Saturday, April 14, 2012

55+ Mobile Home Community/Co-Op In Foreclosure Leaves 250 Elderly Residents In Fear Of Boot; Some May Have Nowhere To Go

In Deerfield Beach, Florida the South Florida Sun Sentinel reports:

  • The Tidewater Estates mobile home park in Deerfield Beach is facing foreclosure, and the roughly 250 residents fear for their future. "There are mornings I'll just cry because I think, 'What's going to happen?'" said Bonnie Alexander, 69. "We don't know where we're going to go."

  • The 55-and-over community, near Hillsboro Boulevard and Military Trail, is a close-knit group that holds pool parties, shuffleboard contests and weekly Bingo and poker games. When Tidewater Estates' owner announced plans to sell to a developer in 2005, residents scrambled to form a co-op and take out mortgages to buy the park for $11.3 million. By 2009, though, the co-op struggled to keep up with the $60,000 monthly payments and defaulted on the loan the following year.


  • Ginny Schriner said the co-op wants to pay back the mortgage debt, but it needs the bank to work with the residents through a difficult period. "We all grew up in an era where if we gave our word, we would take care of it," said Schriner, 72. "We don't want to walk away from the mortgage. We all feel that way."

  • Madelyn Martin, 95, has lived at Tidewater since 1995. If the bank forecloses on the park, she said she'd have to live with family members, even though she prefers to remain independent.

  • "You don't want to live off your kids," said Anna McAnespie, 66, another longtime resident. Roney Alexander, Bonnie's 71-year-old husband, said he doesn't understand why more lenders aren't working with struggling homeowners when taxpayer money helped stabilize the banking industry during the financial crisis of 2008. "We bailed their butts out," he said. "When we get in trouble, who bails us out?"

For the story, see Foreclosure arouses fear in mobile home park residents.

Rent Scams Targeting Vacant Foreclosed Homes Continue Duping Tenants, Increasing Workload For Cops; Utilities Report Increase In Sham Accounts

In Central Florida, the Orlando Sentinel reports:

  • Neighbors in the northwest Orange County community of Rose Point noticed something unusual going on at the vacant, foreclosed house on Rywood Drive — a Rooms To Go truck was unloading furniture there.

  • Community coordinator Rebekah Dulberg knew the house was under contract and could not understand why someone would be moving in before the sale had closed. Delving into the matter with law enforcement, other homeowners and a real-estate broker, Dulberg uncovered a rental scam at that house and another one nearby.


  • No one knows how pervasive the rental hoax has become in a state beleaguered by a shadow inventory of foreclosed-and-vacant houses. Utilities report an increase in sham accounts for getting water turned on, and law enforcement has made numerous arrests in other parts of the state. [...] One factor that has made it easier for con artists to pass off these rental houses as their own is that they are able to get the utilities turned on, Dulberg said.

  • Among examples of the crime in this part of the state: A Polk County man was charged with an organized scheme to defraud using manufactured leases. Charges were filed against a 37-year-old Pasco County man who was operating a foreclosure-prevention business. And a Hillsborough County man recently pleaded guilty to organized fraud, theft and burglary for breaking into houses and moving tenants into them.

For more, see Rent scam targets vacant houses.

Foreclosure Lockouts Remain Major Problem, Leaving Unwitting Renters Caught With Pants Down, Unable To Retrieve Belongings

In Bakersfield, California, KERO-TV Channel 23 reports:

  • Attorneys tell 23 ABC that tenant lockouts have become a major problem since the foreclosure crisis hit. Tami Knopf said she came home two weeks ago to find she'd been locked out due to a foreclosure. "This caught me with my pants down, basically," said Knopf.

  • Knopf claims she's known since November that the home she was renting was in the process of being foreclosed. "So we were moving things out in little increments. I figured I had all the time it took till I got served or until I got all my stuff out," said Knopf.

  • She claims she was applying for cash for keys with Altisource and was told she'd have until April 10 to vacate when someone changed her locks and even glued the keyholes with her property still inside the home. "I received no money for cash for keys, no notice to vacate the premises, no three-day or 30-day notice, neither from landlady or this company," said Knopf. Her belongings have since been cleared out and Knopf says she feels violated.

  • "There's such an injustice going on. I don't know who has done this to me. They're doing it to secure their assets. Those aren't their assets in that home -- those were my assets," said Knopf.

For more, see Renter Lockouts Due To Foreclosure Becomes Major Problem Locally (Real Estate Attorneys Say It's Common For Renter's To Get Locked Out Of Homes After Foreclosure).

Now-Foreclosed Landlord's Below Market Rental Rates Expose Unwitting Tenants To Immediate Boot, Leaving Them Blindsided As New Owner Takes Over

In Kissimmee, Florida, WFTV-TV Channel 9 reports:

  • Some renters in Kissimmee signed leases that they thought locked them in at a great price. But WFTV investigative reporter George Spencer discovered that when their original landlord went into foreclosure, their below-market rates opened them up to eviction.

  • Louis Barrueto disassembled his family's dining room table as his wife packed boxes. Next door, neighbors loaded up a U-Haul. The two families and others in the Oakwater community insist they are being blindsided by evictions.

  • It's hard to adjust to. I'm taking medication for my blood pressure, which I've never had a problem with,” said renter Veronica Barrueto. The Barruetos moved into the community in November. Their lease promises rent of $750 dollars a month for a three-bedroom unit. They saw it as a great deal for their struggling family. Then-owners at Oakwater, the Apostolou family, leased similar great deals to other tenants, perhaps dozens.

  • The problem was that the bank would soon foreclose on the Apostolous family, and a new owner would step in. Some residents said they came home to find that their water had been cut off. Others said they walked right up to their front doors and found the locks had been changed.

  • An attorney for the new owner, Orlando Condo Investments, said many tenants simply were not paying. Residents refute that.

  • Either way, the low rents that attracted them now left them open to immediate eviction. Ninety-day move-out notices under the Protecting Tenants at Foreclosure Act do not apply when rents are substantially less than fair-market.

  • WFTV tried to ask Nick Apostolou why he, with a pending foreclosure, leased to the tenants, but we were told he left when we approached.

For the story, see Mass evictions of Kissimmee renters.

Dozens Of Renters May Face Boot, Fear Worst After Landlord's Foreclosure Notice Spotted In Local Paper

In Superior, Wisconsin, WDIO-TV Channel 10/13 reports:

  • Dozens of families are in housing limbo because a large rental property company is facing the foreclosure of all of its buildings. Even though some of these tenants always paid the rent they could be homeless before the summer.

  • "I never even thought of the word foreclosure," said Sue Wallen, a lifelong renter from Superior. Wallen, her husband and two years have been living in a rental house on North 20th Street for five years. They wanted to make it their permanent home until they saw their address listed in the foreclosure section of the local paper.


  • The Wallen's are one of dozens families facing the same problem because Great Lake Properties and Investments is facing a foreclosure on all their properties. According to court documents Great Lakes Investments and Properties owns 13 buildings with a total of 25 units, all of which are facing foreclosure. Wallen thinks some of the tenants may not even know because the Wallen's didn't know.

For the story, see Dozens of Renters Facing Foreclosure in Superior.

See also, Superior Telegram: Foreclosure leaves renters facing uncertainty.

Friday, April 13, 2012

Lndlord's 'Stand Your Ground' Claim Fails, Gets Life For Killing Father Of 5 Reluctant To Pay Rent; Bank About To Take Over F'closed Home, Victim Told

In Miami, Florida, The Miami Herald reports:

  • With his claim of self-defense already rejected by a jury — and Florida’s Stand Your Ground law deemed irrelevant by a judge — Julian Gonzalez was well-assured of being sentenced to a lengthy jail sentence on Thursday.

