Home Hijacking Suspect Pinched For Commandeering Vacant Homes, Renting Them Out To Unwitting Tenants

In Destin, Florida, the Northwest Florida Daily News reports:

• A 40-year-old man has been charged with racketeering after he rented out vacant homes without the owners’ authorization, according to the Okaloosa County Sheriff’s Office.



• William ‘Bill’ Richard Slattery III of Destin posed as a real estate agent to rent out at least five homes in Destin since last Nov. 23, according to his arrest report. The homes [...] either were abandoned and in foreclosure or were vacant, with the owners in other cities.



• One renter said she met Slattery at the home on Harborwind Court and that he changed the locks and took her inside to look around before she signed a lease, the Sheriff’s Office reported. The home had been vacant for a long time and its owners were filing for bankruptcy.



• Slattery was renting the homes for between $900 and $1,200 a month, his arrest report said. He was arrested Jan. 27 and charged with five counts of racketeering and five counts of posing as an unlicensed real estate broker, according to the report. He was released from the Okaloosa County Jail the next day. Sheriff’s Office spokeswoman Michele Nicholson said deputies are still investigating the case. Additional charges are pending.

Source: Man charged with renting vacant homes illegally.

Georgia Grand Jury Indicts Five In Foreclosed Home-Hijacking Scam; Racketeering, Forgery, Burglary Among Allegations

In Cobb County, Georgia, WSB-TV Channel 2 reports:

• A Cobb County grand jury indicted five people accused of breaking into soon-to-be foreclosed homes then illegally renting them to unsuspecting tenants. John Harris, the CEO of New Life Granted, and four others were named in the racketeering, forgery and burglary indictments.



• Detectives said the investigation lasted more than four months and involved ten different metro Atlanta counties. They believe there are more than 20 victims in the case, including renters and home owners.



• "These individuals were basically taking over homes in various states of foreclosure and renting them out without the permission of the owners," said Cobb County Police Sgt. Larry White. "It's been a very, very manpower intensive investigation but we're very happy where we are at this point."



• In October, Harris told Channel 2's Craig Lucie that what his company was doing was perfectly legal. "I think it's ethical to do anything legal," Harris said. Police arrested him shortly afterwards. "I can't say that a reasonable person would think that what he was doing was legal," said Sgt. Harris.

***

• Harris remains in the Cobb County Jail. A judge ordered him and the others held on $75,000 bond.

For the story, see: Man accused of renting foreclosed homes indicted.

Attorney Pinched Again For Alleged Role In Another Dubious Real Estate Deal; Accused Of Pocketing Homebuyer's $75K Escrow Deposit From Trust Account

On Staten Island, New York, the Staten Island Advance reports:

• A real estate lawyer already facing prosecution in a Brooklyn mortgage fraud scheme now stands accused of stealing a $75,000 down payment from a Staten Island woman who was selling her house.



• Prosecutors say Jarrett Haber, 45, of Hicksville, had already been indicted in Brooklyn -- alongside a disgraced rabbi who would later be accused of arranging two murders -- when he helped himself to the money in 2010. Haber was representing a friend of his who was selling her Bentley Street home for $475,000, and the buyer had placed $75,000 in an escrow account as a down payment, prosecutors allege.



• On July 29, 2010, the date of the closing, the money wasn't there, authorities allege. Haber told investigators the money was stolen from him, a law enforcement source said. Nevertheless, the source said, "The money came out of the account that he was in control over."



• A grand jury returned an indictment against Haber last month, charging him with second-degree grand larceny and second-degree criminal possession of stolen property.(1)

***

• Haber had been arrested back in Feb. 2010, accused of running a mortgage fraud scheme alongside Rabbi Victor Koltun of Brooklyn. That case is still pending.(2) [...] The two are accused of taking out a $225,000 mortgage on the home of a Brooklyn woman who was living in a nursing home. She got a call in October 2009 demanding payment on the mortgage, prosecutors said, which came as a surprise because she and her husband had owned the home since 1975, and hadn't had a mortgage on it since 1987.



• Investigators found out that Haber and Koltun fraudulently used several properties to secure a $225,000 mortgage, which they used to pay down a debt from another real estate scam in Long Island.

For the story, see Real estate lawyer charged in 2010 fraud scheme now accused of stealing $75,000 from Staten Island woman.

(1) To the extent Haber is found guilty or otherwise responsible for the 'disappearance' of the homebuyer's $75,000 deposit, the victim may have some recourse if Haber fails to cough up and return the missing cash that a court may order he (Haber) pay in the form of restitution.

The Lawyers’ Fund For Client Protection Of the State of New York exists to protect legal consumers from dishonest conduct in the practice of law in the state, to preserve the integrity of the bar, to safeguard the good name of lawyers for their honesty in handling client money, and to promote public confidence in the administration of justice in the Empire State. It attempts to secure these goals by, among other things, reimbursing client money that is misused in the practice of law.

For similar "attorney ripoff reimbursement funds" that cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:

• Directory Of Lawyers' Funds For Client Protection (courtesy of the American Bar Association);
• Check the USA Client Protection Funds Map;
• Check the Canada Client Protection Funds Map.

Maps available courtesy of The National Client Protection Organization, Inc.

(2) See New York Daily News: 3 lawyers and correction officer among 12 charged with real estate fraud.

Closing Attorney Gets Year & Day For Role In Escrow Account Ripoffs In Real Estate Deals; Losses Total $2.8M+; Title Insurer Left Holding $1.7M Bag

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

• U.S. District Judge William M. Nickerson sentenced Stephen J. Troese, Sr., age 72, of Davidsonville, Maryland, [] to a year and a day in prison followed by three years of supervised release for wire fraud arising from a scheme to defraud lenders and a title insurance company of $2,838,231.

***

• According to his plea, Troese practiced as a title attorney and was variously an owner, part owner, or the controlling figure of a number of title companies that did business in the Baltimore, Annapolis and Washington, D.C. metropolitan areas, including Troese Title Services, Inc. (Troese Title), located in Camp Springs, Maryland; and [other entities].

***

• Troese Title and Troese/Hughes, which Troese formed in 1994 with co-defendant James Kevin Hughes, shared a joint escrow account for the receipt and disbursement of funds in connection with real estate closings carried out by both title companies.

***

• By 2005, the joint escrow account had developed a shortfall of more than $2 million, partly as a result of several major employee errors and embezzlements. [...] In approximately 2006, the real estate industry started to slow, resulting in a steep decline in business for Troese Title and Troese/Hughes, further aggravating the problem of the shortfall in the escrow accounts.



• In 1994, Troese had refinanced his home, claiming that the $655,000 loan would be used to pay off the previous first and second mortgages. In fact, the mortgages were not paid off. In February 2006, Troese again refinanced his home, representing that the loan of $964,533.26, would be used to pay off the two existing mortgages. Again, the mortgages were not paid off, but instead the funds were used to help cover the existing shortfall in the Troese Title escrow account.



• Troese concealed the fact that the mortgages were not paid off by continuing to make the monthly mortgage payments on all three loans. The resulting loss to Chicago Title was $937,183.47, which it was required to pay to satisfy the two previous mortgages and pass clear title to the new lender.

For more of Troese's handiwork, and the entire U.S. Attorney press release, see Owner of Troese Title Companies Sentenced to Prison In $2.838 Million Mortgage Fraud Scheme.

Couple Face Foreclosure After Falling For Mortgage Payment Hijacking Scam; Signed Up For $1700/mo Bogus 'Auto-Pay' Deal While Home Loan Went Unpaid

In Portland, Oregon, KATU-TV Channel 2 reports:

• A year and a half worth of mortgage payments were stolen from a local couple in a phishing scheme. he money went to an offshore bank account operated by someone pretending to be a Bank of America employee. A person calling herself Lisa McNaughton sent the Schelhaas family an automatic payment agreement that looked legitimate but it wasn't from Bank of America at all.



• The family bought the home 18 years ago and refinanced about five years ago. A couple years later they got a letter in their mailbox asking if they wanted to start automatic withdrawals.



• The family thought it was making payments on their Southeast Portland home after agreeing to those electronic transfers. More than $1,700 was coming out of their checking account per month.



