Saturday, December 8, 2012

Deceased Homeowner's Frustrated Son On Experience With Notorious Mortgage Servicer: "Everyone At Bank Of America ... Has Jammed Their Head Up Their Asses & There’s No Hope Of Getting It Free!"

From a recent post on The Consumerist:

  • Picking up the pieces of a late loved one’s life is something no one looks forward to. Many businesses know this and will do what they can to ease you through the process. Then there’s Bank of America.

    Consumerist reader Matt is still in college but he’s already having to deal with the loss of his mother, who passed away on Oct. 1. Since then, he has been going through the process of notifying credit card companies, utilities, and everyone else.

    All of them were fairly cooperative and, in fact, Capital One and Chase were even helpful!” Matt tells Consumerist. “Everyone at Bank of America, however, has jammed their head up their asses and there’s no hope of getting it free.”

    Matt couldn’t locate any of his mother’s mortgage documents, so he had to call BofA to see what they could tell him. Regular readers of Consumerist can probably guess that the bank put impossible demands on Matt...
For the rest of the story, see Bank Of America Is Really Good At Losing Documents, Really Bad At Believing My Mother Is Dead.

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

Animal Control Officer Gunned Down, Locksmith Wounded During Home Eviction Follow-up Visit; Swat Team, Tear Gas Needed To Bag Barricaded Foreclosed Ex-Owner After 17-Hour Standoff

In Galt, California, KXTV Channel 10 reports:

  • A standoff between a suspected gunman and SWAT officers came to a conclusion Thursday morning nearly 17 hours after it began.

    An animal control officer, identified as Roy Curtis Marcum, 45, of Elk Grove, was fatally shot and one of two locksmiths sent by Citibank was wounded when they approached the front door of a home on the 600 block of 1st Street following up on an eviction notice that was served Tuesday, Sacramento County sheriff's Sgt. Jason Ramos said.

    A shot was fired through the front door, hitting Marcum. One of the locksmiths was grazed by a bullet. The second locksmith ran from the home and flagged down a community patrol officer, who called for help.

    Sacramento County sheriff's deputies, Galt police, Elk Grove police and SWAT responded to the home and set up a perimeter near New Hope Road and 1st Street. Ramos said Marcum was removed from the front lawn by emergency responders and taken to a nearby church where he was pronounced dead.

    Residences around the surrounded home were evacuated and two neighborhoods around the scene were blocked from access.

    Ramos said the suspected shooter was identified as Joseph Francis Corey, the former homeowner, according to Sacramento County Assessor's Office records.
  • [A] unified SWAT team from the Elk Grove and Galt police departments assumed command of the incident. They worked with Elk Grove Police Department negotiators in an attempt to convince Corey to surrender peacefully, Ramos said.

    At approximately 10:30 p.m., tear gas canisters were deployed into the home to draw Corey out, but he remained inside.

    Then at approximately 5 Thursday morning, while Corey was moving from the living area of his home toward the garage area, he was met by a team of officers who had entered the home undetected. Corey tried to retreat back into the living area, but officers were able to catch him and take him into custody, said Ramos.

    According to Ramos, Corey was placed in an ambulance and moved to a local hospital for evaluation before being incarcerated.
  • Corey's home was foreclosed upon and sold to Citibank at a trustee's auction in November 2011, according to the Sacramento County Assessors Office.

Financially Strapped Homeowner Accused Of Torching Home In Foreclosure Scores Acquittal

In York, South Carolina, The Herald reports:

  • Carrying a wash basin of court and bank documents, a Rock Hill woman accused of setting her family home on fire told prosecutors it would’ve been “stupid” for her to start the blaze that incinerated the top half of a house she paid thousands of dollars to remodel.

    A judge agreed.

    After a two-day bench trial in a York County courtroom, Eighth Circuit Court Judge Frank R. Addy on Tuesday ruled that Charlotte Ann Smith, 63, was not guilty of burning $125,000 worth of a house she owned at 4986 Mount Gallant Road.
  • Prosecutors argued Smith set the fire two years after the primary mortgage-holder, Bank of America, placed the house in foreclosure and opted to give the house to a receiver, possibly limiting Smith’s access to the property and rental money.

    Rebecca McNerney, one of two 16th Circuit assistant solicitors prosecuting the case, said Smith burned the house a week before she was scheduled to appear in court to hear motions for the receivership.

    “We find that to be a strange coincidence,” said Christopher Epting, the other assistant solicitor who prosecuted Smith.

    York County Sheriff’s Detective Johnny Martin said Smith admitted to buying several gallons of gasoline that she put in a bathtub in the house to burn tree limbs before a planned house inspection.

    Fire officials on Monday testified that they evacuated the house when burning embers collapsed on them. After the flames were doused, investigators found buckets of gasoline “strategically” placed throughout the house, along with bags of sticks, McNerney said.

    In other buckets, they found gasoline-soaked bank and court documents addressed to Smith from both her property lenders, Bank of America and Guardian Fidelity, she said. They found similar documents at the house where Smith lived, along with a matchbook missing some of its matches.

    On the stand, Smith said she spent more than $16,000 to remodel her parents’ home with plans to move into the apartment herself. “I never thought my home would burn,” she said.

