In this July, 2006 article, a disabled Antioch woman who had fallen behind in her mortgage payments sought the advice of her church's pastor, whom she had known for 10 years. According to a lawsuit that she ultimately filed, she alleged that the pastor referred her to a fellow church parishioner to assist with a refinancing and, within a month after she signed the legal documents involved in the transaction, both the man arranging the transaction and another party (who claimed to be the new owner of the woman's home) claimed that she was no longer the owner and demanded the house keys and rent for being in the home.
This article points out that the homeowner in this case
- "is luckier than some because she was able to get legal help. Through the Association of Community Organizations for Reform Now ["ACORN"], she was put in touch with the Oakland-based housing advocacy group, Housing and Economics Rights Advocates, which works with the law firm Morgan Miller Blair in Walnut Creek. The law firm took [the homeowner's] case on a pro-bono basis."
In the civil lawsuit, the homeowner (represented by attorney Joshua Cohen) alleged violations of California's Home Equity Sales Contract Act, the Mortgage Foreclosure Consultants Act, fraud, civil conspiracy to commit fraud and unfair business practices, intentional infliction of emotional distress, and undue influence. The defendants in this case include the pastor, the man arranging the transaction, the purported new owner, and others.
To read more, click below for the article, as reported in the East Bay Business Times:
Mortgage fraud cases multiply, hit more homeowners
Homeowner sues pastor, others
For those seeking legal assistance or representation in California, see my blog post immediately preceeding this one.
As a personal observation, in cases such as this one (and the one in the blog post preceeding this one), where a victimized homeowner retains possession of the home after a purported sale, this possession under the law generally imparts what experienced real estate lawyers refer to as "notice to the world" that the person in possession of the premises may have a legal interest in the home (whether this "notice" is considered to be "actual notice", "constructive notice", or "inquiry notice" under California law, I welcome input from any California real estate attorneys).
This point may be significant to the victimized homeowner because if, after litigation, the homeowner is successful in voiding the sale, and the holders of any subsequent intervening interests (in the above case, the purported interests of the new buyer and the mortgage company that financed the new purchase) are deemed to have had this "notice to the world", it seems to me that the homeowner should be entitled to get the home back free from any claims of the new buyer or bank. (Being deemed as being "on notice" may possibly "disqualify" the new buyer or mortgage company of the legal status of being a "bona fide purchaser for value, and without notice.") For any victimized homeowners and others wanting more information on this point, seek out a competent, experienced real estate attorney in your home state.
Should this be the case, then the new buyer and the bank or mortgage company financing the purchase would end up "holding the bag". However, if they each obtained a title insurance policy to protect their interests as part of the purchase, then it seems to me that they may have a "title claim" to submit to the title insurance company issuing the policy (I wonder how title insurance companies are dealing with issuing title policies in foreclosure rescue situations. If anyone knows of any cases or articles addressing the ramifications to the title insurance industry in connection with foreclosure rescue issues, please drop me a line by clicking "Comments" below).