Keep up to date on the U.S. Attorney's Mortgage Fraud task force

The phrase "tip of the iceberg" comes to mind as I read the press releases on the U.S. Attorney's website. His collection of prosecutions and pleas are significant, surely, but my own experience is that dozens of settlement companies and their owners have simply melted away into the mist with their ill-gotten gains.

We have brought prosecutors iron clad cases of fraud, with deposition transcripts and documented transactions, only to be told that sums in the range of $300,000 are not big enough for prosecution. Worse, we are told that "its a business matter," and we should continue to pursue our civil remedies.

Do you have claims involving Maryland Title and Escrow and David Wehrs?

Maryland Title & Escrow is owned by David Wehrs. He appears in many of our claims. On February 1, 2010, the SEC sued him for a $1.96 offering fraud scheme. The SEC Complaint is fun reading. It alleges a scheme where money was solicited in order to support "day trading," a self-owned home improvement business, and vacations in the British Virgin Islands.

And as the the late-night television ads declare, "wait, there's more!"

On March 1, 2010, Mr. Wehrs pleaded guilty in the U.S. District Court for the District of Maryland to one count of wire fraud, in connection with the same scheme. The Government's recitation of facts says that at least $630,000 was diverted from a real estate settlement fund intended to payoff mortgages. The Government got him for wiring stolen funds to a brokerage located in another state. If you have access to PACER, you can read the sordid details in case number 1:10 cr 00038. Mr. Wehrs will be sentenced in May, and faces 20 years, plus a restitution order.

If you think you may have a claim against Mr. Wehrs or his entity, arising from his conduct of real estate settlements, you will be at the end of a long line.

It's getting easier to locate estates in Maryland.

The latest addition to Maryland's on-line databases is here! You may now search all estates, across the state, on the new Register of Wills page. We may all search by decedent, interested party, and other categories. The search gives access to the docket.

But this is not like the PACER system, where you may download .pdf documents with a few clicks of the mouse, and payment of $.08 per page. This site only gives you document titles, and the number of pages. The document must be ordered, at a cost of $.50 per page. This involves filling out a form, and mailing or delivering the form., and then awaiting delivery of the documents through snail mail...*yawn*.

This is still a great tool to replace having to send our paralegals and assistants out to various courhouses to search for the existence of estates. But it does not vitiate the need to review the actual file (or microfilm) at the courthouse, and obtain copies.

Is that Deed of Trust fully and properly executed?

Do you have a claim or case involving a deed of trust with missing or mistakenly executed affidavits of consideration and disbursement? This is all the rage among several bankruptcy trustees, who have been filing adversary cases seeking to invalidate recorded liens. The black letter law says that this type of defect is "self-cured" if a party to the instrument fails to make a formal challenge to the documenet within six months.

We have at least six of these cases in the office. All parties in these cases are anxiously awaiting the Maryland Court of Appeals decision in Ameriquest Mortgage v. Paramount, #52, argued on January 7, 2010. It will decide whether a lienholder may challenge an earlier recorded deed of trust on the basis of an allegedly defective affidavit of consideration and disbursement where that challange was made a full eighteen (18) months after the instrument was recorded.

We have stayed some of the cases, by agreement of the parties, as we await this important court decision.

Baltimore County is attempting to recalculate recording tax on old transactions!

We recently assisted a client that could not get a refinance deed of trust recorded in Baltimore County. The tax office demanded over $5,000 it claimed was due on two prior deeds in the chain of title for transactions one year prior to the deed of trust! Even though the lien sheet for the client's refi was clear, the County claimed the entitlement to recalculate and recapture the tax, and further refused to record the client's deed of trust until the funds were paid. We communicated directly with the County Attorney's Office, explained the operation of the various tax and recording provisions, and arranged for the County's acceptance of the deed of trust for recording within one week's time.

At risk, of course, is that the County's refusal to accept the instrument could have pushed the recording outside the bankruptcy code's "safe harbor" period in the event the borrower files for bankruptcy sometime in the near future. There was also the risk of intervening liens, and a loss of lien priority.

If the County had not accepted our analysis, the client would have had to advance the funds, and then file a claim for reimbursement with the Comptroller's office. This would have cost additional legal fees. The poorest choice would have been for the client to withhold the instrument while chasing the borrower in court to compel payment of the $5,000.

The lesson: Get it recorded! We can help you sort through the recoupment issues, after the lender's lien is perfected.

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