Saturday, February 23, 2013

Elderly Florida Manufactured Home Park Residents Seek Protections Against Skyrocketing Lot Rents That Cause Some To Walk Away, Abandon Equity In Homes

In Lakeland, Florida, The Lakeland Ledger reports:

  • Diagrams illustrating the eight ways to win at bingo adorned the walls of the community room at Citrus Center Colony, but the 30 or so seniors gathered there on a recent morning weren't playing games.

    The representatives of local manufactured-home communities listened as activist Ed Green urged them to pressure state legislators to support a proposed bill that he said could some day save them from having to forfeit their homes.

    Green spoke calmly, but his words were often incendiary.

    "You understand that they (park owners) have to make a profit or they wouldn't be able to supply you with what they supply you with," Green said, "but they don't have to make such a large profit that you bleed to death to enjoy it. Take little chunks instead of big chunks."

    That prompted murmurs of agreement from the seniors whose parks were identified by yellow paper labels — Highland Village, Anglers Cove, May Manor and others.

    Green, who lives in a manufactured-home park in Citrus County, is traveling the state to promote the "Florida Rent Fairness Act," which he said he hopes will be introduced in the Florida Legislature session beginning in March. The proposed bill would greatly limit the amount parks can raise lot rents following a home sale by linking them to the Consumer Price Index, the federal government's measure of inflation.

    Residents of manufactured-home neighborhoods — also called mobile-home parks — occupy a unique niche. In most parks, residents own their homes but rent their spaces. Lot rents can vary greatly within a park, and when a resident sells a home the park owners impose "market rent adjustments," meaning the buyer might face a lot rent much higher than the seller's.

    That, Green said, can make it difficult for seniors to sell their homes. He gave the example of a senior resident whose spouse dies, cutting the resident's income in half and leaving him or her unable to afford living in the park.

    With potential buyers deterred by high lot rents, some seniors simply turn their homes over to the park owners, abandoning tens of thousands of dollars in equity — a scenario Green called "involuntary foreclosure."
For more, see Seniors Seek "Fairness Act" Bill to Limit Mobile-Home Park Rent Hikes (Activist traveling state to promote "Fairness Act.").

70-Year Old Man Who Was Allegedly Behind In Rent Charged In Slaying Of Eviction-Seeking Sister; Head-Grazing Bullet Wounds Niece

In East Flatbush, Brooklyn, the New York Post reports:

  • An elderly Brooklyn man allegedly shot and killed his sister yesterday when she tried to evict him, law-enforcement sources said.

    William Thurmond, 70, was taken into custody at the East Flatbush house after he allegedly gunned down his sister and grazed his niece at around 10 a.m., the sources said. Thurmond was taken to the 67th Precinct station house in Brooklyn where he was charged with criminally negligent homicide.

    Investigators believe the bloodshed was sparked when Carol Lovell, 63, and her daughter, Crystal Birk, 37, tried to evict him for not paying his share of the rent, the sources added.

    The women, who live upstairs, confronted Thurmond in the basement, police sources said. They argued, and Thurmond allegedly shot Lovell in the chest and grazed his niece in the head, law-enforcement sources said.
For more, see Brooklyn man 'kills' sister, wounds niece in eviction fight (Brooklyn man allegedly kills sister and wounds niece in eviction fight).

80-Year Old Homeowner Falls Victim To Forged Documents Used To Scam Him Out Of $110K

In Manhattan, Kansas, WIBW-TV reports:

  • Riley County police say an elderly Manhattan man fell victim to a home mortgage scam and is out of $110,000.

    Officials say the suspects sent the 80-year-old victim information saying that he was past due on payments and that his home was pending foreclosure. According to police, paperwork from the suspects used a header from Bank of America.

    The victim provided his financial information and ended up losing thousands. He started having contact with the suspects on December 1, 2013 and their communications continued until February 1, 2013. After realizing that the whole thing was a scam, he contacted Riley County police to report the theft on February 5, 2013.

    Police encourage citizens to report suspicious phone calls or things they receive in the mail and verify things with the company before providing any personal or financial information.

    The victim told WIBW that during the scam, he was contacted by phone and by mail. He declined an interview [].

Friday, February 22, 2013

Pair Of Lowlife Lawyers Who Extracted $275K In Cash, Home, Etc. From Criminal Defense Client & Left Him Hung Out To Dry Now Face More Trouble For Thumbing Nose At Court Orders

In Miami, Florida, the South Florida Sun Sentinel reports:

  • Two lawyers who acted so despicably in a South Florida case that they were held in contempt of court and ordered to repay $275,800 in fees to a client, have managed to create more trouble for themselves and even could end up serving time in federal prison.

    By thumbing their noses at a federal judge, Peter Mayas, of Miramar and Plantation, and Emmanuel Roy, of New York and South Florida, are now in about as much of a legal mess as trained lawyers can get themselves into in a courtroom.

    In the latest twist, a judge found they have attempted to hide assets, lied to the court and tried to thwart him. The judge now recommends that Roy and Mayas face sanctions for their behavior and for wasting the court's time.

    The odyssey began when Roy and Mayas — who weren't authorized to practice law in federal court in South Florida — nonetheless represented a defendant, Patrick Coulton, in a criminal case in 2008.

    They managed to wring $275,800 worth of cash and property out of Coulton's family for a minimal amount of work they weren't qualified to do, the judge ruled.

    Roy even flew to England to personally remove a $23,000 wedding and engagement ring set from the finger of Coulton's wife, Pamela, during a breakfast meeting in London, according to court testimony. Roy gave the rings to his mother-in-law, witnesses testified.

