Wilmington– Today Attorney General Beau Biden named Kathleen Jennings as State Prosecutor in the Delaware Department of Justice.  Jennings brings more than 30 years of experience as a prosecutor and administrator to the top spot in the Department’s Criminal Division.  She replaces Richard Andrews who was confirmed by the United States Senate last week as U.S. District Judge for Delaware.

Attorney General Biden said, “Kathy brings unique and valuable experience from years prosecuting criminal cases and managing prosecutors to this position.  I look forward to working closely with Kathy as a member of my senior staff.”

After graduating from Villanova Law School in 1978 Jennings worked as a Deputy Attorney General for 16 years in the Delaware Department of Justice Criminal Division.  During that time she prosecuted the full range of cases, from misdemeanors to homicides, and she supervised the Rape, Felony Screening, and Trial Units.  Notably, she handled the 1989 prosecution of serial killer Steven Pennell.  From 1993 to 1994 Jennings served as Chief Deputy Attorney General under Attorney General Charles Oberly.

In 1995, Jennings and outgoing Attorney General Charles Oberly established a private legal practice in Wilmington, where she has handled a range of criminal defense, white collar, regulatory, and civil litigation cases.  Jennings is a member of the American College of Trial Lawyers.

“I am honored that Attorney General Biden has asked me to fill this important position,” Jennings stated.  “The prosecutors in the Attorney General’s Office are a terrific group of talented trial attorneys who tirelessly devote themselves to the cause of justice, and I look forward to working with them.”

# # #

Wilmington – The Attorney General’s Mortgage Fraud Task Force is sponsoring free statewide housing workshops on November 8th in Seaford and November 9th in Wilmington to help Delawareans who are at risk of losing their homes to foreclosure, Attorney General Beau Biden announced today.  The workshops are offered to facilitate loan modifications, reduce foreclosures, and provide information to help residents stay in their homes and avoid foreclosure fraud.  Since 2009, more than 1,200 homeowners have attended 20 workshops sponsored by the Task Force in conjunction with the Delaware State Housing Authority and State Bank Commissioner.

“Our goal is to make sure that homeowners who are seeking ways to meet their mortgage obligations are able to have meaningful conversations with their lenders and avoid being victimized by mortgage “rescue” scams that strip homeowners of their equity and their home,” Attorney General Biden said.  “I strongly encourage homeowners who are behind on mortgage payments to attend our housing workshops where they can sit face-to-face with their lenders and discuss repayment plans or other options to avoid foreclosure and get information about the many services available to them.”

Sheriff sales of foreclosed homes increased 33% statewide during the first ten months of the year, climbing to 2,166 from 1,628 during the first ten months of 2010.  Among Delaware counties, Sussex had the biggest jump, 63% to 551 sales from 339 last year.  Statewide foreclosure filings for the first ten months of 2011 totaled 3,749, representing a reduced pace from the record 6,400 filed in all of 2010, but remaining at a historically elevated level.

Homeowners who have missed mortgage payments, are facing foreclosure, or suspect foreclosure fraud can receive immediate on-site help from housing professionals. At each workshop, mortgage servicers, state employees, and HUD-certified housing counselors will discuss mortgage modifications, government homeowner programs, and foreclosure scams.

Walk-ins are encouraged. Workshops will take place as follows:

Tuesday, November 8, 2011
3 to 7 p.m.
Nanticoke Senior Center, 1001 West Locust Street, Seaford
Participating Servicers: AHMSI, Bank of America, CITI, GMAC, OCWEN , US Bank

Wednesday, November 9, 2011
1 to 7 p.m.
Chase Center on the Riverfront, 815 Justison Street, Wilmington
Participating Servicers: AHMSI, BANK of America, Chase, CITI, Freddie Mac, GMAC, HSBC, OCWEN, US Bank

Homeowners who wish to meet on-site with their mortgage servicer should bring information about current income and details about their current mortgage, including loan number, monthly payment, interest rate, and loan balance.

This year Biden’s office has taken action to ensure that homeowners who are faced with foreclosure are able to have meaningful conversations with their lender about their mortgage.  Specifically, the Department of Justice drafted legislation that was recently signed into law that establishes a statewide automatic foreclosure mediation program and provides additional protections for homeowners in foreclosure.  Beginning next January, when a lender files a foreclosure action in court, every homeowner will have the opportunity to sit down face-to-face with their lender to discuss alternate resolutions before that foreclosure moves forward.