  • The landlord of a North Miami Beach rental home had two years earlier fatally shot a tenant in a dispute over past due rent. That action led to a second-degree murder conviction, and a minimum mandatory prison term of 25 years. The only question before Miami-Dade Circuit Judge Beth Bloom was whether to levy the maximum penalty of life imprisonment. Bloom ultimately decided to do exactly that — choosing a punishment that the family of Gonzalez’s victim, 25-year-old Vladimir Santos, had fervently pleaded for.

  • My one and only son,” Santos’ mother, Connie Garcia, told the judge. “He had a great personality, a great sense of humor, always had a smile on his face.”

  • Florida’s highly controversial Stand Your Ground law — which is at the center of the Sanford shooting of 17-year-old Trayvon Martin — was not applied in this case for two key reasons: Gonzalez, despite being a landlord, did not have a legal entitlement to be at his tenant’s property, and perhaps more importantly, there was no credible evidence that Gonzalez was ever in any danger.

  • In addition to his grieving mother, Santos left behind a wife and four young children — three boys and one girl. Wife Maria Rivera was nine months pregnant when the shooting took place, and gave birth to their daughter eight days after Santos died.


  • In front of a jury earlier this year, Gonzalez unsuccessfully tried to cast the shooting as an act of self-defense. Gonzalez had visited Santos demanding the tenant either pay rent or move out, but Santos refused to do either.

  • The home was in foreclosure, prosecutors say, and Santos was reluctant to pay rent when the bank had told him it would soon be taking over the property. Gonzalez testified that he only shot because it appeared Santos was reaching for a gun. Police, however, never found a gun in the Santos home, and witnesses contradicted Gonzalez’s version of events.

For more, see NMB landlord gets life for shooting tenant in rent dispute (A landlord who fatally shot his tenant during a rent dispute claimed self-defense but his defense was rejected as he is sentenced to life in prison).

Tenants In Foreclosed Million $ Home Used As Rooming House Score Moving Cash In Negotiated Settlement With Bank

In San Jose, California, the San Jose Mercury News reports:

  • Nine remaining tenants in a foreclosed million-dollar San Jose home have been given until May 1 to move out, under an agreement that also gives them $1,500 each to cover rent deposits and moving expenses.

  • The agreement with Bank of America, which foreclosed on the foothills home last November, was filed in San Jose Superior Court Thursday. The bank had no comment. At one point, as many as 15 renters lived in the home, which its former owner continued to rent out after the foreclosure.

  • "The tenants did nothing wrong," said Deborah Thrope, a lawyer with the nonprofit Law Foundation of Silicon Valley.(1) "It's not your fault if you move into a house where the person hasn't paid their mortgage," she said. The Law Foundation represented the tenants in negotiations with the bank.

  • Neighbors in the upscale neighborhood complained of noise, and San Jose police said they had responded 16 times since September to resolve disputes and disturbances at the house.

  • The tenants said the former owner didn't tell them the home was foreclosed. They said they only learned that after moving in and discovering an eviction notice from the bank. Thrope said the foundation frequently receives requests for help from tenants facing eviction due to a foreclosure.

Source: Tenants in foreclosed San Jose home given help with moving expenses.

(1) The Law Foundation of Silicon Valley provides free legal services to residents in Silicon Valley, California, representing clients affected by unfair housing discrimination, educational and parenting teen issues, AIDS, mental or developmental disabilities, or civil injustice.

Man Busted, Faces Theft By Deception, Forgery Charges For Allegedly Renting Same Residence To Multiple Victims, Pocketing $10K In Deposits

In McDonough, Georgia, FOX 5 Atlanta reports:

  • A McDonough man duped several renters out of thousands of dollars, according to authorities. Police say 35-year-old Joel House leased two homes to at least seven victims, collecting some $10,000 in deposits. “He was awful anxious to get money,” said Ray Radford. “I gave him $1,600.”

  • Radford says he signed a lease for an $800 a month four bedroom, three bathroom home. He said his family moved in last month. But in the meantime, police say, House was also leasing to other families.

  • He would accept a partial deposit one day and turn around the next day and accept a partial deposit from another family for the same residence,” said McDonough Police Detective R. Gardner. Gardner says House leased a home in Ellenwood and another house in Stockbridge to at least seven families. Police say House worked for the home’s owner, who was unaware of the scam.

  • House is facing three counts of first degree forgery and three counts of theft by deception. Police say House lured victims through Craigslist ads. One family came from California. “They come here, moved here but when they come here they found out we were here and they were from California,” said Radford. The Radfords say they're now moving because the home is in foreclosure.

  • Police said they anticipate more victims will come forward.

Source: Man Charged With Duping Renters in McDonough.

Albuquerque Man Suspected Of Hijacking Vacant Homes In Foreclosure Faces More Heat From Cops

In Albuquerque, New Mexico, the Albuquerque Journal reports:

  • An Albuquerque man accused of illegally assuming ownership of several homes and renting them out is now in trouble for allegedly having stolen items taken from at least one of the properties.

  • A search warrant led police to the items after Shaun Anaya, 35, was arrested on March 13 for allegedly trying to cash altered money orders at a check-cashing business on Coors NW. Anaya told police the money orders were from tenant who rents one of his homes. He said he did not know exactly who they were from because he rents out a lot of properties through his company, Mt. West Investment Group LLC, which he said he runs from his home on San Patricio SW, according to a criminal complaint filed in Bernalillo County Metropolitan Court. He said he had to check his records to determine who wrote the money orders.

  • Police were already working on other cases involving Anaya, who also owns Olive Tree Property Management, according to a search warrant affidavit.


  • Police were contacted by several people about Anaya allegedly illegally assuming ownership of several properties that he had no legal claim over and renting out these properties. The renters were forced to vacate the properties when the fraud was discovered. Anaya would enter the residences and change the locks before renting them, the affidavit states.

  • Most of the properties Anaya would take possession of were in the process of foreclosure and located in southwest and northwest Albuquerque. In one case, Anaya impersonated the homeowner and signed a lease agreement for a house that was being sold, according to the affidavit. The parties were due to close on the property within a month from the time that Anaya leased the residence, the affidavit reads.

For the story, see Stolen Items Allegedly Found in Home of Man Accused of Illegally Renting Out Southwest ABQ Properties.

Memphis Feds Indict Self-Proclaimed Sovereign Citizen For Recording Dirty Deeds Purporting To Snatch, Hijack Titles To Foreclosed HUD Homes

In Memphis, Tennessee, WMC-TV Channel 5 reports:

  • A federal grand jury indicted a self-described "sovereign citizen" on charges he fudged property deeds to steal homes. 44-year-old Devitoe Farmer of Memphis faces three counts of theft of government property. U.S. Attorney Edward L. Stanton, III, said Farmer knowingly used fraudulent "quit-claim" deeds to essentially steal foreclosed properties assumed by the U.S. Department of Housing & Urban Development (HUD).


  • Farmer's indictment comes almost a year to the date since The Action News 5 Investigators caught him quit-claiming (or quick-claiming) the property deeds of seven Raleigh-Bartlett homes he does not own, according to Shelby County property records. [...] "I claim the unalienable (sic) rights that were guaranteed to us by the sovereign forefathers," said Farmer when confronted at one of the properties, 5181 Wax Wing Ln.


  • Tom Leatherwood, Shelby County's register of deeds, said Farmer quit-claimed the deeds by coming into the office and signing paperwork that shifted the properties from himself to himself, clouding the properties' titles. "If someone files fraudulent documents, that does create a cloud over someone's title and creates a real headache for the legitimate property owner," Leatherwood said.

