Owner Of Vacant, $1M Home In Foreclosure Says His Title Was Hijacked Thru Forgery; Current Occupant Says He Rented Premises, But Can't I.D. Who He Did Business With; Coral Gables Cops, City Attorney Left Befuddled

In Coral Gables, Florida, The Miami Herald reports:

• Police are investigating whether a family allegedly squatting in a million-dollar Coral Gables house forged a lease they turned over to city officials Wednesday.
  
  Meanwhile, the owners of the rambling four-bedroom house at 601 Sunset Dr. face a $500-a-day fine unless they secure the house and properly register the vacant house, said Craig Leen, the attorney for the city of Coral Gables.
  
  Since September, when police were called to the house by a tenant renting a room, city officials have suspected the family was squatting in the house. The house had been empty and in the midst of a foreclosure after the owners divorced five years ago. Owner Damian Echauri said his wife was given the majority of the house in a settlement and was supposed to sell it, but when she couldn’t, she stopped paying the mortgage.
  
  In November, Echauri said he discovered Robert Ramos, 33, his wife Ana Alvarez, 52, and Alvarez’s son, Jonathan, 27, living in the house when his son spotted an ad on Craigslist listing a room for rent.
  
  Echauri called police and confronted the family at the house. But police were unable to determine who rightfully belonged in the house and told Echauri to seek eviction.
  
  Frustrated and worried over spending money on a house that was already in foreclosure, Echauri said he didn’t know what to do. “I don’t want to evict people when I know they’re trespassers,” he said. “Why should I go to the expense?”
  
  But Leen said if Echauri comes to the city and proves the family is trespassing, the police can take action. “If he can show they have absolutely no right, no lease, he can come to the police,” Leen said.
  
  The house’s murky ownership is furthered complicated by a deed recorded with the clerk of court in March 2012 by a partnership, Prescott Rosche, indicating Echauri sold the house to the group. Echauri said his signature on the deed is forged.
  
  A spokeswoman for Chase, which paid the 2012 tax bill for $20,460.15, said Wednesday that bank records indicate Echauri is still the property owner. A foreclosure action has been started, she said, but has yet to conclude.
  
  When contacted by Code Enforcement Officer Michael Kattou Tuesday, the family living in the house vowed to produce a lease. But the document they turned over Wednesday to the city included signatures belonging to Echauri and his wife, Nadia Casamayor, that do not match those on notarized records, Leen said.
  
  The city assigned a Coral Gables detective to investigate the lease late Wednesday, said acting Police Chief Scott Masington. The family living in the house, who has insisted they were duped by a landlord they cannot name, told Kattou they planned to leave by the weekend, Leen said.

For the story, see Police are investigating possible fraud in squatters’ case in Coral Gables (The property owners face a $500-a-day fine from the city of Coral Gables).

WPB Woman Claims 'Adverse Possession' Defense After Being Collared By Cops On Grand Theft, Fraud Charges For Allegedly Hijacking Neighbor's Vacant Home In Foreclosure, Subsequently Pocketing $13K+ From Unwitting Renters Thru Craigslist Ad

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

• A West Palm Beach woman is accused of commandeering her neighbor’s empty and foreclosed-upon home, renting it through Craigslist and collecting more than $13,000 in rent before the owner discovered the ruse and called the cops.
  
  Nathalie Heil, 30, was booked into the Palm Beach County Jail on Friday. Facing charges of grand theft and fraud, she was released Saturday after posting $6,000 bond.
  
  But Heil said she believes she has ownership of the house, stating that she filed what’s called “adverse possession” papers. The arcane Florida law, created hundreds of years ago, states that if a person claiming adverse possession stays in a home for seven years, paying taxes and caring for the property, they can take permanent ownership.
  
  Andre De Palma Barbosa, the 23-year-old Brazilian now known as the “Boca Raton squatter,” used adverse possession to move into an empty foreclosed 7,000-square-foot mansion in Boca Raton in December.
  
  As for Heil, she said the owner of the property at 314 Vallette Way abandoned the home more than six years ago. She assumed that as soon as she filed her papers with the courts, the property was hers. “Legally, I thought it was right,” she told the Palm Beach Post. Heil said she’s received death threats since the story first ran on the Post’s website Tuesday afternoon. “I’m freaking out,” she said. “I have a full-time job and I’m a single mom.”
  
  West Palm Beach police were tipped off to the situation Friday morning, when they got a call from Kelly Keefner, who manages the 314 Vallette Way property for her father-in-law, Juan Cedeno. Keefner told police the home is in foreclosure, and for that reason she had not checked on the property in the last eight months. She said when she stopped by in late January, the place looked lived-in.
  
  Keefner returned to the home with her husband and met April Wehle, 24, and Talia Williams, 25, who said they had been renting the home for $1,500 a month since mid-June. The women said they found the place through a Craigslist ad placed by Heil, who lives next door at 312 Vallette Way.
  
  The women told police they’d paid a total $13,500 in rent by check to Heil and spent another $500 to make various repairs, according to Heil’s arrest report. The home sits south of downtown and just blocks south of the Mango Promenade historic district, tucked between S. Dixie Highway and S. Olive Ave. south of Okeechobee Boulevard.
  
  After confirming Cedeno’s ownership — the county property appraiser lists him as the owner of record since 2007 — police said they confronted Heil when she went to the home to collect rent. Heil told police she had gone to the county courthouse and “completed paperwork giving her possession of the residence.”
  
  Police said they found no such paperwork, and property records name Cedeno as the owner. After her arrest, Heil said she was told to “show up for court with the paperwork.”

For the story, see Cops say West Palm woman rented out neighbor’s foreclosed home, collected more than $13,000 in rent.

Cops, Local Prosecutor Finally Conclude That Case Of Mansion-Squatting, Adverse Possession-Claiming Crackpot Merits Trespassing Probe, Assist BofA In Reclaiming Possession Of $2.5M Vacant Foreclosure

In Boca Raton, Florida, WTVJ-TV Channel 6 reports:

• South Florida's infamous squatter is squatting no more. On Thursday police moved in to evict 23-year-old Andre Barbosa from a Boca Raton mansion – but said he was no longer there.
  
  Bank of America owns the foreclosed mansion, worth $2.5 million. Investigators said Barbosa used an obscure process called “adverse possession” to occupy the home. Bank of America sued him.
  
  Boca Raton police conducted a trespassing investigation on Thursday, to make sure that nobody was inside, and Barbosa was not.
  
  “From a police department's perspective, we needed a legal foundation to take some action,” Police Chief Dan Alexander said. “We were able to determine with the state attorney after extensive legal research that there was a basis for us to conduct an investigation.”
  
  Neighbors said it was around Christmastime when Barbosa forced his way into the home and started making it his own, with friends coming and going.

For the story, see Police Move in To Evict Squatter From Boca Raton Mansion, But Don't Find Him There (Andre Barbosa, 23, used "adverse possession" to occupy the home, investigators said).

Dilapidated Homes Sold By County Officials At Tax Foreclosure Sales Are Subsequently Being Demolished By Order Of Local City Officials, Leaving Unwitting Homebuyers Caught In Middle

In Jackson, Michigan, MLive reports:

• Terrence Hill had spent months working on a new home he thought he'd bought in a Jackson County tax foreclosure sale in September.
  
  He'd sunk $3,000 in the home on Maple Avenue — putting on a new roof, installing brand new carpeting and putting up new drywall. Just new windows would have completed the home, which he planned to rent out.
  
  On Friday, Jan., 18, Hill discovered the city had turned utilities off and claimed the home was on its demolition list. Just three days later, he headed over to the property, only to see a crane tearing down the home he'd worked on for four months. “I just couldn’t believe it,” he said. “I was shocked.”
  
  Hill isn't alone in his confusion.
  
  Homeowners who think they are helping the city tackle blight by purchasing foreclosed homes are finding themselves in a much different fight.
  
  Several homeowners who say they've bought houses in a Jackson County tax sale are seeing their new homes demolished, or scheduled to be knocked down.

***

• Although the properties have been purchased from the county, city officials say the structures on them are governed by city housing codes and state building codes.
  
  Buyers also only purchase the deed to a property at tax auctions, this allows the city to demolish them, even if the property is sold by the county, officials said.

For more, see Jackson residents upset over demolition of city homes purchased in county tax sale.

Contract For Deed Real Estate Deals: 1st Step On Road To Disaster For Wanna-Be Homebuyers?

From an op-ed column in the Minneapolis Star Tribune:

• A Robbinsdale woman faced foreclosure even though she had faithfully made payments. She had purchased her house under a contract-for-deed arrangement, but the seller went bankrupt and didn't pay his lender. So the woman lost her home, the payments she had made and the $25,000 she had put down on the property.
  
  That example -- and dozens of others across the metro area -- bring renewed power to the "buyer beware'' adage. And they demonstrate why more must be done to protect consumers from shady contract-for-deed real-estate deals.
  
  In a Star Tribune investigation published earlier this week, reporter Jeffrey Meitrodt tracked hundreds of questionable property transactions. In examining 1,330 deals over the past five years, he found that many of the homes were sold for highly inflated prices, with high interest rates and other terms that almost guaranteed that buyers would default. Hundreds of deals occurred without housing inspections that would have revealed code violations and safety hazards.
  
