Jurisdiction, courts, and filings

Searching for trustee filings is not a quick-and-easy process.

The idea is that the filings would show which houses will be coming up on the market in foreclosure sales; this is the kind of tip passed along in online conversation threads for would-be investors who want to dabble in real estate. In Maryland, however, getting such information is easier said than done. I just spoke with a nice clerk at the Prince George’s County Circuit Court, who told me clearly that “we are not required to keep any lists or [that] information.”

Let’s backtrack a little. In an earlier post, I clarified on the basis of information received that, in Maryland, the Circuit Court handles foreclosures. A Circuit Court judge explicitly confirmed the language of the law in writing to a troubled homeowner. All District Court judges know that house foreclosures are not to be handled in the Landlord-Tenant division of the District Court. Regrettably, this crystal-clear law has been repeatedly violated, especially in Prince George’s County, and in the chambers of Judge Crystal Mittelstaedt–where, regrettably, foreclosures have in fact been processed. In legal terms, the District Court lacks jurisdiction to help a house flipper foreclose on a homeowner.

Trying to track down ‘substitute trustee’ filings in Prince George’s County corroborates the principle. When a bank or lender plans to foreclose on a homeowner, often it will arrange with a ‘substitute trustee’, as previously written. By law, a record of the arrangement has to be filed with the county. As one typical legal website explains,

The trustee named in the deed of trust carries out the foreclosure action.  While the original trustee named in the deed of trust may institute the foreclosure, the lender will generally appoint an individual, firm, or company that is experienced in foreclosure matters to be substituted in place of the original trustee.  This is accomplished by the execution of a written document properly recorded in the county where the real property collateral is located.  N.C.G.S. § 45-10 and 11.

Figuring that since foreclosures have in fact been processed in the District Court in Hyattsville, Maryland, I should start there, I called up the court to ask how to look up trustee filings. A nice clerk in the Hyattsville building told me that was “not something we actually handle here,” and transferred my call to the District Court in Upper Marlboro. Another nice clerk there told me, very politely, that the information I wanted “sounds like it may be Circuit Court,” and transferred me there.

Once in Circuit Court, it still took a couple of tries to land in the Foreclosure Department. Note that foreclosures are indeed a department in the Circuit Court, not in the District Court. To put it bluntly, beware of anyone pushing a foreclosure who proceeds through the wrong court. Furthermore, it is a sound principle that the records should be kept in the building where the cases are adjudicated.

Last resort

Even in the right department, however, it would not be an easy or at-a-glance task to look up forthcoming foreclosures by means of substitute trustee filings. One would need a case number and would have to come in requesting to see a specific case.

With that information, one could go to Maryland Case Search, or to some law firms; some large banks have foreclosure sections in their websites; real estate firms have access to foreclosure listings. Everything is easier if you have the information already.

For example, if you already know that one major ‘foreclosure mill’ attorney is John S. Burson, you can find ready confirmation with a quick look at the multi-page list of some of his cases. If you know that the Wittstadts are walking foreclosure mills, you can easily look them up. Each of these names generates more than 500 results in the quick Maryland look-up.

Looking up the name Hijazi also generates more than 500 results. Many of these cases belong to Abdulla Haitham Hijazi, the attorney son of P. G. County DPIE Director Haitham Hijazi. Some of Mr. Hijazi’s foreclosure cases–indicated as such in the Maryland case list–are actions in district courts in Maryland. Mr. Hijazi did not communicate in reply to a request for comment.

Each page shows 25 results. One can find the results here, or go to Maryland Judiciary Case Search and fill in the search boxes with the name/s.

In a quick search of the first page, I counted two cases in the District court in Hyattsville, six in the District court in Frederick County, and five in the District court in Silver Spring. These are all cases involving real property in which Hijazi is listed as “Attorney.” In fact, Hijazi is a party in each. On the entire page of 25 cases, only seven were handled in Circuit Court (none of those in P. G.).

Second page, another 25 results. All 25 were handled in District courts–fourteen in Rockville; one in Glen Burnie; ten in Hyattsville. For those of you keeping score at home, seven of the Hyattsville cases date from 2016 or 2017 and are currently listed as “ACTIVE.”

Presumably there is still hope for those homeowners. Sadder are all the cases listed as “CLOSED.”

Third page, another 25 results. Not all are indicated as foreclosures, but most involve real property and are being processed in District courthouses with Hijazi as the “Attorney” for his company as party–twenty in all, with five in the Upper Marlboro District Court and the rest in the Hyattsville District Court.

As a citizen, I am beginning to wish that our Judicial Disabilities Commission would take an interest in this pattern.

It also looks like a viable class action lawsuit. That could be hard to pull off, admittedly; people who have already been forced out of their homes might be hard to find.

More to come.

 

 

 

House flippers help pressure homeowners into foreclosure

Reducing foreclosure ‘backlogs’ is not the same as reducing foreclosures. To reduce foreclosures, best we keep people in their homes. Unfortunately, a different strategy is too often pursued, at least in Prince George’s County–speeding up the foreclosures. The backlog of foreclosures still in the hopper in the county can thus be reduced, on the books. It’s a strategy that benefits real estate investors. House flippers with the capital and connections to snap up a bunch of houses can then turn around and sell the houses at a profit, sometimes quickly.

