Court To Slum-Financing Lender: Cough Up The Repair Cash; Bank Learns It 'Can't Just Wash Its Hands & Walk Away'

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

• City Council Speaker Christine Quinn on Tuesday was touting a court decision to hold a bank responsible for repairs to a dilapidated Brooklyn tenement. “I think this is really a precedent-setting decision,” the mayoral hopeful said. “The buck finally stops somewhere for tenents in the city of New York.”



• Six elderly and disabled tenants at 294 5th Avenue in Park Slope filed a motion in May 2011 after two years of living with deteriorating conditions since the building’s owner defaulted on a $1.85 million mortgage. The tenants were living with on-and-off heat and hot water, no trash collection, an unsecured front door and a roof in danger of collapse.



• The building has 109 open violations, including seven “immediately hazardous” violations, according to the New York City Department of Housing Preservation and Development. The decision by Judge Sylvia O. Hinds-Radix on Dec. 20 orders the National Bank of New York City to pay a receiver who is responsible for overseeing repairs when the rent doesn’t cover the fixes.



• Shira Galinsky, a senior Staff attorney at South Brooklyn Legal Services, which handled the case, said the case will lead to banks being “held responsible for bad lending.”



• Quinn said the decision can be cited by tenants in future cases to force banks to pay for repairs when a foreclosure had been initiated and a receiver is in place to oversee repairs. "It says that the mortgage holders are not without responsibility,” Quinn said, “that they can’t just wash their hands and walk away.”

Source: Christine Quinn touts case which could lead to banks being 'held responsible for bad lending' (Court holds bank responsible for repairs to Brooklyn tenement).

See also, Elderly and Disabled Tenants Win Suit Compelling Bank to Pay for Repairs.

Court Strips Landlord Of Control Over Dilapidated Buildings Innundated With Code Violations; Gives Hope To Dozens Of Poor, Boot-Fearing Residents

In St. Paul, Minnesota, the Star Tribune reports:

• Halima Eidl lives in a St. Paul apartment that has urine-stained carpet and also mold, mice, roaches and rats. Despite that, she isn't looking to move. But Eidl and about five dozen of the city's poorest families could find themselves homeless later this month.



• The families live in two East Side apartment buildings that are on the verge of bank foreclosure, city condemnation or orders for eviction. Because money is short, moving isn't possible for most tenants, including Eidl and her daughters, Rashida Eidl, 17, and Maidah Ali, 11. Halima Eidl said owners Peggy and Randall Chun repeatedly ignore requests to fix problems.

***

• In early December, an inspection of the two buildings [...] yielded nearly 300 code violations -- an appalling number to City Council members. The buildings each have about 30 rental units and also have produced a substantial history of police calls for thefts, drug dealing and prostitution.

***

• Wells Fargo filed in Ramsey County District Court to foreclose on the Chuns for the $3.1 million mortgage on the buildings, [...]. The bank will ask a judge [] to appoint a receiver who could begin repairs on the battered properties.

For more, see Families face eviction from infested St. Paul apartments (The landlords said they will make the necessary repairs on the rundown East Side property, but it may be too little too late).

For story updates, see:

• Judge to appoint receiver for shabby St. Paul apartments,
• Troubled east St. Paul buildings to change hands (New receiver will have to decide whether to fix the apartment units or to declare them uninhabitable).

Man Pinched For Setting Up Indoor Pot Farm In Foreclosed Dad's House; Said He Decided To Grow His Own Stash After Being Burned By Local Pot Peddlers

In Sheboygan Falls, Wisconsin, the Sheboygan Press reports:

• A marijuana growing operation discovered when the locks on a house were changed during foreclosure led to charges Friday for a 43-year-old Sheboygan Falls man. Brock O. Bizzell, [...] is charged with marijuana manufacturing, maintaining a drug trafficking place and marijuana possession, felonies punishable by up to eight years in prison.



• Bizzell was arrested Wednesday after police raided a house at W3180 Highway PP and seized 40 marijuana plants and an array of related equipment. Sheboygan Falls Police Chief Steve Riffel called it a "large-scale and elaborate growing operation."

***

• [According to a criminal complaint,] Bizzell admitted to growing the marijuana but claimed it was only for personal use. He told police he was sick of getting burned by the people he bought marijuana from and decided two months prior to start growing his own. Bizzell did not live at the home, which had belonged to his father.

For the story, see Foreclosure helps uncover marijuana growing operation.

Cops: 'Disappointed' Homeowner Threatened To Shoot Judge After F'closure Hearing, Telling Paralegal He Was Taking Bomb, Missiles, Gun Into Courthouse

In Lakeland, Florida, The Ledger reports:

• A Lakeland man is accused of threatening to shoot a Polk judge after a foreclosure hearing, deputies said. Walter E. Norris, 55, was arrested Friday and charged with threatening to discharge a destructive device.



• Norris called his lawyer [...] and told a paralegal that he was going to take a bomb, missiles and a gun into the courthouse, according to an arrest report. The law firm's security division contacted deputies.



• Norris was released Saturday on a $5,000 bail, according to records.

Source: Man Accused of Courthouse Plot, Threatening to Shoot Judge at Hearing.

