Saturday, August 25, 2012

Two Year Old Rent Strike Continues As Tenants Step Up Campaign To Draw Media Attention To Mold/Vermin Infested Apartment Buildings In Foreclosure

In Sunset Park, Brooklyn, The Village Voice reports:

  • Sunset Park residents engaged in a protracted rent strike packed into a Brooklyn courtroom this morning to find out the fate of their three apartment buildings.

    The rent strike actually began more than two years ago, when Sara Lopez and other tenants of three buildings, 553, 545, and 557 46th Street began organizing against their landlord, Orazio Petito. Tenants have stepped up their campaign in the past month, and with the help of members of Occupy Sunset Park have begun to draw media attention to their plight.

    Residents say they're furious over the neglect of the buildings, which are infested with mold and vermin, frequently go without heat in the winter and without any electricity in the summer. Department of Buildings records for the three buildings list dozens of violations, many of them severe, and hundreds of thousands of dollars in fines.

    Residents say Petito stores trash behind locked doors in the basement, and a recent CBS New York spot showed a desk fan being used to cool and antiquated and underpowered fuse-box.

    Petito, as head of 553 46 Street Corp., is listed as number 26 on Public Advocate Bill DiBlasio's Worst Landlord Watchlist.

    Petito is already being sued in housing court for code violations in two of the buildings, but this morning he appeared in civil court to begin foreclosure proceedings on the three buildings. The owner of the mortgage on the properties, Seryl LLC, has asked the court to take the property away from Petito and appoint a receiver.

Tenants In 32-Unit Apartment Building In Foreclosure Battle To Hang On While Receiverships Fail; Lender Fiddles, Landlord's Whereabouts: Unknown

In Chicago, Illinois, AustinTalks reports:

  • More than a dozen tenants and community members called on BMO/Harris Bank last week to fix the “dangerous” living conditions in one of its Austin apartment buildings it foreclosed in 2008.

    This is not the first time tenants of the 32-unit building, located at 5159 W. West End Ave., voiced their concerns about bedbugs, roaches, rodents, leaking ceilings and broken windows, among other hazards.

    Since April, tenants living at the property held three press conferences and went to court multiple times but have yet to see any substantial changes. The building’s court-appointed receiver, which acts as its temporary landlord during the foreclosure process, changed twice since April.

    A city-appointed emergency receiver, Community Initiative Inc., also stepped in mid-April to speed up pressing issues in the apartment complex, such as turning on the building’s utilities, replacing broken windows and fixing plumbing and electrical problems, according to the court order on April 10 provided by Chicago’s Law Department.

    A representative with the current receiver, Peak Properties, said in a May court appearance that Peak Properties doesn’t have the money to correct the issues with building, AustinTalks reported.

Unpaid Water Bills, Open Termite/Rat/Leaky Roof-Related Code Violations Leave Tenants Feeling Stranded By Rent Skimming Landlord Facing Foreclosure

In Hallandale Beach, Florida, WTVJ-TV Channel 6 reports:

  • Water still flowed from the faucets of a Hallandale Beach apartment complex on the day the city threatened to shut off its water supply. The complex's residents received a notice last Tuesday from the city that said the building’s owner has not paid for water in 21 months, and therefore owes over $14,000.

    Resident Kenny Johnson said the issue has affected his daily activities. "I can't eat. I can't sleep. I'm not going to cry, but I have cried," he said Monday, the day the city said it would shut off the water.

    Johnson and his dogs plan to stay at the home for now, but with health issues, he said the problem couldn't have come at a worse time. "I really need to be in the hospital, but how can I leave the premises under these circumstances?" he asked. The three-year resident told NBC 6 South Florida he has paid his rent, which includes water, on time every month.

    In addition to the notice, Johnson also received a letter from the property owner’s attorney. It said the complex is in the foreclosure process and is asking residents to pay the water bill debt.

    "Regarding the water and garbage account, tenants are advised to keep their rent for August and combine the rents to make a down payment and get a payment plan from the City of Hallandale Beach," the letter read.

    "Why should we have to be on the hook to pay for that?” Johnson asked.

    Peter Dobbens, a spokesman for the city of Hallandale Beach, said the complex’s property owners have also received multiple code violations stemming from termites, rats and leaky roofs.

    Johnson doesn't know who owned the property before the foreclosure process, but had a clear message for them. "It's just outrageous, so to the owners, how dare you. How dare you let us down," he said.
Source: Water Still Running in Hallandale Beach Complex Burdened by Debt (One resident said he has paid his rent, which includes water, every month for three years).

See also Hallandale Beach To Cut Off Water to Apartment Residents Over Huge Bill (Hallandale Beach spokesman Peter Dobbens said the building owner has not paid for water in 21 months).

Friday, August 24, 2012

Residents In Rapidly-Deteriorating Mobile Home Park In Foreclosure Face Loss Of Homes Over Lot Lease Misunderstanding

In Niagara Falls, New York, WIVB-TV Channel 4 reports:

  • A Niagara Falls mobile home park right next to the outlet mall has been the scene of one Call 4 Action complaint after another.

    Back in August of last year, tenants responded with protests when they got notices saying the park would be sold. Then in June of this year the office was burned by an arsonist. Now, we've learned a demolition crew has been ripping through the park.

    There are now more vacant lots and mobile homes at Sabre Park than those that have someone living in them. Some are empty because the owners were evicted. Other residents just left because of the uncertainty hanging over the park.

    But some tenants are being kicked out. Not because they are behind on the rent, or because their homes are dilapidated, but because they didn't sign a new lease.

    Margaret Peters said, "They never said you have to sign it to stay here. So we did not sign it, and I figured I would still go on a month-to-month basis, just like I have all these years."

    Peters told News 4 she has lived in her mobile home since 1976, when her parents owned the home. Now she uses a wheelchair and her son, Kenneth Mahon, is staying with her. She and her son's unit is so old it can't be moved, and they can't just up and start all over.

