Saturday, June 9, 2012

Now-Foreclosed Homeowner: Bank Unloaded Defectively-Constructed House On Us & Financed It With Crappy Loan!

In Joplin, Missouri, KOAM-TV Channel 7 reports:

  • A Joplin woman fights foreclosure on her father's home and says the bank that sold it to her misrepresented it during the sale. It's complicated but Emily Arnold and her father, Robert Ross, are struggling to stay in the place they call home.

  • Mid-Missouri Bank refused to respond to our request for interviews about the loan but has foreclosed on the home. The house on 43 Highway North of Stones Corner looks good on the outside but a closer look reveals construction problems.

  • Arnold and Ross say they thought they were buying the house from Mid Missouri Bank, but instead the home was titled to a construction company, a company who's owner, Danny Tandy, is now in jail. Arnold and Ross say the bank should have backed the home warranty because they insisted Tandy do the home construction and customization.

  • Arnold says a cheap composite was installed instead of tile and is now cracked. Plumbing and groundwater issues have led to moisture, mold and now rot problems that add up to $73,000 in needed repairs.
  • Arnold hired an attorney who says bank officials set her dad up with a yearly renewed loan destined to fail instead of a veteran's loan for which he would qualify. And they contend the bank had an improper relationship with the contractor, Danny Tandy.

Kid Cancer Patient Returns Home From Hospital Trip To Find Cops Giving Him, Tenant-Family The Boot; Victims Screwed By Rent-Skimming Landlord

In Orange County, California, CBS Los Angeles reports:

  • An Orange County family was kicked out of their home Thursday morning despite paying the rent on time, and, now, eight people, including a child with cancer, are homeless. “My brothers and sisters thought because they brought lots of cops that we were criminals or something,” said 10-year-old Jesus Ramirez, who is battling Lymphoma. He’s undergone six surgeries to treat cancer.

  • He and his mother were returning from Children’s Hospital to the home their family rents in Orange only to find sheriff’s deputies serving them an eviction notice. The family had just minutes to grab what they could before the locks were changed behind them.
  • The family was unaware that the bank had foreclosed on the home in December 2011. They had been diligently paying their $2,200 a month rent on time to the owners.

  • The owner never did discuss that with them or give them any notice. They received no notice. And, unfortunately, they received their first notice of the situation last Friday or Thursday. They received a five-day vacate in the name of the owners and occupants — so it didn’t even name them,” said Celia Garcia, a family friend.
For story update, see Family Of 8 Allowed Back Home Temporarily After Being Evicted.

Black Family Moves After Home-Torching; Feds Pinch White Supremacist On Charges Of Arson, Using Fire In Race-Based Interference With Housing Rights

From the Office of the U.S. Attorney (Chicago, Illinois):

  • Accused of targeting an African-American family because of their race, a Joliet man was arrested [] by FBI agents on federal arson and civil rights charges for allegedly setting fire to their home on his street. No one was injured in the early morning blaze in June 2007, although the home was occupied by eight children and an adult at the time of the fire.

  • The defendant, Brian James Moudry, was charged with one count each of arson, using fire to interfere with housing rights on the basis of race, and using fire to commit another felony in a three-count indictment that was returned by a federal grand jury last Thursday and unsealed [] following his arrest.
  • According to the indictment, Moudry set fire to a house located in the 300 block of South Reed Street, on June 17, 2007. The fire was reported at approximately 4:10 a.m. The indictment alleges that Moudry set the fire to “injure, intimidate, and interfere with, and attempt to injure, intimidate and interfere with, Victim A and her family, all of whom were African-American, because of their race” and because they were renting and occupying the dwelling. The family moved after the fire.

  • The arson charge carries a mandatory minimum of 5 years and a maximum of 20 years in prison; arson to interfere with housing rights carries a maximum penalty of 10 years in prison; and arson while committing another felony carries a mandatory prison term of 10 years, which must be served consecutively to any other sentence, and each count carries a maximum fine of $250,000.

Friday, June 8, 2012

Bay State AG: Boiler-Replacing Landlord Pinched For Improperly Removing Asbestos-Containing Pipe Insulation, Then Threatening Tenant To Stay Mum

From the Office of the Massachusetts Attorney General:

  • A property owner from Weston and a Plainville-based heating contractor have been arraigned in connection with the alleged improper removal of asbestos in a single-family rental property in Medway, Attorney General Martha Coakley announced [].

  • David Einis, age 58, and Nicholas Pasquantonio, age 41, were each arraigned on two counts of violating the Massachusetts Clean Air Act for failure to file a notice of asbestos removal with the Massachusetts Department of Environmental Protection (MassDEP) and failure to prevent asbestos emissions.

  • Nicholas Pasquantonio was also arraigned on charges of witness intimidation. Einis and Pasquantonio were arraigned [] in Norfolk Superior Court where each pleaded not guilty and were released on personal recognizance. Pasquantonio was released with the condition that he not have contact with the victim of the alleged witness intimidation.

  • Authorities allege the asbestos containing insulation was from heating pipes in an occupied Medway rental property owned by Einis, which was released when the boiler was being replaced by Pasquantonio.

  • According to authorities, in December 2010, Einis hired Pasquantonio of Johnny’s Oil Service, Inc., who is not a licensed asbestos contractor, to replace the boiler in the Medway property occupied by a family with several children.

  • Pasquantonio allegedly did not seal off the basement while he worked to replace the boiler. After being notified by the Medway Board of Health a few days later, MassDEP inspected the site and allegedly found the improper removal and release of asbestos.
  • Authorities also allege that when Pasquantonio became aware he might be charged criminally, he went to the property where the illegal asbestos removal had occurred and threatened one of the tenants not to testify against him.

Bay State AG Bags Landlord For Alleged Clean Air Act Violations; Improper Asbestos Removal, Failure To Warn Tenants Exposed Them To Associated Dangers

From the Office of the Massachusetts Attorney General:

  • A North Grafton property owner has been indicted in connection with paying two of her tenants to improperly remove asbestos from her Springfield rental property, Attorney General Martha Coakley announced []. The property owner allegedly failed to warn the tenants of the dangers associated with asbestos and did not ensure that they had proper protective equipment or training of removal procedures.

  • Susan B. Nissenbaum, age 59, was indicted by a Hampden County Grand Jury on three counts of violating the Massachusetts Clean Air Act for failure to file a notice of asbestos removal with the Massachusetts Department of Environmental Protection (MassDEP), improper asbestos removal, and improper asbestos storage.
  • According to authorities, in April 2010, Nissenbaum paid two of her tenants to remove asbestos siding from the single-family rental property in Springfield that they were living in and store it on the property.