Another Would-Be Tenant Clipped By Rent-Skimming Property Owner; Kicks Herself For Not Checking Out Home's Foreclosure Status Before Signing Lease

In Augusta, Georgia, WRDW-TV Channel 12 reports:

• An Augusta woman thought she found her dream home only to be forced to move out weeks after signing the lease. April Williams fell in love with the two-bedroom, one-bath cottage on McDowell Street as soon as she stepped through the front door.



• "Once I seen it I said, 'This is the spot for me. This is where I want to be,'" she said. She signed a year lease after two long months of searching for the perfect, affordable home. "It was right at $1,300 because I had to pay the $650 deposit and the $650 to move in," she said.



• She moved into her new address Dec. 6. A month later, she found a letter posted on her front door. "It says, 'This property is now owned by Fannie May,'" she said.



• Williams says her landlord never told her the home was in foreclosure. "I'm tremendously angry and she is still trying to call and get money from me," she said. The government requires Fannie Mae to pay Williams to move out.



• Williams is kicking herself for not checking to see if the property was in foreclosure before she signed the lease. "It never crossed my mind -- never, never, never, because she never said anything. Nothing," she said.

Source: 12 On Your Side: Renter finds herself in foreclosure, forced to move (A woman is forced to move after finding out the home she just leased was foreclosed on).

Now-Disbarred Closing Attorney Gets 3 Years For Looting Trust Accounts Of $1M, Ingloriously Ending 44-Year Law Career

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

• Character witnesses for longtime attorney William Orr Smith described him Tuesday as a trusted mentor whose decades-long career combined a sharp knowledge of the law, respect and a street-smart awareness.



• But when Smith stood to address a Henrico County judge poised to sentence him in a $1 million embezzlement scheme, Smith described his 44-year career as leading to guilty pleas that reduced him to "a common thief."



• The solemn-looking, chagrined attorney will spend three years in prison despite sentencing guidelines that called for no active prison time. Smith, 72, will report to the Henrico jail Jan. 27, Circuit Judge George F. Tidey ruled.



• Special Prosecutor Tracy Thorne-Begland described Smith as unequalled in the assistance he gave investigators tasked with unraveling the savvy attorney's embezzlements from a subsidiary of Bank of America that handled foreclosures and mortgages. But Thorne-Begland said, too, that the five-year scheme involved hundreds of illegal transfers from mortgage accounts and foreclosure accounts — repeated acts that could have stopped at any time but that resulted in only three actual criminal counts of embezzlement.

***

• "It was who he was for virtually all his life," defense lawyer Craig S. Cooley said of Smith's ended law career, noting that insurance will pay $650,000 of the loss and that Smith will be hard-pressed to make restitution of the balance of the $1,065,327.10 that he pilfered.



• Smith surrendered his law license in June, cooperating with State Bar investigators as much as he did detectives. He pleaded guilty to two embezzlement counts in September.

For the story, see Lawyer, 72, will serve three years in $1 million embezzlement.

Bankster's Insurance Premium Overcharge Drives Foreclosure Defense Attorney Into Foreclosure

In Indianapolis, Indiana, The Huffington Post reports:

• Christine Jackson's three-bedroom wood-frame home in Indianapolis is in danger of foreclosure. It's not because she can't afford her mortgage, but because of a bank error, she said.



• Jackson is among thousands of homeowners from all walks of life who have complained that the major banks that service their mortgages have made frequent errors in calculating their loans. These errors include slapping unnecessary inspection fees onto accounts, misapplying payments in violation of Fannie Mae and Freddie Mac guidelines and "force-placing" expensive insurance on homes that are already insured.



• Jackson knows all this all too well because she is a lawyer who represents homeowners trying to stave off foreclosure. Often, those clients have claimed that their bank or mortgage servicer made a mistake in tabulating the cost of their loan, triggering a wrongful default.



• Jackson, 54, a former fraud investigator for the Internal Revenue Service, now understands firsthand the frustration that her clients feel.



• JPMorgan Chase & Co., the bank that services Jackson's mortgage, has declared her loan in default, blocked access to her online account and threatened foreclosure if she doesn't pay late charges that she said are unwarranted. Her once sterling credit is ruined and she could lose her home if the mess isn't resolved, Jackson said in a recent interview.



• Jackson blames her situation on an extra annual insurance premium that she said Chase deducted from her account in 2009 on top of her usual payment. The overcharge triggered a series of account miscalculations, eventually leading to default, according to Jackson.



• "I'm disgusted with the whole thing," she said. "My credit is trashed. I have nothing at all to finance my business. I might have to file for bankruptcy."

For more, see Foreclosure Lawyer Could Lose Her Home Because Of Alleged Bank Error.

Squatters Score With Vacant Foreclosed Homes; Use Phony Leases To Get Free Temporary Housing, Squeeze Banks For 'Cash For Keys' 'Walking' Money

In Antioch, California, NBC Bay Area reports:

• It's a problem plaguing our country. Squatters moving into foreclosed homes and banks paying them to get out. It's happening in one Antioch neighborhood. Neighbors formed a neighborhood watch program in part because they noticed lots of homes being foreclosed in he area.