  Contract sales typically occur as private agreements with no bank, appraisals or lawyers involved. The seller acts as the bank by financing the sale and collecting payments. If the seller still has a mortgage on the property, then he or she must continue to make the payments.
  
  Traditional property transactions take months to complete and involve title searches, credit checks, truth-in-housing appraisals and inspections. But contract sales can be done with little or no oversight.
  
  In fairness, not all of these transactions are bad deals. Historically, they have been used between friends, relatives, neighbors, or longtime renters and landlords to help transfer home ownership. And the Greater Metropolitan Housing Corp. nonprofit has successfully used the process to help lower-income people successfully buy homes and stabilize struggling neighborhoods.
  
  Yet in recent years, these agreements have morphed into big business for some landlords and real-estate investors. In Hennepin and Ramsey counties, registered contract sales grew from 539 in 2007 to 841 in 2012 -- not including transactions that were never formally registered.
  
  Housing advocates call the deceptive contract deals yet another form of predatory lending that take advantage of lower-income, less-experienced buyers and renters. Ron Elwood, supervising attorney with the Minnesota Legal Services Advocacy Project, said that when the mortgage crisis prompted a government crackdown and tighter lending, some unscrupulous landlords and sellers moved into the contract-for-deed business.
  
  Elwood said some of his clients thought they were signing new rental forms and learned later that they were contracts used to help the building owners "get around'' city housing code requirements for rental properties.

For the op-ed column, see Editorial: Risky housing deals need more scrutiny (Too many contract-for-deed property buyers are victimized).

See also Contract for deed can be house of horror for buyers (High-risk housing often is sold on such contracts, with little or no oversight).

Antitrust Feds Score 27th Guilty Plea In Ongoing Probe Targeting R/E Operators Running N. California Foreclosure Sale Bid-Rigging Rackets

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

• A Northern California real estate investor has agreed to plead guilty for his role in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California, the Department of Justice announced.
  
  Felony charges were filed today in the U.S. District Court for the Northern District of California in San Francisco against Gilbert Chung of Burlingame, Calif. Chung is the 27th individual to plead guilty or agree to plead guilty as a result of the department’s ongoing antitrust investigations into bid rigging and fraud at public real estate foreclosure auctions in Northern California.
  
  According to court documents, Chung conspired with others not to bid against one another, but instead to designate a winning bidder to obtain selected properties at public real estate foreclosure auctions in San Francisco and San Mateo counties, Calif. Chung was also charged with conspiring to use the mail to carry out schemes to fraudulently acquire title to selected properties sold at public auctions, to make and receive payoffs and to divert to co-conspirators money that would have otherwise gone to mortgage holders and others.
  
  The department said Chung conspired with others to rig bids and commit mail fraud at public real estate foreclosure auctions in San Francisco and San Mateo counties beginning as early as January 2010 and continuing until about December 2010.
  
  “The conspirators went to great lengths to suppress competition and prices at these foreclosure auctions,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The division will continue to vigorously enforce the antitrust laws and to prosecute those who violate them at the expense of distressed homeowners.”
  
  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 San Francisco and San Mateo County public foreclosure auctions at non-competitive 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.
  
  “Today’s charges are another example of our resolve to bring to justice those who engaged in fraudulent bid rigging and anticompetitive practices at foreclosure auctions,” said FBI Special Agent in Charge David J. Johnson of the San Francisco Field Office. “We continue our partnership with the Antitrust Division in aggressively pursuing individuals who participate in these criminal acts.”
  
  A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. 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 $1 million. A 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 charges today are the latest 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.
  
  These investigations are being conducted by the Antitrust Division’s San Francisco 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.

For the Justice Department press release, see Northern California Real Estate Investor Agrees to Plead Guilty to Bid Rigging at Public Foreclosure Auctions (Investigation Has Yielded 27 Plea Agreements to Date).

Ex-County Treasurer Cops Guilty Plea, Forfeits Entire Public Pension Over Role In Bid-Rigging Racket Involving Pay-To-Pay Scheme Rewarding Political Contributors With High-Rate Liens, Preferred Seating At Tax Auctions

From the Office of the U.S. Attorney (East St. Louis, Illinois):

• The former treasurer of Madison County, Illinois, pled guilty in US District Court on February 5, 2013, to violating the Sherman Antitrust Act, the United States Attorney for the Southern District of Illinois [...] announced []. Fred Bathon, 58, was convicted of structuring Madison County property tax sales in a way that increased prices and rewarded campaign contributors.
  
  The charges allege that at Illinois tax lien auctions, investors bid to purchase tax lien certificates issued against delinquent tax payers. Investors are supposed to compete to purchase these tax liens by bidding on the interest rate the property owner will be required to pay prior to redeeming the tax lien filed on the owner's property.
  
  The bid opens at no more than the statutory maximum of 18% and through a competitive bidding process can be driven as low as 0 percent. The bidder offering the least penalty percentage rate, i.e., the bidder who is willing to allow the owner to redeem his property for the smallest penalty, is allowed to purchase the tax lien.
  
  As such, competitive bidding benefits financially distressed homeowners by reducing the amount of money that they have to pay to save their home from foreclosure; however, that same system reduces the profit made by tax buyers. Tax buyers prefer to receive high interest rates, which correspond to higher profits.
  
  It was revealed in Court today that for the tax sales conducted in 2005-2008, Bathon structured the tax sales in a way that eliminated competitive bidding and allowed the tax buyers to engage in price fixing by only bidding the statutory maximum interest rate of 18%.
  
  In addition to awarding properties at non-competitive interest rates, Bathon also used a seating chart to ensure that his largest campaign contributors were recognized by the auctioneer as the winning bidder.
  
  By 2007 and 2008, the bid rigging and price fixing was so pervasive that distressed homeowners were charged the statutory maximum interest rate on nearly every property tax lien sold. During the tax auction occurring November 14-15, 2007, 2,549 out of 2,574 property tax liens were awarded to bidders for the statutory maximum interest rate of 18%, which represented 99.03% of the property tax liens auctioned. During the tax auction occurring November 13-14, 2008, 2,290 out of 2,364 property tax liens were awarded to bidders for the statutory maximum interest rate of 18%, which represented 96.86% of the property tax liens auctioned.
  
  US Attorney Wigginton said, “This crime exploited financially-distressed homeowners who were at risk of losing their homes for the financial gain of political contributors. This type of pay-to-play politics is intolerable and will be aggressively prosecuted. It is time that those involved in politics learn that public office is a public trust that should never be manipulated to reward friends and supporters. I want to make it clear that not only is this particular investigation far from finished, but that I will continue to investigate violators wherever they are found. Note that today’s charge is a charge of conspiracy. By its very nature, conspiracy involves more than one person.”
  
  A violation of the Sherman Antitrust Act is punishable by up to 10 years imprisonment and a $1,000,000 fine. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims if either amount is greater than the statutory maximum. However, the United States Sentencing Guidelines must be applied to the case and considered by the Court during sentencing. Sentencing has been scheduled for May 17, 2013.
  
  Under Illinois law, Bathon will also forfeit his entire public pension as a result of his conviction. The Illinois Pension Code provides that “[n]one of the benefits herein provided for shall be paid to any person who is convicted of any felony relating to or arising out of or in connection with his or her service as a member.” This provision of Illinois law is oftentimes referred to as the “Ryan Rule,” following the Illinois Supreme Court’s decision in Ryan v. Bd. of Trustees of Gen. Assembly Ret. Sys., 236 Ill. 2d 315, 924 N.E.2d 970 (2010), which determined former Governor George Ryan forfeited all of his public pension benefits following his conviction on federal corruption charges. The state pension forfeiture provision reaches all public pension benefits, including those earned while serving in public positions with no connection or nexus to the federal conviction.

For the U.S. Attorney press release, see Pay To Play: Former Madison County Treasurer Guilty Of Structuring Property Tax Sales To Reward Campaign Contributors.

Massachusetts AG Tags Developer In Suit Alleging It Pocketed $200K+ In Buyer Deposits, Then Failed To Deliver Homes Or Return Downpayments

In Boston, Massachusetts, the Boston Business Journal reports:

• A Foxborough real estate developer who fell on hard times after the economic downturn has been sued for allegedly taking — and then refusing to return — more than $200,000 in down payments for new homes in Sharon that were never provided, according to Attorney General Martha Coakley.
  
  The AG's office has obtained a restraining order in Suffolk Superior Court against Michael Intoccia and his companies including Bella Estates Realty Trust, MTI Realty and Intoccia Builders Corp., prohibiting them from accepting future deposits for new homes unless the deposits are put into escrow.
  
  The order also freezes assets enough to pay a possible court judgment, and requires the defendants to disclose records that might reveal the existence of other consumers who paid deposits but never received a new home.
  
  The lawsuit seeks more than $200,000 in restitution for five homebuyers who paid for single-family homes in the Bella Estates development in Sharon. Coakley’s office is also seeking statutory penalties and a further injunction preventing the defendants from taking unsecured deposits.
  
  Intoccia operates a development business in Norfolk County through a network of companies that were involved in the planning, marketing, and construction of the Bella Estates development that was to consist of 29 single-family house lots, according to the complaint. The defendants allegedly solicited buyers and took deposits of up to $55,300 per residence, Coakley said.

