Saturday, April 6, 2013

Wife Locks Herself In Deceased Hubby's $25M Beachfront Mansion In Effort To Stall Estate Sale; Executors: We Need The Cash To Pay Down Debt On Dead Magnate's Heavily Mortgaged $70M Empire

In Southampton, Long Island, the New York Post reports:

  • A 1970s TV actress has locked herself in her late husband’s Southampton beachfront mansion and refuses to leave — even though a potential buyer is scheduled to close [] on the $25 million home, court documents charge.

    Tara Kulukundis, 51, who had minor roles in “Charlie’s Angels” and “Starsky and Hutch,” has allegedly changed the locks at the home and blocked efforts to boot her for more than six weeks, say executors of the will of her Greek shipping-magnate hubby, M. Michael Kulukundis.

    Her husband didn’t leave any of the property to her, but she was allowed to live in his “magnificent apartment” at The Pierre hotel on Fifth Avenue in Midtown.

    Executors for the estate said they need to sell off the Hamptons property to pay down debt.

    But Tara won’t let go of the beach house, executor Barbara de Mare wrote in Monday’s filing in Manhattan Surrogate’s Court.

    She “purposefully left her sumptuous estate-provided actual residence at The Pierre hotel and is now illegally ‘occupying’ the Southampton property,” de Mare wrote.

    The executors got a court order forcing Kulukundis to fork over the keys to the house last October. She relented and agreed to cooperate and allow movers to pack up the home’s furnishings.

    But she allegedly blocked the movers from getting into a second-floor room and changed the locks so the broker could not enter the house.

    Her husband’s heavily mortgaged $70 million real-estate empire included the Pierre apartment, as well as a second Southampton home and a townhouse on East 67th Street. Both were sold after his death.

    In 2011, she blocked Sotheby’s from coming into the Murray Place house to appraise artwork, and she pulled a similar stunt the next year at her Pierre pad, documents allege.

    The lawyers said they needed to raise funds to support her “lavish lifestyle.”

    Her lawyer declined to comment.

    Tara Kulukundis, who went by the screen name Tara Tyson, also acted in a 1989 movie called “Eden is Burning” and won two awards for her acting in the off-Broadway shows “Foreplay” and “Porno Stars at Home,” according to the film site IMDb, which says she was a fashion model as well.
Source: $25M squatter (Widow’s Hamptons siege).

NYCHA Inspectors Asleep At Wheel, Say 20+ Tenants In Building In Foreclosure; Renters Living In Improperly Carved Up Units Now Face Possible Boot For Having Section 8 Vouchers For Wrong Size Apartments

In The Bronx, New York, the New York Daily News reports:

  • At a troubled Highbridge apartment building that’s in foreclosure, more than 20 tenants are being asked to move out because their Section 8 vouchers are for the wrong size apartments.

    The tenants at 1380 University Ave. informed tenant association president Barbara Williamson that the city Housing Authority wants them moved.

    Landlord Martin Carlin installed illegal partitions to add a bedroom in some of the 144 apartments, Williamson said, and the NYCHA’s Section 8 inspectors didn’t check the units before issuing vouchers.

    “It’s bad the way Carlin put these tenants in a situation like this,” Williamson said. “Section 8 has been ripped off, just like a lot of tenants. That’s taxpayer’s money that’s being burnt up now.”

    Some tenants told Williamson that the court-appointed building manager, WinnResidential, offered to move them to a building in Mott Haven, but not everyone wants to go there. She said tenants have been told they can’t get their security deposits to move elsewhere.

    Tenant organizer Susanna Blankley of Community Action for Safe Apartments said Carlin should be held responsible. “How is possible no one goes after Carlin for that?” Blankley asked. “All these people going to be evicted because he did all this illegal stuff?”

    Blankley blasted NYCHA for failing to inspect the units before dispersing Section 8 vouchers. NYCHA did not respond to requests for comment.

    A Winn spokesman said 32 units are affected, and Winn will help tenants find new units in any of 6,000 properties they manage in every borough but Queens. He said NYCHA issued no timeline by which tenants must move.

    While Carlin still owns the building, Workforce Housing Advisors bought the mortgage and sought foreclosure in June against Carlin’s company, University Residence, Inc. A court-appointed receiver, Edmond Pryor, manages the building’s money.

    “Funds and accounting from the security deposit account is under active litigation as the existing deed holder has refused to provide the necessary information,” Pryor said. “Any tenant moving from the building will have his or her security deposit released pursuant to lease terms and rent regulations.”

    Carlin’s lawyer, Stephen Jones, said, “I have no reason to believe there are illegal partitions in that building put there by management. I really question the timing of the receiver coming in and starting to talk about putting people out of their homes in the middle of this.”

    Carlin faces jail and $1,000 a day in fines unless he convinces Bronx Supreme Court Justice Mark Friedlander to vacate a contempt order against him. Carlin allegedly continues to collect rents and has about $44,000 in tenants’ security deposits, according to Pryor. Friedlander has ordered Carlin to turn over the money to Pryor.
For the story, see Section 8 tenants may be forced to leave troubled 1380 University Ave. in Highbridge due to illegal apartment conversions (City Housing Authority didn't inspect units before issuing Section 8 vouchers, tenant advocates say).

Failed Health, Safety Inspections Spell The Boot For Chi-Town Renters In Bank-Owned Apartment House; City Officials Give Few Days Notice, Threaten Police Presence If No Compliance

In Chicago, Illinois, WLS-TV Channel 7 reports:

  • Dozens of residents at a Chicago apartment building could be forced out of their homes later Wednesday. The city of Chicago says the building in the 1200-block of South Kedvale is not safe, but many people who live there say they will not have a place to go if the city kicks them out.

    The city has a court order indicating the building fails to meet minimum standards of health and safety.

    Tenants, however, say they were given only a few days' notice. They say they were not notified soon enough, and they were planning to challenge that court order Wednesday. If the city prevails, Chicago police could be called to force the residents out.

    "Some guy came and gave us papers and said the building is being closed down. He said if we didn't leave, they were going to use police powers," resident Magdalen Ruffin.

    "They still could've given us more time. They didn't have to give us three to four days. At least they can give us 30 to 60 days to get our stuff together and go," said Keesha Wilkins, also a resident.

    North Community Bank is listed as the building's owner.

    "A lot of people have paid up through the month. We don't know if it's a foreclosure. The man said he was the manager, then he said he was the landlord. A few of us did pay up through the month. They wouldn't give them time to get their money to get a U-Haul truck. They just said we've got to go," said Wilkins.

    According to the court order, police could report to the building at 9:30 a.m. to remove the residents. The court hearing during which the tenants will challenge the court order was scheduled for 9 a.m.

Health, Safety Issues Lead To 'Condemnation-Eviction' Without Advanced Notice For Tenants In Building In Foreclosure

In Sacramento, California, KTXL-TV Channel 40 reports:

  • Dragging belongings by the bagful or in some cases, chucking them out of windows, people who live in an eight-unit apartment complex on Boxwood Street in North Sacramento were racing against the clock before the building was condemned and closed forever on Thursday.

    “Everybody in this place has to get their stuff out in less than an hour, he just gave us an extra couple hours today, or else we would have had to get out by 5 o clock yesterday afternoon,” Debborah Casillas, a mother of a tenant told FOX40.

    Documents indicate the property is in foreclosure. It’s also in terrible condition. Citing rodent infestations and structural issues, the property has been tagged as unlivable, conversely leaving residents without a home.

