Foreclosure Rescue Sale Leaseback Deals Are Usurious Equitable Mortgages, Says Massachusetts AG's Civil Lawsuit

A motion was filed earlier this week by the office of Attorney General Martha Coakley to amend a complaint it filed accusing a foreclosure rescue group of engaging in equity stripping transactions that victimized 26 Massachusetts homeowners facing foreclosure.

In the proposed amended complaint, a Brockton, Massachusetts based attorney / foreclosure rescue operator is being accused, among other things, of engaging in transactions that constituted usurious equitable mortgages.

The lawsuit, which was filed in a Boston Federal Bankruptcy Court, accuses attorney Alec G Sohmer of arranging at least 26 foreclosure rescue transactions involving homeowners facing foreclosure and their homes which, based on their sales prices in the transactions, were valued at close to $10 million. The deals, which also involved the transfer of the homes into trusts, were allegedly consummated with the participation of four additional individuals:

• Jennifer Sohmer, the wife of defendant Alec Sohmer,
• Andrew P. Palmer, an attorney who allegedly served as the closing attorney on behalf of each lender in each of the Sohmer transactions at issue in this case,
• Shaun M. Ellis, an attorney who on several occasions, allegedly referred his clients to Sohmer for foreclosure rescue assistance andreceived a referral fee from Sohmer on at least two occasions, and
• Edward de la Flor, who acted as mortgage broker for eleven Sohmer transactions, while an employee of Carteret Mortgage Corporation.

Companies named as defendants were:

• Carteret Mortgage Corporation, a mortgage company involved in originating loans in eleven of the transactions in question, and
• Timeless Funding, Inc., an allegedly uncapitalized corporation that Sohmer used to offer foreclosure rescue "services" to financially distressed homeowners. According to the lawsuit, Timeless Funding was a sham invented by Sohmer to mislead consumers into believing that Sohmer had arranged financing for them from a mortgage lender.

The alleged home equity ripoff in the 26 transactions, as stated in the complaint, "ranged from $11,946 to $107,093 and averaged $43,973 per transaction, which on each occasion represented the homeowners' home equity "accessed," and then sapped, by Sohmer."

In addition to claims of equitable mortgage and usury, the lawsuit alleges the following:

• Unfair and Deceptive Acts and Practices in Violation of G. L. c. 93A, Sec. 2 ,
• Violations of the Massachusetts Consumer Credit Cost Disclosure Act, and Federal Truth-In-Lending Laws,
• Violations of Massachusetts and Federal Law Applicable to High Cost Mortgage Loans, and
• Fraud.

The 49 page proposed amended complaint sets forth in detail how the alleged scheme is said to have worked and how each defendant allegedly participated. For more, see:

• Commonwealth of Massachusetts vs. Sohmer, et al. - Motion To Amend Complaint
• Commonwealth of Massachusetts vs. Sohmer, et al. - Proposed Amended Complaint

Go here for earlier posts & any available updates on this case.

For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.). equitable mortgage yak