Monday, December 31, 2012

The Grief Continues For Surviving Widows Being Refused Loan Help & Forced Into Foreclosure Shortly After Hubby's Death

In Tampa, Florida, the Tampa Bay Times reports:

  • Lawyers and legal-aid counselors call it a sad reality of the housing crisis: Widows refused loan help and forced into foreclosure in the years after their spouses' death.

    For distressed homeowners, the bureaucratic obstacle course of refinancing in an age of tight credit is hard enough to navigate on its own. But for grieving widows with finances already in disarray, the loan maze and its accompanying fears of losing a family home have proven a demoralizing shock.

    "It's a clash of circumstances that couldn't be any more devastating," said Kathleen Mullin, the executive director of St. Petersburg-based Gulfcoast Legal Services.

    "This problem and the web of paperwork causes so much stress that it can impact (widows') health, impact their well-being, to the point where they don't even know what to do. They're just frozen."

    Widows caught in this runaround, counselors said, never realized the damage it could cause if only their husband signed the mortgage note. They did not expect it would prevent them from a loan modification that could allow them to keep paying and stay in their homes.

    There's no public data on how many widows have faced this frustration. But attorneys and counselors say it is a growing problem for surviving spouses – predominately women – barely seen before the foreclosure crisis began.

    Billy Howard, the Morgan & Morgan attorney representing Jackson in a harassment lawsuit against Wells Fargo, said his firm has more than 25 widows with similar problems, up from only a few cases in recent years.

    "You've got people who want to be able to pay and think they could afford to stay," said foreclosure defense attorney Mark Stopa, whose firm has about 10 similar cases, up from none a few years back, "and the bank tells them it is simply not possible."

    The trap has proven particularly troublesome in Florida, with high rates of home distress and more than 1 million widows and widowers, according to the U.S. Census Bureau's 2010 American Community Survey.
  • Karine Gialella, a Gulfcoast Legal Services attorney, said she worked with a St. Petersburg widow in her 80s who found the only way to avoid foreclosure was to file for bankruptcy.
  • Though due-on-sale clauses allow lenders to demand full payment when a loan changes hands, federal law prohibits calling in a loan just because a widow took it over.(1) But banks have argued in court that they're demanding payment because of the default, not the death, said Matt Bayard, a staff attorney with Legal Services of Greater Miami. Some judges have agreed.
For more, see Widows face foreclosure due to mortgage Catch-22.

(1) For the Federal law, see 12 USC 1701j–3(d)(5) - Preemption of due-on-sale prohibitions (Exemption of specified transfers or dispositions).

Feds Wait Until Home Goes Into Foreclosure & Ex-Servicemember Dies Before Coughing Up Pension Benefits; VA Bureaucrat Declares Reversal Of Initial Denial Of Now-Dead Vet's Claim A Success

A recent story in the San Francisco Chronicle highlights the problems that former armed service members are having receiving their well-earned pension benefits from the Veterans Administration, often times with the latter waiting until after the veteran dies before making payouts. Here's a sample:

  • In November, more than a year after Vietnam veteran John Conrad died of leukemia, the VA sent his widow a letter acknowledging his cancer was caused by exposure to the toxic defoliant Agent Orange.

    The decision marked a reversal for the agency, which had denied Conrad's claim for disability benefits for three years while the former Army specialist was still alive. The denials had come despite supporting medical opinions from a series of doctors, including the VA's own oncologist.

    "We went through our savings and our retirement money. And then, after he died, they said they made a mistake and sent a check for $79,000," his widow, Linda Conrad, said in an interview at her home outside Phoenix.

    Home in foreclosure

    By the time the VA reversed itself, the family home was in foreclosure. Linda Conrad, who had quit her job as a paralegal to care for her husband during his last days, found her efforts to secure a new job thwarted by the recession.

    Yet, in an interview, VA officials deemed John Conrad's saga a success, because the more experienced claims processors who handled Conrad's claim after his death had the authority to reinterpret the medical evidence.

    "That's the way it's supposed to work," said Brad Flohr, assistant director for policy at the VA's compensation service.

Phony 'Prescription Pooch' Claims Used To Dodge 'No Pet' Prohibitions In Residential Buildings Becoming More Flagrant? Some Say Yes

In New York City, Habitat Magazine reports:

  • You no longer have the right to live in a no-dog building. People with allergies, people afraid of dogs, people who don’t like dog waste and urine on the sidewalk or loud barking, or even people who’d simply rather live without dogs — sorry, but your rights and preferences are meaningless.

    That, at least, is the message co-op and condo boards, attorneys, and others are taking from the plethora of people falsely claiming a disability to avoid pet prohibitions. Not physical disability or psychiatric disability, for which there are specially trained service dogs, but emotional disability — which no one can see, anyone can claim, and for which your friendly family doctor will write a note, no questions asked.

    “It’s ridiculous,” says attorney Adam Leitman Bailey, principal in his eponymous firm. “People get a notice to remove a dog, all of a sudden they get a doctor’s note. If you need a dog for support reasons, why would you go to a psychiatrist only after you get an eviction notice?”

    False claims of emotional disability are probably “happening more and more often,” agrees Jennifer L. Stewart, an attorney with Smith, Buss & Jacobs who has defended disabled clients. Indeed, she adds, “I’ve seen signs posted in pet stores: ‘Do you want a dog? Do you live in no-pet buildings? Here’s what you do.’ I was a little shocked at how flagrant that was.”

Sunday, December 30, 2012

NYC Public Housing Tenants Living In 'Sandy'-Ravaged Buildings Lacking Heat, Hot Water Get Slapped With Eviction Notices

In New York City, the New York Daily News reports:

  • Just days after Hurricane Sandy devastated public housing in Coney Island, the Housing Authority slapped eviction notices on apartment doors for nonpayment of rent, the Daily News has learned.

    At the time, tenants had been ordered to evacuate, and those who stuck around had no power, hot water, heat or elevators. Elderly tenants were trapped in upper floors where toilets didn’t function.

    “It’s really ridiculous,” said Edward Josephson, director of litigation for NYC Legal Services. “At the very time they were unable to send people out there to see if people were dying or not, they were able to send people to serve notice of evictions.”

    Nearly 80,000 tenants at 400 NYCHA buildings across the city were affected by the storm, with thousands in Coney Island, Red Hook and the Far Rockaways living in miserable conditions for weeks without basic services. Tenants at developments most severely damaged by the storm complained that for more than a week, NYCHA staff failed to show up to help or let them know when services would return.

    Yet a mere four days after Sandy struck, a NYCHA process server traipsed out to the devastated developments at Coney Island to go after tenants, plastering eviction notices on apartment doors in the Surfside Gardens Houses.

Foreclosure Buyer Coughs Up $5K In Damages To Tenant Over Abrupt Eviction In Violation Of Federal Law; Expiring Statute A Concern To Housing Advocates

In Miami, Florida, The Huffington Post reports:

  • On a Thursday evening three years ago, Sandra McCutchen found an eviction notice stuck to the door of her Miami rental apartment. The following day, she was in court fighting to get it delayed. The day after that, officers from the Miami-Dade police department forcibly removed her from her home, along with her daughter and six grandchildren, dumping their possessions in the front yard.

    "They was at my door to throw me out, and that’s just what they did," says McCutchen, 55, who was then living in a public housing unit. "Grandkids in diapers crying, they threw everything on the lawn."

    McCutchen, a single mother, was a bona fide tenant. She had lived peaceably in the house on SW 114th Street for seven years. She was never behind on her rent. But now, unbeknownst to her, the house had fallen into foreclosure and authorities were insisting she move out immediately.

    A federal law enacted earlier that same year was designed to protect renters like McCutchen from this very situation. Under the Protecting Tenants Foreclosure Act (PTFA), renters living in homes that land in foreclosure are entitled to stay in their homes until their lease expires or, if they have no lease, for a minimum of 90 days. McCutchen's abrupt eviction, which she described as "an emotional roller coaster" that left her clinically depressed, was a violation of this federal policy.

    "You don’t give nobody no one day eviction notice, you know what I'm saying?" she said. "I ain't never heard of that nowhere in my world!"

    With the help of Jeffrey Hearne, advocacy director of the Florida-based Tenants’ Rights Project, McCutchen was awarded $5,000 to help cover the cost of damages incurred by the eviction. (Ruined property included a television set, mattresses, and living room furniture left out in the rain.) Hearne also helped her and her family get resituated in nearby public housing, a process that took months.

    The federal law that allowed McCutchen to win her case is set to expire in 2014, absent Congressional action, and if it does, experts warn America could see an uptick in homelessness.
  • Larry Rosenthal, executive director of the Goldman School of Public Policy's program on Housing and Urban Policy, said the federal law's short-term status is cause for concern.