    Paul Petruzzi, the Miami lawyer appointed by the court to take over Coulton's representation in August 2010 after Roy and Mayas abandoned him in prison, said the case wasn't about making money for him — it was about trying to ensure justice was done.

    "Guys like Roy and Mayas are the reason people hate lawyers," Petruzzi said, saying the case turned into a personal mission for him.

    Petruzzi said he doesn't plan to accept any payment for the 2 1/2 years of work he put into the case.

    "When Coulton's wife told me how it felt to be robbed by the lawyer she hired to represent her husband — to lose her home, her rings, her vehicle, only to have him abandoned in prison — that's when it stopped being about just getting the money back for her," Petruzzi said.

    When Roy and Mayas had extracted as many valuables as possible from the Coultons — including their Coconut Creek townhome, a Porsche Cayenne, more jewelry and tens of thousands of dollars in cash — they helped him plead guilty, handled his sentencing and then ditched him in prison, U.S. Magistrate Judge William C. Turnoff ruled in September 2011.

    The judge issued a scorching 33-page ruling, found Roy, 45, and Mayas, 48, in contempt of court and called their conduct "disgusting, abhorrent" and the "most outrageous" he'd seen in 25 years on the bench.

NY Appeals Court Gives Already-Suspended Attorney Bar Boot; Orders Him To Cough Up $166K+ To 51 Screwed-Over Ex-Clients

The New York Law Journal reports:

  • An appellate panel in Western New York has disbarred an already suspended Rochester attorney and ordered the lawyer to repay more than $166,984 to 51 former clients. The Appellate Division, Fourth Department, said Andrew J. Cohen, who was suspended in 2011 for misappropriating client funds had previously received eight letters of caution but had evinced "a total disregard for his fate as an attorney and his professional obligations to his former clients."(1)

    According to the order filed Feb. 8, Cohen loaned his wife, a full-time employee in his firm, money from his trust account that he knew belonged to a gravely ill client who died two months later. A loan document Cohen drafted required his spouse to repay the loan at a monthly rate of $1,720, but she did not make any payments, the court said.

    Additionally, the court said, Cohen represented both his wife and the client in connection with the loan, did not disclose the "inherent conflict of interest" and did not reveal several other relevant facts, such as: he was under investigation for converting $65,000 from an elderly client who was in ill-health; he and his spouse were subject to two federal tax liens, two state court judgments, owed tens of thousands of dollars in credit card debt and lived in a house under foreclosure.

    Cohen, who was admitted in the Second Department in 1978, was suspended by the Fourth Department on Oct. 7, 2011 (see Matter of Cohen, 89 AD3d 142) for misappropriating client funds and entering into improper loan arrangements with clients to conceal the misappropriation. Subsequently, the Fourth Department's grievance committee filed another petition accusing Cohen of additional misappropriations prior to his suspension and seeking restitution.

    Cohen was ordered to appear on Dec. 4, 2012 on a final order of discipline, but the day before the slated proceeding his wife contacted the court and said her husband was medically incapable of appearing.

    However, the court noted, Cohen did not contact the court directly, submit any proof of medical infirmity or request an extension of time. Consequently, the court concluded that Cohen admitted the allegations. Cohen could not be reached for comment.(2)
Source: Rochester Attorney Disbarred, Ordered to Pay Restitution.

(1) Matter of Cohen, 2013 NY Slip Op 00880 (App. Div. 4th Dept. February 8, 2013) (per curiam).

(2) The Lawyers’ Fund For Client Protection Of the State of New York, whose mission, according to their website, is "to protect legal consumers from dishonest conduct in the practice of law, to preserve the integrity of the bar, to safeguard the good name of lawyers for their honesty in handling client money, to promote public confidence in the administration of justice in the Empire State," may be a last resort for these victims to recover some or all of their ripped off loot.

For information on "attorney ripoff reimbursement funds" in other states and Canada, see:

Meth Lab Operators Busted In Rented Homes Leave Big Contamination Clean-Up Bills For Unwitting Landlords; One Owner Considers Opting For Foreclosure In Lieu Of Footing Stiff Tab

In Louisville, Kentucky, WAVE-TV Channel 3 reports:

  • When is living in a former meth lab only sort of dangerous? That's the question facing hundreds of property owners across Kentucky as they grapple with the high cost of cleaning up toxic methamphetamine contamination.

    Some believe the state regulations are too strict. Landlords often file appeals with the state to get their meth contamination notices downgraded. And only a third of all meth contaminated homes in Kentucky are properly cleaned up.

    "I had no idea what was going on," Steven Outland said.

    Outland is living in a former meth lab. His roommates were arrested for cooking methamphetamine in the home they shared on Powell Avenue in Louisville's south end. The health department immediately posted a notice of methamphetamine contamination. It warns "hazardous chemicals and residual contamination... may pose a serious health threat to those that enter."

    Outland moved out, but only for a little while. "I actually just spent a week in a homeless shelter and decided that was enough so I came here," he said.

    The owner of the house, Don Sinclair, said he wants to clean up but can't afford it, so he's just going to let the home fall into foreclosure. State certified contractors charge between $3,000-$5,000 for even the smallest meth labs. The high price tag is largely because most contamination levels are automatically labeled tier 3 in the state required assessment done by police.

    In Jefferson County, there are dozens of homes where meth contamination warnings were ignored. That's because there is no law that actually forces a home owner to decontaminate a home where someone has been cooking meth.

