

  • Non-judicial foreclosures are, indeed, less costly for lenders and expedited. For those reasons, the non-judicial foreclosure process has become the most popular route for lenders to take when they deem it necessary to take homes from defaulting borrowers.

  • According to companies dealing with foreclosures, the case of In Re Johnson (case nos. 3:10-bk-19119, 3:11-bk-10602 and 3:10-bk-16541 in the Eastern District of Arkansas, Jonesoboro Division) has caused the number of foreclosure proceedings to drop significantly since the court issued its ruling on Sept. 28.

  • In a nutshell, the court found that lenders not authorized to do business in Arkansas can’t properly utilize the state’s Statutory Foreclosure Act as codified in Ark. Code Ann. §§ 18-50-101 through 18-50-117.(1)

  • The aforementioned non-judicial foreclosure act requires all companies wanting to take back homes under that act must be authorized to do business in the state — a real problem for mortgage companies located out-of-state that are servicing loans paid on by Arkansans.

For more, see Bankruptcy court throws wrench in non-judicial foreclosure proceedings.

See also, Bankruptcy court ruling slows down foreclosure sales in state, indicating that national title insurers may be beginning to slam the brakes on Arkansas realty sales involving homes recently foreclosed in non-judicial proceedings.

For the court ruling, see In Re Johnson, Case Nos. 3:10-bk-19119, 3:11-bk-10602, 3:10-bk-16541 (Bankr. E.D. Ark., Jonesboro Div. September 28, 2011).

Editor's Note: Buried in footnote 4 of the court ruling is this point of interest:

  • The Court notes that counsel for the Debtors argued that a determination that the statute had been violated would make any sale under the Statutory Foreclosure Act void ab initio. No property sales actually resulted from the foreclosure proceedings in these cases. The sole dispute in these cases is whether the foreclosure fees and costs incurred through use of Arkansas' non-judicial foreclosure process are owed.

(1) According to the court:

  • Absent compliance with Ark. Code Ann. § 18-50-117, J.P. Morgan's avenue for foreclosing on these properties was that of judicial foreclosure through the courts, not through Arkansas' non-judicial foreclosure process.

The court also made this observation on the Arkansas statutory provisions authorizing the use of non-judicial foreclosure procedings in the state:

  • These statutory provisions must be strictly construed. See Robbins v. M.E.R.S., 2006 WL 3507464, at *1 (Ark. Ct. App. 2006) ("It is also true that the Arkansas Statutory Foreclosure Act, being in derogation of common law, must be strictly construed.")

Another Criminal Prosecution In Equity Stripping Racket Ends w/ Conviction As Pennsylvania Sale Leaseback Peddler Defrauded 34 Homeowners, 14 Lenders

In Harrisburg, Pennsylvania, WHTM-TV Channel 27 reports:

  • A former East Berlin woman has been convicted of defrauding 14 mortgage lenders and 34 homeowners in Cumberland, Dauphin, York and Adams counties out of more than $6.2 million.

  • Joanne Seeley, 41, was found guilty in federal court Monday on four counts each of wire fraud and money laundering, according to U.S. Attorney Peter Smith. Each count is punishable by up to 20 years in prison and a $500,000 fine. Seeley was released pending a sentencing hearing which was not immediately scheduled.

  • Smith said Seeley, who now lives in Texas, was a Pennsylvania licensed real estate agent until December 2006, when she permanently surrendered her license in lieu of disciplinary action. She then became the primary owner and operator of a business in East Berlin known as S&D Property Solutions.

  • Smith said Seeley devised a foreclosure rescue scheme in which she would identify homes scheduled for sheriff's sale and advise homeowners they could avoid foreclosure by selling the home to her or one of her investors.

  • Seeley assured homeowners the homes would be leased back to them after the sale, and the sales would allow them to pay off personal debts, rebuild their credit ratings, and allow them to qualify for a new mortgage when they bought back the homes a year later, Smith said. She also promised homeowners that any equity they had in the house would be held in escrow after the sale as a down payment, Smith said.

  • Smith said Seeley either charged homeowners an extremely high commission or had them sign over their entire sales proceeds to S&D Property Solutions. No homeowner was ever able to buy back their home and no funds were escrowed because Seeley instead spent the money on her personal expenses, Smith said.