  • Authorities allege that although Nissenbaum knew that the siding contained asbestos, she did not inform her tenants how asbestos needed to be handled and failed to ensure that they had the proper training or equipment to do so.

  • Nissenbaum allegedly failed to ensure that the tenants follow proper procedures to prevent asbestos fibers from being released into the air. Further investigation revealed that Nissenbaum had the asbestos containing materials stored improperly at the property in torn bags.

  • As a result, authorities allege that the tenants, their children, and others were exposed to asbestos. Nissenbaum also allegedly failed to notify MassDEP before commencing work on the project.
  • Members of the public who have information regarding a potential environmental crime are encouraged to contact the MassDEP Environmental Strike Force Hotline at 1-888-VIOLATE (846-5283) or the Attorney General’s Office at 617-727-2200.
For the Massachusetts AG press release, see Property Owner Indicted for Allegedly Ordering Unsafe and Illegal Removal of Asbestos From Springfield Rental Property (Property owner paid tenants to remove asbestos without providing proper equipment, warning of dangers, or removal training).

Bay State AG: Landlord Evicted Renters Shortly After They Gave Birth, Made Threats Implicating Tenants' Immigration Status, Loss Of Housing Vouchers

From the Office of the Massachusetts Attorney General:

  • A Boston area landlord has been ordered to cease violating state housing laws after allegedly threatening tenants who complained about unsanitary and unsafe conditions, Attorney General Martha Coakley announced []. Keith L. Miller of Newton allegedly threatened one tenant over their immigration status and others after they complained about property conditions.

  • The preliminary injunction was issued [...] by Suffolk Superior Court in a pending housing discrimination case against Miller who owns 24 units in Chelsea, Newton, Boston and Arlington. The court order requires Miller to remove lead paint hazards from his units, to refrain from discriminating against tenants who have young children and to stop retaliating against his tenants for complaining about unsafe conditions.

  • We want to ensure that tenants have access to safe housing and are not threatened or evicted when they complain about living conditions,” AG Coakley said. “This case is of particular importance because the safety of young children is at risk and the landlord has been uncooperative. We allege that this landlord engaged in a pervasive pattern of retaliatory and coercive conduct directed at tenants who raised concerns about unsafe conditions.”

  • The AG’s Office filed a lawsuit against Miller in February 2011 alleging numerous violations relating to three former tenants. According to the lawsuit, two tenants were evicted shortly after giving birth because their apartments were not deleaded and the third was evicted after requesting a lead paint inspection by the Department of Public Health (“DPH”), which ultimately found violations in the unit. State law requires landlords to abate lead paint hazards in apartments where children under the age of six reside.

  • Since it was first filed, the AG’s case has expanded significantly based on information obtained through further investigation. According to the amended complaint filed last month, Miller evicted or threatened to evict tenants with young children, rented apartments containing lead paint to tenants with young children, failed to remove lead hazards in those apartments, failed to provide proper notice of lead hazards to his tenants and made misrepresentations regarding the presence of lead paint in his apartments. In one instance, Miller allegedly attempted to force a tenant to pay for the lead paint abatement required by DPH.

  • It is also alleged that Miller refused to repair unsafe and unsanitary conditions, that he used threats, intimidation, and coercion to interfere with the rights of his tenants, and that he retaliated against tenants when they reported suspected violations of the law to city and state officials. Among other things, after several tenants requested health code inspections, Miller allegedly made inquiries and threatening comments about one tenant’s immigration status and threatened other tenants with the loss of their housing vouchers.
For the Massachusetts AG press release, see Landlord Ordered to Remove Lead Paint and End Discriminatory, Threatening Conduct (AG’s Office Obtains Court Order Against Landlord Alleged To Have Threatened Tenant About Immigration Status, Evicted Others That Complained About Sanitary Conditions).

Ongoing Litigation Targeting Real Estate Agents Highlights Home Seller Disclosure Issues When Premises Is Near Environmentally Toxic Site

In Gainesville, Florida, The Independent Florida Alligator reports:

  • Two ongoing court cases involving Gainesville residents highlight potential issues about how much information realtors should tell buyers about the Cabot/Koppers Superfund site.
  • The Cabot/Koppers Superfund site is an environmentally toxic site in Northeast Gainesville. Two companies, Cabot Inc. and Koppers Inc., used improper methods to dispose of hazardous chemicals. Now, the soil and water at and around the site are contaminated.
  • [Clara] Melgarejo’s lawsuit states she did not know her home, at 444 NW 30th Ave., was less than 100 feet from the western boundary of the Cabot/Koppers Superfund site when she signed in 2004. She learned about the site in 2009 when the Florida Department of Health sent letters to neighbors to tell them about the site and the health hazards associated with the contaminants.

  • The lawsuit states the realtors knew about the Superfund site but did not disclose that information to the buyer. While Melgarejo was looking at the house, the sellers gave her a property disclosure form that identified toxic substances in or around the property. Asbestos siding was the only item noted.

  • Melgarejo is suing to get out of her contract and to get compensated for damage. Bosshardt Realty Services and the noted realtors responded in court documents, saying they deny all allegations. Documents state the damage noted by Melgarejo was caused by third parties over which the defendants “have no responsibility, duty, domain or control.”

  • In the second case, [Clara Bea] Horton asked the court to set aside the sale of her house because the nearby Superfund site made it essentially worthless.

  • The dispute is based on the fact that … the property is within the area of contamination from the Koppers Superfund site. Accordingly, the property is at best valueless and may represent a virtually unlimited CERCLA liability,” court documents state.

Thursday, June 7, 2012

Buyer At 2nd Mortgagee-Forced F'closure Sale Unwittingly 'Inherits' Bad Payment History On Existing 1st Loan; Needs Media To Fix Resulting Credit Woes

From the San Jose (California) Mercury News Action Line:

  • I have worked on this to no avail for almost a year, and it is absolutely driving me mad. In January of 2011, I acquired a property on the steps of the courthouse by foreclosure.

  • The lender, Luther Burbank Savings, said in order to assume the loan I had to apply for it and qualify to assume. This I did, paying more than $3,000 in charges for the assumption. I had been making timely payments on this loan for almost a year.

  • Then the nightmare started. As soon as I assumed the loan with the same loan number as the previous owners, their bad credit appeared on my credit report. The credit reporting companies show me owning the property from 2003 when I only acquired it in 2011.