  • Leatherwood also produced an affidavit of truth sworn by Farmer, declaring himself to be "...a natural, freeborn Sovereign, without subjects. I am neither subject to any entity anywhere, nor is any entity subject to me."


  • Records held at the Shelby County Criminal Court clerk's office showed Farmer bonded out on the charge. Prosecutors held the case to state in anticipation of a grand jury indictment.

  • Since that time, Farmer quit-claimed six more properties he does not own: [...].

For more, see Feds indict "sovereign citizen" on foreclosure theft.

Thursday, April 12, 2012

Attorney Gets Five Years For Snatching $500K+ In Foreclosure Surplus Funds Generated From Forced Sales Of Former Owners' Homes

In Milwaukee, Wisconsin, the Milwaukee Journal Sentinel reports:

  • A Brookfield lawyer who scammed more than $500,000 from the Milwaukee County clerk of courts was sentenced Wednesday to five years in prison, but the question of how much restitution he might pay, and who'll get it if he does, remains partly unanswered.

  • Thomas Bielinski, 52, was charged in August with a scheme stretching back years in which he purported to represent the rightful owners of unclaimed money kept by the clerk. He falsified notarizations, created fake companies, stole identities and forged altered court records. Though prosecutors said he committed dozens of crimes, they agreed to charge him with a single count of theft by fraud of more than $10,000 saying all the illegal acts were part of the single overarching crime.

  • Milwaukee County Circuit Judge J.D. Watts said the enormity, length and complexity of the fraud, and the fact that it relied on the trust extended to lawyers within the system, called for the maximum penalty, despite Bielinski's lack of prior crimes and solid record as a father of six. He ordered five years of extended supervision to follow Bielinski's prison term.

  • Watts also ruled that the county was Bielinski's primary victim, and the many people who had claims to the surplus funds were only secondary, though he did let three of them speak at the hearing.

  • Michael Krueger said the $83,000 could have provided more accommodations for his son, who endured several reconstructive surgeries after being wounded in Iraq during military service.

  • John Slomanski said the $36,000 his father had coming might have saved his business back in 2003, and kept him out of the depression that led to further health complications and his death last year.

  • Janice Echols said she wanted Bielinski to know that she has a face and a name, and that it took her 17 years to build up the credit he destroyed by stealing her identity to take $2,000 she had coming.

  • Watts read briefly from written statements he received from several other victims, many of whom were in desperate straits, even homeless, after losing their homes to foreclosure. All the unclaimed funds Bielinski stole were surplus funds from foreclosures.

  • After the hearing, Slomanski said he doubts any of the individual victims will ever see a penny of their money. He also wondered how many of the victims would have agreed to spend five years in prison later if they could have had $542,000 to address their family's needs over four years. "I'd take that deal," he said. Tina Wood, who lost $4,500 to Bielinski, called his sentence "a slap on the hand."

For more, see Lawyer gets 5 years for defrauding county.

Closing Agent Gets 12 Months For Failure To Pay Income Tax On Loot Embezzled From Real Estate Escrow Account; Missing Cash Meant For Lien Payoffs

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

  • U.S. District Judge Catherine C. Blake sentenced Collette Snyder, age 42, of Timonium, Maryland, [] to one year and one day in prison, followed by one year of supervised release, for filing false tax returns in 2007 and 2008, after she did not claim over $382,000 she embezzled from her employer, Maple Leaf Title. Judge Blake also ordered Snyder to pay $115,529 in restitution to the IRS.


  • Because of the embezzlement from MLT’s escrow account by Snyder and by Anthony Weis, MLT’s president, MLT did not have sufficient funds to pay off existing mortgage loan notes on properties for which MLT had performed settlement services.

  • As a result, Weis directed MLT employees in 13 real estate closings conducted in 2009 to withhold the payoff checks from institutions that held the existing mortgage loan notes on the properties.

  • Because the existing mortgages had not been paid off, clear title could not be passed to the new lender and borrower. An insurance company that had issued title insurance policies to the borrowers guaranteeing clear title ultimately paid out $3.9 million to financial institutions that held mortgage notes.

  • Weis pleaded guilty to wire fraud, was sentenced to 78 months in prison and was ordered to pay restitution of $4,007,705, which includes the loss to the title insurance company and the expenses of the individual victims.

For the U.S. Attorney press release, see Former Towson Title Company Employee Sentenced to Prison for Filing False Tax Returns.

Non-Profit Continues Attack On Foreclosure Rescue Rackets; Targets Attorney Unlicensed In NY, Others For Alleged Upfront Fee Loan Modification Ripoff

From an announcement from the Lawyers’ Committee for Civil Rights Under Law:(1)

  • The Lawyers’ Committee for Civil Rights Under Law (Lawyers’ Committee) and pro bono counsel Davis Polk & Wardwell (Davis Polk) have filed their fifth lawsuit in a year targeting for-profit loan modification companies in Nassau County, New York, and the second such suit this month.

  • The most recently filed case, Squassoni v. Blackwell, was filed in New York Supreme Court in Nassau County on March 20 on behalf of 26 homeowners from New York and eight other states against two pairs of for-profit loan modification companies—the “United Solutions” group comprised of United Legal Solutions, Inc. (also known as United Solutions Corporation) and United Solutions Law Firm LLC and the “Consumer First” group comprised of Consumer First Corporation and Consumer First Law Group LLC, which was also sometimes called “Blackwell’s Attorneys.”

  • On March 20, 2012, the court granted plaintiffs’ emergency application to freeze certain of the defendants’ assets pending a determination of plaintiffs’ motion to attach those assets to secure a future judgment. The entities whose assets were restrained are Consumer First Law Group LLC, United Solutions Law Firm LLC, and Blackwell’s Attorneys LLC.

  • Plaintiffs allege that two so-called “law firms” run by Anthony J. Blackwell, an attorney not admitted to practice in the State of New York, falsely advertised “legal services” to vulnerable homeowners seeking help with much-needed mortgage modifications, extracting thousands of dollars in up-front payments from each homeowner.

  • Once paid, the firms then consistently failed to deliver results and abruptly stopped answering the homeowners’ phone calls and e-mails. The case seeks to recover money damages, including the illegal up-front fees paid by plaintiffs, and injunctive relief to put an end to the deceptive practices of the entities named as defendants and Mr. Blackwell. The Lawyers’ Committee and Davis Polk are representing the plaintiffs free of charge.

  • This scam is particularly pernicious because it preys on the public’s trust in legal service providers,” said Jon Greenbaum, Lawyers’ Committee chief counsel and senior deputy director. “This case really presents two scams in one—an unlicensed attorney advertising for-profit mortgage modification services as legal services, and a for-profit mortgage modification scam that can be devastating to homeowners—causing them not only to lose the fees they paid, but in the worst cases, causing defaults that lead to foreclosure as a direct result of the scam.”

For more, see Lawyers' Committee's Fight Against Unscrupulous Loan Modification Scammers Continues.

(1) The Lawyers' Committee for Civil Rights Under Law, a nonpartisan, nonprofit organization, was formed in 1963 at the request of President John F. Kennedy to involve the private bar in providing legal services to address racial discrimination.

