Indiana County Scores $1.5M In New Tax Revenue In Battle Against Fraudulent Homestead Exemption Claims

From a joint Lexis/Nexis and Tax Management Associates press release:

• LexisNexis® Risk Solutions and Tax Management Associates, Inc. (TMA) [] announced that Delaware County, Ind. has discovered almost $1,500,000 in new revenue by leveraging the companies' Homestead Exemption Fraud Detection program.



• The program -- the result of an alliance created by the companies -- combines LexisNexis analytics technology and public records databases with TMA's investigative capabilities to help counties detect Homestead Exemption fraud and discover new revenue.



• Under the program, LexisNexis identified 3.6 percent of the applications in Delaware County's Homestead Exemption program were potentially fraudulent by examining key indicators of fraud such as:
  
  1) Exemptions filed by owners for rental properties;
  2) Individuals with multiple exemptions for multiple properties within Indiana;
  3) Individuals with multiple exemptions for multiple properties across multiple states;
  4) Businesses receiving exemptions; and
  5) Family members receiving exemptions under deceased property owners' names.



• TMA further investigated the LexisNexis findings, verified the information and prioritized the accounts for collection by Delaware County.

For more, see LexisNexis and Tax Management Associates Identify Fraud and Discover Nearly $1,500,000 in New Revenue for Delaware County, Indiana (Alliance Leverages Data and Investigation Capabilities to Combat Homestead Exemption Fraud).

Florida Homestead Claims An Issue For Temporary Bay State Residents Registered To Vote In Massachusetts

In Essex, Massachusetts, the Gloucester Times reports:

• Town voting officials are once again examining Essex's voting rolls with evidence that at least four people who are registered to vote in Essex, including a town official, claim primary residence in Florida, according to public records.



• Steven and Margaret Hartley and Kristine and John True have filed for homestead exemptions on their Florida residences, which offer tax breaks as well as legal protections that can be applied only to a primary residence. Yet all four are registered to vote in Essex, records show.



• A homestead exemption in the state of Florida prevents a home from being seized as part of bankruptcy filing, and protects the owner from being forced out of his or her home to cover debts, including potential long-term, health care needs. It also comes with substantial tax benefits: it allows the taxpayer to deduct $50,000 from the assessed value of the home, lowering the tax bill.

***

• Both the Hartleys and the Trues are residents of Conomo Point, which is officially designated as summer housing only. Neither the Trues nor the Hartleys have another residence in Essex, and neither couple has permission to live on Conomo Point year-round.

For more, see Florida papers raise new red flags over Essex voting.

Meth Lab Explosion Leaves Home Uninhabitable; Premises Suspected To Be In Foreclosure Drags Down Quality Of Life For Surrounding Neighbors

In Lilburn, Georgia, WGCL-TV Channel 46 reports:

• Many residents in a Lilburn neighborhood are fed up with what's left of a home on Spring Mill Drive. One year ago, a meth lab explosion inside killed three children, and damaged the home beyond the point of being inhabitable. The people living there were either arrested or fled from authorities, and haven't been found.



• Initially shocked by the tragedy, neighbors have become weary of the house as it falls into disrepair, without an owner to take care of it. Several windows are boarded up, and signs of damage from the explosion are visible.



• "Can't really do anything to the house, and I don't know, maybe technically we're not even supposed to be in the yard," said nearby resident Donna Sowell. She said some of her neighbors have taken their own lawn mowers to occasionally trim the grass, and take care of fallen tree limbs. But the structure, itself, is out of their hands.



• Most people in the neighborhood now assume the property went into foreclosure after the explosion, and is owned by a bank.



• "It affects the quality of life for everyone on this street," said Sowell. "I'd hate to be trying to sell a house, and (the former meth lab house is) the first thing perspective buyers see coming into the neighborhood."

Source: One year after meth lab explosion, home lingers as eye sore.

NYCHA Set To 'Gently Boot' 1000s Of Public Housing Hogs As Some City Tenants Use Federally Subsidized Rental 'Safety Net' As Comfortable 'Hammock'

In New York City, the New York Post reports:

• About 55,000 city public- housing tenants are living in apartments far larger than they’re legally entitled to — and only a handful are cooperating with efforts to move them into smaller units, the head of the [New York City] Housing Authority ['NYCHA'] said [].



• “That’s a sizable number,” declared agency Chairman John Rhea at a hearing of the City Council’s Committee on Public Housing. “This is not a small issue.” He warned that tenant hoarding of huge apartments “fundamentally jeopardizes” the operation of the nation’s largest public-housing agency and its 178,882 apartments. The waiting list for city housing has 160,000 names.



• And that doesn’t include the thousands of Housing Authority families crowded into apartments too small for them because turnover is so low for the largest units, which can be up to six bedrooms.



• Councilwoman Rosie Mendez (D-Manhattan), the committee chair, said she knows of a family of three holding onto a six-bedroom apartment in her Lower East Side district. Mendez said the family was once filled with kids who have since moved out, leaving a mother and her two adult children. “They need to be moved to accommodate someone else who is in her situation [of years ago],” said Mendez.



• “The number we didn’t get [at the hearing] is how many people are in crowded or severely crowded apartments,” she added. “It really is a problem.”



• Officials said that more than 25,000 single tenants are occupying two-bedroom units, which require a minimum of three residents under federal guidelines. Complicating matters is the fact that seniors are living in 30,000 of the 55,000 underutilized units and are generally reluctant to leave.



• “This is leading to unbelievable anxiety,” Councilwoman Melissa Mark-Viverito (D-Manhattan) said. Rhea agreed, but said his agency has no option in the matter because it stands to lose federal funding if the rules continue to be violated.



• “Right-sizing apartments is a very delicate issue,” Rhea conceded. “Having said that, we have an obligation to act. The reality is we need compliance.” He said the problem was “not aggressively handled” in prior administrations.

***

• Comments posted by angry tenants on the Internet indicate the Housing Authority is in for some fights.



• “I’m all by myself in a two-bedroom app and I have lived here 26 years and I understand how people feel about families that needs apts but I’m not going to transfer from a community I’ve known my whole life . . . to move to bad neighborhood with a high crime rate and one day get shot,” a tenant identified as LinkCalderon wrote on the city-data.com forum site.



• On the other side, JayBrown80 recommended gripers pipe down because they’re all receiving government subsidies. “I totally support the safety net for those people who cannot help themselves,” he wrote. “But it’s a safety net, not a safety hammock where you get comfortable and stay there for the rest of your life.”

For the story, see Trough time booting public-housing hogs.

FTC Scores Preliminary Halt To Bill Collector Collecting 'Phony' Debts As Court Order Stops Outfit That Already Pocketed $5M+ From Alleged Victims

From the Federal Trade Commission:

• At the request of the Federal Trade Commission, a U.S. district court has halted an operation that the FTC alleges collected phantom payday loan “debts” that consumers did not owe. Consumers received millions of collection calls from India, and that since January 2010 the operation took in more than $5 million from victims, according to the FTC.