    "We have nowhere to go," Mahon said. "I just don't know what to do anymore. It is causing so much grief in the household, and it is just so stressful."

    Peters and her son are among the 70 or so tenants who were offered new one year leases from the park's owner, Sabre Park Associates, LLC. Many didn't take the offer seriously because just last summer, they were told new owners were probably going to kick them out anyway, leading to angry protests. Sabre Park Associates is in foreclosure and among the potential buyers is the owner of Fashion Outlets, next door.

    Now Peters and her son want to sign a lease. "If I would have known I had to sign it, I would have signed it, but I didn't know I had to sign it because I've never signed one since 1976," Peters said.

Score One For State Bar; Probe Into Now-Disbarred Lawyer For Ripping Off Clients Leads To Referral To Michigan AG For Criminal Felony Charges

From the Office of the Michigan Attorney General:

  • Michigan Attorney General Bill Schuette [] announced the Attorney General's Criminal Division has charged a Mount Pleasant lawyer for an alleged scam targeting multiple Michigan residents in the vulnerable position of attempting to declare bankruptcy. The lawyer has since been disbarred and now faces criminal charges.

    "Financial scams can devastate the lives of citizens who work hard to provide for their families," said Schuette. "Scams preying on individuals in fear of financial ruin are especially reprehensible.
    "Our office is committed to protecting the interests and dignity of Michigan citizens battling financial hardship."

    The charges allege that between April 2007 through July 2009 James Roslund, 66, of Mount Pleasant, accepted payment from multiple clients with the understanding that he would represent them as they attempted to file for bankruptcy. Allegedly, instead of representing the interests of his victims, Mr. Roslund simply pocketed the money with no intention of completing the legal work he was hired to do.

    The following charges have been filed by Schuette with the 84th District Court in Wexford County against James Roslund:

    o One count of Conducting a Criminal Enterprise, a felony punishable by up to 20 years in prison and/or a $100,000 fine;

    o One count of Acquiring/Maintaining a Criminal Enterprise, a felony punishable by up to 20 years in prison and/or a $100,000 fine;

    o Three counts of False Pretenses - $1,000-$20,000, a felony punishable by up to 5 years in prison and/or a $10,000 fine.

    The charges come as a result of an investigation by the State Bar of Michigan. When the Bar discovered that Mr. Roslund's alleged conduct was not only unethical, but criminal in nature, they contacted the Attorney General's Office for further investigation and prosecution.

    "A primary function of the State Bar is to protect the public," said Julie Fershtman, President of the State Bar of Michigan. "While the vast majority of lawyers hold their clients' interests paramount and serve them ethically and professionally, unfortunately a few do not.

    Lawyers in Michigan fund a program to provide reimbursement in such cases, and it was this Client Protection Fund program that referred the Roslund case to the Attorney General."(1)

    Roslund surrendered to authorities this morning without incident and is expected to be arraigned on the charges later today in Wexford County's 84th District Court.
For the Michigan AG press release, see Schuette Charges Former Lawyer With Racketeering.

(1) The Client Protection Fund of the State Bar of Michigan was established to reimburse clients who have suffered a loss due to misappropriation or embezzle­ment by a Michigan-licensed attorney.

For similar "attorney ripoff reimbursement funds" that sometimes help cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:

Maps available courtesy of The National Client Protection Organization, Inc.

Texas Church Seeks Summary Judgment Against Attorney For Allegedly Ripping Off $1M+ In 'Rita-Damage' Insurance Proceeds

In Jefferson County, Texas, The Southeast Texas Record reports:

  • First United Pentecostal Church of Beaumont is seeking summary judgment against Beaumont attorney Kip Lamb, who allegedly swindled the church's $1 million Hurricane Rita settlement.

    As previously reported, First United Pentecostal Church (The Anchor of Beaumont) filed a lawsuit Feb. 21 in Jefferson County District Court against Lamb Law Firm, Kip Lamb, Leigh Parker and Lonnie C. Treadway.

    Court records show that on June 1 the church filed a motion for partial summary judgment against Lamb and Leigh, asserting that the evidence shows the defendants took the church's money and did not return it.

    Lamb responded to the motion on July 26, stating that no summary judgment evidence has been presented showing that any written demand for payment has ever been made, court papers say.

    The Commission for Lawyer Discipline, an arm of the State Bar of Texas, filed a petition to suspend the Lamb practice on July 10 in Jefferson County District Court.

    Furthermore, Lamb has been charged with two counts of misapplication of fiduciary property. The criminal case is set for trial in September.

    According to the plaintiff's original petition, the church alleges it was awarded $1.09 million from a settlement with Lloyds Insurance Co. in 2006 for damages caused to its property by Hurricane Rita.

    Following the settlement, Treadway, the church's pastor, ordered that the money be deposited into a trust account held by the Lamb Law Firm, the suit states.

    The church seeks recovery of the settlement money and an accounting from Treadway of all his financial dealings with the church in the past 10 years. It also seeks attorneys' fees and demands a jury trial.(1)

(1) The Clients' Security Fund of the State Bar of Texas was established to reimburse clients who have suffered a loss due to misappropriation or embezzle­ment by a Texas-licensed attorney.

For similar "attorney ripoff reimbursement funds" that sometimes help cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:

Maps available courtesy of The National Client Protection Organization, Inc.

Thursday, August 23, 2012

HOA Fight Against Dues-Stiffing, Deadbeat Banksters Continues As Lenders Increasingly Find Themselves On Defensive In Foreclosure Actions

In Broward County, Florida, the South Florida Sun Sentinel reports:

  • South Florida homeowner associations are foreclosing on some of the nation's largest banks, accusing the lenders of failing to pay thousands of dollars in maintenance fees on repossessed properties.