• They were apparently right to be worried. Police arrested three people Tuesday on Bedrock Way in Antioch.



• Police said the people in the home tried to show them a phony lease, but they weren't fooled. A following search of the home netted stolen goods and a stolen car.



• Authorities believe the people arrested were involved in what is called cash for keys. That's when criminals move into foreclosed homes and banks end up paying them thousands of dollars to move out.



• "I think most of the bank agents know that these folks shouldn’t be there it’s easier just to pay them get them out and everything’s left there," Capt. Leonard Orman with Antioch police said. Orman said cash for keys happens all the time in his city where there are hundreds of bank owned homes nestled in nice neighborhoods.

Source: Squatters Plaguing Foreclosure Neighbors (The latest crime wave to hit Antioch is called cash for keys).

Cops Pinch Pair For Illegally Hijacking Possession Of Temporarily Vacated Rental Home; Landlord Was In Process Of Remodeling Unoccupied Premises

In Taylorsville, Utah, KSTU-TV Channel 13 reports:

• Amanda Booth and Tony Hoskins face criminal charges related to squatting in a Taylorsville home. The two suspects apparently took up illegal residence November by allegedly squatting at a home on 5200 South and 3700 West.



• The rental property was vacant and being prepared for a new tenant, according to Taylorsville Police Sgt. Tracy Wyante. Wyante says the owner was upgrading the space by having it remodeled.



• Crews doing the remodeling noticed something was wrong when thousands of dollars worth of new carpet was missing. They informed the owner, who called police. "The case was investigated as a burglary, unfortunately we could not prove the burglary element of the case, which certainly existed, but we couldn't prove it," says Wyante.

***

• Police say it is becoming more common to see individuals squat in homes while hundreds of properties sit vacant due to foreclosure, from owners who walked away from an upside-down mortgage, or, such as this case, a home that is being renovated.

For the story, see Police say squatters allegedly took up residence in vacant Taylorsville home.

Now-Defunct Title Agency Typo Screw-Up Leads To Foreclosure Headaches For Former Homeowner Eight Years After Selling & Moving Out

In Plant City, Florida, The Tampa Tribune reports:

• Barbara and Rick Borchers sold their house and paid their mortgage in full eight years ago. But now, all these years later, another lender, Bank of America, is suing them for foreclosure on the same house. When the process server knocked on their door, lawsuit in hand, the Borchers thought it must be a mistake.



• "Everyone I tell says, 'That's impossible, it's a scam, somebody is pulling your leg,'" Barbara Borchers said. The lawsuit is no mistake. But it starts with one – made by the title company the Borchers hired to handle their sale in 2003. The lawsuit, real estate experts say, illustrates the complexity of foreclosure and how innocent people can get pulled into someone else's financial trouble.



• When the Borchers sold their home, the title company made a typo on the deed, according to the lawsuit and public records. Instead of "Bloomingdale Section R," the deed reads "Bloomingdale Section H," a legal description for a different house in the neighborhood. The mistake stuck with the home through three more sales.



• The last buyer in the chain is the one who fell behind on payments and may lose the home to foreclosure. But the error on the deed means that mortgage holder, Bank of America, can't take the home back because the property mortgaged is listed incorrectly.



• The bank can't get the clear title required for a transaction until the error is fixed. The bank named the Borchers – and all buyers after them – in the lawsuit.

***

• This type of mistakes is why homeowners get title insurance in the first place, said Ron Donalson of Alday-Donalson Title Agencies of America. The homeowners should be able to go back to the title company and ask it to correct the deed. But in this case, the Borchers' title company is out of business.

For more, see Deed typo haunts couple in foreclosure suit years after they sold.

Recent Florida IG Report Adds More Proof Of State Officials' Fear Of Prosecuting Foreclosure Fraud

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

• The Nevada attorney general calls signing another person's name on documents used to repossess a home "forgery" and a "scheme."



• Michigan's attorney general launched a criminal investigation that includes whether "falsified signatures" were used in foreclosure cases.



• But Theresa Edwards and June Clarkson were forced to resign their jobs as foreclosure fraud investigators for the Florida Attorney General's Office, in part, for referring to so-called "surrogate signing" as forgery.



• According to a Florida Inspector General report that cleared Attorney General Pam Bondi's office of wrongdoing in the firings, the duo repeatedly used the word "forgery" in a 2010 presentation that included documents from the Jacksonville-based Lender Processing Services. The company complained and drew the attention of economic crimes boss Richard Lawson.



• Lawson says in the inspector general's Jan. 6 report that surrogate signing as it relates to Lender Processing Services, also called LPS, is not forgery, which requires an intent to defraud. The practice was authorized by the company, more evidence, Lawson said, that no forgery occurred.



• Homeowner advocates who support Edwards and Clarkson are now questioning portions of the 83-page report. They point to the LPS signature issue as an example of what they say is Florida's resistance to go after foreclosure fraud.

For more, see Is signing foreclosure documents for others forgery?