  • Since then, my life has been a nightmare, trying to repair this. Luther Burbank, to give them their due, has tried to have the previous bad credit erased from my credit report -- to no avail. The credit reporting companies don't respond to letters or to any other form of communication.

  • Luther Burbank has contacted the credit reporting companies and there is now a note in my file that says this loan number is paid as agreed, but they will not remove the years of derogatory information connected with the loan number.

  • You can never talk to a live person, their websites don't take complaints, and they don't reply to letters. Where can I go from here? (Kate Talbot)
  • I contacted the three major reporting agencies for you, Kate. Experian spokesman Gerry Tschopp reported back: "We reviewed Ms. Talbot's credit history and found that the foreclosure information had been deleted as requested by Luther Burbank Savings. There was no indication of foreclosure in her credit report, and the account shows current with no negative payment history."

  • TransUnion spokesman Clifton M. O'Neal reported that your record has been corrected.

  • Equifax spokesman Timothy Klein said that he is looking into this for you.

Lack Of Notice, Dispute Over Homestead Eligibility Left Couple Facing Possible F'closure By Tax Certificate-Holding Neighbor & Subject Of Local Gossip

In Washington, D.C., The Washington Post reports:

  • Theresa Bollech found out by chance that a neighbor had purchased a tax-sale certificate on her family’s home in the Chevy Chase neighborhood in the District and was quietly planning to foreclose in a matter of weeks.

  • The Bollechs weren’t deadbeats. But they were at odds with the D.C. Office of Tax and Revenue over their homestead exemption.

  • They say they never received notification last year that the city had placed a lien on their property and sold it to the neighbor in July at a tax-sale auction. In that, their experience was typical of a system in which the District sells tax-sale certificates — liens — on properties owing as little as $500 in back taxes or utility bills to speculators and financial institutions that are not required to notify property owners until they begin foreclosure proceedings, according to attorneys working with a consortium called the Alliance to Help Homeowners Maintain Equity.
  • But all parties agree on one critical aspect of the system — the notice property owners receive immediately after the tax-sale auction: none. The city passes that responsibility to purchasers, who are required to notify property owners only when they file to foreclose, a motion that can’t be legally pursued until six months after a sale.
  • Theresa Bollech said she and her husband didn’t know that the city had sold a tax certificate on their home in the 5700 block of 27th Street NW last July to a neighbor because they never received notice before or after the sale.

  • What’s more, she said, no one from the District said a word to them about the sale during a hearing in September with the director of the OTR’s homestead unit over the root cause of their delinquency — the disputed homestead exemption, which significantly reduces assessments for residents who claim a D.C. property as their primary home. (The unit ultimately ruled in the Bollechs’ favor.)

  • They wouldn’t learn that a neighbor had purchased a tax certificate on their home for months. But it became the subject of gossip in their neighborhood, and a neighbor tipped them off just weeks before the neighbor who purchased the certificate could have initiated foreclosure proceedings.

  • There’s no way to describe what it feels like to think you’re going to lose your home,” said Bollech, sitting at the dining room table that now doubles as a repository for hundreds of tax documents. “How could they do this to us? How could they not say something?”

NJ AG Squeezes Five Guilty Pleas From Scam Group For Roles In Use Of Dead Man's ID To Buy, Finance Home Purchase

From the Office of the New Jersey Attorney General:

  • Attorney General Jeffrey S. Chiesa announced that five people have pleaded guilty for their roles in a scheme, led by a Hudson County woman, to defraud a mortgage lender of $431,200 by filing a false loan application and purchasing a home in Newark in the name of a man who was deceased. The final defendant, a Morris County lawyer, pleaded guilty [].

  • The leader of the scheme, Genilza R. Nunes, 38, of Kearny (aka Leticia Wilchez, Geny Silva, Gena Nunez and Genilza Borges), pleaded guilty on May 8 to second-degree money laundering before Superior Court Judge Salem Vincent Ahto in Morris County. Under the plea agreement, the state will recommend that she be sentenced to 10 years in state prison, including two years of parole ineligibility, and be ordered to pay a $150,000 fine.

  • [P]aul DiGiacomo, 46, of Madison, a lawyer who laundered stolen funds through his trust account, pleaded guilty to second-degree money laundering before Superior Court Judge Thomas V. Manahan in Morris County. Under his plea agreement, the state will recommend that he be sentenced to eight years in state prison and be ordered to pay a $150,000 fine.
For the rest of the NJ AG press release, see Five Plead Guilty in Scheme to Defraud Lender of $431,200; False Mortgage Loan Application Results in Loan Issued to Dead Man (Leader of scheme faces up to 10 years in state prison).

Theft By Deception Among Charges For Newark Man Accused Of Using Stolen ID To Sell His Own Home To Unwitting Victim, Then Purchase & Move Into Another

From the Office of the New Jersey Attorney General:

  • Attorney General Jeffrey S. Chiesa announced that a Newark man was indicted [] for allegedly stealing approximately $1.2 million from two mortgage lenders by using a stolen identity and false information to obtain two home loans, which he used to sell his home in Newark and acquire a luxury home in Georgia.

  • Davionne Anderson, 41, of Newark, and his unregistered real estate investment company, AAA Investment Group, were each charged in a five-count state grand jury indictment with two counts of second-degree theft by deception, two counts of second-degree identity theft and one count of third-degree money laundering. The charges stem from an investigation by the Division of Criminal Justice Financial & Computer Crimes Bureau.

  • In April and May of 2007, Anderson and AAA allegedly used a woman’s stolen identity and false information to obtain a total of $1,205,250 in loans, which Anderson used to buy two homes in the woman’s name: a home that he himself owned in Newark, and a home in Georgia that was owned by an innocent seller who was unaware of the fraud. [...] After completing the phony sale of his own home and acquiring the Georgia home in the name of the unsuspecting buyer, Anderson moved into the Georgia home with his wife

  • Using a single stolen identity and two fraudulent loan applications, this defendant from Newark allegedly stole over a million dollars from lenders and attempted to settle into a luxury home in Georgia that we allege he never intended to pay for,” said Attorney General Chiesa.

Wednesday, June 6, 2012

Homeowner Lawsuits Challenging Foreclosures Skyrocket In New Hampshire With Many Finding Their Way Into Federal Court

The New Hampshire Business Review reports:

  • A Swanzey woman claims a mortgage originator deliberately lied about her income in order to push through a refinancing, and then the bank pressured her husband -- suffering from dementia -- to sign on to the mortgage to make it easier to foreclose on the property.