• And then in May 2010 they received a foreclosure notice posted on their front door that they were 18 months behind on payments. They were shocked and said they had every reason to believe the payments were being made."Yeah, no reason not to," said Dan Schelhaas. "Like I say when the letter is coming on Bank of America letterhead, with our account number, property address and all of that kind of stuff."



• Schelhaas said he knows the $31,000 did not go to Bank of America but to someone living in a foreign country. He and his wife learned recently their home will go on the auction block March 30. According to a Bank of America representative, the bank normally communicates by mail and phone and the contact is more frequent as someone becomes more delinquent.

For the story, see Family gets ripped off in mortgage phishing scam.

Title Agency Abruptly Shuts Down As Criminal Probers, Auditors From State Regulator, Insurance Underwiter Look For Million$ In Missing R/E Escrow Loot

In Farmington, New Mexico, The Daily Times reports:

• Several million dollars appear to be missing from title and escrow accounts at New Mexico Title Co., a police detective said Tuesday, as the investigation widens into possible wrongdoing at the Farmington business. "It's going to be a pretty large and complex investigation," said Farmington Police Sgt. Brandon Lane.



• The New Mexico Division of Insurance is auditing the business with the help of the title company's insurance underwriter, First American Title Insurance Co. A report is expected as soon as this week. Once that report is completed, Farmington police will determine if criminal charges are warranted, Lane said. Investigators are working to discover the extent of funds missing, but the initial investigation suggests it could be more than $10 million, he said.

***

• On Friday, the state's Financial Institutions Division obtained a restraining and enforcement order to prevent documents at the business from being destroyed or altered. First American Title Insurance won a similar court order giving auditors access to the business. In its complaint seeking the court order, the Santa Ana, Calif.-based insurance company said its auditors were barred from entering the business and examining documents on Feb. 1.

***

• New Mexico Title Co. closed abruptly on Jan. 30 when it stopped accepting title work and interim manager Quentin Smith sent employees home. For days afterward, a phone message said that the business was closed. Customers began to stream in to inquire about their escrow accounts and the status of their real estate transactions.



• Several New Mexico Title Co. customers told The Daily Times they had not received expected disbursements from escrow accounts, or that their payments to escrow accounts were not properly credited.

For more, see Millions missing: Investigation widens into NM Title Co.

Thanks to Deontos for the heads-up on the story.

Suit: Unwitting Man Loses Home To F'closure After Scammer Sells Residence Out From Under Him, Allows Subsequently-Obtained Mortgage To Go Into Default

In Madison County, Wisconsin, The Madison/St.Clair Record reports:

• An Alton man claims he lost his home after a notary authenticated a fraudulent signature that conveyed his home to another owner.



• Stephen R. Evans filed a lawsuit Jan. 20 in Madison County Circuit Court against Robert Albert Burns, David C. Davis and Nicholas P. Terry. In his complaint, Evans alleges Burns notarized a quit claim deed on Aug. 30, 2005. The deed conveyed Evans's home [...] in Alton to Terry. Evans's signature on the deed, however, was fraudulent, according to the complaint.



• Evans claims he was not aware of the quit claim deed until May 2008 when a foreclosure judgment was entered on his property. Because of the deed, Evans lost ownership of his home resulting in a loss of more than $50,000 but less than $75,000, the complaint says.



• Evans blames Burns for contributing to the loss of his home, alleging Burns negligently failed to perform his duties and failed to obtain identification for Evans before notarizing his signature.



• "The defendant knew or reasonably should have known that the plaintiff was not present before him on August 30, 2005, or any other date and did not sign the purported Quit Claim Deed," the suit states.



• In addition to Burns, Evans names Davis as a defendant, saying he negligently prepared a mortgage on Terry's behalf even though he should have known Evans's signature to be fraudulent. Terry is also named as a defendant because he allegedly forged Evans's signature on the quit claim deed, according to the complaint.



• In his five-count complaint, Evans seeks a judgment of more than $239,000 but less than $300,000, plus punitive damages, attorney's fees, interest and costs.

Source: Alton man claims he lost home in fraudulent conveyance.

Feds Bag Three More Northern California Real Estate Operators On Charges Of Bid Rigging At Public/Courthouse Foreclosure Sales

From the U.S. Department of Justice:

• Three Northern California real estate investors have agreed to plead guilty today for their roles in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California, the Department of Justice announced. To date, as a result of the ongoing investigation, 20 individuals have agreed to plead guilty.



• Charges were filed [] in U.S. District Court for the Northern District of California in Oakland, Calif., against Barry Heisner of Brentwood, Calif.; Dominic Leung of Alameda, Calif.; and Hilton Wong of San Ramon, Calif.



• According to court documents, for various lengths of time between August 2008 and January 2011, Heisner, Leung and Wong conspired with others not to bid against one another at public real estate foreclosure auctions. Instead, the investors designated a winning bidder to obtain selected properties at public real estate foreclosure auctions in Contra Costa County.

***

• Heisner, Leung and Wong also were charged with conspiracies to use the mail to carry out a scheme to fraudulently acquire title to selected properties sold at public auctions, to make and receive payoffs, and to divert money to co-conspirators that would have gone to mortgage holders and others by holding second, private auctions open only to members of the conspiracy.



• The department said that the selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions. The private auctions took place at or near the courthouse steps where the public auctions were held. According to court documents, a forfeiture allegation was also included in the charges against Heisner.



• The department said that the primary purpose of the conspiracies was to suppress and restrain competition and to conceal payoffs in order to obtain selected real estate offered at Contra Costa County public foreclosure auctions at noncompetitive prices.



• When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner.



• Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. Each count of conspiracy to commit mail fraud carries a maximum sentence of 30 years in prison and a $1 million fine.



• The government can also seek to forfeit the proceeds earned from participating in the conspiracy to commit mail fraud. The maximum fine for the Sherman Act charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than the $1 million statutory maximum.(1)

For the U.S. Justice Department press release, see Three Northern California Real Estate Investors Agree to Plead Guilty to Bid Rigging at Public Foreclosure Auctions (Investigation Has Yielded 20 Plea Agreements to Date).

Go here for other posts & links on bid rigging at foreclosure and other real estate-related auctions.

Go here for links to more from the U.S. Justice Department on bid-rigging prosecutions, generally.

(1) According to the press release, [these] charges are the latest cases filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa and Alameda Counties, Calif. The investigation into fraud and bid rigging at certain real estate foreclosure auctions in Northern California is being conducted by the Antitrust Division’s San Francisco Field Office and the FBI’s San Francisco office.

Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Field Office at 415-436-6660, visit www.justice.gov/atr/contact/newcase.htm or call the FBI tip line at 415-553-7400.

By the way, by agreeing to plead guilty, these defendants (at least implicitly) have acknowledged that their 'arrangement' at the foreclosure sales was not an innocent, lawful joint bidding endeavor. See Illegal Bid Rigging Racket? Or Mere Innocent 'Joint Bidding' Arrangement?

Nationwide Federal/State Robosigning Settlement Not Yet Final?

American Banker reports:

• More than a day after the announcement of a mammoth national mortgage servicing settlement, the actual terms of the deal still aren't public. The website created for the national settlement lists the document as "coming soon."



• That's because a fully authorized, legally binding deal has not been inked yet. The implication of this is hard to say. Spokespersons for both the Iowa attorney general's office and the Department of Justice both told American Banker that the actual settlement will not be made public until it is submitted to a court.



• A representative for the North Carolina attorney general downplayed the significance of the document's non-final status, saying that the terms were already fixed. "Once the documents are finalized, they'll be posted to nationalmortgagesettlement.com," the representative said in an email to American Banker.



• Other sources who spoke with American Banker raised doubts that everything is yet in place.

***

• Some who talked to American Banker said that the political pressure to announce the settlement drove the timing, in effect putting the press release cart in front of the settlement horse.



• Whatever the reason for the document's continued non-appearance, the lack of a public final settlement is already the cause for disgruntlement among those who closely follow the banking industry. Quite simply, the actual terms of a settlement matter.



• "The devil's in the details," says Ron Glancz, chairman of law firm Venable LLP's Financial Services Group. "Until you see the document you're never quite sure what your rights are."

For more, see Missing Settlement Document Raises Doubts on $25B Deal.

See also, Daily Finance: Why the Foreclosure Mess Settlement Proposal Can't Fix the Damage:

• [I]t can't go far enough, because it can't address one of the most confounding problems the banks have created: the millions of properties nationwide that now have "clouded" titles. To put it plainly: Because of these bad titles, property owners can't prove they own the properties they think they bought, and banks can't prove the had the right to sell them.

