Not quite, but close. An appellate court in Illinois has clarified that employers are responsible for the acts of their notary employees, and the court seems to be saying that employers are obligated to train their employees adequately. It is certainly a good idea to make sure your notary employees are properly trained (we do), but it is not specifically required by statute. This is an important case if you have any notaries on your staff who notarize documents "on the clock."
The case was rather fact-intensive (seventy-two pages worth), but for a very short version: The case involved a Kinko's employee who either notarized a document without adequate verification of identity, allowed someone else to use his notary stamp, or notarized a document without the signer present. Based on this defective notarization, a $100,000+ fraud was perpetrated.
Kinko's provided training, but the trainer was not a notary or attorney, the materials he prepared were not prepared or reviewed by a notary or attorney, and he did not test the employees in any way. Based on his training, the notary was under the impression that all he needed to do was match the signature on any sort of identification provided by the signer to the signature on the document he was notarizing. He did nothing to otherwise verify the identity of individuals whose signatures he notarized. He left his notary stamp somewhat unsecured, and his story is that he left his notary stamp with Kinko's when he moved on to another location.
Sure there are a lot of jokes about notary jail, and notary school, and notary police, implying that being a notary is a simple and and ministerial function. In reality, a notary is a public official, and as such has important duties to others who rely on the documents he or she acknowledges.
We would be happy to provide assistance or training to any employer which has notaries on its staff. It could save you $100,000+.
Friday, May 1, 2009
Thursday, April 23, 2009
Illinois Corporate Compliance
A new scam! Apparently these folks took a page from Illinois Deed Provider's playbook. Illinois Corporate Compliance contacts corporations to inform them that for a fee of $150, they will file your corporate minutes with the State.
You do not need to file your corporate minutes with the State in Illinois. And as far as I know, even if you wanted to file your minutes with the State, you could not do so. There is no reason to do this, and there is no fee from the State to file minutes. You do need to file your annual report along with a fee, but that fee goes directly to the Illinois Secretary of State.
It IS very important for Illinois corporations to prepare their annual minutes, but they need to go in your minute book, not filed with the State. This can be difficult to remember to do unless you have an attorney prepare them for you every year. Most of our corporate clients have us act as their registered agent, so each year, when the annual report is due, we make sure their "corporate house" is in order by preparing minutes, and assisting with filing the annual report.
Always be on the lookout for private companies trying to pretend to be part of the government.
You do not need to file your corporate minutes with the State in Illinois. And as far as I know, even if you wanted to file your minutes with the State, you could not do so. There is no reason to do this, and there is no fee from the State to file minutes. You do need to file your annual report along with a fee, but that fee goes directly to the Illinois Secretary of State.
It IS very important for Illinois corporations to prepare their annual minutes, but they need to go in your minute book, not filed with the State. This can be difficult to remember to do unless you have an attorney prepare them for you every year. Most of our corporate clients have us act as their registered agent, so each year, when the annual report is due, we make sure their "corporate house" is in order by preparing minutes, and assisting with filing the annual report.
Always be on the lookout for private companies trying to pretend to be part of the government.
Wednesday, March 25, 2009
Lien filing service?
Huh? Lien filing service? How is this happening? Apparently contractors are paying firms (NOT law firms) to file mechanic's liens for them. The Illinois Attorney General is getting after one of these firms:
According to the Attorney General’s complaint, Contractor’s Lien Services (CLS) and its founder, Steve Boucher, analyze, prepare and file mechanic’s liens on property on behalf of general contractors and subcontractors. CLS allegedly misrepresents to contractors that it has valid cause for filing mechanics liens against homeowners when, most often, those contractors do not actually have valid claims under state laws. CLS also allegedly files liens without the knowledge of some contractors and, in other instances, CLS files liens against homeowners when contractors have not performed work at the properties in question.
After filing foreclosure liens, CLS allegedly files foreclosure actions against consumers who don’t pay off the debts. Some contractors claim that CLS collects money on behalf of contractors but then fails to redistribute the collected debts to them.
The press release does not refer to any unauthorized practice of law claims, which seems like a slam dunk. While filing a mechanic's lien is easy-peasy, the mechanic's lien law is rather complex. Filing it amounts to filling out a simple form and giving the recorder's office $40 or $50. There is no need to pay someone to do that. Knowing when to file one and in what circumstances is where the knowlege and expertise comes into play. If this CLS was giving this kind of advice, they were 1) giving wrong advice, and 2) engaging in the unauthorized practice of law. Either way, all they are allowed by law to do is file a form you complete at the recorder's office. If they were charging more than fifty cents, the contractors were paying too much, since all you need to do is mail it with your filing fee check to the recorder.
