by: Peter J. Gallagher (@pjsgallagher) (LinkedIn)
A recent decision from the Appellate Division drives home (1) the duty of sellers at sheriff's sales to announce all material information about the property being sold at the sale, (2) the duty of bidders at sheriff's sales to perform independent due diligence about the property notwithstanding that announcement, and (3) the flexibility of Chancery Division courts to fashion remedies when both fail to fully satisfy their obligations.
In Wells Fargo Bank Bank, N.A. v. Torney, plaintiff foreclosed on property owned by defendant, obtained final judgment against defendant, and proceeded to sheriff's sale. In advance of the sheriff's sale, plaintiff submitted its "sheriff's sale package" to the Camden County Sheriff. Included in the package was a short form property description (required under N.J.S.A. 2A:61-1), which, among other things, disclosed that the property was subject to a $94,000 first mortgage. The existence of this prior mortgage was also disclosed in the conditions of sale attached to the short form property description, and in the Affidavit of Consideration submitted by plaintiff in connection with the foreclosure. Finally, the short form property description also contained the following disclaimer: "all interested parties are to conduct and rely upon their own independent investigation to ascertain whether or not any outstanding interest remain[s] of record and/or have priority over the lien being foreclosed and, if so[,] the correct amount due thereon."
Edward Shuman, who would eventually be the winning bidder at the sheriff' sale, learned about the sale through the sheriff's website, which did not mention the prior mortgage. Also, at the sheriff's sale, plaintiff did not announce, as part of its "general announcements," that the property was subject to a prior mortgage. And, on the "printed condition of sale, the box next to 'subject to a first mortgage' was not checked." Shuman claims that he did not know about the prior mortgage when he placed his winning bid on the property, and did not learn about it until later that day when he inquired about the existence of any tax liens on the property. Once he learned about the mortgage, he contacted plaintiff and requested that the sale be vacated and his deposit returned. When plaintiff refused, Shuman filed a motion seeking the same relief.
Continue reading “Winning Bidder At Sheriff’s Sale Entitled To Recoup Some, But Not All, Of His Deposit After Sale Is Vacated”
by: Peter J. Gallagher (@pjsgallagher)
In an interesting case this morning at the US Supreme Court, the Justices will be asked to determine whether a fish is a “tangible object.” No. Really. That is the issue in Yates v. United States.
The Sarbanes-Oxley Act, which was passed in the wake of the Enron scandal, makes it a crime to “destroy, mutilate, conceal, or cover up any record, document, or tangible object” with the intent to obstruct a federal investigation. It is unlikely that Congress had fish in mind when it passed the Act, but this is nonetheless the federal law that was used to convict John Yates — captain of the Miss Katie, a commercial fishing boat out of Cortex, Florida — for throwing 72 red grouper that were allegedly below the legal limit back into the ocean.
Continue reading “Today at SCOTUS – [Insert Bad Fish Pun Here]”
by: Thomas Spiesman
On August 15, 2011, the New Jersey Department of Environmental Protection ("NJDEP") published proposed rules that represent the final step in the implementation of the 2009 Site Remediation Reform Act ("SRRA"). The SRRA completely overhauls the way environmental investigations and remediations are conducted in New Jersey and introduced the Licensed Site Remediation Professional ("LSRP") program.
The proposed final rule package completes the transformation of the site remediation process from one of NJDEP command-and-control to one that allows for decision-making to be placed in the hands of LSRPs hired on behalf of the remediating party. LSRPs are responsible for overseeing remediations in accordance with NJDEP regulations, making the day-to-day decisions regarding the remediation of sites, and determining when a cleanup is complete. Although the NJDEP maintains oversight of remediations and reviews documents submitted by responsible parties and their LSRPs, the responsible parties and their LSRP are allowed to continue with the remediation without waiting for NJDEP approval.
The proposed new Technical Requirements are intended to ensure that remediation is conducted in a way that is protective of human health and the environment, while allowing the party responsible for cleaning up the site and the LSRP flexibility in addressing the different types of sites, contaminants, potential exposure pathways, and geographic settings within the State. In addition to the proposed Technical Requirements, the NJDEP is producing multiple guidance documents.
Comments on the new rules may be submitted to the NJDEP until October 14, 2011 and the Department anticipates adopting the final rule package by May 2012.
by: Peter J. Gallagher
Earlier this week, we posted a story about the Washington Post's year-long investigation into HUD's HOME Program which was designed to provide affordable housing to the working poor ("HUD Is A Dud According To Washington Post Investigative Report"). As you might recall, the investigation slammed HUD's management of the HOME Program as "dysfunctional." HUD has now posted a response on its blog (the cleverly title HUDdle), called "Setting The Record Straight: What The Washington Post Got Wrong About The HOME Program." After reading the response, you may be left with the impression that HUD could have shortened it to one word — "everything" — because it offers a strikingly different view of the HOME Program than the one presented in the Post. Among other things, HUD criticized the Post's study for: (1) unfairly focusing on a small percentage, approximately 2.5%, of the more than 28,000 active developments underway pursuant to the HOME Program; and (2) failing to factor the nationwide housing crisis into the equation.
In a follow up article, "Members Of Congress Call For Probe Of HUD's Affordable-Housing Program," the Post noted that it never intended to track all 28,000 projects, but instead analyzed 5,100 deals worth $50,000 or more, hundreds of which were started before the housing crisis began. The Post also reported that, in response to its study, a bipartisan group of Senators and Congressmen were calling for investigations into the program.
by: Peter J. Gallagher and Steven P. Gouin
Our regular followers know that many of our pieces focus on the foreclosure industry, and with good reason, as over 2 million American homes are currently in foreclosure. Add to this troubling statistic the recent allegations of shoddy paperwork at many of the nation's largest mortgage companies and the law firms representing them, and you have the makings of a compelling story of a giant foreclosure-induced catastrophe. While homeowners have been feeling the pain from this crisis for years now, the catastrophe struck close to home recently for many of the banks and mortgage companies at the heart of the foreclosure crisis.
In an article entitled “Confidential Federal Audits Accuse Five Biggest Mortgage Firms Of Defrauding Taxpayers,” the Huffington Post is reporting that a recent federal audit conducted by the Department of Housing and Urban Development (HUD) revealed that five of the nation's largest foreclosure firms, including industry giants like CitiBank and Bank of America, are guilty of fraud under the Federal False Claims Act. Specifically, the audit concluded that the banks “filed for federal reimbursement on foreclosed homes that sold for less than the outstanding loan balance using defective and faulty documents.” According to the article, federal prosecutors are debating whether to use the audits as the basis for criminal and civil sanctions against the mortgage companies.
At the same time, the New York Times is reporting that New York Attorney General Eric Schneiderman has requested information and documents from three major banks – Goldman Sachs, Bank of America, and Morgan Stanley – about their mortgage-backed securities operations (“NY State Investigates Banks’ Role In Financial Crisis”). This suggests that Mr. Schneiderman may be launching an investigation into the banks' practices, which many believe led to billions in mortgage losses. One of the most interesting aspects of the article is the suggestion that, by requesting this information from the banks, Mr. Schneiderman is “operating independently of peers from other states who are negotiating a broad settlement with large banks over foreclosure practices.” The article notes that Mr. Schneiderman has been unwilling to join this proposed settlement because the banks are demanding that it include a clause whereby regulators agree not to conduct additional investigations into the banks’ activities during the mortgage crisis.