Banksters' Big Win In Robosigning Scandal: Were America's Prosecutors Outgunned, Wilting Before Prospect Of Battling High-Priced, White Shoe Lawyers?

Rolling Stone columnist Matt Taibbi writes:

• So the foreclosure settlement is through. A few weeks back, I was optimistic about it – I had been worried that it was going to contain broad liability waivers for all sorts of activities, and I was pleasantly surprised when I heard that its scope had essentially been narrowed to robosigning offenses.(1)



• However, now that the settlement is finalized, and I've had time to think about it and talk to people who know far more than I do about this, I'm feeling pretty queasy.



• It feels an awful lot like what happened here is the nation's criminal justice honchos collectively realized that a thorough investigation of the problem would require resources they simply do not have, or are reluctant to deploy, and decided to accept a superficially face-saving peace offer rather than fight it out.



• So they settled the case in a way that reads in headlines like it's a bite out of the banks, but in fact is barely even that.

***

• Really this looks like America's public prosecutors just wilted before the prospect of a long, drawn-out conflict with an army of highly-paid, determined white-shoe banker lawyers. The message this sends is that if you commit crimes on a large enough scale, and have enough high-priced legal talent sitting at the negotiating table after you get caught, the government will ultimately back down, conceding the inferiority of its resources.

For more, see Why the Foreclosure Deal May Not Be So Hot After All.

See also, Daily Finance: Why the Foreclosure Mess Settlement Proposal Can't Fix the Damage.

(1) In his earlier column, Taibbi emphasizes that he is not minimizing the significance of the robosigning scandal with the following observation:

• Robosigning is not a small offense. It's not a "clerical" issue. It's a mass-perjury issue, a tax evasion issue, a contractual fraud issue, and it's a criminal conspiracy issue (the banks' highest executives were engaged in planning it) and it resulted in millions of errors that resulted in untold numbers of premature foreclosures.

The Top 12 Reasons Why The Nationwide Federal/State Mortgage Settlement Deal Stinks!

From Naked Capital blogger Yves Smith:

• As readers likely know by now, 49 of 50 states have agreed to join the so-called mortgage settlement, with Oklahoma the lone refusenik. Although the fine points are still being hammered out, various news outlets (New York Times, Financial Times, Wall Street Journal) have details, with Dave Dayen's overview at Firedoglake the best thus far.



• The Wall Street Journal is also reporting that the SEC is about to launch some securities litigation against major banks. Since the statue of limitations has already run out on securities filings more than five years old, this means they'll clip the banks for some of the very last (and dreckiest) deals they shoved out the door before the subprime market gave up the ghost.



• The various news services are touting this pact at the biggest multi-state settlement since the tobacco deal in 1998. While narrowly accurate, this deal is bush league by comparison even though the underlying abuses in both cases have had devastating consequences.

For more, including a list of the top twelve reasons why this deal stinks, see The Top 12 Reasons Why You Should Hate the Mortgage Settlement.

See also, Daily Finance: Why the Foreclosure Mess Settlement Proposal Can't Fix the Damage.

Manufacturer Of Dubious Foreclosure Documents, Ex-Company President Face Criminal Charges Alleging Forgery Of Robosigned Mortgage-Related Documents

The New York Times reports:

• One of the largest companies that provided home foreclosure services to lenders across the nation, DocX, has been indicted on forgery charges by a Missouri grand jury — one of the few criminal actions to follow reports of widespread improprieties against homeowners.



• A grand jury in Boone County, Mo., handed up an indictment Friday accusing DocX of 136 counts of forgery in the preparation of documents used to evict financially strained borrowers from their homes. Lorraine O. Brown, the company’s founder and former president, was indicted on the same charges.



• Employees of DocX, a unit of Lender Processing Services of Jacksonville, Fla., executed and notarized millions of mortgage documents for big banks and loan servicers over the years. Lender Processing closed the company in April 2010, after evidence emerged of apparent forgeries in these documents, a practice now called robo-signing.



• Chris Koster, the Missouri attorney general, will prosecute the case. “The grand jury indictment alleges that mass-produced fraudulent signatures on notarized real estate documents constitutes forgery,” Mr. Koster said in a statement. “Today’s indictment reflects our firm conviction that when you sign your name to a legal document, it matters.”



• Mr. Koster said his office’s investigation was continuing. This suggests he may hope to persuade Ms. Brown to cooperate in his investigation of the parent company. If convicted, Ms. Brown could face up to seven years in prison for each forgery count. DocX could be fined up to $10,000 for each forgery conviction.

For more, see Company Faces Forgery Charges in Mo. Foreclosures.

Fannie: 'UBS Peddled Mortgage Packages Loaded With Crappy Loans!'

Legal Newsline reports:

• Summaries of 24 mortgage loans paint a heart-breaking picture of routine dishonesty that brought down America's house of cards. Conservators of Federal National Mortgage Association filed the summaries in federal court in December, to support a claim that "Fannie Mae" relied on bad information from lenders when guaranteeing packages of loans.



• "A forensic review of loan files has revealed pervasive failure to adhere to underwriting guidelines," conservators wrote. Conservators wrote that in a random review of 996 loans that UBS Securities packaged, 78 percent were not underwritten in accordance with applicable guidelines.



• They also wrote that a review of 363 defaults revealed that 99 percent were not underwritten according to guidelines. Fannie Mae sued UBS and other big lenders last year, seeking to recover billions it lost in the mortgage meltdown that started in 2008.



• Lenders deny responsibility, claiming they didn't know that loan originators loaded mortgage applications with lies. What no one could see a few years ago appears monstrous in hindsight.

For more, see Fannie Mae offers examples of routine dishonesty in its fight against lenders.

Florida Bar Score On Attorney Misconduct In Foreclosure Fraud: Not Guilty: 139; Guilty: 0

In West Palm Beach, Florida, The Palm Beach Post reports:

• The Florida Bar's investigations into foreclosure fraud by its members jumped 63 percent in the past year, but no disciplinary actions against attorneys have been levied since complaints began to mount in the fall of 2010.



• The responsibility to hold lawyers accountable for foreclosure misconduct now rests solely with the Florida Bar after the state attorney general's investigation into high-volume foreclosure law firms collapsed this week.



• Since March of last year, the number of foreclosure fraud investigations of attorneys by the Bar grew from 222 cases to 362. During the same time period, about 130 cases were closed with no findings of fault. There are 229 pending cases.

***

• "We're putting a lot of resources into this," Vanstrum said Friday, a day after Florida Attorney General Pam Bondi announced an unfavorable court ruling that effectively shut down her foreclosure mill investigations. "These cases are unique in that it's very widespread, not just in Florida but nationwide."

For more, see Foreclosure lawyer probes left up to Florida Bar.

Florida AG Probe Into Sleazy Foreclosure Mills, Sweatshops Ends With A Dull Thud

In West Palm Beach, Florida, The Palm Beach Post reports:

• Florida's once-heralded foreclosure mill investigations have fizzled as the attorney general's office has failed to find the right strategy to continue its pursuit and three law firms call for the cases to be dismissed.



• [Last] week, an attempt to have the Florida Supreme Court weigh in on whether the state has the authority to subpoena the Law Offices of David J. Stern was denied by the 4th District Court of Appeal. The decision effectively ends the investigations into complaints that the firms doctored court paperwork in an attempt to speed foreclosures.

For more, see Florida attorney general's attempt to subpoena foreclosure mills stalls.

Dilapidated Buildings In F'closure Continue Driving Tenants Into Streets; Deteoriating Conditions Force Fire Chief To Give Residents The Boot

In Swissvale, Pennsylvania, WTAE-TV Channel 4 reports:

• Residents at a Swissvale apartment building are being forced out because officials said the landlord has been ignoring citations for the past five years. "He's not doing what he's supposed to be doing," said 83-year-old tenant Sarah Kandor of her landlord, Michael Sturdivant.



• Sturdivant is facing a foreclosure lawsuit on the apartment building. He also owes more than $40,000 in back taxes.



• "We've had window sashes that have rotted to the point where windows have fallen out. We've had a ceiling collapse on a tenant in there. We had to go over and render medical aid and transfer her to the hospital for injuries from that," said Swissvale Fire Chief Clyde Wilhelm.