File a lien when you should not, and you could be looking at your lien being invalid at best, or defending a slander of title lawsuit at worst. I have no idea how much this CLS outfit charged contractors, but mechanic's lien law is not the place to skimp. Hire an attorney who knows mechanic's lien law.
The press release goes on to describe how many homeowners were duped into paying off liens which were wholly invalid, sometimes when they did not even have any work done by the contractors whose names were on the liens. Just because someone files a lien against your home does not necessarily mean you owe them money or that you need to pay them. If you believe there is a valid reason you do not owe the money they claim (whether it is because the contractor did not do all the work claimed, did it badly, did not do it at all, you already paid them, the lien was filed too late, etc., etc., etc.), talk to an attorney before you pony up the cash.
www.thomasmoens.com
According to the Attorney General’s complaint, Contractor’s Lien Services (CLS) and its founder, Steve Boucher, analyze, prepare and file mechanic’s liens on property on behalf of general contractors and subcontractors. CLS allegedly misrepresents to contractors that it has valid cause for filing mechanics liens against homeowners when, most often, those contractors do not actually have valid claims under state laws. CLS also allegedly files liens without the knowledge of some contractors and, in other instances, CLS files liens against homeowners when contractors have not performed work at the properties in question.
After filing foreclosure liens, CLS allegedly files foreclosure actions against consumers who don’t pay off the debts. Some contractors claim that CLS collects money on behalf of contractors but then fails to redistribute the collected debts to them.
The press release does not refer to any unauthorized practice of law claims, which seems like a slam dunk. While filing a mechanic's lien is easy-peasy, the mechanic's lien law is rather complex. Filing it amounts to filling out a simple form and giving the recorder's office $40 or $50. There is no need to pay someone to do that. Knowing when to file one and in what circumstances is where the knowlege and expertise comes into play. If this CLS was giving this kind of advice, they were 1) giving wrong advice, and 2) engaging in the unauthorized practice of law. Either way, all they are allowed by law to do is file a form you complete at the recorder's office. If they were charging more than fifty cents, the contractors were paying too much, since all you need to do is mail it with your filing fee check to the recorder.
File a lien when you should not, and you could be looking at your lien being invalid at best, or defending a slander of title lawsuit at worst. I have no idea how much this CLS outfit charged contractors, but mechanic's lien law is not the place to skimp. Hire an attorney who knows mechanic's lien law.
The press release goes on to describe how many homeowners were duped into paying off liens which were wholly invalid, sometimes when they did not even have any work done by the contractors whose names were on the liens. Just because someone files a lien against your home does not necessarily mean you owe them money or that you need to pay them. If you believe there is a valid reason you do not owe the money they claim (whether it is because the contractor did not do all the work claimed, did it badly, did not do it at all, you already paid them, the lien was filed too late, etc., etc., etc.), talk to an attorney before you pony up the cash.
www.thomasmoens.com
Wednesday, March 4, 2009
Interesting stats
I have been tracking lender's bid vs. sale price for FHA loans in Iowa for a little while, and the numbers are interesting.
The calculation:
The sale price to a new buyer after the sheriff's sale divided by the amount bid by the lender at the sheriff's sale as a percentage.
The data:
The amount bid by the lender at the sheriff's sale is essentially the money the lender has lost, between the principal balance of the loan, accrued interest, taxes and insurance paid by the lender, and costs of the foreclosure. The sale price to a new buyer is the actual price paid by someone who is buying the property after the foreclosure has gone through and the property has gone back on the market.
The results:
The price paid by the new buyer is a little more than half of what the lender bid at the sheriff's sale. For seventy-six properties analyzed, the drop is 48.28%. There were some amazing outlyers:
$58,000 bid - $8,000 sales price
$44,000 bid - $5,000 sales price
$45,000 bid - $3,000 sales price
$80,000 bid - $21,000 sales price
$115,000 bid - $42,000 sales price
The average number of days between the sheriff's sale and the date of the accepted contract is 291--sneaking up on a year. This does not include the time it takes to foreclose, which can be an additional two to twelve months.
Granted, this is a relatively small sample (however, the standard deviation is 0.1656, so the difference is certainly statistically significant), but what is the cause of incredible loss of value? Three possibilities come to mind:
The calculation:
The sale price to a new buyer after the sheriff's sale divided by the amount bid by the lender at the sheriff's sale as a percentage.
The data:
The amount bid by the lender at the sheriff's sale is essentially the money the lender has lost, between the principal balance of the loan, accrued interest, taxes and insurance paid by the lender, and costs of the foreclosure. The sale price to a new buyer is the actual price paid by someone who is buying the property after the foreclosure has gone through and the property has gone back on the market.