  • Seeley also submitted false documents to induce lenders into making more than $6.2 million in loans, but converted about $2.3 million from the loans to her own use., Smith said.(1)

Source: Former real estate agent convicted of money laundering, wire fraud.

(1) For more on sale leaseback equity stripping ripoffs, see:

Miami Sale Leaseback Equity Stripping Victim Reaches End Of The Road In Fight To Keep Home As Scammer Awaits Trial On RICO, Grand Theft, Etc. Charges

In Miami, Florida, The Miami Herald reports:

  • On Friday, Imogene Hall fought against tears as she boxed up her belongings and shut the door at her Miami Gardens home for the last time, closing the chapter on a five-year homeownership nightmare.

  • Hall’s account of her housing experience involves a harrowing combination of mortgage fraud, foreclosure rescue scams, title fraud, predatory lending and unscrupulous foreclosure attorneys.


  • Hall’s ordeal began in 2006, when she lost her job as a home health nursing aide and looked to tap into the equity in her home to help pay the bills while she looked for work. Her plan was to take out a home equity loan for about $50,000 on the three-bedroom home, which had nearly doubled in value since she purchased it for $80,000 in 1997.

  • As her bills began to pile up, a well-dressed man showed up on her doorstep unannounced, pitching just what she thought she needed: a no-stress cash-out refinance. What Hall didn’t know was that the man, Johnson Cuffy, was a convicted felon who investigators say was running an elaborate mortgage fraud scheme. Through his Tamarac-based company BlueKap Financial, Cuffy allegedly duped Hall into signing over the property to a straw buyer who later took out an outsized mortgage on the property, according to court documents and Hall’s account.

  • Unlicensed title agents helped Cuffy and his associates siphon off more than $180,000 from the mortgage loan, leaving Hall with $50,000 and what she thought was a simple second mortgage. In reality, she had sold the home to a straw buyer, wiping out her equity.

  • Subprime lender Argent Mortgage approved a $230,000 mortgage loan to the straw buyer, even though he listed employment at a non-existent video store in New York, and a county property appraiser valued the home at only about $140,000.

  • The more we learn about this the more incredibly amazing it is that mortgage servicers and banks allowed this to happen,” state mortgage fraud investigator R. Scott Palmer told The Miami Herald when briefed about Hall’s case last year.

  • Hall began making monthly mortgage payments of $1,500 to Cuffy’s BlueKap Financial firm. The money — about $12,000 — never made it to the lender, and the home went into default.

  • Hall’s house fell into foreclosure in 2006, sparking a five-year court battle that involved allegations of mortgage fraud and predatory lending. The case began to shift against Hall last year when it was transferred to Miami-Dade’s Section 50 court, a so-called “rocket docket” created to quickly dispose of old foreclosure cases. In a matter of weeks, the bank foreclosure was approved.

  • While Hall, 50, has been living rent-free during the legal ordeal, she said much of her limited income went to attorneys who charged her more than $20,000 while assuring her they would save the home.

  • Court records show that many of the attorneys did not follow through on their promises, failing to show up at court hearings, avoiding her phone calls and collecting thousands of dollars in fees. One lawyer billed her $2,800 for work he did trying to withdraw himself from the case. Another is being investigated by the attorney general for foreclosure rescue fraud.

  • None of the attorneys did anything for me but take my money,” said Hall, who had heart surgery during the foreclosure process and now lives on a disability check.

  • Deutsche Bank, a trustee for Argent Mortgage, took title to the home on the Tuesday before Christmas last year. After several attempts by pro-bono lawyers to stave off eviction and work out a mortgage modification, a judge in October ordered Hall to vacate her house within 30 days.

  • John Spittler, an attorney that took over Hall’s case on a pro-bono basis earlier this year, said he tried to halt the bank foreclosure, but the case had gone too far by the time he came along. “Everything was exhausted that we could possibly do to keep her in the home,” he said. “We kept her in there another seven months.”

  • Cuffy is currently serving an 11-year sentence for grand theft in an unrelated case and is charged with defrauding unsuspecting homeowners like Hall. His trial is set to begin in January, said John Swope, a Department of Financial Services agent who has been investigating Cuffy for the last four years. Cuffy faces charges for violating the Racketeer Influenced and Corrupt Organizations Act, grand theft and scheme to defraud.