    With so many meth labs located in low income areas, Energy and Environment Cabinet program coordinator Kim Greenidge knows cost makes it difficult to get these homes properly cleaned up. That's why Greenidge says Kentucky created an appeals process for property owners who don't think they have as much meth contamination as reported on that initial assessment.

    But in 2012, only 5 tier reduction appeals were granted because even small labs can leave behind dangerous toxins when used repeatedly over a period of time.

    That means huge headaches and bills for property owners like Dave Melton, who had to hire a state certified contractor after a tenant was arrested for cooking meth in his rental property on Swan Street in Louisville.

    "It wasn't an active lab when they did the bust," Melton said. "But there was some residual stuff." Residue that cost Melton thousands of dollars before he could safely rent out the property again.

    The Kentucky Housing Corporation created a program to help innocent homeowners pay the decontamination costs but landlords like Melton don't qualify. The fund is for homeowners living on site, like a grandmother living in a home where her grandson was secretly cooking meth in the basement. And the recipient also has to be low income.

    KHC said it recently spent $50,000 to clean up just two homes.

Thursday, February 21, 2013

Arkansas Law Turning Slow-Paying Tenants Into Criminals? Local Prosecutors Into Landlords' Personal Attorneys?

From a post from Human Rights Watch:

  • Hundreds of Arkansas tenants face criminal charges every year because they don’t pay their rent on time and then fail to vacate their homes quickly enough. The Arkansas state legislature should repeal the abusive law that allows for these prosecutions, which has no parallel in any other US state.

    The 44-page report, “Pay the Rent or Face Arrest: Abusive Impacts of Arkansas’s Criminal Evictions Law,” tells the stories of Arkansas tenants who were dragged into criminal court for transgressions that would not be a crime in any other US state.

    Other tenants who did not violate the law have faced charges because prosecutors acted on specious claims by landlords. Several of the tenants interviewed for this report were confronted at home or at work by police officers who had warrants for their arrest. One woman was berated in open court by a district judge, who compared her to a bank robber.

    “The Arkansas ‘failure-to-vacate’ law is unjust and tramples on the fundamental rights of tenants,” said Chris Albin-Lackey, business and human rights senior researcher at Human Rights Watch. “It also criminalizes severe economic hardships many tenants are already struggling to overcome.”

    Under Arkansas’s failure-to-vacate law, a landlord can demand that a tenant move out of a property within 10 days if the tenant does not pay the rent in full and on time. Any tenant who fails to do so is guilty of a misdemeanor. There is no way for tenants to present their side of the story in court without risking a criminal conviction.
  • “The failure-to-vacate law effectively coerces tenants into either quietly moving out or pleading guilty instead of exercising their right to defend against a criminal charge and having their day in court,” Albin-Lackey said. “Disturbingly, it does so by turning prosecutors into landlords’ personal attorneys – at taxpayer expense.”
For more, see Arkansas: Tenants Face Prosecution Over Rent Problems.

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

Man Who Allegedly Hijacked Possession Of Unoccupied Home From Out-Of-Town Owner, Then Ran Online Scam To Pocket $4,500 In Rent From Duped Tenants Pinched On Felony Theft By Deception Charges

In Conyers, Georgia, the Rockdale Citizen reports:

  • A man who allegedly rented someone else's house to two tenants is in the Rockdale County Jail charged with two counts of felony theft by deception.

    Patrick Henry Stuart, 43, of 3107 Baywood Court, Conyers, was arrested Feb. 8 on warrants that were taken out as part of an investigation that began in December. Prior to his arrest, police said Stuart was believed to be in Texas.

    According to a report by the Conyers Police Department, the owner of a house at 1526 Evergreen Hollow went to the property on Dec. 20 where he had scheduled to have some repairs made. When the man, who lives in Florida, arrived, he reportedly found a family living there illegally.

    Police investigated and learned that the house had been leased to two sisters who said they signed a rental agreement in November. Stuart, who was known to the sisters as Jamere Stuart of Real Foreclosure Solutions, was identified as the man who rented them the house.

    According to one of the sisters, they had found the property online. The sisters reportedly had paid $4,500 in rent. They provided police with a copy of the rental agreement and receipts for money cards that they got at Walmart to pay the rent.

    The owner of the house said that the stainless steel refrigerator and stove that he had installed in the house were missing.

Defendant In N.California Bid-Rigging Scam Probe Says Operators Duped Him Into Investing & He Knew Nothing About Underlying Racket

In Modesto, California, The Modesto Bee reports:

  • People conspiring to rig bids at foreclosure auctions used a Modesto businessman's money without him knowing about the fraud, he claimed this week in a court brief.

    Andrew Katakis, president of California Equity Management, stridently maintains his innocence while asking for help from the government to prove he was duped by those running the scheme. He wants their phone records.

    "Mr. Katakis flatly denies being a part of any conspiracy and seeks to explain how this illegal activity could have occurred under his nose," reads the document, filed Tuesday in federal court in Sacramento.

    Ten people have pleaded guilty to bid rigging at public auctions in San Joaquin County. Katakis is among four others — three investors and one auctioneer — facing trial in November.

    Conspirators obtained dozens of foreclosed homes on the cheap, resold them at higher prices and split profits that should have gone to initial lenders, federal antitrust authorities say.

    Katakis acknowledges doing business with the others but wasn't in on the game, the legal paper says. He needs their phone records to establish patterns "to defend himself by showing how the conspirators used their business relationships to conceal the mechanisms of the conspiracy from him," the document reads.

    "The jury is likely to wonder how such a conspiracy could have been perpetuated with Mr. Katakis' money but without his knowledge," the brief continues.
For more, see Modesto businessman says he was duped in bid fraud (His money used in auction scheme).

