Saturday, April 28, 2012

Yankee Stadium Parking Garage Nears Foreclosure As Fans Opt For Cheaper Sites, Subway Schlep; Bondholders Backing Project May Be Left Holding The Bag

In The Bronx, New York, WNBC-TV Channel 4 reports:

  • On the day of the Yankees home opener last week, the stadium was packed with more than 49,000 fans, but inside a nearby parking garage on 153rd Street, three of the four floors were empty. Parking cashier Janee Addison estimated about 20 percent of the 2,300 spots were actually being used, and that was during the third inning, when even the latecomers had scanned their ticket.
  • The garage, along with about a dozen other lots and garages, was built with millions of dollars in tax-free bonds by a firm called Bronx Parking Development Company, to accompany the new stadium. Last year, the Bronx Parking Development Company's average game-day lot was 43 percent full. This year, on the day of the Yankees' home opener, the garages increased the price of a parking space by $12 to $35, amid the sluggish demand.
  • On March 23, the company filed paperwork with the Securities and Exchange Commission notifying them that it will likely default on its tax-free bonds within 60 days.
  • Joyce Hogi, a South Bronx resident who lives near the stadium, is not surprised. According to Hogi, many Yankees fans began opting last year to park in a garage attached to a nearby shopping center. It is cheaper, she said, and nearly as close to the stadium. And unlike the garages owned by Bronx Parking, the shopping center garages don't kick out fans two hours after games end.
  • The company was able to strike a deal last year with private bondholders to delay foreclosure on the garages. It is unclear if the bondholders will grant another waiver this year.
For the story, see Bronx Garage Near Yankee Stadium Nearly Empty on Home Opener (Neighbors say the garage, built with millions of dollars in tax-free bonds, was a wasteful project; On the day of the Yankees home opener, more than 49,000 fans packed the stadium. The skies were clear. The No. 4 subway was crowded. But the garage was nearly empty).

Frustrated, Embarrassed Town Votes To Unload Title To Empty Jail Onto Stiffed Bondholders After Nationwide Search For Prisoner/Occupants Yields Squat; Desperate Request To House Guantanamo Terror Suspects Nixed

In Hardin, Montana, the Great Falls Tribune reports:

  • Economic development officials in Hardin voted Tuesday to relinquish control of a $27 million jail that was built with the promise of economic development, but brought only frustration and embarrassment to the southeastern Montana town in the five years since it was built. The board of Hardin's Two Rivers Authority voted unanimously to transfer the title to the 464-bed jail to the bondholders who financed the project. The bondholders still must approve the transfer.
  • Two Rivers chairman Bill Joseph said the board made the decision in an effort to get the jail open. "If we can give them back the title and someone can come in here and buy it, and this will help get it open faster, then we are all for it," Joseph said. Two Rivers is hoping the transfer will take a month or less, said executive director Jeffrey McDowell.
  • McDowell said bondholders "ran out of patience" with the city's efforts to put the jail to use and wanted to assume control over the 92,000-square-foot jail on 40 acres rather than go through the foreclosure process. The jail was built at a time when state and local governments didn't need additional jail space.
  • After looking for prisoners from Vermont to Alaska, local officials became so desperate to put the jail to use they nearly turned it over to a convicted con artist who promised to turn it into a military training camp. They also sought unsuccessfully to house terrorism suspects being held by the military at Guantanamo Bay.
  • The privately operated facility defaulted on its bond in 2008, forcing authorities to dip into the jail's construction loan to meet its debt payments. The last of those payments was made in late 2008, McDowell said.

Foreclosure Led To Problems With Unburied Bodies, License Revocation: Funeral Home Operator

In Wadesboro, North Carolina, The Associated Press reports:

  • An Anson County funeral home operator has lost her operating license after regulators say she left unburied bodies lingering for up to five months. The North Carolina Board of Funeral Services revoked the operating permit for F&M McLendon Funeral Home in Wadesboro and the license of its operator, Mary McLendon. Funeral home operators face criminal citations if they try to provide services without permits.
  • McLendon denies the claims and says the problem with unburied bodies happened when her funeral home was in foreclosure. Police evicted McLendon after finding three bodies there in 2010. The state funeral services board says the deceased had been dead between one month and five months. The bodies were sent to another funeral home for cremation and funerals.

Friday, April 27, 2012

Civil Rights Feds Settle Race Discrimination Suit Saying City Responded To Public Opposition By Nixing Affordable Housing Project It Earlier Approved

From the Office of the U.S. Department of Justice:

  • The Department of Justice announced [Wednesday, April 11, 2012] that it has settled its lawsuit against the city of New Berlin, Wis., for race discrimination in violation of the Fair Housing Act.
  • Filed in June 2011, the lawsuit alleged that the city of New Berlin blocked a 180-unit affordable housing project that a developer, MSP Real Estate Inc., had proposed for the city center area of New Berlin.
  • The city’s planning commission initially approved the project, but reversed course and denied it weeks later, after hundreds of residents objected to it. The suit alleged that opposition was based partly on racial stereotypes and fear that the project’s tenants would be African-American.
  • The lawsuit also charged that the city, in response to public opposition, changed its zoning and land use requirements to bar affordable housing in the city center in the future.
  • Shortly after the United States filed a motion for preliminary injunction requesting that the court order the city to allow MSP’s affordable housing project, the city agreed to issue the necessary permits to allow MSP’s affordable housing development to be built.
  • The settlement, filed [] as a proposed consent decree in the U.S. District Court for the Eastern District of Wisconsin, requires that the city not take any further action to obstruct or delay the affordable housing project. It also requires that the city take affirmative steps to provide for future affordable housing, communicate its commitment to fair housing and establish a mechanism to ensure open and fair housing in New Berlin.(1)
For the Justice Department press release, see Justice Department Settles Lawsuit Against City of New Berlin, Wisconsin, for Blocking Affordable Housing.

