Compelling Loan Modifications A Violation Of Investors' Constitutional Rights? Not So, Says One Expert

David Dana, professor of law and associate dean for academic affairs at Northwestern University School of Law writes in The Huffington Post:

• In recent years, mortgages have been carved up into so many pieces that the re-working of mortgages -- and the saving of homes from foreclosure -- is not happening even when there are responsible homeowners who are willing and able to make reasonable payments.

• Regulators and politicians have done nothing yet to compel the re-working of mortgages, in part because they fear that they will be labeled as trampling upon the constitutional rights to property of the investors who own parts of these troubled mortgages.

***

• Our property law and property rights tradition simply does not require, or even allow, our lawmakers to sit back while the ill-advised chopping up of property into competing interest creates a gridlock that undermines national prosperity. As Abraham Lincoln famously remarked, the Constitution is not a suicide pact.

For the case Professor Dana makes in support of his position, see The Feudal Mistake.

Ohio Homeowner Hits Jackpot; Lender Loses Right To Foreclose On Delinquent Mortgage Due To Violation Of Procedural Rule, Says State High Court

In Canton, Ohio, The Repository reports:

• A city man took his foreclosure dispute to the state’s highest court, and according to a ruling issued today, he won. What that means for Giuseppe Gullotta is that he gets to remain in his house without a mortgage. What it means for homeowners around the state remains to be seen.

• The case involved a rule that limits plaintiffs to one re-filing after a civil lawsuit has been voluntarily withdrawn. During a two-year period, U.S. Bank filed three foreclosure actions against Gullotta, [...]. The bank voluntarily dismissed the first two complaints.

• In 2005, it filed a third. Gullotta said that broke the re-filing rule, but the trial court and 5th District Court of Appeals said the foreclosure was legal. In March, the Ohio Supreme Court heard arguments. U.S. Bank argued that the third case wasn’t the same as the first two because it didn’t try to collect payments and interest owed before April 2005, which the other cases did.

• But Gullotta’s attorney said the complaints were essentially the same. The court justices agreed in a 5-2 vote.

According to the court decision, the amount owed at the time of the start of the foreclosure action was $164,390.91, plus interest at the rate of 7.35 percent per year.

For the story, see North Canton man wins foreclosure case in Ohio Supreme Court.

For the decision of the Ohio Supreme Court, see U.S. Bank Natl. Assn. v. Gullotta (2008-Ohio-6268, slip op., December 10, 2008). UndoMortgageLoans TILAdelta SloppyForeclosuresAlpha

NYS Appeals Court To Review County's Foreclosure Attempt Where Owner Failed To Include $25 Late Fee With Tendered Tax Payment; Faulty Notice An Issue

In Canandaigua, New York, the Daily Messenger reports:

• A panel of nine judges with the state Appellate Division’s Fourth Department will hear arguments Monday in the case of a man battling Ontario County to keep his Monks Road property off the auction block.The eight-acre wooded parcel overlooking Canandaigua Lake was to be auctioned this past May 14 at Ontario County’s annual foreclosure auction for unpaid property taxes.

• But property owner Bruce Middlebrook took the county to court, claiming he had tried to pay the amount he was told he owed by the due date, however, the county refused to accept his payment because it lacked a $24.74 late fee.

• Middlebrook’s attorney, David Whitcomb, said he will argue two points. The first is the county failed by giving Middlebrook wrong information about the amount owed. Additionally, Whitcomb will argue, it failed to notify Middlebrook the foreclosure process had begun in January 2006, because Middlebrook did not receiving notice of the back taxes until October 2007, four months before the final date to pay his bill Jan. 18, 2008.

For more, see County, homeowner battle over auction.

For another report on a lawsuit involving the issue of giving faulty notice to a property owner in an Ontario County, NY tax foreclosure action, see Court Denies Dismissal Of Suit Accusing County Of Screw Up In Giving Proper Notice To Owner In Tax Foreclosure Action. foreclosure faulty notice

Another "Money Store" Defendant Falls; Maryland Feds' Tally Reaches Four In Equity Stripping, Foreclosure Rescue Scam Prosecution

From the Office of the United States Attorney (District of Maryland):

• Katisha Fordham, age 35, of Washington, D.C., pleaded guilty [yesterday] to conspiracy to commit mail and wire fraud in connection with a mortgage fraud scheme that falsely promised to help homeowners facing foreclosure keep their homes and repair their damaged credit, announced United States Attorney for the District of Maryland Rod J. Rosenstein.(1)

For the U.S. Attorney's press release, see Metropolitan Money Store Loan Processor Pleads Guilty In Mortgage Fraud Scheme (Under the Scheme Conspirators Took Title of Homes from Financially Distressed Homeowners and Secretly Used Home Equity for Personal Benefit).

Go here and Go here for other posts on the alleged Metropolitan Money Store foreclosure rescue scam.

Go here for criminal prosecutions of foreclosure rescue operators.

(1) According to the press release, Katisha Fordham is the fourth defendant to plead guilty in the Metropolitan Money Store mortgage fraud scheme. Richard Allison, age 37, of Camp Springs, Maryland, an attorney and employee of the U.S. Census Bureau; Clifford McCall, age 47, of Lanham, Maryland, president of Burroughs & Smythe Financial Services, Inc., based in Lanham and a director of the Fordham & Fordham Investment Group, Ltd., a foreclosure consulting and credit servicing business based in Lanham and Greenbelt, Maryland and Carlisha Dixon, age 31, of Hyattsville, Maryland, vice president and a director of Burroughs & Smythe Financial Services, Inc.; each pleaded guilty to the conspiracy and are facing a maximum sentencing of 30 years in prison. joyjackson

Texas AG Gets Permanent Injunction Against Upfront Fee Foreclosure Rescue Operator; Firm To Pay $1.55M

Buried in a recent press release is the following announcement from the Office of the Texas Attorney General:

• [A]ttorney General Abbott revealed the results of a recent enforcement action against a mortgage rescue fraud scheme. Arizona-based Abell Mediation, Inc., and its president and vice-president, Elizabeth Cory and Michael Cory, respectively, were charged with fraudulently claiming that their company could save homeowners from imminent foreclosure. Homeowners who were delinquent on mortgage payments responded to the defendants’ solicitation cards and Web site. The defendants’ cards claimed that “Abell Mediation, Inc. has saved over 7,000 homes from foreclosure,” boasted about a “staff of highly trained loss mitigation specialists” with established relationships with mortgage lenders and banks nationwide and promised to “achieve results that no one else can.”

• Under an agreement secured by the Attorney General, the defendants are permanently enjoined from conducting a foreclosure mitigation business in the future. The defendant is also required to pay a total of $1.55 million in fines, restitution and attorneys’ fees.

Go here for the Texas AG 12-10-08 press release.

Go here for the Agreed Final Judgment with Abell Mediation, Inc.. loan modification

Disabled Michigan Woman Fighting Eviction After Being Screwed In A Sale Leaseback, Foreclosure Rescue Scam

In Sturgis, Michigan, Workers World reports the story of a disabled homeowner who is now fighting off eviction after being victimized by mortgage fraud when she attempted to save her home after she fell behind on payments due to medical expenses. From the story:

• A bogus mortgage company, which subsequently had its license revoked, tricked Brown into signing her house over to them. She continued making what she believed were the mortgage payments.