***

• According to the AG's complaint, Intoccia and his companies also allegedly made false promises to promptly build homes when they knew that construction was prevented by permitting issues, and in some cases took multiple deposits for the same lot. Homebuyers suffered additional expenses for moving, temporary housing, appliances and fixtures for houses that were never built.
  
  The defendants allegedly held consumers’ deposits long after the final deadlines for closing passed and in some cases more than two years after the deposit was paid. The complaint alleges that the defendants allowed many lots in Bella Estates to fall into foreclosure.

For the story, see Foxborough real estate developer Michael Intoccia sued by AG.

3rd Circuit: Not Necessary To File TILA Lawsuit Within Three Years To Exercise Loan Rescission Rights; Firing Off Letter To Mortgage Holder Invoking Claims Enough To Satisfy Statute

Forbes reports:

• A recent decision by the Third Circuit Court of Appeals gives borrowers an indefinite period to rescind their home-equity loans, complicating life for lenders and setting up a conflict that may have to be resolved at the Supreme Court.
  
  Home buyers normally have three days to rescind a loan, and after that mortgages to purchase a property can’t be reversed. But federal law allows other types of loans to be rescinded for up to three years if the borrower can prove violations of the Truth in Lending Act, such as an inaccurate interest rate or undisclosed finance charges. If they prevail — and have enough cash to repay the loan principal — borrowers can get a refund of their interest and fees.
  
  Most courts, including the Ninth Circuit Court of Appeals, have held that borrowers who want to do this also must sue the bank within the three-year deadline.(1)
  
  But the Third Circuit, in Sherzer vs. Homestar, ruled that borrowers only have to send a letter of notice to the bank. They can sue whenever they want after that, leaving a potential cloud on the lender’s claim against the property that can only be resolved if the lender gets a declaratory judgment denying the recission.
  
  The ruling released Tuesday follows a similar decision by the Fourth Circuit(2) and gives borrowers another tactic for delaying lenders that want to seize the collateral backing their loan.
  
  “If you’re having trouble making payments and worried about foreclosure, you could fire off letter to the lender saying you believe there was a material TILA violation,” said Martin Bryce Jr., a partner with Ballard Spahr in Philadelphia. “Then you get to sit back and hold that in your pocket.”

***

• Under the reasoning adopted by the Third and Fourth Circuits (based in Philadelphia and Richmond, respectively) borrowers don’t need to worry about whether they have the cash to pay off the loan, however. The smartest course is to fire off a letter demanding recission within three years and keep it on hand in case they get in trouble. Then it becomes a bargaining chip with a lender who’s already facing a certain loss on the loan. The question becomes how much more the lender wants to spend on legal fees to gain clear title to the collateral.
  
  Other borrowers, of course, pay the price. Look for this case, or one like it, to percolate up to the Supreme Court.

For more, see Court Decision Gives Lenders A Headache, Borrowers An Ace In The Hole.

For the ruling, see Sherzer v. Homestar Mortgage Services, No. 11-4254 (3d Cir. February 5, 2013).

(1) See Rosenfield v. HSBC Bank, USA, 681 F.3d 1172, 1188 (10th Cir. 2012); Yamamoto v. Bank of N.Y., 329 F.3d 1167, 1172 (9th Cir. 2003); Large v. Conseco Fin. Servicing Corp., 292 F.3d 49, 54–55 (1st Cir. 2002).

(2) Gilbert v. Residential Funding LLC, 678 F.3d 271, 277–78 (4th Cir. 2012). See also Williams v. Homestake Mortgage Co., 968 F.2d 1137, 1139–40 (11th Cir. 1992) (explaining that rescission occurs automatically upon notice).

Note: The binding effect of these federal appeals court rulings are limited to all lower Federal courts located in the states within the appeals court's jurisdiction, but may be considered for its persuasive effect by other courts. To find out which Federal appeals court has jurisdiction over appeals from the lower Federal courts in your state, you can check the U.S. Circuit Court of Appeals Map.

Banksters Score Another Big Win As Florida Supremes Say Current Procedural Rules Allow Foreclosure Mills To Use Voluntary Dismissals To Dodge Accountability When Bagged By Homeowners For Using Fraudulent Docs In Foreclosure Actions

In Tallahassee, Florida, Reuters reports:

• Florida's highest court has ruled a homeowner cannot re-open a voluntarily dismissed foreclosure case despite allegations that the bank falsified documents, giving a win to banks in a closely watched ruling that could have affected thousands of cases in a state hit hard by the foreclosure crisis.
  
  The Florida Supreme Court had been asked to decide whether banks accused of using fraudulent documents to file foreclosure lawsuits could dismiss the cases, and then later re-file them with different paperwork.
  
  The case involves a foreclosure brought against homeowner Roman Pino in 2008 by Bank of New York Mellon Corp , the trustee for the security that owned his loan. The mortgage was serviced by Bank of America .
  
  Pino asked the court to dismiss the case, arguing that the documents filed by the bank and its attorneys had been fraudulently backdated. The case stems from the robo-signing scandal, in which banks and law firms allegedly signed off on foreclosure documents without verifying their accuracy.
  
  The documents in Pino's case had been signed by an employee of the now-defunct David Stern law firm, one of the biggest foreclosure law firms in the country.
  
  Before the court could rule, BNY Mellon voluntarily dismissed the case. The foreclosure was later re-filed, using different documents. Pino's lawyer asked the court to re-open the first case, saying the bank should not have been allowed to bring the same case when it committed fraud the first time around.
  
  Before the case reached the Florida Supreme Court, Pino and BNY Mellon reached a confidential settlement. The high court decided to hear the case anyway to address what it said was a key policy question that has vexed courts across the state - whether or not voluntary dismissals can be reversed when there is an allegation of fraud.
  
  On Thursday, the Florida Supreme Court decided that it could not, unless the plaintiff - in this case, the bank - had obtained some kind of affirmative relief, and the dismissal had kept the fraud from being remedied by the court.
  
  However, the court acknowledged the "multiple abuses that can occur from fraudulent pleadings," and asked Florida's bar association to review civil litigation rules to determine if changes should be made to address the issue.
  
  A lawyer for Pino, Amanda Lundergan of the Ice Firm, said she believed the ruling "will have the unintended effect of encouraging underhanded tactics" by plaintiffs in foreclosure and other cases.
  
  A spokesman for BNY Mellon, Kevin Heine, declined to comment. Bank of America did not immediately return a request for comment Friday evening.
  
  The case has been closely watched by banks and homeowners. An unfavorable ruling for the banks could have exposed them to severe financial liability in the state.

Source: Florida court finds for bank in major foreclosure case.

For the ruling, see Pino v. Bank of New York Mellon, No. SC11-697 (February 7, 2013).

Bank's Lien Wiped Out In Tax F'closure; 'Lack Of Notice' Claim Kiboshed When It Failed To Include Its Address On Recorded Docs; Left Holding The Bag Despite Assessing County's Failure To Review Court File In Bank's Earlier-Dismissed F'closure Action For Current Mailing Address

Wisconsin Bar News reports:

• A bank’s failure to list its address on mortgage documents filed with the register of deeds means a default foreclosure judgment will stand.
  
  In Juneau County v. Associated Bank, N.A., 2012AP1304 (Jan. 31, 2013), a state appeals court ruled that Juneau County was not required to “look beyond the record in the office of the register of deeds” to find the bank’s address for notice purposes.
  
  That is, a three-judge panel ruled that Juneau County complied with Wis. Stat. section 75.521(3), which sets out the notice requirements counties must follow to commence tax lien foreclosure proceedings against property owners and secured creditors.
  
  Sebastian Madej used Associated Bank to finance the purchase of two parcels of land in Necedah, located in Juneau County. The bank recorded its mortgages with the county register of deeds, but neither mortgage listed an address for the bank.
  
  In subsequent years, Madej failed to pay property taxes. In 2008, the bank mailed a tax payment to satisfy Madej’s tax debt for 2003 and 2004 to the county treasurer.
  
  The cover letter accompanying the check listed the bank’s address in Green Bay. In 2009, Madej defaulted on the notes secured by the mortgages.
  
  The bank filed foreclosure actions, and recorded a lis pendens for each lot. The recorded warnings did not list an address for the bank. However, they listed the case numbers for the foreclosure actions, and the complaints listed the bank’s address.
  
  In 2010, the bank obtained default judgments of foreclosure on Madej’s property, and sent payments to the county treasurer for some delinquent tax years, but not all. The treasurer sent tax receipts to the bank’s address in Green Bay.
  
  Before the sheriff’s sale however, the bank settled with Madej and moved to vacate the foreclosure judgments. It also recorded discharges of lis pendens.
  
  Soon after, the county commenced tax lien foreclosure proceedings against 94 parcels, including the Madej parcels, under section 75.521. The county retained a title insurance company to ascertain the names of owners and secured creditors for notice purposes.
  
  It listed Associated Bank, a secured creditor, as having an “unknown address” because the bank’s address could not be found in recorded documents with the register of deeds. The county published a notice of affected parcels in the official newspaper.
  
  Associated Bank did not appear or file an answer to the county’s foreclosure action against the Madej properties, and default judgments of foreclosure were entered.
  
  The bank moved to vacate the judgments, arguing that the county did not comply with notice requirements of section 75.521(3). But the appeals court panel affirmed the circuit court’s ruling that Juneau County met the notice requirements.
  
