Saturday, June 29, 2013

Demolition Not An Option For Mold-Infested Townhome; Couple Coughs Up $478K Over Five Years To Remediate Virginia Residence

In McLean, Virginia, The Wall Street Journal reports:

  • Jenny Guinness of McLean, Va., waited as men in moon suits cut away chunks of drywall in 2-foot increments. They would bag and seal the material, and start again. Soon they had removed the walls of an entire room. A mold remediator sat her down and said: "I have really bad news for you. This looks like it goes in every direction…I think you need to have a demolition company come in and start removing whole walls because I can't see an end to it anywhere."

    In January 2012, Jenny Guinness decided to oversee the rest of the work on her home. Drawing from her experience as a real-estate agent for 10 years, she served as her own general contractor and interior designer.

    In 2008, Ms. Guinness and her husband, Os, discovered that their townhouse in a suburb of Washington was contaminated with stachybotrys—also known as black mold. That launched a painstaking five-year renovation that cost as much as the couple originally paid for the house and involved ripping out walls, replacing many of the finishes and sterilizing nearly every surface and item they owned.

    What they couldn't clean, they threw away, including stuffed animals, sweaters and other items from their son's childhood that they were saving for his kids. "I remember standing in the snow in the street in a moon suit, throwing these precious things into a bin," Ms. Guinness says.
  • In 2007, Ms. Guinness was diagnosed with lung cancer. Even after undergoing successful surgery, she still had trouble breathing in the house and, in early 2008, decided to test the home for mold. She discovered that black mold had streaked the firewalls and settled in thick clumps near the floor. The breadth of the mold shocked Ms. Guinness, who says she normally keeps her home spotless. "You could scrape it off with a spoon," she says.

    John Spangenberg, production manager of Columbia Restoration, a fire and water restoration service in Jessup, Md., broke the initial news to Ms. Guinness. He says the McLean townhouse had one of the worst cases of hidden mold he has seen in his 13-year career. "Most of the time when we deal with mold, you can usually find a stopping point. In her situation, the stopping point was after every wall was out," he says.
  • Virginia is a "buyer beware" state, meaning that homeowners aren't legally required to disclose a mold problem. Mold can be such a detriment to a home's value, though, that homeowners are almost always better off paying to remediate or even tearing the house down and starting from scratch, says appraiser Donald Boucher, president of Washington, D.C.-based Boucher & Boucher. Often "it can cost more to renovate a house than it would cost to build it new. You're better off knocking it down," he says.

    With a townhouse, tearing it down wasn't an option, the couple says. "The simple fact was, unless we renovated it, we couldn't sell it," Mr. Guinness says.
  • The total renovation cost $478,500, as much as the house itself, which was $479,000, according to public records. Ms. Guinness estimates that they spent $107,000 just on getting rid of the mold alone: $17,000 on testing, $70,000 on remediation and $20,000 on cleaning. Since their insurance doesn't cover mold, the couple paid for the renovation themselves with their retirement savings.

    "We read about people who did mold lawsuits and how many lawyers you had to go through and how many experts to go through," Ms. Guinness says. "We just didn't think we could face this. We were already fighting something." Generally, mold isn't covered under most homeowners insurance policies because it's considered to be a maintenance issue, says a spokesperson for the Insurance Information Institute.
For the story, see The $500,000 Housecleaning (When a Virginia couple discovered that their townhouse was infested with mold, it was the start of an arduous, expensive multiyear cleanup).

Cheap, Shoddy Rehab Work, Improvements Made Without Pulling Proper Permits, Encroachments, Unexpected Red Tags Among Potential Hazards Facing Novice Prospective Homebuyers When Dealing With Foreclosure Flippers

From the San Francisco Bay Area, the San Francisco Chronicle reports:

  • There's a surge in Bay Area homes being remodeled, as run-down foreclosures find new owners. Some of those new owners are house flippers, whose goals are to fix up and resell a property as quickly as possible. That can mean cutting corners by skipping permits and inspections for the renovations, city building officials say.

    "Time is money when you're flipping a house," said Dan Marks, Vallejo's interim economic development director. "Especially in this crazy market when we have no idea how long this (house-buying) frenzy will last. Timing is critical for these guys, and going through the permit process takes time."

    While non-permitted work is a perennial issue for cities, the sheer volume of dilapidated properties changing hands in recent years has spurred a big increase in unpermitted work, building officials say. The fallout can include slipshod construction standards, big headaches for new owners, and loss of revenue for cities. The problem is big enough that Oakland passed an ordinance requiring investors to register properties and comply with city rehab codes.

    "With the volume of (remodeling) work increasing as it is, I would expect work without permits to follow," Ed Sweeney, San Francisco deputy director for permit services, said in an e-mail. "The developer who is flipping houses is under added pressure to bring a product to market. Since the work being performed is interior ... a sense of security is there" about not being caught.

    Holding the bag

    Short-staffed building departments throughout the region said they rely on complaints from neighbors to catch unpermitted work in process, although inspectors keep an eye out when they're driving through town.

    "The house flipping is still going on here and we still find some in our travels performing inspections," Gary West, Vallejo's chief building official, said in an e-mail. "We have found contractors performing substandard work and converting unoccupied areas to living spaces. The new property owner is left holding the bag on getting the work legalized, which is sometimes a problem or not allowed."

    One contractor was found working on 12 different homes with no permits, he said. In another case, an addition to a home had to be removed because it encroached on the house's front "setback" area, even though a recent purchase had included that square footage as part of the home's value.
  • New Oakland ordinance

    A new ordinance requires investors who purchase foreclosures to register the properties with the city and do all rehab work to city standards, said Margaretta Lin, strategic initiatives manager for the Department of Housing & Community Development.

    "We're targeting investors who weren't planning to do the rehab work up to code," she said. "We know the foreclosure stock has a lot of deferred maintenance issues. If investors are buying a property that was in foreclosure, there's a high likelihood that it needs rehab work."

    Besides flippers, the new law targets investor landlords to make sure they don't simply rent out run-down properties without bringing them up to code.
For more, see House flippers often skip city permits (requires subscription; if no subscription, go here, then click appropriate link for story).

Slipshod Construction, Unpermitted Rehab Work Leave Homebuying Couple Holding The Bag, Facing Foreclosure; Prior Owner's Response To Inquiries On Nature Of Renovations: 'I Can't Recall!'

In Matlock, Manitoba, CBC News reports:

  • For sale: cozy two-bedroom home just minutes from the beach. Black mould, caving-in walls and crumbling foundation included. That's the property in Matlock, Man., that will be up for grabs in a foreclosure sale at the end of this month.

    Steven Tymchuk, left, and Tracey Walsh bought their Matlock home in 2005, only to find a number of issues with it. It's a property that Tracey Walsh and Steven Tymchuk fell in love with back in 2005.

    "See that robin's nest under the awning? She's got babies in there," Walsh said. "See that sign on the door next to the nest? Our house is condemned."

    It's a worst-case ending to a nightmare that began right after the couple bought the home. That's when they learned that much of it appears to have been renovated without building permits and was not up to code.