Friday, December 7, 2012

Oregon Regulator Issues Caution On Doing Business With Payday Lenders & Other Short Term Loan Sharks Affiliated With Federally-Recognized Indian Tribes

From the State of Oregon Division of Finance and Corporate Securities:

  • It has come to our attention that a number of lenders offering short-term loans (payday loans) to Oregon consumers are subdivisions of, or affiliated with, federally-recognized Indian tribes. As a result, these companies may not be subject to the jurisdiction of the Oregon Department of Consumer and Business Services (DCBS). We are still evaluating the law and the various tribes’ positions to determine if tribal lenders are outside Oregon’s authority.

    Most Internet-based payday lenders, including the companies listed below, are not licensed to do business in Oregon. If you are considering using the services of an Internet-based payday lender or any other company not licensed to do payday lending in Oregon, you should be aware that they typically charge interest rates and other fees significantly above the limits found in Oregon law.

    Based on consumer complaints received by DCBS and information received from other states, it appears that the following are tribal-run payday lenders. (Note: this is likely not an exclusive list.):

    US Fast Cash
    United Cash Loans
    Star Cash Processing
    Instant Cash USA
    500 Fast Cash
    Rio Resources
    Xtra Cash
    One Click Cash
    Preferred Cash

Twinkie The Pig May Dodge Xmas Boot; City: With Proper Docs, Family May Be Entitled To 'Fair Housing' "Reasonable Accommodation" Granting 'Residency Status' To Miniature Porker As Emotional Support Animal For Down Syndrome Son

In Coral Springs, Florida, the South Florida Sun Sentinel reports:

  • Twinkie the pig might get to stay after all.

    Although it's against city codes to keep pigs as pets, the Ray family insists they should receive an exception because their pet pig Twinkie provides emotional support for their son, Kason, who has Down syndrome.

    On Tuesday, city officials asked for documentation, such as a doctor's prescription specifically for a pig as an emotional support animal, and documentation of Kason's dad's severe allergies, which prevent the family from having a dog or cat.

    "If you provide the additional information, we will be able to reevaluate the applicability of the ordinance," wrote City Attorney John J. Hearn. "If we receive the documentation ... we will look at making reasonable accommodations,"(1) he added Thursday.

    The Rays could have faced a daily fine of $500 for keeping the pig.

    After the story about Twinkie was published in the Sun Sentinel, the family's plight has been featured in the New York Daily News, the Huffington Post and a futures and commodity market news site. Local television stations aired her story and it also appeared on a Boston TV website. It even showed up in the Daily Mail in England.

    Kason's mother, Heather Ray, also received more than 260 signatures on her online petition at asking the city to change its code and allow indoor pigs as pets.

    Heather Ray said Thursday she would happily provide the paperwork to put this matter to rest.

    "Mr. Hearn assured me that the city would not be fining us and that they would not be out to take Twinkie and that with the requested documentation we could come to an agreement in which Twinkie would be allowed as an emotional support animal for Kason without any further issues," she said. "I am satisfied with the agreement that we have come to and I appreciate the city being compassionate and understanding of our situation."(2)
Source: Twinkie the pet pig may get exception from Coral Springs.

For an earlier post on this story, see Miniature Swine A Therapy Animal, Says Homeowner After City Nixes Waiver Request To Keep Cuddly 3-Pound Pig; Situation May Be Federal Case In The Making If City Not Careful.

(1) In fact, this family may have legal rights under the Federal Fair Housing Act for reasonable accommodation to be granted when a household member has some type of physical or mental impairment. The Fair Housing Act prohibits discrimination against people with disabilities and requires residential property owners to make reasonable accommodation to allow people with disabilities and their families to use and enjoy their homes. See, for example:
(2) See 'The Swine Stays!' Says Judge To HOA; Well-Behaved Wilbur The Pot-Bellied Porker Dodges Boot As Effort To Evict Beloved Family Pet Deemed 'Not Kosher' for another post involving a successful attempt by a homeowner to score 'residency status' as a household animal for their beloved pig.

Another Tenant, Kids Get Pre-Xmas Boot After Unwittingly Renting House From Vacant Home Hijackers; Cops Bag Duo, Say They Have Ten Cases Against Pair

In Plantation, Florida, WPLG-TV Channel 10 reports:

  • When Marcella Scott rented a home in Plantation she'd already pictured her holidays there. "I was thinking I could walk with the kids and they could ride their bike," Scott said. But before she could live out her dream a stranger knocked on her door.

    "He knocked on my door and asked what I was doing in his house. At the moment, I was shaking and about to pass out," Scott said.

    It turns out the guy who she thought was her landlord, Kenneth Corbin, is now in jail. Investigators say he and his associate, Tyrone Jones, are notorious for illegally taking over foreclosed homes in Broward County.

    "They use false companies, falsify documents, get the houses turned over to their names and then rent them out," said Plantation police investigator, Sgt. Al Butler. Police say they break in, change the locks, and then find someone to pay the rent in cash.

    There are currently ten cases against the duo.

    Local 10's Sasha Andrade may have stumbled upon the 11th. She approached a family living inside a home Corbin rented out a couple of weeks ago.

    "He's now in jail," Andrade told Daniel Biban. Biban was stunned. He says he paid Corbin $2000 in cash, money he may never see again. "He gave me a lease, he gave me a receipt," said Biban.

    As for Marcella Scott, she spent Wednesday moving out of a house that was never hers.

    Her holidays are now ruined, and any cash she had for presents will now be spent on a hotel room. "It's past tough because I have three kids, I'm pregnant, and I have nowhere to go," said Scott.

