Rhode Island Foreclosure House Stripping, Equity Stripping In The Same Story

In North Kingstown, Rhode Island, The Providence Journal reports the story of a subprime mortgage loan originator who lost his home in foreclosure. When the foreclosing lender took possession of the property, they found the home was stripped out of a variety of items typically found in and around a home.(1)

A possible contributing factor to the loan originator's financial problems: he was arrested(2) and charged in an alleged sale-buyback, foreclosure rescue scam:

• At the time of DeBarros’ arrest, he was working as a mortgage originator when a Swansea homeowner called his company seeking help in refinancing her house to avoid foreclosure. Instead, DeBarros arranged for the house to be deeded to somebody else, according to court documents. A lawyer representing DeBarros argued that the homeowner received more than $13,000 and an option to buy back the property, so she “got exactly what she contracted for.”

• DeBarros faces charges on two felony counts: larceny of over $250 by false pretense and solicitation to commit a felony. The judge scheduled the case for a jury trial on Sept. 18.

For more, see Where’s the kitchen!

Go here for other posts on pre-foreclosure fixture stripping.

(1) According to the story, sprinkler heads on the front lawn were snipped off; the heater for the in-ground swimming pool was missing; the shiny black countertops, wood cabinets, built-in double oven and decorative hanging lights were all gone; French doors had been torn from their hinges; a toilet and vanity in the downstairs bathroom were gone; air conditioner condensers had been ripped out; and the water, sewer and gas lines had been cut, leaving the pipes open and unsafe.

(2) According to the story, North Kingstown police had a warrant to arrest him on a “fugitive from justice” charge in connection with an alleged mortgage fraud scheme in Swansea, Mass. foreclosure fixture stripping apple

Memphis Legal Services Firm To Expand Free Aid To Homeowners Facing Foreclosure; Uses Lending Law Violations As Leverage In Seeking Loan Restructuring

In Memphis, Tennessee, the Memphis Daily News reports:

• The budget of Memphis Area Legal Services has swelled to almost $650,000 this year as a result of grants and other special funding awarded to the group. And MALS, in turn, is using that windfall to expand its free counseling and legal aid to homeowners in danger of losing their homes to foreclosure.

***

• The new funding MALS acquired to fight the rising tide of foreclosures in Shelby County was born out of a large settlement agreement put together over several months in the late summer and early fall of 2007. The agreement covered a series of companion lawsuits MALS brought against defendants including appraisers, brokers, closing agents and more.(1)

***

• MALS’ staff pursues a variety of strategies to negotiate between debt-laden homeowners and their lenders. One of the first priorities is looking for any violation of lending laws. “If we do find a violation, that gives us some leverage to try to demand that lender restructure the mortgage,” [MALS' attorney Webb] Brewer said. “Basically, we look for leverage to get the meaningful restructuring (of a loan) that will allow someone to stay in their home.”

For more, see MALS Expands Homeowner Aid.

For other posts on homeowners using Federal & state consumer protection statutes to try and undo bad mortgage loans, Go Here, Go Here, and Go Here.

For posts that reference the failure of some mortgage lenders and their attorneys to file the required loan documents and otherwise fail to establish that they have legal standing to bring foreclosure actions, Go Here, Go Here, Go Here, and Go Here.

(1) According to the story: The plaintiffs were homeowners trapped in mortgages they couldn’t afford; MALS' attorney Webb Brewer said the settlement on behalf of 17 plaintiffs in the various cases was cumulatively worth $3 million; some of the settlement was actual cash for the victims - the rest of the value comes from the savings in restructured mortgages that MALS helped negotiate. undo mortgage loans TILA batallion

Ventura DA Issues Advisory On Fractional Deed Transfers In Foreclosure Rescue Scams

In Ventura County, California, District Attorney Gregory D. Totten has issued an advisory warning county homeowners facing foreclosure to look out for and avoid fractional interest deed transfers promoted by foreclosure rescue scam artists as a way to avoid foreclosure.

Among other things, the advisory warns that, while the County Clerk Recorder's Office may be legally required to accept properly prepared documents for recording, it doesn't necessarily mean that the act of recording a fractional deed is lawful. Among the potential unlawful acts that may be committed in connection with a fraudulent scam involving a fractional interest deed transfer in California (which can be found in the California Penal Code and the California Civil Code), according to the advisory, are:

1. recording a false or forged document (Penal Code Sec. 115),
2. foreclosure consultant fraud (Civil Code Sec. 2945.4),
3. grand theft by false pretenses (Penal Code Sec. 487), and
4. fraudulent conveyance of land with intent to delay creditors (Penal Code Sec. 531),

For more, including an explanation of the fraudulent deed transfer scam, see "Fractional" Deed Advisory (English version) (Spanish version).

Go here for a brochure on the Ventura County DA's Real Estate Fraud Prosecution Program (English) (Spanish); and go here for the DA's Real Estate Fraud Unit webpage.

Go here for other posts on fractional interest deed transfer, foreclosure rescue bankruptcy scams.

Grand Rapids Couple In Foreclosure Accuse Equity Stripper Of Pocketing Home Equity, Defaulting On Mortgage; Cops Investigate

In Grand Rapids, Michigan, WOOD-TV Channel 8 reports:

• Jason and Tricia Wise were losing their home on Grand Rapids' northwest side when they got a mailer from a company called Canal Street Financial. "It was one of the first letters we got that actually said, 'we're interested in saving your home,'" Jason Wise said. But it didn't turn out that way. "Basically they got a mortgage and robbed all the equity out of our home and then never made those payments and then waited for the bank to foreclose and kick us out of our house," Wise laments.

***

• The Wises deeded their house for $1 to a company called Wells Financial, operated by an employee of Canal Street. Then Wells Financial deeded the house to Canal Street's boss, Norman Long. Long, using another corporate identity, NTW Investments, sold the house back to the Wises on a land contract which had them making monthly payments of $719 until the total amount was paid off, at which time they would get back the deed to the house.

• But Norman Long had a secret. He had his own deal to make money off the house, unknown to the Wise family. He got a new mortgage on the house for $119,000, paid off their old mortgage of $86,000, and pocketed the $33,000 difference. In addition, Long was receiving the Wises faithful monthly payments on their land contract.

• "For the next two years we make all of our payments and we think everything is fine, that we're rebuilding our credit," Jason Wise said. But what he didn't know is that, despite all that income, Long didn't make the payments on his mortgage. That lender foreclosed and the Wises were back where they started with an even bigger payoff needed to save their home.

***

• A Grand Rapids police detective and a US Postal Inspector are investigating to see if they can charge Long with a crime.(1)

For more, see Secret deal leaves family facing foreclosure - again (go here for video).

Editor's Note:

Arguably, the transaction described in this report could constitute an equitable mortgage. In that case, the homeowners who were screwed out of their home title would still be considered the owners of the property.

Further, because the Wises remained in possession of the home throughout the entire relevant period, and were in possession when the bank made the mortgage loan to Long, it is arguable that the mortgage lender making the $119,000 mortgage was on notice of any property rights the Wise's could establish, and consequently, would not be entitled to bonafide purchaser status - thereby making their mortgagee's interest in the home inferior to the Wise's (at least to the extent that the $119,000 loan exceeded the $86,000 balance on the existing mortgage that was paid off). Essentially, a case could be made that it's the bank that loaned the $119,000 that would be screwed out of $33,000 - not the Wises.

For examples of what a lawsuit against a foreclosure rescue operator looks like, one that asserts equitable mortgage and usury, see:

• Moore v. Cycon Enterprises, Inc. (a Michigan foreclosure rescue case),
• Commonwealth of Massachusetts vs. Sohmer (a Massachusetts foreclosure rescue case).