• Recently, after being served with eviction papers, Brown learned she had been scammed and the house was in foreclosure. She discovered she had lost her property rights and was only a tenant in her own home. She filed complaints with the FBI, police and the State Office of Financial Services.

For more, see Help stop eviction of disabled woman.

Three Face Criminal Charges In Las Vegas-Area Alleged Foreclosure Rescue Scam; Homeowners Paid Upfront Fees To Avoid Losing Homes, Says State AG

In Las Vegas, Nevada, KLAS-TV Channel 8 reports:

• One person is under arrest and two others are still at large for allegedly operating a foreclosure scam that bilked desperate homeowners out of money.(1)

***

• The alleged scheme involved the collection of upfront fees for the purpose of assisting the victims with avoiding foreclosure on their homes. The suspects, under the business of Federal Housing Aid, allegedly charged the victims between $899 to $1500 for foreclosure rescue services and offered a 100% money back guaranty, claiming their company would refund the money if the foreclosure could not be stopped. The state says the company did not follow up on its promises.

For the story, see Arrest Made in Las Vegas Foreclosure Rescue Scam.

See also, KTNV-TV Channel 13: Arrests Made in Foreclosure Rescue Scam.

(1) According to the story, Attorney General Catherine Cortez Masto announced that William Vargas has been arrested and warrants have been issued for Paula Luna, who is believed to be in California and Michael Sinclair who is believed to have fled to the Philippines. KTNV-TV Channel 13 reports, the three defendants are each charged with multiple felonies including: One (1) felony count of Theft of a Person 60 Years or Older; seven (7) felony counts of Theft by Material Misrepresentation; and eight (8) misdemeanor counts of Deceptive Trade Practice. loan modification

San Antonio Feds Charge Foreclosure Rescue Operator For Allegedly Pocketing Upfront Fees & Allowing Clients' Homes To Be Lost In Foreclosure

In San Antonio, Texas, the San Antonio Express News reports:

• On Thursday — almost 15 years after she first was put on notice over alleged fraud — FBI agents arrested [Rosario Castro - aka Rosie] Divins on charges she ran a foreclosure-rescue scam that swindled [Isaac and Christina Vela](1) and at least three other families out of thousands of dollars and sometimes vehicles. All lost their homes to foreclosure.

• A federal grand jury Wednesday indicted Divins on four counts of mail fraud and four counts of criminal contempt for disobeying bankruptcy court orders(2) instructing her to stop her misrepresentations.

***

• Janie Anderson, 58, feels the Velas' pain. Anderson, who was diagnosed with cancer, and her husband, Rene Rodriguez, who needed an operation, turned to Divins in 2006 during their medical crises to help them avoid foreclosure. They're out almost $10,000, Anderson said. Not a penny of it went to pay the mortgage debt, the indictment said. The couple, like the Velas, haven't seen any of their money returned.

For more, see Local woman is arrested in foreclosure scam.

(1) Reportedly, court records show that the Velas gave Divins $6,800, but she never made a payment to the mortgage company.

(2) Since 2000, Divins has been warned by bankruptcy judges to stop sending out fliers claiming that she could “stop” foreclosures, according to the story. loan modification

Central Florida Lawyer Gets 15 Years Probation For Stealing Foreclosure Surplus Funds From Clients

In Orlando, Florida, WFTV Channel 9 reports:

• An Orange County lawyer can no longer practice law and is on probation for 15 years after taking advantage of foreclosure clients. Investigators said Norman Sanders Moss took advantage of the foreclosure crisis and kept money from auctions of foreclosed homes.(1) Moss pleaded guilty to grand theft and offered one of his victims an apology.

***

• Moss was ordered to work 40 hours a week in order to pay the victim, Nicholas Cabrera, back the $31,000 he stole from him. However, the former attorney will have to obtain a job that doesn't allow him to handle money or practice law.

Source: Lawyer Apologizes For Stealing Victim's Money.

(1) This money, commonly referred to as Foreclosure Surplus Funds, are proceeds generated from the sale of a home at a foreclosure, trustee's, or sheriff ’s sale over and above the balance owed on the foreclosing mortgage. Where a foreclsoure sale yields such a surplus, the foreclosed homeowner may be entitled to the money, provided there aren't any secondary liens on the foreclosed property, in which case these lien holders could have priority in their claims to the surplus. In some cases, this surplus could total thousands of dollars, although in the current real estate market, the vast majority of foreclosure sales are not attracting third party bidders, are being acquired by the foreclosing lenders, and consequently, are not yielding surpluses.

Arizona AG: Complaints About Loan Modification Firms On The Upswing

From the Office of the Arizona Attorney General:

• The Attorney General’s Office has experienced a recent increase in complaints from consumers who have been contacted by individuals claiming to have "connections" and expertise in negotiating with mortgage lenders to reduce consumers’ monthly payments and/or prevent foreclosure. These individuals charge consumers high upfront fees and say they can modify mortgage terms to make them more affordable.

For more, see Terry Goddard Warns of Fraudulent Mortgage ‘Assistance’ Businesses.

Florida Developers Cop Plea To Grand Theft Charges; Accused Of Pocketing $475K Of Customer Cash, Failing To Deliver

In Vero Beach, Florida, TC Palm reports:

• Two developers of an unfinished subdivision north of Vero Beach pleaded no contest to criminal charges of first-degree grand theft of $475,000 in deposits from customers at the Indian River Courthouse on Wednesday.

• Developer Richard Rendina of Palm Beach Gardens agreed to pay $80,000 in restitution in addition to serving five years probation. [...] Stephen Siegel of Boca Raton agreed to pay $388,936 in restitution — to be paid out of his cash bond of $500,000 — in addition to five years probation.

***

• Construction of Eagle Trace Phase II was stopped last year, leaving empty lots and unfinished concrete block walls. Prosecutors allege they improperly took deposits from 11 customers who paid on homes, according to court files.

For more, see Eagle Trace developers plead no contest to grand theft charges, agree to pay restitution.

For more on homeowners left in the lurch due to actions by builders/contractors, go here, go here, go here, go here, and go here. StiffingContractorsTheta

Rhode Island Closing Agent Cops Plea To Pocketing Escrow Cash Intended For Payoff Of Existing Mortgage Loans; Title Underwriter Takes $1.3M Hit

In Providence, Rhode Island, the Office of the U.S Attorney announced:

• Angela Raposa, who owned Title America Closing Services, pleaded guilty today to a federal fraud charge, admitting that she used about $1.3 million from her company’s escrow account to pay for personal expenses.

***

• Proceeds of real estate transactions were deposited into the escrow account and were supposed to be used to be disbursed at real estate closings, primarily to pay off existing mortgages. Stewart Title served as an underwriter for Title America and discovered Raposa’s fraudulent scheme in February 2007. As the underwriter, Stewart Title had to pay off mortgages totaling $1,301,826 from five real estate transactions.

For the press release, see Title company president admits $1.3 million fraud.

Go here, Go here, Go here, and Go here for other stories of trust account / escrow account theft of funds. EscrowRipOffAlpha

Infantry "Basic Training" In Foreclosure Battle Continues In NYC

From the Brooklyn Daily Eagle:

• Mon. Dec. 15, CLE: Representing Homeowners in Mandatory Settlement Conferences, 8:30 a.m.– 4:45 p.m.

