Saturday, February 2, 2013

San Bernardino County Scraps Thoughts Of Using Eminent Domain To Bail Out Underwater Homeowners

In San Bernardino, California, the Contra Costa Times reports:

  • More than seven months after announcing it was entertaining a proposal to use eminent domain to acquire underwater mortgages to help stabilize the local housing market, a San Bernardino County joint powers authority on Thursday rejected the proposal.

    The proposal, rolled out by San Francisco investment firm Mortgage Resolution Partners last summer, intrigued cities and counties across the nation hardest hit by the subprime mortgage crisis and garnered national opposition by the real estate and mortgage industries, which joined forces in an effort to stop the proposal in its tracks.

    But it was potential risk and a lack of community support, not threats of litigation and the cutting of credit to homebuyers in San Bernardino County, that prompted the Homeownership Protection Program - the joint powers authority (JPA) composed of the county and the cities of Fontana and Ontario - to back away from the proposal, said Greg Devereaux, chief executive officer of both the county and the JPA.

22 Elderly Plaintiffs File Suit Accusing Landlord Of Unconscionably Jacking Up Rents To Drive Them Out Of Their Homes & Give Complex A More Youthful Appearance

In Greenwich, Connecticut, Greenwich reports:

  • Dogged for years by complaints of onerous rent hikes, a revolving door of owners and disruptive construction, a Glenville apartment complex now faces a legal battle over how much it charges its renters.

    More than 20 residents of Greenwich Oaks are suing the property's parent company, alleging it has attempted to levy excessive rent increases against some tenants. The suit was filed against Greenwich Oaks, the management or owner of the apartments on Weaver Street, according to a complaint submitted at state Superior Court in Norwalk in August 2012.

    The complaint document claims "the defendant has attempted to raise the rent of each of the plaintiffs by an amount which exceeds that which is fair and equitable," based on state law.

    "The defendant is attempting to raise the rents of each plaintiff to unconscionable levels in order to force the plaintiffs to vacate their apartments and create a more youthful appear in the rental complex," the document states.

    Tenants complained of age discrimination several years ago, when an ill-fated condominium conversion by a Greenwich-based real estate developer collapsed after the complex's mostly elderly residents claimed they were being strong-armed out of their apartments to make way for a younger clientele.
  • [2]2 plaintiffs were listed on the suit, which is seeking over $15,000 in damages in addition to the fair market value determination. Included in the document is a complaint that the company said residents would be charged $250 if they failed to sign their leases.

    "As persons over the age of sixty two the plaintiffs are not required by law to sign new leases and therefore may not be charged a $250 penalty for not signing said leases," the document indicates. "Said leases are therefore void as contracts of adhesion and are further void as being entered into through deception and misrepresentation."

    The acts of the defendant are unfair or deceptive under the Connecticut Unfair Trade Practices Act,(1) the lawsuit alleges.
For more, see Lawsuit alleges unfair apartment rent hikes.

(1) The Connecticut Unfair Trade Practices Act is Connecticut's version of the state laws that prohibit unfair and deceptive acts and practices in trade and commerce (commonly known 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.

Judge Delays Sentencing For Sobbing Scammer Until Alleged Co-Scamming Dad Stands Trial In Case Involving Failed Promises Of Foreclosure Assistance That Screwed 100+ Homeowners

In Hartford, Connecticut, NBC Connecticut reports:

  • Sunita Buddhu sobbed in the courtroom [] as she expressed remorse for her role in a debt elimination scheme that left many homeowners facing foreclosure. "I'm horrified that this is the result of what we did," Buddhu said. "I thought we would be helping people, but it turned into the opposite."

    Buddhu, 42, pleaded guilty in October to issuing, selling and presenting fictitious financial instruments. Her father, Deowraj "Deo" Buddhu, is the alleged mastermind of the scheme.

    Prosecutors say the Buddhus preyed on struggling homeowners and defrauded them out of thousands of dollars by promising access to a supposed secret stash of federal money. Sunita notarized many of her father's documents and invoices. Prosecutors claim there are nearly 200 victims.
  • Sunita's apologies to the victims did not appear to gain her any sympathy with the judge, who announced he would wait to sentence her until after her father's trial later this year. [...] Sunita Buddhu has already served almost seven months in a federal holding cell. Her lawyers were asking for a "time served" sentence.
  • The judge said he already has a number in mind for Sunita Buddhu's sentencing and told the courtroom it would be "substantial."

Friday, February 1, 2013

Court Allows Couple To Stay In Their Home & Continue Making House Payments After Getting A Loan Modification Screwing-Over From Wells Fargo

In St. Augustine, Florida, the Jacksonville Business Journal reports:

  • Something just isn’t going right for Wells Fargo in St. Augustine. The bank, which is the third-largest in Northeast Florida, is on the wrong end of a court ruling that will allow a St. Augustine couple to stay in their home.

    The couple, facing foreclosure, was going through a loan modification when the bank advised them to make a lump sum payment of nearly $7,000 to bring their loan out of default. After the couple made the payment, the bank moved to foreclose on the home a month later, prompting the couple to defend the foreclosure with an attorney, according to a news release.

    The end game? The couple gets to keep their home, and continue to pay their original mortgage.

    Last November, a St. Augustine woman filed foreclosure on an area Wells Fargo branch after the bank tried to forclosure on her home.(1) A judge subsequently ruled she could keep her home and the bank owed her nearly $20,000 in legal fees, but at the time of the suit the bank hadn't paid the fees.(2)
For more, see St. Augustine couple wins foreclosure case against Wells Fargo, will stay in home.

(1) See Local woman wants to shut down big bank.