The results:
The price paid by the new buyer is a little more than half of what the lender bid at the sheriff's sale. For seventy-six properties analyzed, the drop is 48.28%. There were some amazing outlyers:
$58,000 bid - $8,000 sales price
$44,000 bid - $5,000 sales price
$45,000 bid - $3,000 sales price
$80,000 bid - $21,000 sales price
$115,000 bid - $42,000 sales price
The average number of days between the sheriff's sale and the date of the accepted contract is 291--sneaking up on a year. This does not include the time it takes to foreclose, which can be an additional two to twelve months.
Granted, this is a relatively small sample (however, the standard deviation is 0.1656, so the difference is certainly statistically significant), but what is the cause of incredible loss of value? Three possibilities come to mind:
- The lenders loaned way more than the property was worth;
- The foreclosure process takes too long, and allows the properties to remain vacant for such long period of time that they significantly deteriorate;
- Something about the property being vacant and/or foreclosed somehow stigmatizes the property, and makes many buyers avoid them.
Any other ideas, or better yet, suggestions?
Friday, January 30, 2009
Another attempt
I had to stave off another attempt to commit fraud via a HUD-1 Settlement Statement a few weeks ago. This time I alienated what is apparently the First Centrally located State Bank which is located in Iowa--if you catch my drift.
This was an FHA loan. There was a provision requiring the seller to pay $3,000 of the buyer's closing costs. Prior to closing we received a preliminary HUD-1 from the short-sleeved-dress-shirt-wearing closing agent which accurately showed the $3K as a credit from the seller to the buyer. When we arrived at closing, the seller paid closing cost credit had been reduced to $700. Since this was an FHA loan, the buyer was required to put in 3% of his own money (the closing was in 2008). If he had been given the whole $3K, he would not have met this requirement, so the lender reduced the seller paid closing cost credit.
The buyer reasonably asked how he was going to receive the remainder of his $3K in closing costs. We volunteered that we had no objection to paying the full $3K, but it would have to be shown on the settlement statement. The loan officer jumped in and told me that the seller had to write a check the the buyer for the $2,300 because it was in the purchase agreement. Apparently she was the buyer's attorney too!
Even though this was a state bank, and the loan officer was the one recommending we cut a check under the table, they were acting as a broker, so I am certain the end lender would not accept this. I told her that this was fraud, plain and simple, and I read to her the language from the settlement statement and from the the Certification of Seller in an FHA-Insured Loan Transaction, which says:
I certify that I have not and will not pay or reimburse the borrower(s) for any part of the cash downpayment.
That is when she really got mad. Actually turned red, wouldn't let me get a word in edgewise, tried to stare me down with an evil glare; that sort of mad. I gathered from her reaction that this was not her first "just write a check under the table that will solve everything the lender will never know" rodeo. Mr. Pocket Protector closing agent was not much help either, smugly repeating, "Oh, I'm sure there's something you can do to work this out." When I asked for suggestions, he was not very forthcoming.
I suggested that the purchase price and/or loan amount could be changed to ensure the buyer contributed his required 3%. They would have none of that.
Do you think I went too far when I told the loan officer that it was attitudes and actions like hers that have ruined this country? I thought maybe I had, but honestly, it really didn't seem to bother her.
This was an FHA loan. There was a provision requiring the seller to pay $3,000 of the buyer's closing costs. Prior to closing we received a preliminary HUD-1 from the short-sleeved-dress-shirt-wearing closing agent which accurately showed the $3K as a credit from the seller to the buyer. When we arrived at closing, the seller paid closing cost credit had been reduced to $700. Since this was an FHA loan, the buyer was required to put in 3% of his own money (the closing was in 2008). If he had been given the whole $3K, he would not have met this requirement, so the lender reduced the seller paid closing cost credit.
The buyer reasonably asked how he was going to receive the remainder of his $3K in closing costs. We volunteered that we had no objection to paying the full $3K, but it would have to be shown on the settlement statement. The loan officer jumped in and told me that the seller had to write a check the the buyer for the $2,300 because it was in the purchase agreement. Apparently she was the buyer's attorney too!
Even though this was a state bank, and the loan officer was the one recommending we cut a check under the table, they were acting as a broker, so I am certain the end lender would not accept this. I told her that this was fraud, plain and simple, and I read to her the language from the settlement statement and from the the Certification of Seller in an FHA-Insured Loan Transaction, which says:
I certify that I have not and will not pay or reimburse the borrower(s) for any part of the cash downpayment.