***

• [The landlord's] tenants are asking for more time to move out but Wilhelm said he knows granting it could cost them everything. "It's getting to the point where it's not if something's going to happen, it's probably when it's going to happen -- and we don't want that to occur," Wilhelm said. [...] The Salvation Army said tenants will be able to get help with moving expenses.

For the story, see Residents Forced From Home After Landlord Ignores Citations (Swissvale Residents Looking For New Homes).

See also, State Assisting Tenants Being Forced Out Of Apartments (Officials Say Swissvale Landlord Has Ignored Citations For 5 Years).

Financially-Strapped Multi-Unit NYC Residential Apartment Houses Sap Value From Neighboring Rental Buildings

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

• Overleveraged residential buildings, properties that are not generating enough rental income to cover their mortgage payments and overall maintenance costs, as well as multi-family buildings that have gone through foreclosure are having a negative impact on neighboring properties, according to a new study released Thursday.



• Buildings within a 500-foot radius of overleveraged properties face a higher risk of physical deterioration and an increase in building code violations, said the study by the Citizens Housing and Planning Council and Enterprise Community Partners.



• The study, called "The Impact of Multifamily Foreclosures and Over-Mortgaging in Neighborhoods in New York City" looked at more than 1,100 multi-family buildings in Brooklyn, Bronx, Manhattan and Queens that were within 250 to 500 feet of overleveraged properties.



• “Our study suggests that proximity to an over-mortgaged building increases the likelihood of increased code violations, with New York City's Department of Housing Preservation and Development stepping in to carry out additional emergency repairs,” said Harold Shultz, senior fellow of Citizens Housing and Planning Council, in a statement. “As a result, the city should continue its efforts to closely monitor and prevent deterioration in those communities troubled by over-mortgaged multifamily buildings.”



• Buildings within a 500-foot radius of overleveraged building spend almost twice as much money on emergency repair expenditures conducted by the city, compared to buildings beyond that distance. In 2010, the study estimates that a building that neighbors a distressed property has roughly $1.9 million more in emergency repair charges than those beyond a 500-foot radius.



• Meanwhile, buildings within 250 feet of troubled properties had a tendency to have major housing code violations compared to buildings further away. These properties had a 13.7% increase in Class C, considered the most hazardous, code violations from 2008 and 2010.(1)

Source: Distressed buildings bring down their neighbors (A new study reveals buildings located 500 feet away from overleveraged and foreclosed properties face risk of deterioration and increased costs to maintain them).

(1) See also:

• The Real Deal: Foreclosures are contagious in NYC apartment buildings, too,
• The Wall Street Journal: City Feels Foreclosure Affects:
  
  "In single-family neighborhoods, you see empty homes and swimming pools filled with algae, in a way that you don't see them in multifamily neighborhoods," said Harold Shultz, a senior fellow at the housing and planning council.
  
  Instead, the parallel effect on neighboring apartment buildings can be measured in landlords making fewer repairs and a corresponding increase in housing-code violations, according to Mr. Shultz.
  
  The problem in New York City is widespread, but concentrated in northern Manhattan, the central and west Bronx and central Brooklyn, according to the report.

Law School Snags Local Vacant Firehouse; Will Be Future Home Of Institution's 10 Legal Aid Clinics

In Detroit, Michigan, the Detroit Free Press reports:

• The University of Detroit Mercy School of Law has purchased a vacant former Detroit firehouse downtown for use as the future home of its public legal aid clinics.

***

• The two-story facility will provide more than 6,000 square feet of space for the school's 10 legal aid clinics. Last year, UDM provided assistance for more than 1,450 people in its various clinics, including urban law, immigration and asylum, mediation, consumer defense and mortgage foreclosure. The school plans to open the new facility in December.



• The firehouse was built in the early 1900s and served as the home for the Detroit Fire Department's Engine 2 for many years. The building was used for other purposes after it was sold by DFD, but it retains much of its historic character including spiral staircases, exterior red fire doors and a lookout tower. UDM Law will keep the historic look in its redesign, the school said.

For the story, see UDM Law School buys former firehouse for legal aid clinics.

Bar Ethics Opinion Fails To Set Off Nuclear Bomb Effect With Florida Foreclosure Lawyers & Their Bankster Clients

In Sarasota, Florida, the Sarasota Herald Tribune reports:

• A year ago, the Florida Bar issued an ethics opinion that was a warning for every mortgage lawyer who helps lenders foreclose on Florida homes. It must have made many of them squirm a bit, but maybe not enough.



• By then, everyone paying even a bit of attention knew huge numbers of foreclosure cases had been filed with iffy mortgage documents, most purporting to prove the plaintiff's right to foreclose.

***

• Though it seemed a fiasco, lenders' lawyers kept using the created-documents tactic. Most often, it still worked; most homeowners didn't even fight the case. The Bar ethics decision a year ago seemed likely to change that.



• It warned that lawyers could be suspended or disbarred if they knowingly filed iffy documents or, even in closed foreclosure cases, failed to tell judges about it now. Some predicted a nuclear bomb effect, all but wiping out the ability to foreclose.



• With all lawyers on notice, how could lawyers for lenders dare to keep glutting the courts with so many cases even if they were winning most without a fight?



• Well, there have been some effects. Lawyers are being more cautious, it seems. But that's about it. Sarasota County Circuit Judge Lee Haworth, a leader in helping courts handle the masses of such cases, says he hasn't heard of any lawyers coming forward to confess anything.

For more, see Lyons: Bar's ethics opinion little chill to foreclosures.

Prosecutors: Wife Torched Family Home To Conceal Pending Eviction From Unwitting Family; F'closure Stemmed From Loans Obtained By Forging Hubby's Name

In Alameda County, California, the Contra Costa Times reports:

• A mountain of debt cloaked in years of forged spousal signatures and a pending foreclosure were the motive for a Pleasanton woman to burn down her home in a 2008 fire, according to arguments given by prosecutors before the Alameda County grand jury. Deonna Zuffa, 43, was critically injured in the fire that she is accused of setting.



• During the grand jury proceedings, which ended with an indictment of Zuffa on Dec. 20, prosecutors presented testimony from witnesses who said Zuffa used gasoline throughout her east Pleasanton home to ignite it the morning of Dec. 8, 2008, three days before her unsuspecting family was to be evicted due to foreclosure.

***

• In the transcripts, Alameda County senior deputy district attorney William Denny describes Zuffa as a master of keeping things bottled up. Testimony and evidence presented showed Zuffa was able to hide bankruptcy, foreclosure and deep financial debt incurred over the years from her husband and two sons.

***

• Witnesses told the jury Zuffa kept track of the finances and had the only keys to the family's two P.O. boxes, helping to conceal the debt.



• Keith Zuffa testified that he didn't know his wife of 17 years had taken out loans against the house, which was in his name, and that as far back as 2001, she had been forging his signature. He knew nothing about the failed bankruptcy attempt he said, or an eviction notice delivered Dec. 4, 2008, four days before the fire.



• According to the transcripts, Keith Zuffa told the grand jury that his wife had kept secret that she borrowed money from his 401k, took a second loan on the home and forged his signature to give herself power of attorney, giving her authority to sign all loan documents. The deceit was revealed by investigators to Keith Zuffa in the days after the fire. He has since divorced his wife.



• "It was unbelievable to me that (Keith Zuffa) didn't know what was going on," Keith Batt, a Pleasanton police detective, told the grand jury. "But all the evidence showed he didn't know this was happening."

For more, see Grand jury testimony points finger at Pleasanton woman accused of arson.

Suit: Woman Holds Ex-Hubby's Home Hostage, Refusing To Release Lien Held Against His House Despite Receiving Full Payment Of Debt Owed To Her

In Galveston, Texas, The Southeast Texas Record reports:

• A divorced Galveston County couple is at odds over certain funds stemming from the sale of local property, recent court documents say.



• Richard See has filed suit against his ex-spouse Glenda G. Gordon, claiming she refuses to release the lien on the property despite receiving $20,000 from him. The suit filed Jan. 12 in Galveston County District Court states the property was awarded to See in the final decree of divorce three years ago. According to the suit, the lien prevented the release of $30,000 in proceeds to the plaintiff.