    The foreclosure filings are a growing trend as associations become more aggressive in going after delinquent fees that have crippled HOA budgets during the housing bust.

    Banks owe a portion of the past-due maintenance fees and the full amount from the date they take title to the property, attorneys said. If the lenders fall behind, they're subject to foreclosure just as an individual owner would be.

    In one Broward County case, Deutsche Bank didn't pay maintenance fees for nearly three years on a townhome it repossessed in September 2009 at the Southbridge development in Pembroke Pines, said Ben Solomon, a lawyer for the association.

    The Southbridge HOA filed for foreclosure against Deutsche Bank last year. The bank finally paid $25,553 in June — and only then because it had to convey clear title to another buyer, Solomon said.

    "They expect payment from their customers, but once they become our customers, they don't want to pay us," said Marc Lebron, treasurer of the Southbridge HOA. "It's ironic, isn't it?"

    Solomon is representing dozens of other South Florida homeowner associations that have filed foreclosures against Deutsche Bank, JPMorgan Chase, Citibank and others. He expects more than 100 similar cases to be filed by the end of the year.
  • Solomon said lenders often remain delinquent while they market the home for sale to a third party. Once those deals are completed, the banks pay what's owed out of the proceeds of the sale rather than fulfill the legal requirement of paying each month. "Every association needs to pursue delinquent owners, banks or otherwise," he said.

    In another case, he said, JPMorgan Chase hasn't paid the Keys Gate Condominium Association in Miami-Dade County for more than two years after it foreclosed on a condominium there.

    Keys Gate filed for foreclosure against the bank, saying it owes nearly $20,000 in fees. JPMorgan failed to respond, and the association entered a default against the bank and is awaiting a judge's ruling, Solomon said.

On Verge Of Foreclosure, Arizona Man Coughs Up $21K+ To Reinstate Loan & Halt Sale; Bank Pockets Cash, Auctions Off Home Anyway

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

  • An Arizona man is accusing his bank of stealing his house and he wants it back. The homeowner was on the verge of foreclosure when he paid off all the money he owed, but the bank sold the house anyway.

    David Reed told CBS5 that he thought he had nothing to worry about when his home and 5-acre property in Maricopa was scheduled to be sold at auction, because he fell behind on his mortgage payments. "I called their payment line and asked them what is the total amount I owed to stop my house from going into foreclosure," said Reed. "They told me $21,573."

    The 52-year old, who's spent the past year battling health problems, sent the full amount straight to Cenlar Bank, which acknowledged receiving the money March 5. Reed was convinced his home was safe, but it wasn't.

    "I came home one day and had a notice on my door that somebody else owned my property and I either had to get out immediately or rent it back from them."

    Cenlar Bank had gone ahead with the trustee sale, March 23, even though Reed was now up to date on his mortgage and had paid all his interest and late fees. "I believe they just figured it was an easy way to make another $20,000," said Reed. "Let me make my payment, then turn around and auction it off and make more money."

    Reed hired a lawyer and filed a lawsuit after Cenlar failed to reverse the trustee sale. [...] Reed said that he was only able to pay off what he owed because of money he inherited recently following a death in the family.

    CBS5 made several calls and sent a number of emails to the attorney for Cenlar Bank to get their side of the story, but have not heard back.

C. Florida Woman Named In F'closure Of Home She Sold 15+ Years Ago; Blames Problem On Title Company Screw-Up, Bank Attorney's Failure To Amend Filing

In Clearwater, Florida, The Tampa Tribune reports:

  • Deloris Bell sold her house in 1995, so she was shocked when in March a bank filed for foreclosure on the house and named her in the lawsuit.

    She said she called the attorney's office handing the foreclosure and was told not to worry. "I called and the guy said, 'It's just an error, just file for a new deed, and we'll correct it and take your name out of the paperwork,'" Bell said.

    Bell called her title company and filed for the new deed right away. But two months later, more court filings showed up, and her name was still listed as a defendant. The attorney's office again said it was an oversight.

    "He said, 'Oh, not a problem, I see it right here, it's on the computer, it's been corrected. We'll take your name off,'" Bell said. That was in June, but her name was still on the lawsuit.

    Lawsuits like Bell's, real estate experts say, illustrate the complexity of foreclosure and how innocent people can get pulled into someone else's financial trouble. When Bell sold her home, the title company made an error on the deed. She should have been dropped from the suit as soon as the deed was filed.
  • [A]fter inquires from The Tampa Tribune and News Channel 8, Bell said she got good news. "The attorney called and said they're dropping me from the suit," she said. "I'm so relieved."

Wednesday, August 22, 2012

Recent Court Ruling Favors TX Land Owners In Effort To Stop Pipeline Firms' Forced Easements By Invoking Purported Condemnation/Eminent Domain Rights

In Austin, Texas, The Associated Press reports:

  • Pipeline operators and landowners called on Texas lawmakers [] to clarify eminent domain laws following a recent court decision that has thrown that authority into question.

    Representatives for pipeline companies complained that the Texas Supreme Court decision to give landowners the power to challenge a company's right to condemn property to make way for a pipeline has injected uncertainty into the industry. Before the court ruling, the company only had to check a box on a permit application to the Texas Railroad Commission to prove it should have the authority to force people to sell their land.

    "To go to a policy change that would make this a judicial review (instead of an administrative one) ... could severely impede the development of pipelines in this state," said Greg Schnacke, a representative for Plano-based Denbury Associates, which lost the Supreme Court case.

    Julia Trigg Crawford, a landowner and farmer in Lamar County, said she was sued by TransCanada Corp. when she refused to turn over part of her land for a pipeline. She complained that no state agency is thoroughly vetting whether pipelines actually qualify under Texas law for eminent domain authority as a common carrier.

    A common carrier is a pipeline that transports substances to or for the public and are for hire by the public. The pipeline must not operate solely for the company that owns it to have eminent domain powers.

