Ethics Violation Against Northwest Trustee in Oregon


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Editor’s Comment: It’s a gutsy move. The lawyer for the newspapers filed the complaint alleging illegal mark-ups in pricing. That filing indirectly attacks their own advertising revenues. What they are going to find is that the “trustees” are not trustees at all and where paid off to keep quiet.

Trustees are routinely “substituted” in robo style. That is because the original trustee would never do what the pretender lender wanted them to do. The old Trustee would exercise due diligence and demand some sort of proof that the “new creditor” actually owned the loan and that the loan was in default. That would create all sorts of problems for the pretenders, inasmuch as they don’t have the proof — because the proof doesn’t exist. The proof doesn’t exist because they don’t own the loan and the only way they can pretend to be the new creditor is with fabricated and forged documents.

So a new “Trustee” is either created or controlled by the pretenders with the understanding that they will do as they are told to do by the pretenders and not as the law requires. In exchange, the Trustee is given carte blanche to charge whatever they want making extra profits for allowing the pretenders to “rent” the professional license of the “new” trustee. Those extra fees — like the extra fees made by all the other intermediaries and conduits in the fake “securitization” chain, is the economic incentive to break the law, violate ethics and defraud the courts, borrowers and investors.

As the facts emerge, the attorney who played “trustee” will be shown to have dodged the requirements all the way around — so much so that the appointment of Northwest will be immediate reason to inquire as to whether their was an actual trustee at all as required by Oregon statutes. Thus the limited grievance filed by the gutsy attorney for the newspapers, is merely the tip of the iceberg.

This action is on the heals of hundreds of grievances filed against notaries, appraisers and real estate brokers for failing to comply with the ethical standards of their professions. The fact that the target is finally a lawyer, ups the ante quite a bit.

Perhaps, when all else has failed, prosecutors will do the right thing.


By Jeff Manning, The Oregonian

foreclosure for sale sign 2007 denverThe Associated Press: A sign of the times across the country as foreclosures hit coast to coast.
A lawyer representing The Bulletin of Bend and the Redmond Spokesman  newspapers has filed an ethics complaint with the Oregon State Bar against an executive of the Northwest’s largest foreclosure trustee, accusing the company of secretly marking up the cost of foreclosure legal ads to its lender clients.

Michael Dillard, of the Karnopp Petersen law firm in Bend, filed the complaint last week against David Fennell, a lawyer and a principal owner of Northwest Trustee Services, which by its own account has handled more than 250,000 foreclosures.

Dillard alleges that Northwest Trustee and its advertising operation, FEI, charged its clients an undisclosed 18 percent premium over the actual price. These “deceptive and dishonest” tactics, Dillard said, allowed FEI to collect from its clients about $360,000 more than it actually paid for the foreclosure notices published in the Redmond newspaper just since 2009.

Those costs were then presumably passed on by banks to homeowners and others, Dillard said.

Stephen Routh, CEO of Northwest Trustee Services, denied that FEI was charging a secret premium. “The markup was fully disclosed to it customers,” Routh said. “It’s how they make a profit.”

The complaint is intriguing on several levels. Since the economic crash of 2008 let loose a tidal wave of home foreclosures, the financial industry has been accused many times over by homeowners of improperly and fraudulently repossessing homes. But in this case, one of Northwest Trustee’s own vendors alleges wrongdoing, with 26 pages of painstaking detail backing up the claim.

The complaint puts Western Communications, owner of the Redmond Spokesman, The Bulletin and a handful of other newspapers, in a delicate position. It is accusing one of its largest advertisers of underhanded billing practices even as the newspapers’ parent company struggles through a Chapter 11 bankruptcy.

The Bulletin published a lengthy story Tuesday about Northwest Trustee’s alleged overcharging.

The Oregonian published a story about Northwest Trustee Jan. 14, which focused on the company’s emergence during the foreclosure boom as one of the region’s largest newspaper advertisers and its decision to begin buying newspapers outright.