Biden’s office is also investigating a range of mortgage and foreclosure practices by the financial services industry.  In addition to helping to lead a nationwide investigation by state Attorneys General into serious questions about banks’ foreclosure practices, last week Attorney General Biden filed a lawsuit in Delaware Chancery Court against the shadow mortgage registry known as MERS that is at the center of the housing crisis.  The suit charges that the Mortgage Electronic Registration System (MERS) engaged in deceptive trade practices that sow confusion among homeowners, investors, and other stakeholders in the mortgage finance system, seriously damaging the integrity of the land records that are central to Delaware’s real property system, and leading to improper foreclosure practices. 

Attorney General Biden stated when he announced last week’s lawsuit: “MERS has raised serious questions about who owns what in America.  Rules matter.  A homeowner has the obligation to pay the mortgage on time, and lenders must follow the rules if they are seeking to take away someone’s house through foreclosure. The honor system won’t work.”

For more information about the November 8 and 9 workshops, call the Attorney General’s Foreclosure Hotline at 1-800-220-5424, e-mail mortgage@delaware.gov, or visit www.attorneygeneral.delaware.gov.

# # #

Wilmington – Following a proactive online undercover investigation by the Child Predator Task Force, Newark resident James R. Cairns, III has been arrested and charged with dealing in child pornography, Attorney General Beau Biden announced today. Cairns, who has worked part-time as a referee and umpire for youth sports in Pennsylvania, also formerly coached children’s soccer when living in the Bryn Mawr area.

“With state-of-the-art technology and training, the Child Predator Task Force keeps kids safe by taking predators offline and off our neighborhood streets,” said Attorney General Biden.

            Today, members of the Delaware Child Predator Task Force and a uniformed Delaware State Police Trooper executed a search warrant at 4 Mapleshade Road in Newark that was based on information gathered during an undercover investigation into the online distribution of child pornography. Cairns, 41, who lives at the residence with his parents, admitted to police that he used the Internet to locate and download child pornography. A forensic examination of computers and other digital evidence seized during the search revealed over 1,000 files of child pornography, some of which contained images of children as young as six years old. Detectives also seized several printed images of child pornography. Cairns was arrested and charged with 26 counts of dealing in child pornography. After arraignment at JP Court 2, he was committed to James T. Vaughan Correctional Center in lieu of $780,000 secured bail. The investigation is ongoing.

            A mug shot of Cairns is attached.

# # #

Attorney General files suit against MERS under the state’s Deceptive Trade Practices Act;
Inaccurate and unreliable records harmed homeowners

Wilmington, DE – Delaware Attorney General Beau Biden filed suit today against the shadow mortgage registry known as MERS that is at the center of the housing crisis. The complaint, filed in the Delaware Chancery Court, charges that MERSCORP and its subsidiary Mortgage Electronic Registration Systems, Inc. have repeatedly violated the state’s Deceptive Trade Practices Act.

            “Since at least the 1600s, real property rights have been a cornerstone of our society,” said Attorney General Biden. “MERS has raised serious questions about who owns what in America. A man or woman’s home is not just his or her largest investment, it’s their castle. Rules matter. A homeowner has the obligation to pay the mortgage on time, and lenders must follow the rules if they are seeking to take away someone’s house through foreclosure. The honor system won’t work.”