Go here for information on equitable mortgages in Michigan. Go here for information on bonafide purchaser case law in Michigan.

Go here for a recent post in which this scenario was played out.

(1) Go here for Criminal Prosecutions Of Foreclosure Rescue Operators, Refinancing & Other Deed & Equity Scams.

Ohio AG Files Civil Charges Against Company Promoting Accelerated Mortgage Payoff Program

In a June, 2008 press release, the Ohio Attorney General announced:

• A Greene County company offering mortgage payment plans is facing legal action for continuing to mislead consumers, despite a 2005 agreement to clean up its act. The Ohio Attorney General’s Office [...] charged Nationwide Biweekly Administration, Inc., (Nationwide Biweekly) with violating the Ohio Consumer Sales Practices Act and the Home Solicitation Sales Act. The lawsuit was filed in the Greene County Court of Common Pleas.

• According to the lawsuit, Nationwide Biweekly advertised weekly and biweekly mortgage payment plans that could build home equity “twice as fast” as monthly payment plans. Consumers paid the company a non-refundable fee of $75 or more to set up the service. Every one or two weeks, Nationwide Biweekly deducted money from consumers’ bank accounts, so consumers believed they were making weekly or biweekly payments to their mortgage companies. In reality, however, Nationwide Biweekly collected the payments and paid consumers’ mortgage companies only every month.

For the rest of the press release, and to view the lawsuit, see Mortgage Payment Company Sued for Misleading Consumers.

NY AG Hits Lender For $1M To Resolve Charges Of Alleged Discriminatory Lending Practices

The New York Attorney General's Office announced last week:

• Attorney General Andrew M. Cuomo [...] announced that his office has issued more than $900,000 in restitution to approximately 270 African-American and Latino borrowers who experienced discriminatory lending practices by GreenPoint Mortgage. Further, the office is proceeding with its investigation into potential discriminatory pricing by various mortgage brokers that did substantial business with GreenPoint. Greenpoint is a subsidiary of Capital One Financial Corporation. The restitution comes from a groundbreaking fair lending agreement reached between the Attorney General’s office and GreenPoint totaling approximately $1 million.

***

• The Attorney General’s office initiated an inquiry into GreenPoint after reviewing Home Mortgage Disclosure Act (HMDA) data showing that GreenPoint’s African-American and Latino customers were more likely than white customers to receive high-priced loans in New York.

For more, see NY AG Press Release: AG Cuomo Obtains Approximately $1 Million For Victims Of Greenpoint's Discriminatory Lending Practices.

Go here and go here for other posts on alleged race bias in real estate transactions. PredatoryLendingRaceBias

California AG Settles Suit With Firm Accused Of Knowingly Using Unaffordable "Lease To Own" Agreements As Device For Pocketing Renters' Downpayments

In a July 18, 2008 press release:

• California Attorney General Edmund G. Brown Jr. [...] announced a $150,000 settlement for aspiring homeowners who had their entire down payments unlawfully seized by Lease2OwnHomes for missing rent on a lease-to-own agreement. "We have obtained restitution for renters who were ripped off by an unscrupulous landlord who illegally seized down payments that were part of a lease-to-own home scam," Attorney General Brown said.

• Under California law, if a renter misses a monthly payment in a lease-to-own program, the landlord may only seek eviction and unpaid rent. In this case, the landlord unlawfully seized the entire down payment for the purchase of the home in addition to seeking the eviction and unpaid rent.

According to his press release, among the activities Attorney General Brown accused Lease2OwnHomes of was providing a lease and option to purchase agreement when the company knew that consumers were not financially capable of meeting monthly payments required to successfully purchase a home.

For more, see Brown Obtains Restitution For Lease2OwnHomes Renter Rip-Off.

Illinois AG Files Civil Charges Against Upfront Fee Foreclosure Rescue Operator

The Illinois Attorney General announced:

• Illinois Attorney General Lisa Madigan today continued her aggressive battle against those taking advantage of homeowners in crisis by filing a lawsuit against an Ohio-based company(1) allegedly engaged in a mortgage rescue fraud scheme. The lawsuit claims the company violated the [Illinois] Mortgage Rescue Fraud Act and the [Illinois] Consumer Fraud and Deceptive Business Practices Act by preying on vulnerable homeowners on the verge of foreclosure. This is the 13th lawsuit Attorney General Madigan has brought against mortgage rescue fraud companies.

For more, see Illinois AG Sues Ohio Company For Mortgage Rescue Fraud (Madigan Alleges Company Takes Advantage of Homeowners on the Verge of Losing their Homes to Foreclosure).

(1) According to her press release, Madigan filed suit against Foreclosure Solutions, LLC and company president Timothy Buckley of Maineville, Ohio, based on allegations that the defendants falsely promised to help consumers save their homes after falling behind on their mortgage payments. The defendants charged consumers $1,250 and promised to provide mortgage foreclosure rescue services, which either were never performed or proved to be ineffective, according to the complaint.

Missouri AG Launches "Operation Stealing Home" - Targets Foreclosure Rescue Scams, Predatory Lenders; Seeks To Void Deeds, Obtain Victim Restitution

From the Missouri Attorney General's Office:

• Attorney General Jay Nixon is taking legal action to stop those who are preying on Missouri homeowners left vulnerable to mortgage fraud because they are facing foreclosure or other financial difficulties. Nixon today launched Operation Stealing Home by filing seven lawsuits [...] aimed at individuals and businesses Nixon said had defrauded consumers through refinancing, advance fee and foreclosure consulting scams.

***

• Four of the defendants(1) operate what Nixon termed "foreclosure rescue scams." [...] The companies [...] convince the homeowners to deed their property over and rent it back from the company so they can still live in the home, on the premise that the rent goes to make the mortgage payment, plus a modest profit for the company. Unfortunately, the homeowners discover that the companies are not using their rent payments to make mortgage payments, causing the lenders to initiate foreclosure proceedings.

***

• Nixon is asking the courts to void the deeds the companies illegally obtained; to award restitution to consumers who suffered losses; to impose appropriate penalties; and to issue injunctions to prohibit the defendants from future violations of Missouri consumer protection laws.

For more, see Operation Stealing Home: Nixon goes after mortgage fraud targeting those facing foreclosure or other financial woes.

(1) According to the Missouri AG press release, four of the lawsuits targeted foreclosure rescue firms and were filed against: (I) St. Anthony Avenue LC, based in St. Louis County; (II) Private Funding Solutions, based in St. Charles, and its president, Mike C. Rothweiler; (III) Brian J. Thompson, of Springfield, who does business as "All Decked Out"; and (IV) Access Mortgage and Financial Corp., of Lansing, Mich., and its agents, David Snyder and Josh Nowell. This lawsuit was filed in Henry County.

Jacksonville Foreclosure Rescue Operator Faces Criminal Charges; Allegedly Stripped Equity From Homeowners, Allowed Mortgages To Go Into Default

In Jacksonville, Florida, The Florida Times Union reports:

• [Thomas] Cuomo wasn't a white knight of the souring housing market, prosecutors and victims say. He was one of its villains. Cuomo ran a private company, soliciting one desperate person after another and offering them help: The chance to sell him their homes and rent them back. Foreclosure Counselors Inc. is listed as a nonprofit with the Florida Division of Corporations, but not on the Internal Revenue Service's list of 501(c)3 charities.

• Prosecutors say Cuomo bought homes, lied on mortgage applications to buy them, took what equity the former owner had built up, and then let the houses go into another foreclosure. In some cases he took out a second loan on the house, documents show. The [Jacksonville area] State Attorney's Office has charged him with mortgage fraud and schemes to defraud.