• According to the suit, co-respondent Alamo Title Co. held the money in question while Gordon maintained the lien. See says he paid the $20,000 owed to his former wife with the payments remitted to her attorney of record and fellow defendant, Elaine Michael, but the lien was still in place.



• Alamo provided alternative methods to free the lien while the plaintiff made repeated yet unsuccessful attempts to reach Gordon, according to the suit. The suit says See also provided Michael a copy of the affidavit essential to the lien's release, but the attorney refused to sign it notwithstanding the plaintiff's repeated requests.

Source: Divorced couple in dispute over property.

Couple Gets Three Years Probation For Creating, Using Bogus Lease To Hijack Possession Of Vacant Home In Failed Attempt To Snag 'Affordable' Housing

In Newport Beach, California, The Orange County Register reports:

• A husband and wife were sentenced to three years of informal probation after a guilty plea of illegally occupying vacant homes in foreclosure. Chris Wayne Duncan, 43, and Robin Ann Duncan, 37, both of Newport Beach, pleaded guilty to a court offer of one misdemeanor count of conspiracy to commit trespass and one misdemeanor count of trespass, according to a news release from the Orange County District Attorney's Office.



• Prosecutors filed the conspiracy count as a felony, but the court reduced it to a misdemeanor, according to the news release. The couple will also have to pay restitution, the amount of which will be determined at a later date, the district attorney's office said.



• In September 2010, prosecutors said, the Duncans drafted a fraudulent lease of 10 Hidden Pass – a foreclosed and vacant property in Newport Coast – and then broke in and illegally moved in.



• The district attorney's office said the couple claimed to be renters of the property and had utilities turned on in their names to give the appearance of legitimate tenancy. In October, when an appraiser went to the property as part of the short-sale process, prosecutors said the Duncans changed the locks and kept the appraiser from entering the home.



• The couple told the appraiser that they were legal renters and that the owner should contact the Duncans directly, prosecutors said. The owner then contacted the Newport Beach Police Department, which investigated the claim and arrested the Duncans.

Source: Husband, wife squatters get probation (The couple will also have to pay restitution, the amount of which will be determined at a later date, the Orange County District Attorney’s Office said).

North Texas Adverse Possession-Claiming Vacant Home Hijacker Faces The Boot As Foreclosing Lender Initiates Eviction Action

In Flower Mound, Texas, WFAA-TV Channel 8 reports:

• The man who made international headlines by claiming an abandoned $340,000 Flower Mound home with a $16 piece of paper now faces eviction in Denton County. Kenneth Robinson filed an affidavit for adverse possession in July, and his story on News 8 set off a frenzy of filings across North Texas.



• In court papers, Bank of America says it now owns the property in question and is asking for Robinson to be evicted. The bank says it took ownership through foreclosure on January 3. Papers say Robinson moved in when the previous owner walked out on his mortgage, and Robinson never had permission to be there. Bank of America says it asked Robinson to leave, but he did not vacate the property. News 8 e-mailed Robinson and stopped by the house. He would not comment about the case.



• If the court sides with the bank, Robinson will be the latest squatter to get the boot. At least eight people who sought his advice and claimed homes in Tarrant County have been evicted and charged with theft or burglary. Robinson was there when three of them appeared in court.



• Flower Mound neighbors say Robinson has been seen scouting out other potential homes for adverse possession. They are now counting the days until Robinson leaves town.



• Robinson tried to maximize his adverse possession claim with a speech at SMU's law school and in on-line seminars. He charged hundreds of dollars for sessions about how to file the paperwork.



• But when Tarrant County started making arrests, Robinson told News 8 that the others did not follow his advice to the letter. He said his case was different because he fully intended to pay property taxes and live in the house until he had clear title.



• Robinson is scheduled for a hearing in Denton County on February 6. If he fails to appear, he will forfeit his claim to the house.

Source: Original Flower Mound squatter gets eviction notice.

Title Hijacker Gets Five Years For Snatching, Selling Homes Belonging To Others; One Victim Discovers Occupant In House Recently-Inherited From Parent

From the Office of the U.S. Attorney (Birmingham, Alabama):

• A federal judge [...] sentenced a Birmingham man to five years in prison for a mortgage fraud scheme in which he sold three houses that he did not own, announced U.S. Attorney Joyce White Vance, [and others].



• U.S. District Judge Sharon Lovelace Blackburn sentenced DARRYL COBB, 54, on two counts of mail fraud in connection to the scheme. Cobb pleaded guilty to the charges in August. The judge also ordered Cobb to pay restitution of $262,861 and to forfeit $262,861 to the government as proceeds of his illegal activity.

***

• According to Cobb’s plea agreement with the government, his scheme was uncovered after the owner of a home in the 7900 block of 4th Avenue South complained to Birmingham police that someone was living in the house, which should have been vacant. The owner had gotten the house in a will from a deceased parent.



• The person living in the house said they had bought it from Cobb. Further investigation showed Cobb had filed false documents in Jefferson County court and with a mortgage company claiming to be the rightful owner of the property, according to the plea agreement.



• Records searches determined Cobb had conducted two other fraudulent transactions using identical methods to obtain control over two other properties, which he then sold under the false pretense that he was the rightful owner and seller.

For the U.S. Attorney press release, see Federal Judge Sentences Birmingham Man to Five Years in Prison for Mortgage Fraud Scheme.

Surplus Snatcher Gets Four Years For Embezzling Ex-Homeowners' Unclaimed Funds Generated From F'closure Sales; County, Insurer Left Holding $1.2M+ Bag

In Memphis, Tennessee, The Commercial Appeal reports:

• Former Chancery Court bookkeeper Brandon Gunn was sentenced Friday to four years in federal prison and ordered to repay more than $1 million in surplus tax foreclosure funds he embezzled from the office between 2008 and 2011. [...] The 47-year-old Gunn pleaded guilty in October to embezzlement, conspiracy and money laundering.



• U.S. Dist. Court Judge Samuel Mays Jr. told him he had stolen from taxpayers who were in a most vulnerable time of their lives. "The basis for this crime was sheer greed," Mays said, noting the theft was in seven figures. "That's an astonishing amount of money to steal from the public. The theft has caused people to lose faith with the government and the courts." U.S. Atty. Ed Stanton called Gunn's actions "a flagrant abuse of the public's trust."



• Gunn was involved in an office function in which delinquent property taxes are paid by selling a homeowner's property, with the remainder or surplus to be placed in an escrow account the homeowner can claim.



• The embezzlement scheme came to light when one homeowner seeking to claim a surplus discovered that it had been paid to a company set up by Gunn. Gunn admitted to writing 38 checks ranging in amounts from $5,761 to $72,241 and sending them to his company or to other entities linked to him between May 2008 and March 2011.



• He told the court earlier that he targeted old tax accounts, including some that had gone unclaimed for as many as 17 years. When he was first caught, he tried to pay back money by stealing even more money.



• On Friday, Gunn was ordered to make restitution of $1,063,903, most of which will go to the county's former insurance carrier. The county's loss not covered by insurance was placed at $179,596.

***

• A second man, Correy Isom, 35, a restaurant employee who allegedly conspired with Gunn, faces three felony counts and has pleaded not guilty.

For the story, see Chancery Court embezzler Brandon Gunn gets 4 years in prison (Ordered to repay more than $1 million purloined).

San Bernardino DA: Duo Hijacked Possession Of Vacant Foreclosed Homes, Then Fraudulently Squeezed Banksters For Thousand$ In "Cash For Keys" Racket

From the Office of the San Bernardino County District Attorney:

• A woman alleged to have operated a "cash for keys" scam in Rancho Cucamonga has been charged with Burglary, Forgery and Grand Theft. Quddusa Lynette Anderson, 38, of Patton, was arraigned Thursday in Rancho Cucamonga Superior Court.



• Investigators from the District Attorney's Real Estate Fraud Prosecution Unit have issued a felony arrest warrant for John Woodrow Smith, 48, of Roseville, who is suspected of taking part in the scam. Smith also uses the alias Eimbari Kemet.



• Anderson and Smith are alleged to have conspired to defraud mortgage giants, Freddie Mac and Bank of America, and taxpayers, by illegally occupying foreclosed homes and applying for relocation assistance known as "Cash for Keys."