(1) As part of the settlement, the city agreed to modify changes it made to its zoning and land use requirements following public opposition to allow for future additional affordable housing in the city center. The settlement requires the city to provide a minimum of $75,000 to establish a Housing Trust Fund, which will finance projects that promote affordable housing, residential integration and equal housing opportunity. In addition, city officials must develop a Fair Housing Outreach Plan to encourage tenants and developers of affordable housing to come to New Berlin, appoint a fair housing compliance officer, and undergo fair housing training. It also provides for a $5,000 civil penalty to be paid to the United States.

Civil Rights Feds Pinch Pennsylvania Man For Interference With Another's Housing Rights In Connection With Cross Burning Incident

From the U.S. Department of Justice:

  • Ryan M. Held, aka Ryan M. Foley, 20, of Philipsburg, Penn., was indicted on March 27, 2012, by a federal grand jury on charges stemming from a cross burning he committed in August 2010. The indictment was unsealed [Tuesday, April 10, 2012].
  • According to the indictment, on or about Aug. 20, 2010, Held burned the cross because a woman was associating with an African-American male within the residence.
  • The two-count indictment charges Held with violating the housing rights of the two victims by burning the cross for the purpose of threatening and intimidating the victims in order to interfere with their rights to occupy a dwelling free from racial discrimination.

For the Justice Department press release, see Pennsylvania Man Indicted for Cross Burning.

Go here for links to other cross burning incidents from the U.S. Justice Department.

Ohio Man Cops Guilty Plea For Role In Cross Burning Conspiracy

From the U.S. Department of Justice:

  • Brandon Rhodes, 20, of Marengo, Ohio, pleaded guilty yesterday to a charge related to the burning of a cross in the yard of an African-American juvenile in March 2011, the Justice Department announced [Friday, March 2, 2012].
  • Rhodes pleaded guilty to conspiracy to interfere with the housing rights of another in federal court in Columbus, Ohio, before U.S. District Judge Gregory L. Frost.
  • Information presented during the plea hearing established that a cross burning occurred on March 2, 2011, at a residence in Bennington Township, Ohio, that was home to an African-American family with three high school children.(1)

For the Justice Department press release, see Ohio Man Pleads Guilty for Cross Burning.

Go here for links to other cross burning incidents from the U.S. Justice Department.

(1) According to the press release, the investigation revealed that Rhodes and his co-conspirator agreed to burn a cross in the backyard of the home of one of the children who resided there. After the six-foot wooden cross was constructed, Rhodes and his co-conspirator transported the cross to the back yard of the African-American family. Rhodes and his co-conspirator wrote “KKK will make you pay” and another racial derogatory term on the cross. Rhodes and his co-conspirator poured gasoline on the cross and, using a cigarette lighter, ignited the cross around midnight.

A burning cross is a symbol of bigotry and hate and, in this case, it was used to threaten a family. These incidents have no place in our country, and they are a reminder of the civil rights challenges we still face today,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We will continue to aggressively prosecute hate crimes of this kind.”

Thursday, April 26, 2012

Atlanta Cops Pinch 'Sovereign' Pair On Theft By Deception, Racketeering Charges; Duo Accused Of Hijacking F'closed Homes w/ Adverse Possession Claims

In Atlanta, Georgia, the Atlanta Journal Constitution reports:

  • A husband and wife associated with the so-called sovereign citizens movement were arrested Thursday for allegedly trying to sell stolen vacant Atlanta homes. Edgar Lee Rodgers and Diane Rowe are accused of filing false adverse possession documents – essentially claiming squatters’ rights – to homes that were vacant, likely due to foreclosure. Rodgers and Rowe are being held in the Fulton County jail awaiting bond hearings on racketeering and multiple theft-by-deception charges.
  • Police say the couple ascribe to the sovereign citizen philosophy that they are subject to the rule of common law – that is, legal precedent established by judges – and are immune to federal, state and local laws.
  • "The irony of it is that while they were out convincing people to buy homes using adverse possession, they both paid a regular mortgage," said Sgt. Paul Cooper, head of the Atlanta Police Department fraud unit.
  • Rodgers called himself Immanuel Hood and went around recruiting people to take over homes using adverse possession, police said. He was charging upwards of nearly $9,000 to walk people through his process for adverse possession, promising them they could own homes in as little as two weeks for sums as low as $2,000. "He was literally hosting tours of homes," Cooper said. At least 19 homes across Atlanta were targeted.
  • Georgia's adverse possession laws allow for a person living in a home for 20 years or more -- with the owner's knowledge and express permission -- to take possession of the home. Rodgers' method fell far short of the state's requirements, authorities said.
For more, see Police: Man gave tours of stolen homes.

An Inside Look At The Wells Fargo Foreclosure Factory

The following excerpt is taken from an MSNBC report on the inner workings of the foreclosure document mill at Wells Fargo:

  • The Wells Fargo worker, who first contacted via email in late January, told of a wide range of concerns about the foreclosure documents she processes. Some families apparently were denied loan modifications after only cursory interviews, she said. Other borrowers applying for help sent comprehensive personal financial documents to a fax machine that she discovered had been unattended for weeks. Others landed in foreclosure after owing interest payments of as little as $1.18 a day, according to documents she said she reviewed.
  • The legal process specialist asked not to be identified because she was not authorized to speak about the internal workings of the department, where she has worked since last year. Her account was supported by company documents and by a co-worker in the same office.
  • "There was one file where they weren't even past due and they were in foreclosure status," the loan processor said. "They're pushing these files and pushing these files....
  • Sweeping enforcement actions a year ago by the nation's top banking regulators, and a recent settlement among 49 state attorneys general, the Department of Justice and other federal agencies with the five biggest mortgage lenders, were supposed to fix the system. Mistakes are likely still getting through, according to Wells Fargo employees.

For more, see Inside the foreclosure factory, they're working overtime.

