Saturday, July 27, 2013

Renter Partially Blows Up Cockroach-Infested Chinatown Apartment House By Accident After Aerosol From Two Dozen Pesticide Foggers Ignites Gas, Blows Out Load-Bearing Wall; 60+ Residents Crammed Into Illegally Subdivided 'Deathtrap' Forced To Flee, Seek Red Cross Aid As NYC Officials Slap Structure Remains w/ Vacate Order

In the Chinatown section of New York City, the New York Post reports:

  • Cockroaches were the least of the problems for a Chinatown building that was blown apart by “bug bomb” canisters this week, officials said.

    It’s a deathtrap in there,” an FDNY firefighter said of 17 Pike St., which went up in a fiery explosion, injuring at least nine people, [...].

    An engineer called to investigate the five-story prewar structure described it as “a disaster” of illegal subdivides and fire hazards, and the Department of Buildings [] issued a full vacate order and slapped owner Mary Shiu with violations.

    At least nine people were injured in the blast, three critically.

    DOB inspectors found illegal partitions that compromised exits on the second through fifth floor, along with “illegal plumbing work and gas lines.”

    “There were inhumane living conditions,” said appalled structural engineer Gregory Georges. “There were a lot of violations. The apartments were subdivided. There were [illegal] SROs throughout the building. There were electric and gas lines everywhere.”

    The building — which can legally house 18 families — was a maze of one-bedroom apartments split into four, the engineer said, with multiple sets of bunk beds in the rooms. Bathrooms had also been converted to bedrooms.

    Part of the building collapsed after aerosol from two dozen flammable aerosol pesticide foggers set out by a resident ignited on a pilot light or appliance and blew out a load-bearing wall, officials said.

    It will likely be a year before anyone can move back into the building, officials said.

    It is unclear how many people were living there but The Red Cross has had 61 residents register for emergency assistance.

    “I don’t know who is living here,” said co-owner Thomas Shiu. “I think there are a lot of illegal immigrants. We tell them it’s not allowed to put partitions in. Like the city, it is out of control.”

Lawsuit: Goy Landlord Allegedly Declared Rental Apartment “A Christian Residence!" As She Gave Orthodox Jew The Boot Over Refusal To Take Down Mezuzah From Front Door

In North Babylon, Long Island, the New York Post reports:

  • There was no welcome mat for his mezuzah.

    An Orthodox Jew claims he was booted by a Long Island landlord who demanded that he remove the treasured religious artifact from his apartment door and declared, “This is a Christian residence.”

    Arye Sachs says the mezuzah, a piece of parchment inscribed with verses from the Torah and typically hung in a special case at the entrance of a Jewish home, is a precious family heirloom handed down from his grandfather, a victim of the Holocaust.

    In a Brooklyn federal lawsuit, Sachs, 53, calls the mezuzah a “priceless, irreplaceable protector” that helped him recover from three strokes and even made his divorce “one of the most amicable and peaceful divorces known to man.”

    He claims that landlord Margarita Pascale, 57, repeatedly told him to take the mezuzah down from the door of the North Babylon home where she rented him an apartment and that she then evicted him when he didn’t.

    “Pascal [sic] informed me this residence is a Christian residence, and if I will not remove my mezuzah, I will be out ‘on the street,’ ” Sachs alleges.

    He says he discovered the mezuzah missing after returning from a trip last month. Pascale did not return a call for comment.
Source: Jew: I’m evict-im of bias.

For the lawsuit, see Sachs v. Pascal.

Friday, July 26, 2013

Another Reverse Mortgage Horror Story: Sleazy Bankster Saddled Now-Deceased 78-Year Old Widow With 'Estate-Devouring Home Loan'; Heirs Left To Fight Off Foreclosure, Claiming Deal Is Unconscionable, Usurious

Syndicated real estate columnist Kenneth Harney writes:

  • Call it the estate-devouring, nightmare home loan you hope to never encounter: A reverse mortgage with a base interest rate of 9.95 percent, plus a 50 percent share for the lender of increases in value of the house following closing, plus another 2 percent "maturity fee" to sweeten the payout even more.

    On top of that, there's a $33,000 mandatory purchase of an annuity by the homeowner that is added to the principal balance and incurs compounding interest while lessening the lender's future payments to the homeowner.

    Is this for real? Do mortgages with terms like this actually exist in this country today? They do. Talk to Sarah Havemeyer of Southampton, N.Y., who's been fighting a California bank in court for two years over her late mother's reverse mortgage that dates back to 1997.