Wednesday, April 11, 2012

Head Of Maryland-Based Mortgage Elimination Racket That Ripped Off Homeowners Gets 150 Years; Scam Operated Like Ponzi Scheme

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

  • U.S. District Judge Roger W. Titus sentenced Andrew Hamilton Williams, Jr., age 61, of Hollywood, Florida, [] to 150 years in prison followed by three years of supervised release(1) for his participation in a massive mortgage fraud scheme which promised to pay off homeowners’ mortgages on their “Dream Homes,” but left them to fend for themselves. On November 10, 2011, a federal jury convicted Williams on charges of conspiracy to commit wire fraud, wire fraud and conspiracy to commit money laundering.


  • These individuals were responsible for shattering the dreams of countless hard working families during one of our country’s worst economic downturns,” said FBI Special Agent in Charge Richard A. McFeely. “The teamwork exhibited by all participating agencies throughout the joint investigation was exemplary.”

  • Mortgage fraud is every bit as corrosive to American society as any street crime,” stated Eric Hylton, Special Agent in Charge, IRS-Criminal Investigation, Washington D.C. Field Office. “This type of fraud has far-reaching economic consequences and severely thwarts recovery from the foreclosure crisis, leaving homeowners in dire financial situations and financial institutions with uncollectible loans.”

  • According to evidence presented at the two week trial, beginning in 2005, Williams and his conspirators targeted homeowners and home purchasers to participate in a purported mortgage payment program called the “Dream Homes Program.” In exchange for a minimum of $50,000 initial investment and an “administrative fee” of up to $5,000, the conspirators promised to make the homeowners’ future monthly mortgage payments, and pay off the homeowners’ mortgage within five to seven years.

  • Dream Homes Program representatives explained to investors that the homeowners’ initial investments would be used to fund investments in automated teller machines (ATMs), flat screen televisions that would show paid business advertisements, and electronic kiosks that sold goods and services.

  • To give investors the impression that the Dream Homes Program was very successful, Metro Dream Homes spent hundreds of thousands of dollars making presentations at luxury hotels such as the Washington Plaza Hotel in Washington, D.C., the Marriott Marquis Hotel in New York, New York, and the Regent Beverly Wilshire Hotel in Beverly Hills, California. Metro Dream Homes had offices in Maryland, the District of Columbia, Virginia, North Carolina, New York, Delaware, Florida, Georgia and California.

  • According to trial testimony, Williams and his co-conspirators failed to advise investors that the ATMs, flat-screen televisions and kiosks never generated any meaningful revenue. The defendants used the funds from later investors to pay the mortgages of earlier investors [ie. a 'Ponzi scheme'].

  • Evidence showed that MDH had not filed any federal income tax returns throughout its existence. The defendants also failed to advise investors that their investments were being used for the personal enrichment of select MDH employees, including Williams, [...].

For the U.S. Attorney press release, see Owner and Founder of “Metro Dream Homes” Sentenced to 150 Years in Prison in $78 Million Mortgage Fraud Scheme.

(1) By the time the 61-year old Williams wraps up his prison stay and becomes eligible for his three years of supervised release, he'll be over 200 years old.

Atlanta Feds Pinch Attorney For Allegedly Having Sticky Fingers When Handling Clients' Cash At R/E Closings; Head Fed: Racket Ran Like Ponzi Scheme

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

  • NEAL LANDERS, 45, of Duluth, Georgia was arrested [...] on federal charges that LANDERS stole money from his clients after acting as the closing attorney for their real estate transactions.


  • United States Attorney Sally Quillian Yates said, “In real estate closings, lenders trust the attorneys who represent them to fairly and honestly conduct the closings and appropriately handle the funds with which they are entrusted. This defendant is charged with running a Ponzi scheme out of his law firm, often using the proceeds from real estate transactions for his own personal benefit rather than the business purpose for which they were intended.”

  • According to United States Attorney Yates, the charges, and other information presented in court: Beginning in 2007, LANDERS allegedly exploited his position as a closing attorney by misappropriating the funds from real estate transactions.

  • Specifically, LANDERS is charged with receiving money transfers into his escrow account from several real estate closings. Once the real estate transactions were complete, LANDERS was required to disburse these funds. However, according to the indictment, LANDERS delayed paying out the funds for weeks and sometimes for months. Rather than promptly disbursing the funds for the recently-closed properties, LANDERS used those funds to pay out the parties from previously completed real estate transactions (who should have been paid earlier).

  • LANDERS is also charged with transferring funds, in amounts that far exceeded any closing fees and/or costs, from his escrow account to a checking account. He then used that money to pay various personal expenses.

  • Finally, LANDERS is charged with making false statements on a loan application. The fraud alleged in the indictment totals more than $1.5 million.


  • LANDERS was disbarred by the Georgia Supreme Court in 2009.

For the U.S. Attorney press release, see Disbarred Lawyer Indicted and Arrested for Running a Corrupt Real Estate Practice.

Title Agent Gets 18 Months For Screwing Over Lenders, Insurance Underwriter Out Of $3.1M By Pocketing R/E Escrow Proceeds Meant For Mortgage Payoffs

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

  • U.S. District Judge William N. Nickerson sentenced James Kevin Hughes, age 53, of Crownsville, Maryland [] to 18 months in prison followed by three years of supervised release for wire fraud arising from a scheme to defraud lenders and a title insurance company of approximately $3.1 million. Judge Nickerson also ordered Hughes to perform 300 hours of community service, pay restitution of $3,107,246, and forfeit his interest in a South Carolina condominium.


  • According to his plea agreement, Hughes and Stephen Troese owned Troese/Hughes, a title company in Greenbelt, Maryland. [...] In approximately 2006, the real estate industry started to slow. As business slowed down, it became the policy of Troese/Hughes to check with [escrow accountant and co-defendant Brenda] Lukenich as to when mortgage pay-off checks could be sent out, so that she could confirm that there were sufficient funds in the escrow account to cover the check. At this time, the mortgage payoff checks were stored in Federal Express envelopes under the credenza in Hughes’s office.

  • Hughes made efforts to fill the escrow shortage at Troese/Hughes by re-financing his own home twice and not paying off the prior mortgage, causing a loss of over $1 million to [title insurance underwriter] Chicago Title.

  • In addition, after an employee of Troese/Hughes re-financed his home, Hughes caused the prior mortgage on that home to not be paid off so that the money could be used to fill the escrow shortage, causing a loss to Chicago Title of approximately $217,000.


  • Eventually, there were not enough settlements to cover all of the shortages. Chicago Title received information that a mortgage had not been paid off and conducted a surprise audit of Troese/Prestige. The escrow account did not contain enough money to cover all of the outstanding mortgage pay-offs from Troese/Prestige. Chicago Title, as the title insurer, was forced to make the mortgage pay-offs, to pay off funds due to sellers from settlement, and to pay the recording fees. In total, the loss to Chicago Title stemming from the Troese/Prestige pay-offs was approximately $1.7 million.(1)

For the U.S. Attorney press release, see Title Company Owner and President Sentenced to 18 Months in Prison In $3.1 Million Mortgage Fraud Scheme.

(1) Stephen J. Troese, Sr., age 72, of Davidsonville, Maryland, pleaded guilty and was sentenced to a year and a day in prison for his participation in the scheme. Brenda Lukenich, age 60, of Hughesville, Maryland pleaded guilty to mail fraud and is scheduled to be sentenced on April 10, 2012, at 9:30 a.m.

Tuesday, April 10, 2012

State Appeals Courts Unrelenting In Screw-Up Reversals Of Florida Trial Judges' Rulings In Foreclosure Cases; Slams Brakes On Standing-Lacking Lender

Broward County, Florida Circuit Court Judge Miette K. Burnstein is among the latest scofflaws nabbed by a state appeals court for a incorrect ruling unfavorable to a homeowner in foreclosure. (One wonders if these trial judges simply figure that most homeowners simply do not have the personal resources to fund an appeal of these crappy rulings, and figure they can simply get away with their seemingly blatant conduct in granting judgments in favor of the foreclosing bankster in these cases).

