Saturday, August 4, 2012

Wanted: Sleazy, Rubber-Stamping Part-Time Attorney To Sign Ghost-Prepared Court Documents In Collection Lawsuits For Zombie Debt Buyer; Inquire Below

St. John's University Law Professor Jeff Sovern comments on Public Citizen's Consumer Law & Policy Blog on the following excerpt taken from an ad found on a Craigslist posting:

  • We are a collection agency/debt buyer. What we are looking for is a part time attorney to work for us as our corporate counsel, on our payroll, about 5 to 6 hours a week. This is a short term employment arrangement, no longer than 90 to 120 days.

    Your job will be to sign pleadings, praecipe for entry of appearances, praecipe for writ of execution, and garnishment orders. Our paralegal will prepare all paperwork for your signature. This is very standard stuff for us.

    If you are an attorney looking for challenging legal work, this is not for you. WE DO NOT NEED F LEE BAILEY- we are fee shopping.

    If you passed your boards with a D+, and you can sign your name, you possess all the credentials required for this job. If this opportunity interests you, please feel free to reply to this email with a brief description of who you are, when you got your law license, and what you will be needing from us in the way of compensation.
For Professor Sovern's comments, and the link to the Craigslist post, see Debt Collection Attorney Listing: Attorney Who Can Sign Name is Good Enough.

NYC Co-Op Moves To Boot Chain-Smoking Resident Accused Of Willfully Neglecting Effects Of Her 2nd-Hand Smoke Intrusion Into Hallways, Other Units

In New York City, the New York Post reports:

  • Hit the bricks, smokestack!

    A chi-chi Upper West Side building wants to boot the trust-fund transsexual who’s been stinking up the joint with her chain smoking. In papers filed in Manhattan Supreme Court, the co-op board of the El Dorado, at 300 Central Park West, says Diane Wells has ignored its pleas to be more considerate of her neighbors — even refusing to use the air purifiers residents bought her for her ninth-floor apartment.

    "Wells smokes so heavily that the smoke and odor permeates the elevator and extends as far down as the lobby of the building and at least as high up as the apartments on the 10th floor,” the complaint says.

    On multiple occasions, the cigarette smoke and odor [have] filled the entry halls on at least the ninth and 10th floors of building, requiring shareholders to traverse a cloud of smoke between the elevator and their apartment entrances.”

    The odor “permeates the inside of other shareholders’ apartments,” says the filing on behalf of the El Dorado, which has been home to the likes of Alec Baldwin, Bono, Michael J. Fox and Marilyn Monroe over the years.
    While Wells has lived — and smoked — in the apartment for about a decade, the problem apparently started this year.

    The building blames it on holes in the walls of Wells’ four-bedroom apartment, as well as a hole in the plumbing line. Management has offered to seal the holes, but Wells, 59, has denied them access, the suit says.

    When she refused the building’s requests to buy air purifiers for her apartment, fed-up residents bought her some on their own. But she’s refused to use them, the suit says.

    Wells, who was born a man, also has fallen behind on her common charges to the tune of $18,000 and is $42,000 short in the escrow account she agreed to maintain in return for living in the apartment, which used to belong to her late mother.

    The building is seeking an order barring her from smoking until the apartment is repaired — and an order giving her the heave-ho.
    She could not be reached for comment yesterday. Her multimillionaire mom, Constance Cheney, died in 2007.

    A Manhattan judge allowed Wells to stay there pending the outcome of a battle for her mother’s estate in Manhattan Surrogate’s Court, where she’s duking it out with her two siblings.

Condo-Residing Couple Score Win In Disability Discrimination Complaint Against HOA Over Lower-Floor Neighbors' 2nd-Hand Tobacco, Pot Smoke Intrusion

In Vancouver, British Columbia, The Toronto Star reports:

  • Condominium corporations have a duty to accommodate residents who have sensitivity to second-hand cigarette smoke, according to a recent decision of the British Columbia Human Rights Tribunal. Corporations who fail in their duty may well be subject to penalties.

    The case involved Melanie and Matthew McDaniel, who lived in a 39-unit condominium in Langley, B.C. Shortly after the McDaniels took possession in March 2008, they experienced second-hand smoke entering their unit as a result of other residents smoking tobacco and marijuana on the patios and decks below their unit.

    For the next three years, the McDaniels were involved in lengthy ongoing communications with the board and property manager. Melanie suffers from severe allergic reactions to all types of smoke and perfumes. She was pregnant when she moved in and claims her health was being seriously affected by the smoke fumes.

    Melanie kept a two-year log in which she documented some 175 incidents of smoke infiltration into her unit.

    Matthew also suffers from chronic health issues, including diabetes and hypoglycemia, making it important that he avoid exposure to second-hand smoke.

    The condominium corporation suggested that the McDaniels install an air conditioner, and that they attempt to get 25 per cent of the owners to petition for a no-smoking bylaw. It asked residents who smoke to be respectful of others, it wrote the owners below the McDaniel unit asking them not to smoke on their patios, and it considered imposing a total smoking ban.

    Nothing worked. Eventually, the McDaniels took the matter to the B.C. Human Rights Tribunal, alleging that the condo corporation failed to accommodate their complaints adequately or appropriately.
  • In the end, the tribunal sided with the McDaniels. It acknowledged that the McDaniels were physically and psychologically vulnerable and that they were treated by the condominium and the property managers with “what can best be termed a patronizing or benign neglect for a period of almost three years.”

    I accept that the (corporation’s) conduct severely diminished the McDaniels’ enjoyment of the property and had a physical as well as significant emotional impact on them,” tribunal chair Bernd Walter wrote in his decision,

    Walter ordered that the corporation refrain from committing a similar contravention in the future (even though the McDaniels had lost their unit to foreclosure and had moved out), but declined to order that they pass a non-smoking bylaw.

    The condominium was ordered to pay the McDaniels $1,118.88 for an air conditioner and to reimburse them for naturopathic consultations.

    The tribunal also ordered the condominium to pay Matthew $2,000, and Melanie $4,500, as compensation for injury to their dignity, feelings and self-respect.
See McDaniel v. Strata Plan LMS 1657, 2012 BCHRT 167 (May 14, 2012) for the ruling of the British Columbia Human Rights Tribunal.

Remaining Residents In Failing 20-Unit Condo At Risk Of Getting The Boot After Being Belted With $47K+ Overdue Water Bill, Shut-Off Notice

In Warrensville Heights, Ohio, WEWS-TV Channel 5 reports:

  • Owners of the Clarkwood Townhouses #3 in Warrensville Heights were issued a shocking piece of news, their homeowners association is more than $47,000 behind on their water bill.

