Friday, July 31, 2015

Another Contract For Deed/Land Contract Racket Claims At Least Five Victims; Unsophisticated Homebuyers Paid Downpayments & Monthly Payments To Seller But Lost Homes To Foreclosure Anyway Due To Seller's Non-Payment Of Undisclosed Liens

In Phoenix, Arizona, the Phoenix Business Journal reports:
  • The founder of a Phoenix co-working space and one of its companies are facing accusations from the Arizona Attorney General’s Office for defrauding at least five people who believed they were purchasing homes from the company.

    The five Spanish-speaking victims made down payments and monthly mortgage payments to this company, believing they were homeowners, but ultimately lost their homes to foreclosure.

    The company, Montecristo Properties LLC, which leases space at the Office Pile co-working space on Seventh Street in Phoenix, had obtained hard money loans using these victims’ homes as collateral, unbeknownst to the victims, according to the search warrant affidavit obtained by the Phoenix Business Journal.

    Montecristo, also known as Montecristo Property Investments LLC and San Marino Property Investments LLC, fell behind on payments to its lenders, causing the foreclosures. Montecristo failed to disclose that the company had obtained or planned to obtain a hard money loan on these homes, and that the victims never had the title recorded in their names, according to the affidavit.

    ***

     A spokeswoman with the Attorney General’s Office said no one has been charged or arrested and the investigation is continuing.

    The victims met with the four listed Montecristo employees at the Office Pile, where they signed documents to buy their homes. The victims believed their mortgage with Montecristo was the only encumbrance on their home, according to the affidavit.

    The investigator noted that documents the victims signed were “worthless” and did not transfer ownership of property.

    The victims lived in the homes and made their mortgage payments to Montecristo, while believing they were the homeowners. They only learned of their homes being encumbered by a third party lender after they received foreclosure notices, according to the affidavit.(1)

    Aguirre and Montecristo took out the loans via hard money lenders on each of the homes, and then stopped paying each of the lenders, causing the homes to go into foreclosure, according to the affidavit.

    A search warrant was issued earlier this month, and the Office Pile and Montecristo office was searched on July 14. Many items were seized during the search, including receipts, client list information, notebooks, more than 60 binders labeled with different addresses, external hard drives, laptops and 10 cellphones.
For the story, see The Office Pile founder, real estate company accused of defrauding five people out of their homes.

Editor's Note: I think it's fair to infer that customary practices for transacting real estate conveyances (ie. use of standard real estate closing, escrow agent, issuance of closing statements and title insurance, etc.) were not employed here.
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(1) Go here for earlier stories on screwed over homebuyers who have been peddled properties through the use of the predatory instruments of choice for real estate scammers: the troublesome contract for deed, and its "kissin' cousin", the equally problematic land contract.

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