Homeowners facing scams have options
There's an old adage: "If it sounds too good to be true, it probably is."
That is the warning that many housing counselors and attorneys give to those on the brink of foreclosure who are approached unexpectedly by a private investment company that wants to buy their property.
"These scam artists present themselves as guys in white hats," said Douglas Robinson, spokesman for NeighborWorks America, a Washington-based network of more than 200 community development organizations. "They tell you that it will all go away, that it's not going to affect your credit. When you're in financial distress, that is very exciting to hear ... but it's usually not true."
The state Office of the Attorney General has received five complaints against Saunders Associates, a Fairfield-based private investment company that promises to buy foreclosed properties but instead rents them out, often without the knowledge of the homeowner.
Homeowners approached by Saunders Associates say they either spoke or met with a man named Bill Burke. Burke is known to police as Timothy William Burke, who was sentenced in 2003 in federal court in New Jersey to 60 months in prison in an "equity skimming" scheme.
New Jersey authorities said Burke and his associates diverted tens of thousands of dollars per month for their own use - money they collected by illegally renting the properties.
In Connecticut, where he is under investigation but has not been prosecuted, Burke has allegedly had
homeowners sign management agreements, third-party authorization letters and indemnification agreements. In some cases, he had homeowners quitclaim the properties to Saunders Associates, which never filed the quitclaims in town or city halls.
In the last three years, the state Better Business Bureau received 11 complaints against Saunders Associates.
"What a homeowner in Connecticut or any other state needs to understand is that the federal government and the state governments are working with nonprofits to help you go over your options, give you counseling, and it's free," Robinson, of NeighborWorks, said. "Consumers should never sign anything without legal representation."
The Attorney General's office reported 75 complaints about mortgage rescue or assistance scams over the past two years, sometimes involving an up-front fee, which is illegal in Connecticut.
A property owner from Bridgeport in September 2013 and one from New Haven in September 2014 each filed a complaint with the office after Saunders Associates allegedly promised to buy their properties but instead rented them without the owners' knowledge. Both complainants had signed quitclaim deeds that were never filed.
The Bridgeport complainant lost her home in January. Foreclosure proceedings against the New Haven property were withdrawn in April, court records show.
In response to the New Haven complaint, an assistant attorney general told the victim, "Thank you for sending a copy of the fraudulent communication you received to our office. This communication appears to be part of a so-called 'phishing' attempt, a scam in which con artists send out thousands, perhaps millions of solicitations via email, fax and regular postal mail in an effort to reel in personal and financial information."
Both complaints were referred to the state Department of Banking. The department closed the Bridgeport complaint after police there said they would not investigate. The New Haven complaint is still under review.
Other complaints came from tenants renting the homes, who were seeking return of security deposits. One tenant in Portland said he was evicted when the homeowner found out he was living there. The office referred this complaint to the Office of the Chief State's Attorney.
The Day spoke with others who provided details of their dealings with Burke.
In January, George Bulgin was about to lose his Waterbury home when he received a letter from Saunders Associates, offering to buy it.
Eugene McGuire got a similar letter from Saunders Associates in May 2013, expressing interest in two Jewett City properties.
Henry McDonald's letter came in April from Realty Partners Group, another company affliated with Burke. The letter said the company wanted to buy his Andover home. Donald Pardy got a similar letter in June, expressing interest in his New London home.
Neither Saunders Associates nor Realty Partners Group rescued the homes from foreclosure.
Bulgin lost his home. McGuire lost one house, the other is still in foreclosure. Pardy lost his home in September. McDonald's home is still in foreclosure.
According to RealtyTrac, a California company that collects housing data, there were foreclosure filings in August for one out of every 784 homes in New London County. Statewide, there were foreclosure filings for one in every 984 homes, ranking the state 12th highest among all states in concentration of filings.
Nicole Greene Robinson, vice president of marketing and communications for the Homeownership Preservation Foundation, an independent, national nonprofit that provides free financial education and confidential foreclosure prevention counseling, said homeowners who are in distress are susceptible to being scammed.
She said people should never pay any up-front fees to a third party for loan modifications that allegedly would resolve their issues or get them better terms with a lender. Nor should homeowners sign anything that gives their property away.
"The homeowner always has to be part of the process," Greene Robinson said. "If the third party is telling you not to contact your bank, then that should be a red flag. No one should be taken advantage of when they are down."
She said free counseling is available for those in danger of losing their home, and she recommended using only counselors who are approved by the U.S. Department of Housing and Urban Development. There should be no cost, she said.
Pamela Heller, staff attorney at the Connecticut Fair Housing Center, said she has seen numerous variations of the so-called equity skimming scheme allegedly being run by Saunders Associates and Realty Partners Group.
She said homeowners should know that signing a quitclaim deed does not absolve them of debt.
"The bank still can go after you," she said.
Heller said resources available to homeowners include foreclosure mediation programs and an emergency mortgage assistance program through the Connecticut Housing Finance Authority.
And, she said, tenants have rights, too.
Homeowners may rent out their properties even if the properties are in foreclosure. If the bank takes over, it doesn't mean the tenant will be evicted, Heller said. Tenants must receive notice of the foreclosure and their right to stay before any post-foreclosure eviction proceeding may be brought in court. Under state law, tenants cannot be required to vacate for at least 90 days after a title passes, or until the end of their lease, whichever is later.