    To make matter worse, the Cleveland Division of Water sent them a notice that their water is scheduled to be turned-off on Aug. 10, if payment arrangements aren't made soon.

  • Townhouse owners like Gloria Davis told NewsChannel5, many will lose their homes if water service is interrupted. "If the water is shut-off here, that would become a medical emergency crisis," said Davis. "We have seniors living here, we have children living here."

    Davis and other tenants said they were not aware their association water wasn't being paid over the past three years, and blame their former management company, and association board for the massive total.

    The huge water bill was also caused by a growing number of association members not paying their monthly dues, and going bankrupt. NewsChannel5 confirmed 12 of the 20 units on the property are now vacant, many of the unoccupied units are in foreclosure.
For more, see Warrensville Heights homeowners association faces $47,000 water bill (Homeowners blame former management company).

Friday, August 3, 2012

Baltimore Pair Accused Of Hanging Dead Racoon On African Family's Home Plead Guilty To Interference With Housing Rights, Civil Rights Conspiracy

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

  • Dena Whedbee, age 42, and her daughter Brittany Whedbee, age 20, both of Baltimore, pleaded guilty [] to their involvement in a racially-motivated conspiracy to interfere with an African family’s housing rights by hanging a dead raccoon on the family’s porch.
  • According to their plea agreements, Dena and Brittany Whedbee conspired with Joshua Wall, Billy Pratt, and another co-conspirator to hang a dead raccoon from a noose on the porch of a family from Africa, in order to frighten the family and interfere with their housing rights.

  • Dena Whedbee admitted that she and another co-conspirator found the dead raccoon. Wall, Pratt, and the other conspirator hung the raccoon on the porch of the home in the middle of the night of April 29, 2010. Both Dena and Brittany Whedbee also admitted that they encouraged their co-conspirators to hang the raccoon on the family’s porch. The investigation is ongoing.

    Dena and Brittany Whedbee each face a maximum penalty of 10 years in prison and a $250,000 fine for conspiracy to deprive a person of civil rights and one year in prison and a $100,000 fine for violating the Fair Housing Act.
For the U.S. Attorney press release, see Two Conspirators Plead Guilty to Civil Rights Violation (Used a Noose to Hang a Dead Raccoon on a Family’s Porch).

Man Gets 42 Months For Interference w/ Another's Housing Rights, Civil Rights Conspiracy; Played Role In Vandalizing, Torching Biracial Man's Home

From the U.S. Department of Justice (Washington, D.C.):

  • A Missouri man was sentenced today to 42 months in prison for his role in the vandalism and arson of a biracial man’s home in Independence, Mo., the Department of Justice announced.

    Charles Wilhelm, 23, of Independence, was sentenced in the Western District of Missouri by U.S. District Judge Dean Whipple.

    On March 8, 2012, Wilhelm pleaded guilty to one count of conspiracy and one count of violating the Fair Housing Act. Wilhelm’s co-conspirators, Teresa Witthar and David Martin, pleaded guilty on Feb. 2, 2012, and March 7, 2012, respectively, for their roles in vandalizing and burning down Nathaniel Reed’s home in Independence.

    According to the plea agreement filed with the court, Wilhelm, Witthar and Martin conspired to intimidate and scare Reed, a biracial man, into moving out of the Highland Manor Mobile Home Park in Independence, in part because of his race. On or about June 6, 2006, Wilhelm, along with Witthar and Martin, entered Reed’s home, without his permission, and vandalized it by writing at least 15 racially derogatory slurs on the walls of his trailer.

    Two days later, on or about June 8, 2006, Witthar drove Wilhelm and Martin to a neighborhood behind Reed’s home so that they could set fire to it without being detected. Witthar waited in her vehicle for Wilhelm and Martin to set the fire and then provided them a ride back to the Highland Manor Mobile Home Park.
  • Witthar was sentenced to 63 months in prison on June 18, 2012. Sentencing for Martin is scheduled for Aug. 2, 2012.

Baltimore Landlord Gets 12 Months Prison, 6 Months House Arrest For Improper Lead Based Paint Abatement, Failure To Disclose Hazards To Tenants

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

  • U.S. District Judge Benson E. Legg sentenced Cephus R. Murrell, age 69, of Catonsville, Maryland, [] to a year and a day in prison, followed by six months of home detention as part of one year supervised release, for improper lead paint abatement at rental properties owned and managed by Murrell, as well as failure to disclose to tenants the presence of documented lead-based paint hazards. Murrell owns and manages approximately 175 rental housing units throughout Baltimore.
  • [M]urrell pleaded guilty to three misdemeanor counts of violating the Toxic Substances Control Act. According to his guilty plea, on September 15, 2010, Murrell had workers conduct lead-paint abatement work at one of his apartments, located on Frederick Avenue in Baltimore, while one of the apartment tenants and his children were present on site, in violation of the lead-paint abatement regulations.

    In addition, Murrell provided MDE [Maryland Department of the Environment] with a Project Notification Form for this project in which he falsely stated that a particular supervisor would be at that location on a particular date, when in fact no supervisor was on site, also in violation of the lead-paint abatement regulations.

    Murrell admits that there were several instances in which he falsely certified that workers would be conducting lead abatement work and that a particular supervisor would be on site to supervise the work, when in fact, no supervisor was on site.

    For example, Murrell had notified MDE that he would be conducting abatement work on August 31, 2010, and that a specific individual would be supervising it. When officials from MDE visited the apartment on that date they found workers conducting abatement work, but no supervisor was on site. The alleged supervisor was, in fact, out of town on travel.

    Finally, Murrell admits that he and his company failed to disclose to tenants the presence of documented lead-based paint hazards when they rented units he owned and managed. Many of these units had a history of lead-based paint problems that had been documented by MDE.
For the U.S. Attorney press release, see Baltimore City Landlord Sentenced to Prison for Lead Paint Violations in Rental Properties He Owns and Manages (Previously Cited by the State for Numerous Lead Paint Violations and Documented Children with Elevated Lead Blood Levels Living in His Properties).

Couple Get Suspended Sentence After Copping Pleas To Fraudulently Scoring Section 8 Rental Benefits, Mortgage Loans

From the Office of the Massachusetts Attorney General:

  • [P]aulo Montenegro, age 45, and his wife, Rosana Pereira, age 48, each pleaded guilty in Middlesex Superior Court to charges of Larceny by False Pretense (3 counts) and Conspiracy to Commit Larceny by False Pretense (3 counts), in connection with fraudulently obtaining Section 8 public housing benefits and fraudulently obtaining mortgage loans from financial lending institutions.