    "The process lacks real oversight by any empowered and engaged state agency," Crawford said. "Why is it my responsibility as a Texas landowner to make a foreign corporation prove critical elements that should be step one in the state permitting process?"

    Lindale Fowler, general counsel of the Texas Railroad Commission, said the agency processes 4,400 pipeline permits a year and a little more than 200 are for new pipelines. Applicants check a box on the application form promising to be a common carrier, but the commission does not attempt to verify the claim, he said.
  • Clayton Henry, representing the Texas and Southwestern Cattle Raisers Association, told lawmakers his members want a process where they can argue against a pipeline company using eminent domain authority.

    "To simply check a box on a one page form, submit a pipeline route, and post a $25,000 bond to receive condemnation authority appears to be a very low bar," he said.

    Pipeline operators said they would like the Legislature to give the Railroad Commission control of certifying a pipeline is in the public interest and for public use, rather than force companies to fight legal challenges in perhaps dozens of local courts if the pipeline crosses multiple counties. "The issue is whether we do it once, or will we do it 100 times," said James Mann of the Texas Pipeline Association.

Go here for the State of Texas Landowner’s Bill of Rights, which applies to any attempt by the government or a private entity to take your Texas property through eminent domain (go here for Spanish version).

Go here for Pipeline Eminent Domain and Condemnation Frequently Asked Questions.

Texas Land Owner Challenges Energy Firm's Purported Common Carrier Status With Right Of Eminent Domain, Condemnation In Effort To Prevent Forced Sale

In Jefferson County, Texas, The Southeast Texas Record reports:

  • Golden Triangle Properties is asking the courts to declare that Williams Field Services-Gulf Coast Co. does not have eminent domain powers in a proposed pipeline extension.

    According to the lawsuit filed July 23 in Jefferson County District Court, GTP is the owner of 1,116.39 acres of land in Jefferson County.

    WFS contends it is a common carrier with the right of eminent domain and condemnation with respect to the proposed extension of the BASF 840 pipeline.

    Williams Field Services-Gulf Coast Company LP is a natural gas distribution company located in Tulsa, Okla., and operates as a subsidiary of Williams Partners L.P.

    According to the company website, Williams is an energy infrastructure company focused on connecting North America's hydrocarbon resource plays to markets for natural gas, natural gas liquids and olefins. Williams' operations span from the deepwater Gulf of Mexico to the Canadian oil sands.

    "Plaintiff contends defendant does not have these rights and would show that defendant has produced no evidence establishing even a colorable claim to these rights," the suit states. "In fact, public records show that defendant is not a common carrier with respect to the proposed extension."

    GTP is seeking a declaratory judgment from the court that WFS has not established its status as a common carrier and thus does not have the power of eminent domain. The company is also seeking to recover court costs and attorney's fees.
Source: Golden Triangle Properties questions company's eminent domain powers.

In a related story, see The Associated Press: Pipelines unhappy with Texas eminent domain ruling.

Go here for the State of Texas Landowner’s Bill of Rights, which applies to any attempt by the government or a private entity to take your Texas property through eminent domain (go here for Spanish version).

Go here for Pipeline Eminent Domain and Condemnation Frequently Asked Questions.

Co-Owners' Inability To Reach Mutually Acceptable Purchase/Buyout Agreement Leads To Partition Suit

In Jefferson County, Texas, The Southeast Texas Record reports:

  • Seeking to properly divide up a tract of land worth around $4 million, Susan McCurry has filed a petition for partition against Texas Mountain Ranch and Mark and Carolyn Fertitta. The petition was filed July 23 in Jefferson County District Court.

    According to the petition, McCurry and the Fertittas are one-third, co-owners of undivided interest in certain real estate in Bandera and Medina Counties. The other third interest belongs to Elizabeth Wadill. The land is estimated to be worth more than $4 million.

    "Defendants ... have expressed an interest in obtaining a one-half divided possessory interest in the tract," the suit states. "Plaintiff has attempted to negotiate an equitable division of the property. However, defendants ... have been unreasonable in proposing a division of the property, thus, necessitating this lawsuit."

    The plaintiff seeks the court to enter a decree as follows:

    Determining the share of each of the joint owners of the property; Determining that the property is susceptible to partition and directing partition; Appoint commissioners to make such partition; and Awarding of court costs and attorney's fees.

Tuesday, August 21, 2012

Scammer On Lam For 12 Years Bagged In Canada; Allegedly Ran Fractional Interest Deed Transfer F'closure Rescue Scam Involving Unwitting B'krpt Debtors

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

  • Federal authorities have charged a former Los Angeles man with aggravated identity theft and having operated a foreclosure-rescue scam in Southern California and elsewhere that promised to postpone foreclosure sales for more than 800 distressed homeowners.

    Glen Alan Ward, 47, of Canada, was indicted [] in the Central District of California on two counts of bankruptcy fraud, one count of mail fraud and two counts of aggravated identity theft.

    In 2000, Ward became a federal fugitive when he failed to appear in court after signing a plea agreement, which stemmed from federal charges in the Central District of California associated with a similar scheme. On April 5, 2012, Ward was arrested in Canada on a U.S. provisional arrest warrant based on the charges in the Central District of California. His extradition to the United States is pending.

    [The] indictment charges the defendant with identity theft and a scheme to defraud that took place from July 2007 to April 5, 2012, while he was a fugitive. According to the indictment, Ward led a scheme that solicited and recruited homeowners whose properties were in danger of imminent foreclosure. Ward allegedly promised to delay their foreclosures for as long as the homeowners could afford his $700 monthly fee.