The screw-up was on an issue so basic, it didn't require to extensive an explanation by the appeals court as to why Judge Bernstein was wrong (the shorter the ruling on reversal, the more fundamental the issue of law was).

The rule operative in this case was simply that "A party must have standing to file suit at its inception and may not remedy this defect by subsequently obtaining standing." Apparently, this rule was beyond the scope of the trial judge's knowledge and understanding and, consequently, required reversal on appeal.

The appeals court reversal follows below, in its entirety:

  • This appeal stems from a complaint of foreclosure filed an the appellee, Wells Fargo Bank, N.A., as trustee ("Bank"), against the appellants David Rigby and Kathlyn Rigby. The trial court entered final summary judgment. Because Bank failed to meet its burden on summary judgment, we reverse.

    The Bank filed its complaint on May 21, 2008, and attached a mortgage that named Option One Mortgage Corporation ("Option One") as the lender. Subsequently, the Bank filed an assignment of mortgage, from Option One to Bank, dated May 22, 2008, as well as the undated original note containing a special endorsement in favor of Bank. The parties proceeded to discovery and Bank sought an admission from the Rigbys acknowledging that they had previously received notice that the note and mortgage had been transferred to Bank. The Rigbys failed to respond to this request. Bank then filed a motion for summary judgment, attaching an affidavit wherein the affiant swore that Bank was holder and owner of the mortgage. Based on this record, the trial court entered summary judgment. A trial court's entry of summary judgment is reviewed de novo. See Frost v. Regions Bank, 15 So.3d 905, 906 (Fla. 4th DCA 2009).

    The Bank failed to establish that it had standing to foreclosure upon the note. "A crucial element in any mortgage foreclosure proceeding is that the party seeking foreclosure must demonstrate that it has standing to foreclose." McLean v. JP Morgan Chase Bank Nat'l Ass'n, 79 So.3d 170, 173 (Fla. 4th DCA 2012).

    To establish standing, the plaintiff must submit the note bearing a special endorsement in favor of the plaintiff, an assignment from payee to the plaintiff or an affidavit of ownership proving its status as holder of the note. Servedio v. U.S. Bank Nat'l Ass'n, 46 So.3d 1105, 1107 (Fla. 4th DCA 2010).

    "A party must have standing to file suit at its inception and may not remedy this defect by subsequently obtaining standing." Venture Holdings & Acquisitions Grp., LLC v. A.I.M. Funding Grp., LLC, 75 So.3d 773, 776 (Fla. 4th DCA 2011).

    The Bank has not shown that it was holder of the note at the time the complaint was filed. The note containing a special endorsement in favor of Bank was not dated. The assignment of mortgage, dated May 22, 2008, indicates that Bank did not acquire the mortgage until the day after the complaint was filed.

    Finally, neither the affidavit, nor the technical admissions made by the Rigbys, establishes the date on which Bank acquired possession of the note and there is no evidence in the record establishing that an equitable transfer of the mortgage occurred prior to the date the complaint was filed. See McLean, 79 So. 3d at 174 (reversing final summary judgment of foreclosure because appellee bank failed to establish standing where mortgage was assigned to bank three days after lawsuit was filed; note contained undated special endorsement in favor of bank; and affidavit in support of summary judgment failed to indicate that bank became equitable owner of note and mortgage prior to date lawsuit was filed).

    WARNER and CONNER, JJ., concur.

For the ruling, see Rigby v. Wells Fargo Bank, 4D10-3587 (Fla. 4th DCA April 5, 2012).

Ohio Supreme Court Hears Arguments On Whether Banksters Need To Have Standing At Time Of Filing Foreclosure Action

In Columbus, Ohio, The Columbus Dispatch reports:

  • Mortgage giant Freddie Mac’s decision to foreclose on a Dayton-area house without having all the necessary paperwork could have implications across Ohio and possibly the country.

  • The state Supreme Court [Wednesday] weighed whether a bank or mortgage company can file a foreclosure lawsuit in Ohio without having proof at the time that it actually holds the mortgage or note. The practice is a byproduct of the real-estate boom days when loans were repackaged, bundled and sold off, resulting in sloppy paperwork and other problems.

  • Banks and mortgage arms such as Freddie Mac and Fannie Mae — which undertook a flood of foreclosure filings when the economy went south — often did so without having the proper documents on hand.

  • Typically in foreclosure proceedings, banks want to speed up what can be a costly process. Homeowners try to slow it down. “We find these two interests in conflict in this case,” Justice Robert R. Cupp said.

  • The high court is involved because Ohio appellate courts have issued conflicting decisions on whether a bank needs all the paperwork in order initially or can “catch up” by filing it before the judge rules.

  • Justice Yvette McGee Brown questioned why the high court should soften the requirement that a party have legal standing before filing suit, noting that banks are known to strictly enforce their own rules on customers. “Why should this court find a more relaxed rule for Freddie Mac than Freddie Mac would otherwise give to its customers?” she asked.

  • McGee Brown later wondered why Freddie Mac simply did not wait to sue until it had the note and mortgage in hand. “There was no urgency. The house wasn’t simply going to get up and leave,” she said.

  • In November 2006, Duane and Julie Schwartzwald bought a house in Xenia for $335,000, securing a $251,250 loan. After Duane Schwartzwald lost his job, they moved to Indiana for a new job and put their home on the market, according to a ruling from the 2nd District Court of Appeals that went against the couple.

  • They no longer could make the mortgage payments by early 2009 and spoke to Wells Fargo about a loan modification or short sale. They had a short-sale buyer, with the closing set for June 2009, but Freddie Mac filed a foreclosure suit in April.

  • In its suit, Freddie Mac said it was the “holder” of the promissory note but did not attach a copy of the note. It also said it had obtained an assignment of the mortgage but did not attach documentation of the assignment. Those documents were not filed until later in the year.

  • Freddie Mac attorney Scott King said to have the legal right to sue, a plaintiff just needs to allege facts giving the court jurisdiction to rule. Down the line, he said, a bank can back up its suit with the necessary documents.

  • Andrew Engle, the Schwartzwalds’ attorney, said “it’s ironic that one of the biggest actors in the U.S. residential mortgage market is coming in and asking the court to loosen the standards, to deviate from what this court has repeatedly said.”

  • The case — which drew friend-of-the-court briefs from a host of legal-aid and homeowner-rights groups — could have implications nationally because few state supreme courts have ruled on the issue.

Source: Justices reviewing criteria for foreclosure (Lenders seek loosening of rules).

NY Court Halts Tax F'closure Of Factory Targeted For Bakery Expansion Over Incorrect Payment Deadline In Legal Notice; Area Cookie Lovers Disappointed

In Troy, New York, the Albany Times Union reports:

  • A bakery looking to expand is eyeing a former meat processing plant as a new location, once the city completes a tax foreclosure on the building's bankrupt owners.

  • The owners of The Cookie Factory, which has operated from an 8,000-square-foot plant on Congress Street since 2006, want to buy the former Levonian Brothers plant at 41-61 River St., which has been shuttered since 2009. However, problems with unpaid property taxes left by the former owners have slowed city efforts to foreclose on the property and then sell it.