(2) In a typical Florida foreclosure action that allows a foreclosing lender to recover its attorney fees from the homeowner when successfuly foreclosing its mortgage, state statute (F.S. 57.105(7)) similarly allows a homeowner to recover his/her legal fees from the lender in the event he/she successfully defends against a foreclosure. See:
For an example of how an attorney can screw-up and deprive his/her client out of a recovery of legal fees paid in a successful foreclosure defense (and possibly leave him/herself open to a professional malpractice claim), see:
See Pleading Requirements for a Claim for Attorneys' Fees for an old (July/August, 2000) article in The Florida Bar Journal that may be of some value in providing guidance to Florida lawyers in requesting court-ordered, prevailing party attorneys fees from losing defendants (ie. lenders, servicers, etc.).

Nevada AG Bags Loan Modification Operator On Multiple Felony Charges Alleging Upfront Fee Ripoffs

From the Office of the Nevada Attorney General:

  • Nevada Attorney General Catherine Cortez Masto announced a preliminary hearing has been set for Xochitl Cervantes, 35 of Las Vegas, for her involvement in a mortgage lending fraud case involving several victims operating under the name of CSR Services.
  • Xochitl Cervantes is charged with two felony counts of mortgage lending fraud, one felony counts of embezzlement, eight felony counts of uttering a forged instrument, one felony count of multiple transactions involving fraud and deceit in the course of enterprise and occupation, and one felony count of pattern of mortgage lending fraud.

    From approximately March 2009 to May 2010, Cervantes made false representations that she was capable of rescuing homeowners who were looking to refinance their mortgages by negotiating loan modifications. She collected up-front fees, in most cases ranging from $2,100 to $2,500, for the proposed services that were never performed or refunds provided.

Lawyer Not Liable For $80K Deposited Into Client Trust Account Without His Knowledge, Then Subsequently Embezzled By Legal Secretary In Soured Foreclosure Avoidance Deal

In Mobile, Alabama, Alabama Live reports:

  • A judge [...] determined that a Saraland lawyer had no legal obligation to safeguard money that his secretary had deposited into a client trust account. The judge ruled in the defendant’s favor.

    Mobile County Circuit Judge Michael Youngpeter’s ruling meant that Johnny Lane, who also is a part-time municipal judge in Chickasaw, did not have to put on a defense in the civil trial. “The judge made the right ruling,” defense lawyer Walter Honeycutt said.

    Robert Stankoski, who represented plaintiff Daniel Burrage, said he would discuss an appeal with his client. “I think Judge Youngpeter is a great and thoughtful judge,” Stankoski said. “But I completely disagree with his finding in this one.”

    The dispute centered on an $80,000 check that Burrage wrote in January 2010. According to testimony, he had agreed to pay off the mortgage of Lane’s secretary, Susan Pack, to stave off foreclosure of her home. The plan called for Pack renovating the house, selling it and splitting the profit with Burrage. The mortgage company would not halt the foreclosure unless the money was safe in an escrow account.

    Witnesses gave conflicting accounts of what happened next. Burrage maintained that Lane suggested the money be deposited in his client trust account, telling him it was the safest place the money could go.

    Lane testified that he never agreed to that. Pack testified that Lane expressed misgivings but ultimately allowed her to deposit the money.

    The deal went south later in the year after Lane fired Pack for failing to address her drug problem. Burrage testified that he went to Lane and asked for his investment back. It was gone, along with a bunch of other money. Pack ultimately pleaded guilty to embezzling some $195,000 form the law firm.

    Burrage already has won a civil judgment against Pack, but it is unlikely she ever will be able to pay the money back. Stankoski argued that Lane should be held liable because he was so detached from the day-to-day operation of his office that he allowed Pack to have unsupervised access to the law firm’s finances despite her drug problem.

    Lane testified that he did not realize his longtime employee was abusing drugs until shortly before he fired her. Honeycutt argued that his client had no legal obligation to protect the money that Burrage had put up because Lane had nothing to do with that transaction. “It was a private deal between Ms. Pack and Mr. Burrage,” Honeycutt said. Youngpeter agreed.

    During the trial, Honeycutt argued that Lane was a victim. It was his account that Pack stole from. It is Lane to whom a judge in the criminal case ordered Pack to pay restitution.

    Stankoski noted that Lane did not even bother to look at bank records from the time his law partner died in 2008 until he fired Pack in 2010. “You can’t stick your head in the sand like an ostrich and say you’re a victim,” he said.

    Honeycutt acknowledged that his client could have done a better job overseeing the financial affairs of his practice. He said Lane has not reason to suspect a trusted employee who had worked for him for 27 years. “Most lawyers are terrible businessmen,” he said.

    Lane’s legal headaches are not over. He still has a pending lawsuit against him by families of asbestos victims who alleged that she forged the litigants’ signatures on settlement checks that she then stole. Honeycutt said banks have paid most of those clients back.

Thursday, January 31, 2013

Southern California Squatters Continue Making Themselves At Home In Vacant Unguarded Foreclosed Homes As Banksters Fiddle

In Southern California, KCET-TV reports:

  • This is a foreclosure story that will make you hit the roof. It all started when California's real estate bubble popped. Then foreclosures spiked, and then came the squatters.

    Squatters are taking advantage of all those empty, unguarded homes owned by the banks and not being maintained. Turns out at least one trespasser may have done a lot more than just make himself at home.

Another Couple Gets Screwed Over Renting Home Offered Online; Premises A Fire Hazard & In Foreclosure

In Miami-Dade County, Florida, WTVJ-TV Channel 6 reports:

  • After Army soldier Josh Wagner returned from Afghanistan to his base in Tennessee, he was stationed in South Florida.

    His wife found online what looked like a wonderful home in Florida City. But the Wagners’ troubles began as soon as they opened the door. “None of this was fixed. I mean, this in itself is a fire hazard,” Wagner said, pointing to an open electrical socket.

    After the Army helicopter mechanic came back to the U.S. from Afghanistan, he got a job in the Florida National Guard, gathered his family and pets, and headed to Florida City. But his rental home had all the electrical socket covers broken, no smoke detectors, hanging electrical wires, infestation of roaches and other violations, inspectors ultimately found.

    “Absolutely. Absolutely without a doubt we were had,” Wagner said. His wife, Misty Wagner, found the rental.