    Once a homeowner paid the fee, Ward accessed a public bankruptcy database and retrieved the name of an individual debtor who recently filed bankruptcy. The indictment alleges that Ward also obtained a copy of the debtor’s bankruptcy petition and directed his clients to execute, notarize and record a grant deed transferring a 1/100th fractional interest in their distressed home into the name of the debtor he provided.

    Then, Ward allegedly faxed a copy of the bankruptcy petition, the notarized grant deed and a cover letter to the homeowner’s lender or the lender’s representative, directing it to stop the impending foreclosure sale due to the bankruptcy.

    Because bankruptcy filings give rise to automatic stays that protect debtors’ properties, the receipt of the bankruptcy petitions and deeds in the debtors’ names forced lenders to cancel foreclosure sales. The lenders, which included banks that received government funds under the Troubled Asset Relief Program (TARP), could not move forward to collect money that was owed to them until getting permission from the bankruptcy courts, thereby repeatedly delaying the lenders’ recovery of their money.

    As part of the scheme, Ward delayed the foreclosure sales of approximately 824 distressed properties by using at least 414 bankruptcies filed in 26 judicial districts across the country. During that same period, Ward collected more than $1 million from his clients who paid for his illegal foreclosure-delay services.(1)
For the Justice Department press release, see Twelve-Year Federal Fugitive Indicted for Fraud and Identity Theft in Nationwide Foreclosure Rescue Scam (Defendant Arrested by Canadian Authorities; Allegedly Collected More Than $1 Million from More Than 800 Distressed Homeowners).

(1) See Final Report Of The Bankruptcy Foreclosure Scam Task Force for a discussion of fractional interest deed transfer scams and other foreclosure rescue rackets involving the abuse of the U.S. bankruptcy courts.

Mo. AG Scores Securities Fraud Conviction Against Member Of Group That Operated Contract For Deed Racket Financed By Unwitting Straw Buyers

From the Office of the Missouri Attorney General:

  • Attorney General Chris Koster said [] that Greene County Circuit Judge Calvin Holden has convicted William David (Bill) Strong of securities fraud and unlawful merchandising practices for his role in the real estate investment scheme perpetrated by Greenleaf Companies and The Real Estate Company in Springfield.

    When a company misleads Missourians about the risks of an investment, my office will prosecute the responsible parties,” said Koster. “I am pleased that Judge Holden found Mr. Strong guilty for his role in this multi-million dollar fraud.”

    According to Koster, Greenleaf convinced investors to purchase homes chosen by Greenleaf by promising the investors that Greenleaf would pay the down payment, closing costs, and monthly mortgage payments. Greenleaf also promised to purchase the homes from the investors and pay a $10,000 bonus at the end of several years.

    Greenleaf then contracted to sell the homes, which were actually owned by investors and not by Greenleaf, to buyers in the subprime market. Greenleaf did not tell the buyers that investors actually owned the homes Greenleaf was purporting to sell.

    When Greenleaf stopped paying the investors their monthly mortgage payments, and investors were subsequently unable to make the payments themselves, banks began to foreclose on the homes even when the buyers were current on their payments to Greenleaf.

    Evidence at trial showed (1) that Strong misrepresented to investors the creditworthiness of the buyers to whom Greenleaf was reselling the homes; (2) that Strong purposefully failed to advise the buyers that title to the homes was held by the investors, not Greenleaf; (3) that Strong purposely failed to advise the buyers that Greenleaf failed to make timely payments to the investors; and (4) that Strong promised to give a buyer a deed of trust when Greenleaf did not in fact own the property it was selling.

    Strong’s guilty verdict follows guilty pleas by two other officers, Lane Sanders and Eric Gagnepain. Gagnepain, former part-owner of Greenleaf, pleaded guilty earlier this year to ten counts of securities fraud and nine counts of unlawful merchandising practices; his sentencing is scheduled for September 7, 2012. Sanders, former president of Greenleaf, pleaded guilty to securities fraud and unlawful merchandising fraud charges in February 2011; his sentencing is pending.

    Charges against three other officers remain pending: Scott Allen Dasal, former President of The Real Estate Company; Misty May Perkins, former Director of Investor Relations for Greenleaf; and Robert Lee Batchman, former real estate broker for The Real Estate Company.

Arizona AG Targets Three Outfits With Civil Lawsuits In Probe Into Loan Modification Scams

In Phoenix, Arizona, The Arizona Republic reports:

  • The Arizona Attorney General's Office is accusing three loan-modification companies of targeting Spanish-speaking residents with bogus services and guarantees of averting foreclosure.

    In lawsuits filed Wednesday against Making All Homes Affordable in Phoenix and La Paz Source in Tucson, authorities allege the companies illegally charged up-front fees, charged for services available for free and misrepresented contracts written in English to customers who could read only Spanish.

    The owner of Making All Homes Affordable, Albert Figueroa, is accused of charging customers $1,900 to lower interest rates and reduce principal loans. But authorities say homeowners got only standardized forms that are available for free on government websites. They also were charged fake sales tax of 9.3 percent, according to the suit.

    The owners of La Paz, Maria Beltran and Francisco Ramos, are accused of operating without a license. Authorities say they promised modifications that were never delivered, which caused some customers to lose their homes.

    In November, Beltran and Ramos shut down La Paz Source and on the same day launched another modification company called La Placita Multi Services, according to the suit.

    Both La Paz and La Placita "deceptively and willfully target the Spanish-speaking community," the attorney general's office said in a statement.

    "The Defendants verbally explain terms of the agreement to consumers, in Spanish, that are in direct contradiction to the written provisions of the contract provided in English," the statement said.

Undeterred By State Bar Suspension, California Attorney Continues Peddling Foreclosure Relief Services

In Modesto, California, The Modesto Bee reports:

  • A Modesto attorney suspended for botching real estate cases continues offering services similar to those that got him in trouble.

    John Villines acknowledged Monday that his advertisements might mislead potential clients into thinking he's still practicing law. He will change wording and ask again that his landlord remove building signs indicating his office is a law firm, he said.

