Bank of America

Bank of America has agreed to pay $335 million, yes a third of a billion dollars, to settle claims that its Countrywide unit engaged in systematic discrimination. It is alleged that Countrywide steered minority customers to subprime loan products based only on their minority status. This resulted in much higher costs and interest rates than Countrywide's non-minority customers enjoyed. How can something like this even happen in the 21st century?

Engelmann sentencing date set

Sentencing for Marc Engelmann, the Davenport real estate attorney found guilty on nine counts of bank fraud, wire fraud, and conspiracy, has been set for January 20, 2012.

Two attorneys sentenced in Mississippi

Charles H. Evans, Jr., of Jackson, Mississippi was sentenced on December 19, 2011 to serve 20 years
in federal prison. Brother and co-conspirator, Jon Christopher Evans, also of Jackson, was
sentenced to 14 years in prison.

The Evans brothers ran what was billed as the largest real estate Ponzi scheme in Mississippi history. They would purchase tracts of vacant land, and then subdivide and resubdivide, obtaining mortgages on real and fictitious pieces of real estate. Charles prepared title opinions and certificates of title on the fictitious land to perpetuate the fraud. They would get new mortgages to service the debt on the old mortgages, as well as put some in their pockets. Their fraud has involved eighty million dollars in loans, fifty lending institutions, and thirty shell corporations they created to hide their activities. All this in only six years.

Charles and Jon will be 77 and 67, respectively, when they reenter society.

Engelmann update II

Marc Engelmann's motion for a new trial, discussed here, was denied. Sentencing is scheduled for January 2012.

Mary Pat Harper sentenced

Mary Pat Harper, the real estate agent for Darryl Hanneken and Robert Herdrich, has been sentenced to two years in prison, $185,000 restitution, and three years of probation. Ms. Harper asked the judge to allow her to withdraw her guilty plea, which he declined to do. Even if the judge had allowed her to withdraw her guilty plea, I cannot see how it would have helped her much. In her written guilty plea, she admitted to all of the elements of the crime. She assisted Hanneken and Herdrich in a scheme to defraud lenders by fraudulently inflating the purchase price of investment properties, and then having the sellers of the properties kick back the extra money under the table to the Hanneken and Herdrich. This scheme involved approximately 40 properties in northwest Davenport, Iowa.

Marc Engelmann, the Davenport real estate attorney who was involved in nine of these transactions, and who was found guilty of nine counts of wire fraud, bank fraud, and conspiracy in September, is still awaiting sentencing. Strangely, even though he is a convicted felon as of September, he is still licensed to practice law in Illinois and Iowa.

www.thomasmoens.com

DIY

That's right--do it yourself. Apparently, with all of programs which are supposed to become available to help homeowners, the scamsters are ready to take your money. They offer to get you a better interest rate, negotiate with your current lender, etc., etc.

You do not need to pay a third party to get a new mortgage. Contact a reputable local lenders directly

Tenancy by the entirety

There seems to be a misconception that holding title to real estate as tenants by the entirety is a magic bullet that makes judgments go away. Not the case. All it accomplishes is to protect you from creditors foreclosing judgments against your real estate, while you live there, and while you are still married.

The example that comes up frequently is this. Married couple own their residence as tenants by the entirety. A judgment is entered against the husband only, and a memorandum of judgment is recorded. If they, for example, owned the property as tenants in common, that judgment creditor would be able to foreclose the judgment lien. But since they own the property as tenants by the entirety, this cannot happen. When the couple decides to sell the house, they will need to take care of the lien. Many people are under the mistaken impression that tenancy by the entirety makes the lien disappear. The lien is still there, it just cannot be enforced against the real estate. So when they sell the house, it will no longer be their residence, and the tenancy by the entirety protection will cease to exist. And boom, as soon as the deed to the buyers is recorded, the lien is now enforceable, and it is ahead of any mortgage lien the buyers might have.

More information on tenancy by the entirety is here.

www.thomasmoens.com

Senator Jacobs CAN write!

I have sent our esteemed Senator Mike Jacobs two letters over the past couple of years regarding matters that I consider important to the People of the State of Illinois. Senator Jacobs apparently disagrees, since he has not even given me the courtesy of a political "thanks but you bore me." You know, the typical, "Thank you for expressing your concerns, and I will give your suggestions all of the consideration warranted under the circumstances." Or, "Your letter brings up some important matters of which I was not fully cognizant. I will immediately create a commission and make recommendations accordingly." Anything would have been nice, including actually doing something.

