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New FRAUD series in newspaper.

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This is one of TWO stories printed in this series on fraud taking place relating to mortgages and appraisals.





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May 05, 2002
Foreclosees question documents, process


By BARBARA ARNTSEN, Daily Dispatch Writer


When Brenda Williams answered an advertisement to rent a house almost two years ago, she had no idea she would end up buying a manufactured home - or that she would be facing bankruptcy within a short period of time.

"I called a number, and it was for rentals," she said. "We were trying to move, but when I got down there, they didn't have anything available. Or if they did, it was way too small. And that was when the guy was like, 'I understand you're disgusted. You don't really want to buy a house, but let us go ahead and see what you can do, and we'll work out something.' "

Williams said she didn't think the sale process would go very far, because she didn't believe she was in sound financial shape to buy a home, but Creative Real Estate convinced her otherwise.

"This is the way they presented these deals," she said. "And like I said, my credit ain't A-1, no way. But they say, 'Why rent when you can buy?' And you're just trying to live a halfway decent life and come home to some place decent."

In Vance County the number of foreclosures has almost quadrupled in the past four years, and the majority have been on mobile homes owned for less than two years.

In 1998 there were 58 foreclosures in the county, but in 2001 the number climbed to 200. In the first quarter of 2002 there were at least 52 properties on the foreclosure list.

Though foreclosures occur throughout the county, some developments have been hit harder than others.

Key Estates, developed and sold by Creative Real Estate, has had at least 13 foreclosures the past two years.

Williams' home is in Key Estates.

Because some of the people have less-than-perfect credit records, they receive mortgage loans through sub-prime lenders with high and/or variable interest rates.

Williams said she put $500 down (approximately 0.4 percent of the purchase price of her home) and received a blank gift letter from the company.

Said Williams: "The gift letter was something they gave to me and said, 'Have a family member sign it, and we'll fill in the figures as far as the down payment and that type of thing."

Neighbor Ron Sanders said he and his wife also were given a blank gift letter to have signed by a relative when they bought their home from Creative Real Estate.

"Gift funds are allowed, depending on your loan," said Creative Real Estate owner Donald Gupton. "The FHA (Federal Housing Administration) allows relatives to give gift money."

But Sanders, Williams and another customer, who asked not to be identified, said no relative gave money for the down payment, though their loan documents reflect thousands of dollars in "gift" money.

Gupton said he had no knowledge of customers being instructed to bring back signed, but blank, gift letters.

"I have heard of that from different ones," he said. "I would need to know in those situations. I wouldn't condone that behavior."

Sheronda and Ellis Strong, who also bought a home in Key Estates, said that when they looked through their paperwork after closing on their home, they saw they had been credited with trading in a mobile home valued at $15,000. But they had no trade-in.

"We never owned a mobile home or anything before," Sheronda said. "I don't know where they got that from."

None of the families in the quiet little cul-de-sac in Key Estates ever received a signed copy of the loan papers. They were given a stack of unsigned closing documents and told they would receive their signed copies later.

"I still to this date don't have anything with my signature on it," Williams said. "I just got nothing but a stack of papers with my name typed on it."

Gupton said most people simply lost their loan documents and would come to his office wanting copies.

"We don't keep signed copies except for the HUD sheets," he said. "But I've never seen an attorney not give the signed papers."

Lawyers Robert Catherwood and Lori Renn said they did not provide their clients with signed copies of all loan documents.

Catherwood was the closing attorney for the Strong and Sanders home loans, while Renn handled the closing for Williams.

"Every closing, they get a set of the closing papers, but, no, they are not signed," Catherwood said. "I don't have time to run copies - there are about a hundred papers in the closing documents."

Renn said she provided the clients with a signed copy of the settlement document and later mailed them a signed copy of the deed or the deed of trust.

Williams said she never received a signed copy of any of those documents.

"When you go in there, they tell you that they are going to take care of the closing and the attorney and everything," she said. "And, like I said, being a first-time home buyer, I didn't have any reason to think otherwise - to think that I should go out and get my own lawyer. They explained it like they are going to take care of everything."

One local real estate law specialist was alarmed at Williams' allegations.

"If an attorney did that, they ought to be flogged," said Michael Satterwhite, a Henderson attorney who handles 350 to 400 real estate transactions annually.

"There is no reason or excuse for someone not getting their signed copies at the time of closing."

Satterwhite said that during closing he goes through each page and explains what it means before the buyer signs that page. Then his assistant makes a copy of that one page, and he gives it to the buyer before he proceeds to the next page that needs to be signed.

It makes for a lengthy closing, but Satterwhite believes that's the job he's hired to do. Satterwhite has never handled closings for Creative Real Estate.

"Some lawyers may not give copies of what I refer to as housekeeping documents," he said. "But I believe that everyone should receive, at a minimum, the truth-in-lending statement, the note and the HUD-1 closing statements."

Satterwhite said the deed is mailed to the buyer after the closing because it must be recorded at the courthouse.


The writer can be contacted at mailto:[email protected]
 
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