Contra County DA, Recorder Implement Plan Notifying Property Owners Of Recent R/E Recordings In Effort To Curb Title Thefts Due To Land Doc Forgeries

From the Office of the Contra Costa County, California District Attorney:

• Contra Costa County District Attorney Mark A. Peterson, in joint cooperation with County Clerk-Recorder Steve Weir, announces the implementation of a real estate fraud notification program. This process is made possible with the cooperation of the County Assessor Gus Kramer through inter-county data sharing.



• Beginning November 1, 2011, citizens will be notified by mail if certain real estate recordings occur pertaining to their property. In order to identify the transaction, the notifications will include copies of the first two pages of the subject document.



• Property owners are usually aware of these recorded transactions. However, if the recording was not authorized by the owner or the owner feels potential fraud may be taking place, a dedicated phone number at the District Attorney's Real Estate Fraud Unit will be provided. The property owner will be able to inquire about the details of the transaction or notify the District Attorney of potential fraud.



• Contra Costa County recognizes the potential for real estate fraud is a serious problem. Contra Costa County District Attorney Mark A. Peterson and County Clerk-Recorder Stephen L. Weir are committed to the prevention and prosecution of real estate fraud.

Go here for the Contra Costa County DA press release.

Celebrated Immigrant NYC Real Estate Operator Accused Of Building Empire By Preying On His Own

In Richmond Hill, Queens, The New York Times reports:

• For years, a self-made real estate magnate named Edul Ahmad personified the collective dreams of Richmond Hill, Queens, which is populated by many immigrants from Guyana, in South America. Mr. Ahmad drove a yellow Lamborghini, sponsored a cricket team and held white-glove parties at a lavish banquet hall that he owned.



• At a prominent intersection near the border of Richmond Hill and South Ozone Park, his smiling face looked down from a large billboard that promoted his real estate services. Many residents responded, taking out high-risk mortgages that they were told they could readily afford.



• In July, it all came crashing down. Agents from the Federal Bureau of Investigation arrested Mr. Ahmad, charging him with masterminding a $50 million mortgage fraud that seemed to exemplify a nationwide phenomenon of celebrated immigrant brokers who were accused of preying on their own.



• Now, scores, if not hundreds, of Guyanese immigrants are facing financial ruin because of loans said to have been arranged by Mr. Ahmad, and the repercussions from the case have extended from Queens to Washington to Guyana.



• Mr. Ahmad is currently engaged in intensive plea-bargain negotiations with federal prosecutors, according to court documents, but it appears that the impact of the loans will endure for years.

For more, see Queens Broker Is Accused of Bringing Immigrants’ Ruin.

NJ Feds Squeeze Guilty Plea From Another Sale Leaseback Peddler In Equity Stripping Ripoff Of Homeowners In Foreclosure Having High Equity, No Cash

From the Office of the U.S. Attorney (Newark, New Jersey):

• A former employee of a Parsippany, N.J., mortgage lender admitted [] to taking $138,402 in illegitimate proceeds of multiple home sales as a result of a mortgage fraud scheme, U.S. Attorney Paul J. Fishman announced.



• Jorge Abbud, 33, of Dover, N.J., pleaded guilty before U.S. District Judge William H. Walls in Newark federal court to an Information charging him with wire fraud.



• According to documents filed in this case and statements made in court:
  
  In 2008, Abbud was an employee of a Parsippany mortgage lender. He admitted that he targeted homeowners in New Jersey who had equity in their homes, but were facing foreclosure because of their inability to pay their monthly mortgage payments.
  
  Abbud falsely promised to help these homeowners avoid foreclosure, keep their homes, and repair their damaged credit. He instructed the homeowners to permit the titles of their homes to be recorded in the names of third-party purchasers ( “straw buyers”) for approximately one to three years, promising the homeowners that he would improve their credit scores during that time, obtain mortgages with more favorable interest rates for them and return the titles of the homes to the homeowners.
  
  Abbud said he then recruited straw buyers with good credit scores to act as buyers of the homes facing foreclosure. He told the straw buyers they were helping the homeowners keep their homes, and that the straw buyers would make money when the homes were sold back to the original homeowners.
  
  Abbud admitted that on certain occasions, and notwithstanding his promises to the homeowners and straw buyers, the homes fell into foreclosure.

For the U.S. Attorney press release, see Former employee of Parsippany, N.J., mortgage lender pleads guilty to fraud.

For the formal criminal charges, see Information - U.S. v. Abbud.

Michigan Appeals Court: Failure To Record Mortgage Assignment Prior To Sale Sinks Foreclosure

From a press release from the Michigan law firm Warner Norcross & Judd:

• On January 12, 2012, the Michigan Court of Appeals issued its opinion in Kim v. JP Morgan Chase Bank, No. 302528. The foreclosure-by-advertisement statute, MCL 600.3204, provides, “If the party foreclosing a mortgage by advertisement is not the original mortgagee, a record chain of title shall exist prior to the date of sale under section 3216 evidencing the assignment of the mortgage to the party foreclosing the mortgage.” MCL 600.3204(3).



• In Kim, the defendant was the assignee of the mortgage, and it failed to record its ownership of the mortgage before foreclosing by advertisement.