***

• While other victims have ultimately been evicted, [Jacksonville Area Legal Aid Society's April] Charney has challenged Cuomo's foreclosure on [homeowner/victim Lester] Thomas' behalf. She believes his salvation could be the very cause of the mortgage collapse: Cuomo's loan was already in default when it was bundled with others and sold to securities. Often, in cases like this, no one can produce the original loan to prove who it belongs to. The trustee bank, Wells Fargo, has asked for an extension of time in the case.

For more, see Mortgage aide accused of scam on homeowners (Prosecutors say he let homes be foreclosed after buying out owners).

Go here for more on criminal prosecutions of foreclosure rescue operators.

Wall Street Journal On Stalled Foreclosures, Legal Standing & Sloppy Paperwork

The Wall Street Journal reports:

• A cadre of state-court judges scrutinizing foreclosure actions in a string of recent rulings have discovered flaws in documents that borrowers may be able to use to keep their homes. The judges, including a committee from the Kings County Supreme Court in Brooklyn, N.Y., are highlighting shortcuts taken by mortgage companies in court filings, which borrowers might be able to exploit when facing foreclosure.

***

• About six judges from the supreme court in Brooklyn, the state's lowest court, which handles most of the New York City borough's foreclosure actions, have been digging into the problem and finding new issues that they can use to dismiss cases.

• The work of the Brooklyn court -- which formed a committee to discuss foreclosures about five years ago, long before the housing crisis emerged -- looks prescient now as it has rejected dozens of foreclosure actions since the crisis began by identifying mistakes or suspicious information. Among the most energetic members of the Brooklyn committee is Justice Arthur Schack,(1) 63 years old. Justice Schack says barely any of the foreclosures he has denied eventually are completed.(2)

***

• Elsewhere, in Suffolk County on Long Island, several judges have taken up scrutiny of mortgage documents. Justice Jeffrey Arlen Spinner wrote recently in a ruling that he found "glaring discrepancies and unexplained issues of substance" in a foreclosure lawsuit filed last year by GMAC Mortgage LLC.(3)

For more, see Some Judges Stiffen Foreclosure Standards.

See also, Wall Street Journal Law Blog: Subprime Legal: Judges Scrutinize Mortgage Docs, Deny Foreclosures.

For a story on the efforts of the Brooklyn judiciary in search of an effective approach to deal with the local foreclosure problem, see Brooklyn Daily Eagle: Brooklyn Justices Fight Foreclosure Crisis From All Angles.

(1) Go here for list of links to over thirty of Justice Schack's decisions denying foreclosure.
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(2) Among Justice Schack's colleagues on the Brooklyn court who haven't hesitated to deny foreclosure when the paperwork was screwed up are the Honorable Donald Scott Kurtz (see LaSalle Bank NA v Smalls, Jan. 3, 2008; PHH Mortgage Corp v Barber, Jan. 15, 2008; US Bank NA v Villaruel, Feb. 1, 2008; Wells Fargo Bank NA v Hampton, Jan. 3, 2008); and the Honorable Jack Battaglia (go here for links to his cases where foreclosures were denied).
.
(3) For another of Justice Spinner's rulings denying foreclosure, see Wells Fargo Bank NA v Whitworth, Jan. 2, 2008. Not to be outdone, Justice Spinner's colleague on the Suffolk County court, the Honorable Joseph Farneti, has issued a couple of foreclosure denials of his own. See Aurora Loan Services v MacPherson, March 11, 2008; and CitiMortgage Inc. v Brown, March 13, 2008.

Lender's Lack Of Standing, Murkiness Surrounding Promissory Note Ownership Means Favorable Settlement For Elderly Atlanta Homeowner In Foreclosure

The New York Times reports:

• [I]n some mortgage circles, Ms. [Mamie Ruth] Palmer, a 74-year-old former housekeeper, has earned her moment of fame. After enduring six years in foreclosure hell, almost losing her home twice, Ms. Palmer has escaped intact.

• Last month she received a settlement from the Bank of New York, the trustee for a vast pool of mortgages that included hers. Under the terms of the deal, the bank reduced Ms. Palmer’s loan balance to $59,000 from about $100,000 and has agreed to accept the proceeds of a reverse mortgage in full satisfaction of her obligation.(1)

***

• Ms. Palmer’s case is hardly unique. It’s just one of a swelling number that revolve around the thorny issue of who owns the note on a home when it’s forced into foreclosure proceedings.

• In the seemingly long-ago era when banks held on to the mortgage loans they made, this was a straightforward matter. But today, amid the freewheeling packaging of mortgage loans into securities that are sold off to investors, it’s much less clear who controls the note — all of which promises to cause banks enormous legal and financial headaches as foreclosures mount. The added twist is that some judges are taking the borrowers’ side in foreclosure disputes, precisely because of murkiness surrounding notes.

***

• Loans were heaped into trusts with little documentation of ownership or proper loan assignments — it was all about volume and the fees that came with it — and now that sloppiness is hurting both lenders and borrowers.

Among the notables receiving mention in the story with regard to the problems some foreclosing lenders are facing because their loan documentation is all screwed up:

• Howard D. Rothbloom, a Marietta, Georgia consumer bankruptcy attorney who represented the homeowner in this story,
• April Charney, a consumer lawyer at Jacksonville Legal Aid Society in Florida,
• William J. Brennan Jr., director of the Home Defense Program of the Atlanta Legal Aid Society,
• The Honorable Arthur M. Schack, a justice on New York State Supreme Court in Brooklyn, who has been hammering foreclosing lenders appearing before him for sloppy paperwork for some time,(2) and on occasion, has excoriated lenders' attorneys for wasting the court's time for filing foreclosure actions on behalf of clients that lacked legal standing to do so.(3)

For more, see Fair Game: How One Borrower Beat the Foreclosure Machine.

For other posts that reference the failure of some mortgage lenders and their attorneys to file the required loan documents when starting foreclosures, Go Here, Go Here, Go Here, and Go Here.

(1) According to the story, the settlement also eliminated about $12,000 in foreclosure fees added to her debt and called for the installation of central air-conditioning in Ms. Palmer’s home; and roughly $10,000 in legal fees billed over five years by Ms. Palmer’s lawyer, Howard D. Rothbloom, will be covered by payments she has made toward her mortgage while she was battling foreclosure.
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(2) Go here for list of links to over thirty of Justice Schack's decisions denying foreclosure.
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(3) In a 2007 decision in which he dismissed a foreclosure action with prejudice, Justice Schack makes this observation on the conduct of the law firm filing the suit on behalf of Aurora Loan Services in which legal standing was lacking:

• "[T]he Court is troubled that Aurora's counsel, Druckman & Sinel, LLP, and Robert S. Aronin, Esq., of counsel to Druckman & Sinel, appears to be wasting judicial resources in an action that could be construed as frivolous conduct. Druckman & Sinel, at the home page of their website, www.callthebestlawyer.com, has a headline, "Lawyering is a Difficult Business." It certainly is, if your client lacks standing and your firm engages in wasting of judicial resources". (emphasis added) Aurora Loan Servs., LLC v Sattar, 10/09/2007, 17 Misc 3d 1109(A), 2007 NYSlipOp 51895(U); (2nd paragraph).