MERS engaged and continues to engage in deceptive trade practices that sow confusion among homeowners, investors, and other stakeholders in the mortgage finance system, seriously damaging the integrity of the land records that are central to Delaware’s real property system, and leading to improper foreclosure practices.  These deceptive trade practices fall into three broad categories:
• MERS, through its private mortgage registry, knowingly obscures important information from borrowers and the information that MERS does provide to borrowers is frequently inaccurate.  The opacity of MERS’ mortgage registration database makes it difficult for consumers to know of or challenge inaccuracies in the MERS System.  This harms borrowers when MERS forecloses on borrowers in its own name, thus impairing a borrower’s ability to raise defenses.  This also hampers the ability of borrowers to seek out the owner of their loan to pursue loan modifications or other loss mitigation relief. 
• MERS often acts as an agent without authority from its proper principal.  Because the MERS System was both unreliable and frequently inaccurate, MERS often does not know the identity of its proper principal.  Where the name of the owner of the mortgage loan recorded in the MERS System does not reflect the true owner, any action MERS takes on behalf of the purported owner is without authority. 
• MERS is effectively a “front” organization that has created a systemically important mortgage registry but fails to properly oversee that registry or enforce its own rules on its members that participate in the registry.  Rather than maintaining an adequate staff to provide MERS’ services, MERS operates through a network of over 20,000 deputized non-employee corporate officers who cause MERS to act without any meaningful oversight from anyone who works at MERS.  This has resulted in MERS recording so-called “robosigned” documents with country recorders of deeds and failing to follow its own rules regarding proper institution of foreclosure proceedings.
MERS, which is incorporated in Delaware and based in Northern Virginia, was formed in 1995 to facilitate the growing mortgage finance market. Large banks, such as Bank of America and Wells Fargo, the quasi-governmental institutions Fannie Mae and Freddie Mac, and other participants in the mortgage-lending industry created MERS to bypass the county Recorders of Deeds offices throughout America. Unfortunately, there was little to no outside oversight of MERS’ murky registry or transparency for homeowners. MERS did not meaningfully audit its records and failed to even enforce its own rules governing members’ conduct.
The complaint cites an example of a recent foreclosure in New Castle County in which MERS foreclosed on a loan in which it had no interest and without naming the real party in interest.  In fact, the entity upon whose behalf MERS sought to foreclose had actually been dissolved months prior.  MERS’ own records indicated numerous transfers in and out of MERS that were not reflected in the county records, as required by MERS’ own rules.  The confusing path and inaccurate records associated with this mortgage are not an isolated instance of bad record keeping by MERS.  Rather, this type of confusion is endemic to the entire MERS System.
Specifically, the suit alleges that MERS violated Delaware’s Deceptive Trade Practices Act by:
• Hiding the true mortgage owner and removing that information from the public land records.
• Creating a systemically important, yet inherently unreliable, mortgage database that created confusion and inappropriate assignments and foreclosures of mortgages.
• Operating MERS through its members’ employees, who MERS confusingly appoints as its corporate officers so that such employees may act on MERS’ behalf.
• Failing to ensure the proper transfer of mortgage loan documentation to the securitization trusts, which may have resulted in the failure of securitizations to own the loans upon which they claimed to foreclose.
• Assigning and foreclosing upon mortgages for which MERS did not possess authority to act because the mortgage loan was never properly transferred.
• Initiating foreclosures in the name of MERS without authority to do so or without appropriate controls to ensure the actions were being carried out by the actual owner of the mortgage.
• Allowing the entry and management of data by those MERS members who are identified as owners or servicers in the MERS System, instead of controlling entry and management itself.
• Initiating foreclosure actions in which the real party in interest was hidden, thus preventing homeowners from ascertaining who owned their mortgage in order to challenge whether or not they had a right to foreclose and limiting their legal defenses.
• Purporting to act as an agent without knowing the identity of its principal and therefore if it acted within the scope of its agency or not.
• Encouraging reliance on the MERS System when MERS knew the system was unreliable and by allowing its members to cause MERS to act beyond the scope of its authority in reliance on such unreliable data.
• Taking instructions from entities who, despite being listed as note holders in the MERS system, were not the proper principals to cause MERS to act under MERS’ rules.
• Assigning mortgages without authority to do so where MERS purports to act for the wrong entity or where the requisite signature of a MERS signing officer is not actually executed by that officer.
# # #

Delaware, 16 other states ask FCC for tougher federal rules fighting ‘cramming’

WILMINGTON – Delaware Attorney General and his colleagues in 16 other states called on federal regulators this week to do more to protect consumers against unauthorized charges added to their telephone bills. 

The Federal Communications Commission has proposed rules targeting a fraudulent scheme known as cramming – parties other than the telephone company deceiving customers and placing charges on phone bills without their consent. Cramming charges, which a recent U.S. Senate report estimates cost consumers more than $2 billion annually, cover services such as e-mail and voicemail.
The proposed FCC rules are designed to give customers greater ability to guard against cramming.  In a filing with the Commission this week, the Attorneys General asked the FCC to strengthen the proposed rules, especially those covering wireless phone users.

“Consumers should not have to be constantly defending themselves against schemes to sneak phony and fraudulent charges onto their phone bills,” Biden said. “We are asking the federal government to step up to protect consumers by cracking down on cramming.”

Specifically, the Attorneys General are asking the FCC to:
• Ban all third-party charges on landline bills or at least require that landline phone companies block all third-party charges unless the customer specifically agrees to allow such charges on his or her phone bill.
• Require wireless service providers to get approval from customers for every third-party charge that would be added to their bills, either via a phone call or text message; and
• Allow wireless customers to block all third-party charges from the their bills.

“It is time that the Commission take decisive and effective action to put an end to unauthorized third-party charges on customer telephone bills,” the Attorneys General wrote in their FCC filing.
In addition to Delaware, the states participating in the filing with the FCC include Washington, New York, Oregon, Tennessee, Maryland, Indiana, Kentucky, Mississippi, Arizona, Nevada, Iowa, New Hampshire, Alaska, Georgia, New Mexico and Alabama.
# # #