Snared! Two women take a stand when shady company moves in
Originally published on the front page of the Real Estate section in the Chicago Sun Times on Friday, May 18By Sandra Guy
Mortgage scams come in an increasing variety of flim-flams, as two women who nearly lost their homes in the Englewood neighborhood can attest.
Shakeela Muhammad, a retired bank officer, found herself in bankruptcy after having to be hospitalized for health problems, including a stint in the intensive care unit.
A longtime friend suggested repeatedly that Muhammad take advantage of a program in which Muhammad would put her house into a trust account, pay rent lower than the mortgage payments for five years, and after that time, have her home returned to her, paid in full.
The program was run by RYM Technology Holdings LLC, a company that Muhammad later learned had its headquarters at a mail-box drop in a suburb outside Detroit.
The idea was that RYM Tech would invest the equity of Muhammad's house and garner returns generous enough, along with Muhammad's monthly payments, to pay off liens against the property.
What really happened was that RYM Tech had Muhammad sign a deed to a third party. The third party took out a new mortgage on Muhammad's home that was $44,000 larger than the original mortgage of $110,000. The third party paid off the old mortgage, but someone kept the difference. Muhammad has filed a lawsuit seeking damages from the responsible party.
Muhammad, who has been praised by the FBI for her attention to detail in the case, joined RYM Tech's so-called Mortgage Reduction Program in July 2005, after she had checked the company's papers of incorporation and found no consumer complaints.
The principal who did all the talking promised Muhammad "on his life" that nothing bad would happen to her home.
To her horror, Muhammad learned that RYM Tech had not paid the mortgage in three months, and had paid no homeowners' insurance payments or real estate taxes on her house, according to her lawsuit against the company.
She complained, and RYM Tech paid one installment of real estate taxes.
Muhammad started paying the taxes and insurance herself.
Muhammad received a letter in February 2006 from a woman who said she owned Muhammad's house and wanted to sell it.
"I literally passed out on the floor," Muhammad said. "I said, 'Who are you? My house is in a trust account.'"
Muhammad convinced the woman to return the deed to the house back to her. The foreclosure is pending, but the mortgage company has not proceeded against her property since the turnover of the deed.
Foreclosures generally start when a borrower falls three months behind on the mortgage payments.
Muhammad also called the FBI, the company to whom she paid the rent and attorneys general offices in Illinois and Michigan. Muhammad learned that RYM Tech was never registered to do business in Illinois, and that it had injunctions against it in Arizona, Michigan, Utah and one pending in California.
She found out that the people involved in the scheme had been paid hundreds and in some cases, thousands of dollars to recruit unwitting homeowners to join the program.
The FBI continues to search for RYM Tech's principal officer, who has disappeared.
RYM Tech could not be reached to comment.
The case has proceeded because Muhammad kept copies of every document she received and took the initiative to seek justice.
"You can't sit back and let other people do something about this," she said.
This particular scam is called rescue fraud.
Muhammad put up a fight because she is determined to keep her 4-bedroom, 2-bath home with a nice backyard, which she bought 22 years ago.
She advises people who find themselves in a similar situation to keep every document, take detailed notes and research the companies involved.
Muhammad's lawyer, Lea Weems, said many of the recent rescue fraud cases have taken place on Chicago's South and West sides.
"This is fraud perpetrated by people and companies who hold themselves out as 'investors' or 'rescuers,' saying they can save homes from foreclosure," said Weems, Equal Justice Works attorney for the Legal Assistance Foundation of Metropolitan Chicago.
Marlynne Rolland got a phone call in August 2005 from a rescuer of a different sort -- a man who claimed he could lower the interest rate on her mortgage by refinancing it.
The man said he would combine her mortgage, insurance and property-tax payments and put them into an escrow account.
The man kept asking Rolland to pay for "credit cleaning" and to pay off small utility bills before the refinancing.
Meanwhile, Rolland said she started getting notices that she had a new mortgage company. Her mortgage company changed hands twice from December 2005 until February 2006.
Just before the promised refinancing was about to take place, in June 2006, the man who had called her in August 2005 told her that her house was in foreclosure proceedings.
"I nearly hit the floor," she said.
To stop the foreclosure, Rolland had to come up with $3,000 in two weeks.
"I said, 'Oh Lord, I'm going to lose my house,'" she said of the house she has lived in for 18 years.
"These people will say, 'Don't worry about paying the mortgage. We'll pay that off,'" she said. "There are so many papers. You don't really look [at the details]."
"I said later, 'You got me. That's what you did,'" she said.
Rolland was able to stop foreclosure on her home with the help of her church, St. Stephen's Missionary Baptist at 658 E. 92nd St., and Neighborhood Housing Services, a non-profit group that works to rebuild low- and moderate-income neighborhoods in Chicago.
Rolland's mortgage payment is now higher than it was before -- $969.70 a month, compared with her previous $741.66. But she is proud to have her home, a place where anyone in the extended family can find refuge, or just enjoy a get-together.
Rolland lives with her husband, her brother and her three granddaughters.
"Everything is here. Everything happens here," she said.
Sam Finkelstein, national affordable housing organizer for the National Training and Information Center , a Chicago-based non-profit that fights predatory lending practices, said credit-reporting agencies sell information to lenders about borrowers' personal lives, including bad credit and whether the borrower has just gotten married or bought a home.
"A lender will say, 'I can refinance you into this great rate. But you have to wait,'" he said. "It usually results in the mortgage interest rate increasing, with a promise that it will decrease in the future."
Local non-profit groups say their observations and independent research show that Chicago has a higher incidence of home foreclosures than the average statewide and nationally.
In 2005, Chicago had 7,575 foreclosure cases, a 93 percent increase from the previous year, according to an NTIC study. A separate study released in March by the Woodstock Institute, also of Chicago, showed that Chicago had 10,268 foreclosures in 2006, a 37 percent jump from 2005.
The entire Chicago region had 29,000 foreclosures in 2006, a 36 percent increase from the year earlier, according to Woodstock.
NTIC's Finkelstein believes Chicago's poor showing is caused by sticker shock from adjustable-rate mortgages whose interest rates suddenly spike up; brokers getting paid to close a sale, regardless of the suitability of the mortgage; and a public-policy failure to ensure that all borrowers have access to non-risky loans.
"We see brokers and lenders nationwide targeting people they assume may not have as much information on home buying, and taking advantage of them," said Michele Taylor, NTIC's national predatory lending organizer.
NTIC has set up agreements with lenders and servicers to implement best practices and to do a repair and review process.
Under the process, the lender or servicer offers the borrower the best options to help keep that person in his or her home.
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