• Thus, the Court held that the foreclosure sale was invalid because the defendant had not complied with MCL 600.3204’s requirements.

For more, see Court Sets Aside Foreclosure Sale Where Assignee Of Mortgage Failed To Record Its Interest Prior To Sale.

For the court ruling, see Kim v. JP Morgan Chase Bank, No. 302528 (Mich. Ct. of App., January 12, 2012).

Unimpressed w/ Progress In Current Negotiations, State AG Group Meets To Discuss Enforcement Options/Strategies Around Various F'closure Fraud Issues

The Huffington Post reports:

• Attorneys general or representatives from nearly 15 states met in Washington, D.C., on Tuesday to discuss and share different enforcement options and strategies around various mortgage-related issues, according to sources familiar with the conversation.



• The meeting was prompted by the slow pace at which a national foreclosure settlement led by the Obama administration is progressing, and is likely to be the first in a series, said these sources.



• The participating attorneys general, from states including California, Nevada, Delaware, Massachusetts and New York, discussed how they could possibly join together to investigate and potentially file lawsuits against abusive mortgage lenders and servicers. Principals or representatives also attended from Hawaii, New Hampshire, Missouri, Mississippi, Maryland, Kentucky and Minnesota.



• "This past Tuesday, a group of like-minded Attorneys General met in D.C. to discuss ongoing and future investigations into the mortgage finance and foreclosure industries," said Delaware Deputy Attorney General Ian McConnel.



• "The talks weren't just about investigations," said a source with knowledge of the discussions. "They were also about the attorneys general offices feeling uninvolved in a process by which their federal colleagues have been negotiating on their behalf."

For more, see Attorneys General, Frustrated With National Foreclosure Settlement, Consider Alternate Course.

Process Server's Failure To Keep Adequate Records Sinks NY Foreclosure; May Open Floodgates In Effort To Vacate Judgments

In Nassau County, New York, Reuters reports:

• A process server working for a once-prolific foreclosure law firm in upstate New York broke the law by failing to keep any record of papers served in a 2008 foreclosure case, a Long Island judge has ruled, giving defense attorneys a new angle to explore in foreclosure cases as they seek to buy time for their financially beleaguered clients to modify or refinance their mortgages.



• Gary Cardi, a former police officer contracted by A&J Process Service -- which has offices on the same floor in the same building as the foreclosure firm Steven J. Baum PC -- admitted in Nassau County court last October that he didn't have any record of serving foreclosure papers on Soledad Murillo in 2008. In fact, he told state Supreme Court Justice F. Dana Winslow during an October hearing, he hasn't kept records of any of the "thousands" of cases he served over the last six years.



• An attorney for the Baum firm, Victor Spinelli, representing foreclosing bank U.S. Bank NA, told Winslow that he thought the failure to keep tabs on service wasn't a reason to overturn a foreclosure judgment against Murillo under New York law.



• But Winslow disagreed. Not only was Cardi required to keep some record of his attempts to serve Murillo, Winslow ruled, but his failure to do so violated New York General Business Law Article 8, which defines and outlines the duties for process servers -- including, Winslow said, the need to keep "legible" records of service.



• "The duty to keep comprehensive records may have been unnoticed, or underestimated, by litigants and the courts," Winslow wrote in a ruling dated Dec. 22. "Past practice, however, cannot be the motivating force for future conduct and determinations.



• "The need, particularly in this economic environment and under these telling circumstances, for valid and reliable proof of service, mandates the rejection of 'trust me,' and the adoption of 'show me,'" Winslow wrote.

***

• Traverse hearings -- which are held to determine whether parties were properly served -- are still a relative rarity in foreclosure cases, said Rebecca Grammatico, an attorney at the Empire Justice Center who works on foreclosure issues.



• But defense attorneys in foreclosure cases may find a useful new approach in the wake of Winslow's ruling, Grammatico said. "Time is frequently the thing you really need," she said. "This will, for many petitioners across the state, become the tool."



• It is possible that other defendants who were served by Cardi or another server who failed to keep records could use Winslow's ruling as a way to get judgments against them vacated, Grammatico added.

For the story, see NY judge: Sloppy service has legal consequences.

Bay State High Court Invites Supplemental Briefing In Pending Foreclosure Case That Looms As Possible Disaster For Massachusetts Land Titles

From The Boston Globe's Real Estate Now blog:

• Attorney Richard D. Vetstein reports on another court case about foreclosure paperwork problems.
  
  The Supreme Judicial Court has just issued an unusual order in the very important Eaton v. Federal National Mortgage Association case, indicating its deep concern over whether its ruling with have a disastrous impact on foreclosure titles and, if so, whether its ruling should be applied prospectively rather than retroactively.
  
  As outlined in my prior post on the case, the Court is considering the controversial question of whether a foreclosing lender must possess both the promissory note and the mortgage in order to foreclose. If the SJC rules against lenders, it could render the vast majority of securitized mortgage foreclosures defective, thereby creating mass chaos in the Massachusetts land recording and title community. If you thought U.S. Bank v. Ibanez was bad, Eaton v. FNMA could be Apocalypse Now.
  