• In tough economic times, many consumers turn to high-interest, short-term payday loans between paychecks. The FTC alleges that information submitted by consumers who applied online for these loans found its way into the hands of the defendants.



• Often pretending to be law enforcement or other government authorities, the callers working with the defendants would falsely threaten to immediately arrest and jail consumers if they did not agree to make a payment on a delinquent payday loan, the FTC’s court papers stated.



• Claiming to be law enforcement, such as a local police department, the “Federal Department of Crime and Prevention,” or simply a “federal investigator,” the callers typically demanded more than $300, and sometimes as much as $2,000.



• At other times, the callers said they were filing a large lawsuit against the consumer because of the delinquent payday loan or would have the consumer fired from his or her job, according to the FTC.



• But the consumers did not owe money to defendants – either the payday loan debts did not exist or the defendants had no authority to collect them because they are owed to someone else, according to the FTC.



• The court order stops the illegal conduct and freezes the operation’s assets while the FTC moves forward with the case.

For the FTC press release, and links to related court documents, see Court Halts Alleged Fake Debt Collector Calls from India, Grants FTC Request to Stop Defendants Who Often Posed as Law Enforcement.

For more on bill collectors attempting to collect on fake debts, see FTC Consumer Alert: Who's Calling? That Debt Collector Could Be a Fake.

Bank Has 2nd Thoughts On Completing Foreclosure Action After Homeowner Vacates; Premises Becomes Uninhabitable, Taking Down Neighbors' Quality Of Life

In Cleveland, Ohio, NewsChannel 5 reports:

• For one woman, moving into a southeast Cleveland neighborhood in the 1980s was a dream come true. But years later, the dream spiraled into sleepless nights. "Despair. Frustration. Why did this have to happen?" Jennifer Simmons said.



• Renting somewhere else now, Simmons cries over the home that slipped away. Foreclosure knocked on her door after she had taken loans against the house and fell behind in payments. "They served me papers at work, at my job, at home, in the mail. Everywhere," Simmons said.



• Simmons moved out, and vandals hit the house within days. They turned it into a nightly stop, stripping away everything that was not nailed and some things that were, even the furnace. "People took the water meter out of the house and it caused the house to flood for three weeks straight," Simmons said.



• Two years later, the bank called and said it was dropping foreclosure proceedings. But by then, the house was uninhabitable.



• “And the bank came back and said, 'Hey Jennifer, you can have your home back,’" said Jim Szakacs, director of the Nehemiah Mission, a church group helping people and properties. At no charge, the mission cleaned away debris and propped up the house to keep it from caving in.



• "This used to be a kitchen. I'm looking around at the kitchen and utility room. I used to cook holiday meals in here," Simmons said. Simmons loves the house, even now. It was home . County ownership records still carry her name. "I can't look at pictures of Christmases past and holidays… The last holiday before I moved out and I cry. I can't look at the pictures anymore," Simmons said.



• So now an abandoned house becomes a falling domino, taking with it lives of others. "What happens to the neighbor next door, to his property values because of this house?" Szakacs said.



• Ask neighbor Rick Johnson, who has seen enough to know he has seen too much. "You go around any corner, there's at least seven empty houses on the street. Everybody used to own these houses around here. It wasn't like rental, stuff like that. They owned these houses now. Neighborhood tore. It's tore up bad," Johnson said.



• It’s the story of a house which is a ghost of what it was, and of a woman who had sweet dreams before foreclosure. Problems of the abandoned house now ripple down the street, affecting the lives of those around it.

For more, see Cleveland woman gets her foreclosed home back after it's destroyed by vandals.

Fort Worth DA: Adverse Possession Vacant Home Hijackings "A Goofy Scam To Excuse Criminal Behavior" After Grand Jury Indicts 8; One Faces Life In Jail

In Fort Worth, Texas, the Star Telegram reports:

• Eight people have been indicted by a Tarrant County grand jury for illegally taking possession of other people's vacant or abandoned homes, the Tarrant County District Attorney has announced.



• "A burglary by any other name is still a burglary,'' District Attorney Joe Shannon said in a written statement. "Any invasion of a person's home is a serious matter."



• The eight so-called squatters filed affidavits with the county to try to claim the properties. A state law allows persons to claim abandoned properties as long as they pay property taxes, provide maintenance for the homes and meet other requirements. After a while, if no owner contests the claim, the squatter may get to keep the property.



• But Shannon chalked such actions up to "a goofy scam to excuse criminal behavior." In early November, he instructed the county clerk's office, which is responsible for accepting the affidavits, to deny them because he said they were fraudulent. He said such behaviors "will be dealt with by this office, our courts and juries."



• One of the squatters - Anthony L. Brown, 62 -- is facing up to life in prison because of his prior criminal history. He and seven others are also facing one count of burglary of a habitation and one count of theft ranging from $100,000 to $200,000. The bulk of the indictments carry a penalty of up to 20 years to life in prison.



• Among the indicted are Jasmine Williams, 22, and David Cooper, 25, who are accused of illegally taking possession of a $400,000 Arlington home. Others include relatives Andrew James LaTour II, 31, and Alicia Renee LaTour II, 30; and Sandra Selena LaTour, 51, Selena Kareen Brown, 29 and Andre Brown, 30.



• A ninth squatter, Billie V. Henderson, 64, has been charged with criminal mischief for changing the locks on a Grapevine house in an effort to try and take possessions. His case was not presented to the grand jury because it is a misdemeanor charge.



• Homes the squatters claimed were in Mansfield, Arlington and Grapevine. Shannon and other officials at the district attorney's office are also making presentations to various neighborhood associations to educate the public about the abuses, a spokeswoman said []. No further information was provided regarding the indictments because the cases are pending.

Source: Tarrant grand jury indicts eight squatters.

Small Dog Takes $20K 'Bite' Out Of HOA In DOJ Suit Alleging Association Refused To OK Support Animal To Help Disabled Combat Vet Cope With Depression

From the U.S. Department Of Justice ('DOJ'):

• The Justice Department [] announced a $20,000 consent decree that resolves a lawsuit alleging that a Park City, Utah, condominium association and its management company violated the Fair Housing Act by refusing to grant a resident’s request for a reasonable accommodation.



• The lawsuit, filed on Nov. 21, 2011, in U.S. District Court for the District of Utah, alleges that the Fox Point at Redstone Association, Property Management Systems and on-site property manager Derek Peterson refused to grant a reasonable accommodation so that Thomas Burton, a disabled combat veteran of the first Gulf War, could keep a small dog in the condominium he rented to help him cope with the effects of depression and anxiety disorder.



• The lawsuit further alleges that the defendants refused to waive their pet fees and insurance requirements and issued multiple fines that eventually led to the non-renewal of Burton’s lease.



• Under the consent decree, which was entered by the U.S. District Court in Utah, the defendants will pay $20,000 in monetary relief to Burton.

For the Justice Department press release, see Justice Department Settles Disability Discrimination Case Involving Disabled Veteran in Utah.

For the lawsuit setting forth the allegations, see United States v. Fox Point at Redstone Ass'n, Inc, et al. (go here for the $20K consent decree).