Foreclosure Cases Swamp Non-Profit Legal Services Offices

The following links are to stories of how some non-profit law offices have their hands full handling foreclosures for the poor, disabled, and elderly:

• Louisville, Kentucky: Potential home foreclosures keeping Legal Aid swamped (case loads have reportedly tripled at Legal Aid Society - Louisville),

• Winston-Salem, North Carolina: Attorney helps those hurt by housing woes (number of foreclosure cases at Legal Aid of North Carolina Inc.'s Winston-Salem office reportedly increased from 25 a week to 50 a week(1)),

• Jacksonville, Florida: Getting tough on foreclosure (clients seeking relief from bankruptcy and foreclosure reportedly innundate Jacksonville Area Legal Aid - both issues are related and both mean standing room-only when JALA hosts its bankruptcy and foreclosure clinics).

(1) According to their website, Legal Aid of North Carolina's Mortgage Foreclosure Project ("MFP") includes a "team" of attorneys and staff who are located in LANC offices (and other legal services organizations) and who specialize in foreclosure defense and predatory lending law. The MFP team acts on referrals from Legal Aid of North Carolina offices and community organizations throughout North Carolina. Go here for MFP brochure.

Maryland Law Firm To Donate 1,000 Pro Bono Hours To Help Homeowners Hit By Foreclosure Crisis

According to their recent press release:

• Joseph, Greenwald & Laake, P.A. (http://www.jgllaw.com/), the largest law firm in Prince George’s County, has created The Thousand Hours Project, to assist local homeowners hit by the exploding foreclosure crisis. JGL will donate 1,000 hours of pro bono legal services to help local homeowners.

***

• “While our initial efforts will center on cases referred from HIP [Housing Initiative Partnership, Inc., in Hyattsville] or Civil Justice,” said [JGL partner, Barbara A.] Jorgenson, “we anticipate doing cases throughout our practice areas in Montgomery, Prince George’s, Frederick, Anne Arundel, Howard, and the Southern Maryland counties.” Case referrals will also be accepted through the Community Legal Services of Prince George’s County, from which JGL received the award for Outstanding Pro Bono Service in 2007.

For more, see Maryland Law Firm Announces Formation of 1000 Hours Project to Assist with Nation's Foreclosure Crisis.

Miami Judge Orders Foot-Dragging Lender To Foreclose & Take Title To Condo Or Start Paying Maintenance Fees

In Miami, Florida, the Miami Daily Business Review reports:

• As bills mounted and revenue shrank, the board of Miami Beach's luxury Bentley Bay condo knew it had to take drastic action. [...] In one instance, the condo association took legal action against a lender that it said was dragging out the foreclosure process to avoid paying maintenance fees.

***

• Unit 212 at the Bentley was mired in a drawn-out foreclosure process, and fees were mounting. The cash-strapped condo association finally asked Miami-Dade Circuit Judge Daryl Trawick, who was overseeing the foreclosure case, to force U.S. Bank to take title to the unit or immediately start paying maintenance fees.

• In his June 1 order, Trawick gave U.S. Bank, the trustee for Citigroup Mortgage Loan, two choices: Don't foreclose and start paying maintenance fees on a unit it doesn't actually own, or foreclose and pay thousands of dollars in past-due fees.

For more, including links to the condo association's court filing requesting that the bank be compelled to foreclose, and Judge Trawick's order directing the lender to do so, see Desperate times call for desperate measures for condo associations.

For Attorneys:

In the condo association's court filing (at paragraph 12 of the motion to compel), the Florida court case F.D.I.C. v. Ventura Corp. of Sarasota, Inc., 622 So. 2nd 581, 582 (5th DCA 1993) is cited as precedent in support of the proposition that a trial court, exercising its equitable powers, can compel a mortgage holder to either proceed with a foreclosure sale or to pay the condominium association's monthly assessments.

The Piling On Continues As City Of San Diego Civil Suit Charges Countrywide With Predatory Lending Practices; WaMu, Wells Fargo, Wachovia May Be Next

In San Diego, California, the San Diego Union Tribune reports:

• San Diego City Attorney Mike Aguirre is taking on the lending industry, filing suit Wednesday against Countrywide Financial, which he accuses of engaging in unlawful and fraudulent predatory lending that victimized numerous San Diego home buyers.

• His suit, which follows similar litigation filed against Calabasas-based Countrywide last month by State Attorney General Jerry Brown, seeks to halt foreclosures that are tied to risky, adjustable-rate loans made by the lender. It also seeks civil penalties of $2,500 per violation against each of the named defendants. Also targeted in the suit is Bank of America, which recently purchased Countrywide.

• In a press conference held in front of a vacant, partially burnt Skyline home that has recently been taken over by Countrywide, Aguirre said he hopes his suit will be a way to bring other lenders together to work out settlements with borrowers who are about to lose their homes or who already have been foreclosed on.

***

• While Aguirre said he also plans litigation against other lenders, including Washington Mutual, Wells Fargo and Wachovia Corp., he said his main goal is to resolve the issue of growing foreclosures “in an orderly way.”

For more, see Aguirre sets his sights on Countrywide.

To view the lawsuit brought by the City Attorney for the City of San Diego, see People v. Countrywide Financial Corp., et al.
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For links to recent lawsuits filed by states targeting Countrywide, see Recap Of Recent State Actions Against Countrywide Financial.

Go here and go here for more on Countrywide's problems. countrywide consumer problems

Judge Stalls Foreclosure As Homeowner, Allegedly Duped Into Signing Away House In Equity Stripping Deal, Claims Violations Of NY Home Equity Theft Law

In Nassau County, Long Island, the New York Law Journal (appearing at Law.com) reports:

• Applying a recently passed New York state law to a "questionable" transaction, a Nassau County judge has halted a foreclosure to give the homeowners a chance to prove they were tricked into selling their house. In Washington Mutual Bank v. Sholomov, [...] Supreme Court Justice Daniel R. Palmieri denied a motion by Washington Mutual to foreclose and sell the Glen Cove, N.Y., residence of Frank and Vincenza Dizazzo.

***

• Here, the decision required Palmieri to apply New York's Home Equity Theft Prevention Act, which went into effect on Feb. 1, 2007. In doing so, the judge weighed "the rights of both homeowners claiming to have been duped out of their home and the lending institution now seeking to foreclose on a mortgage made to the party the homeowners claim was part of the scheme."

***

• Frank Mitchell Corso of Jericho, N.Y., represented the Dizzazos. In an interview, Corso characterized the decision as important to banks that lend money to purchasers who may be involved in mortgage fraud schemes, as delineated in the state act. "The banks now have to be extremely careful as far as following procedure because they may become a party to the fraud," Corso said.

For the entire story and details, see Foreclosure Halted for Couple Who Say They Were Tricked Into Selling Home.

For the case, see Washington Mut. Bank v. Sholomov; 7/10/2008, 2008 NYSlipOp 28250.

Go here for the statute in question, the New York Home Equity Theft Prevention Act, or go here for consumer information on the law (both available online courtesy of the New York State Banking Department).

For other posts on homeowners using Federal & state consumer protection statutes to try and undo bad mortgage loans, Go Here and Go Here.

Editor's Note:

The issue of whether the straw buyer involved in the equity stripping arrangement (Sholomov) and the lender providing the financing in the transaction (Washington Mutual) were "bona fide purchasers for value" was raised in the case, according to this excerpt in the article:

• It is "certainly questionable" that Sholomov, who also was in default, was a "bona fide purchaser for value," wrote the judge, as the Dizzazos continue to reside in their Glen Cove home, and the transaction only required a down payment of $1,000 for a home worth roughly 600 times more.

• In turn, while Washington Mutual "is not directly implicated as 'equity purchaser'" because of its loan to Sholomov, Palmieri held the bank "still must be charged with knowledge, through its agent, of the possible application of the statute and of its violation."