    “They told us that they loved to rent to military families and they had a beautiful home for us to stay in, and everything would be ready when we came down here,” she said.

    She said she saw an ad to rent a home with pictures of the rooms and what looked like a nice backyard. The owner's wife even wrote, “I am sure you will like the home an (sic) you will love it.”

    The Wagners signed a lease and said they give the security deposit and two months’ rent in advance, totaling about $3,300.

    The owner's wife, Romina Jelves, sent them a copy of her driver’s license along with her driver's license photo, the couple said.

    “We got copies of their licenses, their IDs, their work information, verified their bank information, and we thought it was completely legitimate,” Misty Wagner said.

    But she quickly told the Jelves in an email that she was shocked when she first walked into the house. “The pictures you listed on the ad did not come close to representing the true condition of this home,” she wrote, in a message from her and her husband.

    The Wagners said that when they started complaining about the conditions of the property, the owners told them they could simply leave, but that would mean forfeiting the $3,300 that they had put down upfront.

    The Wagners said they were burglarized this week, and lost their computers and televisions.

    Court records show the bank moved to foreclose on the homeowners two months before the rental agreement was signed. “They took our money and they left us with their issue,” Misty Wagner said.

    The couple that rented the property told NBC 6 South Florida they did nothing illegal.(1) They said in an email that they offered to refund the security deposit – which the Wagners dispute. The owners said they did not want to provide any more information, told NBC 6 not to contact them again, and hung up.

    “Do not ever rent sight unseen,” Misty Wagner concluded.

    Florida City’s mayor said he will try to help, and the bank and service provider that took back the home are investigating how to bring how to bring it up to code, and clear up the Wagners’ financial and living mess.
Source: Military Family's Move to South Florida Turns into Housing Nightmare (The Wagners said their troubles began when they opened the door of their Florida City rental home).

(1) Obtaining money or property by deception, or securing the execution of documents by deception may, in fact, be crimes (albeit crimes that may not be too frequently prosecuted).

Cops Continue Efforts In Probes Targeting Scammers Hijacking Possession Of Vacant Homes In Foreclosure & Renting Them Out To Unwitting Tenants

In Pearland, Texas, The Pearland Journal reports:

  • For one couple hoping to find an affordable place to live, paying $900 rent each month for a 5,000 square-foot home in Shadow Creek Ranch seemed a dream come true. Months later after they moved in, made numerous repairs and spent weekends painting and decorating the house, the couple discovered they had been taken in by a sophisticated real estate scam.

    In recent months, Pearland Police detectives have uncovered several cases involving the same real estate scheme. In addition, investigators in Fort Bend County and League City are also investigating similar incidents. Detectives say there may be even more residents taken in by the scams. Police officials are now reaching out to community to identify other potential victims

    Detectives say in each case so far, lease agreements were arranged by “Homeowner Solutions,” a company that reportedly specialized in finding rental properties for those not able to qualify for a regular lease arrangement.

    Sugar Land-resident Kenneth Upchurch has been identified by police as the suspected business owner. According to police officials, Upchurch put his plan in motion by allegedly tracking down vacant homes in the process of foreclosure. After changing the locks and making sure the property was clean, Upchurch would find potential renters via Craig’s list or through word-of-mouth advertising.

    To cover his track with new renters, Upchurch allegedly refused to accept personal checks and instead required money orders that had to be mailed to a P.O. Box. Victims were also reportedly not given contracts. Instead, Upchurch allegedly gave customers only unsigned documents outlining the lease terms by mail.

    Police say the plan went on without a snag for several months in each case; that is until the real homeowners showed up and discovered uninvited strangers had taken up residence and called police.

    In the most recent case, detectives say the victims were cheated out of monies paid in rent plus their deposit. The couple was asked to move out as soon as the upset homeowners arrived.

    Police officials said no charges have been filed against Upchurch although he is currently considered a suspect in the case. Anyone with information related to the case or those who may think they may have been victimized are urged to call Pearland Police Det. DeSpain at 281-997-4231.

Wednesday, January 30, 2013

Another Adverse Possession Crackpot Stakes Claim To Foreclosed Home; Recent Target: Vacant $2.5M Boca Raton Waterfront Mansion; Cops Befuddled As BofA Fiddles

In Boca Raton, Florida, ABC News reports:

  • The neighbor of a Florida man invoking an obscure real estate law to stake a claim to an empty $2.5 million mansion said he believes that the man is a pawn in a attempt to cash in on the empty property.

    Andre "Loki" Barbosa has lived in the five-bedroom Boca Raton, Fla., waterside property since July, and police have reportedly been unable to remove him. The Brazilian national, 23, who reportedly refers to himself as "Loki Boy," cites Florida's "adverse possession" law in which a party may acquire title from another by openly occupying their land and paying real property tax for at least seven years.

    The house is listed as being owned by Bank of America as of July 2012, and that an adverse possession was filed in July.

    After Bank of America foreclosed on the property last year, the Palm Beach County Property Appraiser's Office was notified that Barbosa would be moving in, according to the South Florida Sun-Sentinel.

    The Sun-Sentinel reported that he posted a notice in the front window of the house naming him as a "living beneficiary to the Divine Estate being superior of commerce and usury."

    On Facebook, a man named Andre Barbosa calls the property "Templo de Kamisamar."

    A neighbor of the Boca property, who asked not be named, told that he entered the empty home just before Christmas to find four people inside, one of who said the group is establishing an embassy for their mission, and that families would be moving in and out of the property. Barbosa was also among them.

    Police were called Dec. 26 to the home but did not remove Barbosa, according to the Sentinel. Barbosa reportedly presented authorities with the adverse possession paperwork at the time.

    The neighbor said he believes that Barbosa is a"patsy."

    "This young guy is caught up in this thing," the neighbor said. "I think it's going on on a bigger scale."

    Bank of America responded to, saying that it is in communication with the Boca Raton police department regarding concerns at the house.(1)

    "There is a certain legal process we are required by law to follow and we have filed the appropriate action. The bank is taking this situation seriously and we will work diligently to resolve this matter," the bank said in a statement.