My first contact was when I was unable to get anyone interested in the rampant mortgage fraud occurring in our area. I was under the mistaken impression that maybe our legislators could light a fire under the appropriate enforcement agencies.

No response from Senator Jacobs.

Next, I was frustrated with the one-sided and possibly unlawful contracts being required by banks selling foreclosed properties. In many of these contracts, the bank requires the buyer to use the closing agent and sometimes title agency selected by the bank. These closing agents and title agencies are sometimes charging as much as five times what a local provider would charge (i.e., local providers which are small businesses in Senator Jacobs' district). No disclosure of these exorbitant fees is provided to the buyer prior to when they show up at closing. I had this crazy idea that Illinois could follow several other states in allowing buyers to select their own settlement service providers. After all, there is no good reason that the seller should tell the buyers who they have to hire and pay.

No response from Senator Jacobs.

Did I take this personally? Not at all. Maybe he is too busy getting these things taken care of for us. Maybe his typewriter is in the shop. Was I bitter that I made an effort to make a difference and make things better for the people of the State of Illinois and was summarily ignored. Of course not! Perhaps Illinois Senators do not send letters as a cost-saving measure.

But then I hear that he CAN write AND send letters! Well, sort of write, anyway. An acquaintance sent me correspondence from Senator Jacobs. Apparently, someone was annoyed that Senator Jacobs cast the only vote in favor of using taxpayer money to pay for a portrait of Rod Blagojevich. (Actually, in the interest of accuracy and specificity, he voted no to a bill which would prohibit the use of taxpayer money to pay for the portrait, so it is a double negative kind of thing.) And she sent a letter to Senator Jacobs telling him so.

Rather than take the high road and ignore her, which, I assure you, he is fully capable of doing, he sent a letter to her demonstrating his intellectual prowess. He responded that "in the words of Harry Truman, if you want a friend in government, get a dog."

Well, first of all, what President Truman is actually credited with saying is, "If you want a friend in Washington, get a dog" [emphasis added], so he did not even quote correctly. See the difference? The big difference is, President Truman's statement actually makes sense. He was simply saying that Washington is full of folks with ulterior motives desiring political gain. If you want a real friend in a town like this, a dog is your best bet. Senator Jacobs' quip seems to imply that the government is full of dogs. I guess. Maybe

Now for Senator Jacobs quote: How would getting a dog help me have a friend in government? Ok, Senator, I went and got a dog at the shelter and he is my friend, now what? How does this help me get a friend in government? Should I get my dog elected to office? Can I get my dog to replace Senator Jacobs? What if my dog was a relative of Senator Jacobs, would that help? Perhaps Senator Jacobs should stick with ignoring letters sent to him. Less embarrassing perhaps.

It is great for Senator Jacobs that the job was handed to him by his father, but I am not so sure it is great for residents of western Illinois. This is why nepotism is generally frowned upon in most circumstances. It is also why tigers often eat their young.

Marc Engelmann update

Marc Engelmann, a Davenport, Iowa real estate attorney was found guilty of nine counts of wire fraud, bank fraud, and conspiracy on September 13, 2011. Engelmann filed a motion for a new trial based on his assertions that 1) the jury was confused regarding whether he acted in good faith, and 2) the investigating FBI agents were discussing the case during the trial.

The jury sent a question to the judge asking for more information on "good faith." The Judge responded that the instructions provided a clear definition of good faith, and the jury should refer to those instructions. Part of Engelmann's defense was that he acted in good faith that the lender was aware of the fraud scheme. He claimed that the closing agent was aware of the fraud, and therefore, he claims, the lender was aware. All of the employees of the closing agent testified that they were unaware of the kickback scheme. His own (former) real estate assistant testified that Engelmann told her not to discuss the kickback with the closing agent. He also prepared two closing statements--one which was marked "Numbers for HUD" and one which was marked "courtesy copy." The "Numbers for HUD" version was faxed to the closing agent, but it did not appear the "courtesy copy" was provided to the closing agent. The "Numbers for HUD" version did not show the kickback, while the "courtesy copy" did. As an experienced real estate attorney, he was certainly aware that the scheme was illegal, and if he believed the lender knew of the scheme and assented to it, he certainly should have had ample documentation in his file from the lender. No such documentation was presented at trial.

