MD AG Wins "Rescue" Scam Civil Suit; Settles w/ Lenders Who Financed Bogus Sale Leasebacks, Saves Homes For Some, Clips Closing Agent For $100K

In Baltimore, Maryland, The Real Estate Wonk Blog in The Baltimore Sun reports:

• Stop me if you've heard this one before: Borrower needs help. Borrower goes to foreclosure-rescue business to get help. Borrower signs documents to get or start the process of getting the mortgage refinanced, only to discover later that the foreclosure-rescue specialists were really getting the home signed over to them. Such fraud has happened across the country, both before and after the housing market went downhill.

• One local case just wrapped up in Baltimore City Circuit Court with a judgment ordering the defendants to pay just over $1 million in restitution and penalties. The business associates, Michael K. Lewis, brother Earnest Lewis, Cheryl Brooke and Winston Thomas, pleaded guilty earlier in the year to criminal charges related to dozens of foreclosure rescue scams. Michael Lewis was sentenced to 6 1/2 years in prison, Earnest Lewis to 4 1/2 years, Brooke to almost four years and Thomas to just over three years.

• The Baltimore civil case, brought by the Consumer Protection Division of the Maryland Attorney General's Office, covered 13 properties, most in the Baltimore area. Once the homeowners unwittingly signed over their properties, Earnest Lewis pulled all their equity out with a new loan and split the money with the defendants, said Bill Gruhn, chief of the Consumer Protection Division. "Some of the homeowners have moved," he said. "Other homeowners are in their homes and we were able to facilitate settlements" with the lenders.(1)

For more, see Homeowner beware.

See also, Maryland Attorney General press release: Attorney General Gansler Announces Judgment of More Than One Million Dollars in Restitution and Penalties in Foreclosure Rescue Scam:

• The [Consumer Protection] Division also entered into a consent order with Cornerstone Title & Escrow, Inc., a real estate settlement company, that the Division sued for participating in the scheme and for using practices that violated the Consumer Protection Act. Cornerstone denied the Division’s allegations and has not admitted any wrongdoing. [...] The consent order entered with Cornerstone requires the company to pay $100,100, [among other things].

(1) Last year, Massachusetts Attorney General Martha Coakley similarly reached a settlement with ten lenders and loan servicers who financed equity stripping ripoffs for a foreclosure rescue group who peddled bogus sale leasebacks to financially strapped Massachusetts homeowners facing foreclosure. The settlement impacted 26 residential properties, was designed to return homeowners to their financial position before they were screwed over in transactions that stripped their home equity, and provided an opportunity for the victims to reacquire the legal title to their homes. The victims' mortgage liens were to be reduced to the lower of the actual amount paid for prior mortgage loans on the property, subtracting any beneficial payments to the homeowners; or 80% of the then-current value of the properties, resulting in approximately $1.8 million in reduced mortgage obligations. See Court Approves Massachusetts Settlement With Lenders In Bogus Foreclosure Rescue; Case Involved AG Claims Of Equitable Mortgage, Usury, Etc.