  • A Wolfeboro borrower claims that he wanted to pay off the note in full, but couldn't get a straight accounting from the bank. Indeed, the bank even cited the wrong date, book and page number and parties when recording the mortgage assignment.

  • Another borrower claims he was told by a bank to stop paying the mortgage on his Jackson home in order to qualify for a modification program, and then he was given the runaround when he tried to get on the program, and then the bank filed for foreclosure, telling him it was too late to be eligible.

  • Whether any of these claims is true is up to courts to decide. But these are the kinds of complaints against major banks being made in the state, and now federal, courts as a small but growing number of homeowners begin to challenge foreclosures.

  • In 2011, about 210 homeowners -- or 5.5 percent of the 3,863 foreclosure deeds filed in New Hampshire that year -- sued their mortgage company, almost triple the 75 (2.1 percent) that filed suit in 2008. This year, if the pace keeps up, about 240 will be filed.

  • "Banks' actions are egregious, and more and more people are doing something about it," said Jeremey A. Miller, a Concord attorney who specializes in defending homeowners from foreclosure.
  • Nearly all of the mortgage companies, based out of state, have the right to move these cases to federal courts, and are increasingly doing so because they say the federal court bureaucracy moves much quicker. "I'm sure it does," said Don Goodnow, the director of the New Hampshire Administrative Office of the Courts, which works with the state's courts. "It is better funded."

  • But Concord attorney Miller sees the move to federal courts as an attempt by mortgage companies to intimidate homeowners by moving their suit "to a big granite building in Concord."

Famed Prize Fighter Boxes It Out With Brother In Land Dispute; Says Sibling-Felon Had No Authority To Sign Away Deed To Local Gym To Satisfy Tax Lien

In Phoenix, Arizona, The Arizona Republic reports:

  • A land dispute has thrust one of Phoenix's most notorious boxing heroes into a legal battle with a non-profit organization affiliated with Sheriff Joe Arpaio.

  • The dispute between former world champion boxer Michael Carbajal and the Sheriff's Youth Assistance Foundation has brought new focus to a feud that has torn at Michael and his former trainer and brother, Danny, who was released from state prison in July following a 41/2-year sentence for theft and fraud.

  • Danny signed a document in December giving the Sheriff's Youth Assistance Foundation title to a pair of lots near the corner of 10th and Fillmore streets near downtown Phoenix. The Youth Assistance Foundation is a long-standing non-profit that receives proceeds from the sale of Arpaio's pink underwear, among other endeavors, and is run by a board without members of the sheriff's staff.
  • But an attorney for Michael said in court documents that the land was not available, and in any event, was not Danny's to sign over to anyone. The land is owned by Carbajal's Ninth Street Gym Inc., according to the Maricopa County Assessor, and the most recent deed dates from 1992 when a Phoenix couple conveyed the property to the gym.

  • Each brother is affiliated with a company of the same name: Danny's Ninth Street Gym was administratively dissolved in 2001 by the Arizona Corporation Commission for not filing annual reports, and the Internal Revenue Service revoked its status as a tax-exempt organization in 2010.

  • Michael's Ninth Street Gym was established in 2007 and is listed as a non-profit with the Arizona Corporation Commission, though the federal government has no record of Michael's tax-exempt status.

  • The property has had tax liens filed against it every year since 2006. [Sheriff's Youth Assistance Foundation director Tom] Harper purchased a 2007 tax lien on the property earlier this year to prevent the property from going into foreclosure.

  • Harper claims that Danny, as an affiliate of the original Ninth Street Gym, was authorized to discharge the land as a way to liquidate the remaining assets of his former non-profit, which are statutorily required to go to the state, a church or another charitable organization, such as the Sheriff's Youth Assistance Foundation.

  • David Derickson, an attorney for Michael, said the land became Michael's in 2007 when he established his own version of the Ninth Street Gym, and that the opportunity to challenge Michael's claim to the land expired three years later, in 2010.

  • "It's just ridiculous. Danny's a criminal, he's on probation right now, he signed this thing over to the SYAF without any legitimate authority," Derickson said. "The law in Arizona and elsewhere is fairly clear, even if there's a question about whether Michael had an entitlement to the property. He held it for more than three years in an open and notorious way. He had the corporation incorporated in his name. He ran it and has, therefore, ownership of it."
For more, see Famed boxer Michael Carbajal, Arpaio group in land-rights feud (Carbajal's brother had signed lots over to sheriff's non-profit).

Sovereign Citizen Charged w/ Burglary, Vandalism, Using Sham Legal Process In Attempt To Scare Cops In Alleged Vacant F'closed Mansion-Snatching Case

In Pickens County, South Carolina, the Anderson Independent Mail reports:

  • Garnett Radcliff Campbell Jr. is accused of drilling through one of about a dozen locks at a $2.6 million foreclosed home in Sunset in order to claim it as his own. Campbell installed a new lock and put a notice on the door which claimed that theMoorish American Society of Philadelphiahad seized the property in accordance with international law.

  • The home he allegedly attempted to seize is a five bedroom, six-and-a-half bath, 10,000-square foot waterfront retreat on 3.5 acres in the Cliffs Keowee Vineyards community.

  • According to the printed notice posted on the door, any law enforcement officers who came onto the property — on White Violet Way — would be trespassing and subject to being sued, according to a statement from the Pickens County Sheriff’s Office.

  • Deputies were not persuaded by the paperwork. [...] Campbell has been arrested on charges of burglary, vandalism and attempting to intimidate law enforcement by using a sham legal process.
  • The home listing is held by Scott Garland, a Realtor and appraiser with Community First Real Estate. Regions Bank and the real estate firm were advised by the FBI in advance that the secluded home could be targeted by the sovereign citizen group.

  • Garland said he initially was skeptical that anyone could penetrate the security at the Cliffs community or would be so brazen to target the upscale home. He checked the home following the warnings and didn’t notice anything. A week later while making his regular rounds, Garland saw the notice on the door. “I was shocked at first they made it in, had posted their signs and moved in their items,” he said.
  • FBI agents have spoken with Pickens County deputies on several occasions, warning them of the dangers that sovereign citizens could pose, [Assistant Sheriff Tim] Morgan said. “The sovereign citizen movement, in all its various forms, poses a clear threat to the safety of our community because it’s an attempt to disengage from the rules which govern everyone,” Pickens County Sheriff David Stone said in a statement. “A person who fervently believes that he is not subject to the law, and can essentially dictate his own law, is potentially very dangerous.”