I would point out that the New York Court of Appeals (the state's high court) decision in Phelan v. Brady, 119 N.Y. 587; 23 N.E. 1109; (NY 1890) supports the proposition that, because the homeowners (the Dizazzos) were in possession of the home at the time Washington Mutual acquired its mortgagee's interest in the property, it (WaMu) is deemed to be on notice of the homeowners rights, and therefore, is not a bona fide purchaser for value, without regard as to whether WaMu had an authorized agent involved in the deal from whom knowledge could be imputed to it.(1) Accordingly, its mortgagee's interest in the home is arguably inferior to any interest that the homeowners can establish.(2)

(1) Excerpt from Phelan v. Brady, 119 N.Y. 587; 23 N.E. 1109; (NY 1890):

• At the time of the execution and delivery of the mortgage to the plaintiff, the defendant Mrs. Brady was in the actual possession of the premises under a perfectly valid but unrecorded deed. Her title must, therefore, prevail as against the plaintiff. It matters not, so far as Mrs. Brady is concerned, that the plaintiff in good faith advanced his money upon an apparently perfect record title of the defendant John E. Murphy. Nor is it of any consequence, so far as this question is concerned, whether the plaintiff was in fact ignorant of any right or claim of Mrs. Brady to the premises. It is enough that she was in possession under her deed and the contract of purchase, as that fact operated in law as notice to the plaintiff of all her rights.
  .
  It may be true, as has been argued by the plaintiff's counsel, that when a party takes a conveyance of property situated as this was, occupied by numerous tenants, it would be inconvenient and difficult for him to ascertain the rights or interests that are claimed by all or any of them. But this circumstance cannot change the rule. Actual possession of real estate is sufficient notice to a person proposing to take a mortgage on the property, and to all the world of the existence of any right which the person in possession is able to establish. [my emphasis] Governeur v. Lynch, 2 Paige, 300; Bank of Orleans v. Flagg, 3 Barb. 318; Moyer v. Hinman, 14 N. Y. 184; Tuttle v. Jackson, 6 Wend. 213; Trustees of Union College v. Wheeler, 61 N. Y. 88, 98; Cavalli v. Allen, 57 id. 517.)

(2) For a dissenting view from one in the title insurance industry, see Rifkin, Bernard M., Chicago Title Insurance Company, "Possession as Constructive Notice of Rights of Tenants:Arcane, Possibly Archaic" - last visited July 24, 2008. NewYorkBonaFidePurchaser

Investigative Report Seeks Answers In Alleged "Land Patent" Foreclosure Rescue Scheme

In San Diego, California, the KGTV Channel 10 I-Team reports:

• The I-Team has been looking for Larry Smith for quite some time. When we found him, he refused to talk to us. But we know this confidence man has no problem talking to his victims. There are hundreds of them in Southern California. Victims like Mili Alto, who attended a Smith sales presentation in downtown San Diego. Mili said, "According to him and everybody this was the solution."

• Smith's solution is land patents; he claims these patents would prevent homeowners from losing their homes through foreclosure.

***

• Land patents cannot help distressed homeowners, experts said. "It is a false claim," said Steve Robinson from the Economic Crimes Division of the District Attorneys office. "... a fiction that has been made up by people to justify separating folks from their hard earned money," Robinson said. "The one thread you will see in all these scams is the promise to solve the foreclosure problem by taking money up front."

For more, see I-Team Pursues Man Suspected In Land Patent Scheme (read story) (watch video).

California Class Action Alleges City Intimidation, Harassment Of Section 8 Minorities

In Antioch, California, The National Law Journal reports:

• The mortgage crisis has spawned an unusual federal class action by African-Americans in Antioch, Calif., a San Francisco suburb, alleging city intimidation and harassment of minorities who rent homes using federally subsidized Section 8 housing vouchers in an effort to force them out of the area.

***

• The real estate foreclosure crisis hit Antioch hard. In response, landlords and homeowners turned to renting homes to pay mortgages, often renting to tenants using federal rent subsidy vouchers, known as Section 8, according to [Brad] Seligman, [of The Impact Fund, a public interest law firm in Emeryville, Calif.].

• By 2006, the inability of homeowners to sell homes allowed Section 8 participants to use their benefits to move out of urban centers to the suburb 40 miles west of San Francisco and to larger homes that might otherwise sit vacant, according to the suit.

***

• The suit, brought by five African-American women who rent homes using Section 8 vouchers, alleges that the city and police focused attention on people renting homes using the vouchers. The women say police looking for Section 8 violations subjected residents to warrantless searches of their homes. Police allegedly made threats to landlords who continued to accept the vouchers and they also allegedly intimidated renters with potential loss of benefits.

For more, see Mortgage Crisis Spawns Class Action Alleging Harassment of Minorities.

To view the lawsuit, see Williams v. City of Antioch, No. C08-2301BZ (N.D. Calif.).

See also:

• San Francisco Chronicle: Blacks' suit accuses Antioch of discrimination,
• The Impact Fund: Press Release.

Go here for other posts on alleged race bias in real estate transactions. race bias predatory lending

Another Brooklyn Trial Judge & His Aversion To Sloppy Paperwork From Foreclosing Mortgage Lenders

In a recent article in the National Law Journal, Brooklyn Supreme Court Justice Jack Battaglia, in connection with his approach to the apparent sloppy paperwork being filed by foreclosing lenders and their attorneys (and not unlike the approach taken by his colleague on the Brooklyn bench, Justice Arthur Schack), was described as expressing concerns over shortcuts being taken by them in their filings with the court. A review of three of his cases in which he denied foreclosure (with leave to renew in conformity with his decision) reveals a number of the problems Justice Battaglia found and that is apparently the cause for his concern:

1. resorting to the improper use of "nail & mail" method of service of process without first exercising due diligence in determining Defendants' whereabouts; no indication that the process server made any “effort to determine defendants' business address in order to attempt personal service there at pursuant to CPLR 308(2) before resorting to ‘nail and mail’ service - mortgagee would be expected to have a business address for its mortgagor;
2. Affirmation of Merit and Amount Due was executed and notarized in outside New York State and not accompanied by a certificate of conformity;
3. the submission to the court included numerous documents that purportedly support the relief sought, but many of the documents are not identified by anyone with personal knowledge, and are not authenticated or otherwise rendered admissible as evidence - they are not incorporated in any affidavit or affirmation;
4. no proof of service of the notice of default;
5. non-military affidavits were based upon information obtained from an underage person,
6. affidavit executed by a person who is not an officer or employee of either Plaintiff or the original mortgagee, and who was, therefore, not qualified to testify as to the material facts upon which the action must proceed, particularly since the assignment purportedly giving
   Plaintiff ownership of the note and mortgage was not executed until after commencement of the action;
7. court noted that a Limited Power of Attorney held by the alleged plaintiff did not confer testimonial competence;
8. no explanation for attempted service of Defendants at one location when the default letter was addressed to a different location,
9. notice of default from company who is neither the lender or mortgagee;
10. notice of default failed to identify the lender, the date of the note and mortgage, or even the property;
11. non-military affidavit executed as part of the affidavit of service of the summons and complaint was premature;
12. no evidence of compliance with the additional-mailing requirement of CPLR 3215(g)(3)(i);
13. in one case, the assignor under the Assignment of Mortgage was Mortgage Electronic Registration Systems, Inc., but there is no evidence of the assignor's ownership of the
    note and mortgage, or its right or power to make the assignment;
14. Affidavit of Merit made by an “attorney in fact” who does not assert personal knowledge or facts from which personal knowledge might be inferred.

For more on the three cases, see:

1. New Century Mortgage Corporation v Trench, 03/28/2007, 2007 NYSlipOp 30653(U);
2. US Bank National Association v Lockridge, 11/27/2007, 2007 NYSlipOp 33886(U);
3. Wall Street Mortgage v Lorence, 03/19/2007, 2007 NYSlipOp 30224(U).