• To avoid a lengthy eviction process, mortgage lenders like Freddie Mac, Fannie Mae, and Bank of America offer legitimate tenants what is known as "Cash for Keys," to move out of the residence by a specific date and leave the property in turnkey condition.

***

• The homes selected by defendants were vacant and they would gain unlawful entry into the locations, change the locks, and have utilities turned on in their names to establish residency. One defendant even moved into a Rancho Cucamonga residence.



• Shortly after moving into the residence, the defendants contacted Bank of America's Mortgage Department and signed a Move Out Agreement between them and Bank of America. After signing the agreement, defendants were paid $7500 to move out of the residence.



• The investigation determined that one of the defendants was paid $2500 through Freddie Mac to move out of another foreclosed home located in Rancho Cucamonga.

For the San Bernardino County District Attorney press release, see Woman Arraigned In Cash For Keys Scam.

Lawyer Dodges Pokey, Scores Conditional Jail "Buy Out' w/ 'Pay Restitution' Promise After $360K+ Ripoff; Prison Cell Awaits If Victims Stiffed: Judge

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

• A disbarred lawyer was spared a prison sentence Friday by a Broward judge who said she was giving him a chance to make things right with the elderly couple he bilked out of $362,000. Gerald Lindor, 52, was sentenced to 20 years of probation and ordered to pay $110,000 to Joscelyn and Herma Passley, a couple going through foreclosure because Lindor misappropriated more than $360,000 they gave him as part of a deal to refinance their Miramar home.



• Lindor, who entered a no contest plea to seven grand theft charges on Jan. 24, was also ordered to pay the couple $2,000 a month until the balance is met. The plea came with no promise from prosecutor Catherine Maus that prison time would be reduced from the 13 to 30 years allowed by law.



• Lindor, who worked out of Pembroke Pines, begged Broward Judge Cynthia Imperato to keep him out of prison and give him a chance to pay restitution to his victims. He also looked directly at the Passleys and offered a tearful apology. "I am so sorry," he said, promising to do everything he could to help them keep their home. "I give you my word. Give me the opportunity to make this right."



• Imperato withheld sentencing on one of eight charges of grand theft and warned Lindor that she would send him to prison for 13 to 30 years if he does not make good on his promise to repay the Passleys.



• Lindor lost his license to practice law in 2008, after he admitted to stealing more than $3 million from numerous clients over a period of more than 10 years. His lawyer, David Vinikoor, said the cycle of misconduct began when Lindor found himself saddled with a $40,000 shortfall in a botched transaction.



• The money Lindor took came from mortgage lenders and was put into a trust he managed. Instead of forwarding the money to the seller as required by law, Lindor used a portion to pay off the debt. When the seller demanded payment, Lindor would take money from the next mortgage transaction to settle the last one. Interest and penalties compounded with each misappropriation. Vinikoor said none of the misappropriated money went to Lindor personally, an assertion disputed by prosecutor Maus.



• By the time the Passleys sold their New York property and gave the money to Lindor in a refinancing deal, Lindor was behind more than $1 million and finally realized he would never catch up, Vinikoor said. "He was always in the hole," Vinikoor said. "Finally, he did what he should have done from the beginning. He self-reported the misappropriation to the Florida Bar and consented to his disbarment."



• It was Vinikoor who suggested that Imperato withhold sentencing on one of the charges to force his client to pay his debt to the Passleys, the only victims who have not had their troubles resolved. "Payment of restitution outweighs the need for prison," Vinikoor said. "If he does not make them whole, sentence him to whatever you think is appropriate."



• Herma Passley, 72, told Imperato she did not believe Lindor would be able to repay the full amount, and she feared the consequences. She said she wanted Lindor to spend the rest of his life in prison if he cannot repay his debt. "I am 72 years old," she said. "Where am I going to live? Should I end up in a shelter because he made mistakes?" Her husband, Joscelyn, 82, attended Friday's sentencing hearing in a wheelchair. Suffering from dementia, he did not speak to the judge.



• Maus echoed the victims' lack of confidence in Lindor. She accused the defendant of taking the money to "maintain a lifestyle he could not afford." She also questioned how he could raise the money he owes in any time reasonable enough to benefit the Passleys. [...] Imperato said she will revisit the case in a year to determine sentencing on Lindor's last remaining grand theft charge.

Source: Disbarred lawyer spared prison, but must repay victims.

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

For similar "attorney ripoff reimbursement funds" that sometimes help cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:

• Directory Of Lawyers' Funds For Client Protection (now includes Canadian recovery funds, courtesy of the American Bar Association);
• Check the USA Client Protection Funds Map;
• Check the Canada Client Protection Funds Map.

Maps available courtesy of The National Client Protection Organization, Inc.

Ex-Paralegal Gets 100 Months For I.D. Theft, Forgeries In Connection With Ripoffs Of Employer/Law Firm, Clients' Trust Accounts

From the Office of the U.S. Attorney (Philadelphia, Pennsylvania):

• Bonnie Sweeten, 40, of Pennsylvania, was sentenced [] to 100 months in prison for fraud schemes in which she stole in excess of $600,000 from her employer and family members. Sweeten pleaded guilty June 21, 2011 to wire fraud and aggravated identity theft. In addition to the prison term, U.S. District Court Judge William H. Yohn, Jr., ordered Sweeten to pay restitution in the amount of $1,091,831 and a special assessment of $200. Sweeten remains in federal custody.



• Sweeten stole funds from family members, from the law office where she had been employed, and from the law firm’s clients. She used the identity of another person and posed as another person while using false identification and forging signatures on various documents including a property settlement.



• Additionally, Sweeten stole the identity of a friend and fellow employee and used the identity to facilitate her flight from the jurisdiction. She also forged a signature of a judge on a court order for the purpose of fraudulently withdrawing client funds from a bank. As part of her scheme to defraud, Sweeten concocted an elaborate hoax that she and her daughter had been kidnaped in order to deceive family members and law enforcement as toher whereabouts.

For the U.S. Attorney press release, see Bonnie Sweeten Sentenced For Fraud Schemes.

For an earlier post, see Philly Feds Probe Alleged Rogue Paralegal For Fraud, Theft; Six-Figure Sums Stolen From Law Clients; Bad Acts Lead To Boss' Disbarment: Attorney.

Illinois AG Lawsuit: Ratings Agency "Used Every Trick Possible To Give [MBS] Deals High Ratings In Order To Retain Clients & Generate Revenue"

From the Office of the Illinois Attorney General:

• Attorney General Lisa Madigan [] filed a lawsuit against Standard & Poor's for its fraudulent role in assigning its highest ratings to risky mortgage-backed investments in the years leading up to the housing market crash.



• Madigan filed her lawsuit today in Cook County Circuit Court, alleging that Standard & Poor's, or S&P, compromised its independence as a ratings agency by doling out high ratings to unworthy, risky investments as a corporate strategy to increase its revenue and market share. The Attorney General's lawsuit alleges that S&P ignored the increasing risks posed by mortgage-backed securities, instead giving the investment pools ratings that were favorable to its investment bank client base and S&P's profits.



• "Publically, S&P took every opportunity to proclaim their analyses and ratings as independent, objective and free from its desire for revenue," Madigan said. "Yet privately, S&P abandoned its principles and instead used every trick possible to give deals high ratings in order to retain clients and generate revenue. The mortgage-backed securities that helped our market soar – and ultimately crash – could not have been purchased by most investors without S&P's seal of approval."

For the Illinois AG press release, see Madigan Sues Standard & Poor's For Enabling Financial Meltdown (Lawsuit: 'Profits Were Running the Show' at Leading Credit Ratings Agency).

For the lawsuit, see People v. The McGraw Hill Companies, Inc. et ano.

Fed. Judge 'Green-Lights' Consumer Suit Attacking Bill Collector's Crappy Paperwork In Obtaining State Court Judgment In Credit Card Collection Action

Lexology reports:

• A debtor’s assault on the quality of documentation used by a debt collector to obtain a state court judgment against him in a credit card collection action was held by a Tennessee federal court to be sufficient to state a claim that the debt collector, by filing the state court action, had violated the Fair Debt Collection Practices Act.



• The January 25 decision in Simmons v. Portfolio Recovery Associates, LLC provides yet another example of how collection-related documentation used by the non-mortgage consumer lending industry is increasingly coming under fire. While the case involved FDCPA claims against a debt collector, its analysis could be followed by courts considering claims made under state debt collection laws that mirror the FDCPA prohibitions against creditors collecting their own debts.