    Barbosa could not be reached for comment.

    The Florida Department of revenue even posts the form to establish adverse possession on its website, but it is not the equivalent of a lease.

    The neighbor says that although the lights have been turned on at the house, the water has not, adding that this makes it clear it is not a permanent residence. The neighbor also says that the form posted in the window is "total gibberish," which indicated that the house is an embassy, and that those who enter must present two forms of identification, and respect the rights of its indigenous people.

    "I think it's a group of people that see an opportunity to get some money from the bank," the neighbor said. "If they're going to hold the house ransom, then the bank is going to have to go through an eviction process.

    "They're taking advantage of banks, where the right hand doesn't know where the left hand is. They can't clap."
Source: Brazilian Man Attempting 'Adverse Possession' of $2.5 Million Boca Mansion.

For story update, see Bank files to evict Boca Raton mansion squatter.

(1) Regrettably, the longer this crackpot is able to continue his charade, the more the Boca Raton cops come away looking stupid. It is clear that legitimate adverse possession claims only apply to property that is abandoned. The mere fact that the home has been vacant for some time, without the existence of other factors, doesn't establish abandonment. It seems to me that since the premises was the subject of a recently-concluded foreclosure action by the bankster, that, in itself, is enough to establish that the property is not abandoned and, consequently, enough to establish probable cause for the befuddled cops to arrest this idiot.

By the way, adverse possession claims and other bogus claims like the one made here have not insulated the crackpots making them from arrest in other jurisdictions. See, for example:

Judge Smacks Down Feds In Attempt To Swipe Elderly Mom & Pop's Motel Using Forfeiture Law In Connection With Uncharged Drug Crime Allegations

In Boston, Massachusetts, WBUR Radio 90.3 FM reports:

  • In what is being called a triumph for property rights, a federal judge in Boston has rejected the federal government’s attempt to seize a family-owned motel in Tewksbury under a controversial civil forfeiture law.

    The owners of Motel Caswell have never been charged with any crimes and have never come under police suspicion. But in a trial last November, the U.S. attorney’s office sought to take the property because it alleged the motel — the building — had “facilitated” drug crimes.

    “I’m in shock right now,” said 69-year-old Russell Caswell. “Been three and a half years of this garbage. Takes a while to comprehend it’s finally over with.”

    Caswell had all his savings tied in the family motel that charges $57 a night for a room. He never had any trouble getting license renewals from the town. He’d never received any warnings from the police when he got a letter from the U.S. attorney’s office a few years ago announcing they were coming after his property because of crimes committed by some of his guests.

    At trial, federal prosecutors introduced information about 15 specific drug-related incidents that occurred in a 14 year period. “It should be noted” wrote Magistrate Judge Judith Dein in Thursday’s decision, that during that time period, Russ Caswell had rented out 196,000 rooms.

    “I don’t know how I can see through the doors,” Caswell said last November in reference to the fact that those alleged crimes took place in closed rooms.

    Now, even after winning, Caswell can’t forget his years under threat.

    “You’ve just been going through this stuff every day thinking about it, scratching your head like, ‘What the heck is this all about?’ You know? ‘Where’d this come from?’ It’s just hard to believe this stuff can happen to people when you’ve done absolutely nothing,” Caswell said. “And they even say I’ve done nothing.”

    The judge concluded that there was no evidence that Caswell knew of any drug activities which he did not report to the police.

    After spending a $100,000 defending himself, Caswell turned to the Institute of Justice, a libertarian public-interest law firm. Scott Bullock, who defended him, says the judge pulled no punches.

    “She saw Russ as someone who did all he could do to try to prevent drug crimes on his property,” Bullock said. “And recognized he had no control of what people did behind closed doors out of the view of him and his employees.”

    Judge Dein faulted the government for engaging in “gross exaggeration,” misstatements of fact and “highly derogatory argument.”

    “Punishing Mr. Caswell by forfeiting the Motel obviously would not punish those engaged in the criminal conduct,” Judge Dein wrote.

    During the four-day trial in November, U.S. Attorney Carmen Ortiz released a statement saying her office wanted to send a message by going after the motel. But just up the street from the mom-and-pop run Motel Caswell, the Motel 6, Walmart and Home Depot had all experienced a similar rate of drug crimes, according to Caswell’s attorneys, without the government going after them.(1)

    “I mean, the government’s got all the money in the world to throw at these things and they just bully people is what it is,” Caswell said. “And it’s completely wrong. It’s just not American.”

    The idea to go after the Motel Caswell sprung from the Drug Enforcement Administration, the trial revealed. The DEA has an agent who testified his job is to seek out targets for forfeiture by watching television news and reading newspapers. When he finds a property where drug crimes occur he goes to the Registry of Deeds. Finding the Motel Caswell had no mortgage and was worth almost $1.5 million, the DEA teamed up with the Tewksbury Police, who were offered 80 percent of the taking, the agent testified.

    After widespread criticism following the death of defendant Aaron Swartz, U.S. Attorney Carmen Ortiz, has been dealt a second major setback in two weeks. Attorney Scott Bullock accuses her of abusing a draconian power of civil forfeiture.

    This case epitomizes what an aggressive U.S. attorney wielding these laws can do to a small and even innocent property owner like Russ Caswell,” Bullock said.

    The U.S. attorney’s office says it is reviewing the decision. Having lost its effort to take the Motel Caswell, the government is now obligated to pay for both Caswell’s legal expenses and the legal work of the Institute of Justice, which will come to at least $500,000.
Source: Judge Dismisses Government Seizure Attempt Of Tewksbury Motel.

See also IJ Scores Major Federal Court Victory In Massachusetts Civil Forfeiture Case (Motel Caswell is Safe from Federal Seizure):
  • “This outrageous forfeiture action should never have been filed in the first place,” said Larry Salzman, an IJ attorney. “What the government did amounted to little more than a grab for what they saw as quick cash under the guise of civil forfeiture.”