  “[T]he County was not required to expand its search for the Bank’s address beyond what was ascertainable directly from the records relating to the two affected lots located at the office of the register of deeds,” wrote Judge JoAnne Kloppenburg.

Source: County Complied with Notice Requirement for Tax Lien Foreclosure.

For the court ruling, see Juneau County v. Associated Bank, N.A., Appeal No. 2012AP1304 (Wi. App. January 31, 2013).

Maryland Lawmakers Smack Shameless Colleague Over His Failed Efforts To Pass Law That Would Have Enabled Him To Reinstate R/E License Lost When Found Liable For Screwing Over Homeowners In Foreclosure

In Annapolis, Maryland, The Washington Post reports:

• Maryland’s House of Delegates on Tuesday voted overwhelmingly to reprimand one of its own for working to insert language in a bill last year that would have directly benefited the lawmaker’s business as a real estate broker.
  
  Anne Arundel County Del. Tony McConkey “drafted, offered, lobbied and voted for” a provision that would have allowed him to reinstate his Maryland real-estate license while he still owes one of the state’s largest fines on record for having preyed on homeowners in foreclosure, according to a legislative ethics report released Monday.
  
  McConkey is still a practicing real-estate broker in the District. His maneuvering on the bill, first reported last year by The Washington Post, also would have cut interest charges and processing fees that could have saved McConkey and a small handful of other delinquent Maryland brokers tens of thousands of dollars.
  
  The House voted 127-3 to adopt a resolution of reprimand, an admonishment just one step below the censure last year of veteran Prince George’s legislator Ulysses Currie for his failure to disclose outside consulting payments that became the subject of a federal investigation.
  
  Like Currie (D) before him, McConkey was asked to make a public apology. But unlike Currie’s somber tone, McConkey’s on Tuesday took on a combative one that colleagues on both sides of the aisle derided as something less than repentant.
  
  “I do humbly apologize, with great regret, that the ethics committee found that I acted improperly,” McConkey, said, “Not to provide an excuse, but if the body would indulge me, two minutes, just to provide an explanation...”
  
  McConkey, who had admitted “lobbying hard” for the bill to lawmakers investigating his actions, then went on to claim that colleagues had approved the measure with little interference from him. “People thought it was a good amendment,” he said. McConkey also suggested the legislature’s chief ethics adviser had cleared him of any wrongdoing.
  
  McConkey’s defense of what the legislative ethics committee had ruled indefensible left many lawmakers slack-jawed and prompted Baltimore Del. Shawn Tarrant (D) to walk off the House floor while McConkey was still speaking. “Does that sound like an apology?” he asked a colleague before getting up from his chair.
  
  The remarks also drew a terse rebuttal from Del. Brian K. McHale (D-Baltimore), co-chair of the ethics committee.
  
  “I feel compelled to address that,” McHale said. “Anyone with a clear mind… would have clearly known…that it was an act of misconduct to have presented that amendment and to have lobbied both houses to have it passed ... I would not want anyone to anyhow misinterpret the advice that the ethics counsel gave.”
  
  Three Republicans voted against the reprimand, including Del. Don Dwyer (R-Anne Arundel). Dwyer was the only lawmaker to speak on the resolution. He dryly said he was “honored that we all care so much about our oath that we’re going to do this to our fellow member.”
  
  Afterward Dwyer said he was not defending McConkey but voted no “to point out the hypocrisy ... We have lawyers who regularly pass legislation in their name, that they financially benefit from. It’s hypocrisy to do this selectively when we ought to be calling people out on a regular basis.”
  
  The other two no votes were Del. Glen Glass (R-Cecil) and Del. Neil Parrott (R-Washington). An aide to Glass said he felt there was not enough information to vote yes. Parrott did not immediately return a call seeking comment.
  
  Speaking to a reporter afterward, McConkey appeared bewildered at the House’s displeasure, and questioned the process by which he was investigated by colleagues. “They’re very secretive. It’s like the college of cardinals,” he said.
  
  In 2010, McConkey was ordered to pay $75,000 for what an administrative law judge called “fraudulent and unethical” behavior in real estate transactions. In one instance, the state found that McConkey promised to help a woman keep her home, then didn’t return her calls, bought her property in foreclosure and sought to evict her.
  
  Under the measure inserted into the bill last year by McConkey, he and others could have entered long-term payment plans to replenish a state fund used to compensate consumers who suffer financial losses as a result of actions by Maryland real estate professionals. Three of McConkey’s clients were each paid the maximum $25,000 from the fund,(1) making his debt to the state fund the largest of any real estate licensee in the five years preceding the 2010 decision.
  
  At the time McConkey sought to pass the measure last year, the Maryland Real Estate Commission said it had no evidence McConkey had paid any of the balance due.
  
  Under an agreement with the state, his license to sell homes in Maryland was suspended for one year. But commission officials said he would need to pay the entire amount due before seeking reinstatement of his license.
  
  McConkey’s measure would have halved the 12 percent interest rate on his debt to the state, and eliminated another 16-percent charge for processing the fee. It also would have allowed McConkey to regain his license if he began a payment plan.
  
  The measure was tucked into a bill that lawmakers said had to pass. Without it, the Real Estate Commission, which licenses the state’s 41,000 real estate brokers and other industry professionals, would have ceased to exist.
  
  Sen. Edward R. Reilly (R-Anne Arundel) filed the complaint last April after he said McConkey cursed at him in a heated exchange urging him to support the measure.
  
  Reilly said he took no pleasure in the result.
  
  “I’m never pleased with this kind of thing. This is a black mark on the entire General Assembly. The public has a poor attitude about elected officials in general, and this just supports the stereotype.”(2)

Source: Md. lawmaker reprimanded for bill that would have helped his real-estate practice.

(1) The Maryland Real Estate Commission Guaranty Fund is a special fund that, with limitations, compensates victims of ripoffs committed by Maryland-licensed real estate professionals..

(2) For more on McConkey, the reportedly twice-suspended real estate agent, once-disbarred lawyer, sale leaseback peddler and current member of the Maryland state legislature, see:

• Lawmaker/Sale-Leaseback Peddler Slips Provision Into Pending Law Enabling Him To Recover R/E License w/out 1st Fully Paying Off Damages From Ripoffs,
  ........................................
• MD Lawmaker Takes 1-Year R/E License Loss To Resolve Claims Arising From Running Sale Leaseback Racket; Victims Seek Recovery From State Guaranty Fund,
  ....................................
• Maryland Lawmaker Accused In Equity Stripping Foreclosure Rescue Scam Tells Jury He Was "Doing The Lord's Work",
  ........................
• Maryland Lawmaker To Cough Up $109K For Violating State Law Regulating Sale Leaseback Foreclosure Rescue Scams ("You have to be remarkably self-centered - virtually delusional - to see a $109,000 judgment as a vindication," the victim's attorney Michael Morin reportedly said in response to McConkey's apparent victory declaration in this case, according to an article in the Capital Gazette),
  ......................
• Maryland Lawmaker Accused Of Scamming Homeowner In Foreclosure Dodges Bullet As Unfavorable Jury Verdict Limits Liability To $11K,
  .......................
• Maryland State Lawmaker's Bankruptcy Filing Stalls Completion Of Sale Leaseback, Foreclosure Rescue Court Case.

Feds Tag Major Securities Rating Service For Disregarding Its Own Standards When Giving High Grades To Crappy Mortgage Bonds That Eventually Imploded, Leaving Unwitting Investors Holding The Bag

The Wall Street Journal reports:

• The Justice Department sued Standard & Poor's Ratings Services late Monday, alleging the firm ignored its own standards to rate mortgage bonds that imploded in the financial crisis and cost investors billions.
  
  The civil charges by U.S. Attorney General Eric Holder against the New York company, one of the bond-rating industry's three giants, are the first federal enforcement action against a credit-rating firm over the crisis. Several state attorneys general are likely to join.
  
  S&P said in a statement earlier Monday that the government suit would be "entirely without factual or legal merit," and denied wrongdoing.
  
  After The Wall Street Journal reported Monday afternoon that the government intended to launch the civil case, S&P confirmed the expected lawsuit and said the rating firm was being punished unfairly by the U.S. government for "failing to predict" the housing meltdown or financial crisis.
  
  The two sides have discussed a possible settlement for about four months, according to people close to the negotiations, but S&P balked over concerns that a deal could sink the company.
  
  The government was seeking penalties of more than $1 billion, another person close to the talks said, which would be the biggest sanction imposed on a firm related for its actions in the crisis.
  
  S&P officials also were rattled that the government was pushing the company to admit wrongdoing that could leave it more vulnerable to pending or new lawsuits by investors.

For more, see U.S. Sues S&P Over Ratings (Justice Department Says Endorsements of Risky Mortgage Bonds Fueled Crisis).

For the lawsuit, see U.S. v. McGraw-Hill Companies, Inc., et al.

Maine Supremes Smack Title Insurer For Stiffing Policy-Holding Homeowner On Its Duty To Defend Against Neighbor's Title Challenge Relating To Alleged 'View' Easement

From Justia.com US Law:

• [Homeowner] purchased title insurance for a condominium unit she had recently purchased. [Homeowner]'s neighbor subsequently initiated a lawsuit against [Homeowner] alleging that [Homeowner]'s property was subject to a view easement.
  