  • The city's initial attempt to foreclose on this property and more than 120 others in November was thrown out by Rensselaer County Court Judge Andrew Ceresia because the legal notice gave an incorrect deadline for payment of the delinquent taxes, which now total more than $805,000, said Mike Fraser, a spokesman for Troy Mayor Lou Rosamilia,

  • "This was a major misstep that set us back," said Fraser. "We want to keep this company in Troy." He said the city expects to issue another foreclosure notice on Friday, which would allow the city to foreclose if taxes are not paid within 90 days.

  • Cookie Factory co-owner Chris Alberino said Tuesday the company badly needs extra space to handle its increased production. Once it gets more room, the company expects to hire 10 more workers to help meet demand for its cookies and specialty baked goods, Alberino said. "We are just going through the process with the city, waiting" said Alberino. "We were basically ready yesterday." Alberino, who owns the business with his brother, Joe, said the 28,000-square-foot former meat processing plant is "the next best thing to building a new building. It is set up for how we would use it."

  • However, about $350,000 would be needed to renovate the building, which would house all baking operations. Retail sales and cake decorating would remain at the original plant. Alberino said the company is experiencing a sales surge from the recent introduction of a two-pack for its specialty fudge cookie. "Once we get more space, we plan to add a second shift," he said.

  • Levonian Brothers Inc. filed for Chapter 7 bankruptcy liquidation in July 2010 amidt $4 million in unpaid taxes, bills and other debts. The bankruptcy case was settled in December 2010, but bankruptcy documents did not indicate any transfer of Levonian's real estate, equipment or other assets.

  • In February, Local 1 of the United Food and Commercial Workers union won an $803,000 judgment against the company for failing to make contributions to the employee pension fund through September 2011.

Source: Bakery looks to ex-meat plant for growth (Cookie Factory hopes to get site once occupied by Levonian Brothers).

See also, The Business Review: Troy judge blocks foreclosures, delaying Cookie Factory plan.

BofA Continues Feeding Zombie Debt-Buying Sleaze Factories With Purportedly Unpaid Accounts Backed By Unreliable Records

American Banker reports:

  • Bank of America has sold collections agencies rights to sue over credit card debts that it has privately noted were potentially inaccurate or already repaid.


  • At Bank of America, records declared unreliable yet sold to CACH were used to file thousands of lawsuits against consumers, according to a review of hundreds of cases in the state courts where collection suits are typically filed. The overwhelming majority of cases end in default judgments, which are awarded to creditors when borrowers don't show up to contest the claims made against them.

  • In cases where debtors do challenge collections demands in court, the original bank-creditor must testify about the documentation supporting the claims. In several such instances, people identified as Bank of America employees have submitted affidavits attesting to the validity of debts sold by the bank to collections firms.

  • Even though Bank of America previously disavowed "the accuracy of the sums shown as the current balance," the sworn statements vouch for the borrowers' debts down to the penny and declare that the bank's "computerized and hard copy records" back the claims.

  • There are other possible discrepancies, as well: the affidavits state that B of A "has no further interest in this account for any purpose," while the sales contracts reference a "revenue sharing plan."

  • The prospect that B of A was selling unreliable credit card debts did not deter CACH from buying them. A subsidiary of SquareTwo Financial, CACH does not collect debts itself. Instead, it operates like a restaurant franchiser, acquiring rights to the delinquent debts that are the raw materials of the collections business. It then works with law firms around the country that do the actual collections work, providing them with debt files, court witnesses and other services.

  • In thousands of cases in state courts, CACH has appended a single page from its purchase agreements with Bank of America attesting to its ownership of delinquent credit card debt.

  • CACH has omitted from many such filings the more than 30 additional pages where Bank of America disclaims the accuracy of its debt records. Even so, attorneys affiliated with CACH have cited the reliability of Bank of America's records as the foundation for their collections lawsuits.(1)

For more, see Bank of America Sold Card Debts to Collectors Despite Faulty Records.

See Repairing A Broken System: Protecting Consumers in Debt Collection Litigation and Arbitration for a Federal Trade Commission report on dealing with zombie debt.

Go here for other posts on zombie debt.

(1) For related American Banker stories, see:

For more on the problems with zombie debt, see:

NJ Homeowner Files Suit Seeking Class Action Tagging Investor, Others With Allegations Of Bid Rigging At Tax Lien Auctions

In Camden, New Jersey, Bloomberg reports:

  • M.D. Sass Investors Services Inc., a closely held manager of more than $5 billion, and a unit of U.S. Bancorp (USB) were sued in a racketeering lawsuit claiming they helped to rig New Jersey municipal tax lien auctions for a decade.

  • The complaint by homeowner Raymond V. Contarino Jr. was filed March 30 against New York-based M.D. Sass, U.S. Bank, and four of six individuals who pleaded guilty in a U.S. antitrust investigation of rigged lien sales in New Jersey. It claims they engaged in a “cynical conspiracy” to eliminate competition at auctions.

  • Contarino seeks to proceed in a group, or class-action, lawsuit for those “subjected to artificially inflated rates of interest on their tax liens, and, in some instances, a loss of their real property through tax lien foreclosure,” according to the complaint filed in federal court in Camden, New Jersey.

  • Six people admitted in guilty pleas that they colluded at auctions where bidding for liens began at 18 percent and failed to move downward. Bidders won the right to charge 18 percent interest to property owners, and additional penalties. Three who pleaded guilty had bid at a March 2007 auction in Newfield, New Jersey, where an M.D. Sass representative also won liens.

For more, see M.D. Sass, U.S. Bancorp Sued Over Lien Sales Probed by U.S.

Monday, April 9, 2012

Bankruptcy Judge To Wells Fargo: 'Pay Homeowner $3,171,154 In Punitive Damages For Your Stubborn Refusal To Cut Out The Sleazy Practices!'

U.S. Bankruptcy Judge Elizabeth W. Magner recently ordered Wells Fargo to cough up over $3 million to a homeowner over its blatant refusal to correct its practices used in improperly clipping homeowners for fees and costs incurred during the course of the bankruptcy proceeding.

Judge Magner had, several years earlier in the litigation, described such practices below:

  1. Wells Fargo applied payments first to fees and costs assessed on mortgage loans, then to outstanding principal, accrued interest, and escrowed costs. This application method was directly contrary to the terms of Jones’ note and mortgage, as well as, Wells Fargo’s standard form mortgages and notes. Those forms required the application of payments first to outstanding principal, accrued interest, and escrowed charges, then fees and costs. The improper application method resulted in an incorrect amortization of loans when fees or costs were assessed. The improper amortization resulted in the assessment of additional interest, default fees and costs against the loan. The evidence established the utilization of this application method for every mortgage loan in Wells Fargo’s portfolio.

  2. Wells Fargo applied payments received from a bankruptcy debtor or trustee to the oldest charges outstanding on the mortgage loan rather than as directed by confirmed plans and confirmation orders. This resulted in the incorrect amortization of mortgage loans postpetition. Again, the improper amortization resulted in additional interest, default fees and costs to the loan. The evidence established the utilization of this application method for every mortgage loan administered by Wells Fargo in bankruptcy.

  3. When postpetition fees or costs were assessed on a loan in bankruptcy, Wells Fargo applied payments received from the bankruptcy debtor to those fees and charges without disclosing the assessments or requesting authority. The payments were property of the estate, they were applied contrary to the terms of plans and confirmation orders, and in violation of the automatic stay. This practice resulted in the incorrect amortization of mortgage loans postpetition. Again, the improper amortization resulted in the addition of increased interest, default fees and costs to the loan balance. The evidence established the utilization of this application method for every Wells Fargo mortgage loan in bankruptcy.