Wednesday, February 20, 2013

LPS To Fork Over $35M To Feds To Settle Criminal Charges For Its Role Surrounding Alleged 6-Year Scheme To Prepare, File 1M+ Bogus Mortgage Documents In Land Records Offices Nationwide

Reuters reports:

  • The mortgage servicing company Lender Processing Services Inc has agreed to pay $35 million to resolve a federal criminal investigation into foreclosure fraud, the U.S. Department of Justice said on Friday.

    The settlement resolves allegations over the Jacksonville, Florida-based company's involvement in what the government called a six-year scheme to prepare and file more than 1 million fraudulently signed and notarized mortgage documents in property recorders' offices nationwide.

    It followed a guilty plea last November by Lorraine Brown, the former chief executive of LPS' DocX LLC unit, to a felony charge of conspiracy to commit mail and wire fraud over the scheme, which ran from 2003 to 2009.

    LPS entered into a two-year non-prosecution agreement that requires it to meet many conditions, including cooperating in federal probes, and alert the government to any abuses in mortgage or foreclosure documentation services at the company.

    The $35 million payment includes criminal penalties and forfeiture and must be made within 10 days to the U.S. Marshals Service and the U.S. Treasury, the Justice Department said.

Consumer Groups Give 'Bronx Cheer' To Federal Regulator That Nixed Plan To Tame Banksters' Force Placed Insurance Racket

From a press release from the Consumer Federation of America:

  • Advocates at the Consumer Federation of America, the National Consumer Law Center, the Center for Economic Justice, Consumer Watchdog, the Neighborhood Economic Development Advocacy Project and the Center for Responsible Lending strongly oppose the decision of the Federal Housing Finance Agency (FHFA) – the federal regulator that oversees Fannie Mae and Freddie Mac – to halt Fannie Mae’s recent efforts to reduce the cost of force-placed insurance (FPI) for taxpayers and borrowers by over $1 billion a year.

    Force-placed insurance is property insurance that mortgage servicers impose on homeowners whose insurance policies lapse or are cancelled. FPI policies typically cost at least twice as much as standard homeowners insurance, despite providing far less coverage.

    FPI premiums are excessive as demonstrated by very low benefit ratios – the ratio of claims paid to premiums received by the insurer – of only 21% over the period 2004 through 2011. This compares to a benefit ratio for standard homeowners insurance of 63% over the same period. With the economy in recession and slow recovery, the amount of FPI sold has skyrocketed over the past several years from less than $1 billion in 2004 to $3.5 billion in 2011.
  • Fannie Mae, consumer organizations and some state insurance regulators have criticized the structure of the force-placed insurance market because force-placed insurers pay substantial kickbacks to mortgage servicers– in the form of commissions, captive reinsurance schemes and below-cost services –often by overcharging homeowners who ultimately pay for the FPI charges.

    Fannie’s plan would benefit taxpayers and borrowers. Taxpayers would benefit because Fannie would pay far less than it currently does for FPI and would pass those savings on to taxpayers. Borrowers would benefit because they would pay a price for FPI more closely related to the cost of providing the product and not the current price often inflated by kickbacks from insurers to mortgage servicers.
  • “Fannie Mae has done the due diligence necessary to ensure that homeowners and taxpayers would benefit,” said Birny Birnbaum, executive director of the Center for Economic Justice and an expert on FPI. “The FHFA action maintains the status quo of massive overcharges to borrowers and taxpayers.”

    “Fannie Mae’s original decision would have helped homeowners, taxpayers, and investors avoid unreasonable over-charges for homeowners insurance,” added National Consumer Law Center attorney Andrew Pizor. “FHFA's decision harms nearly everyone while preserving unfair practices in the mortgage servicing and insurance industries.”

Feds Search For Help From Banksters To Carry Out Foreclosure Fraud Agreement An Implicit Acknowledgement Regulators Had Their Bones Picked Clean By Financial Industry In Settlement Negotiations

The New York Times reports:

  • Washington is seeking help from an unlikely group in its effort to distribute billions of dollars to struggling homeowners in foreclosure: the same banks accused of abusing homeowners with shoddy foreclosure practices.

    In doing so, the regulators are trying to speed the process after a flawed, independent foreclosure review delayed relief for millions of borrowers, according to people briefed on the matter. But housing advocates worry that the banks, eager to end the costly process, could take shortcuts as they comb through loan files for potential errors, in some cases diverting aid from the neediest homeowners.

    Regulators say they will check the work. And banks have already agreed to pay a fixed amount to troubled homeowners, creating another backstop.

    According to officials involved in the process, who spoke anonymously because the matter is not public, the regulators had few alternatives.

    Last month, the Office of the Comptroller of the Currency scuttled the foreclosure review by independent consultants because it was marred by delays and inefficiency. Instead, the regulator struck a multibillion-dollar settlement directly with the nation's largest banks, a deal that includes $3.6 billion in payments to aggrieved homeowners.

    To accelerate the payments, the comptroller's office decided to cut out the middlemen, the consultants, from the reviews. In a conference call last week, the government outlined a plan to use the lenders instead, according to people with direct knowledge of the discussion. Banks will now have to assess each loan for potential errors, which will help determine the size of the payments to homeowners.

    The decision to tap the banks for support is the latest twist in the review of more than four million foreclosures, a process that has incensed lawmakers and ensnared the nation's largest lenders. Regulators are eager to make the payments to homeowners, who have languished for more than a year.
  • By relying on the banks, regulators can part ways with the consultants.