  • He’s refused to take a plea agreement,” Swope said. “He’s being charged under the Habitual Offender Act and he [faces] 65 years.”(1)


  • The mortgage scheme stripped her of the equity she had built in her home, tarnished her credit and forced her out of the humble Miami Gardens neighborhood where she raised her four children and three grandkids.

  • In what she describes as a final effort to save a bit of dignity, Hall decided to move out a week before the court-ordered eviction date. “I don’t want them to throw me out,” she said. “I want to take my time and move out.”(2)

For the story, see Mortgage fraud victim ends up losing her house.

(1) At one time, many in state and local law enforcement (particularly those with untrained eyes and who were otherwise clueless in handling 'semi-sophisticated' white collar crimes - for some, anything more complex than investigating a 'rubber check' case is 'semi-sophisticated') once passed on prosecuting these sale leaseback equity stripping ripoffs that under the flimsy pretense that these cases were merely 'civil matters.' Over the last couple of years, it's been primarily the Feds (U.S. Attorneys, FBI, Secret Service, etc.) that have been bringing prosecutions in these equity stripping ripoffs. However, more and more local (state court) prosecutors now appear to be stepping up to the plate and showing some guts by bringing criminal charges against these scammers. See, for example:

See generally:

(2) One may wonder why the homeowner/victim of this ripoff was forced out of her home before the criminal prosecution of the scammer was completed. After all, if the ripoff of the title to the homeowner's residence was perpetrated as a result of an act that is determined to be a crime, it is at least arguable that any contract founded upon such act is absolutely void. The case law, at least in the State of Florida, appears to support this view, as the Florida Supreme Court appears to make pretty clear in one case. See:

  • Town of Boca Raton v. Raulerson, 146 So. 576, 577 (Fla. 1933):

    where a statute pronounces a penalty for an act, a contract founded upon such act is void, although the statute does not pronounce it void or expressly prohibit it."

See also:

Chen v. Whitney National Bank, 65 So. 3d 1170 (Fla. App. 1st DCA, July 22, 2011) ([alteration added] - not in the original text):

  • [T]he Florida Supreme Court has expressed that "where a statute pronounces a penalty for an act, a contract founded upon such act is void, although the statute does not pronounce it void or expressly prohibit it." Town of Boca Raton v. Raulerson, 146 So. 576, 577 (Fla. 1933).

Hooten v. Lake County, 177 So. 2d 696 (Fla. App. 2nd DCA, 1965):

  • As we have indicated, the supreme court in the Town of Boca Raton case approved the principle that where a statute pronounces a penalty for an act, a contract founded on such act is void, although the statute does not pronounce it void nor expressly prohibit it.

Jaylene, Inc. v. Steuer, 22 So. 3d 711 (Fla. App. 2nd DCA, 2009) (Northcutt, J. concurring):

  • One well-established defense to the enforcement of a contract is that the contract violates public policy. See E. Allan Farnsworth, Unenforceability on Grounds of Public Policy, in Contracts ch. 5 (2d ed. 1990).

    This defense is firmly rooted in common law, and because it protects the interests of society at large as well as—and sometimes contrary to—those of the contracting parties, it is an important aspect of the courts' authority. As far back as 1775, Lord Mansfield was expressing the view that an agreement may be void on grounds of public policy, stating: "No court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act." Id. § 5.1 at 347 (quoting Holman v. Johnson
    , 1 Cowp. 341, 343, 98 Eng. Rep. 1120, 1121 (1775)).

    An early Florida case recognized this defense to contract enforcement, citing the principle "ex turpi causa non oritur actio" to explain the law's reluctance to enforce contracts in violation of public policy. Town of Boca Raton v. Raulerson
    , 146 So. 576, 577 (Fla. 1933). Translated, the maxim means "`from an immoral consideration an action does not arise,'" which "expresses the principle that a party does not have a right to enforce performance of an agreement founded on a consideration that is contrary to the public interest." Black's Law Dictionary 607 (7th ed. 1999).

Who knows, but it may very well be that if the lowlife who perpetrated the ripoff is convicted of a crime, said conviction could give rise to a cause of action for the victimized homeowner (ie. possibly a quiet title action) in an effort to reclaim the title to her home on the basis that the contract entered into as part of perpetrating the ripoff, and every contract, conveyance, etc. subsequently made in connection therewith (or devolving therefrom) is absolutely void/void ab initio.