In this case, Judge Magner imposed a punitive damage award of $3,171,154 not so much for the conduct described above, but for Wells Fargo's subsequent stubborn refusal to engage in corrective action to eliminate thses practices, and its refusal to comply with the terms of earlier court orders, Chapter 13 confirmation plans and the automatic stay.(1)

For the ruling, see In re Jones, Case 03-16518, Adversary Case 06-01093 (E.D.La. April 5, 2012).

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

(1) In justification for the slamming Wells Fargo for $3,171,154 in punitive damages, Judge Magner made the following points (footnotes omitted):

  • Wells Fargo has taken the position that every debtor in the district should be made to challenge, by separate suit, the proofs of claim or motions for relief from the automatic stay it files. It has steadfastly refused to audit its pleadings or proofs of claim for errors and has refused to voluntarily correct any errors that come to light except through threat of litigation.

    Although its own representatives have admitted that it routinely misapplied payments on loans and improperly charged fees, they have refused to correct past errors. They stubbornly insist on limiting any change in their conduct prospectively, even as they seek to collect on loans in other cases for amounts owed in error.

    Wells Fargo’s conduct is clandestine. Rather than provide Jones with a complete history of his debt on an ongoing basis, Wells Fargo simply stopped communicating with Jones once it deemed him in default. At that point in time, fees and costs were assessed against his account and satisfied with postpetition payments intended for other debt without notice. Only through litigation was this practice discovered. Wells Fargo admitted to the same practices for all other loans in bankruptcy or default. As a result, it is unlikely that most debtors will be able to discern problems with their accounts without extensive discovery.

    Unfortunately, the threat of future litigation is a poor motivator for honesty in practice. Because litigation with Wells Fargo has already cost this and other plaintiffs considerable time and expense, the Court can only assume that others who challenge Wells Fargo’s claims will meet a similar fate.

    Over eighty (80%) of the chapter 13 debtors in this district have incomes of less than $40,000.00 per year. The burden of extensive discovery and delay is particularly overwhelming. In this Court’s experience, it takes four (4) to six (6) months for Wells Fargo to produce a simple accounting of a loan’s history and over four (4) court hearings. Most debtors simply do not have the personal resources to demand the production of a simple accounting for their loans, much less verify its accuracy, through a litigation process.

    Wells Fargo has taken advantage of borrowers who rely on it to accurately apply payments and calculate the amounts owed. But perhaps more disturbing is Wells Fargo’s refusal to voluntarily correct its errors. It prefers to rely on the ignorance of borrowers or their inability to fund a challenge to its demands, rather than voluntarily relinquish gains obtained through improper accounting methods.

    Wells Fargo’s conduct was a breach of its contractual obligations to its borrowers. More importantly, when exposed, it revealed its true corporate character by denying any obligation to correct its past transgressions and mounting a legal assault ensure it never had to. Society requires that those in business conduct themselves with honestly and fair dealing. Thus, there is a strong societal interest in deterring such future conduct through the imposition of punitive relief.

    Both parties agree that a legal remedy to address stay violations exists under section 362 (k)(1), which provides that “an individual injured by any willful violation of a stay provided by this section shall recover actual damages, including costs and attorneys’ fees, and, in appropriate circumstances, may recover punitive damages.”

    Wells Fargo argues that the Court has already imposed an adequate legal remedy because Debtor has been reimbursed for his actual damages, i.e. his attorney fees. “Punitive damages may be recovered when the creditor acts with actual knowledge of the violation or with reckless disregard of the protected right.” It has also been held that “where an arrogant defiance of federal law is demonstrated, punitive damages are appropriate.” Either standard justifies the assessment of punitive damages in this case. Due to the prevalence and seriousness of Wells Fargo’s actions, punitive damages are warranted.


    After considering the compensatory damages of $24,441.65 awarded in this case, along with the litigation costs of $292,673.84; awards against Wells Fargo in other cases for the same behavior which did not deter its conduct; and the previous judgments in this case none of which deterred its actions; the Court finds that a punitive damage award of $3,171,154.00 is warranted to deter Wells Fargo from similar conduct in the future.

    This Court hopes that the relief granted will finally motivate Wells Fargo to rectify its practices and comply with the terms of court orders, plans and the automatic stay.

Couple Faced Foreclosure Threat When $45K Payoff Was Applied To Escrow Account, Leaving Debt Unpaid; Sleazy Servicer: 'It Was Just A Mistake!'

In Aripeka, Florida, The Tampa Tribune reports:

  • Joe Manzo and Lisa Stowell paid off their mortgage – in full – late last year. But their lender threatened to foreclose anyway. "There was no doubt that it was paid off," Manzo said. "I just assumed that the bank was lagging behind and maybe the system was running every 30 days and it would be corrected."

  • But that didn't happen. Instead, they say, West Palm Beach-based Ocwen Loan Servicing charged them about $2,000 in penalties because they stopped monthly mortgage payments. "We stopped because we had already paid off the loan," Manzo explained. "They say we're in default, and now I'm worried we're going to lose our home."

  • All the while, the couple's money – enough to pay the balance – is sitting in the bank's account. Mistakes happen, but the scenario described by Manzo and Stowell shows the challenge homeowners can face just trying to get through to their lenders. When loans are sold and resold, to companies farther away, as they are in the current housing market, it becomes even more difficult.

  • In the case of Manzo and Stowell, the money they sent was deposited in an escrow account set up for flood insurance. "They applied $44,493 to a balance of $423, leaving a $44,000 overage," Manzo said. "I could have flood insurance until the second coming."

  • Asked what went wrong, Ocwen executive vice president Paul Koches told the Tribune his employees made a mistake. He said Ocwen services thousands of loans and a problem like this one is rare. "We'll go ahead and correct that mistake, and as the homeowner intended, we will apply the full amount of those proceeds to pay off the loan," Koches said.

For more, see Pasco couple stymied in trying to fix lender's mistake.

California Man Gets 15 Years In Equity Stripping, Refinance Ripoff That Screwed 31 People Out Of $2M

In San Francisco, California, KGO-TV Channel 7 reports:

  • A man who posed as a minister and a real estate savior was sentenced Friday after scamming 31 different people in San Francisco. Edward Parada, 33, will serve 15 years in state prison. Authorities say Parada targeted Spanish-speaking homeowners in the city's Ingleside District.

  • He would persuade the homeowner to refinance, then take the equity, let the house fall into foreclosure and then buy it back at a lower price at a foreclosure sale.

  • "So it illustrates, this illustrates really how callous and how vicious this individual was in the way that he treated people and that's why we feel very strongly that the 15-year sentence is very appropriate here," said San Francisco District Attorney George Gascon. Parada stole over $2 million from his victims. He pleaded guilty to 24 felony counts.

Source: Man sentenced for scamming 31 people in SF.

Sunday, April 8, 2012

NYS Expands National Probe Into Banksters' Force Placed Insurance Racket

The Associated Press reports:

  • New York is expanding a national investigation and scheduled public hearings into so-called forced-placed insurance that add costs to homeowners seeking to avoid foreclosure.

  • Banks and mortgage holders take out force-placed insurance when a homeowner misses a mortgage payment or fails to maintain homeowners insurance required by the mortgage. But state Financial Services Superintendent Benjamin Lawsky tells The Associated Press that the high cost of forced-placed insurance adds to struggling homeowners' debt and makes escape from foreclosure even more difficult.

  • Lawsky also sees questionable profits and possible conflicts of interest. He's targeting several banks and mortgage service companies nationwide and is demanding justification for premiums.

  • Lawsky says that even though the insurance costs homeowners more, it often provides less protection for the consumer while protecting the lender's interest.

Source: NY probes insurance in foreclosure.