For other posts that reference the failure of some mortgage lenders and their attorneys to file the required loan documents when starting foreclosures, Go Here, Go Here, Go Here, and Go Here. missing mortgage foreclosure docs gamma

Brooklyn Trial Judge Nixes "Rubber Stamp Method" Of Adjudicating Foreclosures

In a recent article in the National Law Journal, Brooklyn Supreme Court Justice Arthur M. Schack, in connection with his approach to the apparent sloppy paperwork being filed by foreclosing lenders and their attorneys, was quoted as follows:

• "I deny more foreclosures than I approve," [...]. "I want to see the servicing agent's power of attorney, I want to see all the paperwork before I approve it. If the paperwork is garbage, I deny it. If you're going to take away someone's home, it should be done properly."

After a review of some of his foreclosure cases, it appears that he wasn't kidding. Certainly, he has opted against using the ever-popular "rubber stamp method" of adjudicating foreclosures that many of his judicial colleagues around the country have found so handy when in a hurry to clear their respective caseloads. Further, in most of the cases listed below, the homeowner facing foreclosure either was not represented by an attorney, or didn't bother to show up to court at all. Inspite of this, Justice Schack took out his fine tooth comb anyway, went through all the documents, and asked a lot of questions that the lenders were going to have a tough time answering.

Among the issues Justice Schack points to in some of his decisions when denying a foreclosure because the alleged plaintiff did not have legal standing to file the action are:

• Defective powers of attorney, faulty affidavits, failure to file pooling and servicing agreements with the court, conflicts of interest of individuals signing assignments, affidavits, etc. as officers for various mortgage companies, defective verified complaint, assignments of the mortgages being foreclosed subsequent to the commencement of the foreclosure action, and no evidence of alleged assignments.

He has also shown no reluctance in admonishing lenders' attorneys by giving terse warnings of sanctions for filing actions that may be frivolous, in that, by filing foreclosure actions for companies that lacked standing to sue, the actions appear to be a waste of judicial resources, typically discussing the Part 130 Rules of New York law, which give the courts a remedy to deal with frivolous conduct.

In rendering these decisions, he gives this reminder to the lenders and their attorneys of the requirement that if they don't have legal standing to sue, they have no business bringing the foreclosure actions:

• The Court of Appeals, in Saratoga County Chamber of Commerce, Inc. v Pataki, 100 NY2d 801, 812 (2003), cert denied 540 US 1017 (2003), declared that "[s]tanding to sue is critical to the proper functioning of the judicial system. It is a threshold issue. If standing is denied, the pathway to the courthouse is blocked. The plaintiff who has standing, however, may cross the threshold and seek judicial redress." Professor David Siegel, in NY Prac, § 136, at 232 [4th ed] instructs that:


• [i]t is the law's policy to allow only an aggrieved person to bring a lawsuit . . . A want of "standing to sue," in other words, is just another way of saying that this particular plaintiff is not involved in a genuine controversy, and a simple syllogism takes us from there to a "jurisdictional" dismissal: (1) the courts have jurisdiction only over controversies; (2) a plaintiff found to lack "standing" is not involved in a controversy; and (3) the courts therefore have no jurisdiction of the case when such a plaintiff purports to bring it."(1)

Ameriquest Mtge. Co. v Basevich, 6/26/2007, 16 Misc 3d 1104(A), 2007 NYSlipOp 51262(U), among other cases.

The following is a compilation of links of some of Justice Schack's decisions over the last year and a half or so in which he has denied foreclosure because of the questionable and/or faulty paperwork submitted in a foreclosure action that led him to the conclusion that the alleged plaintiffs in the following foreclosure actions did not have legal standing to bring suit:

1. American Brokers Conduit v Zamalloa, 9/11/2007, 2007 NYSlipOp 32806(U);


2. Ameriquest Mtge. Co. v Basevich, 6/26/2007, 16 Misc 3d 1104(A), 2007 NYSlipOp 51262(U);


3. Aurora Loan Servs., LLC v Sattar, 10/09/2007, 17 Misc 3d 1109(A),
   2007 NYSlipOp 51895(U);


4. Bank of New York v Mulligan, 6/03/2008, 2008 NYSlipOp 31501(U);


5. Bank of New York v Orosco, 11/19/2007, 2007 NYSlipOp 33818(U);


6. Countywide Home Loans, Inc. for the Benefit of DB Structured Products, Inc. v Persaud, 01/15/2008, 2008 NYSlipOp 30076(U);


7. Deutsche Bank Natl. Trust Co. v Castellanos, 5/11/2007, 15 Misc 3d 1134 (A), 2007 NYSlipOp 50978(U);


8. Deutsche Bank Natl. Trust Co. v Castellanos, 1/14/2008, 18 Misc 3d 1115(A), 2008 NYSlipOp 50033(U);


9. Deutsche Bank Natl. Trust Co. v Clouden, 9/18/2007, 16 Misc 3d 1140(A), 2007 NYSlipOp 51767(U);


10. Deutsche Bank Natl. Trust Co. v Maraj, 1/31/2008, 18 Misc 3d 1123(A), 2008 NYSlipOp 50176(U);


11. EMC Mtge. Corp. v Batista, 6/05/2007, 15 Misc 3d 1143(A), 2007 NYSlipOp 51133(U);


12. Fremont Inv. & Loan v McBean, 11/26/2007, 17 Misc 3d 1132(A), 2007 NYSlipOp 52229(U);


13. GE Capital Mtge. Servs., Inc. v Powell, 11/13/2007, 18 Misc 3d 228, 2007 NYSlipOp 27463;


14. HSBC Bank USA v Perboo, 7/11/2008, 2008 NYSlipOp 51385(U);


15. HSBC Bank USA, N.A. v Betts, 4/23/2008, 2008 NYSlipOp 31170(U);


16. HSBC Bank USA, N.A. v Charlevagne, 11/15/2007, 2007 NYSlipOp 33673(U);


17. HSBC Bank USA, N.A. v Cherry, 12/17/2007, 18 Misc 3d 1102(A), 2007 NYSlipOp 52378(U);


18. HSBC Bank USA, N.A. v Valentin, 1/30/2008, 18 Misc 3d 1123(A), 2008 NYSlipOp 50164(U);


19. HSBC Bank USA, N.A. v Yeasmin, 5/02/2008, 2008 NYSlipOp 50924(U);


20. NYCTL 2006-A Trust v Kin Kan Wong, 1/09/2008, 2008 NYSlipOp 30037(U);


21. NYCTL-1 Trust v Cruz, 6/07/2007, 15 Misc 3d 1144(A), 2007 NYSlipOp 51144(U);


22. NetBank v Vaughan, 6/13/2007, 15 Misc 3d 1147(A), 2007 NYSlipOp 51197(U);


23. Nomura Credit & Capital, Inc. v Washington, 4/30/2008, 2008 NYSlipOp 50883(U);


24. Perla v Real Prop. Solutions Corp., 4/28/2008, 2008 NYSlipOp 50846(U);


25. U.S. Bank National Association v Maynard, 11/26/2007, 2007 NYSlipOp 33766(U);


26. U.S. Bank National Association, Trustee v Grant, 11/09/2007, 2007 NYSlipOp 33631(U);


27. U.S. Bank Natl. Assn. v Bernard, 2/14/2008, 18 Misc 3d 1130(A), 2008 NYSlipOp 50247(U);


28. U.S. Bank v Videjus, 4/29/2008, 2008 NYSlipOp 50851(U);


29. Wells Fargo Bank, N.A. v Farmer, 2/04/2008, 18 Misc 3d 1124(A); 2008 NYSlipOp 50199(U);


30. Wells Fargo Bank, N.A. v Farmer, 6/05/2008, 2008 NYSlipOp 51133(U);


31. Wells Fargo Bank, N.A. v Guy, 5/01/2008, 2008 NYSlipOp 50916(U);


32. Wells Fargo Bank, Natl. Assn. v Reyes, 6/19/2008, 2008 NYSlipOp 51211(U).

(1) If a court grants a foreclosure judgment in a case where it is subsequently determined that the plaintiff mortgage lender lacked standing (and accordingly, the court lacked jurisdiction over the case), does this mean that the foreclosure judgment is void? If so, does this mean that everything devolving from that judgment (ie. the subsequent foreclosure sale) is also void? Can anyone imagine the mess that may currently exist with real estate titles around the country that have a recent foreclosure in its chain of title where the mortgage lenders and their attorneys were as sloppy as those described in the list of cases? I can only imagine that this is an issue that title insurance underwriters and agents don't want anyone thinking about.