Markups add up

Northwest Trustee enjoys particular clout in central Oregon. The once-high-flying resort area is now one of Oregon’s foreclosure hotbeds.

The foreclosure disaster contained a big upside for Western Communications, which calls itself WesCom. Northwest Trustee ran all its foreclosure legal notices in the Redmond Spokesman.

“They’re one of our largest advertisers,” said John Costa, editor in chief. “It’s a significant piece of money.”

Through a convoluted series of events last spring, WesCom came to suspect that FEI may be charging its lender clients more for legal notices than it was actually paying.

It wasn’t a lot of money. Though the Spokesman generally charged just over $1,000 for the legal notice ads required by Oregon law, WesCom suspected FEI billed $1,185.

Fueling its suspicion were requests from FEI that WesCom continue to bill the lower rate but list the higher rate on invoices and other paperwork between the two companies.

WesCom hired Dillard to investigate. Last spring, according to his ethics complaint, he found evidence –two bills from Northwest Trustee to Sterling Savings Bank – that backed up WesCom’s hunch. Northwest Trustee charged Sterling the higher rate – $1,185. Sterling declined to comment for this story.

Editor has hunch

Costa decided the billing dispute had wider implications and was worthy of a story. In December, he assigned Bulletin reporter Heidi Hagemeier to investigate.

Hagemeier found additional bills from Northwest Trustee to U.S. Bancorp. Here too, Northwest Trustee charged the higher rate. One invoice listed Fennell as “payee.”

It is, of course, common for businesses to include in their customer bills a markup for subcontractor charges. A home remodeling general contractor, for instance, will often charge the homeowner a surcharge on top of the bills from plumbers, electricials and other subcontractors.

The key difference in the case of Northwest Trustee, Dillard argued, is disclosure, or the lack thereof. “When your remodeling contractor marked up the subcontractors’ bills, he did not falsely represent to you that the plumbers bill was $600 when in fact it was really only $550,” he said.

2004 case

Bar ethical rules hold lawyers to a particularly stringent standard, as Fennell learned firsthand in 2004. Then, the Washington State Bar determined that a company within the Northwest Trustee umbrella was charging clients a 50 to 100 percent markup for posting foreclosure notices at people’s homes without disclosing it.

The markup was small – about $50 to $100. But both state bars deemed the undisclosed markup dishonest and suspended Fennell’s license a year.

It’s dangerous, of course, for WesCom to go public with its suspicions about one of its largest advertisers. The down economy and a dispute with a main lender, Bank of America, prompted WesCom to file for Chapter 11 reorganization in August.

“It wasn’t tempting at all to say ‘We’re just going to continue to take their money,'” Costa said. “We couldn’t be complicit in that. We have an obligation to tell the public.”

Northwest Trustee’s Routh said the ethics complaint is another hardball tactic in a strained relationship. Routh and Fennell started up the Oregon Legal Journal in 2009 as an alternative for its own foreclosure notices, a move that threatened WesCom’s Deschutes County foreclosure legal notice business.

And while it’s fashionable to bash the foreclosure business, Routh said, it’s important to note that newspapers have not hesitated to profit off the trend. The more than 2,000 FEI foreclosure notices the Spokesman has run since 2009 generated more than $2 million in revenue.

On Jan. 17, Dillard filed his bar complaint. He accused Fennell of “conduct involving dishonesty, fraud, deceit or misrepresentation that reflects adversely on the practice of law.”

Dillard and Costa said they believe the markups they allege Northwest Trustee was involved in could be widespread and “add up to hundreds of thousands of dollars of secret profits in central Oregon and perhaps millions of dollars elsewhere.”