    Caswell said, “I couldn’t have fought this fight without the help of the Institute for Justice. It is hard to believe anything like this goes on in our country, but the government goes after people they think can’t afford to fight. But with IJ’s help, we put up a heck of a fight and have won. The public needs to stand up against these abuses of power.”
For the court ruling, see U.S v. 434 Main Street, Tewksbury, Massachusetts.

See Inequitable Justice: How Federal “Equitable Sharing” Encourages Local Police and Prosecutors to Evade State Civil Forfeiture Law for Financial Gain, an Institute for Justice report documenting how the problem of the use of the civil forfeiture law by U.S. Attorneys to snatch property to pocket quick cash is apparently growing.

(1) It should be noted that Mr. Caswell right lived right next door to the Motel, with his 71-year old wife who is in poor health, his 92 year old mother-in-law, one of his two sons, his son's wife, and their 9 year old daughter. He has lived there since at least 1994. (See court ruling, paragraphs 6-7) Apparently, they appeared ripe for the pickings, in the view of the Boston U.S Attorney, Carmen Ortiz.

$38K In Cannabis Seized From Basement-Based Mini-Pot Farm To Cost BC Couple $230K In Home Equity Through Gov't Forfeiture Proceedings

In Kamloops, British Columbia, The Kamloops Daily News reports:

  • A retired Heffley Creek couple with a mom and pop grow-op in the basement of their $660,000 log home agreed to forfeit more than a third of the value of the property after a raid by RCMP.

    Bruce and Ingrid Duncan signed a consent order giving up 35 per cent of the value of their home and acreage under a measure contained in the Controlled Drugs and Substances Act.

    Police found about 200 pot plans in a hydroponic operation in the basement of the couple’s 3,000-foot log home in a March 2010 bust.

    Bruce Duncan, 62, pleaded guilty in B.C. Supreme Court to possession of marijuana for the purpose of trafficking. Charges against his wife were stayed by the Crown. The couple, married 42 years, were arrested when they returned home in the afternoon to find police inside.

    Crown prosecutor Anthony Varesi said the forfeiture for the “moderately sophisticated” grow-op means the couple is on the hook for an equivalent of $230,000. The pot, if brought to market, was estimated to be worth about $38,000.
  • Varesi said those caught under forfeiture proceedings often sell their property in order to come up with the equivalent in cash. The Crown’s 35 per cent interest will be registered on the property title.

    In addition to the forfeiture, B.C. Supreme Court Justice Ian Meiklem gave Duncan an 18-month conditional sentence, including six months of house arrest.
For the story, see Grow-op bust costly for retired couple (Husband and wife give up 35 per cent of value of home and acreage).

Tuesday, January 29, 2013

Afghan/Iraq War Vet Challenges Local Ordinance Restricting Rentals; Says Rule At Fault For Leaving Him In Foreclosure, Threatening $50K In Home Equity

In Winona, Minnesota, reports:

  • More than a year after suing the City of Winona for preventing them from renting out their houses, three homeowners will get their day in court [] in a property rights case that’s being tracked by zoning authorities beyond Minnesota.

    “It’s being watched across the country because restrictions on the right to rent and other property rights are popping up in states all over the country. But the epicenter for this battle is in Minnesota, where cities have been very aggressive in denying people the right to rent out their homes,” said Anthony Sanders, the Institute of Justice lawyer who represents the homeowners.

    The southeastern Minnesota city implemented an ordinance in 2005 that caps the number of homeowners who can rent out their properties to 30 percent of dwellings per block.
  • A city study of rental housing in the college community found “the concentration of rental housing results in negative impacts to the quality and livability of residential neighborhoods” and a higher incidence of nuisance and police violations.

    Homeowners unable to obtain a rental permit, however, say the prohibition has cost them thousands of dollars in lost rental income, while also undercutting the value of their property in the real estate market.

    “I could have sold it years ago. I’ve had numerous people tell me, realtors and people that own homes in the town, that they would have bought it the day I put it on the market so they could rent it out,” said Ethan Dean, a plaintiff in the case.
  • During Dean’s five tours of duty as an U.S. advisor in Iraq and Afghanistan, the city granted him a temporary rental waiver until his return. Now that he’s back, Dean says he is in the final stages of losing the house to foreclosure, along with some $50,000 in equity. He places the blame squarely on the lost rental income and sale opportunities due to the rental ban. “It’s not just me who’s been hurt here. It’s numerous people in the Winona city district. Enough is enough and sometimes you just to stand up and say this is wrong,”

    The lawsuit asks the state court to strike down the rental ordinance as a violation of the homeowners’ fundamental property rights under the Minnesota constitution. “What the 30 percent rule does is it bans people from renting out their homes if a certain number of their neighbors already rent out their homes. So your property rights are controlled not by yourself or whatever tenants you have, but by your neighbors,” Sanders said.

    At least three more Minnesota cities have slapped similar restrictions on rental properties. Two cities with significant numbers of college-age students, Mankato and Northfield, now limit the number of rental properties to 25 and 20 percent respectively on a block. West St. Paul may have the toughest restrictions in the country, allowing just 10 percent of dwellings per block to be rented out.

Title Insurance Underwriter Cautions Its Ohio Agents Of Effect Of New Case Law Regarding Foreclosure Standing Requirements

From the General Title Insurance Company Blog:

  • The Fed. Home Mtg Corp. v. Schwartzwald case recently decided by the Ohio Supreme Court has turned foreclosure standing requirements around.

    This was the case in which the Ohio Supreme Court held that a lender must have standing to foreclose on the date the complaint is filed in order to proceed to final judgment. If they do not “hold” the mortgage and note, via assignment or otherwise, on the date the complaint is filed they are not the real party in interest for purposes of foreclosure and they are not entitled to a judgment through the jurisdiction of the court.