    The result? Insulation made up of beach towels, vermiculite and shavings. Sewage seeping underneath the foundation. A wall caving in, partially because a tree had fallen on it two years earlier, and a roof and foundation so unstable that both could collapse at any moment.

    "We were shocked, we were shocked," said Walsh.

    But the real shock came when they learned there was little recourse for them — systemic checks and balances they thought were in place to protect them.

    To a point, they were right. First, in most cases, the "buyer beware" rule applies: a person selling a home is not required to disclose any flaws or problems with the home.

    But there's an important exception.

    "The fundamental ancient rule is that the buyer is without a remedy and has to accept a property," said John Neufeld, who both practises and teaches real estate law.

    "But if the defect is so serious that it renders the property dangerous, then the seller could be successfully sued."

    The catch? One has to prove that the seller knew about the defects. In this case, Walsh and Tymchuk can't.

    No recollection

    When contacted by CBC News last week, the previous owner said he had no recollection of renovations done, with or without permits, and no recollection of any defects.

    That same condition applies to the real estate agent who sold the property. Walsh and Tymchuk filed a complaint against her through the real-estate arm of the Manitoba Securities Commission.

    Tracey Walsh points to black mould that covers part of the bathroom. Its conclusion was that while the agent was wrong to list the property as fully insulated on the MLS listing, she cannot be held responsible for not disclosing the other flaws of the home, as she did not know about them.

    The couple's next option was to file a claim through their title insurance policy. There are policies, while not mandatory, offered to protect buyers from things like problems over the title of the property, or problems borne of zoning violations or building code violations.

    "Our lawyer said, 'Why don't you try title insurance? It will benefit you,'" Walsh said.

    "That's why we started right with title insurance, knowing that if there was something wrong with the home, they would hire a lawyer and take care of it. Well, right from the beginning, we've been given nothing but the runaround."

    Over the years, on the insurance company's request, the couple was asked to provide proof that the home was unlivable, that the damage was due in part to work done without permits, and that they were required to repair it before they could live in it again.

    They did all of that, Walsh said, but their claim was still denied.

    "You know, what more can you do?" said Neufeld. "If I was the judge, I would make the natural conclusion — 'You gotta pay.'"

    'This is devastating'

    It's cases like these that, in part, have sparked a review of title insurance policies a few years ago.

    A report out of Saskatchewan raised questions about the validity of these policies, noting that the companies don't disclose their premium payout ratio, how much money they pay out in claims, or how long it takes to settle a claim.

    Regardless, it was the protection of last resort that Walsh and Tymchuk thought would help make right all that went wrong with the home.

    Today, thanks in part to years of going into overdraft to pay for these efforts, their home is now officially in foreclosure. "This is devastating. It is unbelievable," Walsh said.

    "This was the home we were supposed to grow old in together," said Tymchuk. "That's all been taken away from us."

Busted Single Family Home-Based Meth Labs Begin Finding Their Way Back Onto The Real Estate Market

In Ardmore, Oklahoma, KXII-TV Channel 12 reports:

  • When a meth lab is busted, law enforcement removes all the chemicals, drugs and lab components, but the meth isn't entirely gone. "Itching eyes, burning skin, it may be difficult to breathe," said Bill Coye, who is a registered nurse and owner of Apex Bioclean--a company that cleans meth labs.

    Those symptoms are just an example of what a family living in a former lab can experience, and Coye said the fix is remediation. "Anything absorbent in the home has to be removed," he said. "Carpet pad, tack strip, ceiling texture if it's very coarse. And what do you do with the furnace and the duct work?"

    Coye's company tests the level of chemical residue, scrubs the house top to bottom, and retests.But depending on the level of contamination and size of the home that can cost anywhere between $5,000 and $15,000.(1)

    Oklahoma Bureau of Narcotics spokesman Mark Woodward explains that law enforcement puts a placard on the door stating that the property was a meth lab and that the owner needs to have it cleaned--but the owner doesn't always foot the bill.

    "Some we fear are taking the placard off the door when we leave, airing the house out, putting some new paint on the walls, new carpet, smells wonderful like a brand new apartment and they rent it to somebody else," Woodward said.

    That's because the law in Oklahoma doesn't require homeowners or landlords to clean a home before selling or renting. They are required by law to disclose to tenants or buyers that the home used to be a meth lab. But Rita Ponder with Frances One Realty said it can get tricky if the home was a foreclosure--and they often are. "It's just a home that's put on the market, and we try to sell," Ponder said. "But we don't know the circumstances of the home."

    Last year 829 homes were busted as meth labs in the state, and with that number on the rise, Woodward said some Oklahomans have wondered why no law exists requiring meth lab cleanup. The answer comes down to money. "Is it the Bureau of Narcotics that pays and then we recoup the loss from the defendants? Well no, because the defendants don't have any money," said Woodward.

    And OBN estimates it would cost the state between $17 million and $37 million to finance all the cleanups.

    So to avoid being stuck with the bill, Woodward, Coye and Ponder all recommend doing your homework before you move in: ask neighbors about the history of the home, ask the police or sheriff's office to look it up, or check the DEA's list of clandestine labs online. But the only way to really know is to test.

    "To make sure that that individual who moves into that house with his or her family is going to be safe," said Coye. "And that really is what this is about. This is about public health and safety."

    If you've already moved into a former meth lab and that fact wasn't disclosed by the seller or landlord, Woodward adds that you have grounds for legal action.

Friday, June 28, 2013

Civil Rights Feds Indict Missouri Woman For Alleged Intimidation Of Black Family By Torching Their Rented Home With Molotov Cocktail, Drawing Swastikas & Writing "White Power" On Their Driveway

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

  • An Independence, Mo., woman was indicted by a federal grand jury [] for violating the civil rights of an African-American family by setting fire to their residence, announced Roy L. Austin Jr., Deputy Assistant Attorney General for the Civil Rights Division of the Department of Justice, and Tammy Dickinson, U.S. Attorney for the Western District of Missouri.

    Victoria A. Cheek-Herrera, 33, of Independence, was charged in a three-count indictment returned by a federal grand jury in Kansas City, Mo.

    [The] indictment charges Cheek-Herrera with participating in a conspiracy to threaten and intimidate an Independence family from exercising their constitutional right to reside in their home because of their race or color. It also charges Cheek-Herrera with committing a racially-motivated arson and with using fire during the commission of a felony.

    According to the indictment, Cheek-Herrera conspired with others on June 26, 2008, to injure, oppress, threaten and intimidate Larry Davis, Stacey Little and the couple’s minor children in the free exercise of their constitutional right to occupy and rent their home in Independence, because of their race and color. Davis, Little and their children are all African American.

    The indictment alleges that Cheek-Herrera discussed with others her desire to set fire to the home of Davis and Little, and that Cheek-Herrera and a co-conspirator drew a swastika and wrote the words “White Power” on the driveway to Davis and Little’s residence.

    Cheek-Herrera allegedly asked a juvenile acquaintance for gasoline then helped create a Molotov cocktail by filling a glass bottle with gasoline and inserting a rag into the bottle to serve as a wick. Cheek-Herrera and a co-conspirator then allegedly lit the wick and threw the gasoline-filled bottle into the side of the house that Davis and Little were renting, which set the residence on fire.