    After the pleas were entered, Judge Maureen Hogan sentenced Montenegro and Pereira to two years in the House of Correction, sentence suspended for four years, and ordered Montenegro and Pereira to pay restitution and $25,000 each in fines.
  • Pereira and Montenegro misrepresented material information to the Cambridge Housing Authority and HUD in order to obtain the benefit of Section 8 public housing subsidies. Pereira, in conspiracy with Montenegro, under-reported her income and assets, and reported that she was unmarried, when in fact she was married to Montenegro, and they lived together, shared finances, and benefited from each other’s incomes.

    As a result of such misrepresentations, Pereira and Montenegro received the benefit of renting a three bedroom apartment in Cambridge at a greatly reduced rate, while the Cambridge Housing Authority and HUD covered most of the rent.

    For two years during the period when Pereira and Montenegro fraudulently benefited from Section 8 public housing subsidies, they were not even living in the Cambridge apartment that they were renting at a reduced rate; instead, they were living in a home in Weston that Montenegro had purchased for $860,000.
For the Massachusetts AG press release, see Weston Couple Pleads Guilty, Sentenced in Connection with Section 8 Public Housing Fraud and Mortgage Fraud (Defendants Defrauded Public Housing Subsidy Program and Mortgage Lenders).

Bay State AG Squeezes Guilty Pleas From Pair Charged With Improper Asbestos Removal, Disposal For Work On Public, Private Buildings

From the Office of the Massachusetts Attorney General:

  • The owners of a Lynnfield asbestos removal company have pleaded guilty and been sentenced in connection with the improper removal and disposal of asbestos for work performed on numerous public and private buildings in the communities of Lynn, Beverly, and Marblehead, Attorney General Martha Coakley announced [].

    Asbestos is a hazardous material that must be properly removed and reported to ensure the public’s safety,” AG Coakley said. “These individuals disregarded the laws around asbestos removal and put people at risk of being exposed to this dangerous toxin.”
  • David Harder, Jr., age 48, and Julie Rosati, age 52, of Lynnfield, each pleaded guilty in Essex Superior Court on charges of violating the Massachusetts Clean Air Act (12 counts), violating the Massachusetts Solid Waste Act (2 counts), and Evasion of Unemployment Insurance (3 counts). Rosati also pleaded guilty to Filing False Statements for the Protection of the Environment (1 count).

Thursday, August 2, 2012

Bay State Landlords Settle Housing Discrimination Charges Alleging Refusal To Rent To Families w/ Young Kids To Dodge Lead Based Paint Abatement Rules

From the Office of the Massachusetts Attorney General:

  • Multiple landlords have settled allegations that they refused to rent to families with children in order to avoid obligations to remove lead paint hazards, Attorney General Martha Coakley announced [].

    Under state law, it is illegal to discriminate against housing applicants because they have children or because the rental would require the landlord to abate lead hazards.
  • Celina Puszko and Alojzy Jackiewicz

    According to the complaint filed on June 22, in Suffolk Superior Court, Dorchester property owners Celina Puszko and Alojzy Jackiewicz discriminated against families with children under the age of six by refusing to rent to them in order to avoid their obligation to abate lead paint hazards. Along with the complaint, the parties filed a consent judgment, [...]. The consent judgment requires Puszko and Jackiewicz to delead at least one of their three rental units in Dorchester, to attend fair housing training, and to pay $3,000 in restitution and penalties.

    Gregory Howell and Scott Michels

    According to the assurance of discontinuance filed on June 25, Gregory Howell and Scott Michels, who jointly own four rental properties in Bourne, Wareham, and Fairhaven, posted a discriminatory advertisement for one of their Wareham properties on the website

    The advertisement specifically stated that certain families with young children were not eligible to rent the advertised rental property because the property had not been deleaded. Under the terms of the assurance, Howell and Michels agreed to attend fair housing training, delead the property, and pay a penalty of $3,000 to the Commonwealth.
For the Massachusetts AG press release, see Landlords Settle Claims of Housing Discrimination (Landlords Accused of Refusing to Rent to Families with Children Agree to Remove Lead Paint from Rental Properties).

WV Court Order Temporary Temporarily Stalls Business For Auto Title Lender Accused Of Falsely Threatening Slow-Pay Consumers With Arrest, Etc.

In Charleston, West Virginia, The West Virginia Record reports:

  • Virginia-based Fast Auto Loans Inc. has been ordered to stop collecting payments, seizing vehicles and entering into new loans with West Virginia residents, according to Attorney General Darrell McGraw's office. That is, until a hearing on Aug. 24, the attorney general said in a news release []. Jefferson County Circuit Court Judge David H. Sanders entered the four-page order July 3.

    The order also requires defendants Fast Auto Loans; its parent company, Community Loans of America; and their owner, Robert I. Reich, to produce all records of their loans to state consumers, including records of their marketing activities, to the Attorney General's Office within 30 days.

    A lawsuit filed by McGraw's Consumer Protection Division against the defendants prompted the circuit court order. The suit, filed June 14, sought to prohibit them from "victimizing" state consumers who travel to neighboring Virginia to obtain title loans. Such loans are made to people who own motor vehicles. The loan is secured by a lien on the borrower's vehicle.

    The loans in question charge interest rates of 300 percent Annual Percentage Rate, or APR. Consumers' vehicles are seized when they default on the loans.
  • In his lawsuit, the attorney general alleged the defendants engaged in various unlawful debt collection activities and other unfair or deceptive practices, including repeated telephone harassment, disclosure of debts to employers and other third parties, and false threats of arrest or criminal prosecution to force consumers to relinquish possession of their vehicles without a court order.

Backfiring 1031 Deal Leaves Investors In Hot Water; Despite Positive Cash Flow, 'Exploding' Balloon Payment & Low Appraisal Put Building In F'closure

In Las Vegas, Nevada, the Las Vegas Review Journal reports:

  • If Randy Ghezzi had it to do all over again, he would have paid the capital gains tax on the sale of some inheritance property, instead of investing the money in a Las Vegas office building through a 1031 exchange.

    Ghezzi now has about $550,000 tied up in the medical office building at 2716 N. Tenaya Way, near Mountainview Medical Center, that's facing foreclosure. "I would have personally walked the check to the IRS office," said the investor, who works for the city of Pocatello, Idaho.