    Investigators believe there may be more victims out there. They say that a red flag is a landlord collecting in cash, or having a difficult time turning on water or electricity. Police also say that if a deal seems too good to be true it most likely is.
Source: Suspects take over, illegally rent foreclosed homes (Unsuspecting renters forced to move).

Thursday, December 6, 2012

Homeowner, Attorney Who Showed Up At Bank Branch With Cops, Court Order & Repo Van To Foreclose On BofA Look To Make Incident Into Hollywood Movie

In Naples, Florida, the Naples Daily News reports:

  • Some friends questioned whether it was a good idea to show up at a Bank of America branch with a repo van, demanding that the bank pay up.

    Yet rookie attorney Todd Allen still took the chance and it has paid off.

    Allen made national news when he arrived at a Bank of America branch on Davis Boulevard in East Naples in June 2011 with Collier County sheriff's deputies, a moving company and a court writ permitting them to seize furniture and cash to satisfy the $2,500 judgment. It was a last alternative.

    He left after the branch manager cut a check for the judgment and expenses incurred in executing the levy.
  • Bank of America tried to foreclose on Warren and Maureen Nyerges' Golden Gate Estates home in 2010. But their home had been fully paid for and didn't have a mortgage.

    It was a mistake that was reported by the media. The story also was featured on the "Daily Show" on Comedy Central.

    "Daily Show" correspondent John Oliver told the story of how Allen showed up with repo men to foreclose on a banking giant, making everyone laugh.

    "That is the single, greatest story I have ever heard," Oliver said on the show.

    Oliver told the trio that the case could turn into a movie. That's exactly what happened. A movie on the big screen is in the works, according to the attorney and couple.

    Bank of America representatives couldn't be reached for comment for this story.
  • In summer 2011, Allen and the Nyergeses signed with a producer in Los Angeles and entered into a contract to make a movie. "The idea is being shopped around to movie houses but nothing has happened yet," Allen said.

    Allen said he doesn't have a preference of which company decides to do the film as long as the scope of the foreclosure crisis and the impact it has on people is accurate.

    When asked who he wants to play his part, the married father of three children said he really doesn't care. "I just want it to be funny," he said of the movie.

    Warren Nyerges said he doesn't have a preference of which actor plays his role, as long as he is handsome. "It would make an amusing story," he said about the potential film.

Ex-Law Firm Employees Plead Guilty To Ripping Off $788K+ From Clients' Real Estate Trust Account Funds, Company's Business Accounts

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

  • Two former employees of a law firm based in Edison, N.J., admitted [] to conspiring to defraud their former employer by improperly diverting more than $788,000 from the law firm, U.S. Attorney Paul J. Fishman announced.

    Marla Deptula, 45, of Sayreville, N.J., pleaded guilty to an Information charging her with one count of conspiracy to commit mail fraud and one count of subscribing to a false tax return. Rose L. Crabbe, 31, of Plainfield, N.J., pleaded guilty to an Information charging her with one count of conspiracy to commit mail fraud. Both defendants entered their guilty pleas before U.S. District Judge Peter G. Sheridan in Trenton federal court.

    According to documents filed in this case and statements made in court:

    Deptula and Crabbe each admitted that between February 2005 and September 2007, they conspired to embezzle, and did, in fact, embezzle, from their former employer, referred to in court documents only as the “Law Firm,” by wrongfully writing checks from the law firm’s trust and business accounts to themselves and their personal creditors to pay for their personal expenses, including credit card bills, real estate taxes and child care expenses.
  • Deptula, who had access to the law firm’s bank accounts in order to perform her duties as a secretary in the law firm’s real estate section, used that access to divert more than $788,000 from the attorney trust and business accounts for her and Crabbe’s personal benefit.(1) Deptula received the vast majority of the stolen funds and failed to report any of the income on her federal tax returns.
For the U.S. Attorney press release, see Former New Jersey Law Firm Employees Admit Embezzling More Than $788,000 In Law Firm Funds.

(1) According to the formal charges against Deptula, she "caused checks to be issued from the LAW FIRM'S trust account payable to clients of the LAW FIRM, forged the clients' endorsements on the back of the checks, and then deposited those checks into bank accounts that she controlled."

Real Estate Broker Pinched For Allegedly Ripping Off Clients Of $600K+; Two Victims: He Pushed Us Into Foreclosure Over Unkept Promise To Make Our House Payments From Investment Proceeds

In Harbor City, California, KTLA-TV Channel 5 reports:

  • A real estate broker has been charged with three counts of grand theft in connection with a scheme that officials say defrauded clients more than $600,000.

    According to Lomita Sheriff's officials, 57-year-old Mario Hernandez used his company, OPM Capital Group, Inc. as a front for a tax preparation service that he did not have proper certification for.

    Between March and December of 2007, Hernandez allegedly convinced three clients to invest funds from their 401K accounts into his company and promised they would receive returns as much as 20 percent. Hernandez also told clients that he was a Certified Public Accountant and a former employee of the Internal Revenue Service.

    Investigators found that Hernandez instead spent his clients' money on gifts and loans to family members, mortgage payments on several properties, payments to previous investors and on personal business expenses.

    He also allegedly told two of his clients that he would make payments on their mortgage accounts from their investment proceeds, but when his funds were depleted in 2008, their homes went into foreclosure.

    The investigation also revealed that the acronym in his company name stood for "Other People's Money."