• Topics: The foreclosure process; predatory lending practices; role of the settlement conference; how to hold off foreclosure; recent legislative initiatives to help resolve defaults; negotiating resolutions short of foreclosure. New state rules require settlement conferences in foreclosure actions. [Go here for formal agenda].

Held at the Queens County Bar Association, 90-35 148 St., Jamaica, New York. For information or to register, contact the New York State Bar Association.

Source: Upcoming Events in the Legal Community.

Use Of Lease Option Arrangement As Exit Strategy For Overextended Landlords Looking To Stiff Mortgage Lender & Pocket Some Walking Away Cash Continues

In Washoe County, Nevada, KOLO-TV Channel 8 reports:

• A Sparks couple is just a step away from being homeless, after they say they were "ripped off" by their landlord. Shanna Mayer and Clinton Conroy leased a home in hopes of buying it ... but it turns out, the bank was already a step ahead.

***

• Mayer and Conroy moved their family to Sparks in June. When they signed a lease, with an option to buy contract on a Wingfield Springs home, they thought the deal was too good to be true. "Then we came back here and signed a lease agreement and everything. He shook our hands and said 'congratulations on the purchase of your new home," said Mayer.

• But nearly $15,000 dollars later in down payment fees and rent, Mayer says she received a foreclosure notice on the doorstep of her dream house. That's when she confronted the homeowner.

***

• When [KOLO-TV Channel 8] looked up Mayer's home, it turns out, the seller is headed to foreclosure on Mayer's home, plus 16 other properties he owns in the Reno-Sparks area.

For more, see Sparks Couple is "Ripped Off" By Landlord.

For more on problems with Lease / Option, Contract for Deed, and Rent To Own real estate deals, go here and go here. rent to own lease purchase option scams yellowstone

Missouri Couple Sues "Contract For Deed" Operator For Allowing Home To Fall Into Foreclosure

In Republic, Missouri, the Springfield News Leader reports:

• A Republic couple who made monthly payments but nearly lost their home is suing Greenleaf Cos., accusing the Springfield company of breach of contract and questionable business practices.

***

• In the lawsuit, [David and Susan] Foster say they bought a house from Greenleaf in August 2007 for about $252,000 on a contract for deed. The house, located [...] in Republic, belongs to Talya Finn of Marionville.

• As the middleman, Greenleaf was expected to collect money from the Fosters and pay Finn enough to cover her mortgage payments. But, without enough income, Greenleaf officials have said the company could not pay Finn and other investors.

• In their petition, the Fosters say they made all the payments as agreed on time but had their house threatened with foreclosure when Greenleaf failed to ensure the loan on the house was properly paid. The Fosters say foreclosure proceedings were initiated but canceled when Greenleaf "made arrangements to remedy the deficiency."

Reportedly, the Fosters are seeking punitive damages of at least $100,000 and a release from their contract.

For more, see Couple takes Greenleaf to court (Lawsuit questions company's real estate program).

For Greenleaf's side of the story, see Greenleaf partner describes homeowner lawsuit as ‘frivolous’ (Greenleaf partner Scott Dasal said the story and other recent Greenleaf stories have hurt his business, because more and more Greenleaf clients began to question whether they should pay. “They have come out of the woodwork, and people don’t want to pay,” he said).

Go here for other "contract for deed" problems involving Greenleaf and The Real Estate Co.

For more on problems with "Contract for Deed," "Rent To Own", and "Lease / Option" real estate deals, go here and go here. rent to own lease purchase option scams yellowstone Arkansas

Fresno Cops Foil Fake Landlord Rent Scam; Charge Suspect With Renting Vacant Homes In Foreclosure Belonging To Others

In Fresno, California, The Fresno Bee reports:

• An elaborate scam taking advantage of the mortgage crisis unraveled, authorities say, when Kristen Ables found another family living in her Fresno house. "It was a mixture of disbelief and anger" that she felt on learning that she had been victimized, Ables said Wednesday as Fresno police announced the arrest of Sam Haley, 66.

***

• Police allege that Haley, who they said lost his real estate license in 1979 because of fraudulent business practices, carried out the scam at least 13 times -- and was likely to keep doing it if the unexpected visit by Ables hadn't uncovered the scheme.

• Fresno police detective Donnie Dinnell uncovered evidence at Haley's home and business, Capital Investments Inc., that indicated he had people lined up to rent 19 other houses, police Chief Jerry Dyer said. Dinnell also found evidence that Haley had identified up to 126 other homes that he could possibly use in the scheme, Dyer said.

Reportedly, the cops said that Haley pocketed $26,000 over the seven months he allegedly ran the scam and faces felony theft charges.

For more, see Fresno housing scam uncovered (Police say man rented homes to victims who didn't know he was not the owner).

Go here, go here, and go here for posts on phony landlord rent scams. PhonyLandlordScamZeta

Unconventional Miami-Area Housing Activist Comes Up With "Bailout" Plan; Gets Homeless Off Streets By Moving Them Into Vacant Foreclosed Homes

In Miami, Florida, The Associated Press reports:

• [Max] Rameau is an activist who has been executing a bailout plan of his own around Miami's empty streets: He is helping homeless people illegally move into foreclosed homes. ''We're matching homeless people with people-less homes,'' he said with a grin.

• Rameau and a group of like-minded advocates formed Take Back the Land, which also helps the new ''tenants'' with secondhand furniture, cleaning supplies and yard upkeep. So far, he has moved six families into foreclosed homes and has nine on a waiting list.

For more, see Miami Activist Moves People Into Foreclosed Houses.

For other media reports on this story, see:

• Miami New Times: Squatters Fight for Rights (A homeless mom wants her stuff back) (Thousands of homes in South Florida are in foreclosure, squatters are taking up residence, and when said squatters get booted, they demand a proper eviction notice),

• WPLG-TV Channel 10: Homeless Woman Takes Shelter In Vacant House (Housing Advocate Breaks Into House, Moves Woman In). Go here for the WPLG-TV Channel 10 video.

Thanks to attorney Donald Marritz of Regional Housing Legal Services in Pennsylvania for the heads up on the Associated Press story.

Go here for posts on squatters moving into vacant homes, foreclosures. squatter foreclosure zebra

NYC Prosecutors Call For System Changes To Address Deed Theft After Empire State Building "Heist" By Reporter For Local Paper

In New York City, The Daily News reports:

• The city's top prosecutors called for sweeping changes in the system that let a Daily News reporter "steal" the Empire State building with a fake deed (see: It took 90 minutes for Daily News to 'steal' the Empire State Building). The News' "theft" of the $2 billion Fifth Ave. icon was carried out to reveal a gaping loophole in the city's system for recording property transactions. The loophole: Clerks in the city office of the register are not required to verify information on deeds and mortgages.

For more, see Daily News probe revealing scandalous property loopholes has prosecutors urging change.

More On Hedge Fund Suit Against Countrywide Over $8.4B Bank Of America Loan Modification Settlement

For those interested in reviewing the lawsuit filed in this matter, see:

• New York State Supreme Court (New York County) - Index # 650474-2008: Greenwich Financial Services Distressed Mortgage Fund 3, LLC v. Countrywide Financial Corporation.