    “I’m gonna have to move in with a family member or something like that, in the meantime, I don’t really know,” said tenant LaBrandon Grayson.

    With U-Hauls backed up, piece-by-piece, it was a hasty attempt for some to pack up a life without perhaps a place to move it.

    “I knew there was a foreclosure, but we didn’t really find out, they just kinda crept on us with it, out of the middle of nowhere, you know what I mean?,” Grayson told FOX40.

Friday, April 5, 2013

Disabled Homeowner's Lawsuit: Gun-Toting Cops Invaded My Home, Arrested & Dragged Me Out Into Hot Sun, & Left Me There Until I Nearly Passed Out, All In Response To Bogus Police Report By Foreclosing Bankster's Field Rep!

The following allegations were taken from a March 19, 2013 Opinion and Order on various motions to dismiss by defendants in a lawsuit currently floating around in a U.S. District Court in South Bend, Indiana.

The lawsuit was filed by a homeowner facing foreclosure against a whole slew of people, and who accuses an individual, acting allegedly on behalf of the foreclosing lender, of certain actions that allegedly set off a somewhat unpleasant chain of events for the homeowner and a companion, to say the least.

The banksters' motions, in substantial part, were denied, and the litigation (originally filed in 2011) has been allowed to continue:

  • On August 20, 2009, plaintiffs J. John Marshall ("Marshall") and Kimberly Wiley ("Wiley") (collectively "plaintiffs") were working at Marshall's residence located at 1625 Brookwood Drive, Elkhart, IN ("the property").

    The property was in foreclosure, but the foreclosure had not been completed.

    While plaintiffs were working at the property, an individual who did not identify himself entered the house in an aggressive manner, questioned plaintiffs about their right to be in the house, and demanded plaintiffs leave the house.

    This individual was later identified as defendant Robert Hashberger ("Hashberger"). Hashberger told plaintiffs that he owned and controlled the property, and also told plaintiffs that they should not be at the property.

    At that point, Marshall identified himself as one of the owners of the property, and peacefully removed Hashberger. After Hashberger was gone, plaintiffs went back to work.

    Shortly thereafter, four City of Elkhart police officers arrived at the property with their guns drawn.

    Plaintiffs believe the officers arrived at the property after receiving a call from Hashberger reporting a burglary. The officers pointed their guns at Wiley, handcuffed her, and dragged her outside. Once outside, the officers questioned Wiley about Marshall.

    The officers then entered the room where Marshall was working, pointed their guns at him, and told him to get down on the floor. Marshall informed the officers that he could not get on the floor because of a disability. The officers grabbed Marshall and handcuffed him instead. After Marshall was handcuffed, the officers dragged him outside for questioning.

    At some point, it became apparent to plaintiffs that the officers presence at the property was due to an alleged breaking and entering committed by plaintiffs. Plaintiffs therefore told the officers that Marshall was the owner of the property. Even with this information, however, the officers made plaintiffs stand outside in the sun for almost an hour.

    The officers eventually told plaintiffs that they were being taken to jail, and read plaintiffs their Miranda rights. Marshall asked the officers if he could contact his attorney, but the officers ignored his request.

    Marshall eventually began to lose consciousness because he was forced to stand in the sun for such a lengthy period of time.

    Plaintiffs were released from police custody without any charges being filed.
For the opinion, see Marshall v. JP Morgan Chase Bank, Dist. Court, ND Indiana 2013, No. 3:11 CV 332 (N.D. Ind.).

Thanks to Deontos for the heads-up on this court ruling.

Woman Who Failed To Search Public Records When Buying Mobile Home At Bankruptcy Auction Now Faces Boot After Foreclosure Of Undisclosed 1st Mortgage

In Polk City, Florida, The Ledger reports:

  • When Sharon Little moved to Polk City in 2005 from International Falls, Minn., she went from the freezer into the fire — in more ways than one.

    Little, 60, was burned to the tune of about $40,000 in a convoluted 2010 real estate deal on a mobile home. She thought she was buying a mobile home and lot for $22,000. Instead she bought the home; property; and, unbeknownst to her, a $20,000 mortgage attached to it.
  • Little put about $18,000 into the home, mostly for improvements like new windows and doors, floor coverings and appliances. That figure includes about $1,600 for lawyers who tried to help her keep the place.

    "This place was a real dump when I bought it," Little said. Now, it's an appealing home by most any standard. "If I can save one person from going through what I've gone through, then doing this story is worth it," she said.

    Little has done everything she could to keep her home at 8926 Jericho Court in Polk City but now faces an April 6 eviction.

    The main culprit: When she bought her mobile home and property in a bankruptcy sale in 2010 for $22,000 she didn't realize the $20,000 mortgage was attached to it. Her bid included a $2,000 premium.

    Little didn't do a records search on the property or pay a company to do that, something that usually costs about $125, depending on the work required. "I'll never buy anything like this again for the rest of my life without doing a search," Little said.
  • When people mortgage a standard house they are required to buy title insurance. A title ­company searches the property for any encumbrances, and if it doesn't find any problems but one later surfaces, it becomes the responsibility of the title company, not the homebuyer.

    But mobile homes in Florida are treated like cars, not houses. The title to a mobile home comes from the state Department of Highway Safety and Motor Vehicles.
  • In 2010, she saw a woman leaving the vacant mobile home next door. Little said she asked the woman whether the house and property was for sale and was told it was in a bankruptcy proceeding.

    When she bid on it and won at an auction, Little got a quit-claim deed for the property but never got a title for the mobile home. The quit-claim deed contained warning — oft repeated at other points in Little's purchase process — that said: The property is "subject to all liens and encumbrances, if any."

    She said she had no clue what she'd really bought until four months after the auction when she tried to pay her 2010 property taxes but discovered they'd already been paid by Bank of America.

Outfit Suspected Of Running Loan Mod, Bankruptcy Petition-Preparing Racket Slammed With Bay State AG Civil Suit; Currently Also Faces Concurrent Disgorgement Proceedings Brought By U.S. Trustee

In Lawrence, Massachusetts, the Eagle Tribune reports:

  • As a last resort, Pinnacle Financial Consulting LLC advised their clients they needed to file bankruptcy petitions to save their homes.

    “When their loan modification efforts fail, sometimes just days before the distressed homeowner’s home is scheduled to be sold at foreclosure, defendants pressure distressed homeowners into paying defendants thousands of dollars to file bankruptcy on their behalf in order to delay the foreclosure sale,” according to a lawsuit the state Attorney General’s Office filed against the downtown business.

    But about a quarter of the bankruptcy cases prepared by Pinnacle Financial were defective, according to court records filed in connection with the complaint.

    “Defendants’ bankruptcy filings on behalf of consumers are often incomplete or consist of erroneous paperwork, ultimately resulting in the dismissal of the bankruptcy proceedings,” the lawsuit alleged.

    “The U.S. Bankruptcy Trustee of Region I, District of Massachusetts, has identified, and the Commonwealth is aware of, 107 bankruptcy cases initiated by Defendants, at least 27 of which had fundamental defects in the documents Defendants prepared and filed,” the complaint noted.

    In eight of those cases, the U.S. Trustee has initiated disgorgement proceedings against defendants for illegally-prepared bankruptcy petitions.
  • The Attorney General’s Office maintains in its lawsuit that Pinnacle’s solicitation and acceptance of advance fees for loan modification and preparation of bankruptcy petitions was illegal.

    A Suffolk County Superior Court judge recently issued a preliminary injunction which prohibits Pinnacle from soliciting or receiving any fees for loan modification services, bankruptcy petition preparation services and investment advising services.