    Charges were filed against Hernandez in October and he was arrested at his Harbor City home in early November. He is scheduled to appear in court on Dec. 18. Anyone with information is asked to contact detectives at (562) 233-8204.

Employee Blows Whistle On Aussie Bankster's Alleged Effort To Squeeze Slow-Paying Borrowers With Foreclosure Threats

From the land Down UnderThe Australian reports:

  • ANZ has denied illegally harassing customers who are late on their mortgage payments after an internal whistleblower referred its collection practices to the corporate watchdog for investigation.

    The whistleblower, who works in the bank's collections department, has accused ANZ of engaging in unconscionable conduct and misrepresentation in pursuing late mortgage payments, in contravention of corporate regulations and its own guidelines.

    The staffer alleges ANZ is telling customers who are behind in their payments by as little as 20 days that it has engaged lawyers to begin foreclosure proceedings, when the bank's own policy is to wait at least 60 days.

    "It's ridiculous telling a customer that you're going to lose your house when you're only behind by a month or less -- you have to be at least two or three months behind for the solicitor to accept the account," the whistleblower said during an interview on Seven News.

    The Australian Securities & Investments Commission requires lenders to give borrowers 30 days to make payments after being served with a default notice, and to inform them about their rights and options to apply for relief on the grounds of financial hardship.

    The whistleblower said ANZ's own guidelines allowed customers in arrears to be given extra time to make repayments, but staff were being instructed to "be firm".

    "There have been instances where a staff member has given a customer what they're entitled to, then management has turned around and said 'why are you giving them three months instead of one month'," he said.

    Choice spokesman Matt Levey said ANZ's conduct "would seem to verge on bullying".

    ANZ spokesman Stephen Ries said the bank rejected any "suggestion of systemic issues with inappropriate conduct in its collections area". "We take our compliance obligations very seriously and continually monitor and improve existing policies and processes."
Source: ANZ denies harassing late mortgage payers (requires subscription; if no subscription, try here, then click the appropriate link for the story).

Wednesday, December 5, 2012

Michigan Judge To Cough Up $6K+ In Back Taxes, Penalties Over Improper Homestead Claim; Joins Her State High Court Justice-Mom With Real Estate Controversies

In Wayne County, Michigan, the Observer & Eccentric reports:

  • Before Dana Hathaway takes the bench on the Wayne County Circuit Court, she might want to get her house in order.

    Two homes, actually.

    Hathaway owes Birmingham Schools approximately $6,500 in additional taxes, plus penalties and interest to Oakland County and the city of Birmingham after she rescinded a house at 174 Catalpa as her principal residence for the past three years.

    Birmingham Billing Manager Janet Laing said Hathaway purchased the house in 2010 and had been paying taxes at the principal residence rate. She came into Birmingham City Hall on Nov. 5 with an affidavit declaring the Catalpa Street house as a non-principal residence.

    Laing said Hathaway has to pay the additional taxes because in Michigan, a property owner is not allowed to declare two homes as their primary residence.

    Hathaway was elected in November to serve a six-year term on the Wayne County Third Circuit Court. She's the daughter of Michigan Supreme Court Justice Diane Hathaway, who's being investigated by the FBI over allegations of mortgage fraud.(1)

    Dana Hathaway declined to comment on this story. She's listing a house in Grosse Pointe Farms as her principal residence, a necessary move since she ran for office in Wayne County.

    According to real estate records, she and her husband purchased the house in March 2010 for about $310,000. It was placed into foreclosure by the previous owner. The 3,657-square-foot house was built in 2000. It's now back on the back on the market with a listed selling price of $560,000.

Underwater Homeowner Slams 11th-Hour Brakes On Bank-Approved Short Sale After Discovering That HOA Was Snatching Lender-Promised $13K 'Walking Money'

In Jupiter, Florida, WPTV-TV Channel 5 reports:

  • Lynne Zurback is getting ready for Christmas. Today she's hand-painting a nativity set. “I paint. I do flowers. That's my goal, is to open up a flower shop that only sells local products," Zurback said.

    So when she got letters offering her $13,000 to have a short sale on her condo in Abacoa she thought it was the new start she desperately needed.

    “They call me and say, 'You're going to be here tomorrow at noon,' and I was like, ‘Oh that's wonderful. I'll get my money. I can move on. I can do what I want to do.’ 'Oh no, you're not getting any money.' And I was you've gotta be kidding me," Zurback said.

    Upset with the news, she cancelled the sale. Zurback was told the money was bypassing her hands and going towards past HOA dues.

    "I just said then that's it. No one’s getting any money. I was shocked," Zurback said.

    She contacted Impact 5 to see if it was legal.

    “When you do a short sale you'll generally get what's called a short sale agreement from the bank,” real estate attorney Shari Olefson said.

    Olefson told NewsChannel 5 not only is it legal, it's common.

    “It's really important that you read the terms of that agreement carefully as soon as you get it because hidden in that fine print is going to be a disclosure that says that the money may be used to pay off lien holders and that you'll be required to give good title to the property,” Olefson said.

Texas Law Firm Agrees To Stop Trying To Clip West Virginia Residents Eligible For Nat'l Foreclosure Fraud Settlement Cash For Fees To Submit Simple One-Page Claims Form

From the Office of the West Virginia Attorney General:

  • Attorney General Darrell McGraw announced [] that Murray LLP, a Texas law firm, agreed to permanently discontinue offering a service to West Virginia foreclosure victims that a lawsuit filed by his office characterized as unscrupulous and deceptive. The agreement with Murray is reflected in a final order recently entered on November 1, 2012 in the Circuit Court of Jefferson County that settles the suit filed against Murray.