    Despite billing for roughly $2 billion in fees in the 14-month review, consultants examined only a sliver of the 500,000 complaints filed by homeowners, people involved in the matter said. Their efforts were stymied, in part, because regulators urged consultants to first scrutinize a random sample of the four million foreclosures before digging into specific homeowner complaints, the people involved said. The decision, the people said, may have undercut the scope of the settlement and potentially deprived homeowners of additional relief.

    Consultants were also criticized for a faulty review process.

    Some consulting firms, including the Promontory Financial Group, farmed out much of the work to contract employees. Others faced questions about their objectivity. The consultants, critics note, were paid billions of dollars by the same banks they were expected to police.

    Some consultants say they sounded repeated alarms about the process. Last spring, a group of consulting firm executives met with comptroller officials in Washington to voice concerns that the reviews were too narrow, according to people with direct knowledge of the meetings.

    Other people close to the review say consultants were only partly to blame for the problem. The review process, with its narrow focus, was created by the comptroller's office in 2011, under previous leadership.

Couple Who Recently Paid All Cash For What They Thought Was Mortgage-Free Home Now Face The Boot Over Newly-Discovered Lien; Blame Title Company For Botched Land Records Search

In Lehigh Acres, Florida, WZVN-TV Channel 7 reports:

  • A Pennsylvania couple recently purchased their retirement dream home in Lehigh Acres by using an online auction company.

    Ralph and Linda Donely paid $65,000 cash for the home only to discover an eviction notice on their front door months later. "They say we own the house free and clear. I said we can't. We're getting evicted. How can it be ours?" said Lind Donley.

    It turns out a second mortgage on the property surfaced and the home went into foreclosure.

    "The title company didn't do their job at all." said Ralph. The Donley's did have title insurance. While they're expected to get their money back they will not get money for upgrades they made to their home.
For the story, see Couple evicted from dream home.

Tuesday, February 19, 2013

Outfit Accused Of Ripping Off Consumers Out Of $120M+ In Income Tax Relief Racket Gets Off By Paying Only $15M To Settle FTC Suit; Feds To Suspend $100M+ In Money Judgments Due To Scammers' Inability To Pay

The Federal Trade Commission recently announced:

  • Under an agreement with the Federal Trade Commission, the defendants in a scheme that allegedly bilked consumers out of more than $100 million by falsely claiming they could reduce their tax debts must surrender more than $15 million in cash and assets to settle charges that they violated federal law.

    Under the settlement order, American Tax Relief LLC and its leader, Alexander Seung Hahn, are banned from telemarketing, and they and Hahn’s wife, Joo Hyun Park, are permanently prohibited from selling debt relief services. As part of the FTC’s ongoing efforts to protect consumers in financial distress, this is the agency’s first action against a tax relief company.

    The FTC filed charges against American Tax Relief, Hahn, and Park in September 2010. A court subsequently halted the allegedly illegal practices, froze the defendants’ assets, and appointed a receiver to manage the company pending resolution of the case.
  • The settlement order imposes a $103.3 million judgment against ATR, Hahn, and Joo Hyun Park. It also imposes judgments of $18 million and $595,000, respectively, against relief defendants Young Soon Park and Il Kon Park, Joo Park’s parents, who were not charged with participating in the scheme but were found by the court to have received significant sums.

    The judgments will be suspended once the defendants and relief defendants have surrendered assets that total more than $15 million, including cash, a home in Beverly Hills and a condo in Los Angeles, jewelry and gold items, and a 2005 Ferrari.

    The full judgments will become due immediately if the defendants or relief defendants are found to have misrepresented their financial condition.
For the FTC press release, see FTC Settlement: Tax Relief Scammers Agree to Pay More Than $15 Million (American Tax Relief Scheme Bilked Consumers With False Promises They Qualified for IRS Programs to Reduce Tax Debts).

Feds Score Temporary Shutdown Of Debt Collection Outfit Over Alleged Use Of Imprisonment Threats, Assertions That Minor Kids Would Be Taken Into Gov't Custody, Etc. To Collect On Payday Loans

The Federal Trade Commission recently announced:

  • At the request of the Federal Trade Commission, a U.S. district court shut down a Houston-based debt collection operation that allegedly illegally used insults, lies, and false threats to collect on payday loans – including telling a Virginia woman that she would be arrested and jailed for three years, and would lose her disability payments if she did not pay a $980 debt.

    The court also froze the operation's assets, banned the defendants from engaging in debt collection, and appointed a receiver to take control of the business while the FTC moves forward with the case.

    In addition to using false threats of arrest and imprisonment, the operation allegedly told some consumers their minor children would be taken into government custody; disclosed debts to family members and military superiors; falsely claimed to work hand-in-hand with local sheriff’s offices; and collected bogus late fees and attorneys’ fees, the FTC complaint alleged.

    As part of its continuing crackdown on scams that target consumers in financial distress, the FTC filed a complaint against Goldman Schwartz, Inc., three affiliated companies, and three individuals who own or manage them. The operation did business nationwide collecting debts for numerous payday loan companies, including Ace Cash Express, Advance America, Allied Cash Advance, Checkmate, First Cash Advance, and MoneyMart.

Feds Hand Out Free Pass To Another Outfit That Allegedly Screwed Homeowners Out Of Upfront Foreclosure Rescue Fees; 'Forensic Audit' Defendants In FTC Suit Score Suspension Of $3.5M Money Judgment Due To "Inability To Pay"

The Federal Trade Commission recently announced:

  • The defendants behind an operation that allegedly preyed on vulnerable homeowners have agreed to settle Federal Trade Commission charges that they lured people into paying $1,995 or more by holding out bogus promises that they could help them avoid foreclosure and renegotiate their mortgages.