Participants Sentenced For Roles In Reverse Mortgage Scam Conspiracy That Targeted Elderly Victims

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

• A group of mortgage fraud conspirators have been sentenced to prison [...] in federal district court on multiple charges relating to a “reverse mortgage” scheme targeting the elderly.



• KELSEY TORREY HULL, 39, of Lithonia, Georgia; JONATHAN ALFRED KIMPSON, 28, of Lithonia, Georgia; JAMES MICHAEL GREEN, 44, of Lilburn, Georgia; HERBERT BUSH, 31, of Atlanta, Georgia; WILBUR “SONNY” LETAK, 44, of Atlanta, Georgia; KEVIN CLAUDE BARNETT, 28, of Atlanta, Georgia; were all sentenced for their roles in the scheme.(1)



• United States Attorney Sally Quillian Yates said, “HUD’s Home Equity Conversion Program was designed to enable seniors to buy a home or to stay in a home at a time in their lives when it may be very difficult for them to obtain a conventional loan. These defendants took money out of the hands of the elderly and then put them in houses worth only a fraction of the amounts represented. This case represents yet another variation of mortgage fraud we are combatting through investigation and prosecution.

For the U.S. Attorney press release, see Fraudsters Sentenced To Prison For "Reverse Mortgage" Scheme.

(1) The sentencing fallout follows:

• HULL was sentenced to 151 months in prison to be followed by 6 months of home confinement and 5 years of supervised release,
• KIMPSON was sentenced to 102 months in prison to be followed by 6 months of home confinement and 5 years of supervised release,
• GREEN was sentenced to 37 months in prison to be followed by 6 months of home confinement and 5 years of supervised release,
• BUSH was sentenced to 37 months in prison to be followed by 6 months of home confinement and 5 years of supervised release,
• LETAK was sentenced to 30 months in prison to be followed by 6 months of home confinement and 5 years of supervised release,
• BARNETT was sentenced to five years of probation.

The defendants pleaded guilty to the charges in separate hearings between June 2010 and August 2011. Another co-defendant in the case, GIA JOY GLASSE-HARRIS, 28, of Atlanta, Georgia, was sentenced on November 3, 2011 to 2 years, 7 months in prison and 6 months of home confinement to be followed by 3 years of supervised release, and was ordered to pay $174,000 in restitution.

Now-Jailed Attorney Loses Law License For Pocketing $1.1M+ In Loan Proceeds From Client Home Refinance Transactions Meant For Existing Lien Payoffs

Cincinnati.com reports:

• The Kentucky Supreme Court permanently disbarred a local lawyer Thursday for keeping more than $1.1 million that should have gone to pay off closings on homes. Donald Lynn Richardson, 55, of Crescent Springs is currently at the federal prison in Ashland after previously being convicted of one count of bank fraud in federal court in Cincinnati. He is scheduled to be released in August.



• Richardson’s trouble started in May 2010 when he and his Commitment Title Agency was used by Fifth Third Bank to refinance home mortgages. In one week, Richardson didn’t turn over $1,124,034.63 from five mortgages refinanced by the bank.



• The Cincinnati-based bank found out about the incidents when customers called to complain about their old mortgages not being paid and receiving foreclosure threats. Because the bank didn’t want those refinanced homes to go into foreclosure, it forked over an additional $1.1 million to pay off the old mortgages.



• Richardson and his title company “pose a significant risk of liquidating their assets and property and fleeing,” according to court records. Bank attorneys said in court that they suspected there were other similar transactions involving Richardson in which money went missing.



• To complete home refinancings, the bank placed in escrow the money to pay off the old mortgages. Richardson and his title company didn’t forward that money to pay off the mortgages but kept it, spending it on the “purchase of real and personal property, to pay personal debts and to otherwise convert the funds to their own use,” according to court records. Four of the refinanced homes involved are in Ohio – all north of Columbus – and one is in Indiana.

Source: Attorney disbarred after keeping $1.1 million.

Feds Score 2nd Guilty Plea In Memphis-Area Foreclosure Sale Surplus-Snatching Ripoff

In Memphis, Tennessee, The Commercial Appeal reports:

• A restaurant employee accused of conspiring to steal more than $1 million in surplus tax funds from Chancery Court pleaded guilty Friday in federal court. Correy Isom, 36, pleaded guilty as charged to three felony counts involving conspiracy, theft and money laundering in a hearing before U.S. Dist. Court Judge Jon McCalla. Isom, who was represented by attorney Coleman Garrett, will be sentenced later.



• Last month former Chancery Court bookkeeper Brandon Gunn, 47, who also pleaded guilty, was sentenced to four years in federal prison and was ordered to make restitution of more than $1 million in tax foreclosure funds he embezzled from the office between 2008 and 2011.



• Gunn was involved in an office function in which delinquent property taxes are paid by selling a homeowner's property, with the remainder or surplus to be placed in an escrow account the homeowner can claim.



• The embezzlement scheme came to light when one homeowner seeking to claim a surplus discovered that it had been paid to a company set up by Gunn. Gunn admitted to writing 38 checks, ranging in amounts from $5,761 to $72,241, and sending them to his company or to other entities linked to him between May 2008 and March 2011.



• Like Gunn, Isom likely will be ordered to make payments toward restitution. In response to the systematic theft, the county is implementing new financial software and other office accounting measures.

Source: Second man pleads guilty in Memphis Chancery Court theft case.

Ex-Real Estate Agent Hit With $180K Bail After Being Pinched On Burglary, Grand Theft, Perjury Charges In Alleged Vacant Home-Snatching Racket

In Martinez, California, KGO-TV Channel 7 reports:

• A Martinez man has been arrested and charged for allegedly renting out foreclosed, empty homes throughout Contra Costa County to renters through the website Craigslist, according to the district attorney. Alfonso Salazar, 62, was arrested and charged with multiple counts of burglary, grand theft and perjury in connection with a fraudulent rental scheme involving at least four foreclosed or unoccupied homes in Walnut Creek, Hercules, Antioch, and Brentwood since last October, said Deputy District Attorney Ken McCormick.



• The prosecutor said that Salazar's scheme likely touched some 20 households, and that authorities expect to find more victims as the investigation unfolds. "It's possible that there are more homes out there - and it's possible that the banks don't know about it," he said.



• While investigators have found evidence that Salazar rented out empty homes since October, McCormick said he could have been defrauding renters for much longer. "Individuals like (Salazar) are just taking advantage of this economic downturn," he said. "The people who pay this rent are ultimately going to be evicted."



• Salazar, a longtime Contra Costa County resident and former licensed real estate agent, sought out homes that were unoccupied or in foreclosure, the prosecutor said. Scattered throughout Contra Costa County, the empty homes were valued between $215,000 and $742,000, according to the district attorney's office.



• Salazar would post a note on a home claiming the property was now owned by National Alliance of Homeowners for Justice, a Southern California-based company that employed him, McCormick said. If no one came forward to object, the former real estate agent would change the property's locks and use Craigslist to target unsuspecting renters.