Ex-World Savings Loan Originator Sues Company For Retaliation For Reporting Alleged Improper Lending Practices

In Oakland, California, a story originally aired by KPIX-TV Channel 5 in May reports:

• A former employee of Oakland's World Savings is suing the company (now owned by Wachovia) and its former principals, saying he was fired in retaliation for his reporting of improper practices and violations of state and federal laws [...] by World in selling loans in San Francisco and the Bay Area.

***

• In the complaint, [ex-loan consultant Paul] Bishop claims World "preyed upon" desperate borrowers who were "enticed into bad/predatory loans…without being told the complete truth about the loans" and that "borrowers were not told the full story about the terms, assumptions or risks of their loans".

***

• The complaint says Bishop began working for World in November of 2002 and in 2004 began to observe practices such as World brokers "helping outside brokers to circumvent underwriting guidelines" through classes where "it walked brokers through (World's) loan application and specifically told them to be sure borrowers qualify for loans, even indicating the necessity to overstate income, if need be, to get a borrower qualified."

***

• The complaint further alleges that "World managers routinely overruled underwriting guidelines that would hae prevented loans from being approved" by using what the filing calls an "exception to policy" to get those loans approved. It says some decisions to deny loans were "overridden" by senior loan originating executives.

For more, see Oakland Bank's Lending Sparks Ex-Employee Lawsuit (read story) (watch video).

For a CBS News' "60 Minutes" interview with Paul Bishop (aired 2-15-09; 13+ minute video), see World of Trouble (read story) (watch video).

For a CBS News' "The Early Show" interview with Paul Bishop (aired 2-16-09; about 5 minutes), see Mortgage Whistleblower.

Go here for other posts on whistleblower suits involving alleged fraudulent mortgage lending practices.

Mezuzah Not Protected Under Fair Housing Act, Federal Appeals Court Rules

In Chicago, Illinois, the ABA Journal reports:

• A federal appeals court has ruled that the Fair Housing Act does not protect the right of condominium owners to display mezuzot on their doorframes. The Chicago-based 7th U.S. Circuit Court of Appeals said the federal law requires accommodation for the handicapped but not for religion, the New York Sun reports. Content-neutral regulations that have the effect of banning religious displays are permitted, the court said in a 2-1 opinion (PDF).

***

• The majority opinion by Judge Frank Easterbrook said the regulation was content-neutral. "It bans photos of family vacations, political placards, for-sale notices and Chicago Bears pennants."

• Dissenting Judge Diane Wood said the rule operated as a constructive eviction of observant Jewish residents.

Source: Housing Law Doesn’t Protect Right to Mezuzah, Appeals Court Rules.

For the decision, see Bloch v. Frischolz (7th Cir., July 10, 2008).

Go here for other posts on condo association problems with mezuzot.

Postscript:

In disagreeing with her colleagues in the majority, Circuit Judge Wood made her feelings known by issuing a 17-page dissenting opinion in response to the 6-page majority opinion. A few of her comments are included in this excerpt from the New York Sun article:

• In dissent, Judge Diane Wood said enforcement of the rule amounted to a "constructive eviction" of observant Jewish residents, as well as an effective bar on Jews moving into the housing complex. "Hallway Rule 1 operates exactly as a redlining rule does with respect to the ability of the owner to sell to observant Jews. No such person could buy a unit at Shoreline Towers," she wrote. "The Association might as well hang a sign outside saying 'No observant Jews allowed.'"

Brooklyn Judiciary To Establish Mandatory Settlement Conferences In Certain Foreclosure Actions; Law Students To Participate In Process

In Brooklyn, New York, the Brooklyn Daily Eagle reports:

• In the Brooklyn Supreme Court’s continued effort to fight the foreclosure crisis that is wreaking havoc across the country and ripping homes away from thousands of families, Administrative Judge Abraham Gerges met with community-board leaders last week to discuss the court’s role.

***

• According to Gerges, he and other members of the judiciary will be meeting with various community boards throughout the borough, as well as the mortgage lenders. A system to have certain plaintiffs and defendants meet for mandatory settlement-conferences will be established, and students from Brooklyn Law School across the street are being enlisted to help in the legal process.

For more, see Foreclosure Talks Continue at (not in) Court (Brooklyn Supreme ‘One of the More Progressive Courts Across Country’).

The Secret's Out: Foreclosing Lenders Around The Country Continue To Get Hammered Over Missing, Inconsistent Mortgage Docs

The National Law Journal reports:

• Alarmed by the dramatic rise in housing foreclosures across the nation, judges have taken a variety of actions to slow the pace, ranging from outright dismissals for incomplete work to mandated mediation to threatening attorneys with sanctions.

***

• A number of suits have accused banks of allegedly taking shortcuts to rush foreclosures through, often using so-called "foreclosure mills" — law firms that handle a high volume of foreclosure actions — to handle the cases, according to foreclosure defense lawyers, bankruptcy lawyers and consumer rights groups.

***

• In Ohio, which has been particularly hard hit by foreclosures, a consortium of plaintiffs' attorneys last month filed a class action against Deutsche Bank A.G. on behalf of Ohio homeowners facing foreclosure. The suit alleges that the bank lacks standing to bring foreclosures throughout Ohio and is missing key mortgage documents. Whittiker v. Deutsche Bank National Trust Co., No. 1:08cv00300 (N.D. Ohio).(1)

One Brooklyn, New York trial judge's approach to the apparent sloppy paperwork being filed by foreclosing lenders and their attorneys is described in these excerpts:

• "I deny more foreclosures than I approve," said Justice Arthur Schack(2) of Kings County, N.Y., Supreme Court, in Brooklyn. "I want to see the servicing agent's power of attorney, I want to see all the paperwork before I approve it. If the paperwork is garbage, I deny it. If you're going to take away someone's home, it should be done properly."

***

• In a blistering opinion in June, Schack, the Brooklyn judge, threatened Mary McLoughlin, an attorney at Rosicki, Rosicki & Associates of Carle Place, N.Y., with sanctions for filing a foreclosure on behalf of Wells Fargo. After doing his own research in the [computer-accessible New York City public records], Schack discovered that Wells Fargo never owned the mortgage. Schack denied the foreclosure and further set a hearing for Aug. 1 to afford her a chance to explain why she should not be sanctioned for "frivolous conduct." Wells Fargo Bank v. Reyes, No. 5516/08 (Kings Co., N.Y., Sup. Ct.) [2008 NY Slip Op 51211(U) [20 Misc 3d 1104(A)]; Decided June 19, 2008].(3)

For the whole story, see Judges, attorneys work to stanch foreclosures (As actions surge, so do dismissals, mediation orders) (no subscription required).