Thursday, April 4, 2013

Failure To Cough Up $215K In Court-Ordered Homeowner Restitution In Civil Suit Leads To Short Jail Stay For Head Of Long Island Condo Conversion Outfit

From the Office of the New York Attorney General:

  • Attorney General Eric T. Schneiderman [] announced that Richard T. Mohring, Jr., the developer of the Cambridge Park Condominium on Long Island, was arrested on contempt of court charges for failing to pay $215,000 in restitution to the victims of his and his wife, Deborah Mohring’s fraud.

    [The] arrest by the Nassau County Sheriff’s Department comes after the Mohrings failed to abide by three separate court orders last year requiring them to make repairs to the Cambridge Park Condominium, at 711-725 Willis Avenue, Williston Park, New York.

    The Mohrings, who live and work in Glen Cove, developed and sold apartments in the Cambridge Park Condominium while promising purchasers that they would make repairs to a retaining wall on the property. That promise has festered for years and to this day the wall remains in danger of imminent collapse.

    “By their willful inaction and indifference, Richard and Deborah Mohring put the residents of the Cambridge Park Condominium in danger,” Attorney General Schneiderman said. “What's more, they have failed to pay the money they owe in open defiance of repeated court orders. This office will not stand by when property developers like the Mohrings cheat homebuyers, put their victims in physical danger and flout court orders.”

    Manhattan Supreme Court Justice Carol E. Huff signed warrants for the arrests of Richard Mohring, 58, and Deborah Mohring, 59, last month. Richard Morning, who was released after appearing before the judge, was ordered to make a payment of $50,000 [] or face re-arrest. The arrest warrant against his wife was also vacated pending that deadline.

    Attorney General Schneiderman filed a lawsuit in Manhattan Supreme Court against the Mohrings and their property development company, R & D Willis Avenue, LLC, in March 2011 and established in court that the business partners pocketed the proceeds of the apartment sales while failing to repair the retaining wall.

    They also failed to obtain necessary certificates of occupancy for nearly half of the apartments in the condominium, rendering many of them illegal to occupy or rent and virtually impossible to resell.

    The Mohrings ignored subsequent court orders to remedy the established fraud and Richard Mohring even filed for bankruptcy in an attempt to get around paying restitution. That filing was dismissed by a federal judge last fall for failure to make all required submissions.
For the press release, see A.G. Schneiderman Announces Arrest Of Long Island Condo Developer For Contempt Of Court (Richard T. Mohrning, Jr. Is Arrested On Long Island after Defying Repeated Court Orders to Pay $215,000 In Restitution; Schneiderman: This Developer Was Arrested For Indifference To The Safety Of His Victims And the Law, Is Still Required to Pay What He Owes).

For an earlier story, see The Real Deal: Court to L.I. developer: pay $215K or go to jail (Condo units lacked certificate of occupancy, retaining wall in danger of collapse):
  • A state Supreme Court judge [...] ordered the developers of Cambridge Park Condominium in Williston Park, N.Y., to pay $215,000 within 72 hours for failing to fix a crumbling retaining wall at the 37-unit complex or face up to five days in jail, The Real Deal has learned.

    Judge Manuel Mendez ordered the developers, Richard and Deborah Mohring, to pay the funds after state Attorney General Eric Schneiderman sued the pair for fraud and misrepresentation.

    The Mohrings, who operate a company called Mohring & Sons Enterprises in Sea Cliff, N.Y., sold all 37 units at the complex, a conversion of two former rental buildings at 711-725 Willis Avenue, but pocketed all the proceeds and reneged on numerous promises to fix defective construction at the complex, according to the State Attorney General’s office.

Hawaii Regulator Clips Loan Modification Outfit For $10K In Civil Penalties, Orders Full Refunds To Homeowners For Collecting Upfront Fees, Failing To Deliver Promised Services

From the State of Hawaii Department of Commerce and Consumer Affairs:

  • The State Department of Commerce and Consumer Affair's ("DCCA") Office of Consumer Protection ("OCP") [...] obtained a judgment against Sean Keala Remos ("Remos") and Loan Network Honolulu LLC fka LoanNetwork Honolulu LLC ("Loan Network").

    The judgment prohibits Remos and Loan Network from violating Hawaii’s consumer protection laws, requires them to pay back consumers and imposes civil penalties of $10,000.

    OCP's lawsuit alleged that Remos acted as distressed property consultant and promised to help distressed homeowners obtain loan modifications. He collected up-front fees from the homeowners and failed to get loan modifications or provide refunds.

Crackpot Invokes Sovereign Citizen Defense After Being Pinched For Allegedly Using Bogus Docs To Hijack Vacant 12-Bedroom Mansion Currently Up For Sale By Out-Of-Town Homeowner

In Bethesda, Maryland, The Washington Post reports:

  • Like many people excited about a new home, Lamont Butler invited friends over to check his out. He had a lot to show them. The Bethesda mansion is among the largest in the region and featured floors of imported marble, 12 bedroom suites, six kitchens and a history of playing host to political gatherings, including ones during which Bill Clinton and Al Gore helped plant trees out back.

    But the personable 28-year-old, known to wear a red fez, didn’t own the mansion; he had simply slipped inside and claimed it.

    Taking part in an odd and perplexing phenomenon popping up in cities across the country, Butler said the Bethesda mansion belonged to him because he is a Moorish American National. He’d drawn up paperwork that he said proved it all, with references to a 1787 peace treaty and the Vienna Convention on Consular Relations.

    When a man broke into an unoccupied six million dollar Bethesda mansion and claimed it on behalf of “Moorish Nation,” realtors and police alike were confused by the bizarre sequence of events.

    Montgomery County police call Butler’s stay in the mansion, which lasted only a few hours, something entirely different from a legitimate claim: breaking and entering, fraud and attempted theft. They say it is one of the most audacious local cases in what law enforcement officers called a growing national trend where self-described “sovereign” nationals try to move into homes they don’t own.

    This month in Memphis, a woman saying she was a Moorish American was evicted after a SWAT team moved in on a 9,000-square-foot mansion she said she owned. Tabitha Gentry was charged with trespassing and burglary, but in court she denied the legitimacy of the charges, repeatedly interrupted the judge and invoked her sovereign rights.

    Similar cases have occurred around the nation, where sovereign nationals have slipped into empty houses, sometimes going unnoticed for a week or two, authorities say.

    “It’s going on in every state,” said Kory Flowers, an investigator with the Greensboro, N.C., police and a national expert on sovereign groups.
  • Rashid Chaudary wasn’t thinking about sovereigns in 1995 when he moved into his new Bethesda home, which was worthy of the most lavish Washington occasions. The cosmetics company millionaire’s guests mingled on two levels. On warm nights, they could walk onto a series of limestone terraces with sweeping views of a hillside of trees.

    Several years ago, after Chaudary’s children were old enough to leave home, he and his wife moved to Chicago, where his company, Raani Corp., is based. They put the mansion on the market. “If only a palace will do,” one of the online real-state listings said, “this is your home.”

    It was a well-publicized target for Butler, a resident of Charles County who by last year was calling himself Lamont Maurice El, police say. Butler appeared in court last week, where he said that the charges against him are only allegations and that he is not a criminal. He also invoked his status as a Moorish national.

    “I only have one free national name. That is Lamont Maurice El,” he said.

    District Judge Eugene Wolfe ordered Butler held on $20,000 bond, which Butler posted shortly after the court hearing. He was released last week.