• Drawing on his realty expertise, Salazar drew up sophisticated lease documents that gave renters no reason to doubt his credibility, McCormick said. "He know how to talk the talk and walk the walk, because he's been a real estate agent," the prosecutor said. Victims of the scheme thought little of handing over first and last month's rent and a security deposit, he said.

***

• Salazar is set to appear in court in Pittsburg on March 8 to enter a plea and remains in county jail on $180,000 bail. Anyone who believes they may have been victimized by Salazar is urged to contact Senior Inspector Darryl Holcombe at (925) 957-8762.

For the story, Man arrested for renting foreclosed homes on Craigslist.

Pair Cop Guilty Pleas For Hijacking Possession Of Vacant Homes In Foreclosure, Then Pocketing Cash By Renting Them Out To Unwitting Renters

In Barstow, California, the Desert Dispatch reports:

• A Barstow woman is set to be sentenced in April after she pleaded guilty to renting out several houses going through foreclosure in 2010. Evelyn Thompson, 51, pleaded guilty to two counts of forgery and a trespassing charge [] in Barstow Superior Court. The other defendant in the case, Edward Tofoya, 54, pleaded guilty to unauthorized entry of property the same day.



• Thompson was arrested in March 2010 after police learned she was renting five Barstow homes in 2010. Tenants of the homes told police Thompson would pose as the property manager and offer the homes for rent with no credit check under the alias Deborah Anderson. Tofoya was Thompson’s handyman, who police said they found changing locks on one of the homes. At the time Thompson worked at Exit Strategy Realty in Barstow, but was fired after her boss learned of her actions.



• Thompson was convicted for renting four homes illegally, charging between $500 and $1,300 rent, said Deputy District Attorney Joel Buckingham. Most of the tenants had only recently moved in, he said. There were other homes she was trying to rent but was found out before any leases were signed.



• Thompson is scheduled to be sentenced April 9, where she should receive 180 days in prison per her plea deal, Buckingham said. She could have faced a maximum of three years, eight months for her charges. Thompson will also be responsible for paying restitution to the tenants, the amount of which is still being determined, Buckingham said.



• Tofoya received no jail time due to credit for time served. He owes about $200 in fees to the court.

Source: Two convicted in housing scam (Woman rented out homes going through foreclosure).

Squatter Faces Criminal Mischief Charge After Snatching Possession Of Temporarily Unoccupied Home While Owner Away On Business Trip

In Grapevine, Texas, the Star Telegram reports:

• A 64-year-old man has been arrested in the first criminal case involving a squatter in Northeast Tarrant County. Billie V. Henderson has been formally charged with criminal mischief for trying to take possession of a home [...] in Grapevine, according to the Tarrant County district attorney's office.



• "He went over there and had a locksmith come out and meet him there and change the locks," Grapevine police Sgt. Robert Eberling said. A neighbor who knew the homeowner alerted the police after Henderson had the locks changed, Eberling said. The owner was on a business trip, police said.



• Henderson could not be reached for comment Wednesday. He was convicted of larceny after an arrest in August 1970, public records show. He has lived in several cities in the last five years, including Irving, Waxahachie, Fort Worth and Haltom City, records show.



• The supposed squatter told Grapevine police that he had identified the home by surfing the Tarrant Appraisal District's website, police said. "In his mind, he determined that if they are owned by a financial institution, they are under foreclosure, which this house was not," Eberling said.



• Henderson apparently did the same thing to a home in Coppell, and Grapevine police are working closely with Coppell authorities on the case, Eberling said. An investigation is pending, he said.



• Since November, District Attorney Joe Shannon has formally charged eight people with felony burglary in connection with what he has called fraudulent affidavits filed with the Tarrant County clerk's office by squatters.



• The affidavits of adverse possession stated that the individuals had claimed abandoned property. If an owner doesn't contest the claim for a period of years and the squatter provides upkeep and pays taxes, the squatter may eventually gain legal title.



• Henderson did not file a fraudulent affidavit, Eberling said. Police thought the criminal mischief charge was more appropriate in the case, he said. "His MO was just to look at the [appraisal district's] website and find homes," Eberling said.

Source: Grapevine accuses 64-year-old squatter of criminal mischief.

Federal Judge: Mtg. Assignments Must Be Recorded Upon Each Transfer; MERS F'closure Losses Continue In Oregon; Issue Begs State High Court Ruling

In Portland, Oregon, The Oregonian reports:

• A federal judge has yet again issued a ruling that effectively questions the validity of scores of foreclosures in Oregon, a crisis the Legislature could resolve in the mortgage industry's favor this week if bank lobbyists and House Republican leaders have their way.



• In an opinion issued Wednesday, U.S. District Court Judge Michael Simon rejected a magistrate judge's finding and rulings by two of his colleagues that big banks could avoid recording notices in local land records each time a loan is sold to other lenders or investors.



• Simon sided with two other federal judges in Oregon in ruling that lenders have violated state recording law. They've done this, they say, by logging sales within its nationwide Mortgage Electronic Registration Systems Inc. and declaring MERS a “beneficiary” of the loan.

***

• Simon ruled that under state law, lenders must file a notice in county records each time they sell or transfer a note, or a promise from a borrower to pay. MERS, he ruled, can file those notices on the lenders' behalf, if a lender has authorized it to do so. MERS cannot, however, simply log those notices within its own database without also recording it publicly, he found. In millions of loans nationwide, it has.



• In acting as he did, Simon overruled lower Magistrate Janice Stewart's previous findings and recommendations in the case. His ruling also conflicts with opinions in other cases issued by his equals in Oregon -- Judge Michael Mosman and Judge Marco A. Hernandez.



• But it aligns with rulings in other cases by Judge Owen Panner and U.S. Bankruptcy Judge Frank Alley. Panner's ruling, which also came last year as lawmakers debated the MERS issue, is on appeal to the U.S. Ninth District Court of Appeals.

***

• The differences of opinion in these courts underscore how crucial an Oregon Supreme Court ruling will be, unless the legislature changes state law entirely this week.(1) A ruling by the state's highest court is still likely months away.

***

• Simon said Oregon courts “reaching back more than a century” have found that the note and its security instrument may not be passed on to separate parties. In these cases, the security instrument is the trust deed.



• Simon wrote that Bank of America and MERS wanted him to interpret Oregon law in a way that makes Oregon deed of trust law “virtually meaningless.” If he did, lenders could designate anyone to act in their interests, “no matter how remote, disinterested or obscure,” he wrote. “The Oregon Supreme Court would be unlikely to endorse such a broad interpretation.” Such an interpretation, he said, could open borrowers to unauthorized foreclosure and wrongful sale of their property.

***

• Kelly Harpster, a Lake Oswego attorney who represents homeowners, called Simon's ruling "the most thorough and thoughtful analysis of the MERS issue that has yet been published ... However, the opinion is not binding on any judge in state or federal court. They are free to adopt Judge Simon's reasoning or reject it."



• If the stalemate in Salem holds, Oregon's High Court will have to resolve this disagreement. In the meantime, foreclosures in the state will likely take longer, slowing any recovery in the housing market.