    As a result of this case, we required all Ohio title agents to use the following requirement on all future title insurance commitments with the admonishment that further guidance would be forthcoming: “Per the Ohio Supreme Court’s holding in Fed. Home Loan Mtge. Corp. v. Schwartzwald, 2012-Ohio-5017, the Insurer requires filing and proper service of a new Complaint in Foreclosure naming the assignee under Instrument dated DATE, and filed for record on DATE, in the YYYY County, Ohio Recorder’s Office, as the plaintiff and real party-in-interest in said action.”

    Since lack of jurisdiction cannot be cured by the passage of time, defeated with a laches or bona fide purchaser defense and impervious to prospective application, we must now take the steps to except the result of the Schwartzwald case entirely.

    Therefore, all Ohio title agents should replace the requirement above with the following language, including those transactions insuring the successful bidders at Sheriff’s Sale, or said purchaser’s lender and insuring parties to an REO transaction.

    What is the new guidance for Ohio title agents? In the event you find a foreclosure where at the time of the filing of the complaint the lender was not the holder of the note and mortgage, please use the following guidance for Ohio purchase transactions, including those involving Sheriff’s Sales and REO transactions:

    The Policy does not insure, and the Company will not be liable for attorney’s fees and defense costs, against loss or damage by reason of an attempt to void and set aside the foreclosure judgment and subsequent sale, or a decree voiding and setting aside the foreclosure judgment and subsequent sale, in case captioned ____________v. ____________, Case No. ___________, [name of county] Court of Common Pleas, Ohio.”

    The above-referenced exception must appear in both the title commitment and the title insurance policy.
For more, see Ohio Agents: Be Aware of Recent Ohio Case Law (Dec.10, 2012).

Thanks to Deontos for the heads-up.

Detroit Feds Pinch Recently-Resigned State High Court Justice On Charges Related To Alleged Illegal 'Short Sale Shuffle'

In Lansing, Michigan, The Detroit News reports:

  • Former Michigan Supreme Court Justice Diane Hathaway is scheduled to appear Jan. 29 in federal court on a bank fraud charge stemming from a real estate scandal that caused her to resign from the high court Monday.

    Hathaway is expected to enter a plea on the charge during a 10:30 a.m. appearance before Judge John Corbett O'Meara at the federal building in Ann Arbor. The U.S. Attorney's office in Detroit on Tuesday confirmed the date of the court appearance.

    Federal prosecutors filed a bank fraud charge Friday against Hathaway, accusing her of concealing and transferring assets to stepchildren in a scheme to fool mortgage lender ING Direct into believing she and her husband, attorney Michael Kingsley, had a financial hardship.

    The bank approved the couple for a short sale, allowing Hathaway and Kingsley to unload a $1.5 million Grosse Pointe Park home for about $600,000 less than they owed. The charge is listed as a criminal "information," meaning a guilty plea is likely.

    Though the maximum penalty for bank fraud is 30 years in prison, federal sentencing guidelines call for 27 to 33 months in prison for someone facing a first offense and who defrauds a bank of more than $400,000, according to Wayne State University law professor Peter Henning.

    Hathaway's attorneys have previously argued she and Kingsley saved the bank money by not allowing the home overlooking Lake St. Clair to fall into foreclosure and be subjected to an auction, where the sale price could fluctuate.

    In a related civil case, U.S. Attorney Barbara McQuade is trying to seize Hathaway and Kingsley's second home in suburban Orlando, valued at $664,000 in 2010, to compensate for the $600,000 in mortgage debt the couple allegedly defrauded the bank.

    Kingsley has not been charged.

    Public and legal scrutiny of the questionable short sale caused Hathaway to resign her seat on the Supreme Court halfway through an eight-year term. Before being elected to the Supreme Court in 2008, Hathaway was a Wayne County judge.

    Hathaway, a Democratic Party nominee, is the first sitting Supreme Court justice to be charged with a crime since 1975 when Justice John Swainson was indicted for bribery and lying to a federal grand jury. Swainson, a former governor, later beat the bribery charge, but served a brief sentence for a perjury conviction.

Monday, January 28, 2013

Scrutiny Increases On Texas Lenders Specializing In Unpaid Real Estate Tax Refinancing Schemes That Smell Like Predatory Near-Usurious, Inflated Fee Rackets

Deep in the heart of Texas, Forbes reports:

  • The housing meltdown over the last several years claimed many victims. But in Texas, it keeps creating new ones: the thousands of homeowners who fall prey to property-tax lenders that help them pay overdue property taxes. So now there’s an effort in the new 83rd session of the Texas legislature to prevent property-tax loans from financially disabling still more Texans.

    It turns out that thousands of homeowners not only have ponied up nearly usurious rates to property-tax lenders to get themselves out of a big financial squeeze but also that this specialized group of lenders legally jumps to the front of the line — even ahead of primary mortgage holders, and state and local governments with non-property-tax liens – when it comes to disposition of assets from subsequent foreclosure or sale of the house.

    And property-tax lenders can use “expedited foreclosure,” which has limited judicial involvement and doesn’t allow for scrutiny over certain fees and costs claimed by the lender.

    “It’s a pretty significant issue here, because Texas derives lots of dollars from our property-tax system because we don’t have an income tax,” explained Robert Doggett, an attorney for Texas Rio Grande Legal Aid, an Austin-based not-for-profit consumer-advocacy organization.(1) “So property-tax bills are pretty high.”

    Under these loans, including all fees and interest and other charges by the property-tax lender, “a $10,000 tax bill can turn into a $15,000 to $18,000 bill pretty quickly,” said Steve Scurlock, executive vice president of the Independent Bankers of Texas. “We’re questioning that and looking at potential legislation to address that.”

    One key point, Scurlock said, is that while property-tax lending is legal in Texas, the marketing practices of some companies are less than savory — and, therefore, add to the problem. “Some of their marketing schemes are on the deceptive side,” he said. “They make everything look easy and official.”

    While a unit of local government might let delinquent property taxes for a hard-pressed household slip for as long as two or three years, homeowners can feel undue pressure when they get a solicitation from a property-tax lender that warns of dire consequences if the homeowner doesn’t borrow money now to pay off the tax.