Fair Housing Feds: BofA, Fannie Screwed Over Disabled Woman By Stiffing Her On HAMP Loan Mod Request Based On Her Purported Failure To Provide Adequate Documentation On Nature Of Physical Impairment

From the Department of Housing and Urban Development (Washington, D.C.):

  • The U.S. Department of Housing and Urban Development (HUD) announced [] that it has reached a Conciliation Agreement with Bank of America and Fannie Mae, settling allegations that the Charlotte, NC-based lender and Fannie Mae violated the Fair Housing Act by denying a borrower’s application to modify her mortgage loan because she did not provide sufficient information about the nature of her disability. The woman was applying for a loan modification through the Obama Administration’s Home Affordable Modification Program (HAMP).

    The Fair Housing Act makes it unlawful to deny or discriminate in the terms and conditions of a mortgage or loan modification based on disability, race, color, religion, national origin, sex, or familial status.

    “People with disabilities should not have to answer unnecessary questions about the nature of their disability when seeking a loan modification,” said Bryan Greene, HUD General Deputy Assistant Secretary for Fair Housing and Equal Opportunity. “HUD will continue to take action against lenders that subject persons with disabilities to discriminatory practices.”

    According to the complaint, a San Bruno, CA, woman applied for a loan modification at Bank of America that would have reduced her interest rate and made it easier for her to pay her mortgage after her disability caused her to miss several months of work. During her extended leave of absence, the woman used her savings to pay her mortgage. Fearing that she would not be able to continue paying her mortgage without a lower interest rate, the woman applied for the loan modification, citing her physical “hardship.”

    In responding to her request, a loan officer with the bank asked her to provide documentation relating to her medical condition. The woman provided the loan officer with a letter from her physician, a current medical bill, and a letter from her employer certifying her approved leave of absence due to her disability.

    Still, the bank denied her application, allegedly telling her that she had not provided sufficient information about the nature of her disability. Even after the woman provided another letter from her physician and insurance records showing her medical treatment between 2007 and 2011, the bank reportedly denied her modification application and Fannie Mae allegedly stated that her doctor’s letters and other documentation were insufficient to show that she was permanently disabled.

    Under the terms of the agreement, Bank of America will pay the woman $22,449, which includes $19,349 to cover the approximate closing costs on a refinance loan, and agreed to follow HAMP and Fannie Mae’s servicing guidelines. Bank of America will also provide fair lending training to its newly-hired employees. In addition, Fannie Mae will pay the woman $3,400.

Nashville Landlord To Cough Up $170K+ To Identify, Compensate Hispanic Tenants Who Were Allegedly Intimidated, Harassed & Otherwise Screwed Over On The Basis Of Their National Origin

From the Department of Housing and Urban Development:

  • The U.S. Department of Housing and Urban Development (HUD) announced {[] that a Nashville, TN, apartment complex will pay more than $170,000 as part of a settlement resolving allegations that it discriminated against Hispanic tenants based on their national origin.
  • After being told about the complex’s discriminatory rental practices, HUD filed a Secretary-initiated complaint alleging that TriTex Real Estate Advisors, Inc., of Atlanta, and its management company terminated lease agreements, ignored maintenance requests, and intimidated and harassed Hispanic tenants.

    Under the terms of the agreement, the manager and owner will establish a $150,000 victims’ compensation fund for former residents administered by an independent agency and to pay $10,000 each to two non-profit organizations – the Tennessee Fair Housing Council and the Tennessee Immigrant and Refugee Rights Coalition (TIRRC) – to identify potential claimants. In addition, TriTex and its management company will adopt fair housing policies and its employees will undergo fair housing training.
For the HUD press release, see HUD And Owners,  Managers Of Tennessee Apartment Complex Settle Allegations Of Discrimination Against Hispanic Tenants (Manager and owner to establish $150,000 victims’ compensation fund).

Housing Feds, County Housing Authority Settle Discrimination Suit Alleging Failure To Increase Access To Dwelling Units For Persons With Disabilities, Families With Kids Under 18

From the Department of Housing and Urban Development:

  • The U.S. Department of Housing and Urban Development (HUD) announced [] that it has reached a Voluntary Compliance Agreement with the Jackson County Housing Authority (JCHA) in Murphysboro, Illinois, to increase access for persons with disabilities and families with children under age 18.

    HUD reviewed JCHA’s housing programs and services and determined that the housing authority had not ensured that at least five percent of its units were accessible to persons with disabilities, as required by Section 504 of the Rehabilitation Act of 1973. The review further indicated that JCHA had not allowed children under the age of 18 to reside in housing designated for elderly families, in violation of the Fair Housing Act.

    Section 504 of the Rehabilitation Act of 1973, as amended, prohibits discrimination based on disability in any program or activity receiving federal financial assistance. Under Section 504, a public housing authority must make a minimum of five percent of its total dwelling units accessible to persons with mobility impairments.

    The Fair Housing Act prohibits housing discrimination against families with children under 18 years of age. Public housing or federally assisted housing for the elderly is not exempt from the Fair Housing Act’s prohibition against familial status discrimination.

Service Animals & Assistance Animals For People With Disabilities In Housing, HUD-Funded Programs

From the Department of Housing and Urban Development (Washington, D.C.):

  • The U.S. Department of Housing and Urban Development (HUD) [] issued a reaffirming that housing providers must provide reasonable accommodations to persons with disabilities who require assistance animals. The “Notice on Service Animals and Assistance Animals for People with Disabilities in Housing and HUD-Funded Programs” discusses how the Fair Housing
    Act and the Americans with Disabilities Act (ADA) intersect regarding the use of service or assistance animals by persons with disabilities.

    The Fair Housing Act prohibits landlords from discriminating based on disability, race, color, national origin, religion, sex, and familial status. The ADA prohibits discrimination against people with disabilities in employment, transportation, public accommodations, communications, and state and local government activities. Both laws contain provisions which address the use of service or assistance animals by people with disabilities. While the Fair Housing Act covers nearly all types of housing, some types of housing, such as public housing, are covered by both laws.

    “The vital importance of assistance animals in reducing barriers, promoting independence, and improving the quality of life for people with disabilities should not be underestimated, particularly in the home,” said John Trasviña, HUD Assistant Secretary for Fair Housing and Equal Opportunity. "Disability-related complaints, including those that involve assistance animals, are the most common discrimination complaint we receive. This notice will help housing providers better understand and meet their obligation to grant reasonable accommodations to people with disabilities that require assistance animals to fully use and enjoy their housing.”

    HUD’s new notice explains housing providers’ obligations under the Fair Housing Act, including the requirement to provide reasonable accommodations to people with disabilities who require assistance animals. Pet restrictions cannot be used to deny or limit housing to people with disabilities who require the use of an assistance animal because of their disability. Housing providers must grant reasonable accommodations in such instances, in accordance with the law. The guidance also describes the Department of Justice’s revised definition of “service animal” under the ADA, as well as housing providers’ obligations when multiple nondiscrimination laws apply.

    The Americans with Disabilities Act requires equal access for people with disabilities using trained service dogs in public accommodations and government facilities.