For more, see Federal court ruling against MERS foreclosure in Oregon comes (again) as Republican lawmakers try to validate it.

For the ruling, see James v. Recontrust Company, Case 3:11-cv-00324-ST (D. Ore. February 29, 2012).

(1) Even if the state law is changed, an Orgeon Supreme Court ruling is still crucial in order to straighten out the mess already created by MERS for those foreclosures that have taken place prior to the effective date of any possible change in the law that might be passed by the state Republican lawmakers (and their filthy henchman-lobbyists).

U.S. Appeals Court Boots Nevada AG Foreclosure Suit Back To State Court; Rejects BofA's Attempt To Shop For Friendlier Federal Forum

Reuters reports:

• A federal appeals court on Friday granted Nevada's request to send its lawsuit alleging mortgage modification and foreclosure abuses against Bank of America Corp back to Nevada state court. The 9th U.S. Circuit Court of Appeals reversed a decision by a lower court, which had concluded that the lawsuit belonged in federal court.(1)



• Nevada's complaint, filed in Clark County, Nevada, in January 2011, alleges that Bank of America misled consumers about the terms of its home mortgage modification and foreclosure processes. Nevada also accused the bank of violating terms of a consent judgment it and several of its subsidiaries had entered into with the state in February 2009. After Bank of America removed the lawsuit to federal court, Nevada's request to send it back to state court was denied.



• Chief Judge Robert Clive Jones of the District of Nevada ruled that the lawsuit belonged in his court because the lawsuit was a class action, which gives federal courts jurisdiction. But the three-judge panel for appeals court disagreed, finding that a case filed by a state's attorney general did not qualify as a class action. It also ruled that Nevada had an interest in keeping the lawsuit in its own state.



• "Nevada's strong sovereign interest in enforcing its state laws -- and its state-law-created Consent Judgment -- in the courts of its own state weighs in favor of remand to state," the panel wrote. Bank of America did not immediately respond to a request for comment.(2)

Source: Court sides with Nevada in BoA foreclosure case (9th Circuit sends case back to Nevada state court; Lawsuit alleges mortgage abuses against Bank of America).

For the court ruling, see State of Nevada v. Bank of America Corp., No. 12-15005 (March 2. 2012) (for publication).

For an earlier post, see Desperate BofA Resorting To Forum Shopping In Search Of Better Outcome From Federal Court In Response To Nevada AG's Recent Misconduct Allegations?

(1) A September, 2011 article in the Reno Gazette-Journal (article no longer available on their website, but a copy can be found here) on this story contained the following excerpt on Bank of America's blatant attempt to forum-shop this case into federal court so the case can be heard by 'friendlier judicial ears'):

• But with Bank of America successfully kicking up the original case to federal court earlier this year -- and potentially skipping the state courts -- Nevada's amended complaint against the bank faces a more uncertain outcome, if past federal judgments are any indication.



• "This is such a big deal because 99-plus percent of these cases in federal court are disposed of without evidence ... and in summary fashion," said Geoffrey Giles, a Reno lawyer. "Banks are actually winning these cases hands down and they will do anything to get their case removed to federal court because they know they can get a better deal. It's the most rank example of forum shopping."



• Forum shopping is the practice of trying to get a case heard in a court that is more likely to render a favorable verdict. The case's removal from state court to the U.S. Ninth Circuit was opposed by Nevada Attorney General Catherine Cortez Masto. Bank of America violated state law -- not federal law -- so the case should be decided by Nevada courts, Masto said.

***

• At the heart of Giles' appeal and Masto's argument to have the Bank of America case remanded is a long-standing debate on whether federal courts should be allowed to remove cases directly related to state law from state courts. The debate is at the center of an ongoing case, "Chapman vs, Deutsche Bank," which is being heard at the Nevada Supreme Court.



• The case could potentially put the brakes on state court cases being snatched by federal courts, with the exception of class-action lawsuits. "The issue is, should federal judges be making rulings on Nevada state law?" Giles said. "You basically have federal courts telling Nevada how its foreclosure statutes work and that's wrong. That should be up to the Nevada Supreme Court, but federal courts have consistently refused to buy those arguments."

(2) An ABA Journal article (see Judge Says Firm Must Explain ‘Fraudulent’ Removals or Pony Up $25K) offers this observation on the legal maneuver used by BofA to find a friendlier forum to defend against a lawsuit, one commonly used in civil cases by big-time corporate defendants and their white-shoe law firms in lawsuits brought by (possibly under-financed) individuals and other plaintiffs on behalf of individuals, of moving a case from a state to a federal court:

• [I]t is widely believed that plaintiffs, particularly individuals rather than corporations, fare better in state courts where they have greater likelihood of getting to a jury and often benefit from more favorable interpretations of law. Defendants in turn tend to prefer the federal courts. Thus removals can become a cat-and-mouse game in which a plaintiff names a party having nothing to do with the matter as one of the defendants to prevent the other side from removing the matter to federal court. That court can find fraudulent joinder and keep the case or remand it.

• But studies have shown a greater increase in recent years of defendants removing cases to federal court, only for them to be dispatched back to state court for erroneous removal. One researcher, a third-year student at New York University School of Law, found that most often in such situations, the plaintiffs are individuals. And the rate of their cases being remanded back to state court is higher, too, wrote Christopher Terranova in last summer’s edition of the Willamette Law Review (PDF).

• He adds that “the delays and costs of that extra procedural step to federal court are more costly and burdensome for most individual plaintiffs than they are for bigger defendants with more assets."

For the above-referenced Willamette Law Review article, see Erroneous Removal As A Tool For Silent Tort Reform: An Empirical Analysis Of Fee Awards And Fraudulent Joinder (article also available at http://ssrn.com/abstract=1073402).

For an example of one Federal judge excoriating a lawyer and law firm for, according to the judge, their history of fraudulent removal requests of cases from state court to Federal court, see Hollier v. Willstaff Worldwide, Case 6:08-cv-01382-TLM-CMH (W.D. La. 2009):

• Sadly, the Court is not surprised by G.W. Premier’s counsels’ tactics in this proceeding as Ungarino & Eckert, L.L.C.’s reputation proceeds it. This case is but one in a long line of fraudulent and improper removals that Ungarino & Eckert, and more specifically Matthew Ungarino, have filed in this and other districts. [...] [For more, see Hollier v. Willstaff Worldwide (pp. 4-9).]

Foreclosure Rescue Operator Gets 33 Months For Peddling Predatory Sale Leaseback Deals That Stripped Home Equity From Financially Strapped Homeowners

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

• A Scotch Plains, N.J., man was sentenced [] to 33 months in prison for his role in a mortgage fraud scheme he organized through Elite Financial Solutions, a purported home foreclosure rescue company he owned and operated, U.S. Attorney Paul J. Fishman announced. Stephen French, 53, previously pleaded guilty [...] to one count of wire fraud conspiracy, admitting he caused more than $1 million in losses through the scheme.