Go here for links to Exhibits A through G of the above lawsuit (be sure to type in the letters you see in the picture, then click submit - you'll be taken directly to the links):

• Exhibits A & B - representative examples of the pooling & servicing agreements involved;
• Exhibits C & D - lawsuits against Countrywide filed by California & Illinois;
• Exhibit E - Multistate Settlement Term Sheet regarding the settlement of the accusations of the Attorneys General against Countrywide;
• Exhibit F & G - copies of the California and Illinois judgments.

For some of the media reports on this story, see:

• The Wall Street Journal: Mortgage-Bond Holders Get Voice (Greenwich Financial's William Frey Challenges Loan Servicers Like BofA) (subscription may be required; if no subscription, try here, then click link for story),
• The American Lawyer (at Law.com): Class Action Demands Countrywide Repay Hedge Funds for Losses,
• Bloomberg News: Countrywide Sued by Fund Over $8.4 Billion Loan Deal.

NYC Lawmakers Urged To Establish Right To Counsel In Eviction, Foreclosure Proceedings

In a letter urging the City Council of New York City to pass laws which would establish a right to counsel in eviction and foreclosure proceedings for low income persons, Ann B. Lesk, President of the New York County Lawyers' Association, reminds us of the inherent unfairness in the results emanating from a judicial system where only one party is represented by counsel:

• [T]he backbone of our judicial system is the concept that adversarial proceedings produce just results. For an indigent person facing eviction or foreclosure, this is a very theoretical proposition. Numerous studies have documented the unsurprising fact that having a lawyer improves the outcome for a litigant. In [New York City] Housing Court, 90 percent of tenants are not represented by a lawyer (in contrast, less than 10 percent of landlords are unrepresented). Unrepresented litigants face a complex set of procedural and substantive rules. They may have defenses of which they are not aware.

For more, see Don't Just Pass The Senior Citizen Right To Counsel Bill - Expand It.

Hedge Fund Sues Countrywide Over $8.4B Bank Of America Loan Modification Settlement Of Predatory Lending Charges With State AGs

In New York City, Bloomberg News reports:

• Countrywide Financial Corp., the home lender acquired by Bank of America Corp., was sued by Greenwich Financial Services Fund over claims an agreement to reduce payments on mortgages by $8.4 billion would hurt investors.

• The hedge fund claims investors will be harmed by Bank of America’s settlement, reached on behalf of Countrywide, with 15 state attorneys general. The value of trusts that bought 400,000 mortgages will decline under the deal, the fund said.

• In the proposed class action, or group lawsuit, the Greenwich, Connecticut-based fund demands a declaration that “Countrywide must purchase at par every mortgage loan that it sold to any of the 374 securitization trusts,” David Grais, a lawyer for the fund said today in an e-mailed statement. Grais said Countrywide could owe the trusts $80 billion.

For more, see Countrywide Sued by Fund Over $8.4 Billion Loan Deal.

See also:

1) The Wall Street Journal: Mortgage-Bond Holders Get Voice (Greenwich Financial's William Frey Challenges Loan Servicers Like BofA) (subscription may be required; if no subscription, try here, then click link for story):

• [T]he new lawsuit, filed in New York state court, doesn't take issue with the actual settlement but focuses instead on who should bear the costs. Noting that the attorneys general accused Countrywide of "widespread predatory lending," the lawsuit alleges that Countrywide plans "to pass most or all" of the cost of the settlement to investors.

2) The American Lawyer (at Law.com): Class Action Demands Countrywide Repay Hedge Funds for Losses.

3) Summons & Complaint: Greenwich Financial Services Distressed Mortgage Fund 3, LLC v. Countrywide Financial Corporation. MortgageServicingIssuesAlpha

Non Profit Lawyers Save Day For 80+ Year Old New Mexico Couple Facing Foreclosure Over $2 In Late Payments

In Albuquerque, New Mexico, the Albuquerque Journal reports:

• Dixie and Paul Williams have much to be thankful for -- to wit, not being thrown out of their South Valley home for $2 in late mortgage payments. And they're thankful to the lawyers at the Senior Citizens' Law Office who helped make that happen.

• Senior Citizens law office executive director Angelica Allen said that an order dismissing the foreclosure action against the couple, who are in their 80s and not in the best of health, has been filed in state district court. This time, she said the bank accepted the $4 in mortgage fees that it had previously rejected as payment.

***

• The couple, who live on Social Security, had pledged their house as collateral on a Small Business Administration loan in the 1970s and arranged an extension with a new mortgage payment of $1 a year when Paul Williams became ill. The terms of the legal arrangement say the house will revert to SBA or its successor bank upon the deaths of the Williams.

• The paperwork had changed hands, and the Williams never got any notice of where to send the $1 mortgage payment, legal documents said. The new mortgage holder filed a foreclosure lawsuit against the couple earlier this year when it failed to receive the $1 payments.

For more, see Couple Won't Lose Home Over $2: Order Dismisses Foreclosure Action (subscription required; if no subscription, try here).

Shorthanded Legal Aid Offices Bursting At The Seams With Foreclosure Defense Cases

National Public Radio reports:

• Everyone accused of a crime is entitled to a lawyer, whether they can afford one or not. But in civil cases, such as home foreclosures, there is no right to an attorney. Legal aid attorneys say some people being kicked out of their homes might have been able to stay if they'd had legal help — help that isn't there for everyone.

***

• Nationally, "half the people coming to the office at least are being turned away at the door," says Don Saunders, director of civil legal services at the National Legal Aid & Defender Association. That statistic does not count those who never make it to legal aid offices.

• "The other side has a lawyer," Saunders says. "The bank and the foreclosure process is being brought by a lawyer, and the playing field is clearly not a level one."

For more, see Foreclosures Overwhelm Legal Aid Programs.

No "Miracle On 34th Street" As Empire State Building Victimized By "Deed Theft;" Reporter Easily "Swipes" Historic Midtown NYC Edifice Valued At $2B

On 34th Street in New York City, the New York Daily News reports:

• In one of the biggest heists in American history, the Daily News "stole" the $2 billion Empire State Building. And it wasn't that hard.

• The News swiped the 102-story Art Deco skyscraper by drawing up a batch of bogus documents, making a fake notary stamp and filing paperwork with the city to transfer the deed to the property. Some of the information was laughable: Original "King Kong" star Fay Wray is listed as a witness and the notary shared a name with bank robber Willie Sutton.

• The massive ripoff illustrates a gaping loophole in the city's system for recording deeds, mortgages and other transactions.

***

• Of course, stealing the Empire State Building wouldn't go unnoticed for long, but it shows how easy it is for con artists to swipe more modest buildings right out from under their owners. Armed with a fraudulent deed, they can take out big mortgages and disappear, leaving a mess for property owners, banks and bureaucrats.

Reportedly, the Daily News returned the storied structure back to its rightful owners the day after the heist, which they pulled off on Monday.

For more, see It took 90 minutes for Daily News to 'steal' the Empire State Building.

For a copy of the deed to the stolen structure, see:

• Deed of Empire State Building sale (Page 1),
• Deed of Empire State Building sale (page 2),
• Fake notary stamp. DeedTheftAlpha

Trump "Convinces" Deutsche Bank To Fork Over $13.2M In Construction Cash To Finish Off Chicago Skyscraper

Buried in a recent Between The Bricks column in the New York Post is this blurb on the recent $3 billion lawsuit filed by Donald Trump against Deutsche Bank, in which (according to a recent Wall Street Journal article) the latter was accused of, among other things, "compromis[ing] the senior construction loan by selling pieces off to so many institutions, banks, junk bond firms, and virtually anybody that seemed to come along, that the lending group is unable to come to a consensus on how to deal with the matter":

• In one closely-watched bank stand-off, Donald Trump just got a worried Deutsche Bank to blink - and fork over $13.2 million in construction funds towards his soon to be completed spectacular Chicago hotel and condo tower.