    Under the Fair Housing Act, housing providers have a further obligation to accommodate people with disabilities who, because of their disability, require trained service dogs or other types of assistance animals to perform tasks, provide emotional support, or alleviate the effects of their disabilities.

    HUD’s and the Department of Justice’s Joint Statement on Reasonable Accommodations provides additional information regarding housing providers’ obligations to provide reasonable accommodations. The Department of Justice has also published a fact sheet on service animals and the ADA.

    Click here to read HUD’s new notice.

    Persons who believe they have been denied a reasonable accommodation request may file a complaint by contacting HUD’s Office of Fair Housing and Equal Opportunity at (800) 669-9777 (voice) or (800) 927-9275 (TTY). Housing discrimination complaints may also be filed by going to, or by downloading HUD’s free housing discrimination mobile application, which can be accessed through Apple devices, such as the iPhone, iPad, and iPod touch.

Thursday, June 27, 2013

Florida AG Tags Rogue Pool Contractor In Civil Suit Alleging It Ripped Off Homeowners By Failing To Complete Projects, Charging Illegal Fees, Stiffing Subs That Led To Mechanics' Lien Filings Against Unwitting Customers' Residences

In Fort Lauderdale, Florida, the South Florida Sun Sentinel reports:

  • Florida Attorney General Pam Bondi announced [] that her office is suing Nationwide Pools, accusing the Pompano Beach-based company of violating the state’s Unfair and Deceptive Trade Practices Act.

    The 17-page lawsuit alleges Nationwide failed to complete construction of pools, charged illegal fees and didn’t pay subcontractors, who ended up filing liens on customers’ homes.

    The suit filed in Broward County Circuit Court seeks restitution for consumers and a permanent injunction that prevents the company and its officials, including President Keith Stuart, from building more pools.

    Dozens of South Florida homeowners have filed complaints with the Better Business Bureau, which gave the company an “F” rating. Some customers say Nationwide took thousands of dollars but didn’t complete the projects. Others say the company never delivered on promises to fix construction defects.

    “Floridians should be able to trust the companies they do business with, and they should receive the services advertised or promised,” Bondi said in a statement. Stuart could not be reached for comment Tuesday.

    The suit said the company stopped operating in late May. But in its last few weeks and months, Nationwide improperly demanded “progress payments” from customers, according to the suit. “When customers who paid those monies complained about additional delays, (Nationwide) engaged in a series of lies and misrepresentations about ‘supply shortages’ and ‘damaged items’ in order to string them along,” the suit said.

    The suit also accuses the company of selling pools, obtaining new permits and digging up customers’ backyards with no intention of ever finishing the jobs.

    “I’m glad (the state) stepped in; I wish it was sooner,” said Donald Pittman, 45, of Royal Palm Beach. Pittman said he filed a complaint with the Better Business Bureau about two years ago. Nationwide finished his pool, but the concrete deck started cracking and pool tiles fell off. He said he won a $7,300 award in arbitration, but hasn't been paid.

    Last month, the Broward County chapter of the Florida Swimming Pool Association canceled Nationwide's membership and fined the company a maximum $1,000 for ethics violations, said Wendy Parker, executive director of the statewide association.

    Nationwide has been named as a defendant in a dozen lawsuits in Broward County in recent years, records show.

Daughter Pinched For Allegedly Ripping Off $150K+ From Since-Deceased Elderly Mom By Improperly Pocketing Cash From Victim's Home Equity Line Of Credit

In Toms River, New Jersey, the Asbury Park Press reports:

  • A Barnegat woman was indicted Friday on charges she stole more than $150,000 from her mother over four years.

    Evelyn Hendershot, 59, was charged with one count of second-degree theft and one count of second-degree financial facilitation of criminal activity, according to a news release from Ocean County Prosecutor Joseph D. Coronato.

    According to the indictment, from April 2005 until 2009, Hendershot withdrew and transferred $150,400 from her mother’s home equity line of credit to various accounts under Hendershot’s control. She then transferred the money to pay off credit cards or withdrew cash from them through automated teller machines, the indictment alleges.

    Hendershot’s mother, Mary Ann Siskoski Yakes of Manasquan, died in July 2010 at the age of 87, said Al Della Fave, spokesman for the prosecutor’s office.

    Detectives James Conroy and Lindsay Llauget of the prosecutor’s office special investigations unit of the economic crimes bureau investigated the case.

    Hendershot is free on $75,000 cash bail. A court appearance has not been set.

    The Asbury Park Press asked the Prosecutor’s Office for a photo of the suspect, but it declined. State law allows authorities discretion in releasing suspect photos, but they often refuse to do so.

Dubious Conduct Involving Straw Buyer Scams, Loan Modification Rackets & Solicitations Targeting Victims Of Time Share Ripoffs Among Reasons For Recent Discipline Handed Out By Florida Supreme Court

The Florida Bar recently published its periodic 'gossip sheet' announcing the discipline meted out to some of its wayward members.

The following lawyers were disciplined for a variety of real estate-related missteps:

  • Ronald Clyde Denis, 801 Spencer Drive, West Palm Beach, suspended for 60 days, effective 30 days from an April 16 court order. (Admitted to practice: 1997) Between 2009 and 2010, Denis was associated with a loan modification company that was run by non-lawyers. He accepted clients from the company, although it was not an approved lawyer referral service. The non-lawyer company had clients sign a special power of attorney stating that it was their attorney in fact. (Case No. SC12-2177)

    Daniel Nathan Hoskins, 1154 Adair Park Place, Orlando, disbarred for five years, effective immediately, following an April 16 court order. Hoskins pleaded guilty in federal court to one count of conspiracy to commit wire fraud and bank fraud — both felonies. In and between March 2006 and October 2008, Hoskins, along with another attorney, conspired with individuals involved in the development of three condominium conversion projects to artificially inflate their sales prices through the use of straw buyers and nominee purchasers. Hoskins failed to disclose to lenders the existence of the kickbacks or disguised payments made to straw buyers and Realtors. (Admitted to practice: 1996) (Case No. SC12-2171)

    Harold George Uhrig, 370 Lake Seminary Circle, Maitland, suspended for 60 days, effective May 1, following an April 16 court order. (Admitted to practice: 1975) Uhrig created another law firm, outside of his criminal law practice, to assist his non-lawyer son’s company, which assisted timeshare owners who felt they’d been scammed by timeshare resale companies and wanted refunds. The new firm provided form letters to customers that were misleading and implied that the law firm was available to litigate against timeshare resale companies, if necessary. (Case No. SC12-2175)

    Alexander Zouzoulas, 1270 Miller Ave., Winter Park, disbarred effective 30 days from an April 16 court order. (Admitted to practice: 1983) In August 2012, Zouzoulas pleaded guilty in court to conspiracy to commit wire fraud and bank fraud. Between 2006 and 2008, Zouzoulas and another attorney conspired with persons involved in the development of three condominium conversion projects, to artificially inflate the sales prices of the condominium units. He also made several misrepresentations regarding the condominiums and failed to disclose to lenders the existence of kickbacks or disguised payments. (Case No. SC12-2167)

Wednesday, June 26, 2013

Notorious Foreclosure Trash-Out Contractor Faces Racketeering Accusation In Federal Civil Suit Alleging Repeated Illegal Break-Ins; Homeowners' Lawyer On Clients: "They Weren't Even In Foreclosure!"