  [Homeowner] tendered the complaint to her title insurance company (Insurer) requesting a defense pursuant to her title insurance policy. Commonwealth denied [Homeowner]'s request based on certain exclusions in the policy.
  
  [Homeowner] sued Insurer alleging a breach of contract and requesting a declaratory judgment that Insurer had a duty to defend [Homeowner] against her neighbor's complaint. The superior court granted Insurer's motion for summary judgment, finding that the policy specifically excluded the view easement from coverage.
  
  The Supreme Court vacated the judgment, holding that due to the broad nature of the duty to defend and the law's requirement that insurance-policy interpretation be focused on the insured, Insurer had a duty to defend [Homeowner] in the underlying litigation.

Source: Justia.com Opinion Summary - Cox v. Commonwealth Land Title Ins. Co.

Fro the ruling, see Cox v. Commonwealth Land Title Ins. Co.

Florida Bar Seeks Discipline Against Ex-King Of Now-Defunct Foreclosure Mill

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

• The Florida Bar is seeking disciplinary action against Florida foreclosure baron David J. Stern, whose massive law firm collapsed in 2011 amid allegations that it mishandled the cases of the nation’s largest mortgage holders by filing forged and fraudulent court documents.
  
  Grievance committees found probable cause to pursue punishment in 17 cases stemming from formal complaints made by homeowners, defense attorneys, judges and a bank representative.
  
  It’s the first attempt by the Bar to hold Stern accountable for actions that occurred at his so-called “foreclosure mill,” which grew quickly following the real estate crash to more than 1,500 employees and more than 140,00 cases statewide. Ten probable cause findings were approved Jan. 25 with seven more following on Friday.
  
  Stern’s company closed in March 2011 after losing most of its clients, including federal mortgage backers Fannie Mae and Freddie Mac, as concerns about robo-signing hit lenders and law firms nationwide.
  
  The allegations against Stern where probable cause was found include notary fraud, backdating documents, misleading the court, failing to appear before the Fifth District Court of Appeal, failure of his attorneys to appear at hearings, and the inability of a Michigan-based bank to get clear title to a property because a lawsuit notice was never withdrawn from official records.

For more, see Florida Bar pursues discipline against foreclosure mill boss David J. Stern.

FTC Issues New Report On Zombie Debt Buyers, Their Structure & Practices

From The Consumerist:

• In spite of the many rules imposed on the debt collection industry, it still generates, by far, the largest number of complaints to the Federal Trade Commission each year. That’s why the agency recently completed a lengthy investigation into debt-buyers and why they do such a bad job.
  
  Specifically, the FTC wanted to know why debt-buyers, the companies that snatch up old debt from other companies for pennies on the dollar, seem to constantly be contacting the wrong people and/or using incorrect information about the debt.

For more, see 8 Things We Learned From FTC Report On Debt-Buyers.

See also New FTC Report Highlights Problems in the Collection of Purchased Debt, Consistent with Legal Aid Client’s Experience.

From the Federal Trade Commission, see The Structure and Practices of the Debt Buying Industry:

• 50-page report plus tables and appendices,
• Press release.

Florida Lawyer Gets Bar Boot For Role In Nationwide Loan Modification, Foreclosure Defense Racket

In Fort Lauderdale, Florida, the South Florida Business Journal reports:

• Fort Lauderdale attorney William Timothy O’Toole was permanently disbarred recently as part of the Florida Bar and Florida Supreme Court’s attorney discipline actions.
  
  In 2011, the Bar said it had received 20 complaints about O’Toole. In a petition for emergency suspension at the time, O’Toole was accused of allowing non-lawyers to improperly solicit clients on his behalf for loan modifications and foreclosure defense on a nationwide basis, despite the fact he can only practice law in Florida.
  
  He was alleged to have been splitting fees with non-lawyers, a violation of Bar rules. The Bar announced O’Toole’s disbarment in a monthly release that included discipline actions for five other attorneys in Florida in December and January.
  
  O’Toole’s permanent disbarment took effect on a Jan. 24 court order. He was found in contempt for failing to comply with a May 22 disbarment order, that might have allowed his reinstatement at some point if he had complied with conditions of the order. But the Bar said in a news release that O’Toole failed to comply with providing a sworn affidavit with names of people who had received a copy of his disbarment order.

Source: Fort Lauderdale foreclosure attorney permanently disbarred.

Career Lowlife Gets 12+ Years For Role In Effort To Swipe Cape Cod Man's $2.8M+ Waterfront Property

From the Office of the U.S. Attorney (Boston, Massachusetts):

• A New York man was sentenced [] in connection with a scheme to defraud a Massachusetts man of his Hyannis waterfront property.
  
  Michael Howard Clott, aka Michael Howard, 60, was sentenced [...] to 152 months, followed by 36 months of supervised release, forfeiture of $1,269,168 and ordered to pay $1,425 in restitution. In November 2012, Clott pleaded guilty to three counts of mail fraud and three counts of wire fraud.
  
  From December 2009 through April 2010, Clott spent several months on Cape Cod engaged in a scheme to defraud a Massachusetts man of a property he valued at more than $2.8 million.
  
  During this period Clott was a fugitive from a federal criminal case against him in New York. Clott used the alias “Michael Howard,” and represented to others that he was an attorney and financial executive who specialized in purchasing, repairing and marketing bank-owned real estate when, in fact, Clott was none of those things.
  
  Clott, however, persuaded a local real estate broker to sell a client’s property for half the asking price, then give the sale proceeds to Clott who would use his purported financial expertise to generate an after-tax benefit for the client equivalent to the client’s asking price.
  
  Instead of using the proceeds for the client’s benefit, Clott manipulated others to unwittingly assist in negotiating the proceeds check to enable him to deposit the funds in an account for Clott’s personal benefit. However, Clott’s scheme was discovered and the funds were secured before Clott could further disburse or conceal them.
  
  During the past 30 years, Clott has either been engaged in significant fraud schemes, or been serving time in prison for those schemes.
  
  Most recently, Clott was sentenced by the Southern District of New York to 259 months in prison which he will serve concurrent to his sentence in the District of Massachusetts.

For the U.S. Attorney press release, see New York Man Sentenced for Cape Cod Property Fraud Scheme.

Foreclosed Homeowner Jailed On $1.5M Bond For Allegedly Torching Former Home In Blaze That Severely Injured First Responder

In Stuart, Florida, TC Palm reports:

• A judge Friday refused to lower the $1.5 million bond that's holding a Lake Park man accused of torching a home he lost to foreclosure and critically injuring a firefighter who fought the blaze.
  
  Joseph Edward Haas, 47, remained at the Martin County jail after a brief appearance in court to face charges of arson, grand theft and arson resulting in injury. "I didn't burn the house down intentionally," Haas said Thursday in handcuffs as Martin County sheriff's deputies took him into custody.
  
  Investigators say on Dec. 27, Haas went to his former home at 1151 S.W. Blue Water Way, doused it with gasoline and set it on fire. His motive, authorities have said, was to prevent anyone else from living in the western Martin County home he built that was taken by the bank in a foreclosure action.
  
  The blaze severely burned Martin County firefighter Jahwann McIntyre, who remains hospitalized, and injured two other firefighters.
  
  Chief Assistant State Prosecutor Tom Bakkedahl on Friday said given the extent of McIntyre's injuries, Haas could have faced a murder charge instead of arson. "But for the heroic efforts of two of this young man's co-workers, he was probably seconds away from losing his life and this guy (Haas) would be facing the death penalty today," Bakkedahl said. "That's how severe this case is, and we'll go forward from there."
  
  Haas' public defender on Friday argued that his client's bond was "excessive," but a judge declined to lower the amount.
  
  In court, Haas said he has lived in Martin County for nine years, but resides in Lake Park. He said he is unemployed, and his only assets are the $2.20 in his bank account and his Ford Ranger truck. Bakkedahl though, said authorities seized Haas' truck following his arrest.
  
  Sheriff's reports show Aaron Grosko, who lived at the torched home with Haas' daughter, told investigators Joseph Haas was upset the house was being lost in a foreclosure and that he would "burn his house down" before Haas let the bank or anyone else take it.
  
  Haas' former girlfriend April Finch on Friday told WPTV NewsChannel 5 she dated Haas for 8 months and they lived together at the house for months before their relationship soured. When she learned of the fire, she said her first thought was of Haas.
  
  "I thought of him, because he made that comment all of the time: 'If I can't have this house, nobody will,'" Finch told WPTV.

For the story, see Arson suspect remains jailed after judge leaves bond at $1.5 million.

County Seeks To Snatch Cleveland Resident's Mortgage-Free Home For Missing Payment Deadline On Back-Tax Installment Remittance By One Day

In Cleveland, Ohio, Newschannel 5 reports:

• Ronald Hasinski owns his Cleveland home free and clear, but confusion over a delinquent property tax bill has sent his home into foreclosure, and to a Feb. 11 sheriff's sale.
  
  Hasinski told NewsChannel5 he arranged a payment plan with the Cuyahoga County Treasure's Office to make up for the $5,800 he owes in back property taxes. But Hasinski said everything went wrong when he was just one day late on one of the $152 payments. A notice from the treasure's office said he would be losing his home. The notice sent to Hasinski included a bill, but did not include how much he was to pay to get current with his payments.
  
  "I'm just devastated. I'd cry but the tears haven't sunk in yet," said Hasinski. "I've put a lot of money into this house and now I'm told it's being sold to the highest bidder."
  