Bay State Lender Accused Again Of Strong-Arming Borrowers In Effort To Wrestle Away Ownership Of Homes, Income Properties Used As Loan Collateral

In Worcester, Massachusetts, the Worcester Telegram & Gazette reports:

  • Trustees in U.S. Bankruptcy Court have filed an adversary proceeding on behalf of a local couple alleging that two area businessmen engaged in racketeering and conspiracy. Meantime, lawyers for the businessmen have denied the charges, calling them recycled.
  • Trustees representing the interests of creditors of the bankruptcy estate of husband and wife, Nicholas J. Fiorillo and Tracey L. Krowel, are suing David G. “Duddie” Massad and Marcello Mallegni. The case was filed Jan. 18; however, lawyers for the defendants this month filed a motion asking that the case be transferred to U.S. District Court. The trustees are Jonathan R. Goldsmith, a Springfield lawyer appointed in Mr. Fiorillo's bankruptcy, and Joseph H. Baldiga, a Westboro lawyer, appointed in Ms. Krowel's case.
  • Their adversary proceeding alleges extortion and loan-sharking, usurious interest rates, falsifying debt figures and bait-and-switch tactics to try to wrest income properties from the couple and their trusts and real estate company, and their personal residences.
  • Mr. Massad is chairman and majority stockholder in Commerce Bank and Trust Co. and Mr. Mallegni is manager and an owner of LBM Financial LLC in Marlboro. Also named as defendants in the suit are Commerce Bank and LBM which, along with Mr. Massad and Mr. Mallegni, are alleged to have committed breach of contract and breach of covenant of good faith and of fair dealing.


  • The trustees allege that the businessmen used threats of violence and loan sharking on loans at up to 75 percent interest in a scheme over the past 13 years to take over properties. The trustees are asking a jury to award $6 million.(1)

For more, see Charges against Massad, Mallegni similar to '07 ones (Bankruptcy trustees allege racketeering, conspiracy).

See also Bankruptcy Judge Hammers Mass. Money Lender Accused Of Predatory Practices In Piling Up Loan Charges, Wrestling Property Ownership Away From Borrowers for a July, 2009 story containing similar allegations against this outfit by other borrowers.

(1) Keep in mind that, in Massachusetts, it is evidently legal to rip off borrowers by charging usurious interest rates, provided that the lender notifies the state attorney general in writing ahead of time about it (see M.G.L. Chapter 271: Section 49(d). Criminal usury). It is interesting to note that the lender need not actually obtain approval from the state attorney general to make these loans (or any other government authority, for that matter); you merely have to let the AG's office know ahead of time, in writing, that you're going to engage in the ripoff.

Go here for an earlier-reported example of an LBM Financial letter, sent by Marcello Mallegni, informing the Massachusetts AG it will be charging usurious rates that, but for this notification, would otherwise be criminal pursuant to Chapter 271: Section 49(d), of the Massacusetts state statutes.

BofA's Plan To Work Around Florida Foreclosure Process Results In 'Walking Money" Averaging $12K In Delinquent Borrowers' Pockets

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

  • Bank of America's payoff to Florida homeowners who do a short sale instead of dragging out a foreclosure has averaged $12,000 per deal and helped close 678 contracts statewide since it debuted in October.
  • The Florida-only plan originally targeted 20,000 homeowners with incentives of between $5,000 and $20,000 to forgo the more than two-year foreclosure process and leave their home in "broom swept" condition for a new owner.
  • Bank of America spokesman Rick Simon said the Charlotte, N.C.-based company remains "enthused" about the pilot program, which generated 3,900 purchase offers and 11,000 verbal agreements from customers who said they were interested in participating.
  • "We've quietly done a little experimentation with a similar plan in one of the non-judicial states, but we are not to the point of announcing a major expansion," said Simon, adding that monthly short sale volume has more than doubled this year. "Of particular note is the response from 'hand-raisers' who heard about the program and asked to be included without us reaching out to them."
  • To participate, purchase offers had to be submitted by mid-December. Sales must close by Aug. 31. [...] Florida was a testing ground for Bank of America because of the state's high foreclosure rates. Wells Fargo and JPMorgan Chase have similar plans.

For more, see Bank of America's payoff to Florida homeowners draws 678 short sales (Thousands more homeowners pursue incentives of up to $20,000).

Wednesday, April 25, 2012

Pennsylvania Trial Judge's Undoing Of Sheriff's Sale Where Property Sold At Less Than 50% Of Value Nixed By State Appeals Court

In Pittsburgh, Pennsylvania, the Pittsburgh Post Gazette reports:

  • The state Superior Court has ruled that a sheriff's sale of real estate in Middlesex, Butler County, cannot be set aside simply because a buyer came forward after the fact and made a substantially higher offer.
  • A split three-judge panel said Butler County Common Pleas Judge S. Michael Yeager abused his discretion when he set aside the sheriff's sale of a home after the estate of the homeowner found a buyer willing to pay more than double what it sold for.
  • Judge Christine L. Donohue said appellants Gregory Simakas and Michael Newman, the winning bidders, had lawfully purchased the property at issue. "If the property can be resold at a profit, appellants are entitled to reap the reward of the risk they took in purchasing the property at the sheriff's sale," Judge Donohue said. She was joined by Judge John L. Musmanno.


  • [M]r. Simakas and Mr. Newman purchased the house at the sheriff's sale with the winning bid of $255,800. [T]he [homeowner's] estate filed a petition to set aside the [sheriff's] sale, and Judge Yeager conducted a hearing on Jan. 26, 2011. At that hearing, the estate, pointing to comparative market analyses, argued that the property was actually worth $562,000 and that a new buyer, Alexander K. Wing, was prepared to offer $580,000 for it, Judge Donohue said.
  • Judge Yeager ruled that the price Mr. Simakas and Mr. Newman had paid was grossly inadequate and ordered Mr. Wing and the estate to enter a binding purchase agreement on Jan. 31, 2011, and to close the sale by Feb. 28. On Feb. 18, however, Mr. Simakas and Mr. Newman filed a petition to intervene, asking the court to rescind the order, according to Judge Donohue.
  • On Feb. 24, 2011, Judge Yeager allowed Mr. Simakas and Mr. Newman to intervene but refused to rescind the order. They appealed to the Superior Court the following day.
  • Judge Donohue said that, under the Superior Court's 2002 ruling in Blue Ball National Bank v. Balmer, a decision regarding whether a sale is adequate is one that must be made on a case-by-case basis.