  • The Moorish National Republic is a sovereign citizen group, according to web sites. Several of its offshoots, including the group Campbell claimed to belong to, have been categorized as domestic terrorism groups by the FBI, according to a statement from the Pickens County Sheriff’s Office. [...] He prefers to go by the name “Noble Yeshuah B. al Nina El,” according to the Sheriff’s Office.

Ex-Real Estate Agent Bagged In Alleged $200K+ Ripoff Of Clients' Downpayment Deposits Never Placed In Escrow; DA: Suspect "A Common & Notorious Thief"

In Peabody, Massachusetts, The Salem News reports:

  • A former real estate broker from Peabody pleaded not guilty yesterday to charges that she stole more than $200,000 from a dozen clients hoping to purchase homes through "short sales," prosecutors announced.

  • Farkhanda "Kandy" Tarar Shah, 61, was indicted by a Middlesex County grand jury on charges of felony larceny, embezzlement, and being a common and notorious thief, the Middlesex district attorney said in a press release.
  • [District Attorney Gerry] Leone said Shah was both a licensed mortgage broker and real estate agent who ran a business called K-Realty in Somerville. Over a two-year period between 2007 and 2009, Shah repeatedly used deposits left by clients for her own business and personal expenses, Leone said. Such deposits are legally supposed to be kept in an escrow account.

  • Shah's clients hired her to help them purchase properties that were "underwater" and facing foreclosure through so-called short sales. Because such transactions can be fraught with delays or other obstacles and require approval of the mortgage holder, many of the deals fell through.

  • However, when clients wanted to get their deposit money back from Shah, they learned that she was unable to pay them — because, prosecutors say, she had already spent their money rather than putting it into escrow accounts.

Tuesday, June 5, 2012

Michigan High Court To Decide Impact Of Failure To Record Mortgage On Subsequent Foreclosure Sale

In Lansing, Michigan, Legal Newsline reports:

  • The Michigan Supreme Court, in an order last month, said it will hear an appeal by one of the nation's largest mortgage servicers in a case over a state foreclosure law.

  • In January, the state Court of Appeals ruled unanimously in favor of plaintiffs Euihyung Kim and In Sook Kim. The husband and wife sued JPMorgan Chase Bank N.A. in November 2009 seeking, among other relief, to set aside a sheriff's sale of their home. When the plaintiffs defaulted on a $615,000 loan from Washington Mutual Bank to refinance their home, JPMorgan Chase sought to foreclose by advertisement. In June 2009, the mortgage servicer purchased the property at a sheriff's sale for $218,000.

  • The appeals court ruled that JPMorgan Chase was not authorized to proceed with the sale under Michigan's foreclosure by advertisement statute. The defendant, it said, failed to record its mortgage interest before the sale as required by the law. Soon after the court's ruling, in February, JPMorgan Chase sought review by the state's high court.

  • In a one-page order filed May 9, the Court granted JPMorgan Chase's application. The appeal will be limited to the issues of whether the defendant acquired the couple's loan by operation of law and, if so, whether the foreclosure by advertisement statute applies to the acquisition of a mortgage by operation of law, the Court wrote.

  • Also, the Court said it would review if the foreclosure procedures in the case were "flawed," and whether the foreclosure, itself, is voidable [Editor's Note: or, according to the one page order, void ab initio]. In its order, the Court invited the Michigan Association of Bankers, the Real Property Law Section of the State Bar of Michigan, and the Consumer Law Section of the State Bar of Michigan to file amicus briefs.

Head U.S. Civil Rights Fed: Blacks, Latinos Likely "Paid What Amounted To A Racial Surtax" On A SunTrust Home Loan

The Associated Press reports:

  • SunTrust Mortgage Inc. agreed Thursday to pay $21 million to settle a federal lawsuit alleging racial discrimination in its lending practices, the second-largest fair lending settlement ever obtained by the U.S. Department of Justice.

  • A complaint filed by the department in U.S. District Court in Richmond said SunTrust Mortgage charged more than 20,000 black and Hispanic borrowers more than similarly qualified non-Hispanic white borrowers between 2005 and 2009. Minority borrowers in 75 geographic markets stretching from Virginia Beach to San Francisco paid more in loan fees or higher interest rates based solely on race or national origin, according to the complaint.
  • Thomas E. Perez, assistant attorney general for the Civil Rights Division, said the agreement is second only to last year's record $335 million fair-lending settlement with Countrywide.

  • "At the core of the complaint is a simple story: If you were African-American or Latino, you likely paid more for a SunTrust loan than a similarly qualified white borrower simply because of your skin color," Perez said in a teleconference with reporters. "You paid what amounted to a racial surtax that ranged from hundreds to thousands of dollars."
For the U.S. Justice Department press release, see Justice Department Reaches $21 Million Settlement to Resolve Allegations of Lending Discrimination by Suntrust Mortgage (Borrowers Were Charged Higher Fees Based on Their Race or National Origin in 2005-2009 Before the Company Implemented New Policies).

Chinatown Bank Allegedly 'Unloaded' Profitable Loans Onto Fannie, Gets Pinched Anyway By Shameless DA In Mortgage Fraud Probe

In New York City, the New York Post reports:

  • A small Chinatown-based bank that caters to poor immigrants has been busted in a massive mortgage-fraud scheme for allegedly securing hundreds of millions of dollars in loans for unqualified borrowers.

  • Abacus Federal Savings Bank raked in millions of dollars in fees while systemically falsifying thousands of loans that it knew were over-the-top risky, authorities said [].

  • If we’ve learned anything” from the 2008 mortgage collapse, “it’s that at some point, these schemes unravel and taxpayers are left holding the bag,” Manhattan District Attorney Cyrus Vance Jr. said at a press conference announcing the arrests of 19 former bank workers as part of a 184-count indictment. Those charged include the bank’s chief credit officer, Yiu Wah Wong, 61, of Flushing, Queens, the most senior loan-department manager.

  • The mortgages were granted on the basis of the bankers’ misrepresentations of the incomes and worth of the borrowers, who tended to work in cash-only businesses, Vance said. Based on these paperwork lies, a package of more than 4,000 shaky mortgages was then resold to the Federal National Mortgage Association, commonly known as “Fannie Mae” — the primary victim of the scam along with taxpayers themselves, should the borrowers default, Vance said.

  • The vast majority of the borrowers are current on their payments, but the risk of future default is still high, officials said. The bank — which has branches in Chinatown, Flushing and Downtown Brooklyn — is in no danger of collapsing, prosecutors added. Of the 19 accused bankers, eight have pleaded guilty and the remaining 11 have been indicted by a grand jury, prosecutors said.
  • Abacus officials released a statement saying they were “greatly disappointed” by the indictment given the bank’s role in uncovering and investigating at least some of the alleged misconduct. “There is no evidence that any senior executive at the bank engaged in illegal behavior,” the statement said. “Neither Fannie Mae nor the borrowers were ever harmed.