    It’s not that Texas cities and counties, and bank lenders, are sympathetic figures to Texas homeowners or anyone else. The concern is that the property-tax lenders are a predatory group that only have their immediate financial self-interests at heart. Whatever anyone can say about local governments and banks, they have many reasons to include the interests and needs of taxpayers and customers in their actions concerning delinquent taxes.

    A lot of folks are tricked into getting a loan that they don’t really need that is very expensive and is serviced by an entity that doesn’t have their interests at heart and has only its own financial motives at heart,” Doggett explained, “unlike [officials of] taxing entities that aren’t going to lose their jobs one way or another if they don’t squeeze more dollars out of a low- to moderate-income family.

    Delinquent borrowers “jump from a frying pan into a fire” by succumbing to the lures of a property-tax lender, he said. “Miss a couple of payments and that lender will be all over you.”

    “And with their superior-lien status, they’re going to get their money no matter what. At least a [regular] lender has restraints. These people have none — all the benefits of government in their superior-lien status, but no checks and balances that government and elected officials have.”
For more, see Predatory Property-Tax Lenders Are Targeted In Texas Effort.

(1) Texas RioGrande Legal Aid (TRLA) is a non-profit organization that provides free legal services to low-income residents in sixty-eight counties of Southwest Texas, and represents migrant and seasonal farm workers throughout the state of Texas and six southern states: Kentucky, Tennessee, Alabama, Mississippi, Louisiana and Arkansas.

Real Estate Tax-Delinquent Hubby Challenges Town's Foreclosure, Saying It Only Notified Co-Owner/Wife Of Legal Proceedings; New Owners Took Title 3+ Years Ago, Still Waiting To Take Possession

In Portland, Maine, the Bangor Daily News reports:

  • The Maine Supreme Judicial Court is considering the case of a Madawaska man embroiled in a dispute against another man over ownership of a home lost to foreclosure more than three years ago.

    The high court heard oral arguments in the case of Jeffrey Stoops v. Richard Nelson on Tuesday at the Cumberland County Courthouse in Portland.

    Jeffrey Stoops and his wife, Jeanne, were represented by attorney Jeff Ashby of Presque Isle. Richard Nelson was represented by Richard Solman, a Caribou attorney.

    Jeffrey and Jeanne Stoops were the original owners of a home in Madawaska, which they lost to foreclosure in 2006 for failure to pay municipal taxes. The town subsequently sold the property in 2009 to Richard Nelson. Jeffrey and Jeanne Stoops have retained residency while attempting to seek relief in court.

    Before the Law Court, Jeffrey Stoops was appealing a judgment entered in Aroostook County Superior Court by Justice E. Allen Hunter. It granted summary judgment to Richard Nelson and his wife, Betty, declaring them the owners of the home lost by the Stoops to foreclosure.

    On Tuesday, Ashby argued that the Superior Court erred in granting the motion because the town of Madawaska failed to give his clients proper notice of the pending foreclosure in violation of the due process clause of the Fourteenth Amendment.

    He also argued that the town failed to strictly adhere to a state statute which outlines the steps a municipality must take in order to foreclose a municipal tax lien.

    According to court documents, a 30-day notice sent by the town of Madawaska to Jeffrey and Jeanne Stoops regarding 2004 delinquent taxes was accepted and signed by Jeanne Stoops. Such a notice is required by law and informs the party that they could lose their property if the taxes are not paid.

    Later, the town also sent a notice of impending foreclosure relating to a 2005 tax lien, which was also required by law. It was addressed to the couple and accepted and signed by Jeanne Stoops. It warned that foreclosure would occur in December 2007 and if that happened, the town would own the home.

    Solman said Tuesday that the town went “above and beyond” its statutory obligations as far as notifying the couple that their taxes were delinquent and that they were at risk of losing their home.

    Ashby, however, argued that Jeffrey Stoops was a key part of the process and the town should have done more to assure that both property owners were aware of what was taking place. The town mailed letters related to delinquent taxes to Jeffrey Stoops, but both attorneys acknowledged confusion over whether they were received. One notice sent certified mail was returned unclaimed.

    Chief Justice Leigh I. Saufley questioned Ashby about how the couple could not have understood that they were in danger of losing their home.

    “Jeanne Stoops signed the two letters sent by the town,” she said on Tuesday. “How can she say that she did know the process?”

    Solman said on Thursday that his clients were just anxious for the case to be over.

    They lawfully purchased this home back in 2009 and they have not even had a chance to live in it,” he said. “And they are paying the taxes on it. They are just hoping to get this resolved so they can take possession.”

    Ashby did not return calls seeking further comment.

Land Court Judge OKs Real Estate Tax-Delinquent Property Owner's Effort To Redeem Home & Void Tax Foreclosure; Reverses Town's Earlier Decision To Refuse Back Payments & Snatch Premises

In Middleboro, Massachusetts, The Enterprise reports:

  • A Land Court magistrate overturned a selectmen decision and granted a man’s plea to pay his back taxes and avoid losing his property to the town.

    “That’s what I expected,” selectmen Chairman Alfred P. Rullo Jr., said about the ruling, declining further comment.

    On Jan. 7, selectmen unanimously denied a request by John and Rose Ewas to vacate the foreclosure on their property.

    On Thursday, Boston Land Court Clerk Magistrate Deborah J. Patterson overturned the selectmen’s denial and granted John Ewas’ request to vacate the foreclosure.

    The issue dates back to September 2011, when the Ewases’ property at 4 Vine St. was foreclosed on and the title transferred to the town for back taxes for the years 2004, 2006, 2009, 2010 and 2011. By September 2012, Ewas began proceedings to redeem the property, which culminated in the Jan. 7 selectmen’s hearing.

    Judge Patterson said Ewas was within the one-year legal time limit to make a motion to void the foreclosure.

    “If a town opposes the motion to vacate, I will hear the argument,” Patterson said, adding it is within her jurisdiction to allow Ewas to pay the back taxes. Patterson stipulated that Ewas must pay the taxes in full and instructed the town to provide the court with an itemized bill.