NJ Appeals Court Ruling Goes Far To Gum Up Garden State Foreclosures As Lenders' Lawyers Show Reluctance To Sign Required Certification

In Bergen County, New Jersey, The Record reports:

  • [S]heriff's auctions are among the most visible symbols of the housing crisis, which left many homeowners saddled with mortgages they couldn't afford. But foreclosure auctions have slowed dramatically since questions arose more than a year ago about "robo-signing" — that is, sloppy paperwork by mortgage lenders and servicers.

  • Though lenders were given the go-ahead in August to start foreclosing again in New Jersey after showing a judge they were following the rules, they have been slow to resume activity.

  • The reason: an August appellate court decision, Bank of New York v. Laks, according to Kevin Wolfe, head of the state's Office of Foreclosure. In that case, the court dismissed a foreclosure, finding the lender violated the state Fair Foreclosure Act because it didn't properly identify itself in a notice sent to the troubled homeowners.

  • Under new state court rules, lawyers working for foreclosing plaintiffs have to personally certify that they have checked the facts behind a foreclosure filing with an employee of the lender or the lender's servicer. Many have indicated to Wolfe that they are reluctant to sign such a certification, because they're concerned that the lender's paperwork may not meet the requirements set out in the Laks decision.


  • In the Laks case, for example, Sarah Laks' mortgage was serviced by Countrywide Home Loans, but the actual owner was a trust managed by the Bank of New York. When Laks, of Lakewood, defaulted on the loan, she got a notice of intention to foreclose from Countrywide, but it did not mention the real owner, as required by the state's 1995 Fair Foreclosure Act.

  • A lender's attorney who spoke on condition of anonymity said that in the years since the Fair Foreclosure Act was passed, it's been very common for these notices to name only the servicer, not the actual holder of the loan, as required by the Laks decision.

For more, see Legal issues slow foreclosures.

Sunday, November 13, 2011

Rogue 'Sovereign Citizen' Homeowner Strikes Back After Adverse Foreclosure Ruling; Tags Judge w/ Bogus $350K Lien, Then Gets 179 Days For Contempt

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

  • Senior Judge Pope Hamrick handled a foreclosure case back in June, one of dozens. The veteran jurist, a member of The Florida Bar for more than 40 years, ruled in favor of a bank in a foreclosure. Hamrick never expected that the person foreclosed upon, Patricio E. Sanchez, would file a lien and judgment against him in court. But that's just what happened. Patricio E. Sanchez.

  • Hamrick was shocked to learn the lien -- claiming a debt of $350,000 -- was even recorded against him. The man who filed it, Sanchez, 58, of Deltona is a registered sexual offender. Sanchez was immediately summoned back to court to explain why he "willfully filed and recorded the false and fraudulent liens and judgment." The judgments were filed against Hamrick and two attorneys who had represented Chase Home Finance in the foreclosure. Sanchez was jailed for 179 days for contempt of court.

  • Although Sanchez became known by local court officials as the "sovereign citizen case," he never uttered the phrase. His case -- the second time the sovereign citizen movement has come up locally in court this year -- highlights the growth of ideology that has been around for more than 20 years.

  • The sovereign citizen movement is a loosely organized collection of groups and individuals who have adopted an ideology considered "right-wing" by the Anti-Defamation League. Its adherents believe that virtually all government in the United States is illegitimate. Sometimes, the sovereign citizen movement has been blamed on acts of extremism and violence.

  • Earlier this year, police said a 5-year-old boy was kidnapped by his grandmother in Port Orange. When police caught up with Laurine Arnold and recovered the child, she told them she was a sovereign citizen.

  • Starting in the 1980s, anti-government extremists began pushing theories that claimed people could avoid debt and claim riches under an interpretation of common law. In 1996, members of a sovereign citizen group known as the American National Freemen were indicted in Tampa on charges including conspiracy and jury tampering. Three of the members were sentenced to prison for filing $22.8 million in bogus liens against federal officials and citizens.

  • Since then, information on the Internet has spread the word. Motivational speakers offer seminars to teach people how to file documents in court, claiming they will be free of debts and government interference.

  • Sanchez was less than cooperative when he appeared before Circuit Judge Robert Rouse. He refused to acknowledge his identity. He claimed he was a "representative" of Sanchez. In court documents, Sanchez wrote his name in all capital letters, and referred to the term "UCC-1."