In Pittsburgh, Pennsylvania, the Tribune Review reports:

  • A Bethel Park couple claim in a federal lawsuit filed Wednesday that a national property management company that handles foreclosure services had a local contractor repeatedly break into their home in 2012.

    Alexandra and Anthony Hlista claim that Safeguard Properties of Valley View, Ohio, and the local contractor violated federal racketeering laws because they used the mail and electronic communications in setting up the break-ins and also violated state and federal consumer protection laws.

    Michael Malakoff, their lawyer, said the contractor nailed windows shut, damaged screens and storm windows and changed the lock on their back door without any type of court order. “They weren't even in foreclosure,” he said. A company spokeswoman and the local contractor couldn't immediately be reached for comment.

    The couple have a pending federal class-action lawsuit filed in 2011 against Citi Mortgage of New York, IBM Lenders Business Process Service of Oregon and a Philadelphia law firm over mortgage-related fees that they claim are prohibited by state law.

(1) For those homeowners who've been screwed over by wrongful lockouts by foreclosing lenders (and their confederates) and seek some possible guidance on how much their cases might be worth if they seek to sue, see:
For examples of filed lawsuits involving illegal bank break-in, "trash-out" lockout cases, see:

Nabbed For Proceeding With Foreclosure On Homeowner Who 'Violated' Loan Mod Terms By Paying Too Early & Too Much, Bankster Caves In, Backs Off After Local Media Report Gains Worldwide Attention

In Orlando, Florida, WFTV-TV Channel 9 reports:

  • Etienne Syldor, the hardworking father and Walt Disney World bus driver who found himself in foreclosure received good news Wednesday.

    His attorney said after Channel 9's story aired, she heard from Wells Fargo and said the bank had not only halted foreclosure, but restored his mortgage and even lowered his interest rate and monthly payments.

    Wells Fargo had begun foreclosure proceedings on Syldor's home in May because he didn't follow the fine print on his particular modification.

    Syldor would pay early, and even overpaid, during a mortgage modification with Wells Fargo. "I have never seen a case like this one before," said Syldor's attorney LaMya Henry. He couldn't understand it then, and neither could WFTV viewers.

    Emails and calls poured into the newsroom as Syldor's story was picked up by news outlets around the world. "Doesn't make any sense," Syldor said.

    Syldor was too busy working to sit down with Channel 9 Wednesday. Henry said she'd like to believe the foreclosure was a fluke triggered by a glitch in the massive bank. She said Syldor had been worried his family would be forced out on the streets, until Wednesday.

    "I really believe that had it not been for this story, we may have not gotten this outcome," Henry said.

Wisconsin AG: Attorneys Associated With Consumer Debt Adjustment Firm Merely A Facade For Outfit Providing Services Thru Non-Lawyer, 3rd Party Companies

From the Office of the Wisconsin Attorney General:

  • Attorney General J.B. Van Hollen and the Wisconsin Department of Justice (DOJ) have filed an enforcement action in Dane County Circuit Court against Legal Helpers Debt Resolution, LLC, a/k/a the law firm of Macey, Aleman, Hyslip & Searns, as well as the company’s principal managers and owners.

    According to the complaint, Legal Helpers Debt Resolution provides debt settlement services to people nationwide, including in Wisconsin. Under Wisconsin’s statute governing adjustment service companies, Wis. Stat. § 218.02, companies that negotiate with creditors on behalf of debtors must obtain a license, file certain disclosures with the Department of Financial Institutions -- Division of Banking, and limit the amount of fees they charge from debtors.

    The complaint alleges that the defendants and their Chicago-based company illegally charge exorbitant upfront fees for their debt settlement services while maintaining that, as lawyers, they were not required to be licensed as an adjustment service company pursuant to Wis. Stat. § 218.02.

    The complaint alleges, however, that the attorneys with Legal Helpers Debt Resolution are merely a façade for the company, and the debt settlement services are fulfilled by non-lawyer, third-party companies. Consumers report they never meet an attorney, talk to an attorney and when seeking consult with an attorney about the status of their debt, are not permitted to speak with one.

    According to the complaint, Legal Helpers Debt Resolution has enrolled nearly 2,000 Wisconsin consumers, charging illegal upfront fees that range from $500-$900, and monthly maintenance fees from $50.00 to more than $75.00. This has resulted in the collection of millions of dollars of illegal upfront fees from Wisconsin consumers.

Tuesday, June 25, 2013

1st Circuit: Lower Court Erred In Setting Up Procedure For Forcing Banks, Borrowers Together To Work Out Home Loans In Default; Successful R.I. Foreclosure Mediation Program May Now Be In Jeopardy; Appeals Panel Nixes Outright Reversal & "Chaos," Instead Opts To Boot Case Back To Trial Judge To Fix Problem

In Providence, Rhode Island, The Associated Press reports:

  • A federal appeals court threw more than 700 Rhode Island foreclosure cases into uncertainty by concluding that there are problems with how a judge set up a program designed to force homeowners and banks into mediation.

    The 1st U.S. Circuit Court of Appeals said U.S. District Judge John McConnell did not follow the proper procedures when he instituted his unique order governing foreclosures. A lawyer who represents hundreds of families suing to stop from being foreclosed upon says he fears the appeals court is jeopardizing a program that is helping people.

    McConnell signed an order on Aug. 16, 2011, in which he took over all mortgage foreclosure cases in federal court in Rhode Island. The order halted the cases, suspended all deadlines and required homeowners and financial institutions to engage in ‘‘directed and serious settlement discussions’’ before he would allow any individual case to proceed. He placed no time limits on the discussions.

    The following January, he appointed former bank CEO Merrill Sherman to serve as a special master to help oversee the process and reach settlements, saying that the cases were problematic for both sides.

    ‘‘Plaintiff homeowners are confronted with the emotional and economic devastation of losing their homes to foreclosure. Defendant financial institutions are confronted with countless mortgages on which homeowners have stopped paying,’’ McConnell wrote. ‘‘The problem is exacerbated by a significant downturn in real estate values that has placed many of these properties ‘under water.'’’

    He said it was in the interest of everyone involved to find a system to ‘‘explore all possibilities for the potential settlement of these claims.’’

    About 130 cases had been settled or otherwise dismissed under the program as of April 30, according to a report Sherman filed last month.

    The June 14 appeals court decision is written by retired U.S. Supreme Court Justice David Souter, who was sitting in on the case. He wrote that McConnell’s order violated court procedures because he should have given the banks a hearing on whether the lawsuits were likely to succeed before he ordered mediation. He also said McConnell would have to establish limits on the amount of time and cost spent on mediation.

    McConnell on Wednesday set a July 8 hearing on some of the issues raised in the decision.

    Three lawyers who represented financial institutions before the 1st Circuit declined to comment or did not return phone messages seeking comment on the potential impact of the decision. Sherman also declined to comment.

    George Babcock, a Rhode Island attorney who represents more than 500 families fighting foreclosures, said many of homeowners have reached settlements with the help of the program.