• The debtor alleged the debt collector had falsely represented the character, amount, or legal status of the debt in violation of the FDCPA in two ways: (1) as a result of its intentional business decision not to obtain a copy of the written contract or other documentation evidencing the debt prior to filing the state court action, and (2) by submitting an affidavit in support of the action executed by an individual who had no personal knowledge of the statements made in the affidavit, did not review any records of the card issuer, and did not make any other efforts to determine if the debtor actually owed the amounts claimed.

***

• [U.S. District] Judge [Thomas A.] Varlan noted that, unlike the claims in prior cases, the complaint in Simmons included allegations that the debt collector made false representations or used deceptive means to collect the debt. Most significantly, even though the judge acknowledged that the debtor had “not pointed to any specific statements in the affidavit about [his] account or the debt that [he] allege[d] to be factually false,” the judge nevertheless found the debtor’s allegations of falsity and a pattern and practice sufficient to survive a motion to dismiss.



• In light of the criticism that has been directed at mortgage foreclosure documentation, it is not surprising there is growing scrutiny by governmental agencies and consumer groups of collection-related documentation used in non-mortgage lending.

For more, see Tennessee Federal Court allows FDCPA claims based on documentation challenge (may require subscription; if no subscription, TRY HERE; or GO HERE - then click the appropriate link).

For the ruling, see Simmons v. Portfolio Recovery Associates, LLC, No. 3:11-CV-280 (E.D. Tenn., Knoxville Div. January 25, 2012).

'Zombie Debt' Buyer Accused Of Tricking Consumers Into Paying On Stale Debts To Restart Clock On Statute Of Limitations Squeezed By Feds Out Of $2.5M

The New York Times reports:

• The Federal Trade Commission signaled on Monday that it would continue to crack down on debt collectors who harass consumers for money they may not even be legally obligated to pay.



• In the second-largest penalty ever levied on a debt collector, the F.T.C. said that Asset Acceptance, one of the nation’s largest debt collection companies, had agreed to pay a $2.5 million civil penalty to settle charges that the company deceived consumers when trying to collect old debts.(1)

***

• Asset Acceptance, based in Warren, Mich., was charged with a variety of complaints, including failing to tell consumers that they could no longer be sued for failing to pay some debts because the debts were too old. The company’s collectors also failed to inform consumers that paying even a small portion of the amount owed would revive the debt — in other words, making a payment would extend the amount of time the collector could legally sue.



• Debt collectors have only a certain number of years to sue consumers. The statute of limitations varies by state, but typically ranges from two to 15 years, Mr. Dolan said, beginning when a consumer fails to make a payment. But borrowers often do not realize that making a payment on the old debt may restart the clock.(2)

For more, see F.T.C. Fines a Collector of Debt $2.5 Million.

For the Federal Trade Commission press release, see Under FTC Settlement, Debt Buyer Agrees to Pay $2.5 Million for Alleged Consumer Deception (Firm Also Will Notify Consumers with "Time-Barred" Debt That It Will Not Sue to Collect).

Go here for more on zombie debts.

(1) For some of the relevant court documents in this matter, see:

• Complaint for Civil Penalties, Injunctive and Other Relief,
• Consent Decree,
• Joint Motion for Entry of Consent Decree.

(2) For more from the FTC on zombie debts, see:

• Time-Barred Debts: Understanding Your Rights When It Comes to Old Debts,
• Tick-Tock, Tick-Tock: Time-Barred Debts: What’s that, and why should I care?,
• Watch what you're doing with time-barred debts.

Suit: Loan Servicers/Trustees Failed To Register With Nevada Regulator As Out-Of-State Debt Collectors, Resulting In Illegally-Conducted Foreclosures

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

• More than 20,000 Nevadans were foreclosed on by companies that are accused of doing business illegally in the state. That's according to a new class action lawsuit filed in Las Vegas. The class action lawsuit is against five companies hired by banks to collect debts and begin the eviction process. This lawsuit is one of the first of it's kind in the country.



• The suit alleges a number of foreclosure servicing firms failed to register as out of state collection agencies with the Nevada Financial Institutions Division. The suit was started by 16 Nevada homeowners who recently had their homes foreclosed.



• "These companies not being licensed and didn't have the ability to legally do the things that they did. Send notices out, foreclose on them, get them out of the house, move for eviction," attorney Shawn Christopher said.



• The lawsuit targets: Quality Loan Service, MTC Financial, Meridian Trust Deed Service, National Default Servicing and California Reconveyance company. Only one of those companies, Quality Loan Service, returned 8 News NOW's phone call Monday. They said they do not comment on pending litigation.

Source: I-Team: Nevada Homeowners File Class Action Lawsuit After Foreclosures.

NY AG Bangs Big Banksters, MERS With Suit Alleging Creation, Use Of Registry System Instrumental In Filing Deceptive, Bogus Foreclosure Court Filings

From the Office of the New York State Attorney General:

• Attorney General Eric T. Schneiderman [] filed a lawsuit against several of the nation’s largest banks charging that the creation and use of a private national mortgage electronic registry system known as MERS has resulted in a wide range of deceptive and fraudulent foreclosure filings in New York state and federal courts, harming homeowners and undermining the integrity of the judicial foreclosure process.



• The lawsuit asserts that employees and agents of Bank of America, J.P. Morgan Chase, and Wells Fargo, acting as "MERS certifying officers," have repeatedly submitted court documents containing false and misleading information that made it appear that the foreclosing party had the authority to bring a case when in fact it may not have. The lawsuit names JPMorgan Chase Bank, N.A., Bank of America, N.A., Wells Fargo Bank, N.A., as well as Virginia-based MERSCORP, Inc. and its subsidiary, Mortgage Electronic Registration Systems, Inc.



• The lawsuit further asserts that the MERS System has effectively eliminated homeowners' and the public's ability to track property transfers through the traditional public records system. Instead, this information is now stored only in a private database – which is plagued with inaccuracies and errors – over which MERS and its financial institution members exercise sole control. Additional defendants include BAC Home Loans Servicing, LP, Chase Home Finance LLC, EMC Mortgage Corporation, and Wells Fargo Home Mortgage, Inc.



• “The banks created the MERS system as an end-run around the property recording system, to facilitate the rapid securitization and sale of mortgages. Once the mortgages went sour, these same banks brought foreclosure proceedings en masse based on deceptive and fraudulent court submissions, seeking to take homes away from people with little regard for basic legal requirements or the rule of law,” said Attorney General Schneiderman.



• “Our action demonstrates that there is one set of rules for all – no matter how big or powerful the institution may be – and that those rules will be enforced vigorously. Only through real accountability for the illegal and deceptive conduct in the foreclosure crisis will there be justice for New York’s homeowners.”

For the NY AG press release, see A.G. Schneiderman Announces Major Lawsuit Against Nation's Largest Banks For Deceptive & Fraudulent Use Of Electronic Mortgage Registry (Complaint Charges Use Of MERS By Bank Of America, J.P. Morgan Chase, And Wells Fargo Resulted In Fraudulent Foreclosure Filings; Servicers And MERS Filed Improper Foreclosure Actions Where Authority To Sue Was Questionable; Schneiderman: MERS And Servicers Engaged In Deceptive and Fraudulent Practices That Harmed Homeowners And Undermined Judicial Foreclosure Process).

For the NY AG lawsuit, see People v. J.P. Morgan Chase Bank, N.A., et al.

Thanks to Bill Collins at Frontier Abstract, Rochester, NY for the heads-up on the story.

Illinois AG: F'closure Document Prep Sweatshop Utilized "Assembly Line Process" To Create Dubious Paperwork Used To Improperly Take People's Homes

In Chicago, Illinois, Bloomberg reports:

• Illinois Attorney General Lisa Madigan sued Nationwide Title Clearing Inc., a Florida company she claims caused the filing of faulty documents with county clerks. [...] Nationwide Title Clearing prepares documents for mortgage servicers to use against borrowers in default, foreclosure and bankruptcy, Madigan said. Among the documents are mortgage assignments used by lenders in foreclosures.



• NTC employees signed forms used in Illinois foreclosures as officers of the foreclosing financial institutions and not Nationwide, often without reading or verifying the documents they signed, Madigan said.