— Jeff Manning


24 Responses

  1. Dear Working Hard to Pay Your Way;
    You would do well to work hard to find out the facts. Practically no homeowner is looking for a free house, but free houses are being given away every day to pretender lenders who never loaned the borrower a penny. Like you I believe that every creditor has a right to be repaid but only once. The facts show that the actual creditors have already been paid multiple times which is the sole reason why we are dealing with pretender lenders who are using the ignorance of the public (including people like you) and the ignorance of government to pursue foreclosures on loans they never financed directly or indirectly.

    If you are one of the many shills hired by the banks to fuel the guilt complex afflicting borrowers who don’t know what hit them and don’t understand what is continuing to happen, then think of this: the money you are receiving to write posts like this one has been received from the federal government out of your taxpayer dollars and the taxpayer dollars of everybody else. Given the above, explain to me again who exactly is getting a free ride?

  2. I pray for sink holes under their homes, mercedes, ferrari’s Beamers, harleys, porsches, summer homes, AND THE LIKE… AND that they feel the pain of every person they have harmed… every widow who became their PREY… and that the bailed out ones who have not bailed any of us out will GO TO JAIL as it is written of the WICKED SERVANT… I ask for JAMES 5 and ISA 10 to be all over them right now until they give back every house 7 times and now they are asking for another 150 billion to bail out deutsche bank bungled bonds in greece… TAKE THEM ALL DOWN JESUS… THE PEOPLE ARE CRYING OUT FOR JUSTICE AND MERCY … HEAR US MIGHTY ABBA… DEFEND US NOW I PRAY!!!

    Don’t make fun of this just agree… because agreement is powerful… if one puts 1000 to flight 2 puts 10,000…. HELP …

    NW trustees is trying to evict me … RCO lawyers even contacted the judge behind my back and today I received eviction papers thru the mail… evil BE GONE IN JESUS NAME for it is written we shall look for the wicked but we cannot find them… . DO IT ALMIGHTY GOD!!!

  3. look on Mit Romney has made a fortune by our misfortune. He should be toast as a presidential candidate with this article coming forth.

  4. bc Have you motioned for an affirmation by the attorneys, of authority to represent? And objected to their claims of standing for this alleged debt? Can you find an attorney that can help you? My sister is not in court and she and her husband have asked for affirmations of authority to represent, and proof of ownership of the loan. It is the first time in months they have not had someone leaving a note of their door for over a couple of months now. The debt collectors that were trying to come after them then gave notice they were transferring to another debt collector, so they objected to the authority to transfer and demanded an affirmation of authority to represent this alleged debt, and are still in their house, it may be worth the try. My sister and hubby have filed an adverse possession notice on county records also. So have I and my son. One of my customers at my salon has received a rescinded foreclosure and a rescinded sale at auction by having an attorney send an unlawful foreclosure and unlawful sale at auction notice with loss of equity. No one has heard of this happening ever. He had a sheriff walk him out of his house, and has been back in the house for over a year now. He keeps objecting to any transfers of ownership and denies the alleged debt. He has not paid a twenty-two thousand month Yes month mortgage now for over three years. He had a large great business in the construction business that has been harmed due to the bank fraud causing the economic collapse. He sure did not lie about his income and ability to pay, and is not a dead beat. The majority of us are hard working Americans that did not take out more than we can chew, and are not dead beats and we did not lie on our applications. We have been screwed.

  5. I dont believe the judges are confused with paperwork over their heads and trust in the banks vs the homeowners. I believe most of them to be corrupt. I hope AG Rob McKenna surprises us all. If he does not by the time he is up for election for governor, he wont get my vote and I am very vocal and have contact with a lot of people watching to see what he does. He has not come forward enough, however it may be that he is digging up the proof for a solid case. We need to see results. It is hard to be patient when so much harm has been done to so many. The golden question they should all be asking is yeah a few people may not beable to afford their loans, but ten million plus? And the proof of the economic collapse is on their heads. See Wall street and the Financial Crisis; anatomy of a Financial Collapse: That in itself should have sent thousands of banksters to jail. It is outrageous so many have suffered at the hands of these criminals. My heart goes out to everyone these demons have harmed. The judges are shameless that enable them. The judges need to be called out for Breach of their Oath of Office for not upholding our Constitutional rights, Breach of Duty and Breach of Honest Service and Breach of mandated 18USC2,3, &4.