Sunday, January 27, 2013

Felony Charges Continue For California Homeowners Allegedly Recording Phony Documents In Effort To Stall Foreclosure

In Stanislaus County, California, The Modesto Bee reports:

  • Authorities appear to be taking foreclosure fraud prosecution to a new level in Stanislaus County, with possible implications elsewhere in California.

    A Turlock couple face felony charges of trying to stall foreclosure of their property by filing phony documents with the county recorder, similar to cases launched last month against four other homeowners in this county.

    But this time, state prosecutors — not local — will handle the case. And court documents suggest that authorities may go after supposed masterminds accused of running a fraud scheme from Southern California.

    "We have not filed anything yet against the so-called kingpins, but we're not going to ignore where this case is leading," said Leslie Westmoreland, deputy California attorney general.

    Westmoreland recently filed a felony complaint against Blas and Nancy Arreola of Turlock alleging multiple counts of identity theft, recording false or forged documents, and fraud conspiracy.

    Blas Arreola, 37, initially was arrested in June, and he and his 34-year-old wife are scheduled to appear Tuesday at an arraignment. A state prosecutor is expected to ask that they be held with bail set at $412,000 and $201,000, respectively — far more than in previous similar cases. A phone number for the couple has been disconnected, and they could not be reached.

    They were tutored by Jacob and Aide Orona of Highland in San Bernardino County, according to an arrest warrant affidavit for the Arreolas filed by investigator Glenn Gulley of the district attorney's office. Calls to a number associated with the Oronas' address and business, Document Recovery Forensic LLC, went unanswered.

Financially Strapped Elderly Veteran Files Suit Accusing R/E Operators Of Stripping Equity From His Free & Clear Home

In Seattle, Washington, Seattle Weekly reports:

  • With this week's $3.3 billion settlement by banks who engaged in faulty foreclosures, you might think that the worst tales of the housing bust are behind us. But the predators of the foreclosure era are still out there, still making money on other people's misery.

    According to a complaint filed last month in King County Superior Court, just such a scenario happened to Ames Larson.

    Larson is a 67-year-old Vietnam veteran and former prisoner of war who, as recently as this past December, owned his three-bedroom Lake City home free and clear. But that's about all he owned. He lived on roughly $1,100 a month, most of it coming from Social Security, according to his attorney, David Leen, who recently started a non-profit called the Northwest Consumer Law Center. Larson couldn't afford to pay his utility bills; Leen think he was using candles for light. He also couldn't keep up with his property taxes.

    Had he known about King County programs for seniors offering tax relief, he probably could have qualified, according to Leen. But he didn't. In June of last year, the county initiated tax foreclosure proceedings against Larson. To stop it, he needed to come up with $11,000.

    He didn't have it. In October, however, several representatives from a business called Northwest Home Buyers knocked on Larson's door. "We buy homes: any house any condition," declares Northwest's website, which also proclaims the ability to provide "quick cash" for homeowners facing foreclosure and other difficult situations.

    The Northwest representatives offered Larson $120,000 for his home, according to the complaint But when another company representative, by the name of Chris Lundquist, showed up at the house a month later with paperwork for Larson to sign, the offer was reduced to $70,000. Zillow estimates the house to be worth a little over $300,000.

    Leen says Larson felt he had no choice but to sign. His house was scheduled to be foreclosed upon in just two weeks. In the end, he came away with only about $40,000, after payment of back property taxes and various transaction fees, according to Leen.

    Lundquist, a defendant in the lawsuit, did not return a phone call seeking comment and the person answering Northwest's phone line said he was too busy to talk.

    What happened after Northwest got its paperwork signed by Larson is a little complicated and indicates the intricate dealings of companies who make their money on distressed properties. Northwest never bought the home, Leen says, but turned it over to another company called Lynx Development. Lynx is managed by a man named Will Heaton, the same man who manages a lending company known as Intrust Funding, which provided a $143,500 loan to finance the sale, according to the complaint. Intrust specializes in providing "fast capital" by creating "loan scenarios that cannot be adequately handled by traditional lending sources," according to its website.

    The complaint alleges that the money obtained through the loan was then distributed to an array of people and businesses that somehow participated in this deal, including Lundquist (who got $22,500) and yet another company managed by Heaton called Invest Now (which got nearly $50,000).

    It was all a way of "stripping money out of the house," says William Snell, an attorney who is working with Leen on the case.

Business Partners File Suit Accusing Their Attorney Of Forging Deed To Swipe Title To Company's Real Estate

In Galveston, Texas, The Southeast Texas Record reports:

  • Alleging a Humble attorney committed forgery to gain ownership of their company’s real estate property, Robert M. Green and Barbara Goostree pursue legal action.

    A lawsuit filed Jan. 8 in Galveston District Court asserts that J. Richard McGoey fraudulently executed a deed to transfer property belonging to Green Diesel Inc.

    The suit says the plaintiffs entrusted the responsibilities of maintaining the corporate records and the good standing of the company to McGoey, however, the defendant failed to do so.

    Plaintiffs also allege the attorney misrepresented Green Diesel, and claimed to be its president.

    Green and Goostree argue McGoey prepared the deed in January 2004, without their knowledge, using Green’s signature.

    They insist Green did not know about the document’s existence until last month, and when he saw reportedly saw it, he noticed his name was misspelled.

    The original petition adds a notary public named Dianne Lynn Abrahamsen stamped the subject paperwork which apparently carried an acknowledgment that Green appeared before her on Jan. 4, 2004.

    Green denies the meeting with Abrahamsen, who is a co-defendant along with McGoey’s spouse, and maintains she was not a notary public at the time of the supposed notarization.

    He also says that he did not approve the 2004 sale that is the focus of the litigation.

    The complainants point out that the McGoeys participated in a recent transaction with Equipment International Pension Fund for approximately $140,000, but the latter “wrongfully kept all of the funds paid for the purchase of the real estate paid by the buyer.”