    "Does it represent a genuine threat?" said Rosenthal of PTFA's expiration date. "The answer is yeah. These specific protections that are now required under federal law would disappear, but," he cautioned, "that doesn't mean that tenants go into an utterly protectionless state. We'd have to look at the state where they live, and sometimes even the city where they live, to analyze what protections they have."

    State and municipal laws range from more protective than federal law -- in California, for instance, where rent control regimes have been coupled with a variety of eviction controls to prevent landlords from ousting longtime tenants and driving up rents -- to considerably less protective -- in Montana, for instance, where a fully compliant tenant can be evicted without cause within the month. In some jurisdictions, state and local laws have been interpreted to prevent eviction due solely to a foreclosure.(1)
For more, see Florida Grandmother, Renter Describes Foreclosure Eviction: 'Emotional Roller Coaster'.

(1) See National Housing Law ProjectState and Local Tenant Protections for a roundup of additional state and local protections for tenants in foreclosure situations.

Clauses In Existing Mortgages Create Hang-Ups For Landowners Seeking To Cash In From Natural Gas Drilling Craze

In Youngstown, Ohio, the Youngstown Vindicator reports:

  • Some landowners who have signed lease agreements with oil and gas companies are running into a problem based on mortgage-contract language.

    “A lot of these mortgages appear to contain clauses that would give the banks first dibs on any royalty income or even bonus payments,” said Tom Carey, an attorney for Harrington, Hoppe & Mitchell, Ltd., a Youngstown-based law firm.

    BP has been directing lessees to have this language in their mortgage and have their bank sign a subordination agreement before completing the lease, he said. The landowner typically has 60 days to get the bank to sign the agreement.

    “Some banks are willing to sign; others are requiring an application and a fee; others are just refusing to sign,” Carey said.

    The mortgages were made to people based on collateral and their ability to repay, he said. Oil and gas leases were not something that was being considered.

    “I think if someone receives a big lease bonus payment they would be more likely to repay,” Carey said. “We’ve even agreed to pay the bank the next year’s payments from the lease bonus, whatever it takes to move things along.”

    It would be understandable if the banks were stating that allowing drilling could make reselling a property difficult in the event of a foreclosure, especially if drilling is under way on the property, he said.

    “The deal is that in some cases, [bank employees] don’t want to take a chance,” Carey said.

    Banks with local branches have been easier to work with, but bigger problems have arisen when mortgages were sold to groups based outside the area, he said.

    “One person’s mortgage was sold to Fannie Mae, and trying to get a real person on the phone at Fannie Mae is impossible,” Carey said. “When we did get in touch with someone, they said he would have to fill out a form, pay $295, and it would take six weeks to get a decision.”

    The lessee has only 60 days to get the issue taken care of for the lease to proceed with BP, Carey added.

    The issue with the subordination agreements is due to mortgage language that was inserted into the contracts to protect the banks, said James Thurston, communications manager for the Ohio Bankers League.

    The goal was to protect the bank from damage that could come to the house through it being demolished, used for drug trafficking, or a number of other issues that would diminish the value, he said.

    “For example, if you have a $300,000 house and something is done on the property that creates a sinkhole next to it, the property is now worth zero,” Thurston said. “A lot of these mortgages were written by small community banks that couldn’t afford to inspect each and every one of these 500 to 600 properties they have on the books, so they had to protect themselves through contract language.”

    The contract language has nothing to do with oil and gas development, but those lease agreements have gotten caught up in the general-protection language, he said.

    Banks have to take precautions in contract language because “if we don’t, we’ll get spanked by our regulators,” said Rod Alba, general counsel for the American Bankers Association.

    Mortgages have to contain clauses to ensure there will be nothing done to the property that makes it impossible for the bank to recoup its investment during a sale, he said.

    Banks have to be cautious because it’s not about what the perceived value of the property is, but what the market will pay for it, Alba said.

    Carey said he is not sure how widespread of a problem the subordination agreements are, but has seen 15 to 20 people come to his firm with the issue.

Saturday, December 29, 2012

Watch Out For Those Government Logos On Solicitations Peddling Foreclosure Help

ConsumerAffairs reports:

  • You've seen the Internet ads. They feature President Obama's smiling face or the seal of a federal agency, suggesting the company making the offer has official sanction.

    They don't, and the Consumer Financial Protection Bureau (CFPB) is urging consumers not to fall for this blatant scam.

    “No, really. Just because something has a government logo on it doesn’t mean that it’s legitimate,” the agency warns on its website.

    As a case in point, the CFPB points to enforcement action is has launched against two mortgage modification operations it accuses of ripping off struggling homeowners. The Websites, emails and other promotional materials bear government agency logos, letterhead or other markings that could mislead a consumer into thinking these services are associated with government agencies.

    The government claims these two companies took in more than $10 million by charging consumers for services that falsely promised to prevent foreclosures or renegotiate troubled mortgages.
For more, see Why you should be suspicious of government logos (Pretending to be government-sanctioned is a scammer's favorite ruse).

Russian Immigrant's 'Shtetl' Defense Mitigates Jail Time For Self-Made Millionairess Bagged For Pocketing $77K+ In Federal Low-Income Rent Subsidies; Agreed To Serve 1+ Year, Only Gets 2 Months

In New York City, the New York Post reports:

  • She’s headed for a different kind of public housing now.

    A self-made millionairess was sentenced to two months in the slammer [] for scamming nearly $80,000 in rent subsidies by illegally leasing a taxpayer-subsidized apartment after striking it rich in real estate.

    Russian immigrant Nataliya Dyakovskaya, 65, had agreed to serve more than a year behind bars in a plea deal with the feds, but caught a big break after her lawyer blamed her “crazy” crime on a “shtetl mentality,” using the Yiddish word for the former Jewish villages of Eastern Europe.

    “She has always believed that, notwithstanding her good luck and her success, she was afraid, and still is, that everything could disappear in a day,” defense lawyer Steven Kartagener said.

    Prosecutor Tatiana Martins countered by calling Dyakovskaya’s 14-year scheme “really egregious,” noting that 163,000 families are on a waiting list for the kind of low-income apartment she had in the Vladeck Houses on the Lower East Side.

    “Every time she sat down and took out the [qualification] form and put her name on the form, she knew she was ripping off the US government,” Martins said.

    Judge Alvin Hellerstein rejected Dyakovskaya’s bid for no jail time, saying: “What she did was reprehensible.”

    But Hellerstein also called her a “good person” who did “good things” for her friends and family, and noted that immigrants often fail to appreciate that “what was OK in a different society” isn’t acceptable here.

    In addition to the jail time, Hellerstein gave Dyakovskaya six months’ house arrest, fined her $25,000 and ordered her to pay more than $77,000 in restitution to the Housing Authority.
Source: Rental Yentl (Yiddish plea can’t save apt. cheat).

Minnesota Lets Robosigning Zombie Debt Buyer Off With Hand Slap; Consent Order Requires Outfit To Do What It Should Have Already Been Doing Anyway When Clipping Consumers For Unpaid Bills

From the Office of the Minnesota Attorney General:

  • Minnesota Attorney General Lori Swanson [] announced a Consent Judgment with Midland Funding, LLC, one of the country’s largest debt buyers and which has offices in St. Cloud, to settle a lawsuit she filed against the company last year for filing unreliable “robo-signed” affidavits in collections lawsuits and sometimes targeting the wrong people for payment of old bills that it purchased from credit card companies and banks for pennies on the dollar.

Friday, December 28, 2012

Litigating Miami-Dade Foreclosures Becomes A Joke As Judges Begin Bulldozing Cases Through System, Steamrolling Homeowners In The Process

In Miami, Florida, The Miami Herald reports:

  • Miami-Dade Circuit Court — choked with foreclosure cases, many dating to 2009 — has gotten tough on pushing cases through the system.

    Five months into a state-funded project, Florida’s busiest circuit court is conducting hundreds of foreclosure trials a week.

    With $626,000 in special funds for the fiscal year ending July 31, 2013, the court has added two senior judge slots and a staff of case managers to help clear a backlog of some 53,668 foreclosure cases.

    “It’s a rocket docket,” said Miami-Dade Circuit Judge Jon Gordon, a senior judge who is churning through about 50 trials a day.
  • Most trials are short and simple. Judges can plow through a one-witness foreclosure case in 15 minutes if it isn’t contested, the judge said. Contested cases with two witnesses can take a couple of hours.

    Attorneys, especially defense attorneys, don’t like the court’s tough line.

    Bruce Jacobs, a Miami attorney who specializes in foreclosure defense work and hosts a weekly radio program called Mortgage Wars on WZAB-AM 880 in Miami, said the court’s efforts are well intended but can hamper the defense’s ability to challenge a bank’s evidence that it is entitled to foreclose.

    Jacobs said he has shown up in court objecting that lenders have refused to provide documents he requested to prepare a defense until the day of trial. “They haven’t provided me anything, and the judge sends me outside the courtroom to look at them and then it’s, ‘Let’s go to trial,’ ” he said, expressing frustration at being asked to speed-read important documents.

