Pianka slaps $140,000 fine on no-show Destiny Ventures

January 15, 2008

In an absentee trial yesterday, Cleveland Housing Court Judge Ray Pianka fined Destiny Ventures LLC $140,000 for failure to repair code violations at a vacant two-family house at 3677 East 117th St.

Destiny Ventures bought the property last March for $1,500 from EMC Mortgage (Bear Stearns), which acquired it at Sheriff’s sale in January 2006. (Yes, that means it’s been sitting vacant for two years.)

Here’s excellent coverage of yesterday’s trial by WKYC’s Mike O’Mara.

(c/p CCD


Cleveland sues securitizers for damages under Ohio public nuisance law

January 11, 2008

(c/p CCD)

Exactly friggin’ right:

But Cleveland’s suit is even more unique because the city has based its complaints on a state law that relates to public nuisances. The suit also is far more wide-reaching than Baltimore’s in that it targets the investment banking side of the industry, which feeds off the mortgage market.

Investment bankers at these companies buy subprime mortgages from lenders, then sell mortgage-backed securities to investors. It is a legal practice, known as securitization, that became increasingly popular during the housing boom earlier this decade.

Jackson and city Law Director Robert Triozzi said Cleveland should have been excluded from the frenzy. They pointed to housing prices that remained relatively flat as real estate values jumped elsewhere, as well as a manufacturing downturn and widespread poverty.

The suit claims that even though these issues were well documented, investment bankers continued to feed loans to hungry investors at the expense of borrowers buried in interest.

“Ultimately, they’re responsible,” Triozzi said of the investment banks. “They knew the economic conditions in which they were operating here. They decided that didn’t matter.”

Now I remember why I voted for Frank Jackson.

P.S. You can download the City’s actual filing here (pdf). Recommended reading!

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New at Cleveland Diary

January 7, 2008

Business Week: “Dirty Deeds” vs. housing court heroes.

Oklahoma speculator Destiny Ventures buys 53 more foreclosed Cuyahoga County houses.

(Here’s one of them)

Countrywide says deal with ACORN is near

December 26, 2007

Less than two weeks after agreeing to negotiate a mortgage delinquency workout partnership with Cleveland’s ESOP, the nation’s biggest subprime lender has announced that it’s pursuing a similar relationship on a national basis with ACORN.

Countrywide Mortgage issued a press release Friday about the ACORN negotiation.  It’s the subject of an Inman story this morning.

Countrywide and the Association of Community Organizations for Reform Now (ACORN) “anticipate final release of the groundbreaking provisions of the home retention initiative soon after the new year,” Countrywide said…

ACORN spokesman Charles Jackson told Inman News that moving borrowers into fixed-rate loans will be one of the main points of the initiative now being developed.

Foreclosure Holiday press conference almost evicted

December 19, 2007

Good coverage by Karen Schaefer, with pictures, at WKSU this morning.

WCPN this morning. Plain Dealer Monday. AP.

Over forty people representing at least seventeen of the twenty endorsing organizations showed up at Tina William’s house on East 112th yesterday morning. Mrs. Williams, a member of the Mount Pleasant chapter of ACORN, had her Chase-financed house taken at Sheriff’s sale in September — by HUD, which had insured the mortgage. Her eviction was originally scheduled for yesterday, but last week ACORN managed to get HUD and Chase to agree to a sixty-day stay, which will allow HUD to take title and, she hopes, work out a deal to let her stay as a tenant.

Despite the stay, moving trucks rolled up to the Williams’ door yesterday while we were clearing snow for the press conference, followed shortly by a Sheriff’s deputy with a vacate order in his hand. It seems nobody at Chase had told the Sheriff’s Office about the stay they’d agreed to. For twenty minutes it looked like the coalition to forestall evictions was going to get evicted, along with the Williams family.

But frantic calls were made, a fax got sent to the Sheriff, the deputy got the word, and he got in his car and led the moving trucks away amid cheers and applause.

Not a bad start for a gathering to call for a Foreclosure Holiday.

