January 27th, 2011 3:49 PM by Lehel S.
Con artists seem to be targeting Latino homeowners facing foreclosure, and some real estate professionals are getting sucked in as well, said Glenn Gulley, an investigator with the county district attorney's office.
"A lot of people are getting tangled up in this," Gulley said. His office has brought no charges yet; he confirmed investigations in hopes of warning other potential victims.
In the latest variation, people behind on payments are told they can keep their homes by signing up for a new mortgage, typically at 25 percent of what they owe, with lower premiums, plus a fee that's commonly $1,000 to $3,000.
Fraudsters then file a reconveyance at the county recorder's office, claiming that the legitimate loan has been paid off. Duped homeowners sometimes pay thousands of dollars toward the "new" loan — and still end up losing their houses when the legitimate lender forecloses.
People drowning in debt "are so desperate that they want to believe this is going to work," Gulley said. "Some feel it's worth a shot because they're not making payments anyway, and this is a small price to pay for a glimmer of hope. But they're wasting their money."
Most victims of the latest "fraudulent reconveyance" scam speak little or no English, Gulley said. Some real estate agents and escrow officers are lured to refer clients for a cut of the proceeds.
Bay Area businessmen Kurt F. Johnson and Dale Scott Heineman were sentenced nearly three years ago to federal prison terms of 25 years and 21 years, respectively, for running such operations through the Dorean Group. They relied on a "vapor money theory," claiming that federal banking systems are invalid and mortgages can't legally be enforced because transactions rely on wires or checks as opposed to gold or cash.
They bilked up to 3,500
homeowners in 35 states, authorities said; a Bee review of documents filed with the Stanislaus County clerk-
recorder's office suggests Heineman's involvement in several local transactions before his arrest.
A federal grand jury in Los Angeles last month indicted brothers Henrik and Hamlet Sardariani on charges tied to allegations of fraudulent reconveyances, and they face 115 years in prison.
The U.S. Department of the Treasury in July warned banking and government regulators not to fall for sham "mortgage principal reduction programs" pushed by Alan Tikal. A Bee review shows his involvement in several local transactions as recent as this month.
An active Web site of a company under suspicion asks readers to "join us in revolutionizing the mortgage & banking world. … A conglomerate of registered bankers and team of real-
estate experts have banned (sic) together to provide an alternative solution to this upside-down home market with strategies and programs once only known by the elite and privileged few."
The FBI's Web site warns, "Remember, there is no magic cure-all to relieve you of debts you have incurred."
Some banks threaten
homeowners with financial responsibility for legal costs associated with phony recorded documents, Gulley said.
Scammers sometimes convince homeowners that their mortgages will be pooled with others and sold for pennies on the dollar, allowing new note owners to issue lower loans. Others are told that federal bailout money rewards new note owners for rounding up underwater mortgages.
"It's nonsense," Gulley said, "but people are buying it."
Authorities say suspicions should be reported to the Federal Trade Commission or to local prosecutors' real estate fraud unit at 525-5550.
Bee staff writer Garth Stapley can be reached at email@example.com or 578-2390.
A consumer advisory from the federal Office of the Comptroller of the Currency warns that scam artists "are only too happy to take advantage of homeowners who want to save their homes." Vulnerable and desperate people are easy to find because lenders publish notices before foreclosing when borrowers fall behind on house payments.
Legitimate consumer counselors can help navigate negotiations with lenders. But posers just want your money and can leave you much worse off, authorities say.
Tips for avoiding fraudulent reconveyance scams:
Source: U.S. Department of the Treasury