    Jacobs said under the law, it isn’t enough for a lender to show that a homeowner hasn’t paid a loan; the lender must prove it has the right to foreclose. That often can be dicey when mortgage loans have been packaged into securities and are being serviced by a third party and have been passed from one institution to another.

    “I’m all in favor of moving these cases forward, but they’ve got to hold both sides to the rules of procedure,” Jacobs said.

    Last Thursday, Sergio Cabanas, a Pembroke Pines attorney, was in court arguing to postpone a foreclosure trial set for that morning, because, among other things, his attorney had another hearing in Broward County the same morning.

    Gordon, the senior judge, denied Cabanas’ request. “You’re here today,” the judge said.

    Cabanas, who defends foreclosure cases, claimed it would be “almost like a Woody Allen skit,” for him to be both a witness and the attorney in the case, but the judge brushed aside his argument.

    In Miami-Dade, the court typically won’t consider requests for continuances made the day of trial, except in an emergency. Such requests must be filed at least seven business days ahead of time for review by a judge on the foreclosure team.

    Forced to go to trial, Cabanas acknowledged that he hadn’t made payments on the loan since early 2009, even as the bank laid out its documentation to foreclose.

    Asked if a signature on a document was his, Cabanas said it looked like it, but he had “no specific recollection” of signing it.

    Cabanas then raised one issue after another — to no avail. Among other things, he said he was trying to get a loan modification for the rental property, held in a trust.

    He questioned the bank representative’s qualifications to be a witness in the case. He challenged the bank’s right to foreclose at all, demanding proof the mortgage had been properly transferred when the original lender, World Savings, was acquired by Wachovia, which in turn was acquired by Wells Fargo.

    The judge overruled his objections.

    “I’m running out of time, and I’m running out of patience,” Gordon finally told Cabanas. Soon afterward, he ruled in favor of the bank. Cabanas later said he plans to file an appeal.

    “In my case, they’re overlooking certain burdens of proof and other evidence that would never be tolerated in other proceedings,” Cabanas said. “They’re under the gun, no matter what, come hell or high water, to push these cases off the cliff.’’
For the story, see Miami-Dade court puts foreclosures on fast track (Miami-Dade Circuit Court is aggressively setting foreclosure cases for trial as it tries to clear the backlog that ensued from the ‘robo-signing’ delays).

More On The Out Of Control Miami Judiciary In Handling Foreclosure Cases

A recent post on the website for Loan Lawyers, LLC, Plantation, Florida foreclosure defense lawyer Matthew Bavaro describes a recent courtroom confrontation he had with an arguably out of control Miami-Dade, Florida Judge Alan Schwartz during a trial while representing a homeowner in foreclosure.

As described by Mr. Bavaro, the judge's conduct was outrageous enough that it drove him (Bavaro) to ask the judge to disqualify himself from the case. Apparently sensing that he (Judge Schwartz) may have inappropriately pushed the wrong foreclosure defense attorney, granted Mr. Bavaro's request to recuse himself from the case.(1)

In concluding his post, Mr Bavaro offers this observation on foreclosure proceedings as they are apparently being conducted in Miami-Dade, Florida:

  • Miami-Dade county is just setting hundreds of foreclosure cases for trial at a time without regard to whether any attorney is available or ready. I think this is a problem and shows that in Miami-Dade county, they are just interested in plowing through foreclosures, not administering justice and due process.
For Mr. Bavaro's post, see Fireworks in open court today. Matthew Bavaro and Judge Alan Schwartz did not see eye-to-eye in today’s Miami-Dade foreclosure trial.

Go here for the Order Granting Motion to Recuse.

Thanks to Deontos for the heads-up on this post.

(1) For more on the problem of bad judges -- judges and magistrates who are incompetent, self-indulgent, abusive or corrupt, see (appropriately named): Bad Judges, by New York University Law Professor Geoffrey P. Miller:
  • In jurisdictions across the country, complaints are heard about judges and magistrates who are incompetent, self-indulgent, abusive, or corrupt.

    These bad judges terrorize courtrooms, impair the functioning of the legal system, and undermine public confidence in the law. They should not be allowed in office. Yet many retain prestigious positions even after their shortcomings are brought to light. The situation, moreover, does not appear to be under control. If recent scandals in New York and other states are a guide, incidents of judicial misconduct may be on the rise.

    The problem of bad judges is embedded in broader considerations about the optimal design of the judiciary in American political culture. The basic tradeoff is between independence, accountability and quality. To preserve independence it is necessary to insulate judges from external controls over their behavior. If judges are protected from external controls, however, they have fewer incentives to provide quality services. To ensure accountability judges must be subject to democratic processes. But influence and patronage, enemies of good judging, are inevitable when judges are chosen by political means. The challenge is to select, retain, supervise and remove judges in such as way as to maintain independence and accountability while not unduly sacrificing quality.

Days From Retirement, Bronx Judge Dodges Bench Boot For Failure To Fire Estate Lawyer Subsequently Indicted By Feds For Allegedly Ripping Off Dead People; Majority Ruling A "Big Blank Check" For Future Fleecings: Dissent

In New York City, Reuters reports:

  • Bronx Surrogate Lee Holzman should be censured but not removed from office for failing to fire a lawyer in his court who charged estates hundreds of thousands of dollars in legal fees before performing any work, the state Commission on Judicial Conduct ruled on Tuesday.

    The commission filed charges against Holzman after Michael Lippman, the former counsel to the public administrator, was indicted in 2010 for stealing $300,000 in excess fees. Lippman has pleaded not guilty.

    The public administrator handles estates for which there is no designated heir, and its counsel is subject to oversight by the surrogate.

    The commission faulted Holzman for not firing Lippman upon learning that he violated court protocol and for failing to alert law enforcement and disciplinary authorities about his actions.

    "Instead, respondent failed to report Mr. Lippman's misconduct and permitted him to remain in a position of public trust for three years under an ill-conceived plan to repay the unauthorized monies he had collected, thereby putting the estates under his care at further risk and conveying the appearance of favoritism," the commission wrote in its decision. "Respondent's abdication of his ethical responsibilities, which was influenced by his long and close professional relationship with Mr. Lippman, constitutes serious misconduct."

    The commission, however, dismissed other charges of misconduct, including a claim that Holzman rubber-stamped Lippman's fee requests without proper documentation.

    Holzman, who has served as surrogate judge in the Bronx since 1988, is already set to leave the bench at year's end after reaching the mandatory retirement age of 70.

    Holzman's attorney, David Godosky, said Holzman had only done what he thought was best for the estates under his supervision.

    "Once the surrogate was informed of any departure of protocol, not a penny of harm occurred to any estate of the public administrator's office," he said.

    Holzman has 30 days to appeal the decision to the Court of Appeals. Godosky said a decision on whether to do so has not been made.

    In two dissenting opinions, three of the commission's 11 members said they would have gone further and recommended that Holzman be removed for his actions.

    In one dissent, Richard Emery faulted the majority for a punishment that "defies logic," given the findings.

    "Removal is the only sanction which is commensurate with respondent's uncontroverted, sustained, self-aggrandizing misconduct," he wrote. "And that is because it is clear that respondent's three-year cover-up of the criminal acts of his appointee and long-time colleague was actually an attempt to protect himself from scandal and cover up his own misconduct."(1)

    The commission's counsel, Robert Tembeckjian, had pushed for Holzman's removal from the bench despite his retirement plans.

    "I believed removal from office was the appropriate result based on the judge's egregious misconduct," he said in a statement following the ruling.

    In Tuesday's decision, the commission largely accepted Shea's findings that other charges of misconduct should be dismissed, including the claim that Holzman broke the law by routinely approving a 6 percent fee based on "boilerplate" documents with insufficient detail about the work Lippman was supposedly doing.

    Shea noted that other surrogates often did the same thing and that Holzman should not be held responsible for following what had become standard procedure, even though it might technically violate state law.

    The 6 percent fee is intended to be a maximum fee for public administrators under state guidelines but has become the default payment in almost all cases, Shea said.

    In a dissenting opinion joined by Thomas Klonick, Nina Moore found that charge should have been sustained in order to establish that the 6 percent figure should not be abused.

    Noting that the Bronx administrator's office handles tens of millions of dollars in estates at any given moment, the majority's ruling "gives a blank check to counsels to the Public Administrators," Moore wrote. "It is in all likelihood a big blank check."

    A Bronx civil court judge, Nelida Malave-Gonzalez, won the election for Holzman's seat in November and will take office after his retirement.(2)
For the story, see Bronx Surrogate Holzman faces censure but escapes removal in misconduct case.

For the ruling of the New York State Commission on Judicial Conduct, see In re Holzman.