    Ghezzi, 50, is one of 34 investors suing Wells Fargo Bank and its special servicer, LNR Partners, to stop the foreclosure. In documents filed in Clark County District Court, they allege fraud, conspiracy to secure an inflated appraisal and unlawful foreclosure. They're seeking more than $30 million to cover their investment, attorney's fees and lost profits.

    In one regard, the lawsuit is no different than countless others spawned by the Las Vegas real estate bust, recession and overhyped expectations.

    But in this case, the 34 relatively small investors may lose everything even though they've never missed a loan payment, and are in no danger of doing so. The building generates about $440,000 in monthly rental income, more than enough to cover the their interest-only loan payment of $235,000 per month, attorneys for the investors said.

    Problems arose when the $50.7 million loan came due in full last August. The investors were unable to refinance because the property, appraised at $74 million when they bought it, now is valued at about $44 million.

Judge Slams Brakes On Condo Lien Foreclosure Where HOA Pocketed Substantial Payment From Delinquent Unit Owner, Then Failed To Tell Court

In New York City, Habitat Magazine reports:

  • Most condominium boards and their managers and attorneys act in what they perceive to be the best interests of their condo associations. But when one Manhattan board in an arrears foreclosure tried to not let the owner pay, and then tried to not tell the court when it did let the owner pay, the judge called the board's actions "inexplicable." You really, really don't want a judge to say that.
  • Judge Joan A. Madden, in her July 10, 2012, decision rejecting the board's request for summary judgment, scathingly wrote that, "Even though [the board's] Updated Tenant Ledger clearly shows that defendant made a $7,397.91 payment … [the board] simply seeks the relief … without mentioning such payment and acknowledging that defendant satisfied a substantial portion of the lien for unpaid common charges ... [or that the board] has been charging defendant for 'legal fees.' ... [The board's] silence as to the foregoing payment and charges is inexplicable."
For the ruling, see Board of Mgrs. of the Clinton West Condominium v. Desmond, 2012 NY Slip Op 31791(U) (Sup. Ct. New York County, July 2, 2012).

Wednesday, August 1, 2012

Suit Tags Freddie, Fannie For Alleged Wrongful 'Government Entity' Exemption Claim To Dodge Deed Recording Taxes Upon Taking Title To Foreclosed Homes

In Dayton, Ohio, The Associated Press reports:

  • County officials in southwest Ohio have filed a class action lawsuit against two mortgage giants they say owe millions in unpaid taxes.

    Montgomery County filed a federal lawsuit Wednesday that says Fannie Mae and Freddie Mac wrongfully claimed various exemptions to avoid paying transfer taxes to state counties.

    Transfer taxes are owed to a county when a deed is recorded. The lawsuit claims the companies didn't pay transfer taxes involving banks that foreclosed on homes and new homeowners. Officials say both companies filed for exemptions as government entities and other inapplicable exemptions for an unspecified time.

    The lawsuit involves most state counties. Summit County has filed an individual case.

Ch. 13 Trustee Notorious For Invoking 'Show Me The Note' Defense To Divert Debtor Payments Away From Banksters To Other Creditors Tagged In BofA Suit

In Nashville, Tennessee, the Nashville Business Journal reports:

  • In a rare legal counter move, Charlotte, N.C.-based Bank of America has filed a lawsuit against Nashville's Chapter 13 bankruptcy trustee. It's the first time in recent Tennessee history that a large lender has sued a trustee of the court, according to a local bankruptcy attorney.

    The move marks an effort on behalf of the bank to put an end to a common defense tactic used by debtors and foreclosure judges in the aftermath of the mortgage meltdown. Known as "show me the note," the tactic forces a lender to offer up physical documentation that they actually own the mortgage.

    It's a method that has been successful in Nashville, where bankruptcy trustee Henry "Hank" Hildebrand has become well known for his efforts to force mortgage companies to produce the original note when filing a claim in bankruptcy proceedings. (Tennessee is a state that doesn't require judicial approval for foreclosures, so the process typically takes place in bankruptcy court.)

    But it can be a lofty order for lenders that, following the securitization boom, bundled up millions of home loans, sold them and packaged them into bonds. Bank of America is fed up.

    In mid-May, the bank filed a lawsuit (tucked away as an adversary proceeding in a consumer bankruptcy case) against Hildebrand for taking mortgage payments from the debtors, bypassing the bank and passing the cash along to other creditors.

    Hildebrand's defense? Bank of America had the mortgage but couldn't produce the underlying promissory note — often referred to as a "naked" mortgage.

    Bank of America fired back, citing cases in other states where original lenders didn't have to file a claim. Courts in Arizona and Massachusetts have recently ruled on the issue, partially siding with the banks.

    The rub? Bankruptcy rules in Tennessee still require a timely claim, the mortgage and the original note, rules that Hildebrand has followed to the tee during his tenure.

    The bank also charged in court documents that because of Hildebrand's methods, the debtors wouldn't have the chance for a "fresh start." "The trustee would affirmatively state that the term 'fresh start' is not found in the bankruptcy code, is undefined in the complaint and raises an ambiguous and confusing assertion to which the trustee cannot respond," Hildebrand said in his response to the lawsuit.

HOAs Add Nonlitigious Tactics To Collection Efforts Against Unit Owners Owing Back Due Maintenance Fees

In New York City, The New York Times reports:

  • A SUCCESSFUL condominium depends, in large part, on owners’ paying their monthly fees promptly and in full. Delinquencies can mean less money for maintenance and amenities — and draw the ill will of fellow residents. While the sheer size of larger buildings can often blunt their impact on the budget, small buildings with a high number of delinquencies can be toxic for buyers and a millstone for sellers.

    Now, with New York’s economy seemingly recovering, condominium boards are growing more aggressive in cracking down on delinquent owners, according to brokers, lawyers and board members.

    Some are publicly shaming deadbeats by posting their names on hallway bulletin boards or barring them from facilities like health clubs and concierge services. Others are reflexively filing liens against owners who are more than 60 days in arrears. And boards are writing requirements into their bylaws to provide additional protections.
  • [C]ondominiums have begun employing [] nonlitigious tactics to persuade the delinquent owner to pay up. This can include barring the owner — or the owner’s tenant, if the unit is being rented — from using nonessential services in the building like the health club or the pool. Doormen may be required to stop accepting packages and deliveries. Some buildings even resort to public humiliation by posting names in common areas.

    A number of our buildings, especially those with high-level amenities, are now passing house rules that revoke the privileges of owners or their tenants who are in default for more than 60 or 90 days,” said Dan Wurtzel, the president of Cooper Square Realty, which manages more than 500 buildings in New York City.