  • In addition, Judge Donohue said the sheriff's sale was duly advertised and lawfully conducted, noting that Mr. Wing offered no explanation as to why he wasn't present to make his bid at the sale. (Mr. Wing owns land adjoining the property, and wanted to buy the Hood property as a "buffer" for his land.)

For more, see Sale can't be set aside for late bidder.

For the court ruling, see Bank of America, NA v. Hood, 2012 PA Super 70 (Pa. Super. March 22, 2012).

Forum Shopping By Zombie Debt Buyers - Why Are They Dodging Small Claims Courts & Filing Actions In More Expensive Forums?

Notre Dame Law School Associate Clinical Professor of Law Judith L. Fox writes (footnotes omitted):

  • Carol Jones called the Notre Dame Legal Aid Clinic for assistance. She had received a summons and complaint regarding a credit card she was unable to pay. My student intern and I met with Carol and reviewed her paperwork. Carol agreed that the complaint referenced her credit card and the balance was correct. During the conversation she mentioned “that other complaint” that she had not brought along because it “was not her debt.”
  • In the case of both complaints, for the debt she owed and could not pay and for the debt she did not recognize, Carol saw no reason to appear in court. Carol was judgment proof and too poor for bankruptcy court.
  • Both complaints were collection actions attempting to collect debt far below the $6,000 jurisdictional limit for small claims actions in Indiana, and yet one collector filed in small claims court, a division of the Superior Court, and the other filed in the Circuit Court.
  • Nothing about the nature of the claims accounted for the decisions to file in different courts; the only difference between the claims was the nature of the plaintiff. The plaintiff filing in small claims court was collecting its own debt, the other was a national collection agency.
  • Why would the collection agency spend more money to file an action in a Circuit Court, a court of general jurisdiction, when it could file so much more cheaply in small claims court?


  • Looking back over the statistics, I noticed many other cases filed in Superior and Circuit Courts that were below the jurisdictional limits of small claims court. 64% of the cases in the study group were for claims below $6000. This is significant because much of the conversation around collection activity and abuses has focused on the problems in small claims courts.
  • National collection firms are forum shopping in Indiana. They are increasingly avoiding small claims courts.

For more, including why collection agencies are not filing claims in small claims court and how that decision may impact the debate over reform of the collection industry, see Do We Have A Debt Collection Crisis? Some Cautionary Tales Of Debt Collection In Indiana, 24 LOY. CONSUMER L. REV. 355 (2102).

Thamks to Deontos for the heads up on the article.

Chase Accused Of Strong-Arming Appraisers For Restricted Info, Blacklisting Those Refusing To Cooperate

In Phoenix, Arizona, KPHO-TV Channel 5 reports:

  • Clay Gregory is a Valley home appraiser who is spending a lot of time at home these day, but it's not by choice. "I was put in a position where they pretty much demanded information from me or they were threatening me not to use me anymore," Gregory said.
  • Gregory claims he's been blacklisted by Chase Bank, making it extremely difficult to find work. The appraiser told CBS 5 News that Chase sent him a letter a couple months ago demanding data on an old appraisal and citing possible violations. Chase apparently needed information on the home which they were buying back from a foreclosure.
  • The only problem was Gregory would be breaking state and federal law by sharing info with Chase because the bank was not the one that hired him. A number of new laws were put in place in 2009 to prevent conflicts of interest between lenders and appraisers to help avoid another housing crisis.
  • "It doesn't matter at Chase," Gregory said. "They want what they want and if they don't get their way they put you on an ineligible list." Gregory opted to follow the law and now, instead of appraising eight to ten homes a week, he'll visit maybe two.
  • Another Valley appraiser John Dingeman is facing a similar situation. His letter from Chase arrived a couple weeks ago, stating that Dingeman had 21 days to respond to questions about an old appraisal or he would find himself on the ineligible list.
  • "Appraisers are losing revenue, losing livelihood," Dingeman said. "It's defamation of business character. If they did a bad appraisal, that's one thing, but for someone like me that follows the letter of the law, to place me on ineligible list so I can't work - that's just wrong."


  • CBS 5 News plans to turn its investigation over to the state attorney general's office this week to see if there is anything officials can do to hold these banks accountable for their actions.

For more, see Home appraiser blacklists probed.

Maryland Legislation Targets Foreclosing Banks, Other Real Estate Tax Cheats Benefitting From Improper Homestead Tax Credit Claims

In Baltimore, Maryland, The Baltimore Sun reports:

  • A grab bag of housing-related legislation passed in the Maryland General Assembly's recently completed session. Here are the highlights: Homestead credit penalties (HB 1081): Authorizes local governments to hit people with bigger penalties if they are found to be receiving a Homestead Property Tax Credit (or credits) they don't qualify for and "willfully misrepresented facts" to get the break. The homestead credit caps big tax increases as a result of property appreciation, but it is only for primary residences. No homesteads for banks (SB 123): Requires that banks -- or whoever purchases a home at foreclosure auction -- send a copy of the court ratification notice to the state Department of Assessments and Taxation so the new owners don't reap the benefit of homestead tax credits intended for the previous owners. Previously, the assessments agency said it had to wait until the new owner recorded the deed to transfer title, which frequently took months -- even years.

Source: New Md. laws affecting property tax credits, foreclosures, ground rent (and possibly you).