• The lender filed a $40 million suit against him after he slapped them with his own $3 billion lawsuit. Trump claims they damaged his brand by ceasing funding after he invoked his specially worded "force-majeure" clause due to events and circumstances that "are not reasonably" within his control.

Source: Banks Threaten Foreclosures.

B'klyn Foreclosure Sale Set Aside, Judgment Vacated As Process Server Screw-Up Leaves Court With No Personal Jurisdiction Over Defaulting House Owner

A case decided last month in a Brooklyn, New York trial court serves as a valuable reminder to defaulting homeowners (and their attorneys) that, in cases where a foreclosure judgment has already been entered (and even if a foreclosure sale has already taken place), it is still possible to void the sale and the judgment if the process server failed to properly serve the property owner with the lawsuit upon commencement of the legal action.(1)

In this case, service of process upon the defaulting property owner was purportedly effected by resorting to what is referred to as "nail and mail service" (a form of substituted service that apparently is still allowed in New York) whereby the process server affixes one true copy of the the summons and foreclosure lawsuit on the door of the property owner's "actual dwelling place or usual place of abode." Service is completed when a second true copy is mailed to the property owner.

Unfortunately for the process server and the foreclosing lender, the two locations at which the nail and mail service was attempted (at the house that was the subject of the foreclosure action and at a second location) were not the property owner's "actual dwelling place or usual place of abode." In addition, the three affidavits of service that were filed in court by the process server relating to service on the delinquent property owner conflicted with each other.

The property owner (through counsel) presented an unrebutted affidavit to the court stating that she never lived at either of the two locations, and, for an 18 year period that included the dates on which service was purportedly attempted, she lived at another address.

In reaching his decision setting aside the foreclosure sale and vacating the judgment, Kings County Supreme Court Justice Martin Schneier reminds us of this basic, fundamental precept of law:

• It is "axiomatic that the failure to serve process in an action leaves the court without personal jurisdiction over the defendant, and all subsequent proceedings are thereby rendered null and void" (McMullen v. Arnone, 79 AD2d 496, 499 [2d Dept. 1981]), irrespective of the question of merit. [emphasis added in bold]

For the decision, see HSBC Bank USA, N.A. v Fleurimond, 2008 NY Slip Op 52320(U), Sup Ct, Kings County (November 18, 2008).

Go here for other posts on foreclosures involving faulty notifications to property owners.

(1) As simple as serving a defendant in a lawsuit may appear to the unitiated, the statutes that apply (other than in cases where the process server actually hands an individual defendant the summons and complaint in a face to face encounter) can be somewhat nuanced (particularly when a corporate defendant is involved). It may be a good idea for foreclosure defense counsel to review the statutes regulating service of process and, (in my view) more importantly, take the time to familiarize oneself with some of the case law applying the service of process statutes to become aware of the types of facts and circumstances that have resulted in a finding of faulty service. Such instances can open up opportunities for counsel to void a foreclosure judgment and, where a foreclosure sale has already taken place, void said sale, thereby forcing the foreclosing lender to go back to "square one" of the legal action and start over again.

In my humble judgment, process servers screw up (either innocently, or intentionally - ie. "sewer service") more often than many may think. Accordingly, the careful scrutiny of the process server's actions (reviewing the affidavits of service for errors & inconsistencies, eliciting oral testimony under oath from the process server) is something deserving of serious consideration. SewerServiceAlpha foreclosure faulty notice

Alleged Hampton Roads Equity Stripping Scam Operation Leaves Homeowners Out On The Street, Straw Buyers Holding The Bag

In Hampton Roads, Virginia, The Virginian Pilot reports:

• [T]he alleged scammers presented themselves as saviors of financially distressed - often first-time - homeowners, promising to repair their credit and save their homes. Instead, they recruited straw buyers to purchase the properties - in the process taking out bigger mortgages - and walked away with the proceeds. That left two classes of victims in the dust: dispossessed homeowners and empty-handed straw buyers stuck with inflated mortgages.

***

• The figure at the center of the operation [...] is Shanita Lacy, owner of a Virginia Beach-based company called Clean Slate Financial Services. Settlement documents indicate that she pulled out more than $750,000 in equity from the nine properties identified so far.

For more, see Deals with Beach company put some owners out of homes.

For story update (12-5-08), see More report losing homes to 'credit repair' deals.

Washington State Victim Of Alleged Sale Leaseback Foreclosure Rescue Scam Goes To Court To Save Home Of 35 Years

In Bellevue, Washington, KING-TV Channel 5 reports:

• Karen Handlin has been narrowly saved from eviction – for now. She’s filed a first-of-its-kind lawsuit in Western Washington to save the house her family has owned for 35 years. Handlin almost lost it to foreclosure and then, she says, to a company called Alternative Investors, which claimed it could rescue her from foreclosure.

For more, see Investigators: Alleged foreclosure rescue scam goes to court (read text) (watch KING5 video).

Texas A Handy Haven For Those Seeking To Dodge Debts?

Bloomberg News reports:

• Homeowners fleeing underwater mortgages in California and Florida know where to come up for air: Texas.

• "Texas is an extremely friendly place to live if you owe money and do not want to pay,'' said Marjorie Britt, a bankruptcy attorney with Britt & Catrett PC in Houston. "If you have a lot of money and even more debt and want to shelter your assets, you can live fairly normally.''

• Distressed borrowers can hang on to luxury cars, a primary residence, paychecks, retirement accounts, and even jewelry that creditors might claim elsewhere, Britt said.

For more, see Deadbeat Homeowners Tap Texas Bankruptcy Laws to Duck Creditors.

Court Denies Dismissal Of Suit Accusing County Of Screw Up In Giving Proper Notice To Owner In Tax Foreclosure Action

In Hopewell, New York, the Daily Messenger reports:

• A state Supreme Court justice has denied Ontario County’s attempt to dismiss a lawsuit that claims the county and its treasurer mishandled the foreclosure of the Akropolis Family Restaurant.

***

• The lawsuit alleged the county and county Treasurer Gary Baxter failed to follow correct procedures in the foreclosure auction of the Akropolis Family Restaurant in May 2007. The civil suit claimed Baxter and the county violated the civil rights of Hetelekides by mishandling the process regarding notification and other issues.

For more, see Judge rules for Akropolis owner.

For other stories on the Acropolis foreclosure, see:

• Rochester Democrat and Chronicle: Akropolis restaurant suit still simmering in Ontario County,
• Daily Messenger: Lawsuit filed against Ontario County in tax-foreclosure case.

Go here for other posts on foreclosures involving faulty notifications to property owners. foreclosure faulty notice

Phoenix Man Found Guilty For Filing Fraudulent Lien Releases On Home, Then Pocketing $850K In Subsequent Refinance

From the Office of the Arizona Attorney General:

• Attorney General Terry Goddard [last week] announced that Delanie Belfield Ross, 39, of Phoenix, has been found guilty by a Maricopa County Superior Court jury on three counts of felony fraudulent schemes and practices and one count of theft.