    Without running afoul of discipline imposed by the California Supreme Court, Villines intends to offer help to thousands of property owners in danger of losing their homes, he said.

    "I'm no longer representing anyone in court," said Villines, whose nine-month suspension began June 20 and could end in March if he passes an ethics exam and repays five former clients $46,205.

    Villines believes the suspension does not prevent him from negotiating to halt foreclosures or arranging loan modifications, services that landed him in hot water with prosecutors with the State Bar of California.

    According to court papers, four of five complaining clients lost their homes after Villines made legal blunders. The other obtained a loan modification without his help.

    Twice, Villines waited longer than the law allows to file lawsuits against lenders — in one case, more than a year after he was hired and three months after the property had been sold in foreclosure. In two other cases, he failed to file lawsuits for his clients but kept their money.

    One lawsuit was worthless because Villines "discovered that he had not named the proper defendants," a document says, and he dropped two other lawsuits without telling clients.

    "The suits had very little value, if any, for the clients," reads a stipulation that Villines signed in November, admitting wrongdoing as alleged. He kept fees and gave no accounting as required by California attorney Rules of Professional Conduct, the document says.

    Four years' probation

    In what amounts to a plea bargain, Villines agreed to two years' suspension with all but nine months stayed, or forgiven, if he repays the money and complies with other requirements. He will be on probation for four years, the court order says.

Monday, August 20, 2012

Washington Supremes Give MERS' Foreclosures The Boot; Say Outfit's Actions May Also Violate State UDAP Statutes

In Olympia, Washington, The Oregonian reports:

  • The Washington Supreme Court ruled unanimously [] that the mortgage industry’s controversial document-recording system lacked authority to start out-of-court foreclosures and might have violated state consumer protection laws.

    The state’s highest court ruled that lenders could not foreclose on homeowners in the name of the Mortgage Electronic Registration Systems Inc. It found that MERS did not meet Washington's definition of a beneficiary and could not foreclose on behalf of a lender that holds the mortgage note.

    Simply put, if MERS does not hold the note, it is not a lawful beneficiary,” the court wrote in an opinion written by Justice Tom Chambers and released today.

    The Oregon Supreme Court also is considering whether MERS can be a beneficiary under Oregon law, said Rick Fernandez, an attorney in Lake Oswego whose cases are before the court.

    In July, the Oregon Court of Appeals ruled that lenders could not use MERS to skirt state law requiring that all mortgage sales be recorded in county offices before launching out-of-court foreclosures.

    Washington's court today also found that MERS's involvement in robo-signing mortgage documents, among other behaviors, appeared to violate Washington’s Consumer Protection Act. But consumers must try such claims on a case-by-case basis, the court said.
  • Melissa Huelsman, a Seattle attorney, represented homeowner Kristin Bain in one of the cases against the court. Bain had sued Metropolitan Mortgage Group, Indymac Bank, Fidelity National Title and MERS.

    Huelsman said the ruling cleared the path for homeowners to recover damages and attorneys fees from lenders found to have wrongfully foreclosed. She called the decision a victory for the rule of law. "Too often we've seen courts twisting themselves into knots to get to a decision that's inconsistent with the statute," Huelsman said.

    Attorneys said they were still evaluating how the decision impacts existing cases and already completed foreclosures.
  • The court cited previous federal court rulings in Washington in favor of MERS as "not well taken."(1) The justices declined to evaluate the legal impact of their ruling, as U.S. District Court Judge John C. Coughenour asked them to last year when he sought their opinion.

    Under the state's Consumer Protection Act, MERS's characterization of itself on deeds of trust as a beneficiary could be considered an unlawful deceptive practice, the court said.

    "The fact that MERS claims to be a beneficiary, when under a plain reading of the statute it was not, presumptively meets the deception element of a CPA action," the court said. So could MERS's participation in robo-signing mortgage documents, the court said.

    "MERS's officers often issue assignments without verifying the underlying information, which has resulted in incorrect or fraudulent transfers," the court said. "Actions like those could well be the basis of a meritorious CPA claim."(2)
For the story, see Washington's highest court rules MERS cannot foreclose on homeowners.

For the ruling, see Bain v. Metropolitan Mortgage Group, Inc., No. 86206-1 (Wn. August 16, 2012).

(1) The state high court was rather gentle in its excoriation of those federal judges for their earlier screw-ups that favored MERS.

(2) The Consumer Protection Act is Washington State's version of the state laws that prohibit unfair and deceptive acts and practices in trade and commerce (generically referred to as state UDAP statutes). For more on UDAP statutes across the U.S., see Consumer Protection In The States: A 50-State Report on Unfair and Deceptive Acts and Practices Statutes.

BofA Drops Suit, Apologizes, Pays Legal Fees To Nashville's Ch. 13 Bankruptcy Trustee Noted For Repeated, Effective Use Of 'Show Me The Note' Strategy

In Nashville, Tennessee, the Nashville Business Journal reports:

  • Charlotte, N.C.-based Bank of America has dropped its legal attack on Nashville’s Chapter 13 bankruptcy trustee. Earlier this year, as part of a consumer bankruptcy proceeding, Bank of America became the first lender to sue a Tennessee trustee of the court.

    In an agreement filed Thursday, Bank of America worked out a deal directly with the debtors — dropping accusations that Chapter 13 trustee Henry "Hank" Hildebrand wasn't dispersing money appropriately.

    "They decided they would dismiss the lawsuit, pay my attorney fess and they apologized," Hildebrand said.

    In essence, Bank of America argued that it shouldn't have to file a claim in the bankruptcy proceedings. That argument is tangential to efforts seeking 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. In this case, Bank of America failed to file a timely claim, which included the failure to show documentation they had a right to the home.