Tuesday, April 24, 2012

Minnesota Lawmakers Make Move To Close Loophole Allowing Loan Modification Rackets To Flourish

In Minneapolis, Minnesota, the Star Tribune reports:

  • The homeowners met at such places as Perkins or McDonald's, desperately handing over hundreds of dollars to Kevin Sistrunk in hopes he could help save their home from foreclosure. He never did. Instead, the more than $6,000 they gave him was deposited into his personal bank account.
  • The 2011 case that resulted in felony convictions against Sistrunk of North Branch for check forgery and theft is part of a growing number of loan modification scams targeted at homeowners looking to refinance their homes or save them from foreclosure.
  • In response, Minnesota legislators are moving to ramp up regulations for loan originators like Sistrunk, who have been exempt from nearly all state regulations for the loan modification industry. Legislation that unanimously passed in the Senate and is now awaiting a vote in the House would close that loophole.
  • Advocates and lawmakers say tightening state law will better protect homeowners by requiring loan originators to give specific warnings or provide copies of paperwork, among other provisions. It also will make it easier for lawyers to pursue charges when fraud occurs.
  • "What has arisen here is people getting these licenses as a way to avoid complying with the law," said Ron Elwood, supervising attorney for Legal Services Advocacy Project who lobbied for the change. "It's a growing problem and the potential [for damage] is tremendous as soon as folks figure out that, to get a mortgage broker license, they get a 'get out of jail' free card ... It has become an epidemic."
  • Current state law says financial consultants licensed as loan originators only have to abide by one state rule: Don't charge compensation until after completing what they tell a consumer they'll do. But even that, Elwood says, is loosely defined, giving them ways around it to charge upfront fees. Other provisions such as providing paperwork copies or allowing a homeowner to sue for damages are exempt for loan originators.
  • "Nobody contemplated that loan modifiers ... would actually use the license as a shield to get away with it," Elwood said.
  • In cases that aren't as well-documented as that against Sistrunk, the added provisions would make it easier to build a case in civil court and would put more liability on the company that employs the loan originator. In the case of Sistrunk, prosecutors in Washington County had a clear paper trail.
  • Sistrunk, who worked for Trinity Mortgage, promised to help seven families refinance or modify home loans in 2008 and 2009. They met him at their homes or at fast-food restaurants to drop off checks of about $750 each, according to court documents. In all, they gave Sistrunk $6,375.
  • No copies of the paperwork they signed were given to them. No homes were refinanced and no loans were modified, causing some of the homes to end up in foreclosure. And every check they wrote was deposited in Sistrunk's personal account even though they were written to Trinity Mortgage. After an investigation by the state Department of Commerce, Sistrunk pleaded guilty and was convicted of check forgery and theft, both felonies. Not all of the restitution has been paid yet, County Attorney Pete Orput said, which "just compounds the pain for these victims."
  • In recent years, he said his office have seen more mortgage fraud cases like Sistrunk's, and often "they can hide behind a good faith effort ... a lot of finger-pointing," he said.
For more, see Whistleblower: Loan modification scams 'a growing problem' (A bill moving through the Legislature aims to better protect homeowners from unscrupulous originators).

Ohio AG Files Civil Suit Charging Alleged Loan Modification Racket Of Pocketing Upfront Cash, Then Failing To Deliver Promised Services

From the Office of the Ohio Attorney General:

  • Ohio Attorney General Mike DeWine [] announced a lawsuit against Christopher Rojas of Irvine, Calif., for running a foreclosure rescue operation that used multiple business names and failed to deliver on its promises to lower consumers' mortgage payments. The lawsuit charges Rojas with multiple violations of Ohio's consumer laws.
  •  Christopher Rojas, working out of California, promises consumers that he will reduce their mortgage payments in exchange for fees of approximately $3,000 per consumer. Despite accepting substantial down payments, Rojas fails to provide beneficial services to consumers and fails to refund their money.
  • According to the Attorney General, Rojas also routinely changes his business names when consumer complaints begin to surface. Rojas has done business as National Juris Solutions, US National Legal Solutions, Weston & Wyatt, Merrill & Warren, and Legacy Holdings Group.
For the Ohio AG lawsuit, see State of Ohio v. Rojas.

Homeowner Victimized By Loan Mod Runaround Scores Foreclosure Dismissal; Judge: Failure To Date Loan Mod Agreement Not Fatal To Valid Contract

In Prescott, Wisconsin, the Pierce County Herald reports:

  • Judge Joseph Boles dismissed a foreclosure action brought by JP Morgan Chase Bank against Steven J. and Sharolynne Atkins, N4893 1100th St., Prescott.
  • According to background in the decision, the Atkinses fell behind on their mortgage in 2009. They negotiated with the finance company to modify the terms of the mortgage and were approved for modification in December 2009. They signed the agreement in January 2010.
  • According to the judge’s decision, the couple made all the payments required by the modification agreement since June 2009. But in August 2010, the bank began rejecting the $719 monthly payments, returned the check and began foreclosure proceedings. JP Morgan claimed the modification agreement was not valid because Sharolynne Atkins’ signature was not dated.
  • Boles found the loan modification agreement was a valid contract, the signatures had been notarized and Atkins’s failure to print a date by her signature did not invalidate the agreement.
Source: Judge dismisses foreclosure action against Prescott couple.

Cops Pinch Suspect In Loan Mod Ripoff Who Rejected Opportunity To Give Full Refund To Disgruntled Customer

In Miramar, Florida, the South Florida Sun Sentinel reports:

  • A homeowner who wanted to lower his mortgage payments says he grew skeptical of the woman he hired to perform a loan modification on his home. Hernando Chica, 67, of Miramar, said he contacted police after all he got were promises and excuses from her.
  • During an investigation, Miramar officers learned that the woman he hired, Cindy Clara Bouza, 38, of Miami-Dade, wasn't licensed to conduct loan modifications, according to a police report. 
  • The state Office of Financial Regulation further told police that a person conducting a loan modification isn't allowed to collect "any fees up front, and that a credit check, appraisal and inspection does not have to be completed for a loan modification."
  • On Tuesday, Bouza was arrested on one count of operating as a loan originator without a license and one count of assessing or collecting an advance fee, police said.
  • According to a Miramar police complaint affidavit: Chica hired Bouza in August on a recommendation from a family friend. He paid her about $1,900 for an inspection, appraisal and loan modification for his home in the 2000 block of Southwest 90th Avenue. [...] On Jan. 16, police met with Chica and Bouza at Chica's home.
  • Bouza offered to return to Chica most of the funds, $1,400, saying she didn't think she needed to give a reimbursement for work she already had done. [...] But Chica insisted on a full refund, refusing to accept the $1,400 offer.
  • Miramar police in February were told by the state Office of Financial Regulation that Bouza didn't have a valid license for loan modifications through its office, the police affidavit said. Police subsequently provided the results of their investigation to the Broward State Attorney's Office, which resulted in charges against Bouza.