That is when she really got mad. Actually turned red, wouldn't let me get a word in edgewise, tried to stare me down with an evil glare; that sort of mad. I gathered from her reaction that this was not her first "just write a check under the table that will solve everything the lender will never know" rodeo. Mr. Pocket Protector closing agent was not much help either, smugly repeating, "Oh, I'm sure there's something you can do to work this out." When I asked for suggestions, he was not very forthcoming.
I suggested that the purchase price and/or loan amount could be changed to ensure the buyer contributed his required 3%. They would have none of that.
Do you think I went too far when I told the loan officer that it was attitudes and actions like hers that have ruined this country? I thought maybe I had, but honestly, it really didn't seem to bother her.
Wednesday, January 21, 2009
Foreclosure suggestions
Sorry for the lack of entries of late. Somehow Google decided I was in Japan, so everything in blogspot was in Japanese. Google, I assure you that I am not in Japan, and as evidence submit the sub-zero temperatures and mounds of snow outside my window.
First, if you are having difficulties making your payments, contact your lender, and see if you can work something out with them. Document EVERYTHING. Every telephone call, every letter, every statement, every check. Write down who you talked to, what was said, what time it was, what number you called. Keep copies of everything you send to your lender and everything your lender sends to you.
If you or anyone you know is in foreclosure, or even close to foreclosure, I would suggest a consultation with a knowledgable attorney. I have seen some amazingly sloppy and/or fraudulent work on the part of lender, mortgage brokers, closing agents, appraisers, and real estate agents. Some of their sloppy and/or fraudulent work may be a foreclosure defense. I will run through a few examples, but there are so many tricks these folks pull. Even if you do not see anything in this list that you think applies to your situation, there may be something else that a thorough review of your closing documents might reveal. Be sure to refer to my Foreclosure Rescue Scams article.
In Iowa, if a spouse does not sign the mortgage, the mortgage is void. Wells Fargo recently lost big on this one. Married couple owned a home and refinanced with Wells Fargo. Only the husband was on the loan and only the husband signed the mortgage. Judge said the mortgage was void, and Wells Fargo could not foreclose. Yes, that means they could live there forever without making a house payment. Well, they could live there forever without making a payment IF they could live forever, which they probably can't, but you get my point.
For a refinance, each individual must be given two copies of the Notice of Right to Cancel.
For a refinance, if two people own the property, both of them must sign the Notice of Right to Cancel, even if only one of them is on the loan.
For a refinance, the dates on the copies of the Notice of Right to Cancel give to the borrowers must be completed. Often, I have seen where the closing agent fills in the dates on the original signed by the borrowers, but fails to do so on the copies given to the borrowers.
For some reason, many lenders are sloppy about giving required notices of default to borrowers. When a lender forecloses, they must do everything exactly, perfectly right.
Some lenders fail to provide disclosures to you prior to your closing.
Some lenders fail to provide accurate estimates of closing costs prior to your closing.
There is an interesting case brewing on the east coast. Countrywide is arguing that their claims that they are working with people to prevent foreclosure is mere puffery. Read this story, and see if your blood boils as much as mine did. How they are still in "business," if that's what you call it, completely escapes me.
First, if you are having difficulties making your payments, contact your lender, and see if you can work something out with them. Document EVERYTHING. Every telephone call, every letter, every statement, every check. Write down who you talked to, what was said, what time it was, what number you called. Keep copies of everything you send to your lender and everything your lender sends to you.
If you or anyone you know is in foreclosure, or even close to foreclosure, I would suggest a consultation with a knowledgable attorney. I have seen some amazingly sloppy and/or fraudulent work on the part of lender, mortgage brokers, closing agents, appraisers, and real estate agents. Some of their sloppy and/or fraudulent work may be a foreclosure defense. I will run through a few examples, but there are so many tricks these folks pull. Even if you do not see anything in this list that you think applies to your situation, there may be something else that a thorough review of your closing documents might reveal. Be sure to refer to my Foreclosure Rescue Scams article.
In Iowa, if a spouse does not sign the mortgage, the mortgage is void. Wells Fargo recently lost big on this one. Married couple owned a home and refinanced with Wells Fargo. Only the husband was on the loan and only the husband signed the mortgage. Judge said the mortgage was void, and Wells Fargo could not foreclose. Yes, that means they could live there forever without making a house payment. Well, they could live there forever without making a payment IF they could live forever, which they probably can't, but you get my point.
For a refinance, each individual must be given two copies of the Notice of Right to Cancel.
For a refinance, if two people own the property, both of them must sign the Notice of Right to Cancel, even if only one of them is on the loan.