    The suit alleged that Murray, through its website,, sought to charge consumers a fee of 20% to assist them in processing a claim for benefits they were already guaranteed to receive under the National Mortgage Settlement (“NMS”) reached earlier this year by the federal government and 49 state attorneys general with the nation’s five largest mortgage loan servicers.

    The only requirement to receive the payment, estimated to be $1,500 to $2,000, is completion of a simple one-page form that was mailed directly to all eligible persons. Attorney General McGraw’s suit alleged that Murray attempted to wrongfully profit from this process by leading consumers to believe that its services were necessary to obtain the money when, in fact, the claims process was intended to be simple and free.

    In the final order entered by the court, Murray agreed that it would not represent or collect payments from West Virginia consumers in relation to the NMS claims process or any other non- litigation foreclosure services. Murray also agreed to place a notice on its website,, advising that its services were not available in West Virginia.
For the West Virginia AG press release, see Texas Law Firm, Murray LLP, Agrees to End its Controversial Services to 5,222 West Virginia Families Who Lost Homes Through Wrongful Foreclosures (AG McGraw’s Suit Against Murray’s Settled).

Go here to view the complaint filed against Murray LLP.

Go here to view the Agreed Final Order.

Crackpots Peddling Sovereign Citizen Scams To Purportedly Halt Foreclosure, Wipe Out Mortgages, Liens, Car Loans Continue Making The Rounds

In Anaheim, California, The Orange County Register reports:

  • Faced with foreclosure after falling $19,000 behind on his mortgage, an Anaheim man took matters into his own hands. Sitting at his keyboard, he tapped out an official-looking, one-page document stating that his mortgage didn't exist.

    This picture shows the aftermath of a February 2012 incident in which anti-tax activist Joseph Andrew Stack flew a private airplane into the Austin, TX offices of the IRS, killing himself and a federal employee. Stack is believed to have been tied to the sovereign citizen movement.

    "I have searched and inquired of your records and found that you have no such record," he wrote. "Therefore, I demand that you remove this recording immediately." The homeowner then took his document to the county and attempted to file it at the Orange County Clerk-Recorder's Office.

    Had he succeeded, more than $300,000 in debt would have vanished. His four-bedroom, 2.5-bath condo would be his free and clear. Instead, the county rejected his filing as "unrecordable." His property is in the early stages of the foreclosure process.

    Influenced by the "sovereign citizen" movement, the Anaheim homeowner is among a growing number of people filing liens and notices seeking to wipe out mortgages, eliminate car loans, cancel credit card debt and halt foreclosures, according to county and law enforcement officials.

    The filings are worthless, officials say. But some sovereign citizen followers charge fees for seminars or foreclosure assistance and the FBI cautions that their approach amounts to foreclosure fraud. Like other loan-modification and foreclosure-rescue scams, these operators make money by promising relief, but fail to deliver, the FBI says.

Tuesday, December 4, 2012

Court Gives "John Beck Amazing Profits" Tax Foreclosure-Buying System $113M+ Slam; Product-Peddling TV Infomercial Star Bragged About Buying "Thousands" Of Properties Using His System, Admits Under Oath To Only Buying Ten

Anyone wondering why one-time, late-night TV infomercial star John Beck, known for peddling his "pennies on the dollar", "free & clear" tax foreclosure acquisition system, has been conspicuously absent from the airwaves recently may be interested in the following, borrowed from Rebecca Tushnet's 43(B)log:

  • [A California federal] court granted the [Federal Trade Commission - "FTC"] summary judgment on liability for violation of §5 and the Telemarketing Sales Rule with respect to three “wealth-creation” products sold via infomercials, the John Beck system (promising real estate riches), the John Alexander system (ditto), and Jeff Paul’s Shortcuts to Internet Millions (guess what). The FTC successfully held the named originators, their companies, and related companies liable.(1)

    The John Beck system claimed to help consumers make money by buying real estate at tax foreclosure sales by paying the delinquent back taxes. The relevant defendants falsely represented that consumers could quickly and easily earn lots of money by buying homes in their area “free and clear” for “pennies on the dollar,” then reselling them for full market value or renting them for a profit.

    The informercials also claimed that buyers would get a free 30-day membership to “John Beck’s Property Vault,” but failed to disclose that it was a continuity plan that subsequently charged them $39.95/month, in violation of the Telemarketing Sales Rule.
  • Just looking at the John Beck system, the claims that consumers could “purchase” homes for “pennies on the dollar”; buy homes in their own area, regardless of where they lived; make money “easily” and with little financial investment; and make money “free and clear of all mortgages” were disproved by the kit materials themselves.

    Buying tax liens doesn’t mean you get a deed, only a right to collect delinquent taxes, which only ends up with title and right to possess or sell in exceptional circumstances. Tax sales are held only once a year and bidding typically starts at a very high percentage of fair market value.

    Beck’s deposition testimony also showed the falsity of the infomercials; while he expressly claimed to have bought “thousands” of properties with his system, at deposition he admitted that he did so “very infrequently”—only 10 times.