  6. look up MERS being registered to do business in this state. They are inactive now for years. Neither have the right to do business in Washington state and most likely non of the other states. No right to transfer no right to claim standing in WA courts. I brought this up in district court and it went right over the head of the judge. Smj’d me the victim for the felons whom lack standing. Same as in most district courts. I am hoping for a better outcome in the Appeals court.

  7. social epocolypse look up State Of Washington V RECONTRUST filed by Rob McKenna and State Of Delaware V MERS. look up Recontrust, registered in Washington State Corporations ( it is not!) My son is fighting RECON and he just sent a motion for affirmation of authorization to represent to the defendants attorneys and so far had a response from Lane Powell firm to approve a change of representation on the face, back to Countrywide. Of course he did not! After reading the case above you will see why the language in the RECON case will help your case. Then pull up the OCC letter dated January 14, 2005 and in the first paragraph, it states National Bank law does not preempt state law, there fore Rob McKenna is correct, the banks claims they are not subject to state laws is farce and they have unlawfully foreclosed on every home they have foreclosed on for over five years. It is illegal to be owned by BOA and be the default debt collector, therefore neither of them have done lawful foreclosures. Neither are licensed in the State to be doing business. And if you are a Countrywide turned BOA or US using RECONTRUST, countrywide did not transfer the loans to them. BOA is trying to transfer everything to Crabtree and they have nothing to transfer. Read the REMICS have failed the Remics have failed-deadly clear and the Oppenheim report that is inside the Remics have failed article. I am not a lawyer neither is my son, we are propria persona and are learning like the rest of ya. Shawn Newman in Olympia is an attorney that gets it and has attorney friends that know. One of the few. I would if I were you motion for the affirmation of authority to represent directed at the attorneys. They can only give false perjured affirmation and they don’t want to be liable. I have been following Neil Garfield ever since Chase and Deutsche Bank modification defrauded me and RECONTRUST AND Countrywide mod defrauded my son about the same time your situation started. It has been a real struggle, and a wide awakening on just how corrupt these criminal entities are. And they are corrupt as corrupt can be, in every step of banking and financing they have committed crime. Neil has called it just as it is. He is way ahead of the rest of most in seeing just what is going on.

  8. GOOD FOR YOU! I am in awe of Pro Se litigants. There is a lot of political rhetoric in courts too, which sometimes is a big hurdle for Pro Se people, depending on the judge. Washington (and several other non-judicial states) have BIG fraud problems in the foreclosure process, and until judges routinely scrutinize the activities of these foreclosure mills, the fraud will likely continue.

    Like I always say, there has to be a reason NOT to do something. Right now, there is very little reason for RCO/NW Trustee NOT to continue raking in money hand over fist. Their arrogance is beyond comprehension, but probably deserved… up until lately, it has been extremely rare for someone to have the firepower to stop them.

    I find it curious that our AG has given them so much rope… but then, as they say, the better to hang with. I am still giving Mr. McKenna the benefit of the doubt. These things DO take time, and they are a massive fraud machine.

  9. We have a new bill in the senate and a meeting in Olympia on Tuesday to support the bill. Anyone wanting information on this email me at Bill SB 6199 and SB 6070 Call your Senators and Representatives or find their emails at or contract Orfganization United for Reform Washington at 206-414-0537. The more that come to the senate meeting to support these bills the better. Calls are very important.

  10. I and my son are in Washington State and we were never asked to post a ten thousand dollar bond. We are in the Appeals court now, And yes there are not many attorneys out there in Washington. Shawn Newman is one and has references for those looking for an attorney that gets it. I could not find one October 2010 nor could my son so we went Pro Se now Propria Persona and are in the Appeals court. Not going to let them run over us without a fight.