    Although the bank, OneWest, has not yet provided a total of what it believes is owed on the reverse mortgage, according to Havemeyer, she estimates it could be in the neighborhood of $1.5 million to $1.6 million.

    By comparison, the amount that Havemeyer's mother actually received from the reverse mortgage between 1997 and her death in 2010 was just $272,911.51. A reverse mortgage places a lien against a senior's home in exchange for periodic or lump sum payments. The full amount borrowed does not come due until the borrower dies, moves out or sells the home.

    OneWest, for its part, isn't talking. The bank declined to discuss either Havemeyer's litigation or any details of the reverse mortgage terms. The law firm representing OneWest's subsidiary that claims ownership of the reverse mortgage note — Financial Freedom Acquisition LLC — did not respond to a request for comment.

    Financial Freedom has filed for foreclosure, seeking payment of the $272,911.51, plus "interest at the rate stated" in the mortgage along with legal and other fees. The filing did not indicate that a huge chunk of the "interest" due flows from its 50-50 share in the appreciation of the house from $556,000 in 1997 to its approximate current value around $1.8 million.

    Havemeyer, who is serving as executrix of her mother's estate, is challenging the foreclosure, claiming that Financial Freedom has not been able to present documentation that it actually owns the mortgage, and the terms of the loan are "unconscionable and usurious" and violate state law.

    Were it not for the unusual terms of the mortgage, Havemeyer's dispute with the bank and its subsidiary might be seen as just another real estate squabble in the high-gloss Hamptons on New York's Long Island. But the terms make this case jump out as special.

    Start with the triple whammy of 50-50 appreciation sharing, plus the mandatory annuity added to the loan balance, plus the 2 percent extra fee tacked on at the end. Although the vast majority of reverse mortgages have never employed such payment terms, thousands that were marketed in the 1990s did.

    In the late 1990s, a series of California lawsuits claimed that terms such as these amounted to "financial abuse of the elderly" and allowed lenders to "[reap] unfair profits at the expense of the elderly," many of whom ended up owing far more than they borrowed.

    A consolidated class-action suit was later settled by the defendants — Transamerica Corp. Transamerica HomeFirst, Inc., Metropolitan Life Insurance Co. and Financial Freedom Senior Funding Corp — for $8 million. None of the companies admitted wrongdoing. Through a long chain of events spanning the mortgage crash, OneWest Bank acquired reverse mortgage assets that dated back to Transamerica and Financial Freedom Senior Funding, including the loan now in dispute.

    A widow and 78 when she originally obtained her loan from Transamerica Home First, Sarah C. Hoge, Havemeyer's mother, did not seek guidance from family members. Havemeyer's lawyer in the foreclosure case, Michael Walsh, says "I can't imagine that Mrs. Hoge really did understand what she was getting into." But she signed up, and ultimately did not opt out of the class-action settlement in California, which provided her a payment of $8,480.

    How Havemeyer's case ultimately turns out is anybody's guess. But the bottom line is this: Reverse mortgages, even today's friendlier versions that offer upfront counseling, can be hazardous to elderly borrowers' financial health and potentially costly for their heirs. Nearly one in 10 federally-backed reverse mortgages is in default, risking foreclosure for owners. Family members need to be involved from Day One. And stay involved.

Boot May Be Near For 13 Land-Renting Homeowners In Dilapidated Mobile Home Park Facing Foreclosure; Failing Infrastructure Requiring $750K In Water & Sewer Upgrades, Connection Fees May Be Too Tough A Nut To Crack For Interested Potential Buyers & Lead To Shutdown

In Bennington, Vermont, the Bennington Banner reports:

  • With their landlord in foreclosure proceedings and the infrastructure they rely on failing them, residents of the Sunset Farm Mobile Home Park eagerly sought answers Thursday from a host of town and state officials.

    Park owner John M. Bushee Jr. is not fighting foreclosure proceedings brought forth by Chittenden Trust Co. Bushee will eventually lose the land, leaving tenants unsure of their long-term living situation. They are facing the very real possibility the park will close, forcing them to find a way to relocate.

    The short-term situation is also dim. Residents described month after month of a failed water system, forcing those residing in the park's 13 housing units to purchase bottled water. Most residents are now subtracting the cost of bottled water from the rent they pay to lease the lots their homes sit on. Others, on the advice of Vermont Legal Aid, have begun placing their rent in escrow.

    Walking away

    Bushee has had problems supplying the park with a clean water supply since April 2012. The town of Bennington reached an agreement with Bushee to upgrade the system. The state has issued the requisite permits, but both tenants and state officials said Thursday it's clear Bushee is walking away from the property and has no intention of fixing it.

    "There is a permit out there that's approved but I don't believe the owner has any intention of putting in that new system," said Gary Kessler with the Vermont Department of Environmental Conservation.

    In the meantime, residents said they want to stop paying a monthly surcharge to Bushee for upgrades he claimed to make to the water system. Bushee signed an affidavit stating he has so far paid $4,900 to improve the water system. The $35 monthly surcharge cannot be assessed on each unit until that is paid off, according to Dale Azaria, general counsel for the Department of Housing and Community Development.

    The sewer system has also fared poorly. One woman, visibly upset, said contents of a septic tank "bubbled up" near her home leaving behind a bad odor. "My desire is to get out of the park," she said. "I can't afford to go anywhere else. I'm stuck here."

    Arthur Hamlin, housing program coordinator with the Vermont Department of Housing and Community Development, told residents Thursday that the bank has no interest in taking ownership of the park. The property will likely go to auction in the next several months, he said.

    A private buyer is unlikely to invest the necessary funds to make the park habitable for the long-term, however, according to John Broderick, executive director of Shires Housing, the Regional Affordable Housing Corp. for Bennington County.

    "I'm sorry to be the bearer of bad news here, but this is going to be a heavy bill," he said. "It's a pretty big bill, folks, and for 13 units it's going to be a tough sell."

    Broderick said his nonprofit organization was asked by the state to look into the issues surrounding the park and assess if it could take over the park. Broderick said he hired a civil engineer to investigate the water and sewer infrastructure. The findings are likely cost-prohibitive, he said.

    Anyone looking to acquire the property must pay down more than $30,000 in back taxes owed to the town. The bank is owed about $100,000. Additionally, it will cost about $150,000 to bring the water system up to current codes, and another $600,000 to connect the park to the town's sewer system, which appears to be the best solution, Broderick said.

    "Any new owner coming is going to be faced with a really, really large bill to get the water system to where it needs to be and to get either connected to the town system or get a workable septic system. It really might not even be possible," he said. "Would be willing to do it? Not under those circumstances. Not from what we've seen from this report. This would be very difficult. I have a board of directors I work for and I would have to convince them to take this on."

Thursday, July 25, 2013

NC AG's Efforts Lead To Shutdown Of Loan Modification Racket For Allegedly Clipping Homeowners For Upfront Fees, Failing To Providing Meaningful Help

From the Office of the North Carolina Attorney General:

  • A Charlotte loan modification company that claimed to help people lower their mortgage payments and save their homes from foreclosure but actually did little or nothing to help them is permanently out of business in North Carolina, Attorney General Roy Cooper announced [].
  • Cooper filed suit in September 2012 against Lender Exchange for charging consumers illegal advance fees for mortgage loan modification services and then failing to provide them with meaningful help. Under North Carolina law, it’s illegal to charge an upfront fee for foreclosure assistance or loan modification services.

    Wake County Superior Court Judge Donald Stephens signed off on a consent judgment which permanently bans Lender Exchange and its owners, Kenneth Carl McCurd and Tanya Louisa Wilson, from conducting any loan modification, foreclosure assistance or debt relief services in the state. The owners will also pay refunds of $4,000 to consumers who complained to Cooper’s office about their company. If the defendants violate the judgment, they will have to pay an additional $58,000.

    According to Cooper’s complaint, Lender Exchange falsely claimed that no homeowner who used its services had ever lost their home to foreclosure and promised prospective customers a full refund if it wasn’t able to obtain a loan modification for them. However, homeowners who paid Lender Exchange its fee of one month’s mortgage payment and did not get meaningful help have had a hard time getting their money back.
For the North Carolina AG press release, see Charlotte loan modification business shuttered, AG Cooper says.

Another Corrupt Title Closer Goes Down; Cops Plea For Role In Multiple Real Estate Frauds, Including Shady Short Sales, Escrow Proceeds Pilfering That Left Lien Holders, Title Insurance Underwriters Holding The Bag

From the Office of the U.S. Attorney (Baltimore, Maryland):

  • Rhonda Scott, age 52, of Oxon Hill, Maryland, pleaded guilty [] before U.S. District Judge James K. Bredar to conspiring to commit wire fraud in connection with two separate mortgage fraud schemes which resulted in losses of over $2,500,000.
  • According to her plea, beginning in 2008, Scott agreed to participate in several fraudulent real estate transactions that settled at M&R Title, Inc., and Sanford Title Services LLC. The fraudulent transactions at each title company were part of different conspiracies, both of which Scott joined. In both schemes, Scott facilitated deals between her co-conspirators, identified and recruited individuals that could be parties to the real estate transactions generating proceeds for the co-conspirators, received proceeds of the fraudulent transactions through a shell company designed to disguise her receipt of the funds, sent money to co-conspirators and identified mortgage transactions that the co-conspirators could use to enrich themselves.

    As part of the M&R Title conspiracy, the co-conspirators deceived buyers, sellers and lenders to make it appear to sellers that they were selling their property at a low price, and to buyers and lenders that the property was being sold at a higher price. The co-conspirators created paperwork for two different sales of the property at the same time.

    The first sale was fraudulent because it was backdated, the buyer was planning to immediately flip the property in a subsequent sale and the settlement statement listed a fake hard money loan. The second sale involved a significantly increased sales price and the settlement statement showed a significant sum being disbursed to the hard money lender as a payoff of an existing lien, but in reality those funds would be used for improper disbursements to the co-conspirators.

    With respect to the Sanford Title conspiracy, improper disbursements were made from the title company to Scott and others. The conspirators engaged in many fraudulent techniques, including: short sales in which the property would be sold for a higher price than the seller was aware of; sales of properties not owned by the seller including properties Scott purported to own but did not own at the time of settlement; real estate transactions in which there were multiple sales of the same property at the same time; the seller and/or buyer were shown difference settlement statements and the conspirators used the difference between the figures in the two statements to enrich themselves; and Sanford Title did not disburse money that should have been paid to lien holders and instead diverted a portion of those funds to co-conspirators.

    Both of the M&R Title and Sanford Title fraud schemes involved at least 25 victims, including lenders, sellers and buyers of real estate, title insurance companies and lien holders. The reasonably foreseeable loss associated with Scott’s conduct is at least $2.5 million.

Michigan AG Pinches Suspected Scam Operator On Charges Of False Pretenses, Larceny By Conversion For Allegedly Clipping Upfront Fees From Consumers In Exchange For Purported Real Estate Negotiation Services

From the Office of the Michigan Attorney General:

  • Michigan Attorney General Bill Schuette [] announced the arrest of Eric Lamarr Drake, 37, of Detroit, for allegedly operating a fraudulent mortgage banking business under false pretenses by promising mortgage services, retaining clients' money and never delivering refunds to those clients. The charges follow an investigation by the Attorney General's Corporate Oversight Division.
  • Drake allegedly owned and operated D & F Funding, using a bogus Novi post office box listing and advertising two fake Southfield offices, all located in Oakland County. He misrepresented himself to clients allegedly posing as a mortgage banker with Pathway Financial, LLC in Southfield at a time when Pathway Financial was no longer in business. Drake also allegedly promoted himself as a real estate negotiator, who allegedly collected upfront fees to broker mortgages, bargain down home prices, modify mortgages and pre-approve mortgage credit.

    He allegedly collected fees between $1,000 and $5,480 for his services in the Oakland and Wayne County realty markets. Drake disappeared before any of his clients received the promised end of their bargain and allegedly retained money from at least five southeastern Michigan victims. When pressured for refunds, Drake allegedly promised several of his victims recompense. Those refunds were never made.

    Schuette filed the following criminal charges against Eric Lamarr Drake on Thursday, July 18, 2013:

    Five Counts of False Pretenses - $1,000 or more but less than $20,000, a felony punishable by 5 years and/or $10,000, or 3 times the value of the money or property involved, whichever is greater; and,

    Five Counts of Larceny by Conversion - $1,000 or more but less than $20,000, a felony punishable by 5 years and/or $10,000, or 3 times the value of the property stolen, whichever is greater.

Wednesday, July 24, 2013

Avoiding A Mortgage Lien In Bankruptcy & What It Means


  • A chapter 7 trustee sought to avoid an unrecorded first mortgage on the debtor’s property and to preserve the mortgage lien for the benefit of the bankruptcy estate. The debtor responded by claiming that even if the trustee was successful, he could not sell the property without first foreclosing the mortgage in accordance with state law. The bankruptcy court rejected the debtor’s claims and granted the trustee’s motion for summary judgment. The debtor appealed to the bankruptcy appellate panel.

    The debtor executed a mortgage on her home to secure a $200,000 loan. Unfortunately for the mortgagee, the mortgage was never recorded. The debtor later granted a second mortgage to secure a line of credit (which was recorded), and recorded a homestead declaration under state law.

    The debtor’s bankruptcy schedules showed the value of the home as $223,500, the second mortgage claim of ~$30,000 and the unperfected first mortgage claim of ~$186,000. She also claimed a homestead exemption of $500,000.

    Since the first mortgage was unrecorded, the trustee was able to exercise the strong arm powers under Section 544 of the Bankruptcyto avoid the mortgage. (See Bankruptcy “Strong Arm” Powers: Bye Bye Mortgage.) Under Section 551 of the Bankruptcy Code, a transfer that is avoided (in this case the grant of a lien pursuant to the mortgage) is “preserved for the benefit of the estate.” It was clear that the trustee could avoid the mortgage and that some sort of benefit would be preserved for the benefit of the bankruptcy estate.

    The question was exactly what benefit. [...]

Fraudulent Joinders To Keep Banksters From Removing Homeowner Lawsuits To Federal Court, Repeated Use Of Rejected "Show Me The Note" Theory Allegedly Among Tactics Used By Foreclosure Defense Attorney That Have Landed Him In Hot Water

In Minneapolis, Minnesota, the Star Tribune reports:

  • The Eighth Circuit Court of Appeals took the unusual step [] of threatening to impose its own sanctions on a Minneapolis foreclosure attorney for continuing to file appeals, using legal arguments that have been repeatedly rejected by the district court in Minnesota as well as the federal appeals court.

    Attorney William B. Butler already faces possible discipline from the federal district court in Minnesota and the Minnesota Lawyers Professional Responsibility Board, both of which are currently conducting investigations of him. Butler's problems were described in the Star Tribune last Thursday.

    It is the third time in five days that the appeals panel has upheld the dismissal of a Butler lawsuit.

    On Thursday and Friday it issued separate opinions, upholding dismissals of his suits by Minnesota District Court judges.(1)

    On Monday, a three-judge appeals court panel issued its latest ruling, upholding a decision by U.S. District Judge Patrick Schiltz, who dismissed a case filed by attorney Butler last August.(2) The appeals panel called Butler's continued rehashing of arguments "troubling," citing three similar Minnesota cases in which his arguments were rejected.

    "HIs deliberate attempt to ignore these cases suggests that he has the intention of deceiving or misleading the court into ruling in his favor," the panel said in Monday's decision. "At the very least, it suggests he lacks a nonfrivolous basis for appeal. Such conduct may provide a basis for this court to impose its own sanctions in the future."(3)

    The appeals court quoted liberally from Schiltz's harsh criticism of Butler for using the "show me the note argument" that the foreclosing entity no longer possesses the original foreclosure borrowing note, making the foreclosure invalid. In his August ruling, Schiltz imposed sanctions totalling $79,766. Butler has said he will not pay the sanctions by local federal judges, insisting his position is correct, the courts are wrong and he will eventually prevail. The sanctions now total $323,307, according to Star Tribune calculations.

    In his latest ruling the appeals court quoted Schiltz, describing Butler's strategy:

    "Butler takes a group of a dozen or so individuals who are facing foreclosure but otherwise have no connection to one another; he gins up a dozen or so claims against a dozen or so defendants grounded mostly on the show-me-the-note theory; and he fraudulently joins a single nondiverse defendant (typically a law firm that represented one of the lenders in a foreclosure proceedings) in an attempt to block removal to federal court.

    "The defendants generally remove the cases to federal court, and Butler then moves to remand. If the judge denies Butler's motion, he might 'remand' the case himself by voluntarily dismissing it and refiling in state court within a day or two, thereby starting the process all over again.(4)

    To hide his conduct, Butler will reorder the names of the plaintiffs or substitute a new plaintiff for one of the old plaintiffs, so that the refiled case will have a different caption.

    "When Butler's claims are finally challenged on the merits, he makes false representations and spins out contradictory and often absurd arguments in the hope that their sheer weight and number, multiplied by the number of parties and claims, will overwhelm his opponents and the court...."
Source: 8th Circuit Court of appeals threatens Minneapolis lawyer with sanctions.

(1) Johnson v. Deutsche Bank National Trust, No. 12-2605 (8th Cir. July 11, 2013),  Mustafa v. Bank of America, N.A., No. 12-3217 (8th Cir. July 12, 2013).

(2) Welk v. GMAC Mortgage, LLC, No. 12-3141 (8th Cir. July 15, 2013).

(3) From the court's ruling:
  • In his briefs to this court Butler similarly omits any discussion of the recent cases rejecting his "show me the note" theory and jurisdictional arguments, and he makes no attempt to distinguish or argue against them. He simply represents that Minnesota law requires a foreclosing mortgagee to possess the note and that the district court lacked jurisdiction to hear the case.

    This is troubling. Butler himself has argued several cases in which we rejected his "show me the note" theory under Minnesota law. E.g., Murphy, 699 F.3d at 1030; Butler v. Bank of Am., N.A., 690 F.3d 959, 959 (8th Cir. 2012); Stein v. Chase Home Fin., LLC, 662 F.3d 976, 977 (8th Cir. 2011).

    His deliberate attempt to ignore these cases suggests that he has the intention of deceiving or misleading the court into ruling in his favor. At the very least, it suggests that he lacks a nonfrivolous basis for appeal. Such conduct may provide a basis for this court to impose sanctions of its own in the future. See Fed. R. App. P. 38.
(4) See, generally, Erroneous Removal As A Tool For Silent Tort Reform: An Empirical Analysis Of Fee Awards And Fraudulent Joinder for more on the 'cat-and-mouse' games played by state court plaintiffs and defendants jockeying around to either move or block moves of state court cases into federal court.

Class Action Settlement Near In NJ Bid-Rigging Lawsuit Involving Municipal Tax Lien Auctions

In Hunterdon County, New Jersey, the Hunterdon County Democrat reports:

  • Several defendants in a class action suit regarding municipal tax lien certificates (TSCs) have reached agreements on settlement proposals.

    A dozen New Jersey homeowners are now parties in a suit claiming that they were victims of a conspiracy. The homeowners were either facing foreclosure or had been foreclosed upon.

    Many of the more than two dozen defendants in the federal suit are among those pleading guilty to federal criminal charges.

    One defendant, Crusader Servicing Corp., purchased a lien in Lebanon Township. In March 2012, the owner of that home was the first to file suit in Superior Court in Hunterdon County. The suit was transferred to federal court and then consolidated with other suits like it.

    So far, 17 defendants have reached six different settlement agreements. Attorneys for the property owners are asking the court to certify the proposed settlement class and to give preliminarily approval to five of the most recent settlement agreements.

    A hearing is scheduled on the matter for Aug. 5.

    Under the proposed settlements the tax lien holders will offer discounts of 10% to 15% for property owners to redeem the certificates. The lien holders also agreed to delay any foreclosure proceedings until at least 90 to 120 days following approval of the settlement.

    The defendants also made payments to a settlement fund.

    Due to the number of property owners involved, the attorneys are seeking a delay of having to notify all the potential class members until the settlement fund reaches at least $1 million, or for two years, whichever comes first.

    So far the settlement fund totals $955,000.

    Attorneys are still negotiating with the other defendants.

    The Department of Justice said that the conspiracy limited competition in public auctions for municipal tax liens so the liens could be purchased at higher interest rates, many at the maximum 18% interest rate.

Tuesday, July 23, 2013

Oregon Jury Verdict Favors Homeowner/Couple Victimized In Another Bankster-Perpetrated Loan Modification Jerk Around That Ended In Foreclosure

In Washington County, Oregon, The Oregonian reports:

  • A Washington County jury on Thursday rebuked JPMorgan Chase's handling of a foreclosure case, ruling the nation's second largest bank likely had broken promises it made to borrowers Bela and Eva Lengyel, resulting in the seizure of their home.

    The case is believed to be the first wrongful foreclosure suit to go before a jury in Oregon since the beginning of the housing crash, though many cases have gone before judges in the state. It offers a glimpse into how juries may deal with fallout from the mortgage crisis and the way the nation's leading banks reacted.

    "If I were a transnational bank, I would be very concerned about facing juries in this state," said attorney Terry Scannell, who represented the couple.

    Bela Lengyel said he contacted the bank in November 2008 seeking to lower the monthly mortgage payments he and his wife, Eva, were making on the home where they also operate an adult foster care business. The bank told him it would help, but he had to first default on his payments, he said.

    By January 2009 he had done just that, setting him on the road to an August 2010 foreclosure even though he contends he had the money to pay even the original, higher payments. Shortly thereafter, the Lengyels sued.

    Attorneys for Chase, which serviced the loan owned by federally backed mortgage giant Freddie Mac, argued no such promise was made. They presented a form signed by Lengyel that said no modification agreements would be made verbally, only in writing. And the bank's records didn't show such a promise had been made.

    Still, 10 jurors found that the bank had agreed to modify the loan after the Lengyels went into default and that they qualified for such a modification. (One juror was undecided on each point, and one fell ill and missed the final day's testimony.)

    The jury awarded $10,850 in damages, and presiding Judge Don Letourneau will rule later on whether the Lengyels may remain in the home.

Judge Temporarily Blocks Bankster Foreclosure Amid Allegations Of 'Dual Tracking'/Loan Modification Jerk Around That May Violate California Homeowner Bill Of Rights

In Yuba County, California, the Appeal Democrat reports:

  • A Yuba County judge has temporarily blocked the foreclosure sale of an Olivehurst home after the property owner accused Wells Fargo of breaching a loan modification agreement.

    A hearing is set next week in Yuba County Superior Court on Elias Lopez's request for a preliminary injunction against the bank.

    Yuba County Superior Court Judge Benjamin Wirtschafter issued a temporary restraining order on July 3. The bank had scheduled a trustee sale on July 8.

    "We have worked with Mr. Lopez since 2010 to identify options that would allow him to stay in the home.Given that there is active litigation around (his) loan, we can't discuss the case in any more detail at this time," Wells Fargo spokeswoman Julie Campbell said in an email.

    In court papers, Lopez's lawyer, Janice Dudensing, said Lopez, who owns a home in the 1800 block of McGowan Parkway, was placed in a trial payment plan last year after he submitted a loan modification application. He had fallen behind on his mortgage payments.

    After making payments, Wells Fargo "refused to permanently modify the loan," Dudensing alleged.

    Lopez "was told to start the whole loan modification process over," Dudensing wrote. Lopez was confused because the bank simultaneously started foreclosure proceedings.

    Lopez alleged in his lawsuit that Wells Fargo violated the state's Homeowner Bill of Rights by offering to modify the loan while also starting foreclosure proceedings, what Dudensing called "dual tracking."

    Efforts by Lopez to contact bank officials about the loan were unsuccessful, according to the lawsuit.

Divorced Hubby: My Deadbeat Former Wife Is Stiffing Bank Out Of House Payments On Ex-Marital Home, Forcing Me To Cough Up Cash To Pay Loan & Protect My Credit

In Jefferson County, Texas, The Southeast Texas Record reports:

  • A man claims he was forced to make payments on a $100,000 loan in order to protect his credit after his ex-wife failed to do so.

    Noel Jaimes-Chavez filed a lawsuit July 8 in Jefferson County District Court against Elisavet Flores.

    In his complaint, Jaimes-Chavez alleges he and Flores divorced in 2012. In the divorce proceedings, Flores was ordered to make payments on a $100,000 loan in Jaimes-Chavez’s name. The loan was the lien to the property awarded to Flores in the divorce, according to the complaint.

    Flores, however, failed to make the required payments, the suit states. In order to avoid a bad credit score, Jaimes-Chavez made the monthly payments for Flores, the complaint says. However, he claims he should not be forced to make the payments.

    In his complaint, Jaimes-Chavez seeks foreclosure on the property to satisfy his debt, damages, and costs, plus costs and other relief the court deems just.

Monday, July 22, 2013

9th Circuit: No Right To Sue Landlords Under PTFA For Screwed Over Tenants In Foreclosed Homes; Right In Court Proceedings Limited To Defending Against Improper Boot

HousingWire reports:

  • Tenant protections are a way of life, especially in foreclosure cases, when a renter is often left dangling after a landlord loses a rental property to foreclosure.

    But no matter how many protections are crafted for tenants, a case out of the Ninth Circuit Court of Appeals, reveals just how slippery laws protecting renters can be.

    In Logan v. U.S. Bank National Association, the Ninth Circuit held that the 'Protecting Tenants at Foreclosure Act' does not create a private right of action for tenants to bring a civil challenge in court when they believe a financial firm has violated provisions of the act.

    Instead, the court said the act is designed to give tenants a defense to an eviction proceeding rather than a private right of action to file suit, enforcing parameters of the Act.