Oklahoma High Court Means Business In Booting Back Foreclosure Judgments Based On Unindorsed Notes, Dubious Assignments, Lack Of Standing

Questions surrounding the use of unindorsed promissory notes and dubious assignments in foreclosure actions have recently led the Oklahoma Supreme Court to kick several cases back to the lower court for a closer look as to whether the foreclosing banksters had standing at the time they initially brought their lawsuits.

The following two excerpts, which appear in some of the cases, is generally representative of at least a part of the central problem that led the Oklahoma high court to give the banksters' cases the boot:

  • Following the teachings of Deutsche Bank National Trust v. Brumbaugh, 2012 OK 3, ___ P.3d ____, ¶11, where we held:

    To commence a foreclosure action in Oklahoma, a plaintiff must demonstrate it has a right to enforce the note and, absent a showing of ownership, the plaintiff lacks standing. Gill v. First Nat. Bank & Trust Co. of Oklahoma City, 1945 OK 181, 159 P.2d 717. Being a person entitled to enforce the note is an essential requirement to initiate a foreclosure lawsuit. In the present case, there is a question of fact as to when Appellee became a holder, and thus, a person entitled to enforce the note. Therefore, summary judgment is not appropriate. If Deutsche Bank became a person entitled to enforce the note as either a holder or nonholder in possession who has the rights of a holder after the foreclosure action was filed, then the case may be dismissed without prejudice and the action may be re-filed in the name of the proper party. We reverse the granting of summary judgment by the trial court and remand back for further determinations as to when Appellee acquired its interest in the note


  • It is a fundamental precept of the law to expect a foreclosing party to actually be in possession of its claimed interest in the note, and to have the proper supporting documentation in hand when filing suit, showing the history of the note, so that the defendant is duly apprised of the rights of the plaintiff. This is accomplished by showing the party is a holder of the instrument or a nonholder in possession of the instrument who has the rights of a holder, or a person not in possession of the instrument who is entitled to enforce the instrument pursuant to 12A O.S. 2001, § 3-309 or 12A O.S. 2001, § 3-418.

    Likewise, for the homeowners, absent adjudication on the underlying indebtedness, the dismissal cannot cancel their obligation arising from an authenticated note, or insulate them from foreclosure proceedings based on proven delinquency. This Court's decision in no way releases or exonerates the debt owed by the defendants on this home. See, U.S. Bank National Association v. Kimball 27 A.3d 1087, 75 UCC Rep.Serv.2d 100, 2011 VT 81 (VT 2011); and Indymac Bank, F.S.B. v. Yano-Horoski, 78 A.D.3d 895, 912 N.Y.S.2d 239 (2010)

In each case, the high court remanded the matter back to the trial court for further determination as to if and when the bankster became a person entitled to enforce the promissory note.

For the rulings, see:

  1. Ntex Realty, LP v. Tacker, 2012 OK 26 (April 3,2012);
  2. BAC Home Loan Servicing, L.P. v. Swanson, 2012 OK 25, (April 3, 2012);
  3. J.P. Morgan Chase Bank, N.A. v. Eldridge, 2012 OK 24, (March 6, 2012);
  4. Bank Of America, NA v. Kabba, 2012 OK 23, (March 6, 2012);
  5. CPT Asset Backed Certificates, Series 2004-EC1 v. Kham, 2012 OK 22, (March 6, 2012);
  6. Deutsche Bank National Trust Company v. Richardson, 2012 OK 15, (February 28, 2012);
  7. Deutsche Bank National Trust Company v. Matthews, 2012 OK 14, (February 28, 2012);
  8. Deutsche Bank National Trust Company v. Byrams, 2012 OK 4, (January 17, 2012);
  9. Deutsche Bank National Trust v. Brumbaugh, 2012 OK 3 (January 17, 2012).

See also, HSBC Bank USA v. Lyon, 2012 OK 10 (February 14, 2012) which, in affirming a summary judgment in favor of a foreclosing lender, the Oklahoma Supreme Court reinforces the proposition that, at least in Oklahoma, the only way to cure a foreclosure action where the foreclosing party cannot prove it was entitled to enforce the promissory note prior to filing the action is to dismiss the proceeding and then file an amended petition with the proper proof (ie. a properly indorsed note and a properly assigned mortgage attached thereto):

  • In the present case, Appellee has presented evidence of an indorsed-in-blank note. Appellee must prove it is the holder of the note or the nonholder in possession who has the rights of a holder prior to the filing of the foreclosure proceeding.

    The trial court's actions have cured any deficiencies. The dismissal of the original action and the first Motion for Summary Judgment filed therein, and requiring the refiling of the second amended petition with the attached note demonstrating a proper indorsement, effectively cured any lack of standing in the initial filing. Thus, by the filing of the second amended petition with a properly indorsed note and a properly assigned mortgage attached thereto, HSBC has shown it was a person entitled to enforce the instrument as the holder of the note.
    12A O.S. 2001 §3-301.

Ohio Appeals Court: Bankster's Failure To Establish Itself As "Real Party In Interest" Sinks Foreclosure Judgment

In another reversal of a trial court ruling in a foreclosure sale, an Ohio appeals court found that a bankster who failed, at the time of the filing of the lawsuit, to attach an assignment of the promissory note it was attempting to collect, and who otherwise failed to identify the date it obtained possession of the note or explain why it had been unable to produce evidence of the assignment failed to establish itself as a real party in interest. Accordingly, it was not entitled to summary judgment in this case.

For the ruling, see HSBC Bank USA v. Beirne, 2012-Ohio-1386 (9th Dist. March 30, 2012).

High Bid Of $6,500 Pursuant To $280K Foreclosure Judgment Kiboshed Where Lender Failed To Publish Pre-Sale Notice

A Florida appeals court recently affirmed a lower court ruling nullifying a foreclosure sale where the pre-sale notice was not published in a local newspaper as required by state law.(1) The sale, pursuant to a foreclosure judgment in the amount of $280,982.34, proceeded and yielded a high bid of $6,500 from a private investor.

For the ruling, see Castelo Development, LLC v. Aurora Loan Services, LLC, 4D11-1987 (March 28, 2012).

(1) The appeals court explained their reasoning as follows:

  • The trial court's final judgment of foreclosure required the clerk of the court to sell the property by electronic sale to the highest bidder for cash "in accordance with section 45.031, Florida Statutes." Section 45.031, Florida Statutes, requires that notice of sale "be published once a week for 2 consecutive weeks in a newspaper of general circulation." §45.031(2), Fla. Stat. (2011).

    It is undisputed that in this case the notice of sale was not published as required by statute. Castelo argues that the statute is silent as to what happens if the notice of sale is not published. A plain reading of the statute, however, supports the trial court's interpretation that a foreclosure sale should not be confirmed if the notice of sale was not published.

    Subsection four of the statute dictates that after the sale of the property, the clerk of the court shall promptly file a certificate of sale. § 45.031(4). The statute, however, requires that as part of the certificate of sale, the clerk must certify that the "notice of public sale of the property described in the order or final judgment was published in . . . a newspaper circulated in" the county where the property is located. Id.

    Thus, if the clerk cannot certify that the notice of sale was published, the clerk should not issue the certificate of sale. Without a certificate of sale, the clerk of the court lacked authority to issue a certificate of title and thereby confirm the sale. § 45.031(5), (6).

    In summary, the clerk of the court acted properly in refusing to issue a certificate of sale because the clerk could not certify that the notice of sale was published prior to the public sale. The trial court, therefore, correctly denied Castelo's motion to compel the clerk to do so. We also find that the trial court did not abuse its discretion by refusing to confirm the foreclosure sale.