• “NTC creates documents through an assembly-line process,” Madigan said. “NTC signers typically have little or no role in the actual creation of documents that they sign.” Their sole role is to affix their signatures, she said.



• The complaint, which accuses the Palm Harbor, Florida-based company of unfair and deceptive acts, was filed [] in state court in Chicago.

For more, see Nationwide Title Clearing Sued by Illinois Over Foreclosure Documents.

See also, Courthouse News Service: Illinois A.G. Goes After Robo Signer.

For the Illinois Attorney General press release, see Madigan Files Suit Over Faulty Mortgage Assignments Filed With County Recorders (Attorney General Alleges Faulty Practices in Foreclosing on Homeowners in Crisis).

For the lawsuit, see People v. Nationwide Title Clearing, Inc.

Utah App. Court: Photocopy Of Promissory Note In Lieu Of Original OK In F'closure Where Borrower Fails To Establish Basis For Questioning Authenticity

Lexology reports:

• In a victory for lenders, a Utah appellate court has ruled that a photocopy of a note is ordinarily acceptable in court, and that a borrower who demands the original note must establish a basis for questioning the authenticity of the copy.



• In Howard v. PNC Mortgage, the Utah Court of Appeals rejected a plaintiff’s argument that PNC Mortgage should have been required to produce the original note—not just a photocopy—to support its claim that it is now the holder of the note.

For more, see Lender’s use of photocopied note ok’d by Utah court (may require subscription; if no subscription, TRY HERE; or GO HERE - then click appropriate link for the story).

For the ruling, see Howard v. PNC Mortgage, 2012 UT App 19 (Ut. App. January 20, 2012)

Failure To Give Pennsylvania Homeowner Notice Of Right To Have Face-To-Face Meeting With Lender Within 30 Days Sinks Subsequent Foreclosure Sale

The Pennsylvania Superior Court recently affirmed a trial court order setting aside a foreclosure sale where the foreclosing lender failed to satisfy certain requirements to provide notice to the homeowner.

In the trial court, the homeowner contended that the trial court lacked subject matter jurisdiction over the matter because the lender failed to comply with the notice requirements of the Homeowner's Emergency Mortgage Act, 35 P.S. §§ 1680.401c et seq. ("Act 91").

According to the appeals court:

• More specifically, Appellee [homeowner] maintained that the Act 91 notice she received from Appellant [foreclosing lender] failed to inform her that she had thirty days to have a face-to-face meeting with Appellant.
  
  After holding a hearing, the trial court agreed with Appellee that the Act 91 notice was deficient. The court issued an order setting aside the sheriff's sale and the judgment; the order also dismissed Appellant's complaint without prejudice.

For the reasons set forth in the three-judge Superior Court panel's ruling, the trial court's order was affirmed.

For the ruling, see Beneficial Consumer Discount Company v. Vukman, 2012 PA Super 18 (Pa. Super. January 30, 2012).

Missouri Homeowners Tire From Banksters' Sleazy Practices; Begin Mounting Challenges To State Foreclosure System

In St. Louis, Missouri, the St. Louis Post Dispatch reports:

• John Kevin Kennedy was an engineer at Anheuser Busch for 30 years. Then came the sale to InBev, and the big downsizing at the brewery left Kennedy out on the street along with much of his department.



• With no job, he asked his mortgage lender for a lower payment on his home in Barnhart. What happened next set in motion a lawsuit challenging the way foreclosures are done in Missouri. By raising questions about which lender actually owns the mortgages, the suit claims certain foreclosures weren't properly done and it asks the courts to give "hundreds, even thousands" of Missourians their foreclosed homes back.



• Kennedy's is part of a broader legal movement nationwide challenging the foreclosure process, which debtors say is slanted against them.

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• In Missouri, lenders can foreclose without a judge's order. Unless the homeowner files suit to stop it, the house can be sold at a foreclosure sale on the mortgage holder's word alone. People who can't pay their mortgages usually can't afford lawyers, so foreclosures almost always go unchallenged. In Illinois, court approval is required before a foreclosure.



• But Kennedy, 62, had something that most troubled homeowners don't - money in a 401(k) retirement plan. He used it to hire lawyer Greg White, who specializes in fighting foreclosures.



• White teamed up with three other law firms to file a lawsuit challenging the state's foreclosure system. They hope to convert the case into a class-action suit.

For more, see Suits challenge Missouri foreclosure law.

Colorado Lawmaker Moves To Tighten Up State Foreclosure Procedures, Minimize Sleazy Conduct From Banksters, Lawyer-Sweatshops

In Denver, Colorado, The Denver Post reports:

• A years-old practice allowing foreclosure attorneys simply to attest with a signature that a bank has the right to take someone's home rather than produce the actual mortgage documents is the target of new legislation.



• The bill, introduced last week by Rep. Beth McCann, D-Boulder, aims to ensure thousands of Colorado homeowners facing foreclosure each year know that whomever is trying to take their house is legally entitled to do so.



• The foreclosure process has come into question nationwide because banks and lenders for years have bought, sold and traded mortgages as securities, but rarely recorded those transfers in property records. As a result, homeowners are often left wondering how a bank they'd never done business with could possibly be foreclosing without paperwork proving they had that right.



• "To me it's the integrity of the process we're trying to protect," McCann said. "This bill prevents a lawyer from saying a bank can foreclose simply on their say-so. That's a huge presumption."

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• Currently, judges near-automatically approve the auctions during a process called a Rule 120 hearing. Their job is only to determine a homeowner is in default and that they're not currently serving in the military.



• Consumers once had the right to challenge a bank's standing to foreclose, thanks to a 1989 Colorado Supreme Court decision. But that disappeared following 2006 legislation that let lawyers proceed with a foreclosure based only on their signature rather than actual mortgage documents.



• Homeowners could still file a lawsuit to challenge a foreclosure, but most were already in too much of a financial bind to afford an attorney. If filed, the lawsuits might not yield a result until long after a house is auctioned.



• "They say people are in default anyway, so what's the big deal," McCann said of foreclosing lawyers. "But a homeowner is entitled to know it's all being done properly and legally."

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• With the 2006 change to state law — written largely by the attorneys who handle the highest volume of foreclosures in the state and quietly slipped into a broader piece of legislation — Colorado became a state in which it took little more than a lawyer's signature to take someone's home.

For more, see Colorado bill targets foreclosures based only on a lawyer's OK.

Federal Judge OKs Banksters' Sleazy, Illegal Conduct During F'closure Litigation Where Homeowners Fail To Immediately Raise Issues During Proceedings

In Greenbelt, Maryland, The Baltimore Sun reports:

• A class-action lawsuit over alleged foreclosure "robo-signing" was thrown out of federal court in Greenbelt last week when a judge ruled that the plaintiffs could have raised those complaints during their foreclosure cases.

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• The class-action suit was filed after a former paralegal at the defendant Shapiro & Burson, a law firm based in Virginia that has handled many Maryland foreclosure cases in recent years, complained to regulators and prosecutors, alleging that robo-signing there was routine.



• An attorney for Shapiro & Burson suggested that the ruling could be a blow for other suits seeking damages for alleged foreclosure misconduct. The decision by U.S. District Court Judge J. Frederick Motz said homeowners could have raised the issue during their foreclosure cases and thus are barred from bringing it up in a later suit.

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• The law firm of JR Howell & Associates, which represented the plaintiffs, alleged in the April suit that robo-signing at Shapiro & Burson meant the firm's legal fees and other charges were "fraudulently obtained" and improperly passed on to the homeowners.



• The homeowners argued that allegations of robo-signing at Shapiro & Burson weren't made until after their foreclosures were complete, so they couldn't have raised the issue earlier.



• But Motz dismissed that argument in his written decision Thursday, pointing to the so-called "doctrine of claims preclusion" in Maryland law. "The fact that plaintiffs may not have been aware of the existence of their claims during the litigation of the previous action does not render the doctrine of claims preclusion from being applicable 'where the means of obtaining such knowledge existed and the knowledge could have been obtained with ordinary diligence,'" Motz wrote, citing a 1978 case.(1)

For more, see Md. 'robo-signing' case thrown out of federal court (Complaints should have been raised in the earlier foreclosure cases, judge says).

(1) Singer v. Steven Kokes, Inc., 39 Md. App. 180, 384 A. 2d 463 (1978).