  • The use of that phrase, according to the Southern Poverty Law Center, is sometimes used as an effort to distinguish the "flesh and blood" person from his "corporate shell." The technique is used to avoid paying debt. According to the Anti-Defamation league, sovereign citizens use "paper terrorism," by filing documents against public officials.

  • When Rouse asked Sanchez to explain the liens and judgments he filed against Hamrick and the others, Sanchez insisted "they don't have the authority to deal with the private business of Patricio Sanchez." Judge Rouse found Sanchez committed contempt of court by filing the liens. Rouse gave him 179 days in jail -- significantly less than the one-year maximum allowed.

  • Sovereign citizen activity has been reported in 26 states and their numbers are estimated in the hundreds of thousands. Because of the potential for harm to credit reports and court records, many people who are familiar with the sovereign citizens are weary of speaking publicly about the movement.

  • Among them was Judge Hamrick, who expressed some concerns about further attacks on paper. "You won't print my address, will you?" he said.

Source: Judge in Daytona targeted by man in foreclosure case.

Go here for other posts on sovereign citizens and "paper terrorists."

Steven J. Baum - "Worst Person In The World"

On a recent edition of the program Countdown with Keith Olbermann, upstate New York foreclosure mill sweatshop operator Steven J. Baum was recognized for his less-than-meritorious service in his efforts to allegedly boot homeowners illegally (mocking Baum's now well-known Halloween party that belittled financially distressed homeowners) and was named by Olbermann as the winner of his nightly award "Worst Person In the World."

For the YouTube Video, see Olbermann Wears Guy Fawkes Mask & Discloses Steven J. Baum Addresses (1:47).

BofA Coughs Up $1.3B To Freddie, Fannie Over Delays In Crappy F'closure Paperwork Filings; Bleeding To Continue As Affidavit Revisions Remain Ongoing

Housing Wire reports:

  • Bank of America will spend at least the remainder of 2011 revising affidavit filings in foreclosure cases around the country.

  • In October 2010, BofA and other major servicers froze the foreclosure process nationwide when evidence of improperly signed affidavits surfaced in many state courthouses. BofA had to pay $1.3 billion in penalties to Fannie Mae and Freddie Mac in the first nine months of 2011 because of the delays, the bank disclosed in a Securities and Exchange Commission filing.

For more, see BofA pays $1.3 billion to Fannie, Freddie for foreclosure delays.

Sudden Drop In Nevada Foreclosure Filings May Be Attributable To New State Anti-Robosigner Statute; Law Contains Threat Of Criminal Prosecution

The Wall Street Journal reports:

  • Foreclosure filings in Nevada plunged in October during the first month of a new state law stiffening foreclosure-processing requirements. [...] Nevada’s state Assembly passed a measure that took effect on Oct. 1 designed to crack down on “robo-signing,” where bank employees signed off on huge numbers of legal filings while falsely claiming to have personally reviewed each case.


  • Among other steps, the Nevada law makes it a felony—and threatens to hold individuals criminally liable—for making false representations concerning real estate title. Individuals are also subject to civil penalties of $5,000 for each violation.

  • Foreclosures have slowed sharply over the past year in many states where banks are required to foreclose on homeowners through courts. But slowdowns haven’t yet been as pronounced in non-judicial states such as Nevada, where foreclosures are conducted by an administrative process.

  • To foreclose on homeowners in Nevada and most other non-judicial states, banks hire a “trustee” that notifies borrowers that they are in default and then carries out the foreclosure sale in accordance with state law if the borrower doesn’t become current on the debt.

  • The Nevada law makes an important technical change to those rules by forbidding trustees from handling foreclosures if the trustee is a subsidiary of foreclosing bank. That change appears to strike a blow for Bank of America Corp., which uses a wholly owned subsidiary, ReconTrust, as its trustee for foreclosures in Nevada and other western states.


  • [A]dvocates of the bill say the measure will put the real-estate market on sound footing by ensuring that title defects don’t later lead judges to invalidate foreclosures—a step that has already happened in Michigan and Massachusetts.

  • This is not at all about preventing foreclosures. It is about helping end users,” says Tisha Black Chernine, a real-estate lawyer in Las Vegas who was part of a working group that helped draft the bill. In order to truly heal housing markets, “we need to make sure foreclosures are done properly,” she said. “People taking title pursuant to a bad foreclosure run the risk of having no title at all.”

For the story, see Nevada Foreclosure Filings Dry Up After ‘Robo-Signing’ Law.