In Early 2008, Cheryl Ann Montero, a California mortgage broker, held a series of free seminars in the clubhouse of the Lone Tree Golf Course in Contra Costa County, a suburban area near San Francisco. The attendees, homeowners facing foreclosure, were desperate for a rescue from their woes. Using a PowerPoint presentation, Montero delivered one.
She said her firm, Freedom Financial Solutions, could pressure lenders to stop foreclosures by challenging the legality of loan agreements, according to court records. Her fee: $2,500 upfront and a $2,000 monthly payment to cover legal costs. Promoting her services on the Web site Craigslist, Montero, a blond-haired, blue-eyed woman who looked like a soccer mom, became known as a foreclosure escape artist. “All the real estate agents knew about her classes,” says Kay Trail, a realtor in Antioch. “She was one shrewd sister.”
She was also ripping people off, says Ken McCormick, a prosecutor in the Contra Costa County District Attorney’s office. A player in a new confidence game exploiting soaring defaults, Montero didn’t have a team of attorneys to confront lenders. Instead, her firm took a small ownership stake in some of her clients’ houses and filed for bankruptcy, temporarily suspending foreclosure proceedings on those homes, according to an investigative report filed in court by prosecutors.
In the end, she didn’t deliver lower mortgages for the 10 homeowners who paid a total of $52,000 for her services, McCormick says. Montero did have mounting financial woes of her own: In September, she filed for personal bankruptcy, according to court records.
“She couldn’t make it in real estate anymore, so she just changed hats,” McCormick says. “But she was taking money and doing nothing.” The prosecutor charged Montero with 36 counts of grand theft and related charges. She pleaded not guilty and is free on $100,000 bail. Her lawyer, Cameron Bowman of San Jose, didn’t return telephone calls for comment.
Rescue scams are springing up across the US, says California Deputy Attorney General Angela Rosenau, exacerbating a housing crisis in its third year. The predators are persuading troubled borrowers they can intervene with their lenders and negotiate lower payments on their mortgages, law enforcement officials say. Instead, the players, often out-of-work real estate professionals who peddled subprime mortgages during the boom, pocket hundreds of thousands of dollars in advance fees and disappear or bleed their victims by charging monthly payments.
“There’s just been an explosion of vulnerable homeowners and people preying on them,” says Terry Goddard, the attorney general of Arizona, which recorded the thirdhighest rate of residential foreclosures in 2008, after Florida and Nevada. “People miss their payments, and they are about to be repossessed, and someone walks in the door and says, “I’m here to help.” You just can’t underestimate the power of desperation.”
The swindlers are thriving largely because the lenders and banks that inflated the housing bubble with subprime loans have been slow to help homeowners as those mortgages blow up.
Source: The Economic Times, Mumbai - 28.03.09, By Edward Robinson - San Francisco
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