    Beck claimed that his daughter had bought over 90 properties using his system, but admitted that he knew of only 4 “students” who’d been able to get title to homes like those shown in the infomercial, and those instances required several years of waiting, including a court trip to foreclose on the right of redemption. Purchasing property at tax sales is elaborate and time-consuming.

    Dozens of consumer witnesses further confirmed this falsity. They testified that it was difficult or impossible to find tax sales in their area, and difficult or impossible to earn substantial money using the Beck system.
  • The court dismissed small print disclaimers that endorsers’ experiences were unique. “The prints are so tiny that, under the circumstances, consumers are unlikely to read them while watching and listening to the testimonials of the endorsers.”
For more, see FTC wins against "make money fast" claims.

For the federal court ruling, see F.T.C. v. John Beck Amazing Profits, LLC, 865 F. Supp. 2d 1052 (C.D. Cal. 2012). (Go here for the lawsuit filed by the FTC).

Go here for links to certain other court documents filed in the case made available by the FTC.

(1) According to the federal court ruling, Beck was found to be jointly and severally liable with a couple of others for $113,374,305, which was the amount of injury suffered by consumers, or unjust enrichment obtained by him and the others, in connection with the practices alleged in Count 1 of the Complaint.

Newark Feds Score Another Foreclosure Rescue Guilty Plea; Suspect Admits Role In Peddling Sale Leaseback Ripoffs To High Equity, No-Cash, Financially Distressed Homeowners

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

  • A Middlesex County, N.J., man [] admitted his part in a phony foreclosure rescue scheme that was part of a $4.4 million mortgage fraud, U.S. Attorney Paul J. Fishman announced.

    Frederick “Freddie” Grippo, 32, of Old Bridge, N.J., formerly a loan officer at Worldwide Financial Resources and an officer of Vanick Holdings, pleaded guilty before U.S. District Judge Kevin McNulty in Newark federal court to an Information charging him with one count of conspiracy to commit wire fraud.

    According to documents filed in this case and statements made in court:

    Between January 2008 and February 2010, a coconspirator of Grippo(1) was the president of Morgan Financial Equity Shares and Vanick Holdings, both based in Holmdel, N.J. Morgan Financial was held out to the public as a company that could help homeowners in financial distress who faced foreclosure on their homes through something called the “Equity Share Program.” As described by Morgan Financial and its president, the Equity Share Program involved creating a limited liability company in the name of the homeowner’s house in which the homeowner would supposedly own a 90 percent interest, with the rest to be owned by one or two private investors.

    In reality, the so-called investors invested nothing and were instead straw buyers recruited by Grippo or his coconspirator because they had good credit. Grippo and his associates then made out mortgage loan applications in the names of the phony investors for the purchase of the distressed properties.

    A homeowner in distress would come to a closing at the Morgan Financial office in Holmdel at which he or she would be given a stack of documents to sign that the homeowner thought would prevent foreclosure, but which actually transferred title to the investor. The new mortgage loan applications filled out in the name of the investor by Grippo or his associates contained materially false information about the loan applicant’s monthly income, his assets and whether the residence to be “bought” would be his primary residence.

    Once the new loan application was filled out, it would be submitted to Worldwide Financial Resources for processing, and Grippo, a loan officer at Worldwide, would see to it that the loan was approved. Once the loan was approved and the loan money was wired to the settlement agent for a given transaction, Grippo’s coconspirator would direct the settlement agent to forward a portion of those loan proceeds to bank accounts that the coconspirator controlled.

    The scheme succeeded in obtaining $4.4 million in mortgage loans. Properties whose original owners fell victim to the Equity Share Program are located throughout the metropolitan area, including in Rutherford, N.J., Monroe, N.J. and Brooklyn, N.Y.
For the U.S. Attorney press release, see Middlesex County, N.J., Man Admits Mortgage Fraud Scheme.

Go here for the Information filed by the Feds in this case, which describes the racket in detail.

(1) According to a recent story in The Star Ledger (see Middlesex man admits role in fraudulent home-foreclosure rescue scheme), Grippo along with his father, Vito Grippo, were both slammed by the office of the New Jersey Attorney General on state criminal charges for a racket peddling alleged foreclosure  rescue ripoffs:
  • The office of state Attorney General Jeffrey Chiesa announced in late September that Grippo and his father, Vito Grippo, 57, were charged in state court with promising to help homeowners facing foreclosure, only to sell the properties to unwitting investors and filing for $4.5 million in fake mortgage applications.

    Chiesa’s office also said the scheme was run through Morgan Financial Equity Shares, a company allegedly operated by Vito Grippo. According to Chiesa’s office, the elder Grippo, of Jackson, would persuade struggling homeowners to transfer their deeds temporarily to his business in exchange for financial relief.
(2) For more on this type of foreclosure rescue ripoff, see:

WV High Court Says Quicken Loan Terms "Unconscionable", Violate State UDAP Statute, But Nixes Mortgage Cancellation & Directs Lower Court To Reconsider Screwed Over Homeowners' $2.8M Damages Award

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

  • The West Virginia Supreme Court has agreed with a trial court finding that Quicken Loans, Inc. committed fraud and violated various provisions of the West Virginia Consumer Credit and Protection Act in a mortgage loan with an Ohio County woman, but it sent the case back to the circuit court to adjust the approximately $2.8 million dollar award.
  • [Lower court] Judge Arthur M. Recht found that Quicken “committed fraud and violated various provisions of the West Virginia Consumer Credit and Protection Act(1)… regarding unconscionability … unfair and deceptive acts … and regarding illegal balloon notes.”