Go here for other posts on the sanctioned grave-robbing of people who die without wills in New York City and elsewhere.
  • Cover-ups, as we have come to learn, in many walks of life are often more egregious than the substantive offenses being concealed. But for a judge to protect himself by covering for an appointee he supervised is a particularly grievous assault on the majesty of the judiciary. It is equivalent, in my view, to corruption.

    In this case, respondent's misconduct was worse than a simple cover-up. It was compounded by his bizarre scheme to have Lippman handle estate funds after 2006, when it was discovered that he had systematically taken fees that he had not earned. By constructing this scheme that allowed Lippman to continue earning fees for years - ostensibly to pay back what he had stolen but really to avoid the scandal of thefts by his appointee on his watch - respondent enabled a continuing fraud. It is as if the United States attorney's office told Madoff when his Ponzi scheme was discovered, "Keep the investments going so that what you make in the market can be returned to your victims."

    Remember, even if Lippman had been fired in 2006, he would have been responsible for repaying the monies he owed. Respondent has no excuse or justification for secretly helping him repay those monies - especially by retaining him in a position of trust. In effect, respondent was imposing on future estates a person whom he knew could not be trusted. And he told no one other than his trusted insiders, even while he knew law enforcement agencies were breathing down Lippman's proverbial neck.

    Respondent knew that as long as he kept his secret scheme in-house, the scandal in his court would not be revealed. He knew better than anyone that Lippman's victims were virtually all intestate estates where the beneficiaries had no one to look to for oversight other than the judge (respondent) who is the sole "disinterested" repository of trust and accountability in the system of public administration. Instead of carrying out his sworn duty, he hid the truth from the victims by not disclosing Lippman's dishonesty and not reporting Lippman to the law enforcement agencies that were engaged in ongoing active investigations, or to disciplinary authorities with oversight over attorney malfeasance.

    As we all know, it is all too common for disciplinary committees to disbar attorneys for misuse of client funds. Knowingly enabling that conduct is no less culpable.
(2) For more on the problem of bad judges -- judges and magistrates who are incompetent, self-indulgent, abusive, corrupt, see (appropriately named): Bad Judges, by New York University Law Professor Geoffrey P. Miller.

Court Slams Horndog Judge In Disciplinary Proceedings For "Conducting Photo Sessions Featuring The Judicial Penis" From Cell Phone While Allegedly 'Putting The Moves' On Young Female Courthouse Employee

In Philadelphia, Pennsylvania, The Legal Intelligencer reports:

  • Even though a former Philadelphia Traffic Court judge contends that he did not intend to show photographs of his genitals on his phone to a Philadelphia Parking Authority contractor,(1) the Court of Judicial Discipline found that he did intentionally show the images.

    By doing so, Willie F. Singletary brought the judicial office into disrepute in violation of the state constitution, said Judge Timothy F. McCune, writing for the panel of President Judge Robert E.J. Curran and Judges Bernard L. McGinley, Charles A. Clement Jr. and John R. Cellucci.

    "We think that the public — even those members of the public who register the lowest scores on the sensitivity index — do not expect their judges to be conducting photo sessions featuring the judicial penis and then to be sending the photos over the electronic airwaves to another person," the opinion said.
  • The opinion resulted in an unusual holding.

    "We hold that a judge who intentionally grooms his penis for photography, and then intentionally photographs his penis for the purpose of display to others, had better remember that the photographs are in his phone lest they 'slip out' at some inopportune (albeit unplanned) time under circumstances which are likely to offend another person or persons, for, if they do, we will hold such conduct satisfies the 'mens rea requirement' so as to support a finding that the conduct is such that brings the judicial office into disrepute," according to the opinion.
  • Singletary has previously been the subject of judicial discipline.

    Singletary previously received a public reprimand and probation over a YouTube video in which he was recorded soliciting campaign funds from motorcycle riders while running for judge for the first time in 2007.

    When Singletary was previously subject to judicial discipline, the court found that Singletary violated the state constitution by bringing the judicial office into disrepute by soliciting campaign funds and intimating that he would give favorable treatment to anyone who donated to his campaign. The court sanctioned him with a public reprimand and probation.

    During his donation solicitation, Singletary asked the bikers, according to court papers: "Now you all want me to get there, you're all going to need my hookup, right?'"
For the story, see Court finds picture of 'judicial penis' matter of disrepute (A traffic court judge has been found to have brought his office into disrepute by showing photos of his penis taken with his phone to a contractor).

For the ruling of the Commonwealth of Pennsylvania Court of Judicial Discipline, see, see In re Singletary, No. 3 JD 12 (October 9, 2012).

(1) According to the ruling, this contractor to whom the cell phone photograph of the "judicial penis" was displayed was:
  • "a twenty-two year old female employee [...] assigned as a cashier at Traffic Court’s location at 800 Spring Garden Street to collect [Philadelphia Parking Authority] fees for booting, towing, and impoundment operations." (Findings of Fact No. 12).
As described in the ruling at Findings of Fact No. 28, this judge ("Respondent") apparently took a personal liking to the twenty-two year old female employee ("F"):
  • Respondent’s discussions with F during the time period described above included Respondent’s statements that he thought F was “a beautiful young lady,” that he “would like to go out with” her, and they might choose to have an “intimate relationship.” “But whatever we do, it has nothing to do with Traffic Court. You’re an adult, I’m an adult. It’s a private matter.” Additionally, he told her that, alternatively, he “could be a friend there for you if you need somebody to talk to or if you need help in any other area that I can help you in, whatever that might be,” including “a ride somewhere” or "helping paying a bill or anything.”
The shit began to hit the fan for this judge the following day when, obviously upset, the young woman clocked in for work and asked a female Philadelphia cop with whom she was friendly for advice on how to handle the situation, at which point the judge began to feel the heat, as described in the ruling at Findings of Fact Nos. 44 to 55.

Thursday, December 27, 2012

Illinois AG Tags Two Outfits In Seperate Suits For Peddling Forensic Mortgage Audit Services To Homeowners, Allegedly Pocketing Illegal Upfront Fees While Providing No Assistance

From the Office of the Illinois Attorney General's Office:

  • Attorney General Lisa Madigan [] sought to crack down on a new form of “mortgage rescue fraud,” filing lawsuits against two companies for preying on struggling homeowners and promising loan assistance while actually adding to their targets’ financial hardship.

    In this new scam, a fairly new variation of mortgage rescue fraud, con artists falsely claim that an audit of a homeowner’s mortgage will identify errors and can reduce a homeowner’s monthly mortgage payments. In some cases, Madigan said, scammers specifically targeted struggling homeowners and convinced them that the audit would reduce their mortgage as a way to help them avoid foreclosure and stay in their homes.

    Madigan filed two lawsuits [] against Mortgage FACS Corporation and Enlightened LLC [which operated as A.M.T. Auditing Services LLC and the Mortgage Auditing Program] for posing as professionals who can help consumers by completing so-called “mortgage loan audits.”

    In exchange for illegal upfront fees, the scammers promised to review whether lenders complied with state and federal lending regulations and to identify errors that could help the homeowner’s case for reducing their monthly payment or modifying their loan. In reality, many victims of the scam paid the upfront fee but received no assistance.
For the Illinois AG press release, see Madigan Sues "Forensic Loan Audit" Schemes for Ripping Off Homeowners Seeking Loan Savings, Help Fighting Foreclosure (Attorney General Files 2 Lawsuits in Crackdown on New Form of Mortgage-Related Scam).

Indiana AG Files Civil Suits Against Two More Out-Of-State Outfits Peddling Purported Foreclosure Assistance

From the Office of the Indiana Attorney General:

  • Two foreclosure consultant companies face state lawsuits [] after taking more than $2,600 from local homeowners and not providing services or refunds.

    Nevada-based Blue Chip Group, Inc. and California-based Certified Legal Processing and Legal Preparation Services were illegally operating in Indiana when each company entered into contracts with homeowners.
  • Blue Chip Group and its owner William Damiter contracted with two residents – from Lake County and Spencer County – and charged up-front fees for foreclosure consultant services ranging from $495 to $730. Zoeller filed the lawsuit [] at the Lake County courthouse.

    Certified Processing and Legal Preparation Services and its owner Shaun Lambert are accused of collecting $1,400 in up-front fees from a Porter County resident for similar services.

    Both defendants are accused of taking the money and not rendering the promised services or providing refunds. The companies did not obtain certificates of authority from the Secretary of State’s Office to conduct business in Indiana and did not register $25,000 surety bonds with the Attorney General’s Office. These bonds are required before services can be performed, including collecting money up front.

    According to the lawsuits, both businesses violated the Credit Services Organization Act, the Mortgage Rescue Protection Act, the Home Loan Practices Act and Indiana’s Deceptive Consumer Sales Act. Zoeller is seeking injunctions against the companies, restitution for the victims, civil penalties and attorneys' fees.