"Banks need to do better," Heller said. "Many tenants don't know when the banks take over the properties. The bank has the obligation to go out to the property and see if someone lives there."
Nationally, the FBI made 348 mortgage fraud arrests by warrant in 2013 and secured 696 indictments by grand jury. In fiscal year 2013, there were 774 convictions. The FBI did not provide statistics specific to Connecticut.
Of the 11 complaints the Better Business Bureau has received against Saunders Associates in the last three years, the majority were from tenants who rented from Saunders only to discover the homes were in foreclosure and, in some cases, had been taken over by the bank. The BBB was able to get some security deposits or rent payment reimbursed.
Vince and Melissa Marlowe filed complaints with the Plymouth police and the BBB after renting a home through Saunders Associates.
Vince Marlowe was diagnosed with skin cancer in 2012 and moved from Florida to Connecticut with his wife and three children a year later so he could receive treatment at Yale-New Haven Hospital.
He rented a home in Terryville, a village in the town of Plymouth, through an ad on Craigslist.
In July, as the couple sat at the kitchen table, someone knocked on the door. It was Todd Smith, who said he owned the home. He came to check on the property after receiving a water bill.
The Marlowes said Smith told them Saunders Associates was going to buy the home but never did. Smith could not be reached to comment.
Marlowe said he didn't feel comfortable about the living situation and left the house in August.
He said he spoke to Bradford Barneys, the company's attorney, but while he appeared sympathetic he never returned any of their money until the BBB got involved.
The Marlowes said they got only $1,400 back, just a small portion of what they spent on the home.
"We were taken advantage of completely," said Marlowe. "I am on disability because of my cancer and renting and fixing up this house has totally wiped us out."
The Marlowes, who moved back to Florida, made a complaint with the Plymouth Police Department but were told the complaint couldn't be pursued any further because they were unable to reach anyone affiliated with Saunders Associates.
"People need to be warned about them so they don't fall victim like us," said Marlowe.
TYPES OF SCAMS
• The scammer promises to negotiate better terms on your mortgage for a fee. Once you pay, the scammer takes off with your money.
• The scammer pretends to be linked with a government-approved loan-modification program and promise to get the homeowner in for an up-front fee. Remember, a the Internet address of a real government agency ends with .gov.
• The scam promises to make the homeowner current on the existing mortgage. But the documents transfer title to the house to the scammer.
• The scammer offers to buy a home that is about to be taken by the bank if the owner signs over the deed and moves out. But instead, the scammer rents the house leaving the homeowner still responsible for the debt.
Source: NeighborWorks America
• Connecticut Fair Housing Center, Foreclosure Prevention Clinics: (860) 247-4400
• U.S. Department of Housing and Development, HUD-approved housing counselors: www.hud.gov
• Connecticut Judicial Branch, Foreclosure Volunteer Attorney Program, New London: Every Wednesday from 2 to 4 p.m., 70 Huntington St., Room E-309 in the historic courthouse. Help is offered on a first-come, first-served basis.
• Department of Banking, Mortgage Foreclosure Assistance Hotline: (877) 472-8313
Types of Mortgage Scams
- The scam artist poses as a counselor and promises to negotiate better terms on your mortgage for a fee. Once you pay the fee, the scammer takes off with your money.
- Scammers sometimes pretend to be affiliated with a government-approved loan-modification program and promise to qualify the homeowner for the government program in exchange for an up-front fee. The scammer's company may even have a name that sounds like a real government program, but consumers should note that the Internet address of any program run by a government agency ends with .gov.
- The scam artist has the homeowner sign documents for an alleged new loan modification that purports to make the homeowner current on the existing mortgage. However, the documents the homeowner signs instead give away title to the house to the scam artist.
- The scammers offer to buy a home that is about to be taken by the bank if the owner signs over the deed and moves out. But instead of buying the house, they rent it out while the lender forecloses. The homeowner is still responsible for the unpaid debt because transferring the deed doesn't automatically absolve the owner of what is owed.
- Connecticut Fair Housing Center, Foreclosure Prevention Clinics: (860) 247-4400
- U.S. Department of Housing and Development, HUD-approved housing counselors: www.hud.gov
- Connecticut Judicial Branch, Foreclosure Volunteer Attorney Program, New London: Every Wednesday from 2 to 4 p.m., 70 Huntington St., Room E-309 in the historic courthouse. Help is offered on a first-come, first-served basis.
- Department of Banking, Mortgage Foreclosure Assistance Hotline: (877) 472-8313
Source: NeighborWorks America
Counseling Resources Available to Tenants and Homeowners
Stories that may interest you
Omer Bajwa, a chaplain at Yale University, came to a Groton mosque Sunday afternoon to discuss the complexities of life for young Muslims today.
After receiving a $6,250 allocation from the town to help develop a three-year “strategic plan,” Lyme Academy of Fine Arts officials will ask residents at their annual town meeting Monday for another $8,750.
A crowd banging on pots and pans gathered in downtown Essex Sunday for the 42nd annual event.