  Hansinki claims he contacted the treasure's office several times, but said he couldn't get any answers about the confusing tax bill, or how he could save his home. Hansinski called on the NewsChannel5 Troubleshooter Unit and Cleveland Councilwoman Dona Brady.
  
  Brady contacted the treasure's office about Hansinki's case, promising it would conduct a full investigation within the next 24 hours. "Why would he receive a bill that says don't pay anything and you're going into foreclosure? It doesn't make any sense," said Brady. "We do not want another foreclosed home but, more importantly, we don't want Mr. Hasinski out on the streets."

For more, see Cleveland man could lose home after being one day late on delinquent property tax payment (Councilwoman Dona Brady: tax bill was confusing).

Convicted Low-Level Rent Scammer Pinched Again For Allegedly Ripping Off Prospective Tenant Out Of Upfront Lease Deposit On Home Facing Foreclosure

In Tamarac, Florida, the South Florida Sun Sentinel reports:

• An elderly couple turned to Craigslist to find a room to rent for an adult handicapped daughter, and discovered a Tamarac residence that was being leased by Wendy Richland. They paid Richland a $50 check and art worth $325 as a deposit, the Broward Sheriff's Office says, and the tenant was to move in to the home on the 8500 block of Northwest 83rd Street on Dec. 3.
  
  But on Dec. 1, Richland, 57, who lived in Boca Raton and had cashed the check, told the couple the deal was off, the Broward Sheriff's Office says. She declined to return the cash and claimed the art was a gift.
  
  Broward Sheriff's Detective Monica Jean arrested Richland on Jan. 2, and charged her with larceny of less than $10,000 from a person 65 or older, and violation of probation. Jean hopes to hear from others who may have attempted to rent the property.
  
  Richland's attorneys from previous court cases could not be reached for comment. She has served brief prison terms for forgery and grand theft convictions, a Florida Department of Corrections spokeswoman said.
  
  In 2009, Jean arrested Richland and charged her with two counts of grand theft for taking rent deposits for the Tamarac property of $2,400 and $1,800 from two women.
  
  One of the victims found other tenants unpacking boxes before she could move in, and Richland told the second woman that she changed her mind and wasn't renting the house to her, according to complaint affidavits.
  
  In those cases, Richland received probation after pleading no contest, according to Broward County online court records.
  
  Richland's Tamarac property is in foreclosure, county records show. Jean asks anyone with information to call 954-720-2298.

Source: Tamarac landlord accused of cheating prospective tenants (Broward Sheriff's detective seeks other victims).

Another Elderly Couple Gets Screwed Over By Reverse Mortgage Peddlers; Now-Widowed 91-Year Old Faces The Boot From Family Home After Being Unwittingly 'Deleted' From Loan, Title Documents

Real estate columnist Kenneth Harney writes:

• The federal Department of Housing and Urban Development has a birthday gift for widow Jeanette Ogle that should cause any senior to think twice before signing up for a government-insured reverse mortgage.
  
  Later this month, on Ogle’s 92nd birthday, her home in Lake Havasu City, Ariz., is scheduled for foreclosure — not because she did something wrong. Instead, she is expected to lose her house because during a refinancing in 2007, only her husband’s name was included on the reverse mortgage documents prepared by a loan broker. This was despite the fact that both her husband’s and her names were clearly listed as co-borrowers in the documents for the mortgage being refinanced, Ogle says, and the longtime married couple wanted no change in that status.
  
  But under a controversial policy that is drawing national scrutiny and at least one major lawsuit, HUD — the agency that runs the reverse mortgage program — now insists that when a spouse dies, and the surviving spouse’s name is not on the loan documents, the full mortgage balance becomes due and payable. If a relative or the surviving spouse cannot purchase the house and pay off the debt, the loan may be subject to a foreclosure sale.
  
  Ogle, whose husband, John, died in 2010, says she cannot imagine why she is facing foreclosure. “We did everything we were supposed to do,” she says. “I signed every piece of paper, we followed the rules.” Jeanette and John assumed that the loan they initially took out in 2004 would allow them to do what advertisements for reverse mortgages consistently promise: stay in their home indefinitely, with some extra money for living expenses.
  
  But it’s not turning out that way.
  
  “I just don’t understand why they are doing this to me,” she said in an interview. “I don’t want to lose my home.”
  
  HUD’s reverse mortgage program, run through the Federal Housing Administration, has been big business. Promoted on TV by pitchmen such as Hollywood’s Robert Wagner and former Sen. Fred Thompson, there were 582,000 loans outstanding nationwide as of November 2011, according to the Consumer Financial Protection Bureau, which issued a critical evaluation of the program last year.
  
  Reverse mortgages are restricted to seniors 62 years or older. The program allows homeowners to tap into equity and pull out money for use in their retirement years. As long as they pay their property taxes and hazard insurance, generally they don’t have to repay any of the money until they move out, die or sell the house.
  
  The policy change on surviving spouses that has snagged Jeanette Ogle was not adopted until late 2008, more than a year after the Ogles’ refinancing. That change has been challenged in a federal lawsuit filed by AARP, the seniors advocacy group.
  
  On behalf of two widows and one widower — Ogle was not a plaintiff — who were threatened with foreclosure, AARP charged that HUD disregarded clear statutory language that allows surviving spouses to remain in their homes even if their name is not on the documents. In an appellate court ruling last month, U.S. Circuit Judge Laurence Silberman said that the court was “somewhat puzzled as to how HUD can justify a regulation that seems contrary to the governing statute.”(1)
  
  HUD had no comment on that ruling, which sent the case back to a lower court, and refused to discuss Ogle’s pending foreclosure. So did Ogle’s loan servicer, Reverse Mortgage Solutions of Spring, Texas, which initiated the foreclosure action. Fannie Mae, the federally regulated mortgage investor that owns Ogle’s loan, said the foreclosure would have to proceed because the mortgage is insured by FHA and that agency’s rules effectively require it, given the absence of Ogle’s name on the documents.
  
  Andrew Wilson, a Fannie Mae spokesman, says the company has a document purportedly signed by the Ogles acknowledging that their refinanced mortgage lists only John Ogle as the borrower. Jeanette Ogle says she has no recollection of signing anything of the sort. “Why would we?” she asked in an interview. Wilson says that whatever the facts, Fannie Mae is “sympathetic” toward Ogle’s plight, and will seek to delay any post-foreclosure eviction.
  
  Jean Constantine-Davis, AARP’s senior attorney on the surviving spouse suit, called Ogle’s circumstances “pretty horrible,” and said HUD’s “current regulation has been devastating on surviving spouses.” AARP’s suit alleged that there are “hundreds” of elderly victims of the policy.
  
  Ogle’s son, Robert, has asked the Arizona state Attorney General’s Office to intervene and investigate how his mother’s name was left off the mortgage. But in the meantime, the clock is ticking toward Jeanette Ogle’s foreclosure. And her 92nd birthday.

Source: Reverse mortgage rule threatens widow with foreclosure; AARP files challenge.

(1) Bennett v. Donovan, 11-5288 (D.C. Cir. January 4, 2013).

See also Widows/Widowers Who Are Not Named In Now-Deceased Spouse's Reverse Mortgage Score Big Appeals Court Win In Effort To Dodge Foreclosure Boot; HUD Regs That Seem Contrary To Statute Leave 3-Judge Panel "Somewhat Puzzled".

Newark Feds Bag Nine In Alleged Mortgage Fraud Racket Involving Short Sale 'Flips'

From the Office of the U.S. Attorney (Newark, New Jersey):

• Nine people involved in a long-running, large-scale mortgage fraud scheme that caused losses of approximately $10 million were charged in two Complaints with conspiracy to commit bank fraud, U.S. Attorney Paul J. Fishman announced.
  
  Jose Luis Salguero Bedoya, also known as Jose Salguero, 36, of Elizabeth and Verona, N.J.; Paul Chemidlin, Jr., 41, of Morganville, N.J.; Delio Coutinho, 50, of Colonia, N.J.; Joseph DiValli, 44, of Jackson, N.J.; Christopher Ju, 26, of East Brunswick, N.J.; Carmine Fusco, 44, of East Hanover, N.J.; Jose Martins, 31, of Newark, N.J.; Yazmin Soto-Cruz, also known as Yazmin Soto, 32, of Elizabeth, N.J.; and Kenneth Sweetman, 32, of Lyndhurst and Nutley, N.J., were arrested this morning by FBI special agents.

***

• According to the Complaints:
  
  From March 2008 to July 2012, the defendants engaged in multiple mortgage fraud conspiracies targeting at least 15 properties in and around Newark and Elizabeth, N.J. The defendants mortgage frauds took several forms, including obtaining control of properties through fraudulent “short sale” transactions, short sale flips, and identity theft. They submitted materially false mortgage loan documents to lenders in order to obtain loan proceeds, which the defendants then used for their own financial gain. The defendants also obtained money through various sales to straw buyers.
  
  From March 2008 to June 2010, Salguero, Coutinho, Ju, and Soto conspired with each other and others to release liens on encumbered properties via fraudulently arranged short sale transactions. This allowed the defendants to profit from new fraudulent mortgage loans obtained on the properties from other mortgage lenders.
  