Wednesday, April 3, 2013

Guilty Verdict For Final Two Defendants In Ponzi Scheme That Duped Victims Into Refinancing Homes, Drawing Down Retirement Savings For Fraudulent Investments; Racket Pushed 201 Homes Into Foreclosure

In Riverside County, California, The Press Enterprise reports:

  • Six years ago, Anna Richter stood shoulder-to-shoulder with 40 people at a busy Temecula intersection to chide law enforcement and call attention to a Ponzi scheme that had shattered their lives.

    Homes had been lost. Savings depleted. Reputations ruined.

    A civil racketeering case was brewing against the culprits of a real estate and currency exchange scheme that was taking place in California, Arizona, Texas, Washington, Oregon, Arkansas and on federal military lands.

    The FBI, Securities and Exchange Commission, Riverside County investigators and prosecutors in several states were probing the alleged pyramid-styled investment scam. But the protesters were getting anxious. They said evidence was being destroyed.

    Standing outside The Promenade mall clad in orange T-shirts in May 2007, the families revealed the profit-making scheme and labyrinth of shell companies that James Benjamin Duncan, Hendrix Montecastro, Christopher Oetting and Maurice McLeod ran with other co-conspirators to entice hundreds of “core clients” to refinance their homes, draw down retirement and other savings and max out credit cards for fraudulent investments on houses, hospitals, diamonds and dinar, the Iraqi currency.

    By the time the dust settled on the $142 million real estate and securities fraud case, investigators said 201 homes in Riverside County were pushed into foreclosure. Duped investors across the West were sent into financial ruin.

    “It seems like an old, bad nightmare,’’ Richter said. “We came out of it beaten and bruised.”

    Montecastro and his mother, Helen Pedrino, were found guilty March 25 of hundreds of felony crimes for their role in the mortgage and securities investment scam.

    Richter said she will not feel total vindication until she sees the last two of seven convicted co-conspirators behind bars for a long, long time. Together, prison sentences for the son and his mother could exceed 130 years.


    Montecastro, 40, of Maryland, was convicted of 304 counts that included grand theft, destruction of evidence and felony fraud against 26 of 27 named victims — with asset losses totaling $3.6 million, Riverside County Chief Deputy District Attorney Vicki Hightower said.

    He faces a prison sentence of more than 100 years.

    Pedrino, 61, of Murrieta, was found guilty of 54 felonies based on her recruitment of five victim investors. She faces a sentence of more than 30 years, Hightower said. The two, who have been jailed since the verdicts were read, face a bail hearing Tuesday, April 2. Sentencing is set for April 22.

    Duncan, the mastermind who struck a plea agreement with the state and testified against Montecastro and Pedrino, is also expected to be sentenced in April, along with McLeod, another top lieutenant in the Ponzi scheme.

    Oetting, another admitted swindler, hanged himself Feb. 16, 2010, at his home on Sagewood Drive in Palm Desert. Months before, he admitted to money laundering, conspiracy and four counts of filing false tax returns and awaited sentencing while free on $225,000 bond.

    The others — Charlie Choi, Cindy Kelly and Thuan Nhan Du — are on probation after pleading guilty to selling securities without a license.

St. Louis Feds: Suspect Fraudulently Offered To Broker REO Sales & Financing, Pocketed Customer Deposits, Never Closed Any Deals

In St. Charles, Missouri, the Suburban Journals reports:

  • A federal grand jury has indicted a St. Charles woman on fraud charges for a Ponzi-style scheme related to the purchase or sale of real estate.

    Daniela Spiridon, 41, faces six felony counts of wire fraud, each of which is punishable by a maximum of 20 years in prison and a fine of up to $250,000. She also could be required to forfeit money and property derived from the illegal activity.

    The March 13 indictment alleges Spiridon never completed a purchase or obtained bank financing for the purchasers, but deposited their escrow monies into her own accounts, according to a news release from the U.S. Attorney's Office, Eastern District of Missouri.

    According to the indictment, Spiridon was affiliated with several businesses from an office in Chesterfield, which included A & AD Investments LLC, CDRS ESC Investments, Sentrix Loan Production Office and others. Spiridon is accused of fraudulently offering to broker purchases or arrange for financing to assist buyers in the purchase of properties acquired by lenders through foreclosure and held in inventory.

    She allegedly had potential buyers place deposits that were to have been put into an escrow account, but instead put the monies in a non-escrow account in one of her own companies. She often used buyers’ funds for personal expenses and to reimburse other buyers who demanded return of their funds, the indictment alleges.

Failed Foreclosure Fraud Settlement Continues The Nightmare For Victimized Homeowners

eCreditDaily reports:

  • The much-anticipated notices from Rust Consulting — the bank regulators’ paying agent — was suppose to clear up how much compensation wronged foreclosure victims would get for actions taken three to four years ago.

    They were mailed out over the last few days to 4.2 million borrowers and have by now reached “infamous postcard” status, as one recipient put it. Many were expecting payment instead of a postcard.

    In a string of sometimes emotional comments to eCreditDaily, many of these borrowers who are eligible for payouts wrote of disappointment, frustration and anger caused by lender actions over the past four years or so.

    And now they are feeling victimized again from further delays by regulators in providing more information and rightful closure to a long nightmare.

    The cards that arrived in the mail this week offered few details and informed eligible buyers of another wait of four to eight weeks for getting payouts, more details or more paperwork to fill out. No one knows for sure.

Tuesday, April 2, 2013

Atlanta-Area "Super Lien" Rackets Openly Use Collusion, 'Quiet Auctions' In Connection With Tax Foreclosure Auctions To Wrestle Away Homes, Accumulated Equity From Hapless Homeowners Behind On R/E Taxes

In Atlanta, Georgia, The Atlanta Journal Constitution reports:

  • Using a loophole in Georgia’s foreclosure laws, savvy investors are snatching houses away from taxpayers who get behind on bills, short-circuiting legal safeguards designed to help them keep their homes.

    It’s done by putting claims against properties that are so swift and powerful they’re called “super liens.

    In the worst circumstances, investors can obtain a home for a fraction of its value. A super lien can leave homeowners with nothing, even if they had substantial equity.

    Several Atlanta law firms working on behalf of investors have taken advantage of the loophole in recent years to put claims against hundreds of properties, an investigation by The Atlanta Journal-Constitution has found.

    “This whole thing is a big racket,” said Richard Rowan, who has filed for bankruptcy to keep from losing his Buckhead home to a roughly $80,000 super lien, created after his mother died and he fell more than $40,000 behind on taxes.

    “These people need to be stopped,” he said. “This is just not right.”

    The practice is legal, as established by a series of state Supreme Court and Appeals Court decisions between 2003 and 2010. But critics say super liens can be used to exploit homeowners who may not understand Georgia’s dizzying tax foreclosure process — particularly the sick and the elderly.

    It’s basically a hijack lien,” said Hugh Wood, a real estate attorney who defended clients from super liens in five separate incidents. “(Investors) can structure the super lien in a way that it’s impossible to get your property back.”

    Attorneys who deal in super liens defend the process, saying delinquent taxpayers can always get their properties back, so long as they come up with the overdue taxes and penalties — the same as in any case where a house gets sold at tax auction.

    However, that argument sidesteps some major risks to homeowners. With super liens, they may face much higher costs to reclaim their property following a tax auction, and they have less time to act.

    That’s because the winning bidder at the tax auction, if they’re working in tandem with someone holding a second lien, can place much higher bids, knowing they’ll be reimbursed later. The higher the bid price, the higher the penalty a homeowner must pay the winning bidder to recover the property.