    One complex, Zeckendorf Towers at 1 Irving Place, recently instituted a rule that prohibits a tenant from paying the unit owner advance rent, so that if the owner becomes delinquent it will be able to collect directly from the tenant.

    Now, in the event the owner doesn’t keep up with the common charges, this gives the board the ability to go directly to the tenant and have them pay us,” said Lynda Deppe, a senior vice president of City Connections Realty and a resident broker at Zeckendorf Towers. “If they had already paid their rent, we wouldn’t have that leverage.”

NJ Homeowner's Tab To Recover Home Lost In Municipal Lien Foreclosure Stemming From Unpaid $140 Sewer Bill Could Top $50K

In Middletown, New Jersey, reports:

  • For Dominick Vulpis, a $140 sewer bill has become a $50,000 nightmare. Vulpis didn’t know he had a big problem with the four-year-old bill until last December, he said, when he was served with papers notifying him that he had lost his Middletown, N.J., home to foreclosure. Neither he nor his wife were notified of the foreclosure process until the final judgment was granted last December, he said.

    It was never brought to my attention until it was too late and we were served with papers saying we had to move out of our house,” said Vulpis, a 60-year-old plumber. “I may pay a bill late, but I pay them. I’m not trying to beat anyone for $140.”

    Incredibly, that $140 debt snowballed to the loss of his home after the town sold the lien on his property to an investor, an increasingly common practice as cash-strapped cities and towns try to raise badly needed revenues to close widening budget gaps.

    Vulpis eventually got the foreclosure overturned and didn't have to move out of his house, but not before his attorney negotiated a settlement with the investor. His mortgage company put up $37,500, which was paid to the investor and will be added to Vulpis’ mortgage balance, according to his attorney, who is now negotiating a loan modification with the lender. Combined with attorney fees and added interest for the higher mortgage balance, Vulpis’ total tab could top $50,000.
  • [A]ttorneys say homeowners often aren’t given proper notice to defend their home from seizure before it’s too late.

    Two years ago, the District of Columbia sold a tax lien on the home Stanley Stefan lived in for nearly 40 years. The problem started six years ago, after district tax officials erroneously revoked a homestead exemption, which has since been restored, he said.

    But Stefan, a 68-year-old retired chauffeur, said he didn’t learn until this year that there’s still an unpaid balance on his tax bill, which an investor is now trying to collect, with interest. Stefan has hired an attorney to try to reverse the tax sale.

    I want my property and no payment: I don’t think I’ve done anything wrong,” he said. “I paid what I owed. I shouldn’t be held accountable for a mistake the district made.”
  • Some states and local governments have moved to protect homeowners from the harshest outcomes. Last year, New York City passed an ordinance that allows homeowners to work out payment plans when they fall behind, caps the rate investors can charge on uncollected tax bills and banned tax lien sales for debts of less than $2,000.

    The law also made it easier for homeowners to apply for an exemption that prevents their liens from being sold. As a result, the number of tax lien sales has dropped 24 percent so far this year, according to the New York City Comptroller's office.

Tuesday, July 31, 2012

DC Feds Squeeze Plea From Sale Leaseback Peddler For Running Equity Stripping Scam That Ended In Foreclosure, Eviction For Unwitting Homeowners

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

  • Carline M. Charles, 41, who operated a business that supposedly would rescue distressed homeowners from foreclosure, pled guilty [] to conspiracy to commit bank fraud for her role in a mortgage fraud scheme that cost lenders at least $1 million, [...] As part of her plea agreement, she agreed to the forfeiture of a money judgment of $838,978, representing her share of proceeds of the crime.

    According to a statement of offense, signed by the defendant as well as the government, Charles represented herself as the owner of C & O Property Solutions, LLC, a company that offered refinancing options to homeowners in the District of Columbia and Maryland whose properties were facing imminent foreclosure.

    In fact, she was operating a scheme that ultimately involved 12 homes along with fraudulently obtained mortgages, financial losses for lenders, and evictions for many of the people who turned to her for help.

    Charles and others contacted homeowners through solicitation postcards or by telephone, using foreclosure and land records to identify people who were in financial distress. Charles told the homeowners that they could refinance their mortgage loans with the assistance of financial partners or investors so they could buy time to repair their credit.

    She assured them that their names would remain on the property deeds after thisrefinancing.” Later, after a period of about six months, according to Charles, the homeowners could refinance the mortgages and remove the partners or investors from the property deeds.

    While the homeowners believed they were refinancing their mortgage loans, in actuality they were selling outright their properties to straw purchasers recruited by Charles. Charles and others paid the straw purchasers fees of up to $10,000 per transaction in return for use of their personal information to purchase properties.

    All told, these actions led to mortgage lenders issuing loans of approximately $4 million. Charles arranged to siphon out roughly $1 million of this money from the properties for herself or her company. She used the money to pay her own personal expenses and to continue perpetuating the scheme.

    In addition, Charles required many of the distressed homeowners to pay a monthly “mortgage” payment, which she claimed would be forwarded to the lenders or placed in escrow. Many homeowners paid her, as required, providing a total of about $114,000.

    Charles forwarded the mortgage payments for a period of time, but eventually stopped doing so. This led to the foreclosure of 12 properties that had the fraudulently obtained mortgages, the evictions of most of the homeowners, and a loss to the lenders of between $1 million and $2.5 million.(1)
For the U.S. Attorney press release, see Business Owner Pleads Guilty in Mortgage Fraud Scheme That Cost Lenders More Than $1 Million (Homeowners Turned to Her to Avoid Foreclosure, Wound up Evicted).

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

Cal. AG Score $4M Judgment Against Loan Modification Racket That Targeted 1,000+ Consumers; Civil Lawsuit Leads To Some Jail Time For One Scammer

From the Office of the California Attorney General:

  • Attorney General Kamala D. Harris [] announced defendants who ran a national loan modification scam were ordered to pay more than $4 million in penalties and restitution, including $2 million to consumers who were falsely promised modifications of their mortgage loans.

    More than 1,000 customers paid more than $2 million for loan modification services to Statewide Financial Group, Inc., which did business as US Homeowners Assistance and, and was based in Orange County. In July 2009, the Attorney General’s office shut down the business, which had been in operation since January 2008.
  • The Orange County Superior Court ordered that every US Homeowners Assistance loan modification customer should receive a full refund upon request. The defendants were also permanently enjoined from engaging in the conduct that led to the lawsuit and were ordered to pay $2 million in civil penalties. It is unclear, however, how much money will be recovered and available to pay refunds or penalties.

