Minnesota Real Estate Agent Gets Three Years In Alleged Foreclosure Redemption, Equity-Snatching Scam

In Hennepin County, Minnesota, the Minneapolis Star Tribune reports:

• Michael R. Wayman Jr. was a top-tier real estate agent for ReMax before he discovered the lucrative business of redeeming properties after foreclosure to snatch their equity. [...] But somewhere Wayman's quest for profits veered into illegality, and the 35-year-old Ramsey man was sentenced Friday to just over three years in prison by Hennepin County District Judge Warren Sagstuen on 19 counts of racketeering, perjury and filing false documents. Wayman and his company also were fined $55,000 and face restitution payments to be determined later.

• Prosecutor Tom Fabel sought a sentence of more than seven years, saying Wayman's use of false documents to redeem properties out of foreclosure constituted "massive, systemic abuse" that undermined the integrity of the public land records system.(1) But Sagstuen said Wayman's violations weren't as serious as some racketeering conduct.

For more, see Real estate agent gets prison for racketeering (The Ramsey man was convicted in May of illegalities that netted him thousands in a foreclosure redemption scheme).

(1) According to the story, under Minnesota state law, when a foreclosure occurs, a homeowner typically has six months following the sheriff's sale to redeem the property by paying off the debt owed to the foreclosing creditor. Some do so by selling the house or refinancing, but many owners lose their homes. A house may have several mortgages or other liens filed against it. The priority of those claims is determined by when they were filed with the county. If the homeowner doesn't redeem the property, a junior lienholder must do so to ensure that its debt is paid. That is done by paying off the loan, interest and certain expenses of more senior creditors. The reward is that by gaining the house, the junior creditor not only gets the money it is owed but also keeps any remaining equity in the property. People who specialize in buying up junior liens or creating new ones with the intent of gaining the equity are termed "bottom feeders" by prosecutor Tom Fabel, but what they do is legal under state law that is intended to protect junior lienholders. They can also claim certain expenses related to the property. Wayman ran afoul of the law when he was found to have falsely claimed to have paid taxes on a house he wanted to redeem or claimed expenses that were inflated or were not allowed.