For the story, see Woman accused of accepting loan-modification work without a license.

Accusations Continue That BofA Gives Homeowners Loan Mod Runaround, Pocketing Reduced Workout Payments, Then Threatening Foreclosure Anyway

In Port St. John, Florida, WFTV-TV Channel 9 reports:

  • A Port Saint John family thought they had avoided disaster after a loan modification was approved. But  a year later, they claim, Bank of America is foreclosing on their home even though they haven't missed a mortgage payment since the modification.
  • Billie Whaley posted three signs  at her  home, all attacking Bank of America. One reads: "Please help us. Bank of America is trying to steal our home." Whaley claims the lender double-crossed her family by approving  a loan modification, taking payments for nearly a year, and now threatening foreclosure. "I can't think about it and not cry. We put everything into this home," Whaley said.
  • According to Waley, the bank approved a modified loan with a congratulations letter last March and dropped their payment by $200 a month. Months later, the bank said it had not signed the final papers, but Waley claims she was told to keep paying and the bank told her, "We apologize, it's on our end, it's our problem, everything's going to be fixed."
  • But now, Bank of America told the Whaleys they are $14,000 behind, and it has start the foreclosure process. They're not alone. WFTV has received a dozen complaints from Bank of America customers just this year. Many claim they can't get a straight answer about their loan modification.
  • What angered the Whaleys was that the bank kept cashing their mortgage checks, but did not apply anything toward their loan. [...] Bank of America told WFTV, the couple's case is now under review and they have contacted them. But the Whaleys are considering legal action against the bank to enforce what they consider a final modification.

Monday, April 23, 2012

N. New Jersey Man Pinched For Peddling Sale Leaseback Ripoffs Targeting High Equity Homeowners Facing Foreclosure Gets 21 Months

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

  • A former employee of a Parsippany, N.J., mortgage lender who admitted taking $138,402 in illegitimate proceeds of multiple home sales as a result of a mortgage fraud scheme was sentenced [] to 21 months in prison, U.S. Attorney Paul J. Fishman announced.
  • Jorge Abbud, 33, of Dover, N.J., previously pleaded guilty before U.S. District Judge William H. Walls to an Information charging him with wire fraud. Judge Walls imposed the sentence today in Newark federal court.
  • According to documents filed in this case and statements made in court: In 2008, Abbud was an employee of a Parsippany mortgage lender. He admitted that he targeted homeowners in New Jersey who had equity in their homes, but were facing foreclosure because of their inability to pay their monthly mortgage payments.
  • Abbud falsely promised to help these homeowners avoid foreclosure, keep their homes, and repair their damaged credit. He instructed the homeowners to permit the titles of their homes to be recorded in the names of third-party purchasers (“straw buyers”) for approximately one to three years, promising the homeowners that he would improve their credit scores during that time, obtain mortgages with more favorable interest rates for them and return the titles of the homes to the homeowners.(1)
For the U.S. Attorney press release, see Former Employee of Parsippany, N.J., Mortgage Lender Sentenced To 21 months In Prison For Fraud.

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

Feds Take Down Another Investor In Mobile Foreclosure Sale Bid Rigging Probe; Suspect Agrees To Plea Guilty, Serve 6 Months, 'Sing' Against Others

From the U.S. Department of Justice:

  • An Alabama real estate investor has agreed to plead guilty and to serve prison time for his role in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in southern Alabama, the Department of Justice announced today.  To date, as a result of the ongoing investigation, three individuals and one company have pleaded guilty.
  • Charges were filed [] in the U.S. District Court for the Southern District of Alabama in Mobile, Ala., against Lawrence B. Stacy of Mobile.  Stacy was charged with one count of bid rigging and one count of conspiracy to commit mail fraud.
  • According to the plea agreement, which is subject to court approval, Stacy has agreed to serve six months in prison.  Additionally, Stacy has agreed to pay a $10,000 criminal fine and to cooperate with the department’s ongoing investigation.
  • According to court documents, Stacy conspired with others not to bid against one another at public real estate foreclosure auctions in southern Alabama.  After a designated bidder bought a property at the public auctions, which typically take place at the county courthouse, the conspirators would generally hold a secret, second auction, at which each participant would bid the amount above the public auction price he or she was willing to pay.  The highest bidder at the secret, second auction won the property.

Vegas Loan Mod Suspect Faces Theft Charges After Allegedly Pocketing Upfront Fees, Failing To Provide Substantive Services

From the Office of the Nevada Attorney General:

  • Nevada Attorney General Catherine Cortez Masto announced [] the arrest of Stephen Vitalich, 46, on charges of theft. The criminal complaint filed by the Attorney General alleges Vitalich, doing business as Consumer Loan Excellence of America, LLC or NBMS of America, LLC, promised clients he would obtain mortgage loan modifications that would substantially reduce clients’ monthly mortgage payments. The complaint further alleges that after collecting large advance fees, Vitalich performed no substantive work on his clients’ behalf and eventually disappeared with their money.
  • Vitalich, who was arrested Thursday, is charged with one count of theft of obtaining money in the amount of $2,500 or more from a person 60 years of age or older, two counts of theft of obtaining money in the amount of $2,500 or more, and one count of theft of obtaining money in the amount of $250 or more.
For the Nevada AG press release, see Nevada Attorney General Announces Arrest In Mortgage Loan Modification Scam. For the criminal complaint, see State of Nevada v. Vitalich.