    ‘‘I find it all very unfortunate that a plan that was designed to help people and is really helping people is going to be scuttled,’’ he said. ‘‘I hate to say that the banks are the bad guys, but the banks are the bad guys,’’

    Steven Fischbach of Rhode Island Legal Services, who filed an amicus brief in the case, said the program was devised by the court to deal with a flood of cases, which reflects the severity of the foreclosure crisis.

    ‘‘The program is very important because it provides a certain avenue to speaking with a lender to get a modification of a mortgage,’’ he said. ‘‘It is very hard to get someone on the phone who has authority to respond to and evaluate mortgage modifications.’’

    He said it was too soon to say whether the decision was a death knell, but said it was important to note that the appeals court could have struck it down. Instead, it gave the district court a chance to fix the problem.(1)

    ‘‘I think the court recognized that the court in Rhode Island was faced with an onslaught,’’ he said.

    He called for a state law that would force financial institutions into mediation before foreclosing.
Source: Ruling throws into uncertainty RI foreclosures.

For the ruling, see In re: Mortgage Foreclosure Cases, (1st Cir. June 14, 2013).

(1) From the court's ruling:
  • Although it would be open to this court simply to vacate the injunction and mediation orders, we fear that the practical effect of requiring such immediate action on a docket currently the size of this one would be chaos.

    If the issues resolved here had been addressed by the district court when the volume of cases was at the trickle stage, correction of the errors would have been fairly simple. As the docket now stands, however, nearly 150 cases are consolidated in this appeal, and we are told that at the time of briefing another 550 or so were governed by the orders reviewed here and subject to being affected by this court's action and by the district court's ensuing proceedings on remand.

    We therefore think the prudent course is to tolerate the status quo long enough to give the parties time to plan for contingencies.

    Accordingly, we remand with instructions to take steps expeditiously to correct the errors.

Federal Prison Time Not Enough For NJ Foreclosure Rescue Equity Stripping Duo; Garden State Prosecutors Score Add'l Prison Time In State Slammer For Pair That Targeted Financially Distressed High-Equity/No-Cash Homeowners With Sale Leaseback Ripoffs

In Trenton, New Jersey, the Asbury Park Press reports:

  • A father and son were sentenced Friday to state prison for stealing more $1.3 million in a scheme that offered relief for homeowners facing foreclosure.

    Vito Grippo, 58, of Jackson, was sentenced to 10 years in state prison after pleading guilty in February to charges including theft [by failure to make required disposition of property received] and money laundering. His son, Frederick P. Grippo, 32, of Old Bridge, was sentenced to four years in prison. He pleaded guilty in January to a charge of theft [by deception].

    Both were sentenced by state Superior Court judges in Union County.

    The sentences came a week after Vito Grippo was sentenced to 96 months in federal prison and Frederick Grippo was sentenced to 41 months in federal prison.

    The state and federal sentences will run concurrently, and they will serve in federal prison first.

    According to the state:

    Vito Grippo, who had an office in Holmdel, solicited 12 homeowners facing foreclosure by offering to temporarily transfer title of their home to a company called Morgan Financial. He told them they would keep 80 percent to 90 percent interest in the home; Morgan Financial and an investor would share the rest.

    He told them to make their monthly mortgage payments to Morgan Financial, and Morgan Financial would pay the lender, reducing their payments over time and giving them back title to their homes in a year.

    Grippo also solicited investors who didn’t know they were buying the homes outright; they thought they were investing in income-generating rental properties. He used the identities of the investors to file fraudulent mortgage applications to buy the homes.

    Frederick Grippo, a loan broker, submitted fraudulent applications, the state said.

    Vito Grippo obtained more than $4.5 million to purchase 12 homes in New Jersey and New York. He stole more than $1.3 million in loan proceeds that should have been disbursed to the original homeowners as equity at the closing. And he diverted the money into his companies’ bank accounts, the state said.

    Although Vito Grippo made some mortgage payments in the names of the investors, all of the homes fell into foreclosure. The homeowners lost their properties. And the investors’ credit ratings were ruined, the state said.
For more, see Father and son at Holmdel business get state prison to go along with federal sentence.

See also, The Trentonian: Father and son real estate cheats get prison time:
  • Vito Grippo had the original homeowners and the investors sign documents without giving them time to ascertain what they were signing.

FHFA IG, Nevada Feds Bag Hubby/Wife Real Estate Operators For Allegedly Structuring Short Sale-Leaseback Of Underwater Home In Effort To Stiff Bankster Out Of Loan Deficiency Without Unloading Residence; Straw Buyer-Relative Roped In By Suspects To Assist In Scheme: Investigators

From the Office of the U.S. Attorney (Las Vegas, Nevada):

  • A husband and wife who worked in the real estate profession in southern Nevada, have been charged in U.S. District Court in Las Vegas with conspiracy and fraud for making false statements to Wells Fargo Bank in order to get it to approve a short sale on their home, announced Daniel G. Bogden, United States Attorney for the District of Nevada.

    Cynthia Hosbrook, 41, currently a licensed real estate agent in Nevada, and Robert Hosbrook, 51, formerly a licensed real estate agent in Nevada, both of Henderson, are charged in a criminal indictment dated June 12, 2013, with one count of conspiracy to commit bank fraud and one count of bank fraud.

    According to the indictment, the Hosbrooks allegedly solicited a relative to act as a straw buyer for their residence at 2704 Mallard Landing in Henderson.

    In a short sale contract dated March 2, 2010, and in other paperwork submitted to Wells Fargo Bank, the Hosbrooks falsely represented that the sale of their home would be an arms length transaction, that it was between two unrelated parties, that no party to the contract was a family member or business associate, that there were no agreements that the seller would remain in the property as a renter, and that the short sale did not constitute straw buying, when they allegedly knew that they were selling the residence to a relative and a straw buyer.(1)

    The Hosbrooks also allegedly caused the relative/straw buyer to falsely sign a title company form on July 9, 2010, stating that the relative would be residing at the property, which the Hosbrooks knew was a false and fraudulent representation.

    Cynthia Hosbrook and Robert Hosbrook have been summoned to appear for an initial hearing and arraignment on June 21, 2013, at 3:00 p.m. before U.S. Magistrate Judge Carl W. Hoffman. If convicted, they face up to 30 years in prison and fines of up to $1 million on each count.

    The case is being investigated by the Federal Housing Finance Agency Office of the Inspector General, and is being prosecuted by Assistant U.S. Attorney J. Gregory Damm.
For the U.S. Attorney press release, see Husband And Wife Charged With Short Sale Fraud.

(1) Despite the fact that getting a mortgage lender to approve a deal like this appears to be quite difficult, if not impossible, unless a false representation is made, some real estate operators remain undeterred in their pursuit to peddle sale leaseback deals to underwater homeowners in the context of a proposed short sale in an effort to purportedly allow homeowners to unload a significant amount of home mortgage debt without actually having to move from their home.