    The [lower] court also found that Quicken had violated West Virginia law regarding illegal appraisals and concluded that the “Note and Deed of Trust were unenforceable as a matter of law, awarded restitution of payments made by Plaintiff to Quicken in the amount of $17,476.72 … and enjoined them from attempting to collect any further payments under the loan.”

    Recht subsequently awarded Brown attorneys fees and litigation costs of $596,199.89 and punitive damages of $2,168,869.75.
  • After an analysis of all the evidence presented at trial, the [West Virginia Supreme] Court concluded that, “given the particular facts involved in this case, the terms of the loan described above and the loan product, in and of itself, were unconscionable.”

    The Court then moved to the “cancellation of the loan obligation” issue and found that the circuit court had overstepped its bounds when canceling the obligation of Brown to pay back the principal of the loan – “It is Quicken’s contention that the legislature has strictly limited the circumstances under which this remedy may be awarded under the West Virginia Consumer Credit and Protection Act and that those circumstances are absent in the case sub judice. We agree.”

    Regarding punitive damages, “Quicken argues that the circuit court deprived it of procedural due process by failing to perform the required analysis of punitive damage pursuant to [Garnes v. Fleming Landfill, Inc]” and the Court again agreed with Quicken, ruling “Because the circuit court failed to conduct a proper analysis under Garnes, such an analysis must be conducted upon remand.”

    Quicken next argued that the circuit court should not have included attorneys fees in the calculation of the punitive damages award.

    Recht had added the compensatory damages together and then multiplied by three to determine the amount of punitive damages. Quicken argued that the attorneys fees should not have been part of the compensatory damages. If Quicken was right, then the punitive damages award would have been much lower according to Recht’s formulation.

    The Court agreed with Recht – “[W]e hold that attorneys fees and costs awarded under West Virginia Code §46A-5-104 (1994) of the West Virginia Consumer Credit and Protection Act shall be included in the compensatory to punitive damages ratio in cases where punitive damages are available.”
For more, see Supreme Court affirms judgment against Quicken Loans.

For the ruling, see Quicken Loans, Inc. v. Brown, No. 11-0190 (WV. November 21, 2012).

(1) The Consumer Credit and Protection Act is West Virginia'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.

Monday, December 3, 2012

Losing the Paper – Mortgage Assignments, Note Transfers and Consumer Protection

From Public Citizen's Consumer Law & Policy Blog:

  • CL&B blogger Alan M. White of CUNY has written Losing the Paper – Mortgage Assignments, Note Transfers and Consumer Protection, 24 Loyola Consumer Law Review 468 (2012). Here's the abstract:

    In this article, I survey the state of the mortgage loan transfer system, the legal rules that govern it, and the widening gap between those rules and the practices in the secondary mortgage market just prior to the 2008 crisis.

    The review includes some empirical assessment of the extent of errors and execution problems; the damage done by “robo-signing;” the Mortgage Electronic Registration System (MERS) and note delivery practices; and the extent to which courts will prevent or reverse foreclosure sales based on those errors and problems.

    I then examine why existing legal structures, for both paper-based and electronic transfers, are not working, and the extent to which they have failed, I also identify the key consumer and investor protection values and interests (finality, transparency, fraud protection, and so forth) that must be addressed by the law governing secondary market transfers of home loans.

    I conclude by outlining options for reforming the mortgage loan transfer system, including the use of a single document merging the note and mortgage, and a structure for the registration of a single authoritative electronic version of the mortgage/note and of all changes in parties to, and terms of, the transaction.

Defending Foreclosure Actions

From Public Citizen's Consumer Law & Policy Blog:

  • Marcia Johnson of Texas Southern and Luckett Anthony Johnson have written Defending Foreclosure Actions, 49 Real Estate Law Journal 516 (2012). Here's the abstract:

    With the rising incidences of residential foreclosures, many homeowners are overwhelmed by the foreclosure process and anticipated costs and often opt to vacate the premises without offering any defense.

    The American justice system rests on the premise that no person will be deprived of their liberty or property without due process. Procedural due process requires that a person have notice of the charges against them as well as a reasonable opportunity to defend against them.

    Reasonable opportunity is circumvented when the defendant is effectively without the means to defend. This is especially offensive to our notions of justice when the defendant has legitimate bases for defense but is effectively denied the opportunity to urge such defenses because of finances.

    This article is written to examine the defenses available to homeowners facing foreclosure and to provide a practical approach to defending against foreclosure.

Ex-LPS Exec Tagged Again, Accused Of Racketeering For Role In Littering Property Recorders' Offices With Bogus Mortgage Docs; Michigan AG Joins Feds, Missouri AG With Criminal Charges As Prosecutorial Piling On Begins

From the Office of the Michigan Attorney General:

  • Michigan Attorney General Bill Schuette [] announced he charged Lorraine Brown, former president of mortgage document processor DocX, with racketeering for her alleged role in authorizing the fraudulent signing of mortgage documents filed in Michigan. The felony charge comes as the result of an ongoing Attorney General investigation into questionable mortgage documentation filed with Michigan's Register of Deeds offices during the foreclosure crisis.

    "Shortcuts like robo-signing are just one piece of the mortgage foreclosure crisis," said Schuette. "Our investigation remains ongoing, and we will bring to justice every lawbreaker we find."