• According to court documents, Ross, along with his wife, Veronica Cooper Ross, and his brother-in-law, Willard Cooper, fraudulently obtained mortgage loans for the purchase of a $3.2 million Paradise Valley home in 1994.

• After taking possession of the house, Delanie Ross recorded fraudulent releases of the liens on the loans with the Maricopa County Recorder. He then represented the house as being owned free and clear to potential investors and obtained an $850,000 line of credit from a private family of investors, using the house as collateral.

For the Arizona AG's press release, see Phoenix Man Found Guilty of Felony Fraud and Theft.

For the original indictment in this matter, see State of Arizona v. Ross.

Traveling Real Estate Investment Seminar Teaches Sale Leaseback, Foreclosure Rescue Deals: Media Report

In Bellevue, Washington, KOMO-TV Channel 4 reports:

• A newspaper ad for the Robert Allen Institute's free seminar promised to teach participants how to become millionaires. "Banks are desperate to unload foreclosed properties," the ad's copy read. So KOMO News attended the free seminar in Bellevue, undercover camera in tow.

Reportedly, participants were told they could learn how to knock on a homeowners' door and convince them to surrender the title, then offer to broker a deal to allow the homeowner to rent back their home with an option to buy back the house.

For the video report, see The truth behind 'the best investment ever'.

Go here to read the text of the story.

Partnership Deal Results In 78 Year Old Connecticut Man's Eviction From Home, Losing Farm & 50% Interest In Property; Now Living Out Of Car

In Greenwich, Connecticut, the Greenwich Citizen reports:

• After 43 years of operating Purdy's Farm on King Street, Delmo Zanette effectively became a farmer without a farm at midnight Oct. 31. Not by choice -- at least by his account.

• The 78-year-old Zanette was ordered to vacate the property by court order resulting from a legal battle that began four years ago and ended on Oct. 7 when the court finally ruled against him and in favor of Ronald Pecunies and Arthur K. Watson Jr. - his business partners and now adversaries in the case.

***

• "I was 100 percent owner of the farm and somehow they got hold of 50 percent of my real estate," said Zanette in a phone interview this past week with the Greenwich Citizen. "I was too trusting, I did not have a lawyer I trusted them implicitly ... but somewhere things didn't go right."

***

• Zanette says with the closing of the farm, he is now surviving on income from his monthly Social Security check of $574 and hopes to raise additional money by having tag sales of antiques and a collection of some farm artifacts and books he owns. Despite having some family in the area, Zanette says he is living out of his Suburban and periodically on the couches of family and friends. [...] Currently, Zanette is still 50 percent owner in the properties, which are now on the market with Weichert Realty, listed for $2.6 million.

For more, see A Farmer Without a Farm: What to Do?

Florida Pastor, Wife Charged With Swindling Elderly Couple Out Of $100K+ In Alleged Real Estate Sale, Refinance Scam

From the Florida Department of Financial Services:

• Florida Chief Financial Officer Alex Sink announced [Wednesday] that additional charges have been filed against a Jensen Beach pastor and his wife in an ongoing investigation by the Department of Financial Services, Division of Insurance Fraud (DFS), into allegations the couple bilked investors throughout central and south Florida out of more than $8 million in fraudulent real estate schemes.(1)

• In the newest charges, Rodney and Shalonda McGill are accused of duping an elderly couple out of more than $100,000 worth of property and cash.

For the rest of the press release, see CFO Sink's Call For Additional Information Results In New Charges For Jensen Beach Pastor, $500,000 Additional Bond.

(1) According to the press release, the McGills already face charges of Racketeering, first degree; Conspiracy to Commit Racketeering, first degree; Grand Theft, first degree; Grand Theft, third degree; and Obtaining a Mortgage by False Representation, third degree, for saddling investors with more than $1.15 million in mortgage loans by “flipping” properties in Martin and St. Lucie counties that the McGills sold using fraudulent loan applications. The additional charges announced Wednesday, two counts of grand theft in the first degree, mean the McGills face up to 30 years each in prison as well as penalty enhancements provided by Florida law for theft from persons over the age of 65, the press release states.

Deed Thief Strikes S. Florida Couple; Regain Title After Year & A Half Of Aggravation

In West Palm Beach, Florida WPTV Channel 5 reports:

• You've heard of horse thieves, well how about house thieves? It's a wild west kind of scam that can lead to the loss of what's probably your most valuable asset. Your house. And it turned out to be a nightmare situation for a Loxahatchee couple.

Reportedly, it took extensive investigative work on the part of the police and the homeowners to get the home back, but not after a year and a half, almost $4000 dollars in court costs, time from work, the aggravation and the stressful nights. The homeowners also reportedly lost their homestead exemption and their homeowner's insurance as a result of their home's title being taken out of their name.

For the story, see House thieves, who can steal your home.

Go here, go here, go here, and go here for other posts related to deed or refinancing scams by forgery, swindle, etc. DeedTheftAlpha

Equitable Mortgage Defense Invoked In Lease-Purchase Agreement; Judge Denies Tenant Eviction, Says Foreclosure Is Required To Boot Renter

In Sarasota, Florida, local real estate attorney Jefferson F. Riddell writes in the Bradenton Herald on the fear (for a landlord) that a court will not allow a property owner to evict a tenant under a lease-purchase arrangement:

• [T]he fear was realized recently when the seller under a lease purchase type document went to county court in Sarasota to evict the tenant for failure to make monthly payments. The judge scrutinized the document, concluded that it was an agreement for deed and required the seller to foreclose it in circuit court like a mortgage.

• Cost to the seller for the foreclosure was about $2,000 instead of the nominal cost of a tenant eviction, and the buyer was able to stay in the property rent free for months while the foreclosure was being completed.

Source: Watch out for lease purchase agreements.

More Failed "Contract For Deed" Deals, More Homebuyers, 3rd Party Investors Left Holding The Bag

In Centerton, Arkansas, The Morning News reports:

• James and Patricia Leach of Bentonville couldn't believe their luck in September 2006 when they were approved to buy a home. [...] But two years, two months, and $51,000 later, they are packing their belongings and moving across town to a home they are renting.

• The Leaches are one of at least two dozen local families who recently discovered the homes they thought they purchased through the Real Estate Co. of Arkansas actually belong to someone else.

***

• Financing was arranged through Greenleaf Companies of Springfield, Mo. Greenleaf, through its contractor Bentonville-based Real Estate Co., was a third party that arranged for real estate investors across the nation to purchase homes, which were then resold to local families through a contract for deed.

For more, see Home Deal Fails For Centerton Families.

Go here for other posts on Greenleaf Companies and The Real Estate Co.

For more on problems with "Contract for Deed," "Rent To Own", and "Lease / Option" real estate deals, go here and go here. rent to own lease purchase option scams yellowstone

Las Vegas Family Of Four Gets Screwed Over In Lease-Purchase Of Home In Foreclosure

In Las Vegas, Nevada, the Las Vegas Review Journal recently reported the story of a family of four who had relocated from Hawaii, and who had entered into a lease-purchase agreement for the purchase of the family home. Unbeknownst to the family, the home was in foreclosure.