    And instead of having a year to come up with the money to get the property back, that homeowner’s right of redemption can be cut short. The second lien holder can step ahead of the property owner, redeem the property and proceed to foreclosure.

    Atlanta attorney Robert Proctor is credited with coining the term “super lien” in a 2003 lawsuit. Of the Atlanta lawyers working on behalf of investors in the super lien business, only Proctor would speak publicly about the issue. He identified others as John “Buddy” Ramsey and attorneys with the law firms Clark Caskey; Ayoub & Mansour and Weissman; and Nowack, Curry & Wilco.

    Proctor conceded that super liens do shorten the time property owners have to pay back a debt. But he contends that super liens ultimately do not harm property owners, but only speed up the process of obtaining the property or resolving the debt. Otherwise, he said, delinquents get to live in their house for a year for free.

    “What’s your ideal situation?” Proctor said. “Don’t collect taxes?”

    He also said homeowners have additional protections they wouldn’t have in a typical foreclosure by a mortgage company because super liens require judicial foreclosures and approval of a Superior Court judge.

    “Any sale conducted as a result of the foreclosure of the super-lien is conducted by the sheriff. And the sale must then be confirmed by the judge. This is a lot more due process than ordinary mortgage foreclosure in Georgia,” he said in an email.

    Super liens involve such a complicated legal process, though, that many judges may not fully recognize the potential for abuse.

    In some cases, lawyers representing the super lien holder have persuaded judges to allow them, rather than the sheriff’s office, to conduct foreclosure auctions. Then, they may hold the auction quietly on the courthouse steps while no one is listening, assuring no one else bids and they can pay bottom dollar.

    Proctor said he has never done that, but he knows some lawyers that have. He said he has admonished them to stop. Still, he says such quiet auctions are rare. Ninety percent of foreclosure auctions go for 70 to 80 percent of the value of the property, Proctor said.


    But that slice that goes on the cheap can create fat profits at the expense of homeowners and mortgage holders.

    That’s because super lien holders also can take away homeowners’ and mortgage companies’ ability to preserve some part of their investment when a property gets auctioned to pay back taxes.

    Normally, if the property owner can’t pay and wants to walk away from the property, that owner gets the excess funds — the difference between the tax debt and the auction price. Or, if the owner has an outstanding mortgage, the bank can claim that money.

    But with a super lien, the holder yanks away excess funds along with the right to redeem. “This is an issue that doesn’t get a lot of attention,” said Joe Brannen, president of the Georgia Bankers Association. “But if you’re hit with it – man!”

    Losers in super liens often don’t know what hit them. Susan Dilbeck is still trying to understand what happened with her home.

    She owed about $4,000 in taxes and penalties on her Cobb County home and several hundred dollars in homeowners’ association fees. For that, the 66-year-old was threatened with the loss of a house valued at almost $222,000, even though she has no mortgage on it.

    She fell behind on taxes after suffering from an autoimmune disease that required chemotherapy. She had no insurance and the treatment cleaned out her savings. She said she has struggled with her health since then.

    In 2007, a company called American Lien Fund bought her property at tax auction for $185,000. Then another company called Cornett Consulting acquired a homeowners association lien, redeemed the property and claimed $177,000 in excess funds.

    “I have no idea what’s going on,” Dilbeck said. “I don’t know today what is going to happen, but no matter what the outcome, it can’t be favorable to me.”

    Dilbeck is fighting back in court. During the litigation American Lien Fund transferred its interest in the tax deed to a company called ALF Holdings, and Cornett transferred its interest in the homeowners’ association lien to another company, Tax Relief Investments. That company had the sheriff auction the home. The winning bidder has tried to have her evicted.

    Dilbeck’s lawsuit claims defendants conspired to seize her house. The defendants deny that.

    Eric Reaves, of Tax Relief Investments, said he and other defendants now want to undo the super lien and walk away. But Dilbeck is seeking punitive damages, attorney fees and other costs, Reaves said.

    “I would love for this to be over without more legal expenses flying,” he said. Reaves said he’ll advise his company not to invest in any more tax deeds because “they’re dangerous.”

    Lawrence Forester, a defendant and the registered agent of four companies involved in the case, said he got into the super lien business to help people keep their homes. Ideally, he said, homeowners can be put on payment plans to pay off the companies or a bank can roll the debt into the homeowner’s mortgage.

    “I’m an honest person,” Forester said of the lawsuit, which accuses him and others of “unrelenting predatory conduct” toward a sick woman. “I’m not the type of person who would do that.”

    Dilbeck said she just wants to clean up the title mess so she can move on. Her attorney, Frank X. Moore, said that if the investors hadn’t targeted her home, she could have sold it, paid off her debts and lived comfortably off Social Security and a sizable nest egg.

    Dan Davis, executive director of the Georgia Association of Tax Officials, said what happened to her is wrong. “They’ve essentially tied her hands,” he said. “Being a delinquent taxpayer doesn’t put in her the best light, but they shouldn’t steal her property.”


    Because super liens can be lucrative, some companies seek out partners for a coordinated tax deed purchase and redemption, the bankers association says.

    One company buys the property at the tax auction. The other has already sought out any lien they can buy — even a $50 judgment lien from a lawn care service company will do — to trigger the super lien.

    In more than 55 super lien cases in 2011 and 2012 in Fulton and Gwinnett counties, the AJC found three companies repeatedly involved on each. In many cases, Vesta Holdings — the largest purchaser of tax liens in the two counties — put properties up for tax auction. SPGA Acquisitions LLC won the properties, and Myriad Asset Management obtained super liens on them.

    Rowan’s house was among them. He said that after his mother died in a car wreck, he began having personal and health problems and stopped working. He said he probably couldn’t have come up with the taxes, but were it not for the super lien, he could have sold the house and used the proceeds to settle the bills.

    Rowan said he has long suspected the companies were working together. “It’s just too slick of a move,” he said. “Once you get behind, things tend to escalate, and you can’t catch up.”

    Ramsey — an executive with Vesta — has represented both SPGA Acquisitions and Myriad Asset Management. But Proctor, a long-time Vesta attorney, said those two companies have a new attorney now.

    The two companies, through their current attorney, declined to comment.

    Even if companies do work in tandem, Proctor sees no problems with that. “So what? What difference does it make?” he said.(1)

    Wood, who has tangled with companies in the super lien business, said the difference is that Vesta has the opportunity to work with other companies because it has an inventory of thousands of tax liens purchased from county governments.

    When it has a bundle of liens against one property, it can peel off one and sell it, Wood said. The buyer then can use that lien to quickly pull properties out from under homeowners.

    Vesta itself, Proctor said in an email, has never acquired a super lien.


    Fulton and to some extent Gwinnett counties have become ground zero for super liens. That’s because their tax commissioners, by their practice of selling liens, create more opportunities.

    But Fulton County Tax Commissioner Arthur Ferdinand disagrees with the court decision that created the concept of super liens.

    “Our office would certainly support any action taken by the Georgia General Assembly that would ensure that there is no negative impact on the property owner due to the ‘super lien,’” Ferdinand said in an email to the AJC.

    However, attempts by lawmakers to address super liens have failed to gain traction, and no bills dealing with the sale of municipal tax liens passed in the recent session. State Rep. Wendell Willard, R-Sandy Springs, had planned to introduce legislation cracking down on lien sales to third-party collectors. But he abandoned that effort, saying he couldn’t find the right bill to add the language to.

    Willard said he’s aware that super liens may force mortgage holders to pay exorbitant amounts to save their investments. But any legislative fix, he said, will have to wait until next year.