  • The bank feels that a grave injustice has occurred and that the DA’s office is overreaching in trying to make a case against the bank,” Abacus officials added.

  • We do not understand why our community bank — which is the only victim in this case — would be targeted for prosecution when many other banks that contributed to the national economic crisis remain untouched.”

  • Abacus spokesman James Haggerty told The Post, “The bank has among the lowest default rates in the country — less than 0.50 percent, compared to the national average of more than 5 percent. And Fannie Mae made more than $100 million on these loans.’’ The DA’s office was assisted in its investigation by the Federal Housing Finance Agency and the Internal Revenue Service.

Bid & Cure Statements Filed During Foreclosure Process With Four County Public Trustees The Focus Of Colorado AG Mortgage Fraud Probers' 'Paper Chase'

In Denver, Colorado, The Denver Post reports:

  • Mortgage fraud investigators with the Colorado Attorney General's office have gathered documents filed with at least four county public trustees' offices by some of the state's largest foreclosure law firms, according to several people familiar with the request.

  • Trustees in four counties confirmed they each provided hundreds of pages of documents — mostly bid and cure statements associated with foreclosures spanning a five-year period — in response to a request by the attorney general's consumer protection division.

  • Deputy Attorney General Jan Zavislan, who heads that office's consumer protection division, declined to comment about the scope or nature of the request, or even to say it was an inquiry or formal investigation. "That's a very big no comment," Zavislan said Friday.
  • Trustees in Boulder, Jefferson, Arapahoe and El Paso counties confirm they provided sets of 100 documents for each of seven law firms — Vaden, Dale & Decker, Castle Stawiarski, Hopp, Aronowitz & Mecklenburg , Medved and Janeway — covering the period of 2008 to the present, according to a copy of an email sent to the Boulder County public trustee and obtained by The Denver Post under the state's open records law.
  • The request was focused on bid and cure statements attorneys file in a foreclosure case. Each statement includes charges the law firm says must be paid — by the homeowner in the case of a cure or, in the case of a bid, by the winner of a public auction when a property is sold.

  • The bid sheet is a bank's offer for the auction of a foreclosed property, a requirement by law. If there are no other bidders, the bank retains the property and reduces by their bid amount what a homeowner owes them. Sometimes lenders will bid the exact amount owed.

  • Cures are filed with trustees when homeowners indicate they would like to stop the foreclosure process by paying what they owe. The cure bill will include charges such as outstanding amounts on a mortgage, accrued interest and a variety of other fees such as attorneys costs and property inspections.

Monday, June 4, 2012

Court Nixes Homeowner's 'Finders Keepers' Defense In 3-Way Moneygrab; $500K Found In Walls Goes To Ex-Owner's Heirs; Loot Not Abandoned, Only Mislaid

In Phoenix, Arizona, The Associated Press reports:

  • An Arizona court says a man's heirs are entitled to $500,000 cash that was found in the walls of his former home years after he died.

  • The Court of Appeals ruling Thursday upholds a judge's decision that the money, stashed in ammunition cans inside the walls, belongs to Robert Spann's estate.

  • Spann died in 2001. According to the ruling, his daughters found stocks, bonds, cash and gold hidden in his suburban Phoenix home before they sold it seven years later. The couple who bought the home in Paradise Valley claimed the cash after a worker found it in the walls during kitchen and bathroom remodeling.(1)

  • The Court of Appeals said that legally, the money was only mislaid, not abandoned, so it still belonged to Spann's estate.(2)
For the ruling, see Grande v. Jennings, 1 CA-CV 11-0148 (Div. 1, Dept. A, May 31, 2012).

(1) The following background facts of this story have been extracted from the appeals court ruling, which reveals that the owner of the contracting company that found the stash in the walls may have been attempting a greedy moneygrab of his own:

  • ¶4 The house was sold “as is” to Sarina Jennings and Clinton McCallum (“Jennings/McCallum”) in September 2008. They hired Randy Bueghly and his company, Trinidad Builders, Inc., to remodel the dilapidated home. Shortly after the work began, Rafael Cuen, a Trinidad employee, discovered two ammunition cans full of cash in the kitchen wall, went looking, and found two more cash-filled ammo cans inside the framing of an upstairs bathroom.

    ¶5 After Cuen reported the find to his boss, Bueghly took the four ammo cans but did not tell the new owners about the find, and tried to secret the cans. Cuen, however, eventually told the new owners about the discovery and the police were called. The police ultimately took control of $500,000, which Bueghly had kept in a floor safe in his home.

    ¶6 Jennings/McCallum sued Bueghly for fraudulent
    misrepresentation, conversion, and a declaration that Bueghly had no right to the money, and Bueghly later filed a counterclaim for a declaration that he was entitled to the found funds. In the meantime, Grande filed a petition in probate court on behalf of the estate to recover the money. The two cases were consolidated in June 2009.
If Bueghly had sinister motives in keeping the cash, I wonder if he might have filed his counterclaim in an effort to plausibly deny that he was stealing the money, and to establish his good-faith belief that he was entitled to the loot, thereby (possibly) insulating himself from criminal liability.

(2) In rejecting the homeowner's "finders keepers" defense, the appeals court made these observations on the nature of "found" property and the applicability of the "finders keepers" defense:

  • ¶10 Although elementary school children like to say “finders keepers,” the common law generally categorizes found property in one of four ways. E.g., Benjamin v. Lindner Aviation, Inc., 534 N.W.2d 400, 406 (Iowa 1995) (citing Ritz v. Selma United Methodist Church, 467 N.W.2d 266, 269 (Iowa 1991)).

    Found property can be mislaid, lost, abandoned, or treasure trove. Id. (citing Ritz, 467 N.W.2d at 269); 1 Am. Jur. 2d Abandoned, Lost, and Unclaimed Property § 12 (2012).

    Property is “mislaid”
    if the owner intentionally places it in a certain place and later forgets about it. Terry v. Lock, 37 S.W.3d 202, 207 (Ark. 2001).

    “Lost” property includes property the owner unintentionally parts with through either carelessness or neglect. Id. at 206.

    “Abandoned” property has been thrown away, or was voluntarily forsaken by its owner. Id. (citations omitted).