    The FTC’s settlement order against the Los Angeles, California-based Consumer Advocates Group Experts, LLC, company owner Ryan Zimmerman, and two other related companies is part of the agency’s continuing crackdown on scams that target consumers in financial distress. It bans the defendants from marketing any mortgage assistance relief or other debt relief products or services. It also prohibits them from making misleading claims about any financial product or service, or any other type of product or service.
  • The settlement also imposes a $3.5 million judgment, which reflects the full amount of consumer injury during the two years before the operation was shut down.

    The judgment will be suspended due to the defendants’ inability to pay. If it is later determined that the financial information the defendants provided to the FTC was false, the full amount of the judgment will become due.
For the FTC press release, see Defendants in Alleged "Forensic Audit" Mortgage Scam Settle FTC Charges (Marketers Held Out Bogus Promise that They Could Help Consumers Avoid Foreclosure; Often Charged Thousands of Dollars).

Monday, February 18, 2013

Bankster's Score Big Win In Effort To Perpetuate Force-Placed Insurance Racket; Plan To Save Financially Strapped Homeowners As Much As $300M/Year Squelched By FHFA

American Banker reports:

  • The Federal Housing Finance Agency has killed a plan to slash premiums for replacement homeowners insurance on Fannie Mae loans, according to people informed of the agency's decision.

    The FHFA, which is the conservator of the government-sponsored enterprise, announced its decision Monday on a conference call with Fannie Mae staff and mortgage industry trade groups.

    The regulator's move will block a plan that was expected to save Fannie and homeowners as much as $300 million a year, according to people familiar with it. The plan would have supplied homeowners with low-cost housing insurance from Fannie's own vendors and prevented banks from collecting payments for steering business to "forced-placed" insurance carriers.

    Force-placed insurance is hazard insurance purchased when struggling mortgage borrowers fail to maintain coverage on their own homes. It has become increasingly controversial in recent years as state regulators and consumer advocates have uncovered a pattern of alleged kickbacks from insurers to the banks who buy it.

    Fannie's plan represented the largest threat to the current structure of the industry, and had drawn criticism from mortgage and insurance industry trade groups over the past few months.
  • The FHFA's move is a coup for a coalition of mortgage industry trade groups that have lobbied extensively against Fannie's plan. Shortly after the markets opened on Tuesday morning, the stock price of Assurant (AIZ), the leading force-placed insurer, rose by 5%.

    In a research note, analysts at Compass Point called the FHFA decision "a decisive positive for force-placed insurance providers and brokers."
  • At first blush, the FHFA's move appears to end the single most significant regulatory threat to the force-placed insurance industry, which has been the subject of significant controversy over the last few years. American Banker has reported that the insurers provide sizable commissions to banks that give them business.
For the story, see FHFA Kills Fannie Mae Force-Placed Insurance Plan.

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

Firms Offering Tax Prep Services, Or Illegal Lending Rackets That Violate State, Federal Lending, Unfair Competition, Consumer Protection, False Advertising Laws; Do These Outfits Disguise Loans As 'Instant' Or '24-Hour' Refunds?'

A recent post on Rebecca Tushnet's 43(B)log describes a recent California appeals court ruling that affirmed a lower court's judgment in favor of the State of California against the seemingly ubiquitous tax return preparation service doing business as Liberty Tax Service.

In the ruling, Liberty was ordered to pay about $1.169 million in civil penalties, and roughly $135,000 in restitution, and permanently enjoining Liberty in several ways for violating state and federal lending, unfair competition, consumer protection, and false advertising laws for its business practices involving Liberty's tax preparation and related loan services (refund anticipation loans - "RALs" - and electronic refund checks - "ERCs").(1)

From the post:

  • Liberty made a lot of money from RALs and ERCs, including in California; it got percentages or flat fees from the banks with which it worked, and RALs and ERCs also cross-subsidized its tax preparation services, which was important because many of its customers couldn’t afford to pay for them out of pocket.

    The trial court found that Liberty’s handling fee charged to ERC customers was an undisclosed finance charge in violation of TILA [Federal Truth in Lending Act] (since an ERC was a form of credit allowing delayed payment for tax preparation services), and that the failure to disclose this also violated the UCL [California's Unfair Competition Law] and FAL [California's False Advertising Law].

    Second, the trial court found that using “cross-collection” to collect tax refund loan debts from prior transactions, including non-Liberty transactions, was deceptive, unfair, and illegal. (This could occur when consumers’ prior RALs were larger than the refunds they ultimately received; because a RAL was a loan, they remained potentially liable on the debt.)

    Third, the trial court found that certain print and TV ads were likely to deceive within the meaning of the UCL and FAL; Liberty was liable for its own ads and those placed by California franchisees.

    Among other things, Liberty was enjoined from directly or indirectly representing a RAL as an actual refund, and from failing to state conspicuously that the product is a loan and including the name of the lending institution and the fee or interest it will charge.

    The court of appeals upheld the determination that Liberty’s cross-collection practices violated multiple state laws along with the federal Fair Debt Collection Practices Act (FDCPA). Liberty waived its arguments about the fraudulent and unfair prongs of the UCL and about the FAL, so the court didn’t need to reach other bases for liability.

    Liberty was responsible for bringing customers to the banks, soliciting loan applications and getting consumers to sign applications that authorized cross-collection. These authorizations covered any unpaid RAL debts, whether owed to Liberty or to anyone else, and whether the debt was stale or otherwise uncollectable.