***

• According to documents filed in this and related cases and statements made in court:
  
  Beginning in February 2005, French devised a scheme to use Elite to fraudulently induce financial institutions to provide mortgage loans to unqualified borrowers, enabling French and his co-conspirators to earn consulting fees from the sales of properties financed by the loans.
  
  Michael Martino, 47, of Bloomfield, N.J., who as an employee of Elite was responsible for recruiting straw buyers for properties in foreclosure, was sentenced on March 15, 2011, [...] to a year and a day in prison. Martino previously pleaded guilty to one count of wire fraud conspiracy [...].
  
  French, Martino, and others at Elite targeted New Jersey homeowners who could not make mortgage payments and were facing foreclosure. They would promise the homeowners that Elite would help them keep their homes and repair their damaged credit.
  
  The homeowners would be instructed to permit title to their homes to be put in the names of straw buyers for one or two years. French promised to improve their credit ratings during that time, help them obtain more favorable mortgages, and ultimately return title to their homes.
  
  French, Martino, and others at Elite told the homeowners that equity withdrawn from their homes would be kept in escrow and used to pay the mortgages and expenses and to repair their credit. Instead, Elite took a “consulting fee” of $25,000 per property, and the remaining equity was deposited into bank accounts French controlled.
  
  French, Martino, and others at Elite paid the straw buyers $10,000 for use of their names and credit histories in the transactions, and submitted fraudulent loan applications to mortgage lenders in the straw buyers’ names in order to ensure the loans would be approved. In addition to the prison term, Judge [William J.] Martini sentenced French to five years of supervised release and ordered to pay restitution of $1,957,525.

For the U.S. Attorney press release, see Former owner and operator of phony mortgage rescue company sentenced to prison for role in fraud scheme.

(1) For more on this type of foreclosure rescue ripoff, see:

• Criminal Prosecutions Of Sale Leaseback Peddlers In Equity Stripping Foreclosure Rescue Deals;
• Dreams Foreclosed: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (June 2005).

Feds Squeeze Guilty Plea From Another Scammer Peddling Bogus Equity Stripping Sale Leaseback Deals To High Equity, No-Cash Homeowners In Foreclosure

From the Office of the U.S. Attorney (Norfolk, Virginia):

• Ray D. Gata, 56, of Chesapeake, Va., pleaded guilty [] in Norfolk federal court to conspiracy to commit wire fraud in connection with a fraudulent foreclosure rescue scheme.

***

• According to court documents, from November 2006 until February 2011, Gata and a conspirator engaged in a foreclosure rescue scheme that defrauded homeowners and mortgage lenders.



• The conspirator promised homeowners that he could save them from foreclosure by arranging a sale of their homes to Gata and other straw borrowers. To further entice the homeowners, the conspirator promised that they could remain in their homes after the sale, pay rent, and he would resell the homes back to them once they were more financially secure.



• The conspirator and Gata profited from this scheme by taking all of the proceeds from the home sales. To complete the scheme, the conspirator and Gata executed false closing documents that showed the proceeds of the sale going back to the homeowners when, in fact, the proceeds were going to Gata, the conspirator, and the other straw borrowers.



• The homeowners received nothing from the sale of their homes while the conspirator, Gata and others received in excess of $170,000. In almost every case, the conspirator required the homeowners to pay more in rent to cover a larger mortgage, and ultimately evicted these homeowners from their homes.

For the U.S. Attorney press release, see Chesapeake Man Pleads Guilty to Mortgage Fraud Scheme.

(1) For more on this type of foreclosure rescue ripoff, see:

• Criminal Prosecutions Of Sale Leaseback Peddlers In Equity Stripping Foreclosure Rescue Deals;
• Dreams Foreclosed: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (June 2005).

Mortgage Broker Gets One Year For Role In DC-Area Sale Leaseback Equity Stripping Foreclosure Rescue Scam

From the Office of the U.S. Attorney (District of Columbia):

• Rasheeda M. Canty, a former mortgage broker, has been sentenced to a one-year prison term for her role in an extensive mortgage fraud scheme involving properties in the District of Columbia and Maryland, [...].

***

• The judge also ordered her to pay $339,643 in restitution. Canty also must forfeit $342,572, which represents the amounts of commissions she received from lenders on the fraudulent transactions. As part of her plea agreement, Canty agreed that the scheme led to losses of at least $1 million.



• According to the Statement of Offense filed by the government, to which Canty agreed, Canty was a mortgage broker with an office in Lanham, Maryland. As part of her job duties, Canty completed and filed, often by mail or interstate wire transactions, loan applications to financial institutions on behalf of individuals involved in real estate transactions.



• Over a two-year period starting in about April of 2005, Canty and others conspired to defraud financial institutions whose deposits were insured by the FDIC for the purpose of influencing the financial institutions to approve mortgage loans. She and others perpetrated this scheme by identifying distressed homeowners whose properties in Washington, D.C., and Maryland were facing imminent foreclosure and offering to purchase their properties.



• The conspirators told some of the homeowners that they could repurchase their properties within one year. Canty prepared fraudulent letters to have derogatory information deleted from the sellers’ credit reports so that their credit scores would be increased, thus allowing the sellers to qualify for the re-purchase of their properties.



• The conspirators then sought unsophisticated individuals, with good credit scores or credit scores that could be fraudulently raised, to act as “straw purchasers,” also known as “credit partners,” for these transactions, often in exchange for a $5,000 to $10,000 fee to the straw purchaser for the use of his or her personal information to purchase the respective property.



• The straw purchasers understood that one of the conspirators would make the monthly mortgage payments, and the straw purchaser would not be otherwise financially responsible for the property or required to live there. On some occasions, the conspirators used the identification of innocent, unknowing victims to make these purchases.

For the U.S. Attorney press release, see Maryland Woman Sentenced to One Year in Prison For Her Role in Extensive Mortgage Fraud Scheme (Defendant Submitted Fraudulent Information to Obtain Loans).

(1) For more on this type of foreclosure rescue ripoff, see:

• Criminal Prosecutions Of Sale Leaseback Peddlers In Equity Stripping Foreclosure Rescue Deals;
• Dreams Foreclosed: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (June 2005).

Miniature Horse Ranch Operators Who Sold, Then Leased Back Property To Dodge F'closure Now Face Eviction; New Owner Says He Needs To Unload Premises

In Penngrove, Caliifornia, The Press Democrat reports:

• The owners of the Penngrove miniature horse ranch called Lovepatch Farms face a daunting deadline — come up with $500,000 or vacate the 2 1/4-acre property.



• The Mill Valley family that only two years ago helped Lee Romero and Cory Vandergeld avoid foreclosure by purchasing the ranch and leasing it back to them must now sell the property for business reasons.



• After 30 years of living on the Palm Avenue ranch, moving all their belongings, 41 horses, numerous indoor and outdoor stalls, paddocks and fencing seems inconceivable to the aging couple.

***

• [A]fter refinancing their property three times Romero and Vandergeld, like so many others, found themselves under water and unable to pay their bills.

***

• Ray Kaliski, a member of the Mill Valley family that bought the property in 2009 so that the ranch could survive, said his family paid $412,000 in cash for the property to give Romero and Vandergeld time to get their finances in order.