    Gwinnett County Tax Commissioner Richard Steele has taken action of his own. He said he first became aware of the super lien risk late last year. It’s one reason he said he decided to stop selling liens on houses with homestead exemptions. Otherwise, he said, homeowners in tough times are wide open to super liens.

    “I don’t know of anything right now,” he said, “that would stop that from happening to a homeowner who is living in their home and wants to keep their home, but just gets behind on their taxes and payments.”
For the story, see Super liens a super risk to homeowners.

(1) It is difficult to believe that the blatant ripoff being perpetrated here does not constitute, what the U.S. Justice Department's 'Antitrust Feds' would describe as, a collusive scheme between/among real estate investors aimed at eliminating competition at real estate foreclosure auctions in violation of the Sherman Act.

Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s Atlanta Field Office at 404-331-7100 or visit

Another Bankster Tagged By WV Non-Profit In Suit For Allegedly Screwing Over Homeowner With Unauthorized, Illegal Fees Clipped When Servicing Mortgage

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

  • A couple are suing U.S. Bank National Association after they claim it violated their mortgage contract.

    The defendant repeatedly misrepresented amounts due on John and Esther Stitt’s account and assessed a variety of illegal fees to the account, according to a complaint filed March 14 in Kanawha Circuit Court.

    The Stitts claim the defendant also refused to credit payments on the account by either returning payments or placing the payments in suspense. Rather than provide the Stitts with any assistance, the defendant ultimately chose to pursue foreclosure, in violation of their mortgage contract, according to the suit.
  • The Stitts claim during the course of servicing the loan, the defendant assessed unauthorized and illegal fees to their account and added fees that were never agreed to. U.S. Bank National Association breached its contract with the Stitts, according to the suit.

    The Stitts are seeking actual damages and civil penalties. They are being represented by Daniel T. Lattanzi, Jennifer Wagner and Bren J. Pomponio of Mountain State Justice Inc.(1)
For more, see U.S. Bank National Association accused of violating mortgage contract.

(1) Mountain State Justice, Inc. is a non-profit public interest law office dedicated to pursuing litigation focusing primarily on combating predatory lending and abusive debt collection techniques on behalf of low-income West Virginians, and which provides free legal services in its areas of practice to qualifying individuals.

See Despite Jury's Actual Damage Award Of $0, Booted WV Homeowner Walks Away With $32K In Inflation-Adjusted Civil Penalties, $30K In Attorney Fees Anyway In Connection With Foreclosing Lender's Unlawful Debt Collection Practices for a post on a recent West Virginia Supreme Court of Appeals case in which Mountain State Justice scored a win for another screwed over homeowner.

Living On $641/Month, Another Senior Citizen Gets Stung By Signing Over R/E Paperwork She Didn't Understand; Elderly Homeowner's Attorney: Education, Bad Eyesight Kept My Client From Understanding Details Of Reverse Mortgage

In Austin, Texas, the Austin American Statesman reports:

  • Aron Ezilla Ridge, 74, who has myriad health problems and is living on a monthly $641 check from Social Security, might lose the home she’s owned since 1968 if a mortgage company gets its way.

    James B. Nutter & Co., a Kansas City firm that approved a reverse mortgage for Ridge in 2007, has filed suit to foreclose on her small house on Webberville Road in East Austin for unpaid property taxes, according to court records. Ridge’s attorney, Nan Hazel of the George Brothers Kincaid & Horton, an Austin law firm that is representing her for free, says Ridge’s 2012 taxes were $49, and she has a receipt proving payment.

    James Madson, a vice president for James B. Nutter, however, says the wording in the suit is an error and that the real reason for seeking foreclosure has to do with Ridge not insuring the home for four to five years. The firm has been paying the insurance all this time. A Houston law firm representing Nutter erred in listing unpaid property taxes as the reason for foreclosure. “We are going to refile and list insurance as the reason,” Madson said.

    It doesn’t matter to Hazel that the mortgage company will make the change. “Miss Ridge didn’t understand the paperwork she signed,” Hazel said. “They knew that a woman of her education and bad eyesight would not be able to understand the details.”

    Ridge is distraught. “It’s my home. I worked very hard for many years, and I finished paying for it in 1995 despite my heart attacks and cancer and my diabetes,” she said.

    Ridge was served foreclosure documents in February and had 30 days to respond. Her niece, Brenda Files, found Hazel through Volunteer Legal Services.(1) “This just isn’t right,” said Hazel.

    Files blames the mortgage company from the time the reverse mortgage was approved in 2007. “They sent someone to her house to read her the papers to sign. She does not understand things too well. They saw how she was. They should have asked Auntie if there was a family member they could call to help her understand,” she said.

    Ridge said she approached the Nutter company about a reverse mortgage. Her home was paid for but she didn’t have any money to fix it. “I needed a new roof and repairs to my kitchen because it was dangerous to get around,” she said. She uses a wheelchair and is mostly homebound.

    Hazel said the mortgage company gave Ridge a lump sum of about $39,000. Ridge understood that she could remain in the home as long as it was her permanent residence. If she ever got too sick to live at home, a family member could purchase the house for the loan amount and value, about $66,000.
For more, see Mortgage Company Tried to Take Home of 75-Year-Old Blind Woman Over $49 She Already Paid (The company now claims that was an error, and is now filing for a different reason).

(1) Volunteer Legal Services of Central Texas helps low-income clients access the civil justice system by providing volunteer attorneys who donate free legal advice and representation, and by supporting and training those attorneys. .

Real Estate Operator Allegedly Dupes Dementia-Stricken 88-Year Old Woman Into Handing Over Deed To Home For $5K; Made Surprise Visits To Nursing Facility To Bulldoze Unwitting Victim Into Signing Paperwork: Daughter

In Charlotte, North Carolina, WCNC-TV reports:

  • This story begins on 515 Ideal Way in Dilworth.

    Last June, the property was in foreclosure and the house and two lots were set to be auctioned off. Seven bids were made, the highest bid being $48,358, according to court records.

    But none of the bidders got this house, instead, the house was reportedly acquired for just $5,000 by a company called Home Appeal, LLC which state records show is run by Laura Shields.
  • Pat Rader is sitting next to her mom, 88-year-old Mabel Bobo, who used to own the small quaint home on Ideal Way in Dilworth and did so for 56 years. Mabel told NBC Charlotte that the house holds “memories on top of memories, I could write a book, I could. I raised three kids there.”

    Mabel had taken out a loan some years ago and had tied it to the house, and when the loan wasn’t repaid, foreclosure proceedings began. Mabel wasn’t aware of the foreclosure because she has dementia, as we saw during this interview at the nursing home where she now lives.
  • It’s sad, and it’s hard for her children to watch their mother slowly slip away, which brings us back to Laura Shields and her company called Home Appeal.

    According to Mabel, and the mobile notary that was there, Laura Shields, an investor, made surprise visits to her room inside this nursing home last summer. And, during those visits, Mabel was asked to sign over the deed to her small home in Dilworth.

    Mabel’s family didn’t know, the nursing home didn’t know and even Mabel didn’t know. Mabel says she repeatedly told Shields “I’ll tell you what, you back off and leave me alone!”

    Patricia Rader, Mabel’s daughter is appalled saying “to come in to someone who is almost 90-years-old and shove a piece of paper in front of them, and do it repeatedly until she was so tired of seeing them, she signed it to get rid of them!