Antitrust Feds Pre-Charging Negotiations Lead To Suspect Take-Down In NJ Tax Lien Bid Rigging Probe; Plea Deal Filed Simultaneously w/ Charging Docs

From the U.S. Department of Justice:

  • A former executive of a New York-based tax liens company who supervised the purchasing of municipal tax liens at auctions in New Jersey pleaded guilty today [April 17, 2012] for his role in a conspiracy to rig bids for the sale of tax liens auctioned by municipalities throughout the state, the Department of Justice announced.
  • A felony charge was filed today [April 17, 2012] in the U.S. District Court for the District of New Jersey in Newark, N.J., against former Vice President Stephen E. Hruby, of Hainesport, N.J. Under the plea agreement, which is subject to court approval, Hruby has agreed to cooperate with the department’s ongoing investigation.
  • According to the felony charge, from at least as early as December 2002 until approximately February 2009, Hruby participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey by agreeing to, and directing others to, allocate among certain bidders which liens each would bid on. Hruby, and those under his supervision, proceeded to submit bids in accordance with their agreements and purchased tax liens at collusive and non-competitive interest rates.


  • According to the court documents, Hruby conspired with others not to bid against one another at municipal tax lien auctions in New Jersey. Because the conspiracy permitted the conspirators to purchase tax liens with limited competition, each conspirator was able to obtain liens which earned a higher interest rate. Property owners were therefore made to pay higher interest on their tax debts than they would have paid had their liens been purchased in open and honest competition.

For the Justice Department press release, see Former Executive of New York-Based Tax Liens Company Pleads Guilty to Bid Rigging at Municipal Tax Lien Auctions in New Jersey.

(1) According to the press release, a violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for a Sherman Act violation may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than the statutory maximum.

Hruby’s plea is the seventh guilty plea resulting from an ongoing investigation into bid rigging or fraud related to municipal tax lien auctions, the press release states. Others include Isadore H. May, Richard J. Pisciotta Jr. and William A. Collins, each pleading guilty to one count of bid rigging in connection with their participation in a conspiracy to allocate liens at New Jersey auctions on Aug. 24, 2011. Going down next were Robert W. Stein and David M. Farber, who each pleaded guilty to one count of bid rigging on Feb. 23, 2012. On March 27, 2012, Robert E. Rothman pleaded guilty to one count of bid rigging in connection with his participation in this conspiracy.

State High Court: Georgia Lenders Have Right To Undo Foreclosure Sale After A Properly Conducted Public Auction Has Already Taken Place

Lexology reports:

  • [A] lender can rescind a [Georgia] foreclosure, for among other reasons, the fact that it had entered into an agreement when the default was cured prior to the sale or the borrower had entered into an agreement to cure the default. (See OCGA 9-13-172.1.)
  • What happens though if a lender actually conducts a foreclosure sale and then simply decides that it would rather sue on the note. Can it unwind the foreclosure even if its reasons for doing so do not fall with the statutory guidelines?
  • The Georgia Supreme Court has decided that a lender may in fact rescind a properly conducted foreclosure sale for its own internal business reasons.(See Tampa Investment Group, Inc. v. BB&T, 2012 WL 933110 (Ga.).)


  • On March 19, 2012, the Georgia Supreme Court found that a “sale under power of real estate at public outcry does not become binding as between the mortgagee and the purchaser unless a memorandum is made as prescribed by the Statute of Frauds.” The court went on to note that until a deed under power is transferred and consideration is passed, the sale itself has not occurred; there is only a contract to buy and sell. Under the circumstances the borrowers have not been harmed. They still hold the same rights as they held prior to the attempted sale.

For more, see Rescission of foreclosure sales in Georgia (may require subscription; if no subscription, GO HERE; or TRY HERE - then click the appropriate link).

Sunday, April 22, 2012

Fair Housing Advocate Tags Another Bankster With Race Discrimination Charges In Connection With Post-Foreclosure Handling Of Repossessed Homes

The National Fair Housing Alliance recently announced:

  • [T]he National Fair Housing Alliance (NFHA) and four of its member organizations announced a federal housing discrimination complaint against U.S. Bancorp and U.S. Bank National Bank Association.(1)
  • This complaint, which was filed with the U.S. Department of Housing and Urban Development, is the result of an undercover investigation of U.S. Bank's properties that found that its foreclosed properties in White areas are much better maintained and marketed than its properties in African-American and Latino neighborhoods. U.S. Bank is the fifth largest commercial bank in the United States.
  • The investigation of 177 foreclosed properties owned by U.S. Bank demonstrates that the financial giant has engaged in a systemic practice of maintaining and marketing its foreclosed, bank-owned properties (also known as Real Estate-Owned or REO properties) in a state of disrepair in communities of color while maintaining and marketing REO properties in predominantly White communities in a far superior manner.
  • The U.S. Bank investigation evaluated REO properties in the seven metropolitan areas of Atlanta, GA; Chicago, IL; Baltimore, MD; Dayton, OH; Miami/Fort Lauderdale, FL; Oakland/Richmond/Concord, CA; and Washington, DC.

For more, see National Fair Housing Alliance Alleges Discrimination in Marketing and Maintenance of Foreclosed Properties.

(1) The NFHA recently tagged Wells Fargo with similar accusations.

Notary Trade Group: Foreclosure Fraud Crisis Highlights Need For Legal, Trusted, Ethical Notarizations

The National Notary Association recently announced:

  • With the foreclosure 'robo-signing' crisis and the National Mortgage Settlement sending shockwaves through America's mortgage industry, three nationally prominent Secretaries of State will convene a special Keynote Panel at the National Notary Association's 34th Annual Conference this June to discuss the growing demand for trusted, legal notarizations, and what Notaries need to do to increase public protections and reduce liability risks.
  • Secretaries of State Elaine Marshall of North Carolina, Beth Chapman of Alabama, and Ken Bennett of Arizona are at the forefront of developments transforming the role of Notaries Public. Their insights will be a highlight of Conference 2012 -- especially in light of mounting nationwide concerns over notarial compliance and risk management.
  • "We are pleased that these three influential Secretaries -- all of whom are among the top minds in notarial issues -- will join us to address the nation's Notaries and their employers during this critical time," said NNA President and Chief Executive Officer Thomas A. Heymann.
  • "The foreclosure crisis put the spotlight squarely on the high value of legal and ethical notarizations. These Secretaries will provide their perspectives on what needs to be done to strengthen the notarial process and avoid these types of financial crises."