    The trial court found that both unsophisticated and reasonable consumers were unlikely to recall the details of such debts, particularly those “incurred far in the past and perhaps in connection with a loan issued by a different lender and/or obtained through a different tax preparer.”

    Consumers had no meaningful notice of whether there was a claim against them before they authorized the cross-collection; they thus lost the right to dispute the debt, and thus the practice was deceptive, unfair, and in violation of the FDCPA. The cross-collection authorization “appeared on the second or third pages of lengthy and complex contracts that on their face had nothing to do with debt collection, making it unlikely that applicants would read and understand the significance of the information.”
For more, see Calculation of remedies and vicarious liability under California consumer protection law.

For the ruling, see People v. JTH Tax, Inc., -- Cal. Rptr. 3d --, 2013 WL 177140 (Cal. App. 1 Dist.) (Certified for Publication).

(1) The court pointed out, for example, that during a period relevant to the litigation, "[d]ozens of ads began appearing in Pennysaver that improperly promised such things as "Most Refunds in One Day," "Get $1200 in Minutes . . . And the Rest of Your Tax Refund in 24 Hours," "Most Refunds in 24 Hours" and "Got W-2? 24 Hour Refunds."

Calif. Appeals Court: Bank's Failure To Follow HUD Regs Enough To Support Requested Halt Of An Ongoing Alleged Wrongful F'closure, Despite Homeowner's Lack Of Private Right Of Action; Coughing Up Unpaid Loan Balance To Score Injunction Not Necessary

From a news release from the law firm SheppardMullin:

  • In Pfeiffer v. Countrywide Home Loans, --- Cal.Rptr.3d ----, 2012 WL 6216039 (Dec. 13, 2012), mortgage borrowers filed a damages claim against a trustee for violating the federal Fair Debt Collection Practices Act ("FDCPA") and an injunction claim against a lender to halt a foreclosure they claimed was wrongful. The trial court sustained the defendants' demurrer to both claims without leave to amend. The California Court of Appeal affirmed as to the first claim, but reversed as to the second.

    As to the first claim, the California Court joined others in holding that foreclosure activities are not "debt collection" within the meaning of the FCDPA.(1) In particular, the issuance of foreclosure sales notices in compliance with California non-judicial closure law did not constitute debt collection. Thus, the borrowers could not state an FDCPA claim even if the foreclosure was otherwise allegedly wrongful.

    As to the second claim, the Court held that the lender could be enjoined from foreclosing. The loan here was insured by the Federal Housing Administration. Thus, the foreclosure was subject to servicing regulations of the U.S. Department of Housing and Urban Development ("HUD"). These regulations required the lender to conduct a face-to-face interview prior to initiating foreclosure. The borrowers alleged this never happened.

    The Court held that even though the HUD regulations did not create a private right of action, failure to follow the regulations could nevertheless support an injunction based on a common law claim of wrongful foreclosure.

    Because the borrowers were seeking to halt the foreclosure before it concluded, rather than unwind or set aside a foreclosure that had already occurred, the Court held that the borrowers need not tender the loan proceeds to obtain the injunction.

    Of course, nothing would prevent the lender from conducting the face-to-face interview and then starting the foreclosure process all over again.
Source: California Court Holds That Borrowers May Enjoin A Foreclosure If A Lender Fails To Meet Servicing Guidelines.

For the ruling, see Pfeiffer v. Countrywide Home Loans, --- Cal.Rptr.3d ----, 2012 WL 6216039 (Dec. 13, 2012).

Editor's Note: Apparently, this was an important enough case that it compelled the State of California, through the state attorney general's office, to jump into the fray and file a "friend of the court" brief on behalf of the homeowner.

(1) In actuality, with regard to the first claim, the court never specifically held that "foreclosure activities" - in general - are not "debt collection" within the meaning of the FCDPA. The court's ruling in this regard was specifically limited.

The court simply said that the foreclosure trustee did not fall within the definition of "debt collector" as set forth in the FDCPA and accordingly, its activities in giving a foreclosure sale notice to a consumer in this case did not constitute debt collection activity that is covered by the FDCPA. ("Recon" is the foreclosure trustee involved in this case):
  • [t]he Pfeifers do not have a claim for damages against Recon for violating the FDCPA, because Recon is not a debt collector under the statute" and
  • "[g]iving notice of a foreclosure sale to a consumer as required by the Civil Code does not constitute debt collection activity under the FDCPA."

Sunday, February 17, 2013

Head Of Outfit That Manufactured Fraudulent Documents Used To Foreclose On Homeowners Now Cops Guilty Plea In Michigan After Already Admitting Guilt On Federal, Missouri State Charges

In Kent County, Michigan, The Detroit News reports:

  • The former president of a Georgia company that filed thousands of forged documents in Michigan foreclosures pleaded guilty to state racketeering charges Monday in Kent County.

    Lorraine Brown, former president of loan document processor DocX, faces up to 20 years in prison when she is sentenced May 2, according to the Michigan Attorney General's office.

    Brown already pleaded guilty to similar charges in federal court and in a Missouri case in which she agreed to a prison sentence of two to three years. DocX is out of business, but its parent company, Loan Processing Systems of Jacksonville, Fla., has cooperated with investigators and is paying out millions.
For more, see Ex-exec pleads guilty in loan foreclosures (Firm's 'robo-signing' included thousands of filings in Mich..)

For the Michigan Attorney General press release, see Schuette Announces Guilty Plea for Former Mortgage Processor President Responsible for Fraudulent Robo-Signing Scandal.