For other posts that reference the failure of some mortgage lenders and their attorneys to file the required loan documents when starting foreclosures, Go Here, Go Here, and Go Here.

(1) The suit alleges that, because Deutsche Bank lacked standing to bring foreclosure actions, its attempt to do so constituted violations of the Federal Fair Debt Collection Practices Act, as well as Ohio RICO, R.C. 2923.32 Engaging in pattern of corrupt activity, both on its part as well as on the part of its attorneys filing the foreclosure actions. In addition to damages and other relief, the homeowners seek the return of their homes lost to foreclosure, and request that the attorneys representing Deutshce Bank fork over all the fees they collected on the foreclosure actions.

(2) Ina recent case, Deutsche Bank Natl. Trust Co. v Maraj 2008 NY Slip Op 50176 (U); [18 Misc 3d 1123(A)]; January 31, 2008; Justice Schack, in denying a foreclosure, wondered if he was the target of a corporate "Kansas City Shuffle" (a reference to the 2006 film, Lucky Number Slevin, in which the term is explained by a hitman played by Bruce Willis) in that the paperwork filed by the foreclosing mortgage lender raised questions in his mind the answers to which weren't readily apparent to him, and which created the appearance of possible fraudulent activity, according to his written opinion. See earlier post, Brooklyn Judge Presides Over A Corporate "Kansas City Shuffle" In Foreclosure Action?

(3) In other gems by Justice Schack in which he denies foreclosure to other foreclosing mortgage lenders for submitting questionable paperwork, see HSBC Bank USA v Perboo, 2008 NY Slip Op 51385(U); Decided last Friday - July 11, 2008; and also a 2007 decision, Deutsche Bank Natl. Trust Co. v Castellanos, 2007 NY Slip Op 50978(U) [15 Misc 3d 1134(A)]; Decided May 11, 2007, a foreclosure action in which he subsequently again denied foreclosure in the opinion in Deutsche Bank Natl. Trust Co. v Castellanos, 2008 NY Slip Op 50033(U) [18 Misc 3d 1115(A)]; Decided January 14, 2008.

Cincinnati-Area Community Group Sues Deutsche Bank; Blames Institution For Abandoned Homes, Spreading Blight

In Cincinnati, Ohio, WKRC-TV Channel 12 reports:

• Neighbors who live in Price Hill are taking on one of the world's largest banks. Price Hill Will is suing Deutsche Bank, accusing it of not taking care of the homes it has in foreclosure. The group blames the bank for virtually abandoning hundreds of homes, spreading blight in Price Hill. The suit asks the court to force Deutsche Bank to maintain its properties in accordance with local housing and health codes.

Source: Price Hill Group Sues Deutsche Bank.

See also:

• The Cincinnati Enquirer: Price Hill residents sue bank (Housing foreclosures a blight, group charges),
• The Wall Street Journal: Cincinnati Group Sues Over Homes.

IndyMac Bank Subprime Related Lawsuits

For those interested in the kinds of allegations being made in subprime-related lawsuits brought by homeowners and others from all over the country involving the recently FDIC-seized IndyMac Bank as one of the named defendants, the following links will take you to copies of some of the actual lawsuits filed against this lender. These lawsuits are made available online courtesy of the Center for Responsible Lending ("CRL"), and are all referenced in an investtigative report CRL recently issued on IndyMac.

Alleged Bait & Switch Tactics (among other allegations):

1. Ferguson v. IndyMac Bank, U.S. District Court for the Eastern District of New York, February 14, 2008;
2. Howard v. Countrywide Home Loans Inc., U.S. District Court for the District of Columbia, 2008;
3. Elouise Manuel v. American Residential Financing, Inc., et al, Superior Court of Gwinnett County, Georgia, 2008;
4. Zurawski v. Mortgage Funding Corp., U.S. District Court for the District of New Jersey, 2008;
5. Hartman v. Deutsche Bank National Trust Co., U.S. District Court for the Eastern District of Pennsylvania, 2007;
6. Mitchell v. IndyMac Bank, U.S. District Court for the Eastern District of Virginia, 2008;
7. Brannan v. IndyMac Bank, U.S. District Court for the District of Colorado, 2006;
8. Darling v. IndyMac Bancorp, U.S. District Court for the District of Maine, 2006;
9. Harris v. Vinson Mortgage Services, U.S. District Court for the Eastern District of Missouri, 2008;
10. George v. IndyMac Bank, U.S. District Court for the Central District of California, 2008;
11. Thomas v. DCI Mortgage Bankers, U.S. District Court for the District of New Jersey, 2007;
12. Glover v. Equity Source, U.S. District Court for the District of New Jersey, 2007;

Alleged Racial Discrimination:

1. Mables v. IndyMac Bank, (seeks class action status) U.S. District Court for the Northern District of Illinois, 2008;

Alleged Inflated Appraisals:

1. Cedeno v. IndyMac, U.S. District Court for the Southern District of New York, 2006;

Alleged Falsified Paperwork:

1. George v. IndyMac Bank, U.S. District Court for the Central District of California, 2008;
2. Ware v. IndyMac Bank, U.S. District Court for the Northern District of Illinois, 2007;

Alleged Funding of Loans For Developer in an Area Known as a Hotbed for Mortgage Fraud Without Proper Due Diligence:

1. Gaines v. Parisi, U.S. District Court for the Middle District of Pennsylvania, 2006;

Shareholder Class Action Lawsuit citing Alleged Questionable Lending Practices:

1. Tripp v. IndyMac Bancorp, Inc., U.S. District Court for the Central District of California, 2007.

For the recently issued CRL report on IndyMac Bank, see IndyMac: What Went Wrong? (How an “Alt-A” Leader Fueled its Growth with Unsound and Abusive Mortgage Lending). subprime lawsuits, subprime lender lawsuits

Maryland AG Sues Eight In Alleged Equity Stripping, Foreclosure Rescue Scam; Seeks Return Of Homes To Victims

In Baltimore, Maryland, the Maryland Attorney General's office announced yesterday:

• Attorney General Douglas F. Gansler announced [Thursday] that the Consumer Protection Division has filed a complaint in Baltimore City Circuit Court against a group of individuals and companies(1) alleging they took the equity in consumers’ homes under the guise of providing them with assistance to stop foreclosures.

***

• The complaint alleges the defendants offered to help homeowners avoid foreclosure and repair their credit history and financial situations while remaining in their homes. According to the Complaint, the defendants set up fictitious sales of homeowners’ houses throughout the Baltimore-Washington Metropolitan area to investors who, along with the consultants, obtained large fees for participation in the deal. As a consequence of these transactions, the homeowners lost the equity they built up in these properties.

• The Attorney General’s Office has asked the court to stop the defendants’ unlawful practices, restore property to the injured homeowners and impose fines for violations of the Protection of Homeowners in Foreclosure Act, the Maryland Credit Services Business Act and the Consumer Protection Act. This is the third lawsuit that Attorney General Gansler has brought against alleged foreclosure rescue scams.

Source: Maryland AG Press Release: Attorney General Gansler Announces Consumer Protection Division Files Complaint Against Operators of Alleged Foreclosure Rescue Scam.

(1) The complaint names Rodney Spellen, Jemel Lyles, Brian Boyd, Mid Atlantic Consulting Firm LLC, Absoloot Ventures, Inc., Phillip George, Certified Title & Escrow, Inc., First Choice Property Management Firm, Inc., First Choice Property Management Firm, Sahar Begun Ali, Reggie Simmons, Alan Muniu, Jason Ford and Thuy Thu Nguyan as defendants.