For more, see Secretaries of State to Address Notary Compliance, Liability, Consumer Protection Following National Mortgage Settlement (Distinguished State Leaders Will Convene Keynote Panel at the National Notary Association's 2012 Conference in San Diego).

NYC Renters In Multi-Unit Buildings, Tenant Advocates Left Dealing With Mess Created By Overleveraged, Absentee Landlords Who Cluelessly Jumped Into Real Estate Speculation At Height Of Housing Bubble

In The Bronx, New York, The Atlantic Cities reports:

  • Foreclosure came to 553 East 169th Street in the Bronx in November of 2010. No doubt hundreds of other dwellings nationwide were foreclosed on that month, contributing to the raft of vacant, unkempt single-family homes with which so many cities are now stuck. But 553 East 169th Street isn't empty. Eighteen families still live there. As renters, New York law allows them to stay put, since they weren't the ones who had a problem with the bank. Their landlord did.
  • These people – the renting tenants of foreclosed apartment buildings – are among the least-recognized casualties of the housing crisis. “These are individuals who have never once taken out a loan,” says Celia Weaver, an organizing and policy advocate with the Urban Homesteading Assistance Board in New York.
  • New York City has the highest renter rate in the country, with 69 percent of all households renting, and so the mess of foreclosed multi-unit residences is particularly ugly here. Between January of 2010 and December of 2011, Weaver says more than 400 multi-family buildings fell into foreclosure in the city, mostly in central Brooklyn and the Bronx, affecting about 6,600 apartments. Some of these buildings are as small as six units, others as large as a hundred.
  • So what eventually happens to properties that still have tenants but no permanent owners? For starters, the rats move in.
  • Buildings that have gone into foreclosure are transferred to court-appointed receivers (read: “politically connected lawyers,” Weaver says). They’re charged with collecting rent and making repairs. But the reality is that most of these apartments, built in the 1920s and '30s, began falling apart long before a receiver showed up.
  • Landlords in fear of foreclosure, after all, are more likely to funnel rent checks at mortgage payments than leaky roofs. And a temporary receiver isn’t motivated to make long-term investments in a property, like say a new boiler or broken ductwork. “They’re not good at maintaining these buildings,” Weaver says. “That’s not really their goal. They don’t own the property. So there’s basically no accountability.”
  • Weaver’s organization has been working with the tenants here and in other buildings in the city to find responsible new owners (perhaps the tenants themselves?) and to push banks into taking financial responsibility for maintaining these places in the meantime.
  • A lot of these buildings originally went into foreclosure, even though they house rent-paying tenants, because they were overleveraged at the height of the housing boom by speculators who hoped to drive out rent-regulated existing tenants in favor of newer ones who could be charged much more.
  • So much of the news around this foreclosure crisis has been focused on getting low-income homeowners the opportunity to get back into their homes,” Weaver says. “This is not exactly what we’re fighting here. We don’t want to get the building back to the slum lord who speculated it.”

Tenants Commandeer Control Of 9-Unit Building After Clueless Absentee Landlord Gets In Over His Head & Abandons Premises, Leaving Mortgage, Utility Bills Unpaid; Residents Look To Form Co-Op, Acquire Title

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

  • Some tenants in slum buildings with rats and leaks stop paying rent. Others move out, complain or ask for handouts. But when their Bronx tenement crumbled due to landlord neglect, the tenants at 943 E. 179th St. banded together to collect rent and make repairs.
  • Now they boast new kitchen cabinets, refrigerators, stoves, walls and floors, and they could become homeowners soon. With help from the Urban Homesteading Assistance Board, the tenants hope to buy their beloved West Farms building outright and form a co-op.
  • Department of Housing Preservation and Development officials harbor concerns about tenants performing renovations without permission rather than letting the city force landlords to make repairs. But Jacqueline Rodriguez and her neighbors were tired of waiting. "Most of the people here have been here a long time," said Rodriguez, tenant association president. "They don't want another landlord. No one is going to take care of the building better than the people who live here."
  • Tucked between E. Tremont Ave. and the Bronx Zoo, 943 E. 179th St. began to deteriorate in 2007, after a Hamptons-based landlord purchased the four-story walkup, said Rodriguez, 32, a recreational therapist who grew up in the building.
  • Broken pipes and windows went unmended and cockroaches swarmed to the slum. The 9-unit building still has 248 open housing code violations. It entered foreclosure in 2008, with Lehman Brothers holding the mortgage: a nightmare scenario, said Kerri White, UHAB organizer.
  • "There were no repairs at all," said Rodriguez, 32, a mother of twin infants. "We suffered without hot water for six months and without heat for months…You pay your rent and you don't know where the money is going."
  • The tenants found out about the foreclosure in 2010, when they were instructed to pay their rent to Con Edison via city marshals. Their landlord owed the utility $38,000, Rodriguez said. The revelation spurred Rodriguez and her neighbors to form a tenants association and corporation. They opened a bank account to hold their rent in escrow.
  • In five months under the new system, the tenants have used their rent money to remodel several kitchens, buy new appliances and hire an exterminator. "When I got here there were roaches and rats all over, in every crevice," said exterminator Major Meyers of Complete Enterprize. "Now there are minimal issues."
  • Several tenants who boast carpentry skills have donated their time and Rodriguez has taught some English to neighbors who speak only Spanish. The building "feels like a family" now, she said. Meanwhile, HPD has completed $80,714 in emergency repairs, and helped with boiler oil. The building --controlled by Lehman-affiliated mortgage holder 745 Special Assets LLC , and Aurora Bank -- could head to foreclosure auction soon.

    Tenants Resort To Rent Strike To Get Necessary Services At Foreclosed 32-Unit Building That Lingers In Receivership Limbo Since 2008

    In Chicago, Illinois, CBS-TV Channel 2 reports: