Saturday, August 17, 2013

Fair Housing Feds' Probe Triggered By HUD Complaint Filed By Legal Guardian For Intellectually Disabled Ward Leads To $80K Settlement With St. Peters In Suit Accusing City Of Discriminatory Zoning Practices

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

  • The Justice Department announced [] that the city of St. Peters, Mo. will pay $80,000 and make changes to its zoning laws to settle a lawsuit alleging that the city violated the federal Fair Housing Act (FHA) and Title II of the Americans with Disabilities Act (ADA) when it denied a zoning request to operate a group home for four women with intellectual disabilities.

    The lawsuit is part of the Justice Department’s continuing effort to enforce civil rights laws that require states and municipalities to end discrimination against, and unnecessary segregation of, persons with disabilities. The settlement was filed [] and must be approved by the U.S. District Court for the Eastern District of Missouri.

    “The Fair Housing Act and the Americans with Disabilities Act ensure that municipalities cannot enforce discriminatory land use policies that restrict the rights of their residents to live in the housing of their choice,” said Jocelyn Samuels, Acting Assistant Attorney General for the Civil Rights Division. “This important settlement compensates the individuals who were harmed by the city’s practices and will prevent future housing discrimination against the city’s residents who have disabilities.”

    Zoning ordinances that unjustifiably keep group homes out of neighborhoods violate the Fair Housing Act,” said Bryan Greene, U.S. Department of Housing and Urban Development’s (HUD) Acting Assistant Secretary for Fair Housing and Equal Opportunity. “HUD and the Department of Justice will continue to work together to ensure that everyone, including persons with disabilities, has access to the kind of housing that meets their needs.”

    The settlement resolves the United States’ claims that the city violated the FHA and ADA when it adopted and enforced a facially discriminatory 2,500 foot group-home spacing requirement and when its Board of Adjustment refused, without justification, a variance petition to allow Community Living Inc. (CLI) to operate a group home for four women with disabilities.

    The complaint also alleges that the city refused to make reasonable accommodations to the city’s rules, policies, practices or services that were necessary to afford the residents an opportunity to use and enjoy their home.
  • The case began when a legal guardian for a resident of the group home filed a complaint with HUD after the Board of Adjustment denied the group home’s variance petition. HUD referred the complaint to the Justice Department, which conducted an investigation.

Civil Rights, Brooklyn Feds Score Settlement Agreement In ADA Suit Accusing NYS Of Unnecessarily Segregating/Institutionalizing Thousands With Mental Illness In Adult Homes

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

  • The Justice Department’s Civil Rights Division and the U.S. Attorney’s Office for the Eastern District of New York announced [] that they, along with plaintiff adult home residents, entered into a comprehensive settlement agreement with the state of New York under the Americans with Disabilities Act (ADA).

    The settlement agreement will provide relief to thousands of people with mental illness unnecessarily segregated in 23 adult homes in New York City. Adult homes are institutional, segregated settings that house large numbers of people with mental illness.

    Under the settlement agreement, New York will offer supported housing to people with mental illness currently residing in adult homes. Supported housing is apartments scattered throughout the community for which the state provides rental assistance and housing-related support services. Supported housing residents have access to community-based services and supports that promote their inclusion, independence, and full participation in community life. The settlement agreement has been filed with the U.S. District Court for the Eastern District of New York for the court’s approval.

    The Supreme Court made clear in its landmark decision Olmstead v. L.C,(1) that people with disabilities have a civil right under the ADA to receive services in the most integrated setting appropriate to their needs. The state worked cooperatively with the department and private plaintiffs to negotiate a settlement that resolves the allegations that the New York mental health service system violates the ADA by relying on large, institutional adult homes instead of supported housing units that are scattered throughout the community. A state is responsible for segregation when it designs and implements a system that unnecessarily relies on institutional facilities, regardless of whether they are privately owned and operated.
  • Over the next five years, New York will provide scattered-site supported housing to at least 2,000, and potentially more than 4,000, adult home residents. New York has also committed to providing people moving to supported housing with the community-based services and supports that will allow them to thrive in the community. The agreement also will ensure that adult home residents have the information they need to make an informed choice about where to live. If they choose to move to supported housing, they will participate in a person-centered, transition planning process. An independent reviewer with extensive experience in mental health systems will monitor the state’s compliance with the agreement.

    Because of this agreement, people like Ilona Spiegel, one of the named plaintiffs, will get the opportunity to live independently and “become emancipated” after 15 years in an adult home. Spiegel lived independently in her own apartment until she received psychiatric treatment in a hospital in 1998.  When she left the hospital, her only discharge option was to move into an adult home. In the adult home, Spiegel shares a small room with a roommate, has scheduled mealtimes and no opportunity to cook for herself, has little privacy as staff have entered her room without permission and finds living in the adult home extremely isolating. Spiegel has said that she cannot wait to live in her own apartment again and have autonomy over her life, including doing her own cooking, cleaning and shopping, have personal privacy in her home, and be free from intrusion into her personal belongings.

    Loretta E. Lynch, U.S. Attorney for the Eastern District of New York stated: “With this agreement, thousands of New Yorkers will be able to leave the shadow of institutional living and instead live in and contribute to their communities. Because of this cooperative effort, their lives will be immeasurably better and our communities all the richer for their presence.”

    The individual plaintiff adult home residents, on behalf of themselves and a class of adult home residents with mental illness, are represented by Paul, Weiss, Rifkind, Wharton & Garrison, LLP; Disability Advocates Inc.; Bazelon Center for Mental Health Law; New York Lawyers for the Public Interest; MFY Legal Services Inc.; and Urban Justice Center.

Civil Rights Feds Tag Florida In ADA Suit Alleging State Unnecessarily Segregates Children With Disabilities In Nursing Facilities Rather Than Placing Them In Their Families' Homes Or Other Community-Based Settings

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

  • The Justice Department announced [] that it has filed a lawsuit against the state of Florida alleging the state is in violation of the Americans with Disabilities Act (ADA) in its administration of its service system for children with significant medical needs, resulting in nearly 200 children with disabilities being unnecessarily segregated in nursing facilities when they could be served in their family homes or other community-based settings.

    The lawsuit, filed in federal district court in Fort Lauderdale, Fla., further alleges that the state’s policies and practices place other children with significant medical needs in the community at serious risk of institutionalization in nursing facilities.

    The ADA and the Supreme Court’s decision in Olmstead v. L.C.(1) require states to eliminate unnecessary segregation of persons with disabilities. The department’s complaint seeks declaratory and injunctive relief, as well as compensatory damages for affected children.
  • “Florida must ensure that children with significant medical needs are not isolated in nursing facilities, away from their families and communities,” said Eve Hill, Deputy Assistant Attorney General for the Civil Rights Division. “Children have a right to grow up with their families, among their friends and in their own communities. This is the promise of the ADA’s integration mandate as articulated by the Supreme Court in Olmstead. The violations the department has identified are serious, systemic and ongoing and require comprehensive relief for these children and their families.”

    Since late 2012, the department has met with Florida officials on numerous occasions in an attempt to resolve the violations identified in the findings letter cooperatively. While the state has altered some policies that have contributed to the unnecessary institutionalization of children, ongoing violations remain. Nearly two hundred children remain in nursing facilities. Deficient transition planning processes, lengthy waiting lists for community-based services and a lack of sufficient community-based alternatives persist. The department has therefore determined that judicial action is necessary to ensure that the civil rights of Florida’s children are protected.

Brooklyn Landlord Finds Itself In Crosshairs In Federal Fair Housing/Race Discrimination Suit Accusing It Of 'Failing Black/White Test' In Its Treatment Accorded Black Testers As Opposed To Their White Counterparts

In New York City, the Fair Housing Justice Center(1) recently announced:

  • On August 2, 2013, the FHJC and four African American testers filed a lawsuit in federal district court (E.D.N.Y.) alleging that the owners and managers of apartment buildings located in Brooklyn discriminate against African Americans.

    The case resulted from an investigation conducted by the FHJC in which African American and white testers posing as prospective renters were deployed to two rental buildings located at 592-596 E. 22nd Street in Brooklyn to inquire about apartments.

    The investigation was commenced after the FHJC was contacted by the Flatbush Development Corporation. The lawsuit claims that the defendants, East 22nd Street Towers LLC, East 22 St. Realty LLC, Coney Management LLC, Kalman Zimmerman, Samuel Fleischman, Joseph Lichtman, and Mayer Fishman engaged in racially discriminatory practices in violation of fair housing laws.

    The complaint alleges that the rent stabilized buildings on E. 22nd Street were neglected and in serious disrepair when they were occupied almost exclusively by Black tenants. When the defendants acquired the properties, units were eventually remodeled, but it appeared that Black tenants who remained in the building did not receive the same quality of renovations. Concern was expressed by tenant organizers that the owners were seeking to rent newly remodeled units to tenants who were not Black. In response to this concern, the FHJC conducted an investigation.

    According to the lawsuit, African American testers were treated less favorably than their white counterparts on four tests. In stark contrast to the treatment accorded white testers, comparably qualified African American testers met with misinformation, discourtesies, and discouragement when inquiring about apartments for rent.

    On one test, a white tester was told about four apartments that were coming available in several weeks and, on the same day, an African American tester was told no apartments were available and none would be available for a couple of months.

    On the second test, an African American tester was informed that no apartment was available and that it could be “four to six weeks” and none would be available by October 1st. The same day, a white tester was shown an available apartment that was “just about ready” and that would be ready by October.

    On another test, an African American tester was treated rudely and quoted a security deposit requirement that was twice as much as the amount quoted to his white counterpart.
For the press release, see Flatbush Landlord Accused of Racial Bias (FHJC Investigation Documents Race Discrimination In Gentrifying Buildings).

(1) The Fair Housing Justice Center, Inc. (FHJC) is a regional fair housing organization based in New York City. The FHJC provides a full-service fair housing program to New York City and the seven surrounding New York counties of Dutchess, Nassau, Orange, Putnam, Rockland, Suffolk, and Westchester.

NYC Fair Housing Advocates Score $130K In Damages, Legal Fees From Queens Landlord Accused Of Having Policy Of Stiffing Prospective Black Renters Looking For Available Apartments In Favor Of Whites

In New York City, the Fair Housing Justice Center(1) recently announced:

  • On June 27, 2013, Federal District Judge Roslynn R. Mauskopf approved a settlement resolving a fair housing lawsuit filed by the Fair Housing Justice Center (FHJC) and three African American testers against the owners and managers of an apartment building located at 41-41 46th Street in Sunnyside, Queens.

    The lawsuit, filed in December 2012, alleged that Nasa Real Estate Corporation (“Nasa”) and its agents were discriminating based on race and color in the rental of housing in violation of fair housing laws. The complaint was based on the results of a systemic testing investigation conducted by the FHJC in which matched pairs of African American and white testers inquired about renting apartments at the 107-unit apartment building.

    According to the complaint, an agent informed African American testers that no apartments were available, while informing comparably qualified white testers about available apartments and showing them apartments.

    The agreement provides a general injunction requiring that Nasa and its employees abide by fair housing laws. One of the defendants, Irfan Bekdemir, who was tested by the FHJC, acknowledged in the agreement that he told African American testers that no apartments were available and did not show them any apartments while informing white testers about available apartments and showing them vacant units.
  • [Among other terms], the agreement provides that Nasa will pay a total of $130,000 to the plaintiffs for damages, attorney’s fees, and costs. The plaintiffs were represented by Elizabeth S. Saylor, Diane L. Houk, and Vasudha Talla with the law firm of Emery Celli Brinckerhoff & Abady, LLP.
For the press release, see Sunnyside Race Discrimination Case Settled (Agreement Extends Remedy To Other Rental Buildings In NYC).

(1) The Fair Housing Justice Center, Inc. (FHJC) is a regional fair housing organization based in New York City. The FHJC provides a full-service fair housing program to New York City and the seven surrounding New York counties of Dutchess, Nassau, Orange, Putnam, Rockland, Suffolk, and Westchester..

Friday, August 16, 2013

Disbarred Florida Closing Attorney Who Got Bar Boot For Exposing Title Insurance Fund To $10M+ In Claims Exposure For Allegedly Failing To Record At Least 17 Deeds & 21 Mortgages Continued To Practice Law, Now Receives A 2nd "Permanent" Boot

The South Florida Sun Sentinel reports:

  • Okechukwu Josiah Odunna of Lauderhill was permanently banned after he first was disbarred in 2010 for appearing to be "causing great public harm."

    Odunna was accused of failing "to record at least 17 original deeds and 21 original mortgages, exposing a title insurance fund to more than $10 million in claims exposure," according to Florida Bar records. "A Florida Bar compliance audit of Odunna's trust accounting records determined that he misappropriated more than $370,000 in client funds."(1)

    This year he was found to still be practicing law. Odunna could not be reached for comment [].
Source: 3 South Florida attorneys permanently banned.

(1) The Florida Bar's Clients' Security Fund was established to reimburse clients who have suffered a loss due to misappropriation or embezzle­ment by a Florida-licensed attorney.

For similar "attorney ripoff reimbursement funds" that sometimes help cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:
Maps available courtesy of The National Client Protection Organization, Inc.

84-Year Old Attorney Ingloriously Ends 50+ Year Career By Getting Double Bar Boot After Ripping Off Dead Client's Estate, Then Continuing To Practice Law After Initial Disbarment

The South Florida Sun Sentinel reports:

  • Robert Joseph Friedman of Hallandale Beach had been practicing law since 1958 but got into trouble when he was named a personal representative for a client's estate, according to Florida Bar records. When the beneficiary attempted to cash a check from the estate, he couldn't because there wasn't enough money in the account, the Bar reported. Friedman then "admitted that he misappropriated trust funds," staffers for the Florida Bar wrote.(1)

    This spring, Friedman got into more problems when the judicial watchdog found he had continued to practice law and tell clients he was an attorney despite being disbarred in May. The Florida Supreme Court then found him in contempt and banned him from ever practicing law. Otherwise, he would have had a chance to reapply for his license in five years, said Bar spokeswoman Karen Kirksey.

    Friedman said in a brief telephone interview, "I resigned." He said he was no longer practicing law and had no further comment. The Florida Bar had honored him five years ago for being a 50-year member.(2)
Source: 3 South Florida attorneys permanently banned.

(1) The Florida Bar's Clients' Security Fund was established to reimburse clients who have suffered a loss due to misappropriation or embezzle­ment by a Florida-licensed attorney.

For similar "attorney ripoff reimbursement funds" that sometimes help cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:
Maps available courtesy of The National Client Protection Organization, Inc.

(2) I wonder what the punishment is if this guy again gets caught practicing law. A triple bar boot???

Florida AG: Tampa Attorney Ran Nationwide Loan Modification Racket That Duped Homeowners Into Paying Illegal Fees By Using Websites That Mimicked Gov't Sites, Other Deceptions, Then Stiffed Them On Promised Services

From the Office of the Florida Attorney General:

  • Attorney General Pam Bondi’s Office [] sued Tampa lawyer Eric Mader, alleging he ran a nationwide foreclosure-rescue operation that charged illegal fees and failed to provide promised assistance to consumers.

    Some of the allegations include that Mader and his firm, Mader Law Group, lured consumers with websites mimicking government sites, misrepresented that consumers would be enrolled in government assistance programs or could get loan modifications from lenders, and charged fees for services never rendered.

    Mader allegedly offered refunds to some consumers only if they would withdraw their complaints about him to the Florida Bar, which regulates lawyers.

    “We will not allow scam artists to defraud Florida’s homeowners who are seeking financial relief,” stated Attorney General Pam Bondi.

    Among other things, the lawsuit seeks an order to prohibit Mader and his firm from charging up-front fees for foreclosure-rescue services and to require them to comply with Florida's foreclosure-rescue law. The lawsuit is also seeking restitution for consumers.
For the Florida AG press release, see Attorney General Bondi's Office Sues Tampa Law Firm for Foreclosure Rescue Operation (go here for the Spanish version of the press release).

For the lawsuit, see State of Florida v. Mader, et al.

(1) The Florida Bar's Clients' Security Fund was established to reimburse clients who have suffered a loss due to misappropriation or embezzle­ment by a Florida-licensed attorney.

For similar "attorney ripoff reimbursement funds" that sometimes help cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:
Maps available courtesy of The National Client Protection Organization, Inc.

Georgia Lawyer Faces Unlicensed Practice Of Law Complaint Over Loan Modification Solicitations Mailed To Rhode Island Homeowners; Letters Contained Non-Existent Local Address; Calls To Local Phone Number Were Redirected To Atlanta

In Providence, Rhode Island, the Providence Journal reports:

  • A lawyer from Atlanta, Ga., is in hot water with the Supreme Court's disciplinary counsel for soliciting Rhode Island residents facing mortgage foreclosures while having no office or license to practice law in this state.

    According to David Curtin, chief disciplinary counsel for the Rhode Island Supreme Court, Georgia lawyer Daniel J. Saxton "caused solicitation letters to be mailed" to about a dozen Rhode Island residents in February, advising them that their properties were going to be auctioned "on the Providence County Courthouse steps" on a particular date and "suggested that the recipient immediately contact [him] for assistance in mortgage negotiation and settlement."

    One of the property owners was offended by the solicitation, Curtin said, and contacted a Rhode Island lawyer who anonymously forwarded the mailing to Curtin's office.

    Curtin said the lawyer's solicitation letter listed a local phone number and a firm address of 20 Weybosset Street, an address that does not exist. If someone called the Rhode Island number, the phone was answered at Saxton's law firm in Atlanta, Freeman Saxton P.C., Curtin alleged.

    In his disciplinary complaint, Curtin said that on Feb. 28 of this year, a telephone call was placed to the phone number listed on the solicitation and the caller was put through to someone named "Roberto" who insisted that Freeman Saxton P.C. was located at 20 Weybosset St., but that the caller could not come to the office because he did not have an appointment.

    Saxton, a partner in the Atlanta firm of Freeman Saxton P.C., faced a public hearing July 23 before the court's disciplinary board, which could recommend a sanction ranging from censure to disbarment. It will be up to the justices of the Rhode Island Supreme Court to make a final decision on the punishment to be meted out, if any.

    "By offering to provide legal services to Rhode island residents while not being authorized to do so," Saxton not only violated the Supreme Court Rules of Professional Conduct but he also violated state law "which makes it a criminal offense to practice law without a license or falsely hold oneself out as a lawyer," Curtin wrote in his disciplinary complaint.

    Curtin said Wednesday that bar overseers in Georgia are awaiting the Rhode Island disciplinary board's decision.(1)
For the story, see Georgia lawyer faces disciplinary proceedings for soliciting RI residents facing mortgage foreclosure.

(1) The Clients' Security Fund of the State Bar of Georgia (Part X of the state Bar rules handbook) was established to provide a public service and to promote confidence in the administration of justice and the integrity of the legal profession by providing some measure of reimbursement to victims who have lost money or property because of theft or misappropriation by a Georgia attorney.

In Rhode Island, the Rhode Island Bar Association's Client Reimbursement Fund was established to provide a public service and to promote confidence in the administration of justice and the integrity of the legal profession by providing some measure of reimbursement to victims who have lost money or property because of theft or misappropriation by a Rhode Island attorney, and occurring in Rhode Island during the course of a client-attorney relationship.+

For similar "attorney ripoff reimbursement funds" that sometimes help cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:
Maps available courtesy of The National Client Protection Organization, Inc.

Thursday, August 15, 2013

Mississippi Attorney Gets 46 Months For Bankruptcy Scheme Used To Hide His Fraudulently Snatching Of Property Co-Owned With Business Partner, Then Pocketing Proceeds From Subsequent Refinance

From the Office of the U.S. Attorney (Jackson, Mississippi):

  • Michael E. Earwood, 61, an attorney from Madison, Mississippi, was sentenced [] in U.S. District Court to 46 months in prison, followed by three years of supervised release, for bankruptcy fraud, announced U.S. Attorney Gregory K. Davis, [and others]. Earwood was also ordered to pay restitution in the amount of $792,228.53.

    Earwood previously pled guilty to devising and executing a scheme to obtain money from a business partner by falsely representing that the money would be used to maintain real property owned by Kinwood Capitol Group.

    He admitted transferring title to the real property assets of the business without the knowledge and consent of his business partner, who held a majority interest in the assets of the business.

    Earwood admitted that he transferred these assets to his own company named Northlake Development. He then used that property as collateral for bank loans to Northlake Development but still continued to solicit money from the business partner for a period of time.

    Earwood admitted that when the bank attempted to foreclose on the Northlake Development loan, he placed Northlake Development into bankruptcy and continued to conceal the unauthorized transactions from his business partner and the banks from which he had obtained loans.(1)
For the U.S. Attorney press release, see Madison Attorney Sentenced in Bankruptcy Fraud Scheme.

(1) Don't feel bad for the business partner who co-owned the property with this thief. As it turns out, the deed used to snatch the property was found to be void and having no legal effect (as opposed to merely voidable). Consequently, the business partner dodged the financial hit, and it was the bank that made the loan (and/or the title insurance company that issued the title policy) that was left holding the bag. For more, see Voidable Or Void Ab Initio (Or "Void Unless & Until Later Ratified")?

Self-Proclaimed President Of Sovereign Citizen Nation Gets 18 Years For Peddling Seminars Teaching Attendees How To Create Phony Bonds To Pay Income Taxes, File Retaliatory Liens Against Gov't Officials Who Interfered With Processing The Fictitious Instruments

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

  • The Justice Department, the Internal Revenue Service (IRS) and the FBI announced [] that James Timothy Turner, also known as Tim Turner, was sentenced to serve 18 years in federal prison for conspiracy to defraud the United States, attempting to pay taxes with fictitious financial instruments, attempting to obstruct and impede the IRS, failing to file a 2009 federal income tax return and falsely testifying under oath in a bankruptcy proceeding.

    In March 2013, following a five-day jury trial, Turner was convicted on 10 counts in the U.S. District Court for the Middle District of Alabama.

    Based on the evidence introduced at trial and in court filings, Turner, the self-proclaimed “president” of the sovereign citizen group Republic for the united States of America (RuSA), traveled the country in 2008 and 2009 conducting seminars teaching attendees how to defraud the IRS by preparing and submitting fictitious bonds to the U.S. government in payment of federal taxes, mortgages, and other debt.

    The evidence at trial revealed the bonds are fictitious and worthless but witnesses testified that Turner used special paper, financial terminology and elaborate borders in an effort to make them look authentic and more likely to succeed in defrauding the recipient. Turner was convicted of sending a $300 million fictitious bond in his own name and of aiding and abetting others in sending fifteen other fictitious bonds to the Treasury Department to pay taxes and other debts.

    The evidence at trial also established that Turner taught people how to file retaliatory liens against government officials who interfered with the processing of fictitious bonds. Turner filed a purported $17.6 billion maritime lien in Montgomery County, Ala., Probate Court against another individual.

    This investigation began after Turner and three other self-proclaimed “Guardian Elders” sent demands to all 50 governors in the United States in March 2010 ordering each governor to resign within three days to be replaced by a “sovereign” leader or be “removed.” The FBI immediately began investigating Turner and IRS- Criminal Investigation (IRS-CI) joined the investigation soon thereafter.

Sovereign Citizen Charged In Alleged Attempt To Title-Hijack Multi-Million $ Memphis Mansion Refuses Judge's Order For Mental Evaluation; Wants To Represent Self

In Memphis, Tennessee, WREG-TV Channel 3 reports:

  • Tabitha Gentry, accused of squatting in a multi-million dollar east Memphis home, was in court Monday. Gentry was recently indicted on charges of theft of property more than $250,000 and aggravated burglary.

    “I’m Abka Rey Bey, Moore American national,” said Gentry as the judge read the charges she was indicted on.

    At issue Monday was a mental evaluation the court has ordered.

    “That is not in my best interest to take any kind of mental or forensic evaluation and there is nothing in the American Constitution of 1791 that you can hold, force me to take a mental evaluation,” said Gentry in court.

    Judge James Lammey asked for another mental evaluation Thursday and then for Gentry to appear back in court on August 13th. “The state of Tennessee cannot bring charges against a flesh-and-blood being,” said Gentry.

    Claiborne Ferguson, who is Gentry’s court-appointed attorney, said Gentry cannot be forced to take a mental evaluation. "They will try one more time and at some point she will either be allowed to represent herself or the court will have to find that she is unable to present herself. At some point the court will have to hold a hearing to determine whether she is competent or not to represent herself,” said Ferguson.

    If found guilty of the theft charge, Gentry faces a minimum 15 years in prison and she faces three to 15 years on the aggravated burglary charge.

Wednesday, August 14, 2013

Ex-Fugitive Foreclosure Rescue Operator Gets 132 Months For Running Fractional Interest Deed Transfer Scam Involving Use Of Bogus Bankruptcy Filings To Fraudulently Delay, Postpone Public Auctions For 800+ Financially Distressed Homeowners

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

  • Glen Alan Ward, 48, a former Los Angeles resident who fled to Canada and was a federal fugitive for 12 years, was sentenced [] to serve 132 months in prison for aggravated identity theft and bankruptcy fraud in connection with his leading role in a nearly 15-year foreclosure-rescue scam that fraudulently postponed foreclosure sales for more than 800 distressed homeowners.
  • According to the plea agreement, Ward led a scheme that solicited and recruited homeowners whose properties were in danger of imminent foreclosure. Ward promised to delay their foreclosures for as long as the homeowners could afford his $700 monthly fee.

    Once a homeowner paid the fee, Ward accessed a public bankruptcy database and retrieved the name of an individual debtor who recently filed bankruptcy. Ward admitted that he obtained copies of unsuspecting debtors’ bankruptcy petitions and directed his clients to execute, notarize and record a grant deed transferring generally a 1/100th fractional interest in their distressed home into the name of the debtor that Ward provided.(1)

    Then, after stealing the debtor’s identity, Ward faxed a copy of the bankruptcy petition, the notarized grant deed and a cover letter to the homeowner’s lender or the lender’s representative, directing it to stop the impending foreclosure sale due to the bankruptcy.

    Because bankruptcy filings give rise to automatic stays that protect debtors’ properties, the receipt of the bankruptcy petitions and deeds in the debtors’ names forced lenders to cancel foreclosure sales. The lenders, which included banks that received government funds under the Troubled Asset Relief Program (TARP), could not move forward to collect money that was owed to them until getting permission from the bankruptcy courts, thereby repeatedly delaying the lenders’ recovery of their money for months and even years.

    In addition, if a distressed homeowner wanted to complete a loan modification or short sale, they were left to the mercy of Ward to send them forged deeds, supposedly signed by the debtors, to re-unify their title as required by most lenders.

    As part of the scheme, Ward delayed the foreclosure sales of approximately 824 distressed properties by using at least 414 bankruptcies filed in 26 judicial districts across the country. During that same period, Ward admitted to collecting from his clients who paid for his illegal foreclosure-delay services more than $1.2 million.
For the Justice Department press release, see Former Federal Fugitive Sentenced in California for Nationwide Foreclosure Scam (Collected More Than $1.2 Million from More Than 800 Distressed Homeowners).

(1) See Final Report Of The Bankruptcy Foreclosure Scam Task Force for a discussion of fractional interest deed transfer scams and other foreclosure rescue rackets involving the abuse of the bankruptcy courts.

Sale Leaseback Peddler Gets 96 Months In Connection With Foreclosure Rescue Equity Stripping Racket That Targeted Financially Strapped High-Equity, No-Cash Homeowners

Fed Up & Fighting Back blog reports that Felix Daniel, an alleged foreclosure rescue operator based in Michigan and who did business as RYM Technology Holdings ("Rymtech" was sentenced in a Chicago, Illinois Federal court to 96 months in federal prison and five years parole and over $4 million in restitution/forfeiture)  in connection with a fraudulent scheme involving the equity stripping from homes of high-equity, no-cash homeowners through the peddling of bogus sale leaseback arrangements.(1)

Source (includes original indictment): Felix Daniel Guilty.

Go here for the Memorandum Opinion & Order denying Daniel's motion for a new trial.

Go here for the Illinois Secretary of State's Order of Prohibition addressing Daniel's racket in an earlier, unrelated administrative proceeding.

Thanks to Linda Spak for the heads-up on the conviction.

(1) For more on this type of foreclosure rescue ripoff, see:

Foreclosure Rescue Operator Gets Five Years For Role In Racket That Clipped 250 Financially Distressed Homeowners Seeking Loan Modification Help Out Of $675K In Upfront Fees

In Phoenix, Arizona, the Phoenix Business Journal reports:

  • A San Diego man has been sentenced to five years in federal prison from his role in a mortgage foreclosure rescue scam that took place in Arizona and California. But his two co-conspirators have fled to Mexico, according to federal investigators.

    Frank Becerra Campos, 66, previously pleaded guilty to federal charges of defrauding 250 distressed homeowners out of $675,000 worth of up-front mortgage modification assistance fees.

    Federal prosecutors and the FBI accused Campos and two other men, Miguel Carrera and Oswaldo Esqueda, of targeting Spanish-speaking homeowners in Arizona and California and promising them mortgage modification help. The scheme promised to reduce mortgage payments by 25 percent and sometimes the trio encouraged homeowners to file for bankruptcy protection to delay losing their homes.

    The trio operated under businesses called Gold Capital Investments LLC and Foreclosure Home Savers LLC.

    Federal prosecutors and the FBI claim Carrera and Oswaldo fled to Mexico. They also claim Carrera may be working in real estate there under the name Mike Beltran.

Tuesday, August 13, 2013

Pennsylvania Appeals Court: OK To Void Assignee Bankster's Mortgage, Promissory Note When Homeowner Raised TILA Rescission, Other Issues Involving Originating, Now-Defunct Lender's Pre-Assignment Conduct As Foreclosure Defenses; FIRREA Liability Limitation Involving Certain Asset Transfers Between Financial Institutions Applies Only To Counterclaims

In Philadelphia, Pennsylvania, Law360 reports:

  • The Pennsylvania Superior Court ruled Thursday that federal law does not prevent judges from voiding mortgage agreements through counterclaims brought during foreclosure proceedings, affirming a lower court's ruling voiding the mortgage agreement for a woman whose closing agent absconded with nearly $80,000.

    In a precedential ruling, a three-judge panel found that while the federal Financial Institutions Reformation, Recovery and Enforcement Act — or FIRREA — prevented a Clearfield County judge from voiding a mortgage agreement as part of a declaratory judgment bid brought by a homeowner...(1)
For more, see Judges Can Void Some Foreclosed Mortgages, Pa. Court Says (requires subscription).

For the ruling, see Sass v. Amtrust Bank, 2013 PA Super 230 (August 8, 2013).

(1) When applicable, FIRREA (apparently? - as best as I can figure it, anyway) deprives courts of subject matter jurisdiction to impose liability on a successor financial institution for pre-assignment conduct by the predecessor institution without exhaustion of administrative remedies before the Federal Deposit Insurance Corporation (but don't quote me on this!).

In this case, the 3-judge panel first explained the distinction between defenses/affirmative defenses and counterclaims, and then decided whether the FIRREA limitations on imposing liability on a successor financial institution for pre-assignment conduct by the predecessor institution precluded a trial judge from voiding the homeowner's home mortgage and associated promissory note when a rescission defense (based on both the Truth In Lending Act and other theories) was raised by the homeowner/defendant against a financial institution in a foreclosure action:
  • Courts are well suited to determine whether the merits of a stated defense, affirmative defense, or counterclaim bring it within the ambit of the jurisdictional bar of the FIRREA, and may not premise a determination merely on the label a pleading may carry. See id.

    Thus, “[c]ourts should not allow parties to avoid the procedural bar of § 1821(d)(13)(D) by simply labeling what is actually a counterclaim as a defense or affirmative defense.” Id.

    Similarly, courts must retain a healthy degree of skepticism in applying the bar to assertions pled as defenses merely because their application would compromise the value of assets assumed by a successor bank under FIRREA.

    “[A] claim (or a counterclaim) is essentially an action which asserts a right to payment.” Id.

    Consequently, the court must consider whether the disputed assertion of a party’s pleading stems from the desire to establish a right to payment and collect on the resulting debt, or from an explanation of why the debt is not valid or collectible.

    Consistent with this rational, courts have generally accepted the proposition that a defense of rescission is an affirmative defense—not a counterclaim―as it does not seek payment of any sort, but operates to invalidate a contract based on circumstances that render enforcement unlawful. See id. at 394, n.26.

    Although the net effect of such a defense in reducing sums payable by a defendant may be equivalent to that wrought by a counterclaim for damages, the mechanism by which that effect is achieved is entirely distinct.

    While a counterclaim naturally sets off damages awarded to its claimant against those due on the underlying claim, the affirmative defense of rescission more directly nullifies the contractual basis for the claim.

    Thus, we need not hesitate in concluding that Sass’s assertion of an entitlement to rescission of the mortgage contract is an affirmative defense beyond the reach of section 1821(d)’s jurisdictional bar and subject fully to the jurisdiction of the trial court.

    That defense makes no claim on Nationstar for an award of damages, but merely posits that based on a multiplicity of circumstances, including the conduct of the closing agent in absconding with the proceeds of the loan and the failure of AmTrust to comply with various statutory prescriptions at closing, the terms of the contract cannot be enforced.

    Thus, the defenses and affirmative defenses so characterized in Sass I are exactly that and, as such, are not subject to the jurisdictional bar of section 1821(d).

    We conclude accordingly, that while the declaratory judgment action Sass commenced in Sass II is plainly barred by FIRREA, Sass’s attempts, by way of defense and affirmative defense to nullify, rescind, or otherwise invalidate the contract in response to Nationstar’s mortgage foreclosure action in Sass I are not.

Federal Appeals Court Kiboshes Bankster's "Heads I Win, Tails You Lose" Method Of Offering Trial Period Loan Modification Plans To Financially Strapped Homeowner; Judge: Wells Fargo's Continuing Option Of "Modifying The Loan Or Stiffing Him ... Is A Fraudulent Coin Toss"; Court Says HAMP "Seems To Have Created More Litigation Than It Has Happy Homeowners!"

In San Francisco, California, Reuters reports:

  • Wells Fargo must face lawsuits by homeowners who claim the largest U.S. mortgage lender refused to offer them permanent mortgage modifications for which they had qualified, a federal appeals court ruled on Thursday.

    The 9th U.S. Circuit Court of Appeals said Wells Fargo was required under the federal Home Affordable Modification Program to offer loan modifications to borrowers who demonstrated their eligibility during a trial period.

    Reversing the dismissals by a San Francisco federal judge of two lawsuits seeking class-action status, the appeals court rejected the argument that Wells Fargo became bound only upon sending borrowers signed modification agreements.

    The court said this would create "unfettered discretion" for the San Francisco-based bank to reject modifications "for any reason whatsoever—interest rates went up, the economy soured, (or) it just didn't like the borrower."

    While a federal appeals court in Chicago reached a similar conclusion last year,(1) the 9th Circuit decision applies in several western U.S. states—among them California, Arizona, and Nevada—that have been particularly hard-hit by foreclosures.(2)

    Wells Fargo said it had $352 million of loans under HAMP in a trial modification period as of June 30.

    "The 9th Circuit did not rule on the merits of the underlying cases, and found only that the district court should consider the arguments put forth by the plaintiffs," the bank said in a statement. "Wells Fargo has strong defenses to those arguments, and is prepared to present its case."

    'Heads I win, tails you lose'

    Unveiled by the Obama administration in 2009, HAMP pays mortgage lenders and servicers to rewrite loan terms for borrowers who cannot afford their payments.

    While steps have been taken to broaden HAMP's reach, fewer loans than expected have been modified, and both Democrats and Republicans have complained that many borrowers who get help default on their modified mortgages.

    The program has also spawned other litigation, and the 9th Circuit said it "seems to have created more litigation than it has happy homeowners."

    In a separate lawsuit in Massachusetts, homeowners accused Bank of America Corp of offering employees financial incentives to stall HAMP applications because foreclosures or in-house loan modifications could be more profitable.

    A judge is considering whether to make that case a class action.

    One of the Wells Fargo cases was brought by Phillip Corvello, who claimed he complied with a written trial period plan for a HAMP modification, and the other by Jeffrey and Karen Lucia, who claimed to comply with an oral plan.

    The Lucias' home was sold at foreclosure in August 2010, but they kept possession of the property, Wells Fargo said.

    Both the unsigned majority opinion and a concurring opinion by Circuit Judge John T. Noonan faulted Wells Fargo's drafting of the trial period plan, saying that to rule in the bank's favor would render the benefits for borrowers illusory.

    "No purpose was served by the document Wells Fargo prepared except the fraudulent purpose of inducing Corvello to make the payments while the bank retained the option of modifying the loan or stiffing him," Noonan wrote.

    "'Heads I win, tails you lose' is a fraudulent coin toss. Wells Fargo did no better."
Source: Wells Fargo can be sued over mortgage modifications.

For the court ruling, see Corvello v. Wells Fargo Bank, N.A., No. 11-16234 (9th Cir. August 8, 2013).

See also, Public Citizen Consumer Law & Policy blog: Ninth Circuit to Wells Fargo: keep your promises on loan modification.

(1) Wigod v. Wells Fargo Bank, NA, 673 F. 3d 547 (7th Cir. 2012).

(2) The 9th Circuit Court of Appeals also covers Washington, Oregon, Idaho, Montana, Alaska, Hawaii, Guam, & the Northern Mariana Islands.

The 7th Circuit Court of Appeals covers Illinois, Indiana, and Wisconsin. 

For other U.S. Courts of Appeals, see the U.S. Circuit Court of Appeals Locator Map.

California Appeals Court: Mortgage Transfers To Securitized, NY-Organized Trust After Closing Date Are Void, Giving Homeowners Standing To Challenge Loan Assignments

In Fresno, California, the Central Valley Business Times reports:

  • In a ruling that could impact other home foreclosures in California under similar circumstances, the state’s 5th District Court of Appeal says “that a borrower may challenge the securitized trust’s chain of ownership by alleging the attempts to transfer the deed of trust to the securitized trust … occurred after the trust’s closing date.”

    The Fresno-based appellate court says transfers that violate the terms of the trust instrument are void under New York trust law, and borrowers have standing to challenge void assignments of their loans.

    Thomas Glaski, a resident of Fresno County, sued Bank of America, losing at the Superior Court level but prevailing on several arguments upon appeal.

    Mr. Glaski purchased a home in Fresno for $812,000 in 2005 with a variable interest rate loan of $650,000, issued by Washington Mutual and California Reconveyance Company as the trustee.

    After several interest rate adjustments, with ever-higher monthly payments, Mr. Glaski defaulted in 2007.

    But like many mortgages prior to the burst of the housing bubble, his mortgage had been sold into a securitized trust known, in this case, as the WaMu Securitzed Trust. “In simplified terms, ‘securitization’ is the process where (1) many loans are bundled together and transferred to a passive entity, such as a trust, and (2) the trust holds the loans and issues investment securities that are repaid from the mortgage payments made on the loans,” the court explains.

    Three years after the original mortgage was signed, WaMu was broke, with JPMorgan Chase Bank picking up its pieces and parts.

    Mr. Glaski contends that the attempt to assign his note and deed of trust to the WaMu Securitized Trust was made after the closing date and, therefore, the assignment was ineffective.

    “If Glaski‟s loan was not validly transferred to the WaMu Securitized Trust, it is possible, though not certain, that JP Morgan acquired the Glaski deed of trust when it purchased WaMu assets,” the court of appeal says.

    “Another possibility, which was acknowledged by both sides at oral argument, is that the true holder of the note and deed of trust cannot be determined at this stage of the proceedings,” the court says. “This lack of certainty regarding who holds the deed of trust is not uncommon when a securitized trust is involved.”

    The foreclosure process bumped along and a notice of sale was signed on March 10, 2009, by Deborah Brignac, as vice president for California Reconveyance.

    Mr. Glaski alleges that Ms. Brignac‟s signature was forged to effectuate a fraudulent foreclosure and trustee’s sale of his home.

    He also says that from March until May 2009, he was led to believe by his negotiations with Chase that a loan modification was in process with JP Morgan. Despite the negotiations, a nonjudicial foreclosure sale of the home was conducted on May 27, 2009. Bank of America, as successor trustee for the WaMu Securitized Trust and beneficiary under Mr. Glaski’s deed of trust, was the highest bidder at the sale.

    “Among other things, Glaski raised questions regarding the chain of ownership, by contending that the defendants were not the lender or beneficiary under his deed of trust and, therefore, did not have the authority to foreclose,” the court says.

    While agreeing in some parts with the Superior Court’s ruling against Mr. Glaski, the 5th District Court of Appeal sides with the homeowner on a key argument.