    The prosecution of this action took nearly three years, culminating in a multi-week bench trial in March 2012. The business’ owners, Zulmai Nazarzai and Hakimullah Sarpas and Fasela Sheren (who went by the name Sharon Fasela), were all found liable for violating California’s Unfair Competition Law and False Advertising Law.

    In a separate proceeding in late 2010, Attorney General Harris successfully prosecuted Nazarzai for contempt of court for his refusal to turn over $360,000 unlawfully taken by defendants as ordered by the court.

    He has been incarcerated in the Orange County jail since December 2010 because of his continued refusal to comply with the court’s order.
Go here for the court's Judgment and here for the court's Statement of Decision.

More On Trouble With Land Titles Arising Out Of Wrongful Foreclosures

Albany Law School Professor Elizabeth Renuart writes in Public Citizen's Consumer Law & Policy Blog:

  • [T]here is growing evidence that the parties to securitization deals handle and transfer the legally important documents that secure the resulting investments — the loan notes and mortgages — in a careless and, at times, fraudulent manner.

    Consequently, the foreclosing parties frequently do not possess the right to foreclose and the resulting sales may be unlawful. Defective sales harm homeowners when they lose their homes to the wrong party. Moreover, they could use the extra time afforded by a delayed or jettisoned foreclosure to find another solution, such as a loan modification or short sale.

    Wrongful foreclosures affect another important group, the purchasers. If title to the property is flawed as a result, those parties potentially buy nothing and can transfer nothing. Clear title to real property in the United States may be in jeopardy. The problem is most acute in non-judicial foreclosure states because doctrines of finality do not apply and state law may permit post-sale challenges.
See also:

Bail Set At $250K Each For Trio Accused Of Running Upfront Fee Loan Modification Foreclosure Rescue Ripoff Throughout Southern California

From the Office of the Ventura County, California District Attorney:

  • District Attorney Gregory D. Totten announced [] the filing of a felony complaint against Los Angeles residents Nino Vera (DOB 4/25/60), Rene Solis (DOB 1/17/60), and Hector Menendez (DOB 5/23/56).

    Vera is charged with nine counts of foreclosure consultant fraud and two counts of grand theft. Solis is charged with five counts of foreclosure consultant fraud and three counts of grand theft. Menendez is charged with two counts of foreclosure consultant fraud and one count of grand theft.

    The charges arise out of a fraudulent home loan modification and foreclosure rescue program operating across Southern California under the business name of “Sunset Beach Management.”

    The defendants are accused of collecting thousands of dollars in upfront fees from struggling homeowners while promising to modify mortgage loans and “save” their homes from foreclosure. The victims received no actual services from the defendants and, in addition to losing thousands of dollars, many lost their homes through foreclosure proceedings. Total victim losses are estimated to exceed $78,000.

    The arrests of Vera, Solis and Menendez in Los Angeles follow a two-year investigation by the District Attorney's Real Estate Fraud Unit. Bail was set for all three defendants at $250,000.

Monday, July 30, 2012

Rush Is On For Payday Lenders Seeking Out, Striking Associations With Indian Tribes For Legalized Loan Sharking Rackets

From a recent post on Credit Slips:

  • Think about what happens when you pit tribal sovereign immunity against effective consumer protection laws. In my view, no one wins. Yet payday lenders are now very actively seeking tribes with whom to partner, in order to get the benefits of tribal sovereign immunity. As one might expect, the payday lenders make out big and in most cases, the tribes get very little, at least so far.
  • The payday loan industry generates $52 billion worldwide each year, and Chukchansi officials hope to get a piece of it. They're not alone; about three dozen tribes are in the business across the United States, said Allen Parker, a California consultant who works with tribes nationwide.
  • Although tribes expect to turn a profit, competing payday lenders complain that it's at their expense because tribes are sovereign nations that can ignore state regulations. While California sets a cap of $300 and a 15% interest rate for nontribal payday loans, Blue King's maximum loan is $1,000 -- and the sky's the limit for its interest rate.
  • This article explores how tribal sovereign immunity is being used in the context of payday lending to avoid state law and explores the ramifications of this for both consumer-protection regulation and tribes.

Suit: Lawyer Letter Demanding Back Rent, Failing To Include Required Disclosure In Connection w/ F'closed Homeowner's Eviction Violates FDCPA

In St. Louis, Missouri, Courthouse News Service reports:

  • Deutsche Bank and a Missouri law firm evict people from their homes illegally, a couple claims in a class action in City Court. Sonja Lawson and Ross Schuman sued Boyd Law Group, of St. Peters, Mo., and Deutsche Bank National Trust. They claim the defendants evict people in violation of the Fair Debt Collection Practices Act.

    Lawson and Schuman say they got a letter from the defendants on March 19, threatening legal action for back rent.(1) They say the letter failed to disclose that it was from a debt collector trying to collect a debt, and that though trustee's deeds claim their home was bought at a foreclosure sale, that was not the case.

    "Thus contrary to the express representation in defendant's form letter, Deutsche Bank National Trust did not purchase the plaintiff's home, but was assigned an illegal credit bid," the complaint states.

    "This representation by defendant is grossly misleading in that it not only conceals the true nature of the foreclosure sale from plaintiff, but also actively covers up the whole process of the credit bid being assigned by representing that Deutsche Bank 'purchased' the property."

(1) According to the lawsuit, the Defendants had earlier obtained a final judgment on the merits in an Unlawful Detainer action, and that said judgment was entitled to res judicata effect. The lawsuit then alleges that, six days after obtaining the final judgment, Defendants sent a letter to the foreclosed homeowners threatening to commence another action for back rent. The suit claims that, because Defendants threatened an action barred under principles of res judicata, they threatened an action they could not legally take. See lawsuit, paragraphs 8-14.

Southern Alabama Feds Score Seventh Guilty Plea In Foreclosure Sale Bid Rigging Racket As Ongoing Probe Continues

From the U.S. Department of Justice (Washington, D.C.):

  • An Alabama real estate investor pleaded guilty [] 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.

    Charges were filed on June 25, 2012, in the U.S. District Court for the Southern District of Alabama in Mobile, Ala., against David R. Bradley. Bradley was charged with one count of bid rigging and one count of conspiracy to commit mail fraud. According to the plea agreement, Bradley has agreed to cooperate with the department’s ongoing investigation.

    According to court documents, Bradley 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.

    Bradley was also charged with conspiring to use the U.S. mail to carry out a scheme to acquire title to rigged foreclosure properties sold at public auctions at artificially suppressed prices, to make and receive payoffs to co-conspirators and to cause financial institutions, homeowners and others with a legal interest in rigged foreclosure properties to receive less than the competitive price for the properties. Bradley participated in the bid-rigging and mail fraud conspiracies from as early as June 2003 until at least September 2008.
  • Including today’s plea, to date, six individuals—Harold H. Buchman, Allen K. French, Bobby Threlkeld Jr., Steven J. Cox, Lawrence B. Stacy and Bradley—and one company—M & B Builders LLC— have pleaded guilty in the U.S. District Court for the Southern District of Alabama in connection with the investigation. Additionally, on June 28, 2012, real estate investors Robert M. Brannon and Jason R. Brannon, and their company, J & R Properties LLC, were indicted with participating in bid rigging and conspiracy to commit mail fraud at public real estate auctions in southern Alabama.

    Each 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 charge may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime if either amount is greater than the statutory maximum fine. [...]

Settlement Agent Admits To $684K Real Estate Escrow Ripoff; Loot Intended To Fund Existing Mortgage Payoffs

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

  • Sandy P. Kim, age 43, of Ellicott City, Maryland, pleaded guilty [] to wire fraud. [...] According to her plea, from 2005 to 2008, Kim was employed as a title agent at a title insurance company, and was the owner and chief operating officer of EK Settlements. Kim was required to maintain an escrow account in order to receive real estate settlement funds from buyers and pay off mortgage lenders.

    Starting in 2006, Kim stole money from the escrow accounts to pay her personal bills, including taxes and private school tuition for her children. She also used the stolen funds to pay prior loans she had failed to pay off, in order to forestall discovery of her theft.

    On August 20, 2007 Kim performed a closing for a client and caused $175,136 to be wired to an account she controlled. Instead of paying off the client’s prior mortgage, Kim used the money for her own purposes. To conceal the theft, she made several monthly mortgage payments to the prior mortgage lender.

    In 2008 when her employer began to suspect problems and sought to audit her accounts, Kim submitted fraudulently altered bank records. When subsequently interviewed by law enforcement, she admitted to the scheme.

    Kim stole a total of $684,283 from the escrow accounts which were intended to pay off mortgage lenders. As part of her plea agreement, Kim has agreed to entry of an order of forfeiture in such amount.

Settlement Agent Gets 51 Months For Role In Scheme To Rip Off $4.9M+ In Mortgage Payoff Funds From Real Estate Closings

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

  • U.S. District Judge Catherine C. Blake sentenced Todd R. Bettin, age 42, of Crofton, Maryland, to 51 months in prison, followed by three years of supervised release, for conspiracy to commit wire fraud in connection with a five year scheme to divert or hold mortgage payoff funds from clients’ closings on 17 Maryland properties. Judge Blake also ordered Pierce to pay restitution of $3,392,047.51.
  • According to his plea agreement, Bettin was the assistant manager of At Home Mortgage owned by co-conspirator Gary Pierce, who also owned and managed At Home Settlements, LCC, in Gambrills, Maryland. At Home Settlements provided settlement services and sold title insurance policies to clients who were buying homes or refinancing existing properties.
  • Beginning in 2007, Bettin and Pierce diverted or held mortgage payoff funds from clients’ closings for a matter of days, weeks and sometimes years. Pierce falsely represented on HUD-1 forms sent to the borrower’s lender that the payoff was made, when in fact Pierce intended to divert the funds.

    Bettin and Pierce fabricated wire confirmation reports, which purported to be a bank record of the transfer, to include in loan files. These were created in advance of audits in order to deceive the title insurers.

    Additionally, to forestall discovery by the lenders, Bettin and Pierce contacted the mortgage lender who should have been paid off and posed as the borrower/homeowner. Bettin would either create an on-line profile for the borrower and stop any mail from being sent to the borrower, or he would tell the lender that his, the borrower’s, address had changed and he would re-direct the lender to send all correspondence to a post office box owned by Pierce.

    Bettin would then make monthly mortgage payments to the existing lender. Believing that the bank had been paid off as a result of the settlement, the borrower stopped making monthly payments on that mortgage. And since that lender was receiving monthly payments, it had no reason to notify the borrower of any delinquency. With no delinquency in the account, the scheme went undetected.

    Because the existing mortgages were not paid off, the liens against the property were not removed and clear title could not be passed to the new lender and borrower. The total amount of diverted or otherwise improperly obtained funds totals $4,971,380.

Sunday, July 29, 2012

Idaho Supremes: Right To Be Seen From Roadway Not A Compensable Property Right In Condemnation Proceeding

In Boise, Idaho, The Associated Press reports:

  • The Idaho Supreme Court has upheld a lower court’s ruling favoring the state in an eminent domain case where a business contended it lost customers because the loss of land resulted in the loss of visibility of signs to passing motorists.

    The Idaho Business Review in a story published Wednesday reports the court ruled June 29 that businesses in the state can’t seek damages from the state for a loss of visibility.

    The owners of the former airport Holiday Inn in Boise sought $7.5 million in compensation following the Vista Avenue widening project that included a sound wall. The state offered about $40,000.(1)

    Justice Jim Jones wrote that the lower court was correct in its ruling, which read: “The existence of a ‘right of visibility’ has not yet been expressly recognized as a property right in Idaho. Neither the legislature nor any Idaho cases have expressly recognized a compensable property interest in ‘visibility’ or a right ‘to be seen’ from a roadway.”

    Thomas J. Lloyd III, the attorney for the former Holiday Inn owners, known as HI Boise, said the ruling could harm businesses that rely on locations to attract customers. “A company that invests in location and visibility in the present may, in the future, find itself with neither the visibility bargained for nor any recourse from the political entity that destroys that property benefit,” Lloyd said in a written statement.

    HI Boise filed the lawsuit in 2009, and has since lost the hotel in foreclosure.
For the ruling, see State of Idaho v. HI Boise, LLC, 2012 Opinion No. 103 (June 29, 2012).

(1) According to the ruling, the dimensions of the strip of land that was condemned and taken by the state of Idaho from the HI Boise was approximately 7 feet wide and 133 feet long, totaling approximately 960 square feet. It was pointed out in the litigation (see footnote 3 of the ruling) that the condemned land equated to 0.24% of HI Boise’s 398,574-square-foot property.

Trailer Park Owner Says City's Unfair Application Of Local Land Use Rules Nothing But A Land Grab; Officials Deny Inverse Condemnation Charge

In Panama City, Florida, the News Herald reports:

  • Over the last eight months, the Waldrop Trailer Park has slowly been dismantled. The 30 mobile homes that made up the park are down to four. Only one is occupied, and Bay County Builders Services reported none are habitable.