  11. I can tell you from EXPERIENCE in Washington State that:

    If ***any*** John Doe, with NO paperwork, walks into the county recorders office, they can file a foreclosure notice against you. In Washington State, their statement that they own your house is ENOUGH to proceed with a foreclosure unless you contest it. They WILL BE awarded your house unless:

    1. You spend about $15-$20 THOUSAND dollars of your own money UP FRONT on one of about 3 attorneys in the state who even know HOW to defend wrongful foreclosure. (There is no such thing as “pro-bono” in foreclosure defense) That’s assuming you can even get them to return your call, they are BUSY. Remember, you don’t have much time, foreclosure proceeds QUICKLY in Washington State.

    2. If you don’t HAVE the money, you will NOT have a good attorney (I don’t blame them).

    3. YOU bear the burden of proving that “John Doe” cannot take your house, and many judges have been saying, “Well? Did you Borrow against the house? Then you owe the money!” Luckily, it’s finally starting to get better.

    4. “John Doe” will ask the court to make you post a $10 THOUSAND dollar “BOND” with the court while you contest the foreclosure… NO LIE. You will also be asked to pay the amount of your housepayment every month into bond until the lawsuit ends. (Yes, this is in ADDITION to paying your attorney, of course). So much for using your house payment to pay the attorney…

    Naturally and tragically, this eliminates MOST borrowers from contesting their foreclosure. Routh Crabtree Olsen KNOWS this, they designed it this way, and it is the REASON they foreclosure fraudulently and fearlessly. They rarely have a good fight.

    NO, it does no good at all to contact the Trustee (they ARE THEMSELVES the evil foreclosers, it will be proven. Unless the gavel falls on your foreclosure sale, they do not get paid)

    NO it does no good at all to contact the Attorney General. He will send you a letter saying he cannot defend individuals, and you better call a good attorney. Thanks man.

    Competent foreclosure defense Attorneys are OVER RUN with requests for representation. It is VERY difficult to get a GOOD one to even return your call AT ANY PRICE, and (naturally) if your case is difficult, they will usually pass. Attorneys with good reputations didn’t get that way by risking a LOSS in court.

    That’s the ugly truth my friends. @SocialApocalyps

  12. If one does it they all do it.

    Here’s another:

    California Reconveyance Company

    List them all please. It’s standard practice.

  13. Regional Trustee Services in Seattle subs in after the NOD and is foreclosing on homes in California. Their notary is in Texas. Hmmm.

  14. I have been in litigation with RCO/NW Trustee since October of 2010!! There is no “TRUSTEE”, I call it a “straw trustee”. I have YET to hear from the actual trustee, RCO always responds “on their behalf.” What they forget, is that the trustee must STILL have communication with the client… They make David J. Stern look like TINKERBELL. I know of a lot of action being brought against them, and I expect they will be feeling extensive pain… We can only hope that the judges are able to read the laws verbatim.

    Believe me, the cake-eating is OVER for them, they just don’t know it yet. They are simply trying to choke down the last bit of fat from the foreclosure freefall before it is GAME OVER. Lots of pain coming their way, I promise!

  15. carie there is hope in the Appeals courts. A lot of reversed cases. Seems like the judges have not been bought in the upper courts. I may feel different when my case comes back. However I have a lot of hope it will be a better result in the Appeals court. Multiple cases have been adjudicated for the homeowner and reversed in the Appeals courts I am praying I presented it correctly. A set of Florida Appeals court judges sure were a disappointment recently, however most of the ones on the internet look like their is some kind of justice in the Appeals court.