Ongoing Antitrust Feds' Probe Into Northern California Foreclosure Sale Bid Rigging Rackets Yields 25th Guilty Plea Agreement

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

  • A Northern California real estate investor has agreed to plead guilty for her role in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California, the Department of Justice announced.

    Felony charges were filed [] in the U.S. District Court for the Northern District of California in Oakland against Danli Liu of Fremont, Calif.

    To date, as a result of the department’s ongoing antitrust investigation into bid rigging and fraud at public real estate foreclosure auctions in Northern California, 25 individuals, including Liu, have agreed to plead or have pleaded guilty.

    According to court documents, Liu conspired with others not to bid against one another, but instead to designate a winning bidder to obtain selected properties at public real estate foreclosure auctions in Alameda County, Calif.

    Liu was also charged with a conspiracy to use the mail to carry out a scheme to fraudulently acquire title to selected properties sold at public auctions, to make and receive payoffs, and to divert money to co-conspirators that would have gone to mortgage holders and others by holding second, private auctions open only to members of the conspiracy.

    The department said that the selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions. The private auctions often took place at or near the courthouse steps where the public auctions were held.
For the Justice Department press release, see Northern California Real Estate Investor Agrees to Plead Guilty to Bid Rigging at Public Foreclosure Auctions (Investigation Has Yielded 25 Plea Agreements to Date).

Title Insurer's Duty To Indemnify Foreclosing Bank's Loss Claim, Duty To Defend Against Borrower's Affirmative Defense Addressed In Minnesota Ruling

From a newsletter from the law firm Traub Lieberman Straus & Shrewsberry LLP:

  • In its recent decision in Associated Bank, N.A. v. Stewart Title Guaranty Co., 2012 U.S. Dist. LEXIS 104528 (D. Minn. July 27, 2012), the United States District Court for the District of Minnesota had occasion to consider when a loss is valued for the purpose of coverage under a title insurance policy.
  • With respect to the indemnity portion [of the litigation], Associated Bank argued that its loss should be measured at the time the loan was initiated, not at the time the foreclosure action concluded.

    Stewart Title, on the other hand, contended that Associated Bank did not recognize a loss until the foreclosure action resolved, at which time it was determined with finality that the mortgage would not be repaid. By then, the property had declined in value from $450,000 to $126,000. Stewart Title argued, therefore, that “the loss sustained by Associated Bank on its loan was not due to the invalidity of the Mortgage, but rather due to a decline in the value of the Property securing the loan,” and as such, was uninsurable.

    While the court could find no Minnesota case law directly on point, it noted the majority view in other jurisdictions that a mortgagee’s loss cannot be measured until the note has not been repaid and the security for the mortgage is shown to be inadequate. The court found this rule to be consistent with the purpose of title insurance, explaining:

    A title insurance policy "does not guarantee either that the mortgaged premises are worth the amount of the mortgage, or that the mortgage debt will be repaid." … Rather, the "insurable value of a mortgage on real estate is the fair market value of the realty which secures the mortgage, and is not controlled by the original purchase-price of the mortgage."

    The court observed that had the borrower not challenged the validity of the mortgage, and Associated Bank simply allowed to proceed with the foreclosure, it likely only would have been able to sell the property for $126,000, which was the market value of the property at the time.

    Having recovered $175,000 as a result of the settlement, the court agreed that Associated Bank did not sustain a loss for which Stewart Title was obligated to indemnify.

    The court nevertheless concluded that Associated Bank was entitled to a defense from Stewart Title [Stewart Title stiffed its insured by never responding to Associated Bank's tender of this matter for a title defense].

    Notwithstanding the fact that the borrower questioned the validity of the title in an affirmative defense, rather than a counterclaim or other form of direct claim, the affirmative defense asserted a claim adverse to Associated Bank’s title, thus triggering Stewart Title’s defense obligations under the policy.(1)

(1) In connection with Stewart Title's stiffing of its insured by failing to step up when Associated Bank tendered the matter to it for a defense, the court made these comments in concluding that Stewart had a duty to defend:

  • The parties also dispute whether Stewart Title had a duty to defend against the Arnesons' claim in the Foreclosure Action that the Mortgage was invalid and unenforceable.

    Associated Bank contends the Arnesons' Answer raised a claim that was adverse to the Mortgage, and therefore Stewart Title was obligated to defend against the claim. Stewart Title argues the duty to defend was not triggered because the Policy does not require Stewart Title to litigate a foreclosure action voluntarily initiated by an insured, and because the Arnesons' claim was excluded from coverage as a defect created by Associated Bank.

    The duty to defend is broader than the duty to indemnify. Enron Corp. v. Lawyers Title Ins. Co., 940 F.2d 307, 310 (8th Cir. 1991); Wooddale Builders, Inc. v. Maryland Cas. Co., 722 N.W.2d 283, 302 (Minn. 2006); Rechtzigel Trust v. Fidelity Nat'l Ins. Co. of N.Y., 748 N.W.2d 312, 320 (Minn. Ct. App. 2008) (citing Franklin, 574 N.W.2d at 406).

    Whether a duty to defend exists is determined by comparing the allegations in the underlying claim to the relevant policy language. Garvis v. Employers Mut. Cas. Co., 497 N.W.2d 254, 258 (Minn. 1993). If the pleadings in the underlying action raise a claim arguably within the scope of coverage, the duty to defend applies. Rechtzigel, 748 N.W.2d at 320 (citing Ross v. Briggs & Morgan, 540 N.W.2d 843, 847 (Minn. 1995)). See also Enron, 940 F.2d at 310 (stating an insured "must defend a claim the policy does not cover if the allegations of the complaint state on their face a claim against the insured to which the policy potentially applies") (emphasis in original) (internal quotation marks omitted).

