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• Seton Hall professors and students allege fraud in pleadings
  

  In the following press release Seton Hall University School of Law announced that Seton Hall Professors Linda Fisher and Chinh Q. Le along with Seton Hall Law students Katherine A. Kelly and Molly Moynihan filed a pleading and counterclaim defending elderly homeowner victims from foreclosure.
  
  CSJ filed an answer, counterclaim and third party complaint on behalf of William and Daphne Webb, an elderly Montclair couple. The third party Defendants— a disbarred lawyer, a subprime lender, and others— had induced the Webbs to temporarily sign over an interest in their home in order to save it from foreclosure. Desperate because of health problems, the Webbs complied, trusting that they would be able to remain in their longtime residence.
  
  The CSJ complaint states, however, that the “Defendants preyed upon the Webbs’ financial distress and lack of economic sophistication by persuading the Webbs to enter into a complex real estate transaction wherein the Webbs surrendered title of their home to a third-party “straw-buyer,” with the promise that they could continue to live there as if they still owned it and, after making monthly payments for eighteen months, the Webbs would re-establish their credit and then repurchase their home.” The Webbs were not represented by counsel in the transaction. Although the Webbs made the payments as agreed, ANM Funding LLC. and/or “the straw buyer,” ceased making payments to the mortgage holding bank. Foreclosure proceedings ultimately resulted, with judgment entered in favor of the bank. CSJ, however, was able to get that judgment vacated and the Webbs were ultimately allowed to intervene in the case. They will now, along with CSJ, defend against the foreclosure.
  
  The complaint warrants that “the Webbs lost approximately $400,000.00 in equity in their home by participating in this predatory lending/foreclosure rescue scam,” which is believed to have been perpetrated on numerous other distressed homeowners in the area.
  
  In part, the Counterclaim against Third-Party defendants includes a petition for relief for:

  “multiple violations of state and federal statutes – to wit: the New Jersey Consumer Fraud Act (N.J.S.A. § 56:8-1, et seq.), the New Jersey Civil Racketeer Influenced and Corrupt Organizations Act (N.J.S.A. § 2C:41-2(c)), the New Jersey Fair Foreclosure Act (N.J.S.A. § 2A:50-56, et seq.), and the Federal Truth in Lending Act (15 U.S.C. § 1601, et seq.) – as well as common law fraud, negligent misrepresentation, equitable fraud, conspiracy to commit fraud and misrepresentation, aiding and abetting, and breach of fiduciary duty.”
  
  In part, the pleading also charges that the foreclosing entity, assignee U.S. Bank:
  
  Lacks standing to enforce the Note securing the Property because U.S. Bank is not a proper assignee and holder of the Note pursuant to N.J.S.A. § 12A:3-201 and Article 3 of the Uniform Commercial Code (“UCC”);
  
  Is not a “holder in due course” and therefore is vicariously liable for the Webbs’ claims and defenses against the originators of the mortgage, Credit Suisse Financial Corporation and its agent, ANM Funding, LLC;
  
  The Webbs are entitled to recoupment because U.S. Bank failed to make proper disclosures pursuant to the Truth in Lending Act (“TILA”), 15 U.S.C. § 1601, et seq.
  
  U.S. Bank lacks standing to seek foreclosure because the mortgage was not assigned to it until after the foreclosure action was filed. N.J.S.A. § 46:9-9 requires mortgage assignments to be in writing. A written mortgage assignment between Mortgage Electronic Registration Systems, Inc. and U.S. Bank was not executed until April 9, 2008, approximately four months after filing of the Complaint.

• S.Dakota man pleads guilty in mortgage fraud
  

  In the following press release Marty J. Jackely, United States Attorney for the District of South Dakota announced that Benjamin Ashley Markham, age 31, of Sioux Falls, appeared before US Magistrate Judge John E. Simko on December 16, 2008, and pled guilty to two counts of an indictment that charged him with bank fraud and fraudulent use of a social security number. The maximum penalty upon conviction of the bank fraud offense is thirty years in prison and/or a $1 million fine. The social security offense carries a penalty upon conviction of five years in prison and/or a $250,000 fine.
  
  Markham filled out an application for a mortgage loan with First Premier Bank in Sioux Falls in June 2008. In doing so, he used a social security number belonging to another person and also provided the bank with false information regarding his employment.
  
  The investigation was conducted by the Sioux Falls Police Department and the Federal Bureau of Investigation. The case is being prosecuted by Assistant United States Attorney Kevin Koliner. A presentence investigation was ordered and a sentencing date will be set. The defendant was released on bond pending sentencing.

• 3 arrested, 2 more sought in loan modification fraud allegations
  

  One we missed from November.

  California Attorney General Edmund G. Brown Jr. today announced the arrests of three members of a fraud ring who preyed on desperate Southern California homeowners by falsely promising to renegotiate their home loans, but instead “ripped them off for thousands of dollars” while their homes fell into foreclosure.
  
  “It’s appalling how these scammers took advantage of desperate homeowners and ripped them off for thousands of dollars,” Attorney General Brown said. “Our campaign against mortgage scams masquerading as foreclosure assistance will continue and even intensify.”
  
  California Department of Justice Special Agents of the Bureau of Investigation and Intelligence arrested Rosa Conrado of San Bernardino, Saul Amador of West Covina, and Jesus Flores of Baldwin Park, believed to be members of the fraud ring. Law enforcement officers have issued arrest warrants for Juan Perez of Grand Terrace, and David Giron of Ontario, who are also suspected to be involved in the scheme. The Attorney General’s Office filed a 39-count complaint that includes multiple grand theft, money laundering and conspiracy charges against these suspects.
  
  The arrests came after an investigation into First Gov, also operating as Foreclosure Prevention Services, uncovered that the company was soliciting hundreds of homeowners with mail flyers offering to help them stop the foreclosure process on their homes. The scammers falsely told homeowners that they would renegotiate their mortgages, reduce monthly payments, and transfer any delinquent loan amounts to the renegotiated principle. The company demanded an up-front fee, ranging from $1,500 to $5,000, to participate in the loan-modification program. The company also told the victims to stop any mortgage payments or communications with their lender, claiming they would interfere with the company’s effort to negotiate the loan modification.
  
  When victims complained that they were still receiving delinquency or foreclosure notices from their lenders, fraud-ring members told the victims that the mortgage loans had been renegotiated, but the lenders needed a “good faith” payment to secure the new accounts. Homeowners made payments to accounts under business names such as “Reinstatement Department” or “Resolution Department” that made it appear as if the payment had been applied toward the loan. Bank records indicate that more than $700,000 was stolen from homeowners who fell victim to this scheme.
  
  Typically, the scam initiated with a flyer sent to the homeowner. For example, Eleuteria and Arthur Washington of Redlands responded to a flyer she had received that falsely claimed to offer a way to renegotiate their home loan. On May 16, 2007, a representative of First Gov came to their residence. The Washingtons were asked for two cashier’s checks each for $2,023.58 (totaling $4,046.56), which equaled two times the combined total of the monthly payment on their first and second mortgage.
  
  Although the checks were deposited that same day into the designated Bank of America account, Mrs. Washington continued to receive letters from her lenders that the house would be auctioned. Mrs. Washington’s numerous calls to First Gov went unanswered. Finally, she received a call from First Gov that her lenders had agreed to the loan modification.
  
  The next day, Mrs. Washington received another call from First Gov that the new loan documents would be sent to her to sign. She was told the len