Take for example the real estate company called Integrity Professional Contracting, in Prince George’s County, Maryland. On September 12, 2013, Integrity Professional Contracting purchased a pleasant home at 7800 Suiter Way, in Landover, for the bargain price of $73,000. Four bedrooms, four baths, nice yard if somewhat bland landscaping. The Washington Post’s real estate report listed Mark H. and Gerard W. Wittstadt as the seller. However, Maryland public records show that the actual homeowner was Olusegun A. Bright. Bright had bought his house in 2005 for $215,000. Forced into foreclosure after the collapse of the real estate market, he sold at enormous loss.

The Wittstadts were what is known as ‘substitute trustees’. In Maryland, these companies help push along the process of foreclosure. When a homeowner falls behind on  mortgage payments, the bank holding the mortgage note can contract with a foreclosure firm–which acts as ‘substitute trustees’, standing in for the lender–rather than dealing directly with the homeowner. Sometimes this arrangement works out well for the bank, which has fewer tearful borrowers to deal with and fewer individual cases to decide justly on the merits. Sometimes the arrangement fails to benefit the bank. 

Signs of the times

Signs of the times

The process can benefit well-financed house flippers, as mentioned. Integrity Professional Contracting sold the 7800 Suiter Way property on October 10, 2013, for $193,000–still a reasonable price for a good-sized condo in good shape, nonetheless a $120K gain in less than a month.

The company has not yet returned a telephone call for inquiry. Its members may or may not be Flip or Flop fans. What is known is that its top executive is Abdullah Haitham Hijazi, son as previously written of P. G. County’s Director of Permitting, Inspections and Enforcement. Mr. Hijazi has gotten sweet press from the Washington Post, partly in support of cutting red tape, partly in sympathy for immigrant families in America.

Speaking of immigrant families–

Mr. Hijazi’s company bought another house on Suiter Way on January 30, 2014, paying Tito T. Ladipo $114,500 (foreclosure). The company sold the house on May 8 for $199,000, according to public record. The company bought 3911 Elkhorn Circle from Olushola Adetunji on September 19, 2013, for $162,000 (foreclosure). Sold on December 12 of that year for $270,000.

There seems to be little regulation of ‘substitute trustees’ in Maryland. Or–if you really can’t stand the word “regulation”–there seems to be little public oversight. With the enormous supply of homes in foreclosure in Prince George’s County, there is tremendous market pressure to ease up restraints that would keep properties from coming on the market. ‘Reducing the backlog’, again. (And “reducing regulation” and “cutting the red tape.”) Add to that a large county that includes historically excluded minorities, immigrant families, and first-time home buyers, and you have the ideal population for taking advantage of, historically under-served, with apparently little or no scrutiny from the state Attorney General. (Lack of scrutiny from the courts as an issue will have to wait for another day.)

Add further the recent down and up in real estate–the crash in 2007-2009, and the recovering housing market today. There is interest in buying houses, and there is frustration in waiting for a house to come on the market. Also, sellers leaving their homes voluntarily may choose to hold out for a decent price. And if they’re in a good position to sell, they may also have access to legal protection.

So what’s a sharp house flipper to do? One thing he can do is get in on the ‘substitute trustee’ end of the business. That way, he’s in touch with banks/lenders, with information on houses heading into foreclosure. In fact, he’s put directly in touch with the homeowners struggling with foreclosure. Another thing he can do is keep a sharp eye out for the most recent updates/information on permitting.

Integrity Professional Contracting, for example, the firm mentioned above, became active (registered) in Maryland in April 2011. The company purchased two houses in Prince George’s County in the next two years, and sold two others. Mr. Hijazi became Acting Director of DPIE on June 11, 2013, transferring from his previous county position as Director of the Department of Public Works and Transportation. A quick look at WaPo home sales for P. G. shows that from that date through the end of the year, the Hijazi firm bought six houses, selling the two in foreclosure mentioned above.

The pace picked up further. In 2014, the company bought and/or sold nine houses, including this home at 2715 Judith Avenue bought for $74,000 in October 2013 and sold for $230,000 in July 2014.  In 2015, the company bought or sold ten houses, including 804 Nalley Rd., purchased September 3 for  $100,000 (foreclosure) and sold November 26 for $210,000. In 2016, the company bought/sold eleven houses in Prince George’s County, including 116 Swiss Gap Rd., No. 14-4, sold on February 4 for $159,000 and purchased the previous September for $77,000 (foreclosure).

One cannot assume that all foreclosures are undeserved. Not all homeowners are deserving. But I know for a certainty that some foreclosures are undeserved. The homeowner, or relatives, can offer to make up the payments missed–and the foreclosure will still proceed. In other words, if the substitute trustee wants the house, once a homeowner falls behind on payments–even if because of medical bills or other legitimate issues–the trustee can still push the foreclosure forward.

Legal notice

Legal notice

From the standpoint of public policy, this is not the best strategy for reducing backlogs. The effect in Prince George’s County has been to reduce–directly and drastically–the chief source of wealth for historically excluded groups.

More to come.