  The court is requesting supplemental briefing on whether requiring a unity of the mortgage and the underlying promissory note, in order for there to be a valid foreclosure, would cloud any title that has a foreclosure in the chain of title, regardless of how long ago the foreclosure occurred, and if so, what legal or practical measures exist that might limit the consequences of such a requirement.
  
  The court is also concerned that if it were to hold that unity of the mortgage and note is required under existing law, whether the court’s holding should be applied prospectively only.

For more, see SJC concerned with toxic foreclosure fallout.

Go here for links to the briefs filed in this case.

Fla Appeals Court: 'Green Card-Lacking' Couple Entitled To Benefit Of State Homestead Exemption Against Forced Sale, Dodging $500K Claim Against Home

The Florida Bankruptcy Law Blog reports:

• A Florida appellate court has liberalized homestead exemptions for temporary U.S. residents. The court said that a foreign citizen’s eligibility for Florida homestead depends on his intent rather than the U.S. Immigration Service’s rules.



• A debtor’s eligibility for homestead is based on the all the facts relevant to his intent to reside permanently in his house even if the debtor has not yet received a “green card.”



• The court upheld the homestead exemption of a foreign debtor who resided in a Florida property since its purchase, had a visa giving him the right to reside in Florida, and was actively pursuing permanent resident status.(1)

Source: Court Liberalizes Homestead Exemption For Foreign Debtors Living In Florida Properties.

For the court ruling, see Grisolia v. Pfeffer, Case No. 3D11-198 (Fla. App. 3d DCA, November 23, 2011).

(1) It should be noted that a fact in this case that appears to have played a big part in tipping the scales in favor of the non-U.S. citizen, 'green card-lacking' homeowners (a wife & her now-deceased husband) was the fact that they had a U.S.-born son (making the child a U.S. citizen) who was the target of an attempted kidnapping in the family's native country, Venezuela.

The court made the following observations in connection with the foregoing:

• It is undisputed that the Decedent and the Widow were not in the United States as tourists. Instead, they were registered aliens legally allowed to reside in the United States under their temporary visa.
  
  Moreover, in the Son's case, he was an American citizen who was born in Miami, Florida and had resided in Florida since his family moved here in 2005.
  
  The Widow testified at the evidentiary hearing that her intent, along with that of the Decedent, was that the family reside permanently in the Property due to safety concerns stemming from the attempted kidnapping of the Son in Venezuela.
  
  The Widow further testified that she and the Decedent had applied for permanent residence in the United States prior to the Decedent's passing.[5] These specific circumstances are sufficient to demonstrate the Decedent's intent to have his family permanently reside in Florida.

***

• Under the specific facts of the this case, because the Decedent's American-born Son resided in the Property since its purchase, the Decedent and Widow had a visa which gave them the legal right to reside in Florida, and were actively pursuing permanent residence status prior to the Decedent's death, we find that the Decedent demonstrated the requisite intent to make the Property his family's permanent residence.
  
  Based upon the foregoing, we reverse the probate court's order denying the petition for declaration of homestead exemption.
  
  Reversed.

--------------------------------------

In this case, the court made clear the distinction between the homestead exemption granted to Florida homeowners under Article X, Section 4 of the state Constitution (which deals with the protection against forced sale of a Florida resident's homestead), and the real estate tax exemption (also referred to as a homestead exemption) allowed to Florida homeowners under Article VII, Section 6 of the state Constitution.

• Other cases cited by Appellees are inapposite as they involve Florida's homestead exemption from taxation that is now set forth in article VII, section 6 of the Florida Constitution ("Tax Exemption"), rather than the homestead exemption from forced sale found in article X, section 4.
  
  For example, in Juarrero v. McNayr, 157 So. 2d 79 (1963), the Florida Supreme Court held that a citizen and former resident of a foreign country, who is in the United States solely on the authority of a temporary visa, "has no assurance that he can continue to reside in good faith for any fixed period of time in this country . . . [and, therefore] does not have the legal ability to determine for himself his future status and does not have the ability legally to convert a temporary residence into a permanent home."[6] Id. at 81.
  
  Likewise, in DeQuervain v. Desguin, 927 So. 2d 232 (Fla. 2d DCA 2006), the court found that homeowners who held only temporary visas "could not form the requisite intent to become permanent residents for purposes of the [Tax Exemption]." Id. at 233.
  
  However, the Second District also clarified that "because the [Tax Exemption] provides relief from an ad valorem tax, we must construe the statute strictly against [the homeowners]." Id. (citing Capital City Country Club, Inc. v. Tucker, 613 So. 2d 448, 452 (1993)). The strict construction applicable to the Tax Exemption stands in contrast to the liberal construction of the homestead exemption from forced sale at issue here. See Taylor, 941 So. 2d at 562; Law, 738 So. 2d at 524.
  
  Similarly, at the evidentiary hearing the Appellees raised the fact that the Decedent had never claimed a Tax Exemption on the Property. They further argue on appeal that a person in the United States under a temporary visa cannot meet the requirement of permanent residence or home, and therefore, cannot claim the Tax Exemption. Fla. Admin Code R. 12D-7.007 (2002).
  