For the rest of the story, see THE FACES OF HARD TIMES: 'We put our trust in people' (Alleged scam involving lease-purchase of foreclosed home sends family back to Hawaii). ThetaTenantRentSkimming

Ratings Agencies Face Charges Of Civil Rights Violations In Complaint Filed With HUD; Actions Allegedly Facilitated Discriminatory Subprime Lending

Syndicated real estate columnist Kenneth Harney recently reported:

• In what is apparently the first legal action of its kind, an association of community-based organizations has filed a federal civil rights complaint against two of the three largest Wall Street ratings agencies,(1) charging that their inflated ratings on subprime mortgage bonds disproportionately caused financial harm to African-American and Latino home buyers across the country.

• The complaint,(2) filed by the National Community Reinvestment Coalition, alleges that Moody's Investor Services and Fitch Ratings Ltd. enriched themselves by assigning high ratings to bonds backed by mortgages "that were designed to fail" because of "unfair payment terms and insufficient borrower income levels."

For more, see Civil rights complaint filed against rating agencies.

See also, NCRC press release: NCRC Files Civil Rights Complaint Against Fitch and Moody’s (Civil penalties and equitable relief sought for consumers and communities injured by rating agencies’ role in foreclosure crisis).

(1) According to the column, a third rating agency with heavy involvement in the subprime boom, Standard & Poor's Corp., was not named in the complaint, but has been "in discussions" with the coalition, according to David Berenbaum, the group's executive vice president. If the discussions with S&P prove "unsatisfactory," he said, the company could be the subject of a separate action, the column states.

(2) The coalition reportedly filed its complaint with the Department of Housing and Urban Development's fair housing and equal opportunity unit. After a review, the department could either dismiss the allegations or refer the case to the Justice Department of the incoming Obama administration for litigation next year. If HUD fails to respond adequately, the coalition says it may file a federal civil lawsuit.

Plaintiffs In WaMu Suits May Be Left Holding The Bag; "Almost Nothing" Says FDIC Rep Referring To Assets Left In Receivership For Aggrieved Homeowners

In Seattle, Washington, a recent column in Seattle Weekly describes the problems homeowners suing Washington Mutual for violations of lending and consumer laws may face now that WaMu has been seized and put into receivership by the FDIC.

• [The search for redress is made even tougher by the amount of money left in the receivership—"almost nothing," according to Andrew Gray, [an] FDIC spokesperson.

• Some lawyers [...] are pushing on regardless, waiting to see what happens. Others are dropping their claims. "We're probably not going to go ahead in light of how treacherous and difficult that's going to be," says [a local attorney who filed a class-action suit against WaMu over what he claims were hidden and excessive fees].

For more, see Wronged by WaMu (After the crash, there’s little recourse).

Felonious Rent Skimming, Foreclosure Fraud Charges In Alleged Land Grant "Rescue" Scam Ruled Constitutional, Says California Judge

In San Diego, California, CW Channel 6 reports:

• Felony civil code violations alleging rent skimming and foreclosure fraud against five people accused of victimizing hundreds of San Diego County homeowners are constitutional, a judge ruled Friday.(1) [...] The defendants face a total of 172 charges, including conspiracy and grand theft.

***

• At a hearing in May, Deputy District Attorney Stephen Robinson alleged that the defendants offered to help homeowners keep their property by placing them in "land grants," when in fact the transactions were bogus and left them even worse off than they were before.

For more, see Foreclosure Fraud Charges.

Go here for more on this alleged Southern California land grant, foreclosure rescue scam.

(1) According to the story, Superior Court Judge Charles Rogers denied a legal challenge to the charges against William Hutchings, 62, and his wife Xiaoke Li, 45; Shawna Landis, 36; Diego Gil, age unknown, and Edgar Martinez, 30.

Are Lenders Proactively Offering Borrowers Cash In Exchange For Waiving TILA Violations?

An "Ask The Lawyer" Q & A article appearing last month in the Atlanta Journal Constitution posed the following question:

• I received a letter from my lender stating that a Truth in Lending Disclosure Statement was not prepared and provided to me prior to closing my loan. I was sent forms to sign and was told that I would be sent $250, for my inconvenience when the forms were completed and returned. Is my lender buying me off for a measly $250? Can I get more? Isn’t it a pretty big offense to not provide the Truth in Lending Disclosure?

For more, see Settle for $250, or go for a possible $1,000 (Latter payoff for lender’s failure to provide form less likely, bigger hassle). missing mortgage foreclosure docs gamma

Loan Modification Firms Drawing Attention From NY Feds, State AG

In New York City, Crain's New York Business reports:

• [W]ith citywide foreclosures up 50% over a year ago, some of the same bankers and brokers who sold unaffordable, subprime loans are now joining the rapidly growing ranks of mortgage modification consultants.

• While some members of what an online ad called one of the “fastest-growing job markets in the country” run legitimate businesses, housing advocates say many are taking people's money and doing little or nothing in return. The burgeoning industry has caught the attention of the FBI's New York office and the state attorney general.(1)

***

• Frequently, they ask homeowners for thousands of dollars up front, which is illegal in 12 states, including New York, unless the fee is made to a lawyer or nonprofit. As part of the sales pitch, homeowners are often advised to stop making mortgage payments,(2) putting their homes in further jeopardy of foreclosure.

For more, see Mortgage holders are marks (Loan modification specialists take money, do little in return).

(1) Other law enforcement agencies are zeroing in. The Illinois attorney general last month filed seven lawsuits against modification firms that failed to negotiate workouts for clients. The Colorado attorney general has filed 15 cease-and-desist orders against such companies. State AGs in Tennessee and Florida have also targeted loan modification firms in lawsuits alleging, among other things, that their activities constitute the unauthorized practice of law.

(2) For whatever its worth, advising homeowners to violate the terms of their loan (by advising them to stiff their mortgage lenders) may give rise to a claim of tortious interference with a contract (or a tortious interference with a business relationship) by the mortgage lender and/or mortgage servicer being stiffed, and subjecting the loan modification firm to potential liability for dispensing the "sage" advice. See generally, White Plains Coat & Apron Co., Inc. v. Cintas Corp., 2007 NY Slip Op 3591; 8 N.Y.3d 422; 867 N.E.2d 381; 835 N.Y.S.2d 530; 2007 N.Y. LEXIS 847 (2007):

• It is a familiar proposition that one "who intentionally and improperly interferes with the performance of a contract (except a contract to marry) between another and a third person by inducing or otherwise causing the third person not to perform the contract, is subject to liability to the other for the pecuniary loss resulting to the other from the failure of the third person to perform the contract." Restatement (Second) of Torts § 766.

Loan Modification Firms Swarm Courthouses To Find Leads; Cash-Strapped Homeowners Find Mailboxes Stuffed With Junk Mail, Salespeople On Doorstep

A recent editorial in The New York Times makes this observation:

• The demise of the subprime mortgage industry has been hard on predatory brokers, too. They feasted for years on bad loans until reality crashed down and the money ran out, and there they were: sharks without a frenzy.

• Now they are circling again. Predators of every sort have regrouped and returned to their old ways, this time as loan-modification companies, inserting themselves between hard-strapped homeowners and banks, offering to work deals — for cash up front.

***

• Troubled homeowners know all about the relentlessness of the loan-rescue racket: it fills their mailboxes and sends salespeople to lurk on their doorsteps. Foreclosure filings are public records, and loan modifiers routinely swarm courthouses to find leads.