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Cleveland community groups to call for Foreclosure Holiday

December 15, 2007

Press conference Monday morning:

When: Monday December 17th 10am

Where: At the home of Tina Williams, a homeowner facing foreclosure, 3884 East 112th Street

What: A coalition of community advocates will call on Sheriff Gerald McFaul and lending institutions to observe a 60 day foreclosure holiday to allow vulnerable borrowers time to get the help they need. The coalition will deliver an open letter to Sheriff McFaul calling for his leadership in stemming the tide of foreclosures that threatens to overwhelm many neighborhoods in Cuyahoga County. A 60-day moratorium on foreclosures of occupied houses would allow many of the affected homeowners time to work with housing counselors and their lenders to find ways to stay in their homes.

“Many of our friends and neighbors will be spending this holiday season wondering how much longer they will be able to stay in their homes. Whether they have adjustable rate mortgages that are about to reset, or payments that they simply can’t afford, they need relief. We are calling on Sheriff McFaul to do everything in his power to give these borrowers the extra time that will allow them to contact their lenders and stay in their homes.” said Tina Williams, a homeowner who is herself facing foreclosure.

Up to half of all homeowners facing foreclosure never contact their lenders. The 60 day foreclosure holiday would allow community organizations time to reach many of these borrowers…

Groups calling for a Cuyahoga County Foreclosure Holiday

Properties in the county listed for Sheriff’s sale on Christmas Eve (Google map)

Boyko foreclosure decision snowballs… avalanche on the way?

December 10, 2007

From the beginning of 2007 through last Thursday, December 6, Deutsche Bank was the plaintiff in 1,625 foreclosure cases in Cuyahoga County Common Pleas Court , according to the Court’s online database.

Wells Fargo was the plaintiff in 1,429 foreclosures cases in the same period; US Bank in 1,069; JP Morgan Chase in 1,049.

In most of these cases — as well as the 676 filed by the Bank of New York, the 609 filed by HSBC Bank, and thousands more — the bank named as plaintiff was not the actual lender or mortgage holder. As in this Deutsche Bank case, the named plaintiff was usually the “trustee” for a “securitized investment pool” of thousands of mortgages, with ownership interests in the pool held by unnamed shareholders.

All of which makes this story in Saturday’s Cincinnati Enquirer really interesting:

Last week, a Hamilton County Common Pleas Court judge ruled that Wells Fargo Bank couldn’t foreclose on the Byrds’ North College Hill home because its lawyers didn’t prove that Wells Fargo was the legal owner of the mortgage.

The judge said the foreclosure lawsuit was filed before Wells Fargo owned the mortgage – thus, the suit was premature.

The ruling – the first of its kind by a state court judge in Ohio since the subprime mortgage crisis erupted this year – could have profound implications on how foreclosures are handled in Ohio, which leads the nation in the percentage of mortgages in foreclosure. The local ruling comes as three federal court judges – in Cleveland, Dayton and Columbus – have issued similar opinions in foreclosure cases in the last month…

Ohio Attorney General Marc Dann has already seized on that decision in an effort to slow foreclosure filings throughout the state.

He filed motions Friday in seven Hamilton County cases – and several more in Butler, Montgomery, Franklin and Delaware counties – asking judges to scrutinize each foreclosure case.

The issue is known as the “real party in interest” rule, which says that a plaintiff must prove that it has a stake in a lawsuit in order to file it.

As millions of subprime mortgages are sold and resold on Wall Street, the real “party in interest” isn’t always obvious. Often, the holder of the mortgage note – the legal document that gives a lender the right to take someone’s home for not making loan payments – is different from the servicing company, or the bank that takes the mortgage payments.

It’s unclear how far-reaching the effect of the orders will be. But a recent analysis by University of Iowa law professor Katherine M. Porter found that 40 percent of the 1,733 foreclosures she studied did not contain proof that the plaintiff owned the mortgage.

I’d already heard rumors that several Cuyahoga County Common Pleas judges are considering similar actions in the wake of U.S. District Court Judge Boyko’s now-famous ruling three weeks ago.

Now it looks like AG Dann may be trying to turn this snowball effect into an avalanche.

What happens if Common Pleas judges start throwing out foreclosure cases en masse where trustees haven’t fully documented their “real party in interest” standing? Literally thousands of Cuyahoga County foreclosures may have to be re-filed by Deutsche Bank, Wells Fargo, et al. Assuming they can come up with the documents in most cases, this process still could throw a big, costly wrench into the Unstoppable Foreclosure Machine.

You can be sure that defendants’ attorneys and advocates are looking feverishly for ways to take advantage of this unexpected holiday gift.

(c/p CCD)