Federal Court Issues 'Time-Out'/Asset Freeze Order On Outfit That Allegedly Ripped Off Homeowners With False Low-Interest Debt Consolidation Offers

The Federal Trade Commission recently announced:

  • At the request of the Federal Trade Commission, a U.S. district court has temporarily halted a debt relief operation that allegedly charged cash-strapped consumers hundreds of dollars based on the false claim that it could obtain rates as low as zero percent.

    The agency estimates that the operation’s gross revenues since January 2008 were at least approximately $11.8 million, according to documents filed with the court. The FTC complaint names as defendants Southeast Trust, LLC (formerly known as The Debt School, LLC, also doing business as Financial Freedom Credit Counseling), and the companies’ principal, Paul A. Wexler. The court order stops the illegal conduct and freezes the operation’s assets while the FTC moves forward with the case.

    According to documents the FTC filed with the court, the defendants “callously take advantage of consumers who seek debt relief services in this difficult economic environment.”

    The complaint alleged that the defendants claimed to be a non-profit group that targeted consumers with robocalls, and with ads on websites such as and The defendants promised a single monthly payment, an interest rate ranging from zero percent to six percent, and that consumers would be debt free in three to five years.
For the FTC press release and links to some available court filings, see At FTC’s Request, Court Halts Operation That Allegedly Deceived Consumers with Bogus Debt Relief Services (Defendants Routinely Called Consumers on the Do Not Call Registry, Complaint Alleges).

Wednesday, December 26, 2012

Mozilo's Unloading Of Countrywide: Beleaguered BofA Continues To Choke On Stockpile Of Inherited Crappy Loans

Bloomberg reports:

  • Bank of America Corp. has amassed $64 billion of mortgages that are at least six months delinquent and have yet to enter foreclosure, more than twice the amount held by its four largest competitors combined.

    The loans are monitored as part of February’s $25 billion settlement between the top five U.S. lenders and state attorneys general over allegations of abusive foreclosure practices. Bank of America’s stockpile of deteriorating debt is mostly from its 2008 acquisition of Countrywide Financial Corp., once the nation’s largest mortgage provider. Wells Fargo & Co., the biggest U.S. servicer, has $15.3 billion of such unpaid loans.
For more, see Bank of America Delinquent Loans Mean Losses: Mortgages.

In a related story, see Forbes: As Bank Of America Tries To Recover, Mozilo Says Countrywide Was Never The Problem (The man at the top of the mortgage company that nearly crippled Bank of America says he has no regrets).

Revoked Bar Ticket For Attorney Convicted Of Forging Documents To Snatch $500K+ In Foreclosure Surplus Sale Proceeds From Unwitting Foreclosed Ex-Homeowners

In Madison, Wisconsin, The Associated Press reports:

  • The state Supreme Court has revoked a Brookfield attorney's license after he was convicted of stealing more than half-a-million dollars from Milwaukee County. The court said in a revocation order Tuesday that Thomas Bielinski hurt the integrity of the court system.

    Prosecutors accused the 53-year-old Bielinski in 2011 of defrauding the county out of $542,000. They say he targeted mortgage foreclosure cases in which the owners had failed to file claims for surplus funds. He claimed to represent the owners, filed claims on their behalf and kept the money for himself.

    He pleaded guilty this past February to one felony count of theft and was sentenced to five years in prison. His attorney, Michael Hart, declined comment except to say Bielinski has cooperated with authorities.

Banksters To Score Major Advantage In Lending To Consumer Borrowers: Protection Against Homeowner Lawsuits

From The New York Times' Dealb%k blog:

  • As regulators complete new mortgage rules, banks are about to get a significant advantage: protection against homeowner lawsuits.

    The rules are meant to help bolster the housing market. By shielding banks from potential litigation, policy makers contend that the industry will have a powerful incentive to make higher quality home loans.

    But some banking and housing specialists worry that borrowers are losing a critical safeguard. Industries rarely get broad protection from consumer lawsuits, and banks would seem unlikely candidates given the range of abuses revealed during the housing bust.

    "A lot of bad things are done in the name of expanding access to credit, as we found out," said Sheila C. Bair, former chairwoman of the Federal Deposit Insurance Corporation and now a senior adviser to the Pew Charitable Trusts.

    The legal protection stems from the Dodd-Frank Act, the sweeping regulatory overhaul passed in 2010 to help repair the financial system.

Tuesday, December 25, 2012

Antittrust Feds Score Another Guilty Plea In Ongoing Probe Into Northern NJ Tax Lien Auction Bid-Rigging Scheme

From the U.S. Department of Justice (Washington, D.C.):

  • A New Jersey company in the business of receiving the assignment of municipal tax liens pleaded guilty [Wednesday] for its role in a conspiracy to rig bids for the sale of tax liens auctioned by municipalities in New Jersey, the Department of Justice announced.

    A felony charge was filed [Wednesday] in U.S. District Court for the District of New Jersey in Newark, against Mercer S.M.E. Inc., a company located in Burlington, N.J. According to the charges, from at least 2003 until approximately February 2009, Mercer, in conjunction with a nonprofit corporation and others participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey.

    As part of the conspiracy, the co-conspirators agreed to allocate the liens on which each would bid. Among other things, Mercer was assigned tax liens it understood were purchased in accordance with the unlawful agreement.

    “The conspirators agreed to coordinate their bids and allocate the tax liens amongst themselves, at the expense of distressed property owners,” said Scott D. Hammond, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program. “Today’s guilty plea sends a message that those who profit from illegal, anticompetitive conduct will be held accountable.”
  • [Wednesday]’s plea is the 11th guilty plea resulting from an ongoing investigation into bid rigging or fraud related to municipal tax lien auctions. Eight individuals – Isadore H. May, Richard J. Pisciotta Jr., William A. Collins, Robert W. Stein, David M. Farber, Robert E. Rothman, Stephen E. Hruby and David Butler – and two companies, DSBD LLC and Crusader Servicing Corp., have previously pleaded guilty as part of this investigation.
For the Justice Department press release, see New Jersey Company Pleads Guilty for Role in Bid-Rigging Scheme at Municipal Tax Lien Auctions (Investigation Has Yielded 11 Guilty Pleas).

Baltimore-Area Foreclosure Mill Lawyer Gets Spanked In Court For Having Others Sign, Notarize His Name On Court Documents

In Baltimore, Maryland, The Baltimore Sun reports:

  • A Hunt Valley attorney who admitted to having his employees sign his name to foreclosure documents was found by a Baltimore County judge to have violated three of Maryland's rules of professional conduct for lawyers, according to court records.

    Thomas P. Dore engaged in behavior that was "prejudicial to the administration of justice" by "routinely and repeatedly" filing "with the courts affidavits purportedly signed by him and attested to by notaries" he employed, according to court documents. Affidavits are the written equivalent of taking the stand to testify under oath and Maryland law does not allow for them to be signed by a proxy.

    The decision against Dore is the latest stemming from a series of petitions by the Maryland Attorney Grievance Commission against lawyers who, during the height of the foreclosure crisis, cut corners in thousands of foreclosure cases in order to manage overwhelming workloads. So far, one attorney has been reprimanded by the state's highest court for such behavior and several other cases are working their way through the legal system.
For more, see Foreclosure attorney violated rules by having others sign his name, court finds (Sanctions, if any, will be determined by Court of Appeals).

Ohio Payday, Auto Title Lending Outfits Do End-Run Around State Interest Caps To Lock Financially Strapped Borrowers Into E-Z To Get, Hard-To-Pay-Off Loans

In Columbus, Ohio, the Dayton Daily News reports:

  • Storefront and online lenders are offering a new form of expensive credit — with fees and interest rates totaling more than 300 percent in some cases — by exploiting the same legal loopholes used to sidestep voter-approved rate caps on standard payday loans, a Dayton Daily News investigation found.

    “Auto title loans” give borrowers quick and easy access to cash but at a steep price. Not only do the agreements carry high fee and interest costs — far above the 28 percent rate ceiling that Ohio voters endorsed for short-term loans in 2008 — but consumers risk having their vehicles repossessed.
  • An employee at a newly opened LoanMax store at 2601 S. Smithville Road in Dayton told an undercover Daily News reporter that someone taking out a $400 loan would have to pay back $536 after 30 days. On a $1,000 loan, a borrower would have to repay $1,325, the employee said.

    If those fees and interest were calculated as an annual percentage rate, both loans would have an effective APR of around 400 percent.

    Consumer advocates call auto title lending a dangerous practice that traps people in debt and sometimes takes away an asset that is worth more than the loan: their car or truck. In Texas, an average of 93 people a day have their cars repossessed by auto title lenders, which works out to be a 6 percent repossession rate, according to 2012 data from the Texas Office of Consumer Credit Commissioner.
  • Critics say lenders are doing an end-run around the state’s 2008 Short Term Loan Act, which was heavily opposed by the payday lending industry and overwhelmingly approved by voters in a statewide referendum.
  • Payday and auto title lenders sidestep the strict limits imposed by the Short Term Loan Act by licensing their businesses under the Second Mortgage Loan Act or the Credit Services Organization Act. Both laws permit fees on top of whatever interest rate is charged.