    “We conclude that Glaski‟s factual allegations regarding post-closing date attempts to transfer his deed of trust into the WaMu Securitized Trust are sufficient to state a basis for concluding the attempted transfers were void. As a result, Glaski has a stated cognizable claim for wrongful foreclosure under the theory that the entity invoking the power of sale (i.e., Bank of America in its capacity as trustee for the WaMu Securitized Trust) was not the holder of the Glaski deed of trust,” it says.

    The appellate court ruling returns the case to the Superior Court for further arguments.
Source: Appeals court ruling might impact foreclosure world (Homeowner challenges chain of ownership of his home’s deed; “This lack of certainty regarding who holds the deed of trust is not uncommon”).

For the court ruling, see Glaski v. Bank Of America, No. F064556 (Cal. App. 5th Dist. July 31, 2013) (unpublished).

Editor's Note: Subsequent to the issuance of this ruling, the California appeals court determined that the nonpublished opinion filed on July 31, 2013 meets the standards for publication specified in the California Rules of Court, rule 8.1105(c). Accordingly, it ordered that the opinion be certified for publication in the Official Reports. Opinion ordered published on 8/8/13.

Thanks to Deontos for the heads-up on the order of publication.

Heat Continues For Colorado Foreclosure Mills As State AG Probe Lays Out Theory Of Conspiracy, Price-Fixing That Two Firms Allegedly Engaged In To Corner Lucrative Piece Of State Foreclosure Market

In Denver, Colorado, The Denver Post reports:

  • Colorado's two biggest foreclosure law firms, Castle Law Group and Aronowitz & Mecklenburg, appear to have manipulated and influenced the foreclosure process — in practice and at the Capitol — in a way that guaranteed themselves millions of dollars in profits at the expense of homeowners and taxpayers, according to state investigators.

    In a stunning court filing made public Thursday, Attorney General John Suthers' office lays out a theory of conspiracy and price-fixing that investigators say the two firms allegedly engaged in to corner a lucrative piece of the state's foreclosure market.

Outraged Banksters, Feds Pair Up In Tag-Team Effort To Squelch Municipalities' Plans On Invoking Eminent Domain To Snatch Deeply Underwater Home Mortgages

The Los Angeles Times reports:

  • The nation's top housing finance regulator threatened to choke off mortgage lending in cities that use eminent domain to seize underwater loans from lenders.

    The salvo from the Federal Housing Finance Agency came Thursday, on the heels of a lawsuit directed by major Wall Street firms and U.S.-sponsored mortgage giants Fannie Mae and Freddie Mac against the Bay Area city of Richmond.(1)

    Richmond is the first to push forward with the plan, also being debated in cities across the state and nation. Richmond wants to require lenders and investors to sell underwater mortgages at a deep discount. The city would then refinance borrowers into more-affordable mortgages.

    The federal housing agency, which regulates Fannie and Freddie, on Thursday made clear it doesn't intend to let this happen. The agency said it would instruct Fannie and Freddie to "limit, restrict or cease business activities" in any jurisdiction using eminent domain to seize mortgages.

    The move would be a "huge blow" to the city of Richmond, said Guy Cecala, publisher of Inside Mortgage Finance.

    "It is pretty much a death sentence these days in terms of mortgage financing," Cecala said. "It is sort of an atom bomb solution, and the real question is would they pull the trigger on it, or is it just a threat? But it is the kind of thing they could do fairly quickly."

    Executives and legal counsel for Fannie Mae and Freddie Mac also singled out the eminent domain plan this week during conference calls with journalists to discuss second-quarter financial results.

    The use of eminent domain is "a serious issue that has the potential to unsettle investors in mortgage securities," Fannie Mae Chief Executive Timothy J. Mayopoulos said Thursday.

    On Wednesday, the two mortgage giants joined with big bondholders in suing Richmond, seeking an injunction against the city and its private partner, Mortgage Resolution Partners. The city's program could cause investors losses of $200 million or more if the plan goes forward, the lawsuit said.

    The other bondholders directing that suit include Newport Beach-based Pacific Investment Management Co., BlackRock Inc. of New York and DoubleLine Capital of Los Angeles. In a separate action filed in the same San Francisco court Wednesday, the Bank of New York Mellon also sued the city and Mortgage Resolution Partners.

    Eminent domain is typically used to seize land, not loans, usually to take over blighted property or land needed for projects such as a highway. But the unorthodox plan by Mortgage Resolution Partners would use the power to force private investors to sell mortgages.

    Mortgage Resolution Partners first marketed the plan last year to San Bernardino County and two of its cities, Fontana and Ontario. The firm is now contracting with the city of Richmond to implement the strategy.

    Other cities considering the proposal include El Monte, which weighed the idea behind closed doors during a City Council meeting Tuesday. At least three other California municipalities — La Puente in Los Angeles County, and Orange Cove and San Joaquin in Fresno County — are also consulting with Mortgage Resolution Partners. Half a dozen other California cities have had less formal discussions with the firm.

    North Las Vegas, Nev., has also approved a similar plan, and Seattle and Newark are also considering adopting the measure, according to Mortgage Resolution Partners.

    That makes the working-class city of Richmond, situated just north of Berkeley in the East Bay, an important test case. The hardscrabble town of 106,000 people has sizable black and Latino populations and was hard hit by the housing crisis, with homeownership rates well below the national average.
For more, see U.S. warns against eminent-domain mortgage seizures (Federal Housing Finance Agency threatens to curtail lending in cities, including Richmond, Calif., that resort to eminent domain).

(1) See The Wall Street Journal: Investor Group Calls Richmond, Calif., Eminent Domain Plan Unconstitutional (Suit Against City Would Block Its Plans to Seize and Buy Mortgages) (requires subscription; if no subscription, TRY HERE, then click appropriate link).

Monday, August 12, 2013

Quicken Loans Refuses To Cough Up Cash In Multi-Million $ Award In Favor Of Screwed-Over Homeowner/Borrower; Opts To File Another Appeal With West Virginia Supremes; Case Exemplifies Importance Of Contingent Fee System That Allows Clients To Afford Representation As Litigation Proceeds: Homeowner's Lawyer

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

  • A judgment in a fraud lawsuit against Quicken Loans has only gotten bigger since an appeal to the state Supreme Court, so the company is heading back.

    On July 17, Quicken Loans filed a notice of appeal to the state Supreme Court of a decision in Lourie Jefferson’s lawsuit against it that awarded her $3.5 million in punitive damages and more than $875,000 to attorneys at Bordas & Bordas in Wheeling.

    In November, the Supreme Court found the company committed fraud and violated various provisions of the West Virginia Consumer Credit and Protection Act in a mortgage loan, but sent the case back to Ohio County Circuit Court to adjust an approximately $2.8 million award.

    On June 18, Ohio Circuit Judge David J. Sims, who took over the case from Arthur Recht, awarded Jefferson even more.
  • [Jefferson's attorney Jim] Bordas said the case is an example of the importance of the contingent fee system that has allowed Jefferson and her daughter to afford representation in the case as it proceeds.

    “After a while, enough’s enough,” he said. “I wonder if the Supreme Court is gonna say the same thing.”

Quicken Loans Targeted Again In West Virginia Suit Alleging It Clipped Homeowner With Unauthorized Loan Closing Charges, Misrepresented Home's Value, Extended Credit Without Obtaining An Appraisal

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

  • A woman is suing Quicken Loans Inc. after she claims a notary was hired to perform her loan closing and her residence was not even appraised for the refinancing of the loan.

    Title Source Inc., which is doing business as Title Source Inc. of West Virginia Incorporated, and Delmar Barrett were also named as defendants in the suit.

    On June 15, 2011, Stephanie Kemper refinanced her existing mortgage loan through Quicken, who was working in conjunction with Title Source, and hired Barrett, a West Virginia notary, to close the loan, according to a complaint filed July 17 in the U.S. District Court for the Northern District of West Virginia at Wheeling.

    Kemper claims despite the fact that Barrett is not licensed to practice law in West Virginia and was not directly supervised by a West Virginia-licensed lawyer, Barrett reported that he had performed more than 8,000 closings.

    On Kemper’s closing documents, there was a $575 closing fee, far in excess of the $2 maximum fee for notarial services under West Virginia law and more in line with a typical attorneys’ fee for loan-closings, according to the suit.