  To complete the short sale transactions, the defendants submitted materially false closing and other documents to mortgage lenders. They submitted materially false mortgage loan applications to mortgage lenders to obtain new mortgage loans on properties in and around Elizabeth, New Jersey, including a property on Fulton Street.

For the U.S. Attorney press release, see Nine Charged In $10 Million Mortgage Fraud Scheme.

Widow Files Wrongful Death Suit Against Local Sheriff, Others In Connection With Shooting Death Of Locksmith/Hubby During Forcible Eviction Of Occupant In Foreclosed Apartment

In Fresno, California, Courthouse News Service reports:

• A widow's husband was killed because the sheriff sent him to drill open the door of a heavily armed, deranged man, who shot him to death during a forcible eviction, the widow claims in court.
  
  Irina Engert sued Stanislaus County, Sheriff Adam Christianson, three of his officers, and RT Financial, the owner of the apartment where Jim Ferrario, 45, lived. Engert's husband, Glendon, was shot to death on April 12, 2012, by Ferrario, who "had been subject to foreclosure proceedings since January 2012," according to the federal complaint.
  
  The complaint states: "On April 12, 2012, the Stanislaus Sheriffs' Office sent a young civilian locksmith, Glendon Engert, into a situation the sheriffs knew was dangerous and life-threatening.
  
  Mr. Engert was hired to accompany two sheriffs deputies to assist in an eviction by drilling open the door lock of a residence inhabited by a man known to sheriffs as being mentally disordered, who possessed a cache of weapons, including high-powered automatic military-style rifles, and who had military training, with surveillance cameras mounted inside and outside the residence, who had threatened others in the past, and who was a clear and present danger to himself and anyone who approached him.
  
  The sheriffs, as well as the property owner, gave no warning to Mr. Engert about the danger in which they were placing him, did nothing to protect him, and failed to take alternative measures that could have kept him out of harm's way."

***

• Irina Engert seeks punitive damages for wrongful death, negligence, civil rights violations, and municipal liability.

For more, see Widow Blames Sheriff for Husband's Death.

'Stay Out Of Idaho!' Says State Regulator To S. Florida Lawyer Peddling Participations In 'Mass Joinder' Lawsuit Against Lenders Alleging Deceptive Foreclosure, Lending Practices

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

• A North Palm Beach law firm was ordered by the State of Idaho to stop soliciting residents to join a foreclosure-related lawsuit that allegedly required them to pay thousands of dollars in up-front fees and monthly payments.
  
  The Residential Litigation Group was given a cease and desist order by the Idaho Department of Finance after an investigation that included a department employee posing as a prospective client. The company also has a complaint against it filed with the Florida Attorney General from a New Jersey resident who said he paid $1,000 after getting information from the group in the mail.
  
  The firm changed its name to the Hoffman Law Group in November, according to Florida Department of State records. Its managing partner, attorney Marc H. Hoffman, is under investigation by the Florida Bar for sending out misleading mailings. Hoffman could not be reached for comment Tuesday.
  
  In the Idaho order, the Residential Litigation Group is accused of violating the state’s Financial Fraud Prevention Act by sending “confusing, misleading, and deceptive” information to the public in documents that purport to be a “litigation notification” but are actually an advertisement.
  
  A website for the group says it is suing the nation’s biggest banks and lenders for fraudulent use of paperwork in foreclosures, deceptive mortgage modification practices and deceptive loan practices. A copy of a lawsuit with the names of hundreds of defendants filed in Kings County New York on Dec. 5 is posted on the website.
  
  When a representative from the Idaho Department of Finance called to ask about the lawsuit, she was told it would cost a retainer fee of $6,000 to join, which would be refunded after the lawsuit is settled, and a monthly fee of $450.

For the story, see Idaho orders North Palm Beach law firm to stop soliciting residents.

Post-Foreclosure 'Eviction Rescue' Services The Latest In Schemes Designed To Squeeze Cash From Beleaguered Homeowners

In Sacramento, California, KOVR-TV Channel 13 reports:

• Just about everyone knows a family affected by foreclosure. A West Sacramento homeowner called Kurtis, after a company swooped in, just hours after her home was foreclosed, promising to keep her in her home longer.
  
  We’re told it’s a common M.O.; companies claiming to “guarantee” you more time in your home, before being forced out. Our viewer didn’t buy it, and she wondered: is this even legal?
  
  Seventy-seven-year-old Helena Helmold is packing up everything and preparing to move. “I’ve got my son’s little memorial outside,” said Helmold.
  
  She’s forced to leave behind 25 years of memories after the bank foreclosed on her home. But the day her home sold on the courthouse steps, a company named Eviction Rescue came calling.
  
  “And she says, ‘Well we can fix it so that you can stay there at least five months and maybe longer,’” said Helmold.
  
  They sent emails asking for $395 up front and $395 a month for their services. The company “guarantees” five or more months in the home and tells her to not answer a summons to court.
  
  “They know that you’re kind of like, in shock or whatever and then they’re going to jump right on you and take your money,” said Helmold. She didn’t pay them any money, but showed the emails to Legal Services of Northern California.(1)
  
  “Unfortunately, a lot people come to me after they’ve already paid thousands of dollars,” said LSNC Staff Attorney Salma Enan. Enan has helped Helmold file complaints with several agencies claiming what they’re doing is illegal.
  
  “It is definitely misrepresentation, fraud and unfair and deceptive business practice to guarantee something that you truly can’t guarantee,” said Enan.
  
  One state agency has already taken action. After the State Bar learned about Eviction Rescue’s advice for Helmold, they determined it’s unauthorized practice of law and ordered the company to cease and desist.
  
  We asked Eviction Rescue how they can guarantee customers five or more months in homes that have already been foreclosed.
  
  They told us, “Effective January 1, 2013, Eviction Rescue does not offer any guarantee for 5 or more months eviction delay. While we have been quite successful in obtaining this time, there are absolutely no guarantees…”
  
  Really? Because a screen shot of the company’s website on January 23rd clearly states they “guarantee 5-7 more months before you have to move out.”
  
  Helmold saved a couple thousand dollars by not paying eviction rescue, but she’ll still have to move. “I wish I’d have been a little bit more observant a few years ago when I first got a couple of these loans,” said Helmold.
  
  Legal Services of Northern California helped her stay in her home for a few extra months. Helmold was living there with a tenant. Under federal law, month-to-month tenants have at least 90 days before eviction.
  
  California law prohibits companies offering loan modifications from taking payments up front. But, this company doesn’t do modifications. they do eviction rescues, which the law doesn’t address.

For more, see Call Kurtis: Foreclosed Homeowner Guaranteed Months More In Home; Is That Possible?

(1) Legal Services of Northern California is a non-profit law firm providing legal services on behalf of low-income individuals and families in northern California.

Man Linked To Now-Defunct Loan Modification Outfit Shut Down By State Of Georgia Opens Up Shop Under New Name

In Atlanta, Georgia, CBS Atlanta Channel 46 reports:

• Some consumers told CBS Atlanta News they paid NAARI Housing Counseling Agency to save their homes from foreclosure, but they never got any help.
  
  CBS Atlanta News tracked down NAARI's former director of operations Monday.
  
  A tip led CBS Atlanta News to his new company on Buckeye Road in Atlanta called All American Home Assistance Services. CBS Atlanta News asked NAARI's former director if he'd resolved all issues over at NAARI since consumers are still complaining.
  
  "NAARI filed Chapter 7 bankruptcy and they went through the court process and that was that with them," former NAARI Director of Operations Derek Harris said.
  
  Harris said he is no longer affiliated with NAARI.
  
  This was after the Georgia Department of Banking and Finance ordered the business to stop operating when they discovered the company was involved in mortgage brokering and lending without a license.
  
  Harris insisted that All American Home Assistance Services is operating legally.
  
  "We do counseling only. We do not talk with the bank, we do not negotiate with the bank. We just work with the homeowner and what to say to the bank and how to handle them."
  
  So what do former NAARI customers like Magrieta Segers do? She said she paid NAARI $1,500 to save her home from foreclosure, but she never received assistance.
  
  Now All American Assistance Services has offered to provide counseling.
  
  CBS Atlanta News asked Harris how customers can trust that he's operating legally this time.
  
  "Well because NAARI was talking to the bank. They had processes of talking to the bank. We don't have that process. We just counsel the homeowner and the homeowner talks to the bank only," Harris said.

Source: NAARI's former director of operations opens shop under new name.

In a related story, see Woman claims she was scammed by local foreclosure assistance company:

• CBS Atlanta News began investigating NAARI Housing Counseling Agency in Tucker on Friday after a local woman said she paid the company $1,500 to help her save her home from foreclosure, but didn't get what she paid for.

L.A. Feds Indict Pair In Alleged Mortgage Elimination Scam Based On Sovereign Citizen Arguments

In Los Angeles, California, the Inland Valley Daily Bulletin reports:

• In at early morning raid at a Cello Drive home, FBI agents Wednesday arrested a Diamond Bar man in connection with a scheme that allegedly defrauded as many as 400 people who paid into a mortgage debt elimination scheme, officials said.
  
  Jude Lopez was taken into custody without incident, FBI spokeswoman Laura Eimiller said. [...] A woman, identified as Marcela Gonzalez, was also indicted by authorities in connection with the mortgage debt elimination scheme. She is suspected of six counts of mail fraud, Eimiller said.
  