  We note that the portion of the Florida Administrative Code to which they cite applies to the Tax Exemption and not to the homestead exemption from forced sale at issue here. The probate court referenced in the order on appeal that "[i]n fact, the Decedent never claimed a [Tax Exemption] according to the Miami-Dade County Tax Rolls."
  
  As we have previously stated, "[f]ailure to claim the [Tax Exemption] is not evidence that property is not, in fact, homestead." Taylor, 941 So. 2d at 563 (citing Pierrepoint v. Humphreys, 413 So. 2d 140, 143 (Fla. 5th DCA 1982)).
  
  Clearly, "the homestead exemption from forced sale is different from the [Tax Exemption]." Taylor, 941 So. 2d at 563 (citing S. Walls, Inc. v. Stilwell Corp., 810 So. 2d 566, 569 (Fla. 5th DCA 2002))., 810 So. 2d 566, 569 (Fla. 5th DCA 2002)).

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Prevailing in this case was a big win for the family in that the stakes for them were pretty high. By being entitled to the homestead exemption against forced sale of their homestead as provided to Florida homeowners under the state's Constitution, a claim against the family home made by a creditor of the deceased husband's estate to the tune of $500,000 was successfully avoided.

AZ Appeals Court: Intent To Occupy Home As Residence Where Homeowner Never Actually Moves In Enough To Qualify For Protection Against Deficiency Jdgmt

The Arizona Republic reports:

• A would-be homeowner has the same right to walk away from a mortgage as someone who already is living in the house, the Arizona Court of Appeals has ruled.



• The judges acknowledged that laws which bar lenders from pursuing borrowers for the difference between what the property is worth and the amount owed is reserved under state law for owner-occupied premises. And in this case the borrowers never actually moved in.



• But Judge Patrick Irvine, writing for the unanimous court, said it is clear that Trevis and Lisa Mueller did intend to move in.



• It was only when construction problems developed, Irvine said, that the couple decided to walk away from the home and the mortgage. That , Irvine said, gives them the protections of the law.



• Court records show the Muellers purchased a vacant plot in 2005. The following year they borrowed $444,000 from M & I Marshall & Ilsley Bank to build a single-family home on the property for their own use. Several months later, the Muellers said the contractor was behind schedule and that much of the construction was defective.



• The Muellers notified the bank they would need advances on the loan disbursements to fix the defects. When the bank did not agree, the couple abandoned the property and defaulted on the mortgage. After foreclosing on the property, the bank sought to recover $68,197, the difference between the amount the couple still owed and the appraised value of the home before the foreclosure sale. When a trial judge threw out the bank's lawsuit, its lawyers appealed.



• Arizona law precludes lenders from going after a deficiency if the property is 2½ acres or less and is limited to and utilized for either one-family or single two-family dwelling. Based on that, the bank said the protection does not apply to the Muellers because a home was never built on the property and, therefore, it was never used as a single-family home.



• To back that argument, the bank's attorneys pointed to a 1991 state Supreme Court ruling which said the anti-deficiency protection does not apply to companies building homes. Irvine said that case is different because that borrower was a corporation that never intended to occupy the property.



• "The Muellers intended to live in the single-family home upon its completion," the judge said. "The primary purpose of Arizona's anti-deficiency statutes is to protect 'homeowners' from deficiency judgments -- not to afford protection to commercial homebuilders."



• To require actual occupancy to get the legal protections would create other problems, Irvine said. "An individual facing the possibility of foreclosure may camp out in the unfinished home, claiming to be 'utilizing' the dwelling," the judge wrote. "Additionally, a person who lives in a new home for a day would be entitled to the anti-deficiency protection, whereas someone who had not yet moved into a newly constructed home would not."

Source: Court: Statute also protects would-be owner (Appellate ruling says actual occupancy of home is not necessary).

For the court ruling, see M & I Bank v. Mueller, 1 CA-CV 10-0804 (Ariz. App. Div. 1, Dept. A, December 27, 2011).

NYS Insurance Regulator Probes Suspected Force-Placed Insurance Shenanigans By Major Bankster/Servicers

The New York Times reports:

• A New York State financial services agency is investigating several large banks to see whether they fraudulently steered homeowners into overpriced insurance policies. The investigation centers on so-called force-placed insurance that has become increasingly common since the downturn of the housing market began and homeowners had trouble keeping up with payments on their home insurance.



• JPMorgan Chase, Bank of America, Citigroup and Wells Fargo are among the major companies involved in the inquiry by the office of Benjamin M. Lawsky, the superintendent of New York State’s Department of Financial Services, according to a person briefed on the investigation who asked to remain unidentified because the matter was private.



• Mr. Lawsky’s office issued 31 subpoenas or other legal notices related to the case in early October, just as the state’s insurance and banking departments were merged under his new agency. His office has already turned up instances where mortgage servicing units at large banks steered distressed homeowners into insurance policies up to 10 times as costly as the homeowners’ original plans.

For more, see Big Banks Face Inquiry Over Home Insurance.