Florida Bar Grievance Committee Finds Probable Cause To Probe Now-Sitting Judge Over Alleged Conflicts Of Interest That May Have Left One-Time Client Screwed Out Of Interest In Land

In Live Oak, Florida, the Suwannee Democrat reports:

  • The Florida Bar’s Third Judicial Circuit Grievance Committee has found probable cause to support a landowner’s accusations of misconduct and conflict of interest against Circuit Judge Andrew J. Decker III of Live Oak.

    The finding resulted from an eight-month investigation by the committee into Decker’s handling of a real estate foreclosure case as a private attorney and before he was elected a judge last November.

    The complaint against Decker now goes before the Florida Judicial Qualifications Commission, the agency that reviews ethics charges against state judges and can take disciplinary action if it finds fault. 

    The misconduct and conflict accusations were made last spring by Daniel A. Dukes of Union County, a partner in the B.W.D Land Trust represented by Decker in foreclosure negotiations with TD Bank. Other trust partners were Circuit Judge Paul S. Bryan of Lake City, and William E. Woodington of Union County.

    Among other things, Dukes accused Decker of conspiring with Judge Bryan to transfer Duke’s one-third ownership of the foreclosed property to the judge, then withdrew as Duke’s attorney and later represented the judge in a bankruptcy filing.

    He also accused Decker of representing clients before Judge Bryan without disclosing to the opposing side that Decker had served as the judge’s lawyer in other legal proceedings.

    The Grievance Committee, which serves as a grand jury for complaints against Florida lawyers, found there was probable cause that Decker violated four of the Florida Bar’s rules on misconduct and conflict of interest.
For more, see Local judge accused of misconduct (State commission to review accusations by landowner).

28 SE Texas Minority Landowners File Suit Accusing County Of Applying Financial Squeeze Thru Higher Tax Assessments To Drive Them From Land Owned By Their Families For Generations

In Richmond, Texas, Courthouse News Service reports:

  • A Texas county is trying to drive minorities from their land to make room for subdivisions by raising their taxes so high they can't afford to pay them, 28 landowners claim in court.

    Lead plaintiff Mary Shavers sued Fort Bend County's judge, its chief appraiser, its tax assessor-collector, the Lamar Independent School District and two law firms in Fort Bend County Court. A county judge in Texas is the equivalent of a county commissioner in other states.

    The plaintiffs claim that since growth took off in the county, the appraised value of minorities' land has increased far more quickly than Anglos' land. "Plaintiffs are African-Americans and/or Hispanics who are citizens and residents of the State of Texas," the complaint states. "They live in the Fulshear area, north of Cinco Ranch, the unincorporated Katy area of Fort Bend County."

    Fort Bend County, southwest of Houston, is one of the nation's fastest-growing counties; its population grew by 4.8 percent, to 532,141, between July 1, 2007 and July 1, 2008, when the tax hikes began, according to the complaint. Its population is about 607,000 today.

    "Much of this impressive growth comes from people flocking to new neighborhoods in the unincorporated Katy area of Fort Bend County," the complaint states. "Cinco Ranch, the Fulshear area and Seven Meadows are among the areas that have posted gains in new home sales during this same period.

    "Plaintiffs have low to modest income and have lived in this area for many generations. Plaintiffs own land/or real property ranging from a lot to over 100 acres which were passed to them from generations.

    "All through these years through their meager and modest income they have maintained and kept the property in their family by paying their property taxes which has always been reasonable all these time and before 2007. "However, beginning in 2007, they began to see a substantial increase in the assessed value of their property and their property taxes sky rocketed." Plaintiffs say they can't afford to pay the higher taxes.

    "Plaintiffs have observed that before the growth came to the Fulshear area, sometime before the year 2006 and prior, land owned by minorities valued by Fort Bend County Appraisal District was at $4,000-$4,500 per acre, while land owned by whites were around $20,000 per acre; growth hit and the value of minority's property jumped to $41,000 an acre while whites $22,000-$23,000 per acre," the complaint states.

    "Through investigation, plaintiffs learned that all similarly situated property in the area of the county was not being evaluated equally. The plaintiffs further observed that the property assessed values of their raw land were much higher than similarly situated land owned by whites.

    "Interestingly, plaintiffs have observed the building of subdivisions hit the Fulshear area in the early part of year 2007. "Further, plaintiffs have observed that during this time, delinquent tax collection actions were intensified to drive them from the land they have lived in for generations in what seemed designed to make room for the new subdivisions."

    The plaintiffs' attorney, Diogu Kalu Diogu II, told Courthouse News Service his clients' land has been targeted by developers. "The developers want the area where the African-Americans are living right now. They want to take it over and put subdivisions. I think the issue is they made (the taxes) so high so they could kick African Americans out of that place," Diogu said.

    Diogu said Fort Bend County increased the assessed value of the plaintiffs' properties without notifying them. "For example, on more than one occasion, one or more of the plaintiffs went to the office of Fort Bend Central Appraisal District to protest and were refused a hearing, claiming the property was not in their name, even though the office knew that they were heirs to the estate and the rejections were tacit admissions by the Appraisal office that they knowingly sent increased assessed value notices required by law to purported property owners they knew or should have known were deceased," the complaint states.
  • The plaintiffs say in the complaint that in some instances they set up payment plans with law firms the county hired to collect property taxes, but when they fell short, "no matter how slightly," their land was foreclosed on.

    They seek a restraining order to stop foreclosure and sale of their land, and damages for violations of civil rights and due process, intentional infliction of emotional distress, conspiracy, violations of the Texas Tax Code and negligent supervision and training.