  16. Lane Powell and David Wright law firms are foreclosure mills in Washington State also. They represent Deutsche Bank and RECONSTRUST. Lane Powell is the firm the assist AG from Oregon quit his office to go to work for. Hmmmmmmmmm! My sons mortgage defendants RECONTRUST AND MERS, are being defended by Lane Powell firm. They just sent a letter to him to sign approval for a change in representation on the face of the complaint that is in the Appeals court. NOPE! DENIED! OBJECTED TO! They want to change it to Countrywide. Pretty sneaky! A customer of mine just told me his rental house is in foreclosure and BOA just transferred it to Crab Tree and Crab Tree sent him a letter to just sign it over to them. He said NO! he was not going to make it easy. He is sending a letter of dispute and objection and demanding to the attorneys firm to give affirmation of authority to represent and copies of the Remics have failed and Washington State V. RECONTRUST, AND the Oppenheim Report and the OCC letter dated January 14, 2005 that the Nat. banks are in violation of both Federal banking law and Wa state laws. That both RECONTRUST, BOA, AND MERS have no authority to do business in this state and therefore have no authority to transfer the loan to them and after alleged default.

  17. There’s no such thing as “foreclosure defense”…the banksters and courts made sure of that…

  18. Colorado public trustees pushed to make it easier to foreclose on homes.

    This Christina Whitmer is my trustee. I am in foreclosure, grand county Colorado. Rule 120 hearing March 1st.

    This article is exhibit # 5. Do I have an ethics case??
    Please help

  19. These crimes are being played out across the country, not just in Oregon, Washington, New York or Florida. If they are doing it here, they are doing it everywhere. It is amazing to me that very few lawyers are in foreclosure defense. We need more attorneys in foreclosure defense, not ripping people off.

  20. anyone out there that has used securitization audit in a foreclosure case and beat the bank? i would like very much to hear from you , if you are in a preceding at present than would still like to hear from you to see how it is progressioning. iam fighting hard and am mantaining my house so far. contact at comments are welcomed, unite and fight logo.

  21. Northwest Trustee, the “David Stearns” of the Pacific Northwest. Take these mother fuckers down.

  22. What is this?! I can not imagine an Appeals judge allowing a fraud with no authority to foreclose to have priority over a homeowner that was not given an injunction. I asked for one and the district judge SMJ’d me right out of court without proof the forecloser Deutsche Bank Nat’l Trust had authority to represent in this state. My case in the district court remanded from Superior court, by frauds, states flat out the pretender forecloser has no authority to do business in the State of Washington due to not being in compliance with Washington state law and Wa CPA law, nor in compliance with FDIC law. Never answered the letter of dispute afforded by the FDIC. All ignored by judge Pechman. They have never brought any proof to court of course. They state they don’t have to and have given a photo copy of a note endorsed by Long Beach to “Blank”. Any clues to wither this is true?

    Michelle Darnell posted in Homeowners Rebellion.

    Michelle Darnell
    12:17am Jan 25

    I have rewiewed several cases here in WA and I am seeing a pattern!!
    This phrase is repeated often:
    “We [also] agree that the plaintiffs’ failure to obtain a preliminary injunction or restraining order barring the nonjudicial foreclosure sale waived any right to contest the validity of the foreclosure. We reverse the Court of Appeals and reinstate the trial court’s grant of summary judgment in favor of ——–“.
    Here in WA if you do not contest, seek injunction or in any way resist the foreclosure/sale, you waive rights to contest the validity of the foreclosure!!! Homeowners if you do not know your rights you have none. Just a heads up. MD

    Wait a minute is this the district court reversing the Court of Appeals? I believe it is. WOW! What nerve of the district court judge if so .

  23. How the H**L can these foreclosure mills keep getting away selling/stealing houses with the outright lie that some “securities investor” of the closed and empty MBS trust is the creditor/lender?

    That is exactly what they are doing. That is the bottom line in my case. What can I do? In California?

  24. Routh Crabtree &Olson are the biggest foreclosure mill in WA. state.They have absolutley no ethics and they are impossible to work with.These guys are like Sterns and Baum just do away with them.They’ve been taking people in the northwest to the cleaners for a long time.Glad someone had enough balls to call them on it for whatever reasons.

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