  "Investigators believe approximately 400 clients were defrauded of approximately $5 million over approximately two years," Eimiller said. "(The) defendants allegedly pitched a `sovereign citizen' argument to homeowners, suggesting that the original liens were invalid."

***

• Court documents indicate the FBI, the Montebello Police Department and the Los Angeles Police Department were involved in the investigation. The U.S. Attorney's Office asked that Lopez be held as a flight risk, according to court documents.
  
  Prosecutors allege that Lopez, working on behalf of a company identified as Crown Point, filed bankruptcy paperwork for Crown Point clients. The paperwork was intended to delay foreclosure proceedings, officials said.
  
  "From at least in or about September 2010, through in or about May 2012, defendant Lopez who was not a lawyer prepared and filed, and caused to be prepared and filed, legal papers including ... bankruptcy petitions on behalf of clients in order to delay foreclosure and eviction actions."
  
  The complaints alleges that in some cases Lopez filed paperwork without the client's knowledge. Some of the petitions contained forged signatures, according to court documents.

For the story, see FBI arrests Diamond Bar man in connection with mortgage debt elimination scheme.

California AG-Led Joint Probe Bags Three In 'Mortgage Killer' Upfront Fee Debt Elimination Racket

From the Office of the California Attorney General:

• Attorney General Kamala D. Harris [] announced the arrest of three suspects who have been charged in a mortgage fraud scheme targeting struggling Northern California homeowners. Six websites allegedly used by the suspects to advertise their scheme have been intercepted and redirected to a resource page on the California Attorney General’s website.
  
  The felony complaint alleges that Ronald Vernon Cupp, 58, of Santa Rosa, deceived homeowners by falsely advertising a way to “kill” their mortgage debt on six websites including www.wekillyourmortgage.com.(1)
  
  Cupp was assisted by Randall Gilbert Heyden, 69, of San Rafael, and Angelle Wertz, 38, of Santa Rosa, a public notary who allegedly certified phony legal documents. Cupp allegedly recorded fraudulent documents, which would only delay a foreclosure, not actually satisfy the preexisting mortgage debt.

***

• Cupp, Heyden and Wertz are charged in a 57-count complaint alleging theft, forgery, notary fraud and recording of false documents. They were booked at the Sonoma County Jail on Wednesday, January 23. Cupp and Heyden are being held with bail set at $500,000 and $75,000 respectively. Wertz was released but ordered to appear for arraignment on Friday, January 25.
  
  Through Cupp’s business, North Bay Trust Services, homeowners would often allegedly pay upfront fees of between $1,000 and $10,000 and sign a promissory note or new mortgage for a phony offer to eliminate their mortgage debt. Requiring up-front fees is illegal in California.
  
  The suspects would then allegedly record fraudulent documentation purporting to be the attorney for the homeowner’s actual lender and then relinquish the mortgage and record a new deed of trust in favor of North Bay Trust Services. The debt to the original lender was never actually satisfied.

***

• The arrests were a result of a joint investigation by the California Department of Justice Mortgage Fraud Strike Force, Northern California Computer Crimes Task Force, Marin County District Attorney’s office, Sonoma County District Attorney’s Office and Santa Rosa Police Department.

For the California AG press release, see Attorney General Kamala D. Harris Announces Arrests in ‘We Kill Your Mortgage’ Scheme; Seizure of Fraudulent Websites.

For the formal felony charges, see People v. Cupp, et al.

(1) The websites that were shut down are:

• http://www.northbaytrustservices.com/
  http://wekillyourmortgage.com/
  http://santarosatrustandtitle.com/
  http://sonomafidelitytitle.com/
  http://cortemaderafidelityandtitle.com/
  http://marintrustandtitle.com/

These pages have been redirected to the California Attorney General’s website (http://oag.ca.gov/ecrime/doj-investigation) where individuals are able to file an online complaint form if they believe they may have been the victim of the scheme.

Extradited Scammer Who Admitted Peddling Bogus Multi-Level Early Mortgage Payoff Scheme Gets 100 Months

From the Office of the U.S. Attorney (Las Vegas, Nevada):

• A former resident of Las Vegas who defrauded 17 individuals of almost $1.5 million in an investment fraud and marketing scheme involving early mortgage payoffs, was sentenced [] to just over eight years in prison for his guilty pleas to fraud and tax evasion charges, announced Daniel G. Bogden, United States Attorney for the District of Nevada.
  
  “Mr. Maharaj repeatedly solicited victims through fraud and deception knowing that they would never receive the monetary rewards he pitched,” said U.S. Attorney Bogden. “Although he tried to avoid facing the reality of a conviction by fleeing to Fiji and causing the United States to extradite him, he was eventually brought to justice and will spend much of the next decade behind bars.”
  
  Aneal Maharaj, 65, currently in custody, was sentenced by U.S. District Judge James C. Mahan to 100 months in prison, five years of supervised release, and ordered to pay $1,473,111 in restitution. Maharaj received a greater sentence because of the significant loss amount and number of victims, and because he obstructed justice by failing to appear for trial in the case and fled to Fiji to avoid prosecution. Maharaj pleaded guilty on Oct. 18, 2012, to one count of mail fraud, two counts of wire fraud, one count of tax evasion, six counts of bank fraud, and one count of making a false declaration in a bankruptcy petition.
  
  Beginning in about 1990 and continuing to about October 2004, Maharaj operated a multi-level marketing program from Las Vegas wherein he promised persons that they could pay off a 30-year mortgage in five years or less by investing and becoming franchise owners in a business he called “PowerNet Marketing Systems,” and a “home loan plan” he called Systematic Mortgage Amortization Reduction Technology (SMART).
  
  The system required the investors to recruit additional persons into the program, which Maharaj told them would entitle them to substantial commissions and income. Maharaj knew that no individual had ever paid off a 30-year mortgage in five years or less using the SMART plan, and that he had no intention of paying the commissions and income to the participants.
  
  At least 17 individuals each invested a minimum of $25,000 and up to $500,000 with Maharaj to become franchise owners in his fraudulent marketing program. The plea agreement states that Maharaj convinced one victim to sign over his interest in his $100,000 life insurance benefit.

For the U.S. Attorney press release, see Man Who Stole Almost $1.5 Million From Victims In Early Mortgage Pay-Off Scheme Sentenced To Eight Years In Prison.

Recent California High Court Decision Involving Loan Modifications Resets State Law On Parol Evidence When Trying To Establish Fraud When Entering Into Written Contracts

In Fresno, California, The Business Journal reports:

• It’s rare that a legal case originating in the San Joaquin Valley makes it as far as the state Supreme Court. It’s even more rare that the case sets a precedent changing a decades-old law for years to come.(1)
  
  That’s exactly what happened this month when the seven-judge Supreme Court of California ruled in favor of limiting fraud liability in contract cases and overturning a provision that has protected defendants for the last 78 years.
  
  At issue was an agreement signed between River Island Cold Storage of Dinuba and the company’s lenders, the Fresno-Madera Production Credit Association, to restructure more than $775,000 in debt.
  
  According to the deal inked in March 2007, Lance and Pamela Workman, who own River Island Cold Storage, agreed make specified payments and a pledge of eight separate parcels of land as additional collateral. In return, the credit association promised it would take no enforcement action on the debt for three months.
  
  Although the Workmans failed to make the required payments as stated in the written agreement, they claimed the association’s vice president approached them prior to its signing and modified the deal.
  
  Under that oral agreement, which was highly contested in court for the next four years, the couple believed their loan was extended for two years in exchange for additional collateral consisting of two ranches.
  
  Keeping in step with the written agreement’s terms, the association recorded a notice of default after the company failed to make the required payments within the three-month forbearance.
  
  Although eventually paying off their debt and avoiding foreclosure proceedings, the Workmans later filed suit, seeking damages for fraud and negligent misrepresentation, and including causes of action for rescission and reformation of restructuring the agreement.
  
  What followed was a legal can of worms that hasn’t properly been reopened for several decades...

For more, see State Supreme Court resets precedent with local case.

For an earlier post on this case, see California Supremes: Oral Promises Not Appearing In Written Contract Admissible In Court When Trying To Prove Bankster Fraudulently Tricked Borrower Into Signing Agreement.

(1) Riverisland Cold Storage, Inc. v. Fresno-Madera Production Credit Association, S190581 (January 14, 2013).

In actuality, this case dosesn't create new precedent, it merely resets the law back to the pre-1935 precedent, prior to the state high court ruling in Bank of America etc. Assn. v. Pendergrass (1935) 4 Cal.2d 258, 263 ("Pendergrass"), a ruling that apparently sidetracked California law for the last 75+ years. From the recent ruling:

• Plaintiffs, who prevailed below, not only defend the Court of Appeal's holding but, alternatively, invite us to reconsider Pendergrass. There are good reasons for doing so.
  
  The Pendergrass limitation finds no support in the language of the statute codifying the parol evidence rule and the exception for evidence of fraud. It is difficult to apply.
  
  It conflicts with the doctrine of the Restatements, most treatises, and the majority of our sister-state jurisdictions. Furthermore, while intended to prevent fraud, the rule established in Pendergrass may actually provide a shield for fraudulent conduct.
  
  Finally, Pendergrass departed from established California law at the time it was decided, and neither acknowledged nor justified the abrogation.
  
  We now conclude that Pendergrass was ill-considered, and should be overruled. stare decisis