See, for example, Helps Home Owners Avoid Foreclosure with New Program (Newly launched short sale lease back programs lets homeowners short sale to escape toxic mortgage debt and foreclosure, but lets them rent back the home):
  • The short sale leaseback program works in a similar way to a conventional short sale. This means that the toxic mortgage debt is completely removed, and the decimation of credit history is avoided.

    However unlike a normal short sale, the previous homeowner can remain in the home as a tenant. This stops a huge amount of family upheaval and stops people from having to dramatically change their lifestyle. When times are better, the homeowner may even be able to buy their home back at market price. This is known as a short sale buy back.

Monday, June 24, 2013

Antitrust Feds' List Of N. California Foreclosure Sale Bid-Rigging Suspects Admitting Guilt Now Grows to 31 As Probe Continues

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

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

    Felony charges were filed [] in the U.S. District Court for the Northern District of California in San Francisco against Robert Williams of Atherton, Calif. Williams is the 31st individual to plead guilty or agree to plead guilty as a result of the department’s ongoing antitrust investigations into bid rigging and fraud at public real estate foreclosure auctions in Northern California.

    According to court documents, Williams conspired with others not to bid against one another, but instead to designate a winning bidder to obtain selected properties at public real estate foreclosure auctions in San Mateo County, Calif. Williams was also charged with conspiring to use the mail to carry out schemes to fraudulently acquire title to selected properties sold at public auctions, to make and receive payoffs and to divert to co-conspirators money that would have otherwise gone to mortgage holders and others.
  • “Collusion at these foreclosure auctions enabled the conspirators to present the illusion of competition, when they were actually thwarting the competitive process and profiting at the expense of lenders and distressed homeowners,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The division remains committed to holding accountable those who illegally subvert competition at real estate foreclosure auctions across the country.”

Tacoma Feds Pinch Local 'Loan Wolf' In Business Of Taking Away Homes From Financially Vulnerable; "I Am A Wolf!" Suspect Once Said In Response To Inquiries About Loan Agreements He Used With Hapless Borrowers

From the Office of the U.S. Attorney (Tacoma, Washington):

  • A hard money lender who resides in University Place, Washington was arrested [] after being indicted by the grand jury for conspiracy, making false statements on loan applications and mail fraud. EMIEL A. KANDI, 36,was taken into custody by the FBI this morning and will make his initial appearance on the indictment in U.S. District court in Tacoma at 2:30 today.

    “The business practices of this defendant harmed individuals who lost their homes. Then the lies told in mortgage documents harmed taxpayer funded institutions such as the Federal Housing Administration,” said U.S. Attorney Jenny A. Durkan. “These mortgage fraud cases result from thorough and intensive investigations. I’m grateful for the hard work of the dedicated agents and investigators working to hold Mr. Kandi accountable.”

    According to the indictment, between 2008 and 2009, KANDI submitted false information to obtain home mortgage loans. Some of these loans were designed to let KANDI cash out of properties that KANDI owned through his hard money lending. KANDI’s lending activities were typically secured by a borrower’s home and charged a high rate of interest.

    The hard money loans were structured, in some instances, to allow KANDI to seize control of a home if the borrower missed a single payment. Other loans included an inflated and often disguised commission payment to KANDI. In at least 19 loans, KANDI and his co-schemers submitted false information regarding the borrowers’ employment, salary, and intention to live in the home. Some of the loan paperwork included inflated appraisals so that KANDI could maximize the money he obtained in the scheme.

    The false statements were designed to make the loans appear legitimate and ensure that they would meet federal lending standards. Many of the loans were processed by Pierce Commercial Bank and were insured by the Federal Housing Administration (FHA), a unit within the federal Department of Housing and Urban Development (HUD).
For the U.S. Attorney press release, see Pierce County Hard Money Lender Indicted For Conspiracy, False Statements And Mail Fraud In Mortgage Fraud Scheme (Submitted False Documents Defrauding Bank and Federal Insurers).

Go here for links to earlier stories on Emiel Kandi.

See generally, The Seattle Times: Lender seizes desperate borrowers' homes (A Seattle Times examination of numerous Emiel Kandi loan deals shows that they are set up so he can quickly take borrowers' homes and in some cases flip them for a profit. And he gets away with it):
  • Kandi is the lender of last resort for some people who've been turned down by banks because of poor credit or limited income. He says his requirement for a borrower is merely "a pulse and a legal ability to sign." He admits he charges borrowers as much as he can get away with — 45 percent interest in one case — and makes it clear to them that if they fail to comply with the loan agreements, he will take their property. "I am a wolf," he explained.

    A Seattle Times examination of numerous Kandi loan deals shows that they are set up so he can quickly take borrowers' homes and in some cases flip them for a profit. And he gets away with it. "He's in the business of taking people's property," said Martin Burns, a lawyer who sued Kandi on behalf of [one homeowner]. "He finds vulnerable people and exploits them."(1)

(1) Reportedly, one of Kandi's common practices is to have his victims sign over their title to the property using a quitclaim deed, writing the loan as a purported 'commercial' (as opposed to a 'consumer') loan in attempt to dodge certain consumer protections, and employing 'hair-trigger' default clauses in the loan agreement that allow him to take possession of the house immediately using the deed after a missed payment without going through foreclosure, which includes a 190-day waiting period and several consumer protections.

Deficiency Judgments, Statutes Of Limitations, Collection Period Extensions, Lien Renewals & Other Pleasant Thoughts For Now-Foreclosed Ex-Homeowners

The Washington Post reports:

  • Lenders are filing new motions in old foreclosure lawsuits and hiring debt collectors to pursue leftover debt, plus court fees, attorneys’ fees and tens of thousands in interest that had been accruing for years.

    It’s an aftershock of the foreclosure crisis, and most homeowners don’t know it’s coming.

    “When people take out a loan, they generally think the home is the security for the loan,” said Alys Cohen, an attorney in the Washington office of the National Consumer Law Center. When they no longer have that home, “people don’t expect that debt to follow them,” she said.

    It’s all part of a legal process known as a “deficiency judgment,” which is allowed in the District and 40 of 50 states, including Maryland and Virginia. Since the start of the mortgage meltdown of 2008, at least 400 Maryland homeowners have been pursued in court, according to a Washington Post analysis of state court data. In the first four months of this year, 57 new court actions have been filed against homeowners — on pace to exceed last year’s total of 120.
  • Suing people immediately after foreclosure was problematic. For one thing, lenders usually could not get more money out of already broke homeowners. But, if lenders waited a few years, some forecast that people would have money again once the economy recovered.

    The irony is not lost on Evan Goitein, a Bethesda-based foreclosure attorney.

    “There is very little to be gained from the bank’s perspective to be suing people for the money at this point,” Goitein said. “While deficiency judgments are not really a problem right now, I can see it being a big problem in the future. So seven years from now when my client has recovered from his foreclosure, he’s got a job again, he’s saved up enough money . . . [from the bank’s perspective], that would be a great time for the bank to try to sue them.”
  • States have different statutes of limitation on how long they allow lenders to pursue deficiency judgments, ranging from 30 days to 20 years. In Kansas, a deficiency judgment must be sought at the time of foreclosure. If a judge feels the bid at foreclosure sale isn’t “fair value,” the judge can deny or reduce the judgment.