• Romero and Vandergeld were friends of Kaliski's sister, Barbara Norman, who with her father used to own and run Winners' Circle Ranch on Lakeville Highway. Several of the horses now at Lovepatch were purchased from Winners Circle.



• After buying the Penngrove property, Kaliski said his family began an expensive remodel of the house, putting in new flooring, a new outdoor bathroom for visitors, new heating, remodeling the kitchen and replacing the siding on the house, among other things.



• The family asked for $2,000 a month in rent, but Romero said that all the remodeling work affected their ability to schedule tours and they quickly fell behind in their rent payments. And the horses, which cost roughtly $1,200 a month to feed, have increased the couple's financial burden.



• Last year, Romero and Vandergeld worked out an agreement that would allow them to pay $1,500 a month in rent, with $500 going to cover some of the back rent owed. The two, who have been paying that amount since last September, have been trying to cover their expenses with revenue from several other on-site businesses.



• Romero and Vandergeld run an online distribution business for building supplies. She also does Web page design and sews and sells halter identification tags. “We've been trying to do everything to make money,” Romero said. “What they're going to do is make us destitute,” said Vandergeld.



• But Kalaski said his family has been more than generous, remodeling the ranch home and giving them a break on the rent, which he said should be around $2,500 a month. “I never offered to give them the place for free,” he said. “We talked about the fact that we would offer it to them before we would offer it to anyone else.”



• In an email to the couple sent Jan. 30, the family said it would take $500,000, which is $35,000 less than “comparables.” A 60-day notice asking Romero and Vandergeld to vacate the property expired last week. Kaliski said his family needs to sell the property.



• “We had the money available at the time,” he said. “But since that time, we've made some significant investments with other properties here that's drained our liquidity ... Now we need to convert that property into cash. “It's strictly a business decision,” he said.



• Romero said the family has given her a “drop-dead deadline.” “They said that if we agree to pay rent February, March and April, they will extend the time we have to leave until April 30,” she said. “We're going to try and get financing. We're going to give ourselves X amount of time to get financing.”

For the story, see Four-legged tenants facing eviction.

Review Of Bankster Annual Stockholder Report Necessary To Glean Some Substantive Terms Of National Foreclosure Fraud Settlement

Blogger David Dayen writes in Firedoglake:

• It’s embarrassing that the most information we’ve yet received about the foreclosure fraud settlement comes from an annual report to stockholders by Wells Fargo. In other words, we had to wait for the banks to tell us what was in the settlement, I guess because the regulatory officials who negotiated it weren’t entirely proud of their work.



• The Wells Fargo notice (it begins on page 74) isn’t legal language, and it states clearly that “the terms… do not become final until approval of the settlement agreement by the U.S. District Court and execution of a consent order.”



• But it provides more detailed information than the broad sketch that has been released. For example, we have the first breakdown that I’ve seen of the credit system for principal reductions.

For more, see Wells Fargo Shareholder Report Reveals Information on Foreclosure Fraud Settlement.

Feds: BofA Put Squeeze On Disabled Mortgage Applicants Attempting To Obtain Home Loans

Reuters reports:

• The Department of Housing and Urban Development said [...] it is charging Bank of America Corp with discriminating against homebuyers with disabilities.



• HUD alleged the second-largest U.S. bank by assets imposed "unnecessary and burdensome requirements" on borrowers who relied on disability income to qualify for their mortgages. The charge, now being handled by the Justice Department, is based on complaints by two borrowers in the state of Michigan and one in Wisconsin.

***

• The Fair Housing Act makes it illegal to discriminate against borrowers based on a disability, including requiring different application or qualification guidelines. It is also illegal to ask about the severity of a disability except in limited circumstances, which HUD said were not applicable in the three cases.

For more, see BofA discriminated against disabled borrowers: agency.

Indiana Supremes: Defendants Have No Right To Jury Trial In F'closure Actions; State High Court Reaffirms Application Of 'Equitable Clean-Up Doctrine"

Lexology reports:

• The Indiana Supreme Court recently clarified the standard for when defendants in mortgage foreclosure actions are entitled to have a jury, rather than a judge, consider their defenses and counterclaims. Lucas v. U.S. Bank, N.A., 953 N.E.2d 457 (Ind. 2011).



• Plaintiff bank filed an action against two borrowers to enforce the terms of a promissory note and to foreclose the mortgage that secured the note. The borrowers asserted various statutory and common law defenses and counterclaims and filed a third-party complaint against the loan servicer, asserting similar common law and statutory claims. The borrowers also filed a demand for a jury trial “on all issues deemed so triable.”



• The bank moved to strike the borrowers’ jury demand on the ground that a foreclosure action is essentially equitable in nature. The trial court granted the bank’s motion, holding that any legal claims or defenses the borrowers asserted were drawn into the equitable action. The court of appeals granted the borrowers leave to seek discretionary interlocutory review and reversed the trial court’s decision.



• The statutory claims and defenses included alleged violations of the Truth in Lending Act, the Real Estate Settlement and Procedures Act, and the Fair Debt Collection Practices Act. The common law claims and defenses included alleged breach of contract, breach of the covenant of good faith and fair dealing, promissory estoppels, civil conversion, and civil deception. The court of appeals noted that the statutory and common law defenses and claims asserted by the borrowers were legal, rather than equitable causes of action.



• Further, the borrowers were seeking money damages, which is a legal remedy. The court also stated that the borrowers’ causes of action were distinct from the bank’s foreclosure action because they involved consumer protection statutes that seek not only to protect individual consumers, but also to protect the public at large and deter certain practices. Based on those factors, the court concluded that the borrowers’ legal claims and defenses were sufficiently distinct from the foreclosure action to be tried to a jury.



• The Indiana Supreme Court granted transfer and reversed the court of appeals’ decision. The supreme court conducted a detailed review of the constitutional and statutory provisions that protect the right to trial by jury. Article 1, Section 20 of the Indiana Constitution provides that “[i]n all civil cases, the right of trial by jury shall remain inviolate.”



• The Indiana Supreme Court had previously interpreted that provision to preserve the right to a jury trial only as it existed at common law. Songer v. Civitas Bank, 771 N.E.2d 61, 63 (Ind. 2002). , 771 N.E.2d 61, 63 (Ind. 2002). Accordingly, a party has no right to a jury trial on equitable claims. Id.



• The constitutional protection to a jury trial is codified in Indiana Trial Rule 38(A), which provides:
  
  Issues of law and issues of fact in causes that prior to the eighteenth day of June, 1852, were of exclusive equitable jurisdiction shall be tried by the court; issues of fact in all other causes shall be triable as the same are now triable. In case of the joinder of causes of action or defenses which, prior to said date, were of exclusive equitable jurisdiction with causes of action or defenses which, prior to said date, were designated as actions at law and triable by jury—the former shall be triable by the court, and the latter by a jury, unless waived; the trial of both may be at the same time or at different times, as the court may direct.