    The case developed when the plaintiff’s rental property ended up in the hands of US Bank after a foreclosure proceeding against her landlord. The tenant received a three-day notice of termination from the bank, according to the court records.

    Logan claimed in her lawsuit that the eviction process violated the Protecting Tenants at Foreclosure Act, which requires a 90-day notice prior to eviction when removing an existing tenant after foreclosure.

    Even though the act is designed to protect tenants, the ruling shows its power sticks when tenants are defending themselves against an eviction.

    With no private right of action under PTFA, renters stuck in this situation do not have the same power to create a "federal ejectment claim" or to enforce the PTFA.(1)
Source: Ninth Circuit: An act protecting tenants after foreclosure has its limits.

(1) Possibly, violation of the 'Protecting Tenants at Foreclosure Act' might give a screwed over tenant some basis to file suit against the landlord under a state unfair & deceptive acts & practices ('UDAP') law.

5th Circuit Rejects Homeowner Attempt To Challenge Bankster's Foreclosure Based On Robo-Signed Assignments Allegations

The Louisiana Record reports:

  • Homeowners seeking to avoid foreclosure lost an appeal in the U.S. Court of Appeals for the Fifth Circuit against the Deutsche Bank National Trust Company.

    Dia and Joseph Reinagel, the appellants, attempted to prevent the bank from foreclosing on their property, claiming that the assignments issued by the bank to the appellants were “robo- signed” and therefore invalid.

    The court found that the Reinagels had no right to challenge the assignments nor be considered on merits.

    The court denied the appeal and stated that the Reinagles may be subjected to double collection.

    Judge Patrick Errol Higginbotham, Priscilla Owen and James E. Graves Jr. over saw the case.

Sunday, July 21, 2013

Acting On Homeowner's Complaint, Local Cops Bag Pair For Allegedly Using Forged Affidavit To Hijack Possession Of Vacant Home In Foreclosure, Then Pocketing Thousand$ By Duping Local Couple Into Renting It Out

In St. Louis, Missouri, KMOV-TV Channel 4 reports:

  • Two thieves are accused of stealing a house in north St. Louis, then collecting thousands of dollars after renting it out to a couple. Dwayne Ellis and Bertha Williams had no idea anything was fishy when they agreed to rent the house for $650 per month until the real owner returned six months into their “lease."

    The actual owner of the north St. Louis house was living out of town following the foreclosure of this home earlier in the year.

    “She went to the house and found, while it was supposed to be vacant, there as another family living there, so she contacted county police," Detective Andrew Soll said.

    Police believe Clay Winston and Todd Edwards noticed the home was vacant and took over the occupancy. They allegedly forged an affidavit stating the actual owner granted them possession of the house. They then listed the house for rent and collected thousands that they had no right to legally receive.

    Winston and Edwards were charged with forgery and stealing. “They broke in, changed the locks to locks they provided and since they had keys to the house, they were able to dupe the other woman and her family,” Soll added.

Homeowner Facing Foreclosure Now Also Faces Two Forgery Counts For Allegedly Manufacturing Phony Court Orders Purportedly Allowing Him To Dodge Boot

In Plainfield, Illinois, the Plainfield Patch reports:

  • A Plainfield man facing foreclosure is also facing some legal troubles after he allegedly forged court orders to stay in his home longer.

    Marc Franzen, 46, of the 25000 block of Michele Drive, was arrested July 8 and booked into the Will County jail on two counts of forgery.

    Will County Sheriff's Department spokeswoman Kathy Hoffmeyer said an attorney for Bank of America brought the alleged fraud to light during a June 10 meeting with sheriff's detectives.

    An attorney representing the bank, which now owns the Michele Drive home, told detectives that the bank had been in the process of foreclosing on Franzen's home and evicting him for several years, according to Hoffmeyer.

    Last year, Franzen obtained a Will County court order granting him an extension on the eviction process, police said.

    "In 2012, he was given an eviction/extension order but that time had since come and gone," Hoffmeyer said. The bank attorney told police that no further extensions were granted to Franzen in 2013 — but that the Plainfield man was in possession of three Will County orders from February, March and June of 2013.

    Investigators believe Franzen fraudulently obtained the the orders, including the judge's and attorneys' signatures. A warrant for his arrest was issued June 28, Hoffmeyer said.
For more, see Plainfield Man Accused of Forging Court Orders to Stall Eviction Process (Marc Franzen also faces identity theft charges stemming from a Naperville investigation).