    The Second Mortgage Loan Act was originally designed for borrowers taking out a cash loan with their house put up as security. The CSO act was aimed at regulating the credit repair businesses that collected fees but did little to help consumers consolidate debt or clear up credit blemishes. Now payday lenders licensed as CSOs offer to help borrowers repair their credit by obtaining a payday or auto title loan.
  • When the Daily News undercover reporter visited the LoanMax store on South Smithville, the employee outlined a dizzying array of potential fees. Asked what would happen if a loan wasn’t repaid in 30 days, the employee said as long as a borrower made a “minimum payment” roughly equal to the fees and interest (paying $142 on the $400 loan), they could essentially start over with a new loan of the same amount.

    The employee pointed out that the minimum payment would only pay down $6 of the principal on the loan, then added that “you can do that as many times as you need to.”

    If a borrower did that three times, the dollar amount on fees and interest would be higher than the original loan amount.

    The cost is more steep for those who can’t pay off the loan or make the minimum payment. “If you don’t pay either one of these, there’s 30 days before we would repo the car,” the employee said.
For more, see Popular auto title loans offer fast cash at steep price (Lenders exploit legal loophole to exceed caps on payday loans).

Monday, December 24, 2012

Vegas Juries Convict Ex-Process Server Of 35 Felonies In "Sewer Service" Racket; Bogus Docs Filed In Debt Collector Lawsuits

In Las Vegas, Nevada, the Las Vegas Review Journal reports:

  • A jury convicted former process server Maurice Carroll [] of 17 forgery counts in a scheme to file false affidavits in Las Vegas, Henderson and North Las Vegas justice courts. The 12-member panel deliberated for three hours after a week of testimony and arguments.

    Carroll, 43, a former Las Vegas police officer, was previously convicted of 17 counts of filing false court documents and one count of obtaining money under false pretenses in the 2010 scheme.

    At the request of prosecutors, District Judge Elissa Cadish ordered Carroll remanded into custody while he awaits his Jan. 16 sentencing on all 35 felony charges. "I think it's finally caught up with him," Chief Deputy District Attorney Mike Staudaher said afterward.

    The charges focus on phony court affidavits Carroll was accused of putting together in civil cases involving one of his clients, debt collector Richland Holdings.

    Carroll was accused of failing to serve documents in 17 Richland Holdings cases in May and June 2010, though he certified them as served in Justice Court affidavits.

    As a consequence, people named in the affidavits were not notified they were being sued by Richland Holdings.

    Earlier in the weeklong trial, Staudaher told the jury many of the people Carroll swore he had served weren't even home at the time. Some were at work, one couple was in England, and one address didn't exist, Staudaher said.
For more, see Ex-process server convicted of more counts in affidavit scheme.

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

'Independent' Foreclosure Review Not So Independent

Investigative reporter Paul Kiel writes in ProPubica:

  • The Independent Foreclosure Review is the government's main effort to compensate homeowners for harm they suffered at the hands of banks — and, as its name indicates, it's supposed to be independent.

    But until recently, that was hardly the case with Bank of America. Supposedly independent, third-party reviewers would sit at a computer, analyzing each homeowner's case by going through hundreds of questions, such as whether the bank had properly reviewed a homeowner for a modification or had charged bogus fees.

    But the reviewers weren't starting from a blank slate. Bank of America employees had already supplied the answers, which the reviewers would have to override if they did not agree.

Bail Set At $25K For Westchester County Man Facing Grand Larceny, Scheme To Defraud Charges Revolving Around Upfront Fees Collected For Purported Foreclosure Rescue, Refi Services

In Peekskill, New York, the Peekskill-Cortlandt Patch reports:

  • A 50-year-old Peekskill man faces grand larceny charges after he allegedly bilked residents with a home refinancing scam.

    Anthony Vecchio is scheduled to appear in Peekskill court [] after city police arrested him and charged him with fourth-degree grand larceny, a felony, and scheme to defraud, a misdemeanor.

    Vecchio allegedly obtained money from residents for refinancing and foreclosure on their homes, but never processed the required paperwork. Police said they arrested Vecchio following a six month investigation. Vecchio was arraigned and sent to Westchester County Jail with bail set at $25,000.
Source: Peekskill Man Charged in Home Refinance Scam (Police are reaching to anybody who may have been victimized by Anthony Vecchio, 50, Peekskill. Police said Vecchio charged clients for home financing and foreclosure processing, but he never submitted any paperwork).

Sunday, December 23, 2012

County Lawsuits Tagging Fannie, Freddie Over Failure To Pay Deed Transfer Taxes Continue

In Springfield, Illinois, WRSP-TV Channel 55 reports:

  • Macon County is the latest Illinois county to file a lawsuit against Fannie Mae and Freddie Mac over failing to pay real estate transfer taxes on foreclosure properties.

    Officials in the central Illinois county filed suit Dec. 4 in federal court in Springfield, asking a judge to order the two federal mortgage finance companies, as well as the Federal Housing Finance Agency, which oversees them, to pay the transfer taxes; issue a declaration that they are subject to having to pay them; and award damages, interest, penalties, costs and attorney fees.

    Macon County also wants its suit to be certified as class-action to include all 102 counties in Illinois.

    A transfer tax is an excise tax that has to be paid when a property is sold or transferred to a new owner. Illinois’ statewide transfer tax rate is 50 cents for every $500 of the property’s value. There also is a county transfer tax that is 25 cents for every $500 of value.

    Macon County officials say Freddie Mac and Fannie Mae have handled numerous foreclosure sales in Illinois but have not paid the transfer taxes. The few times the agencies paid the taxes, they did so “under protest,” insisting they are exempt because they are governmental bodies, officials say.

    Fannie Mae and Freddie Mac are not governmental bodies, Macon County officials argue, saying they “are, and have been, private, publicly traded corporations since approximately 1968.” A Michigan judge agreed earlier this year in a similar suit there, saying the entities are not exempt from the transfer taxes because they are excise taxes, not direct taxes.

    It’s unclear from the lawsuit how much back taxes are at stake in Macon County.
    In June, several northern Illinois counties filed a similar lawsuit. DeKalb, Will, Winnebago, Whiteside, Kendall and Kane counties all are asking a judge to rule that Fannie Mae and Freddie Mac are subject to the taxes. DeKalb County officials estimated they were owed about $40,000 for the past five years.

    The Federal Housing Finance Agency responded to the suit, saying that while it recognizes the hardship faced by local officials because of shrinking tax bases, it must resist local governments imposing “unlawful” tax-raising programs that end up costing taxpayers across the country.

    Counties in other states also have filed similar suits, including Minnesota, North Carolina, South Carolina, Ohio and Florida.

NYS High Court: County Not Required To Seek Out Landowner's New Mailing Address After Move When Tax-Foreclosing On Real Estate

In Warren County, New York, the North Country Gazette reports:

  • The state’s highest court has ruled that Warren County officials were not constitutionally required to try and seek out a new address to give a property owner notice before seizing his property in the Town of Chester for overdue taxes and selling the property at a foreclosure sale in 1999 after he had moved and his forwarding address had expired.

    In an unanimous decision, the Court of Appeals ruled that W. James and Andrea Mac Naughton of Short Hills, NJ, had not been deprived of their property without due process of law and that the county had satisfied due process requirements in its effort to notify the property owners that an in rem tax foreclosure proceeding had been been initiated against their property after documents sent to the address listed for them on the tax roll were returned by the postal service as undeliverable.

    When an owner of real property moves and does not give a new address to the collector of real property taxes, he or she may fail to receive notices of overdue taxes and related legal proceedings and the property may consequently be lost in foreclosure.

    The U.S. Supreme Court and NY Court of Appeals have held that, in such situations, due process requires taxing authorities to take reasonable steps to track down the missing taxpayer being seizing and selling her or her property.

    This case raised the question of how much a taxing authority is required to do. The MacNaughtons had argued that, when notice mailed to them at their last known address, in New Jersey, proved undeliverable, the tax collector was required to find some means of making personal service on them, or to address a notice to “occupant” at the former address, or to search New Jersey public records for a new address.

    In 1988, the MacNaughtons acquired a vacant lot in the Town of Chester in Warren County. They then lived in South Orange, NJ, and their South Orange address appeared on the deed.

    The Town sent them real property tax bills at that address, and the MacNaughtons paid them.

    In 1993, the MacNaughtons moved from South Orange to Millburn,NJ. They arranged with the post office to forward their mail, but they did not then inform the Town of Chester taxing authorities of their new address.

    The 1994 tax bill was forwarded from South Orange to Millburn, and paid.

    The MacNaughtons claim that, after receiving the forwarded bill, they gave their new address to the Town in a handwritten note and in a telephone call, but plaintiffs have no record of either communication, and neither is reflected in the Town’s records.