    It won’t be long before all the trailers are gone. While not everyone is disappointed by this, at least one person is: Joe Sikes. Sikes and Cameron Skinner are principals of Waldrop Park LLC, the company that purchased the Waldrop in 2010 with the hopes of running the trailer park before selling the land at a profit.

    Instead, Sikes said, the property is headed to foreclosure, and he believes it is because the city wants to take possession of the land, a charge city officials deny.
  • Waldrop Park LLC purchased the property in October 2010, and it didn’t take long before the new owners were informed of code violations. [...] The code enforcement issues at the park weren’t insurmountable, Sikes said. The death knell was a new business license was required.

    Panama City regulates where mobile homes can be located, and the mobile homes must meet state requirements. After a change in city regulations, the Waldrop Trailer Park became a nonconforming use but was grandfathered in. When the park sold, it lost that status.

    The trailer park is located in a mixed-use area, so approved mobile homes would be allowed, but only after a development order was obtained and the park reconfigured to meet new regulations.

    An Aug. 3, 2011, email from Wade Reynolds, a planner for the city, states Sikes can call him for information about obtaining a development order to develop the property as a manufactured home subdivision. Sikes said doing that would have reduced the number of mobile homes allowed on the land.

    All of our lots were inhabited by families, by low-income families,” he said. “How do I go tell these people they have to move?

    Because the trailer park didn’t meet land use requirements, Sikes said the city planning department would not sign off to allow the business license to be approved. Sikes said he responded by calling Mayor Greg Brudnicki and explaining the situation to him.

    A code enforcement investigation narrative notes the day after Reynolds sent Sikes the email, Brudnicki asked the planning department to back off the complaint, but the business license was never issued. Sikes said he knew he wouldn’t be able to obtain the business license, so he told city officials he would have the trailers moved off the land.

    Of 30 trailers, Sikes said he moved 20, six were torn down and four are still there. It won’t be long until the property becomes vacant, and it likely will go into foreclosure.

    George Wilson, who identified himself as the mortgage holder during the code enforcement hearing, said he plans to initiate foreclosure proceedings and expects to take possession soon.

    Sikes said he believes Waldrop Park LLC was unfairly targeted with mobile home requirements, although the city disagrees. “We’ve been effectively shut down because we have the last big piece of property that the port can get,” he said. “The port can only grow … toward the trailer park.”

    Sikes said other sizable trailer parks in the city have been sold after the city’s manufactured home regulations were put in place and it wasn’t enforced. “I personally bought and sold another trailer park in Panama City, and they never enforced it on me over there,” he said. He said he believes it is part of larger plan for the city to obtain the property for the port.
  • The city has denied having any ulterior motive. In a June 27 email to City Manager Ken Hammons, City Attorney Rowlett Bryant wrote that when Sikes proposed selling the land to the Port Authority, representatives weren’t sure how to respond because they didn’t want to buy the property.

    I told them that it would be neighborly to respond and I wrote them and told that (the) port was not interested in the purchase of the property. The port does not need this parcel of property for its operations,” he wrote.

    Bryant also said he “gives no credence” to the suggestion the city was taking part in inverse condemnation action.

    Still, Sikes believes the action was less about the condition of the property and more about its location. “It’s a land grab,” he said. “It’s exactly what it is.”

FBI: Fraudulent 'Secret Government Fund' Program To Thwart Foreclosures Based On Bogus "Redemption Theory"

In Wethersfield, Connecticut, the Hartford Courant reports:

  • The sales pitch offered people who were drowning in debt a miraculous life jacket. It went like this: There's a U.S. Treasury fund that can be used by individuals to stop foreclosure actions, pay off debts and end their money worries.

    But the Treasury Department keeps the fund a secret. There's a special way to get the loot, but to find out how will involve a fee.

    The fund, of course, doesn't exist, a life preserver filled with rocks. People who paid thousands of dollars for help ended up in worse financial shape than before.

    The alleged scam, based on a well-worn fabrication, was revealed last month when federal tax agents arrested Deowraj Buddhu, 69, and his daughter, Sunita Buddhu, 41, both of Wethersfield, on mail fraud and conspiracy charges. The pair are jailed, waiting for trial.

    The "program" they peddled, police said, was a version of a fraud based on "Redemption Theory," a type that pops up so often that the FBI routinely warns the public not to fall for it.

    The FBI says the theory was introduced by Roger Elvick, a white supremicist, it in the 1980s. He claimed that since abandoning the gold standard in the 1930s, the U.S. government has used its citizens as collateral, issuing Social Security numbers and birth certificates to register people in trade agreements with other countries. In conjunction with "registration," a secret fund was established that is funded with $630,000 for every U.S. citizen, the theory goes.

    Elvick's theory has been embraced by the sovereign citizen movement, whose extremist adherents claim they are essentially a nation unto themselves and have no obligation to the American government, including paying taxes, possessing a driver's license or obeying the law.
For more, see Alleged 'Redemption Theory' Scam Has Roots In Ultra-Right-Wing Dogma (Wethersfield Father And Daughter Charged With Persuading People A Secret Government Fund Would Pay Their Debts).

Vulture Outfit Buys Distressed Junior Real Estate Liens, Then Uses 'Shakedown-Like' Move To Squeeze Profit From Proposed Short Sales

Bloomberg reports:

  • Tom Axon’s mortgage-collection firm gets about 25 calls a day from delinquent homeowners’ brokers seeking approval to sell their houses for a loss and avoid foreclosure. We’ll help, his staff tells them, as long as we get paid enough.

    Axon, working with co-investors, buys distressed U.S. home- equity loans and other junior real estate liens, often for pennies on the dollar. Investors like Axon have to be dealt with whenever a home is sold in a short sale, a transaction in which the lenders agree to accept less than what’s owed on the property.

    The short-sale brokers know us -- they know we’re not cupcakes,” Axon, 60, chairman of Jersey City, New Jersey-based mortgage-servicer Franklin Credit Management Corp., said in an interview. “At the end of the day, my friend, you signed a contract. You owe money and we’re willing to reach an accommodation that is commensurate with your ability to pay.”

    Tough bargaining by second-lien holders is delaying deals and killing some short sales, even as banks embrace the practice to avoid costly foreclosures and help clear the market of homes that are worth less than the loans on them, said Vicki Been, a New York University law professor who has studied mortgages.

    It’s an opportunity for the second-lien holder to charge a price for their cooperation, because it’s needed for a short sale,” Been, a director at NYU’s Furman Center for Real Estate & Urban Policy, said in a telephone interview. “If they’re too greedy, it may squelch the whole deal.”