FHA Seller-Funded Down-payment Outfit Sues ML-Implode In Effort To Silence Criticism
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2008-10-09 — ml-implode.com
Note: ML-Implode's existence is once again threatened by the costs of legal defense. Free speech isn't free; please do consider helping us out.
For immediate release.
Opposition To Injunction and Temporary Restraining Order Filed
On October 7, 2008, the Mortgage Lender Implode-O-Meter (ml-implode.com) filed a Memo of Opposition in response to pre-litigation motions by plaintiffs to enjoin the Implode-O-Meter and restrain publication of materials critical of the Grant America Program.
The suit was filed by plaintiffs Global Direct Sales, LLC, and (principals) Christopher Russell and Ryan Hill, and (collaborators) the Penobscot Indian Tribe, on September 19, 2008 in Maryland Federal Court, and the motion for injunction and Temporary Restraining Order (TRO) was filed September 26th.
The suit concerns an investigative article written by analyst Krista Railey, posted on ml-implode.com in its final form on September 15, 2008. The article was critical of the Global Direct Sales scheme, which effectively attains 100% financing -- insured by the FHA -- by making use of an Indian tribe ("sovereign nation") as an intermediary. This arrangement has allowed bans and restrictions on FHA insured seller-funded down payment programs to be circumvented.
Railey's article pointed out that the IRS has called similar seller-funded down-payment systems "scams," and Forbes has called them (with specific reference to Russell's activities) a "racket." Seller-financed FHA lending was completely banned (beginning October 1, 2008) by H.R. 3221, signed into law July 30th, 2008. This ban covers the Grant America system involving Indian Nations. However the tug-of-war continues, e.g., with H.R. 6694 (under legislative consideration) proposing to roll back the ban, subject to credit score and pricing "controls."
As argued in the Implode-O-Meter's Opposition Memo and Railey's Declaration, all points in the article on the Grant America/Penobscot program are well supported by the evidence, including reports, rulings, and statements from government agencies and courts.
The Implode-O-Meter believes that removal of the article and a ban of further discussion of the Grant America Program would be unlawful suppression of free speech. In this case such suppression would be particularly egregious because of the public interest and legislative aspects of the controversy (the public -- that is, taxpayers -- ultimately insure the Grant America Program mortgages).
The Implode-O-Meter argues that such an injunction and prior restraint in fact constitutes a frivolous filing, and violation of Federal court rules.
The Implode-O-Meter also points out that the filing by Russell (et al) contains many other major defects including: ambiguously making reference to a draft of the article which was only briefly posted, failing to point out specifically which remaining statements are defamatory, and failing to demonstrate actual malice in the posting.
The Implode-O-Meter believes that the suit, given the nature of the tactics involved, is meant to intimidate us and raise the costs of our legal defense against an opponent that has made millions engaging in unsound lending activities. The plaintiffs' clearly are willing to resort to "any means necessary" to see us relent and remove an article which is distasteful (and perhaps existentially threatening) to them, and go silent on the issue of the Grant America/Penobscot program and related activities of the principals.
Given the above points, the Mortgage Lender Implode-O-Meter anticipates a speedy denial of the injunction and restraining order. A full copy of the article is available online here.