    To accept undocumented claims of this kind would be to invite abuse”, the court wrote, “and we therefore conclude that plaintiffs’ ‘bare allegation’ is insufficient to defeat summary judgment on the issue of whether they gave notice of their change of address to the Town; we take it as established that they gave no such notice”.

    A year after the MacNaughtons moved, their forwarding arrangement with the post office expired. Tax bills for the next three years, mailed to them at the South Orange address, were returned to the Town.

    In 1998,Warren County sent a warning letter to the South Orange address that was also returned, and then began a foreclosure proceeding. It served plaintiffs with the petition and notice of petition by certified mail addressed to the South Orange address. The mailing was returned with the notation: “Undeliverable as Addressed – Forwarding Order Expired.”

    The MacNaughtons defaulted in the foreclosure proceeding and title to the property passed to the County, which sold it at auction in 1999.

    The MacNaughtons did not learn of these events until 2003.

    After unsuccessful federal litigation, they began the state action in 2005, asserting that the attempts to give them notice of the foreclosure were constitutionally inadequate, and seeking a declaration that they still owned the property.

    Supreme Court granted the County’s motion for summary judgment, and the Appellate Division affirmed. The MacNaughtons then appealed to the Courty of Appeals as of right.

    At the time the county began its foreclosure proceeding in 1998, the Real Property Tax Law required that notice of the proceeding be published in at least two newspapers and that it be “mailed, by ordinary first class mail” to the owners of the property. It is not disputed that the County complied with the statutes. The question is whether the State or Federal Constitution required it to do more.

    The Court says no. However, it should be noted that the law has been changed and Real Property Tax Law now requires that notice be mailed by certified and first class mail. If these documents are returned, additional steps must be taken by municipal authorities to locate the property owner, including contacting the postal service to determine if other mailing addresses are available and on file.
Source: Court: County Didn’t Deny Due Process In Property Sale.

For the ruling, see Mac Naughton v. Warren County, 2012 NY Slip Op 08442 (NY December 11, 2012).

Homeowner: Mortgage Servicer Belted Me For $6K+ In Charges On $2,289 Loan Balance For Being 91 Days Late In Payments, Refuses To Allow Principal Payoff

In Green Cove Springs, Florida, First Coast News reports:

  • Diane Ham is done with Ocwen, her mortgage servicing company. "I cannot get them to even understand," she said. Ham, who lost her law enforcement job three years ago, said they were trying to keep their mortgage loan current until it happened.

    "We had gotten behind," said Ham, "and my bank account was wiped out by identity thieves." She said it left her account $325 in the negative balance before her credit union was able to correct it.

    Her husband's income was the only cash coming in and soon, they were 90 days late. Ham said in November, she tried to make a payment to Ocwen Loan servicing and it was rejected.

    "They told me I was 91 days past due," said Ham, "and I would have to pay $1707 by the end of December and that would solve the issue."

    Her mortgage balance is $2,289 so she asked for a pay off and Ocwen sent her a statement for $8,507.56. "I was just overwhelmed," she said.

    She is being charged thousands in foreclosure fees, but according to court records she is currently not in a foreclosure lawsuit. There was a lawsuit in 2006, but the records show that was dismissed and not relative to 2012.

    "I'm trying to pay my bill, but when you turn around and hit me with $5,000 additional money, that is not right," said Ham.

    Attorney Tim Pribisco with the Oughton Law firm said most mortgage agreement have a provision for the lender to recover foreclosure fees if it has to retain an attorney, but there has to be a foreclosure. "If there's no foreclosure action started what are the foreclosure fees?" asked Pribisco.

    He said given the evidence he has seen this seems like an act of bad faith. Pribisco said Ham needs an attorney to walk her through the legal mess. Ham said she just wants the fees removed.

    "Give me a justified payoff so that I can pay this off," said Ham.

    Attempts for comment from Ocwen were unsuccessful.

Saturday, December 22, 2012

Massachusetts AG Suit: Unlicensed Contractor Abandoned Projects After Pocketing Upfront Cash From Homeowners

From the Office of the Massachusetts Attorney General:

  • A Framingham man has been sued and ordered to stop any contracting services without a license after allegedly engaging in home improvement projects without proper registration, failing to complete the work, and misappropriating tens of thousands of dollars from a consumer, Attorney General Martha Coakley announced today.

    The lawsuit filed against Kyle Buckminster last week in Suffolk Superior Court seeks civil penalties and consumer restitution for violations of the Massachusetts Consumer Protection Act, due to allegations he misrepresented himself as a licensed home improvement contractor and abandoned projects for which he had received payment.
For the Massachusetts AG press release, see Framingham Man Sued for Illegal Home Improvement Practices (AG Coakley Obtains Injunction Prohibiting Defendant from Operating Without a License).

Milwaukee-Area Real Estate Operator Pinched For Allegedly Running Straw Buyer/Short Sale Scam; Accused Of Illegally Pocketing $1M+

In Milwaukee, Wisconsin, the Milwaukee Journal Sentinel reports:

  • Three of the key figures in a 2007 deal in which a learning disabled man was duped into buying an inner city home are facing unrelated federal mortgage fraud charges.

    Randez Long this week pleaded not guilty to charges that he collected more than $1 million by leading a crew of people who scammed lenders into writing inflated mortgage loans during a three-year period when the housing market was booming.

    Unlike mortgage fraud schemes that involve one loan, Long is charged with using fraudulent information to have lenders provide two loans for the same property - one when it was initially purchased by one of his associates and a second when the property was later sold to different Long associates.

    Long, 33, is charged with money laundering, bank and wire fraud. He is scheduled for trial in February.
  • In the Long indictment, the grand jury charged that he recruited individuals, including his mother and sister, to buy properties in Milwaukee and to obtain inflated mortgages by providing lenders with false information about the buyer's finances and employment. The buyers would quickly default on the loans and arrange for the properties to be sold in a "short sale."

    In a short sale, the property is sold for less than the amount owed on the mortgage, and the lender agrees to accept that sale amount.

    "In fact, these 'short sales' were fictitious and never occurred," the indictment states.

    Instead, the properties were sold to others at a price greater than the amount told to the lenders and new mortgages - again based on fraudulent applications - were received from other lenders, the indictment charges, noting that "Long again received a substantial portion of the sale proceeds."

    The case was investigated by the Internal Revenue Service criminal investigation division and the FBI. Though the indictment describes transactions involving two north side properties, a source familiar with the case said Long was involved in the purchase and sale of at least 30 area properties.

Feds Confirm Bad Holiday News To Family Facing Foreclosure: She's Been Victimized By Nationwide Loan Modification Scam

In Omaha, Nebraska, WOWT-TV Channel 6 reports:

  • An Omaha mother of five opened something that was hardly a holiday gift. It was an email from federal authorities confirming she's a victim of a mortgage scam. Now the family is fighting to keep their home.

    Estes family members are victims of a bad call by a loan modification company. “They've taken our money and not done anything they said they would do,” says Melissa Estes.

    The family paid 1st American Law Center of Oceanside, California $3,500 to negotiate a lower monthly rate with their lender and advised Melissa to stop mortgage payments until that was done. It was bad advice because the lender never agreed and is threatening foreclosure. “I just hope and pray they will let us slowly pay so we would be able to remain in this house.”

    The 1st American Law Center has been exposed by consumer advocates and busted by federal authorities. “It’s justice to know they won't be dong that to anyone else." But justice doesn't pay the mortgage.

    The victims of this loan scam are now getting threatening calls from their mortgage company. Still, they don't want their children to feel victimized as well so they promise gifts will be under the Christmas tree this year.

Friday, December 21, 2012

Another Assistance Pooch Sinks Fangs Into Landlord's Wallet; Property Owners To Cough Up $15K To Tenant, Bay State To Settle Fair Housing Charges Surrounding Renter's Care-Canine

From the Office of the Massachusetts Attorney General:

  • A property owner from Newton has agreed to pay $15,000 and make extensive policy changes at his businesses, settling allegations that a manager at one of his apartment complexes discriminated against a disabled tenant with an assistance dog, Attorney General Martha Coakley announced [].

    According to the assurance of discontinuance, filed Thursday in Suffolk Superior Court, Kevin Regan, the property manager at the Lord Baron Apartments in Burlington, allegedly refused to rent to a prospective tenant because she requested permission to reside with an assistance dog. Regan later agreed to rent to the tenant after being contacted by the AG’s Office and informed that his refusal to rent violated fair housing laws. Subsequent to the AG Coakley’s involvement, Regan allegedly threatened the victim with eviction if he received any complaints about her assistance dog.
  • The other defendants named in the assurance are the L.B. Nominee Trust, doing business as the Lord Baron Apartments, and its trustees, Kosow Construction Corporation and owner Marvin P. Kosow, both located in Newton. Regan is a resident of Westwood.

