Alleged Mortgage Fraud Conspiracy Leaves 1st Time New Haven Homebuyers "Knee-Deep In Sewage — And Debt"; Law Students Take Case In Suit For Fraud

In Connecticut, The New Haven Independent reports:

• When they knocked on the door of L & S Mortgage, Delroy Reid and Debra Willoughby just wanted to buy a home. After getting lured into buying a broken-down house through an alleged mortgage fraud scam, they found themselves knee-deep in sewage — and debt. The unwitting first-time homebuyers have gone to court to try to recover.

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• Reid and Willoughby claim they were lured into a conspiracy between a mortgage company that falsified their loan applications, sellers with family ties to that company, and an attorney who didn’t look out for best interests. The company that brokered the deal, L & S Mortgage, LLC, surrendered its mortgage broker license as of March after the state threatened to shut the company down for charges including taking false loan applications.

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• With the help of the Jerome N. Frank Legal Services Organization at the Yale Law School, Reid filed suit in New Haven Superior Court against six alleged co-conspirators in the scam: L&S mortgage; CA-based lenders Fremont Investment; two sellers; an attorney who oversaw the sale; and Dolan & Luzzi, a New Haven law firm that has a $20,000 contract with the City of New Haven to do foreclosure work.

For more, see Struggling Couple Sues Over “Scam”.

To view lawsuit, see Reid v. L & S Mortgage, LLC, et al., a 26-count complaint alleging, among other things, fraud, negligence unconscionability, theft, breach of duty of good faith and fair dealing, malpractice as to attorney, mortgage broker and real estate appraiser; Connecticut Unfair Trade Practices Act violations (an MS Word .doc file).