• To determine whether a court should sever separate counts of a complaint or counterclaim, with some tried to the court and some to a jury, the supreme court had previously held that a trial court should look to the “essential features of a suit.” Songer, 771 N.E.2d at 68.



• If the lawsuit as a whole is equitable, and the legal causes of action are not “distinct or severable,” then there is no right to a jury trial because the entire case is drawn into the court’s equity jurisdiction. Id. The court referred to this process of equity subsuming a legal claim as the “equitable clean-up doctrine.”



• The court reaffirmed its holding in Songer and concluded that the borrowers’ defenses and counterclaim in Lucas were all essentially equitable in nature. The court explained that “the heart of all of the legal claims in this case rest on whether the Lucases are, in fact, in default and, if so, what the amount of their debt is.” Lucas, 953 N.E.2d at 467.



• The court, therefore, concluded that “the equitable clean-up doctrine is properly invoked, and the legal claims are subsumed into equity to obtain more final and effectual relief for the parties.” Id.

Source: Indiana Supreme Court reaffirms limits to jury trials in foreclosure actions (may require subscription; if no subscription, GO HERE; or TRY HERE - then click the appropriate link).

Court To Defendant Facing Prosecution In Scam Targeting Homeowners Facing Foreclosure: 'Turn Over The Computer Password'

In Denver, Colorado, The Associated Press reports:

• A federal appeals court in Denver refuses to get involved in a mortgage and real estate fraud case that raises questions about whether turning over a computer password amounts to self-incrimination.



• In a ruling issued Tuesday, the 10th U.S. Circuit Court of Appeals said it lacks jurisdiction because the case has not been resolved in a lower court.



• That leaves Ramona Fricosu, of Colorado Springs, obligated to follow a judge's order to turn over an unencrypted version her hard drive that requires a password for investigators to examine documents. Her attorney and civil rights groups said it would violate the Fifth Amendment.

***

• Fricosu and her husband, Scott Whatcott, are accused of targeting distressed homeowners in the Colorado Springs area, about 65 miles south of Denver.



• Prosecutors allege the two promised to pay off the homeowner's mortgage, but then filed fraudulent documents in court to obtain title and sell the homes, without paying the outstanding mortgage.

For the story, see Colorado Woman Must Turn Over Computer Password.

NJ High Court: Actual Lender's Name, Address Must Be Disclosed When Notifying Homeowner Of Intent To Foreclose

In Trenton, New Jersey, Bloomberg reports:

• New Jersey’s Supreme Court ruled that the lender must be named in documents indicating a bank’s intention to foreclose on a mortgage before a residential property can be seized.



• The case involves the foreclosure on an East Orange home owned by Maryse and Emilio Guillaume, who received a notice of intention to foreclose in May 2008. That notice included the name of the mortgage servicer, America’s Servicing Co., while omitting the name of the lender. Credit Suisse AG (CSGN) made the loan and assigned it to US Bank NA.



• The state high court in Trenton ruled [] that the notice sent to the Guillaumes failed to comply with New Jersey’s Fair Foreclosure Act, which requires the name and address of the actual lender, as well as contact information for a loan servicer. Failure to do so creates “potential for significant prejudice” to homeowners, the court said.



• “A misunderstanding about a lender’s identity could prompt a homeowner to make a critical error at a time when he or she is struggling to avert foreclosure,” the court said in the opinion.



• The court ruled that while a trial court judge erred on that point in interpreting the Fair Foreclosure Act, the judge reached the correct conclusion in ordering a default judgment against the couple. The Guillaumes failed to demonstrate either “excusable neglect” or a “meritorious defense” to their foreclosure, according to the ruling.

For the story, see Lenders Must Be Named in Foreclosures: NJ Court.

See also, The Star Ledger: State Supreme Court decision could unlock foreclosure floodgates in New Jersey:

• The ruling also reversed a separate appellate decision, known as Laks, which said a foreclosure should be dismissed if its notice of intent did not comply. Now, trial court judges can dismiss the action, order a corrected notice or determine another appropriate solution. Attorney Mark Melodia, who represented ASC, said the Laks decision left attorneys unsure of what to include in their filings, effectively "clogging" the system.

For the ruling, see U.S. Nat'l Bank Association v. Guillaume.

Banksters' Big Win In Nationwide Foreclosure Fraud Settlement Includes $308B In Protection For Their Crappy 2nd Mortgage/Home Equity Loans

Bloomberg reports:

• Bank of America Corp. (BAC), Wells Fargo & Co. (WFC) and three other banks that settled a nationwide probe of foreclosure practices this month will get a bonus from the deal: protection for $308 billion of home-equity loans they hold.



• The banks that service about half the nation’s mortgages on behalf of investors will be able to share losses on their junior loans with bondholders and get credit toward the cash they pledged to spend in the settlement, said an Obama administration official involved in drafting the $25 billion agreement. Second liens would typically be wiped out before senior-mortgage investors take a loss, said Laurie Goodman, managing director at Amherst Securities Group LP in New York.



• It’s “a gift to the banks, at investors’ expense,” said Goodman, a member of the Fixed Income Analysts Society’s Hall of Fame. “A proportionate write-down of the first and second represents a reversal of normal lien priority.”

***

• The settlement has been criticized by money managers including Scott Simon at Pacific Investment Management Co., who said investors who bought mortgage-backed securities will suffer losses as banks earn credits for easing loan terms.



• “This was a relatively cheap resolution for the banks,” Simon, the mortgage head at Pimco, which runs the world’s largest bond fund, said after the settlement’s Feb. 9 announcement. “A lot of the principal reductions would have happened on their loans anyway, and they’re using other people’s money to pay for a ton of this. Pension funds, 401(k)s and mutual funds are going to pick up a lot of the load.”

For more, see Banks Win Reprieve on Home Equity Loans in Settlement.

Pa. Housing Advocates Respond To Recent Court Ruling w/ Call To Slam Brakes On F'closures Thru-out State; Banksters Ask For Full Appeals Court Review

In Pittsburgh, Pennsylvania, the Pittsburgh Post-Gazette reports:

• Housing activists are calling on Pennsylvania banks and sheriffs to temporarily halt all home foreclosures, saying a paperwork error could save thousands of people their homes.



• The state Superior Court on Jan. 30 ruled in favor of three women facing foreclosure who claimed they were not notified, as required by law, that they could have a face-to-face meeting with their mortgage holders to try to resolve outstanding payments.



• The Pennsylvania Housing Finance Agency issued more than 100,000 such "Act 91" forms from 1999 through 2008 that did not contain that notification, their lawyer Michael Malakoff said.

***

• Pending the appeal of the decision to the full Superior Court -- which was filed Feb. 13 by lenders Beneficial, HSBC and J.P. Morgan Chase -- the housing group says officials should put a halt on all foreclosure actions.

For more, see Halt foreclosures on homes due to paperwork errors, group says.

See also, Pittsburgh Tribune Review: Nonprofit group says 100,000 got flawed foreclosure notes.

For the court ruling, see Beneficial Consumer Discount Company v. Vukman, 2012 PA Super 18 (Pa. Super. January 30, 2012).