There was a clear and concise jury instruction defining good faith, which was taken from a set of model jury instructions. Engelmann wanted a more verbose version, though everything which was included in the verbose version was included throughout the rest of the jury instructions.

A long-time client of Engelmann's was apparently a spectator at the trial. This individual called the Judge after the trial. During a break, this individual claims he witnessed the two investigating FBI agents discussing the case. Normally, witnesses are not allowed to discuss the case prior to testifying. Obviously, it would not be appropriate for the closing agent employees and Engelmann's former assistant to get together to get their stories straight before testifying. These gentlemen, however, were the investigators. They talked to all of the witnesses. And they obviously talked with each other. Can you imagine Sgt. Friday not talking with Officer Gannon about the facts, ma'am? Pete Malloy and Jim Reed ignoring each other in Adam 12? Ponch and Jon with their fingers in their ears saying "la la la la I can't hear you?" In fact, one of the agents was present through the entire trial, and he also testified. The only reason the other agent was called to testify is that Engelmann denied telling the agents that he told them he knew the scheme was illegal when they first came to talk to him. To argue that two investigating agents cannot discuss a case on which they are working together is a bit of a stretch.

The motion was denied. His sentencing has been delayed until January 2012.

www.thomasmoens.com

Engelmann guilty on all counts

A federal jury found Marc Robert Engelmann, a Davenport, Iowa real estate attorney, guilty on all nine counts of bank fraud, wire fraud, and conspiracy.

Engelmann represented a seller who sold nine Davenport properties to Darryl Hanneken and Robert Herdrich. Hanneken and Herdrich recently were sentenced to 40 months in federal prison, five years of supervised release following their imprisonment, and restitution of almost $900,000 for their part in this fraud.

In the scheme, Herdrich and Hanneken would offer to pay a seller more than the asking price of the property, with a side agreement requiring the seller to refund the difference to them after closing. The side agreement, or kickback, was not disclosed to the lender. In one of the nine transactions in which Englemann was involved, the actual sale price was $95,000, but the parties represented to the lender that the purchase price was $125,000. The $30,000 difference was paid by the seller to Herdrich and Hanneken after the closing. Engelmann assisted with the fraud by preparing and sending false settlement statements to the closing agent, reflecting only the inflated price, and not showing the kickbacks. The wire fraud counts resulted from Engelmann transmitting the false statements via facsimile from his Davenport, Iowa office to the closing agent's office in Illinois.

How many other local attorneys were involved in these transactions?

Thinking of co-signing a loan?

Many people have a misconception that as a co-signer, you are not responsible for the debt, or you are less responsible than the primary borrower. Unfortunately, co-signers are just as responsible for the debt as the primary borrower.

Basically, what the lender is saying by requiring a co-signer is this: "We would not loan money to the primary borrower without the co-signer agreeing to pay." In other words, the primary borrower is not sufficiently credit-worthy in the opinion of the lender.

What can a co-signer do if the primary borrower does not pay the debt. The short answer is, get out the checkbook. If the co-signer had the foresight to have a written agreement with the primary borrower that the primary borrower was responsible for the debt, that still does not affect the rights of the lender to make every effort to collect the debt from the co-signer. In that very unlikely event there was such an agreement, collecting is going to be tricky.

First, the co-signer needs to locate the primary borrower. You would be surprised how many times the best of friends, family members, significant others, etc., become separated when the evil spectre of looming debt appears. Then the co-signer needs to try to collect. Obviously, if the primary borrower is not paying the debt, he or she is probably not likely to respond to a polite request from the co-signer to do so. The co-signer can sue the primary borrower, but the co-signer will need to demonstrate to the court that the primary borrower actually owes the co-signer money.

Even if the co-signer can find the primary borrower, and sues the primary borrower, and actually gets a judgment against the primary borrower, there is still the tricky matter of collecting. Getting a judgment does not put money in your pocket. It gives you the legal right to collect. If the primary borrower does not have the money to pay the debt, finding the money to satisfy your judgment can be difficult as well.

And if the primary borrower files bankruptcy, it is game over for the lender and the co-signer getting any money at all from the primary borrower. If the primary borrower files bankruptcy, and the debt is discharged, the co-signer is completely responsible for paying the debt.

The moral of the story: If you agree to be a co-signer for anyone, be sure you are willing and able to pay the debt. That, after all, is what you are agreeing to do.

www.thomasmoens.com