    The duty to defend is determined at the time the insured tenders defense of the claim to the insurer. Jostens, Inc. v. Mission Ins. Co., 387 N.W.2d 161, 166 (Minn. 1986). At that time, if the insurer knows of facts indicating there may be a claim, either from what is directly stated or inferred in the underlying complaint, or if the insured tells the insurer of such facts, "the insurer must either accept tender of the defense or further investigate the potential claim." Garvis, 497 N.W.2d at 258.

    The insurer bears the burden of proving that the claim clearly falls outside the coverage afforded by the policy. Prahm v. Rupp Constr. Co., 277 N.W.2d 389, 390 (Minn. 1979). "Any ambiguity is resolved in favor of the insured. . . . If the claim is not clearly outside coverage, the insurer has a duty to defend" Id.

    Stewart Title first argues the Policy does not obligate it to prosecute a foreclosure action that is voluntarily initiated by an insured, and thus the duty to defend was not triggered here. The Policy's duty-to-defend provision states that Stewart Title "shall provide for the defense of an insured in litigation in which any third party asserts a claim adverse to the title or interest as insured. . . ." Policy at AB002701 ¶ 4(a). The Arnesons' Answer challenged the validity of the Mortgage by alleging it was obtained by fraud and misrepresentation. Answer ¶ 8.

    Therefore, the Answer raised a claim adverse to Associated Bank's insured interest. The duty-to-defend provision does not contain an exception for adverse claims raised in proceedings initiated by insureds. Thus, the fact that Associated Bank voluntarily commenced the Foreclosure Action does not excuse Stewart Title from the obligation to defend against the adverse claim raised by the Arnesons' Answer. Cf. Enron, 940 F.2d at 309-11 (finding an insurer's duty to defend triggered by a claim raised in an answer to the insured's affirmatively filed action).

    Stewart Title also contends an affirmative defense does not give rise to a duty to defend. However, the Policy's duty-to-defend provision does not limit the types of pleadings that will trigger the duty; instead, the provision states generally that Stewart Title shall "provide for the defense of an insured in litigation in which any third party asserts a claim adverse to the title or interest as insured." Policy at AB002701 ¶ 4(a) (emphasis added); see also Joyce D. Palomar, 1 Title Insurance Law § 11:2 at 896-97 (2011-2012 ed.) ("Subsequent amendments to a complaint, answers, counterclaims or cross-claims all are included among the pleadings that invoke the insurer's duty to defend.").

Sunday, August 19, 2012

Series Of Emails Between Buyer's, Seller's Attorneys Creates Binding Real Estate Contract?

In Boston, Massachusetts, the Boston Business Journal reports:

  • In a case that could chill electronic correspondence among parties of a real estate transaction, the Massachusetts Superior Court ruled that a series of emails between the buyer’s and seller’s attorneys created a binding agreement.

    Plaintiffs Ian Feldberg and Michael Rodgers alleged that, through emails, they entered into a binding agreement to purchase two lots in Sudbury for $475,000 from Harold Coxall. In court documents, Coxall said the emails did not satisfy the state’s fraud statute, which requires contracts for the sale of real estate be, “in writing and signed by the party to be charged.”

    Coxall, therefore, moved to dismiss the plaintiff’s complaint as frivolous. But Judge Douglas Wilkins ruled that electronic mail may satisfy the statute of frauds and in favor of the plaintiffs.

    Still, whether the parties’ email exchange satisfied the statute of frauds in this case is not know in this case since the parties have settled their dispute and dismissed the case.

Bankster Handiwork Underlying Foreclosure Fraud Disaster Emerges Again In Connection With Consumer Debt Collection Practices

The New York Times reports:

  • The same problems that plagued the mortgage-foreclosure process -- and prompted a multibillion-dollar settlement with big banks -- are emerging in the debt-collection practices of credit card companies.

    As they work through a glut of bad loans, companies such as American Express, Citigroup and Discover Financial are going to court to recoup their money. But many of the lawsuits rely on erroneous documents, incomplete records and generic testimony from witnesses, according to judges who oversee the cases.

    Lenders, the judges said, are churning out lawsuits without regard for accuracy and improperly collecting debts from consumers. The concerns echo a recent abuse in the foreclosure system, a practice known as robo-signing in which banks produced similar documents for different homeowners and did not review them.

Fraudulent Real Estate Tax Exemption Claims For Homesteaded Property Costs One North Florida County Of Up To $1M Per Year

In Escambia County, Florida, reports:

  • Escambia County is being robbed of up to $1 million annually by property owners committing homestead exemption fraud, Property Appraiser Chris Jones said [].

    Unfortunately some property owners claim exemptions to which they are not entitled,” Jones said. “These may include rental or vacation properties, second homes or other properties in which the owner does not reside.”

    There are currently about 650 cases of homestead fraud per year in Escambia County, Jones said. Homestead fraud occurs when a person who is not a resident of Escambia County files for and is granted a homestead exemption; when that person is not in good faith residing on the property which has been granted the exemption; or is claiming a resident benefit in some other location while at the same time claiming an exemption on the property on which they filed. Homestead fraud is punishable by up to a year in jail, a fine of $5,000, or both.

Woman's Effort To Stymie Foreclosure On Parents' Home By Filing Phony Documents Gets Her A Year In Jail, 3 Years Probation

In Stanislaus County, California, The Modesto Bee reports:

  • A judge has sentenced a woman to a year in Stanislaus County Jail for filing false documents in an attempt to delay foreclosure on her parents' home. On June 5, Monica Whitten was convicted of two felony counts of offering to record or recording false documents, the district attorney's office reported [].
  • Prosecutors said Whitten's case is an example of a common real estate fraud scheme in which defendants pay money for forms they believe will slow down or stop a foreclosure sale and file them at the county clerk-recorder's office. [...] Along with the jail sentence, Stanislaus County Superior Court Judge Nancy Ashley sentenced Whitten to three years of probation and ordered her to pay restitution.