• Loan counselors at the Long Island Housing Partnership, a respected nonprofit in Hauppauge, N.Y., tell of scammers crashing its housing workshops, posing as troubled borrowers, then working the crowd with sales pitches.(1)

For more, see Return of the Predators.

(1) Some state attorneys general have already started going after these loan modification firms. For example, there are ongoing efforts by the state AGs in Illinois, Tennessee, Colorado, and Florida. Further, state AGs in Tennessee and Florida have reportedly also included allegations of unauthorized practice of law in their actions against loan modification firms.

Foreclosure Rescuers, Loan Modifiers Circle San Joaquin Valley Homeowners In Financial Trouble

In the San Joaquin Valley region of California, the Merced Sun Star reports:

• The foreclosure sharks are circling the San Joaquin Valley. [...] With Stockton, Modesto, Merced and Fresno all ranking among the nation's leading cities for foreclosures, the market invites commercial exploitation. Hundreds if not thousands of San Joaquin Valley homeowners are being besieged by letters, phone calls and even door-to-door visits that purportedly offer escape from financial harm.

• Barbara Galvan, for instance, resides in southeast Fresno and said she has never missed a mortgage payment. Nonetheless, as her adjustable rate keeps rising, she's been getting the hard sell from purported rescuers. "I'm getting lots of calls," Galvan said. "They want me to pay $3,000 or $4,000 up front. I tell them, where will I get $3,000 if I can't pay my mortgage? They say, I could put it on my credit card."

For more, see Housing crisis: Foreclosure scams abound in Valley (Organizations promise help but homeowners need to read fine print).

See also, Beware of 'vultures' as foreclosures grow:

• [San Joaquin] Valley officials report that homeowners are getting pounded by letters, phone calls and personal visits from individuals and businesses claiming they have an easy answer to financial problems. For fees of $3,000 or $4,000, they'll unlock the key to saving your home. loan modification

Pittsburgh Homeowner Out $2,800 Paid To Upfront Fee Foreclosure Rescue Firm In Exchange For Failed Loan Modification Promise

In Pittsburgh, Pennsylvania, KDKA-TV Channel 2 reports:

• [S]tephanie and her husband have been unable to keep current on their mortgage payment which carries a 12 percent interest rate. Three months ago, they gave a Florida foreclosure help company $2,800 in hopes the company could convince their lender to modify their loan.

***

• Stephanie says the company assured her of a 90 percent chance of a modified loan, but three months later her lender told them that wasn't in the cards. Now the company won't return her calls and has reneged on their money-back guarantee. "I can't even get a call back, much less money back," Stephanie said.

For more, see Couple Facing Foreclosure Fleeced By Company (read story) (watch KDKA video).

Lack Of Legal Standing Apparently Not A Concern To Some Foreclosing Lenders; Would Rather Play The Odds That Homeowners Won't Contest Legal Actions

Buried in a recent article in the Connecticut Law Tribune is this excerpt, which may reflect the arrogance of some mortgage lenders and their general contempt for the legal system when bringing foreclosure actions against homeowners even though they lack the legal standing to do so:

• [Attorney Patrick] Begos’ firm [Begos, Horgan & Brown] has attempted to carve out a niche with banks to review their troubled loans and to ensure that the banks had standing to file foreclosure proceedings.

• Earlier this year, firm member Christopher Brown got a case against his homeowner client dismissed in New Haven Superior Court because Brown showed that the plaintiff mortgage company couldn’t prove it held the mortgage at the time it filed suit.(1)

• Despite that outcome, banks didn’t bite on Begos’s pitch, telling him that they would rather play the odds that most homeowners won’t contest foreclosures in court.(2)

Source: Adapting On The Fly (Solos, small firms make quick changes in bad economy).

For posts that reference the failure of some mortgage lenders and their attorneys to prove ownership of the promissory note when starting foreclosure actions, Go Here, Go Here, Go Here, and Go Here.

(1) See Connecticut Law Tribune: Shaky Standing (Foreclosure cases identify shoddy record-keeping in mortgage industry).

(2) Even if the homeowners fail to contest foreclosures, a lender's lack of legal standing in bringing an action leaves open a possible future attack that the foreclosure judgment obtained in a court that lacked jurisdiction is void, thereby raising the possibility that judgments obtained and foreclosure sales that have already taken place could be voided or otherwise set aside. Reportedly, the issue of void foreclosures where lenders allegedly lacked legal standing has recently been raised in a Massachusetts lawsuit. The suit seeks to set aside past foreclosures involving two lenders, halt any actions they currently have in the pipeline, and seeks class action status. See Thousands Of Foreclosures Are Void, Says Massachusetts Class Action Demanding Lenders & Their Lawyers Prove Note Ownership. missing mortgage foreclosure docs gamma

The Best Defense Is A Good Offense, Says Homeowner's Foreclosure Attorney

In Orlando, Florida, Central Florida News Channel 13 reports:

• Matt Englett, the lawyer of a Longwood man who lost his job and is in foreclosure, is working to modify his client's loan and do whatever it takes to make sure his client has a place to live. "I can take a 90-day uncontested foreclosure, and I can drag it out for two or three years if we have to," Englett said.

***

• Englett warned just because lenders contact you and make you think they are working with you to modify your loan, look into taking action anyway. If not, the lender may go ahead and take your home before you know it.

For more, see Take Action Against Your Lender During Foreclosure. missing mortgage foreclosure docs gamma

Prince George's State's Attorney Nearing Indictment On 20 Mortgage, Foreclosure Fraud Cases; Lawyers, Loan Officers, Others In The Cross Hairs

In Upper Marlboro, Maryland, The Maryland Daily Record reports:

• The Prince George’s County State’s Attorney’s Office hopes to send a message to potential perpetrators of mortgage fraud: “Not in this county.” Operating since September, the office’s new Mortgage and Foreclosure Division is hoping to bring 20 cases to indictment soon, said Assistant State’s Attorney April Richardson.

• Richardson said the division is moving forward against loan officers, title companies, lawyers and brokerages thought to have participated in mortgage scams.

For more, see Mortgage fraud unit targets lawyers, loan officers.

The Call For Home Loan Modification Rights In Bankruptcy Proceedings Continues

The Honorable J. Rich Leonard, a jurist who currently toils in the U.S. Bankruptcy Court for the Eastern District of North Carolina, recently wrote in The Washington Post advocating for a change in the cuurrent bankruptcy law to allow for the modification of troubled home mortgages in bankruptcy proceedings. In his article, Judge Leonard reminds us of the following:

• [H]omeowners are the only ones who cannot modify the terms of their secured debts in bankruptcy. Corporate America flocks to bankruptcy courts to do precisely this -- to restructure and reamortize loans whose conditions they find onerous or can no longer meet. Airlines are still flying and auto parts makers still operating because they have used this powerful tool of the bankruptcy process. Lehman Brothers will surely invoke it.

• But when the bankruptcy code was adopted in 1979, the mortgage industry persuaded Congress that its market was so tightly regulated and conservatively run that it should be exempted from the general bankruptcy rules permitting modification.

For more, see Give bankruptcy judges the power to alter mortgages.

For a similar position espoused by the Honorable Keith M. Lundin, a judge in the U.S. Bankruptcy Court in the Middle District of Tennessee, see:

• The Tennessean: Homeowner help may lie in bankruptcy courts (Chapter 13 modification could fend off foreclosures).