Relevant documents:
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Comments:
michaelblomquist at 14:06 2008-10-09 said:
Time to rally the troops, especially those in Maryland. Fraud, deception and entitlements created this crisis and more of the same should NOT be tolerated. As of October 1, 2008 the FHA did away with the seller assisted programs because the program was a huge failure. Unless borrowers had skin in the game they walked; in addition if you can't save 3% for a downpayment how will you be able to handle any unforeseen expenses. Why are GLOBAL DIRECT SALES, LLC, PENOBSCOT, INDIAN NATION, CHRISTOPHER RUSSELL and RYAN HILL still advertising such a program on October 9, 2008? http://www.pinfha.org/Programs.h... Ironically the third cause of action complains of unfair business practices, but continuing to advertise seller assisted down payments are unfair business practices. Potential borrowers will be captured and directed to the Plaintiff's business affiliates. Can you say bait and switch? Call, fax, email representative Donna Edwards (Maryland Rep) http://donnaedwards.house.gov/co... and demand she restrains the Plaintiff for false and deceptive advertising. Congresswoman Donna Edwards (301) 773-4094 9200 Basil Court Suite 221 Largo, MD 20774 Washington, DC (202) 225-8699 Fax: (202) 225-8714 Email: 4mddistrict@mail.house.gov You should also contact the following an make sure to include the link http://www.pinfha.org/Programs.h... 1)HUD http://www.hud.gov/offices/hsg/s... (800) 225-5342 hud@custhelp.com 2)FTC http://www.ftc.gov/ftc/contact.s... Report Violations * Online: Use our secure complaint form. * Phone: Call our toll-free Do Not Call helpline: 1-888-382-1222; TTY: 1-866-290-4236 PermalinkAristotle at 22:32 2008-10-09 said:
Whenever I read pleadings, I always look at them to see if they are easy to read and understand. The pleadings for the Defendants pass the readability test. Now, all of us will just wait and see if they work. The filing of this lawsuit illustrates the need for the next Congress to pass an Anti-SLAPP statute like California currently has. PermalinkDollar_guy at 01:11 2008-10-10 said:
Time to rally the troops, especially those in Maryland. Fraud, deception and entitlements created this crisis and more of the same should NOT be tolerated. As of October 1, 2008 the FHA did away with the seller assisted programs because the program was a huge failure. Unless borrowers had skin in the game they walked; in addition if you can't save 3% for a downpayment how will you be able to handle any unforeseen expenses. Why are GLOBAL DIRECT SALES, LLC, PENOBSCOT, INDIAN NATION, CHRISTOPHER RUSSELL and RYAN HILL still advertising such a program on October 9, 2008? http://www.pinfha.org/Programs.h... Ironically the third cause of action complains of unfair business practices, but continuing to advertise seller assisted down payments are unfair business practices. Potential borrowers will be captured and directed to the Plaintiff's business affiliates. Can you say bait and switch? Call, fax, email representative Donna Edwards (Maryland Rep) http://donnaedwards.house.gov/co... and demand she restrains the Plaintiff for false and deceptive advertising. Congresswoman Donna Edwards (301) 773-4094 9200 Basil Court Suite 221 Largo, MD 20774 Washington, DC (202) 225-8699 Fax: (202) 225-8714 Email: 4mddistrict@mail.house.gov You should also contact the following an make sure to include the link http://www.pinfha.org/Programs.h... 1)HUD http://www.hud.gov/offices/hsg/s... (800) 225-5342 hud@custhelp.com 2)FTC http://www.ftc.gov/ftc/contact.s... Report Violations * Online: Use our secure complaint form. * Phone: Call our toll-free Do Not Call helpline: 1-888-382-1222; TTY: 1-866-290-4236I just e-mailed....... Permalink
FHABob at 14:31 2008-10-10 said:
Downpayment assistance programs are still allowed by FHA. It's seller funded programs that are not permitted. So a state funded program (Arizona's Housing Dept's DPA gives up to 10% towards the down, for instance) and progams administered by Indian Tribes or other qualifying entities are just fine. As for the lawsuit mentioned here, I think that congress will bring back seller funded DPA's very soon. The deal has already been made between the House Dems (who understand how losing SFDPA's hurts minority applicants hardest) and HUD (who lost risk based MIP premiums as part of the reform act). It's just a matter of getting the bill passed. The current crisis has left little time for this matter, but it will get done and either Bush or Obama will sign it. Permalinkpoorprocessor at 21:46 2008-10-10 said:
Since Nehemiah has even given up.. Is Nehemiah Funding Gifts After October 1st? The passage of H.R. 3221 eliminates privately-funded downpayment assistance for millions of working class American's as of October 1, 2008. However, per the specific language of the law, Nehemiah is lawfully able to continue funding DPA gifts for FHA loans where the borrower was credit approved per FHA guidelines on or before September 30, 2008. Nehemiah will require that the lender certifies that the borrower was credit approved per FHA guidelines on or before September 30, 2008. Nehemiah will continue to fund certified gifts through November 28, 2008, at which time The Nehemiah Program will cease operations. For gift funds requests with closing/funding dates after September 30, 2008, the FHA lender must certify to Nehemiah that mortgagor credit approval, in accordance with all applicable FHA requirements, was granted by that lender before October 1, and that such credit approval is and will remain in effect through closing. http://www.getdownpayment.com/updates/ I think not... Permalinkadd a comment | go to forum thread
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