    The assurance requires the defendants to pay a total of $15,000 in restitution and penalties to the tenant and the Commonwealth.(1)
For the Massachusetts AG press release, see Property Owner Settles Claims of Housing Discrimination Against Tenant with Assistance Dog (Owner to Pay $15,000 and Implement New Policies to Avoid Violation of Fair Housing Laws).

(1) The inability or refusal to make the distinction between a household pet and either a service animal or an emotional support/assistance animal can give rise to a very costly legal problem for landlords, homeowner associations, municipalities purporting to enforce code restrictions, etc. Both the Housing Feds, the Civil Rights Feds, and others have shown a high degree of interest when these situations arise. See, for example:
See, generally, A Comparative Study: Service Animals and Emotional Support Animals under the Fair Housing Act and the Americans with Disabilities Act & An Overview of Assistance Animal Laws of Select States.

Feds, County, Planning & Zoning Commission Settle Fair Housing Allegations That Denial Of Land Use Approval Was Based Partly On Race, Color, National Origin

From the U.S. Department of Justice (Washington, D.C.):

  • The Justice Department announced [] that it has settled a lawsuit against Sussex County, Del., and the Planning and Zoning Commission of Sussex County for race and national origin discrimination in violation of the Fair Housing Act.

    The lawsuit, filed [] in the U.S. District Court for the District of Delaware, alleges that the county’s planning and zoning commission denied land use approval for a 50-lot affordable housing subdivision proposed by Diamond State Community Land Trust, a Delaware affordable housing developer, in southwestern Sussex County near the town of Laurel, Del.

    The suit alleges that the Sussex County Council later affirmed the denial of the proposed development.  The suit alleges that opposition to the proposal was based partly on the assumption that the subdivision’s residents would be Latino and African-American and on stereotypes based on race, color and national origin. The lawsuit arose from a complaint to the U.S. Department of Housing and Urban Development (HUD) that was referred to the Department of Justice.(1)

Massachusetts Landlord Pinched In Connection With Alleged Racial Harassment Charges Directed Against Mom, Infant Child; Behavior Constitutes Violation Of Earlier-Issued Civil Rights Injunction: State AG

From the Office of the Massachusetts Attorney General:

  • A Holyoke man has been indicted in connection with the racial harassment of his tenant in violation of a civil rights injunction obtained by the Attorney General’s Office in 2009, Attorney General Martha Coakley announced [].

    Jesse Jedrzejczyk, 57, of Holyoke, has been indicted on charges of Violation of a Permanent Injunction, Criminal Harassment, and Civil Rights Violation.

    In 2009, the Attorney General’s Office filed a Superior Court civil action against Jedrzejczyk pursuant to the Massachusetts Civil Rights Act and obtained a permanent injunction against him based on allegations that he threatened, intimidated, and harassed a neighbor and her young daughters because of their perceived race.

    Despite being subject to the Superior Court order, authorities allege that Jedrzejczyk recently engaged in substantially similar behavior toward another neighbor and her infant child because of their perceived race. Authorities allege that Jedrzejczyk regularly used racial slurs and physical harassment to intimidate his tenant and create concern for her infant’s safety.
For the Massachusetts AG press release, see Holyoke Man Indicted in Connection with Violating Permanent Civil Rights Injunction (Defendant Allegedly Continues to Engage in Race-Based Harassment of Neighbors).

Settlement Of Race-Based Discrimination Complaint To Cost Wisconsin Landlord $57,500; Manager Allegedly Told Black Renters No Apartments Were Available While Telling Whites Otherwise

From the U.S. Department of Justice (Washington, D.C.):

  • The Justice Department announced [] that the manager and owner of the Geneva Terrace Apartments Inc. in La Crosse, Wis., have agreed to pay $57,500 to settle a lawsuit alleging they violated the Fair Housing Act by discriminating against African-Americans who were seeking to rent apartments at the complex.

    The complaint, filed in the U.S. District Court for the Western District of Wisconsin on Oct. 26, 2011, alleged that Nicolai Quinn, the manager of the apartment complex, told prospective African-American renters that apartments were not available when they were, while telling prospective white renters that there were apartments available.
  • As alleged in the complaint, in 2009 and 2010, Quinn told an African-American couple who were interested in renting an apartment in Geneva Terrace that there were no apartments available, even though the complex had posted a sign advertising vacancies.

    The couple found it suspicious and asked a white friend to contact the complex. Quinn told the white friend that he had available apartments.

    The couple then reported their experience to the Metropolitan Milwaukee Fair Housing Council (MMFHC),(1) a nonprofit fair housing organization. MMFHC conducted fair housing tests, which confirmed that Quinn was telling African Americans that apartments were not available while showing available apartments to white persons.

    The couple also filed a complaint with HUD, which conducted an investigation and, after issuing a charge of discrimination, referred the matter to the Department of Justice.

    Under the terms of the settlement, which is subject to approval by the U.S. District Court, the defendants will pay the complainants $47,500 in damages.(2)   Defendants will also pay a civil penalty of $10,000 to the United States. Defendant Geneva Terrace Apartments LLC will also develop and maintain non-discrimination housing policies and attend fair housing training.
For the Justice Department press release, see Justice Department Settles Lawsuit Against Wisconsin Landlord and Former Manager for Discriminating on the Basis of Race.

For the lawsuit, see U.S. v. Geneva Terrace Apartments, Inc. (go here for the settlement agreement).

(1) The Metropolitan Milwaukee Fair Housing Council is a private, non-profit, membership-based organization that promotes fair housing throughout the State of Wisconsin by combating illegal housing discrimination

(2) This amount is inclusive of the couple's attorney fees.

Thursday, December 20, 2012

Vegas Real Estate Operator Gets 37 Months For Screwing Over Underwater Homeowners By Taking Upfront Fees In Exchange For False TARP-Associated Debt Reduction Promises

From the U.S. Department of Justice (Washington, D.C.):

  • A Las Vegas man was sentenced [] to 37 months in prison for operating a foreclosure rescue scam that defrauded distressed homeowners who were struggling to pay their mortgages, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Daniel G. Bogden of the District of Nevada.

    Alex P. Soria, 65, was sentenced [] by U.S. District Judge Lloyd D. George in the District of Nevada. In addition to his prison term, Soria was sentenced to serve three years of supervised release and ordered to pay $320,266 in restitution.
  • According to court documents, Soria identified homeowners whose mortgage debt exceeded the value of their homes and charged them a fee purportedly to reduce the principal balance of their mortgages using money from the Department of the Treasury’s Troubled Asset Relief Program (TARP).

    Soria admitted in court that he lied to homeowners about his affiliation with several mortgage lenders and that he provided victims with fraudulent letters stating they had been approved for loans. Soria also admitted he falsely told victims that his loan program had been successful in the past and charged homeowners for loan modifications he knew he could not deliver. Court documents show that Soria concealed from homeowners the fact that the state of Nevada had issued a cease and desist order which legally prohibited him from working in the mortgage industry.

    Soria collected over $100,000 in fees from distressed homeowners, many of whom lost their homes to foreclosure after Soria failed to deliver the loan modifications he promised.

Feds Score Asset Freeze, Temporary Halt Of Operations Of Two Outfits Alleged To Be Running Nationwide Loan Modification Racket

From the Consumer Financial Protection Bureau (Washington, D.C.):

  • The Consumer Financial Protection Bureau [] announced actions to halt two alleged mortgage loan modification scams it believes ripped-off thousands of struggling homeowners across the country. In total, these operations took in more than $10 million by charging consumers for services that falsely promised to prevent foreclosures or renegotiate troubled mortgages.
  • At the request of the CFPB, U.S. District Court Judges in the State of California have ordered a halt to both operations, the Gordon Law Firm and the National Legal Help Center, and frozen their assets while the CFPB moves forward with the cases. The case involving the National Legal Help Center was initially referred to the CFPB by the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) and Treasury’s Office of Financial Stability, which have coordinated closely with the Bureau throughout the investigation.

    “It is absolutely unacceptable for unscrupulous con artists to take advantage of our nation’s housing crisis by targeting homeowners looking for help from TARP’s Home Affordable Modification Program,” said Christy Romero, Special Inspector General for TARP (SIGTARP). “We thank the CFPB for protecting homeowners. SIGTARP will continue to stop these scams and educate homeowners that mortgage modifications through HAMP are free.”

    The CFPB is targeting loan modification operations that attempt to disguise their false promises of relief for struggling homeowners with claims that they are performing legal work or are a law firm. The Bureau is also particularly concerned with schemes that attract victims with false claims that they are endorsed by or represent the government. These tactics are used by mortgage relief scams to attract victims, add credibility to their schemes, or exploit certain legal exemptions for the practice of law.
For more, see Consumer Financial Protection Bureau halts alleged nationwide mortgage loan modification scams (Operations targeted financially distressed consumers in danger of losing their homes).