    Kemper claims because Barrett is not a licensed lawyer, she did not get the benefit of her bargain, as she did not have access to or receive the legal services available through a lawyer-closed loan transaction.

    During the loan origination process and before the closing, Quicken represented to Kemper that her home would be appraised in order to determine that there was sufficient collateral to make the loan and represented in her closing packet that her home was appraised for $180,000, according to the suit.

    Kemper claims she recently learned that Quicken did not even obtain an appraisal of her property and her home did not have a fair market value of $180,000 and would not appraise for an amount equal to or greater than that amount at the time of closing.

    Quicken misrepresented both the existence of an appraisal and the fair market value of the property to Kemper and she materially and justifiably relied on those representations, according to the suit.

    Kemper claims the representations gave her a false sense of security in accepting that loan that now made her solely responsible for repayment obligation, in contract to the loan that she had refinanced, for which she was jointly responsible to pay.

    Kemper is seeking civil penalties and actual damages with pre- and post-judgment interest. She is being represented by James G. Bordas and Jason E. Causey of Bordas & Bordas PLLC and John W. Barrett and Jonathan R. Marshall of Bailey & Glasser LLP.

NJ Appeals Court Reinstates Lawsuit Alleging Foreclosure Mill Law Firm Violated FDCPA, State Fair Foreclosure Act

Law360 reports:

  • A New Jersey appeals court on Tuesday reopened a woman’s claims alleging Zucker Goldberg & Ackerman LLC violated debt collection laws in foreclosure proceedings on her property, finding the trial judge had applied the wrong standard of review.

    A two-judge panel revived claims made by Windy Mazzella, who accused ZGA of negligence and violations of the state’s Fair Debt Collection Practices Act related to a foreclosure action carried out by ZGA on behalf of Deutsche Bank National Trust Co.
For more, see Appeals Court Revives Debt Collection Suit Against NJ Firm (requires subscription).

For the court ruling, see Deutsche Bank National Trust Co. v. Mazella, A-1776-11T1 (August 6, 2013) (unpublished).

Banksters' Faulty 'Right-To-Cure' Notices Open New Opportunity For Bay State Homeowners To Challenge, Void Foreclosures

In Boston, Massachusetts, The Boston Globe reports:

  • Despite increased scrutiny of mortgage lending practices, many banks are still violating basic legal requirements when foreclosing on properties in Massachusetts, according to housing attorneys who represent borrowers fighting to save their homes.

    In particular, they say, lenders do not always adhere to a 2007 state law, amended in 2010, that provides homeowners 150 days to catch up on missed mortgage payments before a foreclosure can begin.

    Under the law, banks and mortgage companies are required to send so-called right-to-cure notices to delinquent borrowers that provide basic information about the foreclosure process, including whom to contact and who holds the mortgage.

    Some homeowners who say they were not treated fairly during the foreclosure process are going to court and — increasingly — winning rulings that force lenders to reverse completed property seizures.

    Eloise Lawrence, an attorney at the Harvard Legal Aid Bureau in Cambridge, said she has helped more than two dozen homeowners overturn their foreclosures in Lynn alone based on problems with right-to-cure notices.

    Lawrence said it is especially important that lenders follow the letter of the law in Massachusetts, a state where foreclosures do not go before a judge for final review.

    “The bank can take your house without ever going to court, and so properly notifying homeowners of their rights is a critical safeguard against wrongful foreclosures,” she said.

    Jon Skarin, senior vice president of the Massachusetts Bankers Association, said some courts interpret Massachusetts law differently than banks do. Lenders send tens of thousands of such delinquency notices statewide annually without problems, he said.

    “The number that have been successfully challenged is very small compared to the amount of notices that get sent out,” Skarin said.

    The latest allegations follow years of complaints about sloppy and fraudulent practices by mortgage companies here and across the country.

    In May, Massachusetts Attorney General Martha Coakley said the country’s major lenders were disregarding sections of a $25 billion mortgage settlement reached between the companies and attorneys general nationwide to address problems endemic to the foreclosure process.

    Among the problems, Coakley said, is that lenders fail to offer help in a timely fashion, send borrowers inaccurate and confusing information, and deny them assistance without specifying why.

    Coakley declined to comment on complaints about the right-to-cure notices. Brad Puffer, her spokesman, said the agency has received complaints and is “still exploring the extent of those violations.”

    Last month, the debate reached the state Supreme Judicial Court, which agreed to consider the case of a Clinton homeowner who lost his home to foreclosure.

    John Schumacher claims in court documents that in 2008 he was not given adequate notice of his right to resolve his mortgage problems, as required by law, because the official holder of his loan was misidentified in the right-to-cure letter. For that reason, he argues, his 2009 foreclosure should be voided.

    “Attorneys all across the state see violations of the statute all the time,” said Schumacher’s attorney, Max Weinstein, who works with the Jamaica Plain-based Legal Services Center, a Harvard Law School group that helps low-income clients. “You would think banks would be doing their best to cross their ‘i’s and dot their ‘t’s.”

    Concerned about the issue, the nonprofit Massachusetts Alliance Against Predatory Lending recently conducted an investigation into 151 notices filed at the Worcester District Registry of Deeds and found widespread problems.

    The alliance is expected to release a report that claims the country’s biggest lenders — Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citibank, and Ally Financial Inc. — all violated the state law by, among other things, failing to provide the name of the loan’s originator or including the name of a bank contact.

    The alliance contends thousands of foreclosures statewide should be invalidated because of the violations.

    “This is an ongoing issue that the banks continue to disregard our laws,” said Grace Ross, coordinator for the Worcester-based alliance.

    Banks contest the report’s findings. Chase said it meets all “filing requirements,” while Citi officials said they “aim to be compliant” with the law.

    Bank of America said its notices “supply the homeowners with the necessary information required by law,” and Wells Fargo officials said they reject the alliance’s conclusions.

    Ally officials, saying they no longer handle foreclosures, declined to comment.

    Housing attorneys seeking to overturn foreclosures have been bolstered by a May 2012 Suffolk Superior Court decision that supported their claims. Justice Elizabeth M. Fahey ruled in favor of Revere homeowner Maria Vasquez, formerly known as Maria Bravo-Buenrostro, who contested her foreclosure based on a faulty right-to-cure notice.

    Vasquez said her foreclosure was invalid because the mortgage holder was misidentified in the letter she received notifying her of the right to resolve her mortgage problems.

    In court documents, Fahey wrote that Vasquez received the notice from IndyMac Federal when the mortgage was actually held by the Mortgage Electronic Registration Systems Inc., or MERS, a Virginia-based company that serves as mortgage holder for loans registered in its database.

    Fahey ruled the foreclosure void. Vasquez was then able to negotiate a new mortgage payment that allowed her to stay in her home.

    Dan Hyman, Vasquez’s attorney, said identifying the mortgage holder is crucial for troubled homeowners like Vasquez who are trying to stave off foreclosure. Between 2010 and 2012, more than 28,000 Massachusetts homeowners have lost properties to foreclosure, data show.

    “If you don’t have the name of who actually owns the mortgage, how can you possibly come to any sort of agreement?” he asked. “If you are going to sit down at the table, you have to have someone on the other side.”
Source: Banks in Mass. accused of violating foreclosure rules (Law guides process in the state).

Sunday, August 11, 2013

Feds' Failure To Criminally Prosecute Big Banksters Continues As DOJ, SEC File More Civil Suits Targeting BofA

The Washington Post reports:

  • Traders at Bank of America willfully misled investors about the quality of the residential mortgages tucked into the securities the bank sold at the start of the financial crisis, according to separate lawsuits filed Tuesday by the Justice Department and the Securities and Exchange Commission.(1)

    The charges are the latest reckoning for the nation’s second-largest bank, which has been plagued by a series of lawsuits stemming from the housing crisis. The bank has been accused of discriminating against mortgage applicants, saddling the government with billions of dollars in troubled loans and a range of foreclosure abuses.

    Now Bank of America faces civil charges for allegedly hiding the risks associated with $850 million worth of securities backed by home loans. Justice claims the bank knew that more than 40 percent of the 1,191 mortgages it bundled into securities did not meet underwriting guidelines and sold them anyway. Prosecutors estimate that the total losses sustained by investors will exceed $100 million.