    Property is considered “treasure trove” if it is verifiably antiquated and has been “concealed [for] so long as to indicate that the owner is probably dead or unknown.” 1 Am. Jur. 2d Abandoned, Lost, and Unclaimed Property § 16 (2012).

    ¶11 A finder’s rights depend on how a court classifies the found property. Terry, 37 S.W.3d at 206 (citation omitted); Ritz, 467 N.W.2d at 268-69; Hill v. Schrunk, 292 P.2d 141, 142 (Or. 1956). In characterizing the property, a court should consider all of the particular facts and circumstances of the case. Terry, 37 S.W.3d at 206 (citing Schley v. Couch, 284 S.W.2d 333, 336 (Tex. 1955)); Corliss, 34 P.3d at 1103 (citing 1 Am. Jur. 2d Abandoned, Lost, and Unclaimed Property §§ 1-14 (1994)) (distinctions between categories of found property are determined by “an analysis of the facts and circumstances in an effort to divine the intent of the true owner at the time he or she parted with the property”).

    Under the common law, “the finder of lost or abandoned property and treasure trove acquires a right to possess the property against the entire world but the rightful owner regardless of the place of finding.” Corliss, 34 P.3d at 1104 (citing Terry, 37 S.W.3d at 206).

    A finder of mislaid property, however, must turn the property over to the premises owner, “who has the duty to safeguard the property for the true owner.” Id. (citing Terry, 37 S.W.3d at 206); see also Benjamin, 534 N.W.2d at 406 (citing Ritz, 467 N.W.2d at 269) (“The right of possession of mislaid property belongs to the owner of the premises upon which the property is found, as against all persons other than the true owner.”).

    ¶12 Significantly, among the various categories of found property, “only lost property necessarily involves an element of involuntariness.” Corliss, 34 P.3d at 1104 (citation omitted). The remaining categories entail intentional and voluntary acts by the rightful owner in depositing property in a place where someone else eventually discovers it. Id.

    For example, the Iowa Supreme Court has stated that “[m]islaid property is voluntarily put in a certain place by the owner who then overlooks or forgets where the property is,” and that one who finds mislaid property does not necessarily attain any rights to it because possession “belongs to the owner of the premises upon which the property is found,” absent a claim by the true owner. Benjamin, 534 N.W.2d at 406 (citation omitted). In Benjamin, the court determined that packets of money found in a sealed panel of a wing during an inspection of a repossessed airplane were mislaid property because the money was intentionally placed there by one of the two prior owners. Id. at 403, 407-08.
The Arizona appeals court noted (in footnote 4) the possible existence of another category of found property:
  • At least one court has recognized a fifth category — “embedded property” — which is property that becomes part of the earth. Corliss v. Wenner, 34 P.3d 1100, 1104 (Idaho Ct. App. 2001). Generally, embedded property “belongs to the owner of the soil” unless the true owner claims the property. See Klein v. Unidentified Wrecked & Abandoned Sailing Vessel, 758 F.2d 1511, 1514 (11th Cir. 1985) (citations omitted); see also 1 Am. Jur. 2d Abandoned, Lost, and Unclaimed Property § 17 (2012) (footnote and citations omitted) (“‘Property embedded in the earth’ includes anything other than gold or silver which is so buried, and is distinguished, in this respect, from ‘treasure trove.’”).

Detroit Feds Pinch Notorious Area R/E Operator Suspected Of Screwing Over Naive Homebuyers With Land Contracts On Homes In Some Stage Of Foreclosure

In Detroit, Michigan, WXYZ-TV Channel 7 reports:

  • For the dozens of people who nave complained for years about the business tactics of a local real-estate investor, this is a day they felt would never come. But [Thursday] morning, FBI agents arrested Leonard Bale, and delivered him to the federal courthouse in Detroit to face a criminal complaint.

    7 Action News has been reporting for months on how 61-year-old Bale of Farmington Hills and his Wolverine Investment company have been selling houses to families that were in some stage of foreclosure. In many cases, they found the property on Craig’s List ads, which in part, lead to the wire fraud charges against Bale [].

    In the federal criminal complaint, Bale is accused of using Craig’s list ads to “execute a scheme to defraud” people who bought houses from him. We spoke to some of his customer’s last fall.

    I put new flooring in, put the gutter up, and we put a brand new back deck on,” said Kim Ostrander of the Garden City house she bought from Bale two years ago. “I handed him $5,000 in cash, then $1,400 more.”

    Foreclosure notices from a bank then came in the mail. Bale went to court to force Ostrander to move out. Though she had a land contract with Bale, his was evicting her as if she was a tenant. Ostrander is now one of ten people who are suing Bale in civil court.

    Ostrander and more than a dozen others showed us the houses Bale sold them, which had lots of repair issues. Bale’s staff allegedly removed the bright orange signs city inspectors posted warning that the homes were in serious disrepair. But Bale allegedly showed the houses to new buyers as if they were move-in condition.

Suspect Pinched In Alleged South Florida Ripoff That Scammed Church Out Of $300K+; Cash Purported To Be Deposit For New Facility Acquisition

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

  • A second corporate officer for a West Palm Beach-based foreclosure rescue company was arrested Thursday after a state investigation into allegations that he misused hundreds of thousands of dollars taken from a Boynton Beach church.

  • Louis Rothman, vice president of the Nationwide Investment Firm Corp. and the registered agent and treasurer for the unlicensed Interstate Title Services and Escrow Corp., faces charges of fraud and acting as an insurance agent without a license. The 75-year-old Delray Beach resident turned himself in Thursday after an arrest warrant was issued based on a Florida Department of Financial Services investigation.

  • Rothman has held high positions in three companies led by Nationwide Investment Firm's President Guilfort Dieuvil, who was arres­ted May 10 and charged with 16 counts of obtaining property by fraud, one count of organized scheme to defraud in the first degree and grand theft. Dieuvil allegedly duped home­owners to sign over deeds with promises of mortgage relief.

  • Detectives found Nationwide had acquired 104 properties in Florida and Georgia worth $9.5 million. But homeowners complain they received little or no help and ended up owing mortgage debt on properties they no longer owned.

  • Rothman's arrest Thursday stems from a deal with the Haitian Bethel Baptist Church, which says it was scammed out of $321,222 by Nationwide Mortgage Bankers Corp. and Interstate Title Services and Escrow Corp., companies run by Dieuvil and Rothman, according to Florida Department of State records.

  • The Palm Beach Post reported on the church in November, following an earlier article about a series of lawsuits filed against Nationwide Investment Firm, Dieuvil and Rothman.