    The NBC Charlotte I-Team showed Mabel a copy of the deed she signed for those strangers while she was lying in her bed, but her blank look, was just that, blank. NBC Charlotte asked Mabel “Is that your signature?” Mabel takes a good look at the paper, her hands shaking as she holds it and looks up and replies “Yes, but I don’t remember signing it.”

    Sitting next to Mabel, her daughter Patricia says as she wipes her eyes, “That’s why I’m crying, cause they did this to my mom.”

    The I-Team and attorneys at the Surane Law firm are now fighting to get the home back as doctors say Mabel wasn’t in any mental condition to sign the house and two lots away in the first place.

    The property resale value of Mabel’s house in Dilworth is over $200,000.

    NBC Charlotte’s I-Team learned from the Bobo family that Laura Shields and her attorney asked for a legal mediation of the disputed real estate transaction.

    Mabel's family says a lawyer for Laura Shields told them during the mediation that Mabel was paid $5,000 for her house when she signed the deed in her bed in the nursing home, and that they have an undated check stub to prove it. But Mabel doesn’t have bank accounts anymore and her family says they never received a dime.

    NBC Charlotte has learned that Shields offered the Bobo family $5,000 for the property (so she doesn’t lose her buyer) beyond what she says she originally paid for it. We’re told by the Bobo family that they rejected the offer.

    NBC Charlotte confronted Laura Shields with a camera and microphone as she got off the elevator following the mediation.

    We had a variety of questions for her including “do you make it a routine practice to go into nursing homes an acquire property like that?” We got no answer.

    We asked “how would you feel if someone did that to your mom, would you be OK with that?” We got no answer. We asked “how did you even know she was in that nursing home?” We got no answer.

    Finally, we asked “do you feel you owe the Bobos any type of explanation?” We got no answer.
    Shields walked in silence to her Audi, got in, slammed the door and drove away.

    Laura Shields may own Mabel’s house at the moment, but she can’t do anything with it.

    The Surane Law firm filed for, and got, a temporary restraining order that now blocks any sale or any future development for the moment.

Monday, April 1, 2013

Georgia Supremes: Legal Malpractice Claim Against R/E Closing Attorney May Be Assignable To Title Insurer Where Lawyer's Employee Snatched $500K+ In Escrow Cash & Closes Bank Account

From US Law:

  • In 2007, Appellant Derick Villanueva acted as the closing attorney for a mortgage-refinance transaction in which Homecomings Financial, LLC served as the lender supplying funds to pay off earlier mortgages on the secured property.

    Appellee First American Title Insurance Company issued title insurance on the transaction. Pursuant to Villanueva’s instructions, Homecomings wired funds into a specified escrow account.

    However, the funds were not used to pay off the earlier mortgages; instead, the funds were withdrawn and the account closed by a person not a lawyer.(1)

    First American paid off the earlier mortgages(2) and, pursuant to its closing protection letter to Homecomings, became "subrogated to all rights and remedies [Homecomings] would have had against any person or property…."

    First American then filed this lawsuit against appellants, the estate of another attorney, the escrow account, the non-lawyer who withdrew the funds from the escrow account, and others, seeking damages for legal malpractice and breach of a contract with Homecomings.

    The trial court denied summary judgment to appellants. The issue before the Supreme Court was whether a legal malpractice claims were not per se unassignable.

    After studying the issue, the Court agreed with the appellate court that legal malpractice claims are not per se unassignable.
Source: Opinion Summary - Villanueva v. First American Title Ins. Co.

For the ruling, see Villanueva v. First American Title Ins. Co., S12G0484 (March 18, 2013).

(1) The non-lawyer, one Neal Allen, who had been made a signatory on the escrow account by Villanueva's law partner George Moss, withdrew more than $500,000. At the time, close to $800,000 was still owed on the homeowner-client's existing mortgages that were being refinanced. Shortly before the withdrawal, Allen had made some payments on the homeowner-client's existing mortgages in an apparent attempt to hide the shortage in the escrow account. See Villanueva v. First American Title Ins. Co., 721 SE 2d 150 (Ga. App. 2011).

(2) Ibid.

Judge Kiboshes Proposed Settlement In Class Action Alleging Bankster Jerked Around Homeowners In Foreclosure; Wonders Whether Deal Will Keep Many From Recovering Their Losses

In San Francisco, California, Law360 reports:

  • A California federal judge again refused [] to approve a proposed settlement between Wells Fargo Bank NA and a class of 28,000 homeowners who say the bank sent them deceptive foreclosure-delay offers, arguing the deal could keep many plaintiffs from recouping their losses.

    U.S. Magistrate Judge Joseph Spero kicked the preliminary settlement back to the parties' attorneys, demanding details on how many class members are likely to make claims against the settlement fund, which is capped at $500,000 under California law.
For more, see Wells Fargo Must Show Foreclosure Deal Is Fair, Judge Says (requires subscription).

Home Loan Borrower Prohibited From Exercising TILA Rescission Rights Despite Unexpired 3-Year Time Limit Where Earlier-Obtained Foreclosure Judgment Becomes Final

From US Law:

  • Plaintiffs granted Eastern Savings Bank, FSB (Eastern) a mortgage on property as security for a loan. Plaintiffs defaulted on the loan, and Eastern filed an action to foreclose the mortgage.

    The circuit court foreclosed on the mortgage, and a public auction was held to sell the property.

    Eastern purchased the property and filed a motion for confirmation of sale.

    Plaintiffs subsequently filed a complaint in the U.S. district court seeking a declaratory judgment that the promissory note and mortgage had been timely cancelled pursuant to the federal Trust-in-Lending Act (TILA).

    The circuit court took judicial notice of Plaintiffs' pending federal case but declined to stay confirmation of the foreclosure sale in the meantime.

    Thereafter, the circuit court concluded Plaintiffs' pending TILA case did not bar confirmation of the sale of the property, confirmed the sale of the property to Eastern, and entered a deficiency judgment against Plaintiffs.

    The Supreme Court affirmed, holding that res judicata principles prohibit a debtor from asserting TILA rescission rights after a foreclosure judgment has become final, despite the rescission attempt being held within the time limit provided by TILA.(1)
Source: Opinion Summary - Eastern Savings Bank, FSB v. Esteban.

For the ruling, see Eastern Savings Bank, FSB v. Esteban, SCAP-30686 (March 15, 2013).

(1) A portion of the court's reasoning follows:
  • [T]he party asserting claim preclusion has the burden of establishing that (1) there was a final judgment on the merits, (2) both parties are the same or in privity with the parties in the original suit, and (3) the claim presented in the action in question is identical to the one decided in the original suit, or to a claim or defense that might have been properly litigated in the first action but was not litigated or decidedBremer, 104 Hawai'i at 54, 85 P.3d at 161.

    Applying these requirements to the facts at hand, we conclude that the Estebans’ TILA rescission claims are barred by res judicata principles.

    First, under Hawai'i law, there was a final judgment on the merits when the time to appeal the Foreclosure Judgment expired. See Glover, Ltd. v. Fong, 42 Haw. 560, 574 (1958).10 Moreover, under Hawai'i law, res judicata principles apply to default judgments. Fuller v. Pac. Med. Collections, Inc., 78 Hawai'i 213, 219, 891 P.2d 300, 306 (App. 1995).

    Second, both the Estebans and Eastern were parties to the prior foreclosure proceeding.

    Third, a TILA rescission claim would have been properly litigated in the foreclosure action, whether as a counterclaim or as an affirmative defense.

FHFA Proposal To Kill Force-Placed Insurance Ripoff As To GSE-Owned/Insured Home Loans; Regulator Backpeddles From Earlier Move Kiboshing Fannie's Plan That Would Have Yielded 30%+ Savings

American Banker reports:

  • The Federal Housing Finance Agency has proposed banning force-placed insurance commissions in a blow to banks and other mortgage servicers.