    “Bank of America’s reckless and fraudulent origination and securitization practices in the lead-up to the financial crisis caused significant losses to investors,” said Anne Tompkins, the U.S. attorney for the Western District of North Carolina who is in charge of the case. “Now, Bank of America will have to face the consequences of its actions.”

    The Justice lawsuit came out of the Obama administration’s federal mortgage task force, a team of federal and state attorneys assembled in 2009 to hold Wall Street accountable for fraud and other misconduct rooted in the financial crisis. The SEC’s case is based on the same collection of securities that underpins the claims in the Justice lawsuit.

    Federal prosecutors said the exact amount of civil penalties will be determined as the litigation proceeds.

    Bank of America said in a corporate filing last week that it expected federal prosecutors and regulators to take action. On Tuesday, the bank defended the quality of the securities in question and insisted that investors had ample access to the underlying data on the loans.

    “These were prime mortgages sold to sophisticated investors,” Bank of America spokesman Lawrence Grayson said. “The loans in this pool performed better than loans with similar characteristics originated and securitized at the same time by other financial institutions.”

    Grayson added: “We are not responsible for the housing market collapse that caused mortgage loans to default at unprecedented rates and these securities to lose value as a result.”

    In the aftermath of the financial crisis, Bank of America has contended with a barrage of lawsuits over mortgage securities and residential foreclosures.

    The bank’s acquisition of mortgage giant Countrywide Financial in 2009 gave it an edge in the housing market and endless legal headaches. Analysts estimate that Bank of America has lost nearly $40 billion on mortgage litigation and repurchases of soured loans linked to Countrywide.

    Tuesday’s lawsuits, however, are tied to Bank of America’s own mortgage operations. Prosecutors say the bank made its employees churn out mortgages, placing quantity over quality to reap profits. One bank employee told prosecutors that “her superiors pressured her to process applications as quickly as possible but to keep her opinions to herself,” according to the complaint.

    In spite of the continued pursuit of banks accused of misconduct, critics say federal prosecutors and regulators are not being as aggressive as the law allows.

    “No matter how intentional the fraud and how much damage it does, the DOJ refuses to prosecute the elite banks and bankers,” said William Black, an associate professor of economics and law at the University of Missouri-Kansas City. “The conduct they describe was not reckless — it was intentional.”

    There seems to be no end in sight for the legal fallout from the financial crisis. Hours before announcing its case against Bank of America, the SEC said it reached a $50 million settlement with UBS over complex mortgage bonds. Regulators say the Swiss banking giant misled investors about the quality of collateralized debt obligations created in 2007 that caused $130 million in losses.

Property Owners Fear Loss Of Their Commercial Property Over Unpaid $6M Tab For City Infrastructure Upgrades That Some Call The Most Egregious Abuse Of Local Improvement Assessments In Oregon History

In Keizer, Oregon, the Statesman Journal reports:

  • The City of Keizer is trying to foreclose on two vacant lots near Keizer Station, a move that some legislators and property rights groups call the most egregious abuse of local improvement assessments in state history.

    “I’m not shy about telling Keizer I think they’re misusing a state law,” said Rep. Brian Clem, chairman of the House Land Use Committee.

    Property owners Timm and Linda Rawlins are more than $1.2 million behind on payments toward a $6 million assessment the city levied on their lots to help build infrastructure for the Keizer Station shopping center. Timm’s parents, Jerry and Doreen Rawlins, have a half interest in the property.

    Back in 2005, when the levy was imposed, the Rawlinses, who live in Redmond, objected and filed a lawsuit against the city and an appeal to the state Land Use Board of Appeals.

    “The property was only worth $300,000. They wanted to encumber it for $6 million,” Linda Rawlins said.

    They dropped their lawsuit opposing the assessment and signed the assessment agreement, Linda Rawlins said, after Keizer Station Developer Chuck Sides offered to lease the property for 30 years through his company Northwest National, and make the assessment payments.

    Sides stopped paying the assessments three years ago, and the unpaid amount has been racking up interest and penalties. The total owed is $6.7 million, according to a foreclosure complaint the city has filed in Marion County Circuit Court.The property is worth about $2.23 million, according to the Marion County Assessor.

    Some legislators, though, think the city took advantage of the Rawlins when it imposed the assessment.

    “The facts surrounding this matter are extremely troubling,” state Sen. Tim Knopp and Rep. Gene Whisnant wrote Keizer Mayor Lore Christopher in June.

    Under state law, infrastructure projects that benefit private property can be funded by a local improvement district, where property owners are assessed for part or all of the cost of improvements.

    Keizer divided an assessment of $29 million among 26 properties, based roughly on each property’s acreage. The Rawlins properties, with a total of 16.3 acres, were assessed $5,970,818.

    However, anchor tenants Target, with 10.1 acres, and Lowe’s, with 12.3 acres, were assessed only $1 million and $1.2 million respectively.

    That means the Rawlins properties each were assessed at $366,758 per acre; Target at $98,619 per acre; and Lowe’s at $97,959 per acre.

    The Rawlinses properties remain undeveloped. They did not receive any infrastructure improvements in connection with the Keizer Station development.

    “For these people to be caught up in it and be given an assessment five or six times that of Target and Lowe’s, and then still have no sidewalks, no streetlights, it just seems insane to me,” Clem said. “This is a disaster.”

    Keizer attorney Johnson said he preferred not to comment on the reason those assessments were lower for Target and Lowe’s.

    According to the minutes of the May 4, 2005 Keizer City Council meeting, “Alan Roodhouse, who was hired by the city as (manager)for the project, explained the concessions given to the two anchor stores, adding that because these retailers are highly discounted, their margin of profit is lower, making them unable to pay as much per square foot of building size in assessments as the smaller tenants.”

    David Hunnicutt, president of the property-rights group Oregonians in Action, spoke at a legislative hearing on the matter in June.

    “This case, as I told the Legislature, is the worst case of abuse of a local improvement district that I’ve ever seen,” Hunnicutt said in an interview.

    “It’s a case where the Keizer City Council made a really bad bet, and used the Rawlins property as the investment,” Hunnicutt said. “Now that it’s turned out that their bet was bad, they’re demanding that the Rawlinses pay the cost.”

    Clem said he wants to make sure a similar situation doesn’t happen again — in Keizer or elsewhere. His committee held a hearing on the matter June 20, and a workgroup is putting a bill together for the February session, he said.

    “I’d like to see some changes to make sure if you’re forced to pay in, you’re actually getting some benefit,” Clem said.

    For the Rawlinses, that can’t come soon enough. They bought the property in 1996 as a retirement investment.

    We’ll lose everything if they foreclose,” Linda Rawlins said. “The property pays for our subsistence. We’ll lose our home, our business, our retirement and our children’s inheritance.”
For more, see Lawmakers outraged at Keizer land grab (City abused assessment law for center, leaders say).

Real Estate Operator Faces Multiple Charges In Alleged Short Sale 'Flopping' Scam Involving Eleven Homes

In Columbus, Ohio, The Columbus Dispatch reports:

  • A Far North Side man is accused of orchestrating a $1.2 million mortgage-fraud scheme.

    Donald P. Landers, 42, also known as Dante Brickman, is named in a 24-count indictment that was sealed by a Franklin County judge when it was filed on July 18. The indictment was unsealed on Wednesday after Landers was arrested on a warrant in Las Vegas.

    Landers, of 2424 Shillingham Court, identified properties that were in foreclosure and negotiated short sales with the lenders to buy the properties at a much-reduced rate, according to Prosecutor Ron O’Brien.

    He said Landers used fraudulent information to convince lenders that the properties were worth “much less than market value due to poor condition, poor location or difficulty in selling.”

    Landers also is accused of recruiting so-called straw buyers to purchase the properties from his business — Great American LLC — at an inflated price, fraudulently obtaining financing for the buyers by submitting loan applications that inflated their net worth and understated their debts.

    O’Brien said down payments for the properties were funded through the loan proceeds, not the buyers’ assets. Landers’ company pocketed the difference between the low short-sale amounts and the inflated sale prices, paying a kickback to the straw buyers, he said.

    Landers is accused of using the scheme from January 2007 to January 2008 with 11 Franklin County properties, including two of his own that were in default because of nonpayment of his mortgages. Most of the loans have since gone into default and foreclosure, O’Brien said.

    Landers is charged with one count of engaging in a pattern of corrupt activity, one count of theft, 11 counts of money laundering and 11 counts of receiving stolen property.