Chase Beginning Consumer Debt Collections Shutdown? Lawsuits Virtually Disappeared In Several Major Cities; Document Irregularities May Be Problem

American Banker reports:

• JPMorgan Chase & Co. has quietly ceased filing lawsuits to collect consumer debts around the nation, dismissing in-house attorneys and virtually shutting down a collections machine that as recently as nine months ago was racking up hundreds of millions of dollars in monthly judgments.



• A sampling of court records in the major cities in five states shows that Chase collection suits have virtually disappeared. In a sixth state, Illinois, contract attorneys continue to file small-dollar cases, though at a reduced rate.



• It is unclear whether Chase has stopped pursuing collection on many claims nationwide, or if intends to pursue the debts in some other fashion. The bank has not explained its apparent moratorium and declined comment.



• Chase's halt does, however, follow scattered defeats in state courts and a whistle-blower's allegation that it falsely overstated the balances of thousands of delinquent accounts it sold to a third party. Former Chase employees and debt collection experts insist that the bank would not have abruptly retreated from its collections efforts in the absence of trouble.



• In a sign that Chase acted with urgency, numerous regional collections teams were fired in mid-2011 at the order of the New York bank's headquarters, according to people familiar with the events.



• "Nobody told anybody anything. It was very traumatic," says a former Chase attorney who asked to remain anonymous because of a nondisclosure agreement. "I think there were investigations by the [Office of the Comptroller of the Currency] and other government entities. If we're not there, we can't be interviewed."

***

• Robo-signing, or the high-volume production of signed legal documents, has been a key element of the governmental and media foreclosure reviews. Chase's current pullback raises at least the possibility that at least some banks may have documentation problems in other business lines.

***

• Linda Almonte, a former team leader in Chase's San Antonio credit card services division, accused the bank of firing her for objecting to the sale of $200 million in legal judgments obtained by bank attorneys. Half the accounts lacked adequate documentation of judgment and one-sixth listed the wrong amounts owed, Almonte claimed in a suit filed in U.S. District Court for the Western District of Texas.



• In its response, Chase did not dispute inaccuracies in the debt balances and documentation. Instead, it said its sales agreement allowed for errors and thus was proper. "[T]he parties explicitly agreed that the judgments were purchased 'as is' and "with all faults," Chase's attorney wrote.



• Chase was unsuccessful in getting the case dismissed and settled it on undisclosed terms last April; it ceased filing new consumer debt lawsuits in many states the same month.

For more, see JPM Chase Quietly Halts Suits Over Consumer Debts.

Reuters On Foreclosure Fraud: The Watchdogs That Didn't Bark

Reuters reports:

• Four years after the banking system nearly collapsed from reckless mortgage lending, federal prosecutors have stayed on the sidelines, even as judges around the country are pointing fingers at possible wrongdoing.



• The federal government, as has been widely noted, has pressed few criminal cases against major lenders or senior executives for the events that led to the meltdown of 2007. Finding hard evidence has proved difficult, the Justice Department has said.



• The government also hasn't brought any prosecutions for dubious foreclosure practices deployed since 2007 by big banks and other mortgage-servicing companies.



• But this part of the financial system, a Reuters examination shows, is filled with potential leads.

For more, see Special Report: The watchdogs that didn't bark.

Nevada AG Begins To Pull Back Curtain & Prosecute Shenanigans At Foreclosure Document Processing Sweatshop

The New York Times reports:

• Last month, [Nevada Attorney General Catherine Cortez] Masto sued Lender Processing Services, the huge default and foreclosure processor that works behind the scenes for most large banks. With this case, she demonstrated how enlightening an in-depth study can be.



• The complaint, which came after a 14-month inquiry, contends that L.P.S. deceived consumers by committing widespread document execution fraud, misrepresenting its fees and making deceptive statements about its efforts to correct paperwork. Investigators interviewed former L.P.S. employees and customers and examined foreclosures the company had worked on.

***

• The details recounted in the Nevada lawsuit describe how that system hustled borrowers through the foreclosure process. A boiler-room operation comes to mind, or that great Lucille Ball skit in which she tries in vain to keep up with the assembly line at a chocolate factory.



• For example, a former L.P.S. employee who worked in “attorney management,” overseeing firms that performed legal work for foreclosures, told Nevada investigators that L.P.S. required him to resolve issues raised by the firms at a rate of 30 foreclosure files every hour. That’s two minutes apiece. The employee soon left L.P.S.



• Former workers at another division described their work as “surrogate signers.” They said their job was to forge signatures on documents. These people were hired through temporary agencies; one said she was paid $11 an hour and told that her job was “to sign somebody else’s signature on documents,” the lawsuit said. She told investigators that she signed roughly 2,000 documents a day for months.



• Another former worker said that when a banking executive came by for a tour, the signers were told “to lie” and tell the executive they were signing their own names, the lawsuit says.



• Notarization worked much the same way, the complaint said. One former worker said she realized that she might have notarized documents she had also signed as a surrogate. As a result, the lawsuit said, borrowers had to deal with documents containing “false assertions about which entity was authorized to foreclose, and false assertions about whether the consumer was delinquent on a loan payment.”

For the story, see From East and West, Foreclosure Horror Stories.

For the lawsuit, see State of Nevada v. Lender Processing Services, Inc., et al.