    In April 2011, Schuette launched an investigation after county officials across the state reported that they suspected Assignment of Mortgage documents filed in their offices may have been forged. A "60 Minutes" news broadcast had shown that the name "Linda Green" was signed to thousands of mortgage-related documents nationwide, but with many different variations in handwriting. County officials in Michigan reviewed their files and found similar documents, thus raising questions about the authenticity of the documents filed.

    As part of his investigation, Schuette reviewed documents filed in Michigan and prepared by DocX, a document processing company located in Georgia. DocX processed mortgage assignments and lien releases for residential lenders and servicers nationwide. Schuette's investigation revealed that former DocX president Lorraine Brown, 51, of Alpharetta, Georgia, allegedly established and orchestrated a widespread scheme of "robo-signing," a practice in which employees were directed to fraudulently sign another authorized person's name on mortgage documents in order to execute these documents as quickly as possible.

    Internally, DocX identified this practice as "facsimile signing" or "surrogate signing." Schuette alleges that from 2006 through 2009, these improperly executed documents were created and recorded at Brown's direction. Schuette's investigation revealed that more than 1,000 unauthorized and improperly executed documents were filed with county registers of deeds throughout Michigan.

    Lorraine Brown has been charged with one count of Conducting Criminal Enterprises (Racketeering), a 20-year felony, in Kent County's 61st District Court. Arrangements are being made for Brown to surrender to Michigan authorities, and arraignment will be scheduled at a later date.

    In 2010, DocX suspended operations, halting its work as a mortgage document processor. Schuette noted that while the criminal charges against Brown address her role in the scheme, his office's overall investigation into robo-signing remains ongoing and is not yet complete.

Sunday, December 2, 2012

Critical Look At Role Of Negotiability In The Foreclosure Crisis

From a recent issue of The Florida Bar Journal:

  • Contemporary negotiable instruments law developed hundreds of years ago, before every important institution of the modern financial world: incorporated banks, business corporations, developed capital markets, global monetary systems, electronic transfers, and even paper currency.1

    It is counterintuitive that this ancient law of negotiable instruments would have any relevance to one of the world’s most sophisticated, cutting-edge tools of high finance — the pooling and securitization of mortgage loans. Yet, the courts routinely look to such law to resolve a foreclosure crisis spawned by the collapse of mortgage-backed securitization, a process which is as strained as trying to decide First Amendment issues using cases pre-dating the Constitution.

    It is all the more extraordinary that, just as the nation begins to awaken to “robo-signing” and other such pervasive and methodical abuses of the court systems, judges should find themselves slavishly compelled to apply a body of law shaped (and then abandoned) by the very authors of such scandals: the financial institutions.

    This article explores the historical underpinnings of negotiability and whether the evidentiary shortcut that negotiability appears to offer as a means of proving a plaintiff’s standing to sue can or should be applied in the context of the foreclosure cases facing the courts today.

    Examination of the original purposes of negotiability, as well as recent changes to the Uniform Commercial Code, leads to the conclusion that mere possession of a negotiable instrument (the promissory note) is insufficient to enforce a mortgage. The possessor or “holder” must prove ownership of the instrument — a complete chain of title from the original creditor — to invoke the equitable remedy of foreclosure.
For more, see Negotiating the American Dream: A Critical Look at the Role of Negotiability in the Foreclosure Crisis.

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

Appeals Court To Address Arizona Lawmakers' Move To Snatch State's $50M Share From Foreclosure Fraud Settlement For General Purposes; Critics Say Loot Should All Be Used To Help Borrowers, Troubled Homeowners

In Phoenix, Arizona, The Assoociated Press reports:

  • An appellate court panel is considering a court case involving Arizona's use of $50 million from a multistate foreclosure settlement to help balance the state budget.

    Critics of the Legislature's decision to put $50 million into the general state budget wanted all of the money to be used for programs and services for borrowers and troubled homeowners.

    Housing advocates are appealing a Maricopa County Superior Court judge's ruling in favor of the state, and a three-judge panel is scheduled to hear arguments [this week].

    The judge said the Legislature decides how to spend the state's money. Housing advocates contend that the attorney general could decide how the money is used.

    Some of the settlement money paid the state by lenders is being used for programs and services for borrowers.

Eligible NJ 'Sandy' Victims May Qualify For Free Legal Help

In Edison, New Jersey, The Jersey Journal reports:

  • An Edison-based legal services firm is providing free legal help for victims of Hurricane Sandy.

    Legal Services of New Jersey(1) president Melville D. Miller Jr. said the storm left many residents facing eviction or foreclosure, and others struggling with applying for federal disaster aid.

    “Although our resources are badly stretched, Legal Services will find a way to assist Sandy victims,” Miller said in a statement. “It is essential to bring the expertise of our staff to bear on those problems.”

    Sandy victims in need of legal assistance can call LSNJ’s new hotline, (888) 222-5765, to determine if they are financially eligible. They can also visit the firm’s website at

    “We are here to help,” said Linda Babecki, LSNJ’s chief coordinator of its Sandy response.
Source: Hurricane Sandy victims can get free assistance from Legal Services of New Jersey.

See also Legal Services of NJ offers free advice to hurricane victims.

(1) Legal Services of New Jersey is the coordinating office for the state’s system of Legal Services programs, which provide essential legal aid in civil matters to low-income people in all of the state’s 21 counties.