Prosecutors Looking Into Conduct Of Colorado Man In Alleged Foreclosure Rescue Scam

In Colorado Springs, Colorado, KKTV Channel 11 reports on a local homeowner facing foreclosure who claims that, based on false representations, she unwittingly signed her home over to an area foreclosure rescue operator. The operator allegedly has since rented out the home, is pocketing the rent, and is stiffing the mortgage lender out of its loan payments. The matter has gotten the attention of a Colorado regulator and a local District Attorney's office:

• Erin Toll, the director of the Colorado Division of Real Estate says, "It just frankly sickens me that people would take advantage of someone who's in a situation like this both financially and emotionally." She warns homeowners to be careful, adding, "You have a giant target painted on your back and hunters will come out and prey on you."

• Toll says since Zehnder is not a licensed realtor she's turning over [the homoewner's] complaint to the Colorado Attorney General's office. Toll says, "It appears from things I've found on the website that this person has done this before to other people and the Attorney General's office is very interested in this case."

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• The El Paso County District Attorney's office [reportedly said] Zehnder was arrested [in the past] for two felonies ... forgery and the filing of false documents ... and received deferred sentences for each. Now the Economic Crimes Division is investigating him again based on [the homoewner's] complaint.(1)

For the story, see Beware of Foreclosure Deals.

(1) If, in fact, it can be proved that the homeowner was tricked into unwittingly signing away the deed to her home by the foreclosure rescue operator, the deed might be considered a forged document triggering the application of the Colorado forgery statute against the operator, despite the fact that the signature on the deed is genuine. See Forgery, 18-5-102(1)(c), Colorado Revised Statutes.

Further, if the homeowner were to prove, in a civil lawsuit, that she was fraudulently deceived about the nature of the document she signed that purportedly conveyed her title to the foreclosure rescue operator, so that she was excusably ignorant about what she signed, there is Colorado law that indicates that the deed she signed could be declared void from the time she signed it ("void ab initio") and, consequently, the home would still belong to her. For Colorado cases addressing the distinction between a deed that is void and a deed that is voidable, in the context of deeds procured by fraud, see:

Delsas v. Centex Home Equity Co., 186 P.3d 141; 2008 Colo. App. LEXIS 674(Colo. App. 2008):

• If a grantor is aware that the instrument he is executing is a deed and that it will convey his title, but is induced to sign and deliver by fraudulent misrepresentations or undue influence, the deed is voidable and can be relied upon and enforced by a bona fide purchaser. Fallon v. Triangle Management Services, Inc., 169 Cal. App. 3d 1103, 1106, 215 Cal. Rptr. 748, 749-50 (1985) (citation omitted).
• However, a deed procured by a particular kind of fraud, called fraud in the factum, is void. If a person has been fraudulently deceived about the nature of a document, so that he or she is excusably ignorant about what has been signed, courts recognize "fraud in the factum." Unlike other types of fraud, fraud in the factum yields an instrument that is void, and not merely voidable. Svanidze, 169 P.3d at 266 (citation omitted); see also Upson, 823 P.2d at 706; Dan B. Dobbs, Handbook on the Law of Remedies § 9.6, at 645-46 (2d ed. 1993).

Svanidze v. Kirkendall, 169 P.3d 262; 2007 Colo. App. LEXIS 1515 (Colo. App. 2007):

• [I]f a person has been fraudulently deceived about the nature of a document, so that he or she is excusably ignorant about what has been signed, courts recognize "fraud in the factum." See Meyers v. Johanningmeier, 735 P.2d 206, 207 (Colo. App. 1987) (explaining relationship between statutory defense against holders in due course of negotiable instruments and the common law defense of fraud in the factum).
• Unlike other types of fraud, fraud in the factum yields an instrument that is void, and not merely voidable. Akins v. Vermast, 150 Ore. App. 236, 945 P.2d 640, 643 n.7 (Or. Ct. App.), adhered to on reconsideration, 151 Ore. App. 430, 950 P.2d 907 (Or. Ct. App. 1997); Bennion Ins. Co. v. 1st OK Corp., 571 P.2d 1339, 1341-42 (Utah 1977).

Go here for other posts on forgery & forged documents involving genuine signatures. ForgeryGenuineSignatureKappa