  • The church filed a lawsuit saying it gave the money it saved for a new facility to Interstate Title Services and Escrow for what it thought was a deposit to secure a $1 million loan from Nationwide Mortgage Bankers, Corp. It never got the loan or deposit back, according to the lawsuit.

  • On May 23, the church won a $371,927 judgment against Rothman, Dieuvil, Nationwide Mortgage Bankers Corp., Interstate Title and Nationwide Financial Consultants - another company led by Dieuvel.

Dallas County Suit Challenging MERS' Recording Fee-Stiffing 'Racket' Gets Green Light; Action Seeks To Include All Affected Texas Municipalities

In Dallas, Texas, The Southeast Texas Record reports:

  • A federal judge in Dallas has denied a request to dismiss Bank of America and Mortgage Electronic Registration Systems Inc. from a suit claiming they created a system to avoid paying uncollected mortgage filing fees in Texas counties.

  • On May 23, U.S. District Judge Reed O'Connor of the Northern District of Texas-Dallas Division said the plaintiffs "have brought sufficient evidence to allow the case to go forward."

  • Dallas County filed the initial complaint in September, alleging that Merscorp Inc.'s MERS was established by banks including Charlotte, N.C.-based Bank of America to avoid paying filing fees, as well as to ease transfers of mortgages. Dallas revised the lawsuit in October, seeking to represent all other Texas counties in which a deed of trust has been filed identifying MERS as a beneficiary.

Sunday, June 3, 2012

Alleged "Ghetto Loans" Peddler, City Of Memphis, Shelby County Settle 'Reverse Redlining' Race-Based Discrimination Suit

In Memphis, Tennessee, The Memphis Daily News reports:

  • Wells Fargo & Co. has agreed to settle a federal discrimination lawsuit the Memphis and Shelby County governments filed against the bank by setting a five-year mortgage lending goal of $425 million here, including $125 million in home purchase lending to low- and moderate-income borrowers.

  • The city and county governments filed suit in Memphis Federal Court in December 2009 against Wells Fargo Bank, Wells Fargo Financial Tennessee Inc. and Wells Fargo Financial Tennessee 1 LLC, alleging the company discriminated against its African-American mortgage holders with refinancing that put the homes of those mortgage holders at risk.

  • Former Wells Fargo workers from Memphis were among those alleging the company specifically targeted black customers for the refinancing.(1)
Go here for earlier posts on this and related stories involving accusations against Wells Fargo targeting minority borrowers with crappy loans.

(1) See The Daily Record: Ex-workers allege race-based loan approach at Wells Fargo, which, in reporting on a similar lawsuit brought by the City of Baltimore, describes testimony from two former high-ranking Wells Fargo employees stating that Wells Fargo intentionally made bad loans to African-Americans.

The employees, who worked out of Virginia and Maryland but knowledgeable about the company's national lending practices, according to the complaints, said Wells Fargo marketed subprime loans to predominantly African-American ZIP codes and churches, used software to "translate" marketing materials into African-American vernacular, joked that borrowers who were deceptively steered from prime into subprime loans were "riding the stagecoach to Hell," and that company officials referred to the loans in minority communities as "ghetto loans" and to the borrowers as "mud people," according to The Daily Record story.

Feds Tag Banksters With Suits Over Crappy Mortgage Securities They Allegedly Unloaded Onto Pair Of Now-Defunct Financial Institutions

Reuters reports:

  • The U.S. government has filed three lawsuits against a group of large banks over losses on soured mortgage debt purchased by two small Illinois banks that failed in 2009. Acting as receiver for Citizens National Bank and Strategic Capital Bank, the Federal Deposit Insurance Corp sued a number of banks including Bank of America Corp , Citigroup Inc , Deutsche Bank AG and JPMorgan Chase & Co.

  • Seeking a combined $92 million, the lawsuits accuse the banks of misrepresenting the risks of residential mortgages they packaged into securities, causing losses for investors once the poor quality and defective underwriting became evident. [...] Two FDIC lawsuits were filed in Manhattan federal court and seek a combined $77 million, while a third filed in Los Angeles federal court seeks $15 million.

Deutsche, Affiliate Admit To Peddling Crappy FHA Mtgs; Head NYC Fed On Banksters' Practices: "Seemed To Treat Red Flags As If They Were Green Lights!"

From the Office of the U.S. Attorney (Manhattan):

  • Preet Bharara, the United States Attorney for the Southern District of New York, [and others] announced [] that the United States has settled a civil fraud lawsuit against DEUTSCHE BANK AG, DB STRUCTURED PRODUCTS, INC., DEUTSCHE BANK SECURITIES, INC. (collectively “DEUTSCHE BANK” or the “DEUTSCHE BANK defendants”) and MORTGAGEIT, INC. (“MORTGAGEIT”).

  • The Government’s lawsuit, filed May 3, 2011, sought damages and civil penalties under the False Claims Act for repeated false certifications to HUD in connection with the residential mortgage origination practices of MORTGAGEIT, a wholly-owned subsidiary of DEUTSCHE BANK AG since 2007.

  • The suit alleges approximately a decade of misconduct in connection with MORTGAGEIT’s participation in the Federal Housing Administration’s (“FHA’s”) Direct Endorsement Lender Program (“DEL program”), which delegates authority to participating private lenders to endorse mortgages for FHA insurance.

  • Among other things, the suit accused the defendants of having submitted false certifications to HUD, including false certifications that MORTGAGEIT was originating mortgages in compliance with HUD rules when in fact it was not.

  • In the settlement [...], MORTGAGEIT and DEUTSCHE BANK admitted, acknowledged, and accepted responsibility for certain conduct alleged in the Complaint, including that, contrary to the representations in MORTGAGEIT’s annual certifications, MORTGAGEIT did not conform to all applicable HUD-FHA regulations.
For the lawsuit, see U.S. v. Deutsche Bank, et ano.
In a statement in connection with this litigation, the U.S. Attorney made these observations on the bankster's lending practices that precipitated this lawsuit:
  • The complaint describes, in detail, lenders taking abusive advantage of a vital Government mortgage insurance program, issuing billions in loans to countless aspiring homeowners. But while the homes the defendants issued loans for may have been built on solid ground, the defendants’ lending practices were built on quicksand.

  • Borrower after borrower defaulted – often within just months of closing – because those loans were doomed to fail. Why? Because, as alleged, the defendants simply ignored every type of red flag and breached every duty of due diligence before endorsing mortgages for federal insurance.

  • In fact, they seemed to treat red flags as if they were green lights. Ultimately, prudence was trumped by profit, and good faith took a back seat to good fees.