For a refinance, the dates on the copies of the Notice of Right to Cancel give to the borrowers must be completed. Often, I have seen where the closing agent fills in the dates on the original signed by the borrowers, but fails to do so on the copies given to the borrowers.
For some reason, many lenders are sloppy about giving required notices of default to borrowers. When a lender forecloses, they must do everything exactly, perfectly right.
Some lenders fail to provide disclosures to you prior to your closing.
Some lenders fail to provide accurate estimates of closing costs prior to your closing.
There is an interesting case brewing on the east coast. Countrywide is arguing that their claims that they are working with people to prevent foreclosure is mere puffery. Read this story, and see if your blood boils as much as mine did. How they are still in "business," if that's what you call it, completely escapes me.
Wednesday, September 24, 2008
Foreclosure "rescue" scams
Whenever disaster strikes, most people try to help out others. Most people. A few others swoop in to try to take advantage of the situation. Foreclosure "rescue" scamsters are just such scumbags. Since foreclosures are public record, it is very simple for the scamsters to get online and see who might need their "help." We used to have one such gentleman in our community who provided such services for a couple of years. What he would do is contact his potential victim, er, I mean client and tell them he could clear up their foreclosure for them. He would have the homeowner sign a power of attorney, sometimes a deed to him, and an authorization to talk with the homeowner's lender. He would make sure he would drain the homeowner of any money they might happen to have for his service fee.
Early in his career he would contact the lender, and find out what it would cost to get the mortgage payments current, and pay that. He skipped this step later. He would then require that the homeowner pay him the monthly payment, which he generously bumped up for more of his "service fees." He even set up an out of state corporation for this payment processing. For a while, he actually made some payments directly to the lenders. This must have been very boring, since he stopped doing this after a time.
You might be thinking that the homeowner would get notification that their payments were not being made. You would be right if he hadn't used that power of attorney to change the address the lender had on file for sending notices to his address. Of course, he had that signed when he was the great guy, white knight, rescuer, etc. Often the next thing people knew was that the foreclosure was back on, and the scamster had been pocketing their money for months without making a single payment to their lender.
In one particularly egregious case, he had the homeowner deed the property to him, in addition to paying him a $20,000 service fee. When the homeowner got wind that he was not making payments, she wisely contacted a lender to help her straighten things out. The scamster, since he was now the owner of the property, demanded that the homeowner give her some money to "buy the house back from him," because he had lots of equity (which he of course stole from the homeowner in the first place). We eventually got him and his equally sleazy attorney to drop this preposterous demand, and we got the property back in her name, with a fair and reasonable mortgage. I wish I could give you a transcript of our "negotiations" with the scamster's attorney, but his language and his claims of what he was going to do to me would require this blog to get an R rating if I did post it. Lucky for us, both the scamster and his sleazy attorney have left town--no doubt raining fraud upon another community.
Moral of the story: If you are in financial trouble, contact your lender right away. And contact a reputable real estate attorney before you sign anything designed to help you. I will bet most attorneys will charge you less than $20,000...
Early in his career he would contact the lender, and find out what it would cost to get the mortgage payments current, and pay that. He skipped this step later. He would then require that the homeowner pay him the monthly payment, which he generously bumped up for more of his "service fees." He even set up an out of state corporation for this payment processing. For a while, he actually made some payments directly to the lenders. This must have been very boring, since he stopped doing this after a time.
You might be thinking that the homeowner would get notification that their payments were not being made. You would be right if he hadn't used that power of attorney to change the address the lender had on file for sending notices to his address. Of course, he had that signed when he was the great guy, white knight, rescuer, etc. Often the next thing people knew was that the foreclosure was back on, and the scamster had been pocketing their money for months without making a single payment to their lender.
In one particularly egregious case, he had the homeowner deed the property to him, in addition to paying him a $20,000 service fee. When the homeowner got wind that he was not making payments, she wisely contacted a lender to help her straighten things out. The scamster, since he was now the owner of the property, demanded that the homeowner give her some money to "buy the house back from him," because he had lots of equity (which he of course stole from the homeowner in the first place). We eventually got him and his equally sleazy attorney to drop this preposterous demand, and we got the property back in her name, with a fair and reasonable mortgage. I wish I could give you a transcript of our "negotiations" with the scamster's attorney, but his language and his claims of what he was going to do to me would require this blog to get an R rating if I did post it. Lucky for us, both the scamster and his sleazy attorney have left town--no doubt raining fraud upon another community.
Moral of the story: If you are in financial trouble, contact your lender right away. And contact a reputable real estate attorney before you sign anything designed to help you. I will bet most attorneys will charge you less than $20,000...
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