    In Maryland, it’s three years. However, there’s a little-known exemption for most mortgage documents that gives debt collectors 12 years to sue homeowners, plus another 12 years to collect the debt and on top of that a one-time renewal of 12 years for a total of 36 years.

    “That’s 36 years that lenders have to go after people,” said [Maryland bankruptcy attorney Tate] Russack, whose firm has taken on 80 bankruptcy cases in the past four months, all of which involve deficiency judgments.
  • Already-foreclosed homeowners won’t know that they’re being targeted until they receive the court notice. In many cases, it is hard to even know who owns the debt until the notice arrives. Often times, the entity pursuing the debt is not the original lender, because that debt can be sold by the homeowner’s lender to someone on the secondary debt market for pennies on the dollar. Most of the deficiency cases that Goitein said he sees involve smaller banks.
  • The wave of deficiency judgments had a prologue in Texas.

    During the 1980s in Houston, the bottom went out of the oil market, with the price dropping to about $15 a barrel. Homes that had been assessed at $200,000 couldn’t be sold for $100,000. More than 200,000 people lost their jobs and could not pay their mortgages.

    The lenders foreclosed on the homes and then pursued the homeowners for the outstanding balance.

    Once a judgment was granted, debt collectors had 10 years to collect, according to the Texas statute at the time, and another 10 years if the debt collector petitioned the court to renew the judgment. “It was an absolute disaster,” [retired professor at the University of Houston Law Center John] Mixon said.

    In response to the situation, the state passed laws increasing consumer protections in deficiency cases. “It’s less an event in Texas today than it was back then,” Mixon said. “But Texas still provides the object lesson of what could happen.”

    But for the moment, efforts to pursue deficiency judgments are ramping up rather than winding down.

Sunday, June 23, 2013

Foreclosure Fraud Settlement Monitor: Banksters Falling Short On Living Up To Their End Of Deal

Bloomberg reports:

  • The largest U.S. mortgage servicers, including Citigroup Inc (C). and Bank of America Corp., haven’t done enough to upgrade their treatment of customers in danger of foreclosure, according to a court-appointed monitor.

    To meet the terms of a legal settlement with the U.S. Justice Department and 49 state attorneys general, the monitor said in a report released [this week], the banks must improve their response to loan-modification requests and their collection of records, and provide a single point of contact for borrowers. The settlement over botched foreclosures requires the banks to submit plans to the monitor for improving their performance.

    “I want to send a simple message to these banks that it’s time for them to live up to their end of the deal by complying with all aspects of the settlement,” Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, said on a conference call with reporters.

    Donovan, who helped negotiate the February 2011 settlement, called the banks’ performance “unacceptable” and said federal and state authorities would fine or “haul them back into court” if they failed to improve their treatment of borrowers seeking mortgage relief.

    The banks were required to meet new servicing standards as part of the accord, which came about after disclosures that they used faulty documents to seize homes.

Oakland Federal Judge Green-Lights Another Lawsuit Alleging Banksters Bilked Home Loan Borrowers In Default With Inflated Junk Fee Racket, Clipping Homeowners For Exorbitant Mark-Ups For Services Provided By 3rd Party Vendors

In Oakland, California, American Banker reports:

  • JPMorgan Chase (JPM) must defend itself against allegations that it charged millions of dollars in improper fees to mortgage borrowers who were in default, a federal judge has ruled.

    Thursday's ruling by Judge Yvonne Gonzalez Rogers of the U.S. District Court in Oakland, Calif., means borrowers may proceed with a lawsuit that accuses JPMorgan of inflating fees for inspections, brokers' estimates and other so-called property preservation services. Vendors hired by JPMorgan's servicer performed the services.

    The decision follows rulings in April by Rogers that allowed similar lawsuits against Wells Fargo (WFC) and Citigroup (NYSE:C) to proceed.

    The homeowners, who live in California, Tennessee and Oregon, say they are suing JPMorgan Chase on behalf of hundreds of thousands of borrowers who have had a mortgage serviced by the company since May 2011.

    The borrowers, who sued JPMorgan Chase last year, charge that the allegedly marked-up fees violated state and federal law, forced them deeper into debt, damaged their credit scores and had the potential to add hundreds or thousands of dollars to their loans.

    JPMorgan Chase sought to dismiss the lawsuit, contending it was preempted by an April 2011 settlement with the Office of the Comptroller of the Currency that required the company and seven other servicers to fix problems with their foreclosure processing.

    Rogers disagreed although she narrowed some of the charges.

    "First, the deficiencies and unsafe or unsound practices identified by the OCC were primarily, if not entirely, devoted to foreclosures," Rogers wrote in an opinion issued Thursday. "The consent order did not require remediation to borrowers for financial injuries outside the scope of the review."

    According to the borrowers, loan paperwork issued by JPMorgan Chase failed to inform borrowers that JPMorgan Chase could allegedly profit from default-related services. As of Dec. 2010, JPMorgan Chase allegedly charged borrowers between $95 and $125 for so-called broker's price opinions that allegedly cost the bank $50 or less, the lawsuit charged.

Dad/Son Duo Belted With Multi-Year Prison Sentences For Running Fraudulent Foreclosure Rescue Outfit Peddling Bogus Sale Leaseback Arrangements To High-Equity, No-Cash Homeowners

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

  • A father and son who ran a mortgage loan fraud scheme that succeeded in obtaining $4.4 million in mortgage loans while masquerading as a foreclosure rescue operation were both sentenced to prison [], U.S. Attorney Paul J. Fishman announced.

    Vito C. Grippo, 58, of Jackson, N.J., the president of Morgan Financial Equity Shares and Vanick Holdings, LLC, based in Holmdel, N.J., was sentenced to 96 months in prison.
  • Frederick “Freddie” Grippo, 32, of Old Bridge, N.J., formerly a loan officer at Worldwide Financial Resources and an officer of Vanick Holdings, was sentenced to 41 months in prison.
  • According to documents filed in this case and statements made in court:

    Between January 2008 and February 2010, Vito Grippo held Morgan Financial out to the public as a company that could help homeowners who faced foreclosure on their homes through something Grippo called the “Equity Share Program.” As described by Grippo and his associates, the Equity Share Program involved creating a limited liability company (LLC) in the name of the homeowner’s house, in which the homeowner would supposedly own a 90 percent interest with the rest to be owned by one or two private investors.

    In reality, the so-called investors invested nothing and were instead straw buyers recruited by Vito Grippo or his son, Frederick Grippo, because they had good credit. The Grippos and their associates then applied for mortgages in the names of the “investors” for the purchase of the properties owned by the homeowners in distress.

    A homeowner in distress would come to a closing in Vito Grippo’s office in Holmdel and be given a stack of documents to sign to prevent foreclosure. The homeowners frequently did not understand that they would be transferring title to their homes to the “investor.”

    The new mortgage loan applications filled out by the Grippos or their associates in the name of one of the investors contained materially false information about the loan applicant’s monthly income, his assets and whether the residence to be bought would be applicant’s primary residence.
  • Properties that lost money through the Equity Share Program were found throughout the metropolitan area, including homes in Rutherford, N.J., Monroe, N.J. and Brooklyn, N.Y.