    The regulator's move was first reported by the Wall Street Journal. It will prevent banks servicing loans owned or insured by Fannie Mae and Freddie Mac from receiving payments from force-placed insurers. Ultimately the cost of force-placed premiums — including commissions paid to banks — is passed on to homeowners or investors, including Fannie and Freddie.

    For the GSEs to end up paying for servicer commissions, which regularly run between 10-15%, runs "contrary to prudent business practice" and "expose the Enterprises to potential losses as well as litigation and reputation risks," the agency wrote in a notice published in the federal register. "While FHFA plans a broader review of issues relating to the market for lender placed insurance, that includes receiving input from government and private sector parties, the practices that are addressed here are considered sufficiently distinct as to merit early action."

    The FHFA announcement comes less than two months after the FHFA, conservator for the government sponsored mortgage entities, told mortgage trade groups that it was killing a Fannie Mae plan to ban servicers from receiving commissions and lower force-placed costs by purchasing coverage directly from underwriters. Fannie's proposal would have produced savings for borrowers and the GSE in excess of 30%, according to proposal documents obtained by American Banker.

    The FHFA's February decision to block Fannie's plan was widely interpreted as a victory for banks by consumer advocates, industry sources and others. The regulator's new move to bar commissions was thus unexpected and caught even Fannie Mae officials off guard, sources familiar with it say.

Sunday, March 31, 2013

Outfit Using 'Dubious Deeds' To Snatch Vacant Homes In Foreclosure & Rent Them Out Runs Wild In Miami; Cops To Two Complaining Homeowners: Take A Hike, No Crime Here - It's A Civil Matter!

In Miami, Florida, the Miami Herald reports:

  • Scavenging the remnants of South Florida’s housing crisis, a partnership called Presscott Rosche appeared to gobble up almost three dozen foreclosed homes in Miami-Dade County last year. The company is currently listed as the owner of 12 homes worth about $3.5 million, according to the Miami-Dade property appraiser.

    But this seemingly thriving business is, in many ways, an illusion. The name of the company’s agent listed in state records is fake. So are many of the deeds the company has filed in Miami-Dade Circuit Court to stake its claim to more than 30 houses and condos, a Miami Herald investigation has found.

    The company has gained control of these homes — renting them out to unsuspecting tenants, in some cases — by filing dubious deeds and documents filled with legal-sounding jargon and shoddy punctuation. The author of many of these documents calls himself an “attorney in fact,” though he is not, in fact, a licensed attorney in Florida.

    “I never saw anything like that. It wasn’t even spelled right,” said Shelley Hallen, an actual attorney who beat back Presscott Rosche’s efforts to evict four college students from a Coral Gables house last fall.

    “They’re brazen,” said Frank Lopez, who says he found three people from Presscott Rosche inside a $700,000 Kendall house he owns. “They forged my signature, forged my wife’s signature.”

    Despite complaints about the company, Presscott Rosche has managed to vex police and prosecutors: A Presscott Rosche associate was arrested for burglary in November for allegedly breaking into a vacant home, yet Miami-Dade prosecutors dropped the case, saying they couldn’t prove the man didn’t have permission to use the house.

    Miami-Dade police detectives are continuing to investigate the company for possible fraud, The Herald has learned. Presscott Rosche representatives declined to comment or could not be reached.

    Presscott Rosche has primarily targeted homes in the legal limbo of foreclosure — homes vacated by their owners, and left untended by the lenders holding mortgages on the houses. In Miami-Dade County, more than 6,200 residences are now owned by banks, with thousands more left abandoned by their owners — and vulnerable to squatters.

    The squatter problem is not unique to Miami-Dade. In the past year, at least two people have been arrested in Broward County for trying to take homes with forged deeds. A Sarasota couple were charged with real-estate fraud last week.

    The drawn-out foreclosure process often makes it difficult for police or city inspectors to determine who owns a property. It can also lead to disputes over ownership that police are ill-equipped to handle.

    Two property owners told The Herald they complained to police about Presscott Rosche, but officers said the dispute was a civil, not criminal, matter.

Final Suspected Co-Conspirator Accused Of Snatching Homes By Peddling Sale Leaseback Deals To Homeowners Facing Foreclosure & By Forging Quit Claim Deeds Found Competent To Stand Trial

In San Diego, California, KGTV Channel 10 reports:

  • A 60-year-old man charged in a multimillion-dollar foreclosure fraud scheme in which notaries' identities were stolen and hundreds of deeds were forged around the state was found competent Friday to stand trial.

    David Zepeda is the last of four defendants to go through criminal proceedings in the case. He was hospitalized in San Bernardino County for an undisclosed medical condition after he was charged in September 2010.

    The defendants, including Zepeda, were accused of acquiring titles to properties by forging quitclaim deeds or convincing homeowners to transfer the property to them by promising the homeowner they would help avoid foreclosure.

    Once they had acquired the title, Zepeda and his brother John would rent out the property, prosecutors said. According to prosecutors, hundreds of victims were discovered in San Diego, Los Angeles, Orange, Riverside, Santa Barbara and San Bernardino counties, as well as in Clark County, Nevada.

    Authorities said they seized $335,000 in checks that hadn’t been cashed along with $33,000 in cash. They also found more than $8,000 in silver coins, gold watches and rings, and a Bentley automobile when they searched David Zepeda's home.

    His brother John Zepeda and two other men pleaded guilty to various charges in 2012.

    John Zepeda pleaded guilty to, among other things, rent skimming, forgery, identity theft and conspiracy to commit grand theft. He was sentenced to 12 years in state prison and agreed to pay $6 million restitution.

    Similar charges are lodged against David Zepeda. Judge Amalia Meza scheduled his trial for May 20, court officials said.
Source: Man charged in multimillion-dollar foreclosure fraud scheme found competent to stand trial (Hundreds of victims discovered throughout SoCal).

While Awaiting Trial, Two Since-Convicted Investment-Peddling Scammers Retaliated Against Prosecutor, FBI Agents By Tagging Them With $101.9M In Phony Liens On All Their Property

From the Office of the U.S. Attorney (Sacramento, California):

  • United States District Judge Kimberly J. Mueller sentenced two Sacramento men last Wednesday for an investment fraud scheme. Judge Mueller sentenced Ronald Wesley Groves, 71, to 10 years in prison and sentenced Donald Charles Mann, 56, to 17 years and six months in prison.

    Today, U.S. District Judge John A. Mendez sentenced each of them to one more year in prison, to be served consecutively to last week’s sentence, for retaliating against the prosecutor and FBI agents, United States Attorney Benjamin B. Wagner announced.

    According to court documents, on May 31, 2007, were indicted on 18 counts of wire fraud in connection with a fraudulent investment scheme.

    After their arraignment, they were released from custody on bond. In February 2008, while awaiting trial, Mann filed four fraudulent liens with the California Secretary of State in Sacramento: two liens against all property belonging to the federal prosecutor and one lien each against the properties belonging to the two FBI agents involved in the investment fraud investigation.

    Each lien claimed that $101.9 million was owed to either Groves or Mann with $100,000 per day in penalties.

    In September 2009, Groves and Mann were charged with four counts of retaliation against federal officials by false claim and slander of title and one count of obstruction of justice. They were taken into custody and have remained in custody since then. On December 13, 2011, both defendants pleaded guilty to two counts of retaliation against federal officials.