Many Desperate South Florida Homeowners Snared By Foreclosure Scams

Sherry Miller signed the foreclosure assistance agreement blindly.

Believing it was the only way to stop the sale of her home in Doral, Fla., she put her trust in a program that let her down. She soon learned that her home would be listed for sale anyway, she claims, because among the flurry of pages she had signed was the deed to her home.

According to the Miami Herald, situations like hers are becoming extremely common.

“It’s the most horrible feeling you can imagine. It’s like somebody telling you they’re going to cut both your legs off,” Miller, 60, said.

As increasingly expensive Florida home loans, insurance costs and energy prices put more homeowners in danger of falling behind on payments, a new crop of investors is looking to capitalize on their bad luck. As a result, consumer advocates have seen a spike in the number of homeowners losing their homes in foreclosure-related scams.

Jeffrey Hearne, a lawyer with Legal Services of Greater Miami, which serves lower-income clients, said several show up at his door each week holding eviction notices after doing business with one of many home-saver investors operating in Miami-Dade and Broward counties.

“It kind of comes and goes, but over the last few years, the problem has picked up significantly in Miami. They come to our offices saying, ‘I’m being evicted from my home I’ve owned for 30 years,’” Hearne said.

Investors specializing in properties facing foreclosure are nothing new. Real estate agents and mortgage brokers have, for years, legally helped people avoid foreclosure — which can badly scar a consumer’s credit report and uproot people from long-held residences — by selling houses quickly or arranging for Florida home loan refinancing.

But foreclosure rescue schemes fall into a real gray area, ranging from the questionable to the downright fraudulent. Consumer attorneys say they are seeing it all, with varying details, but each has this one thing in common:

1. A scam to strip away the wealth homeowners have built in their property and pocket it for themselves.

In response to this disturbing trend, the Florida Legislature passed a law making it unlawful to knowingly use unfair or deceptive trade practices to take advantage of homeowners in foreclosure. The law, which took effect Saturday, hasn’t been tested.

The South Florida housing market has become extremely vulnerable to such schemes because its burgeoning values have allowed even newer owners to quickly build equity in their homes. At the same time, borrowing against that equity has become widespread, as individuals used the capital for renovations, paying down consumer debt, or investing elsewhere.

“A lot of times [owners of these properties] have lived in their houses 20 to 30 years. They might have refinanced to get cash out, and so a property that was once owned free and clear is now vulnerable because they can’t afford the monthly payment on their new mortgage,” James Johnson, manager of investigations for the Florida Office of Financial Regulation.

SETTING THEM UP FOR THE KILL
In most scenarios, the “rescuer” identifies a distressed homeowner from a list of foreclosures sold by county clerks’ offices to private companies, and approaches them with an offer to stop foreclosure by through refinance methods or by reinstating their mortgage. Older people, single women and minorities are the most aggressively targeted for these services.

The investor makes promises of a quick sale if the homeowner agrees to sign a lengthy contract, which often dubiously includes the deed to their home, a power of attorney, or a trust agreement. Unsophisticated owners sign up believing they won’t have to move, but don’t realize they have given the investor full authority to evict them, sell the house and profit.

Typically, the investor requires the homeowner to pay rent to the investor, money the investor says will go to pay the Florida home loan for a period while the owner’s credit is repaired enough to refinance. At the lease’s end, the owner must be ready to buy back the house at full market value or the agreed-upon price.

If they fall behind on rent, however, the deal is off and the investor can sell the property. Many times, homeowners lose their shirts and the homes they could otherwise have sold for a profit.

After falling on hard times, Miller missed several mortgage payments on her home and was facing a grim foreclosure sale. Receiving a dearth of letters and phone calls from companies offering assistance, she responded to an offer from Equinamics, a firm headed by investor Juan Lievano, who she claims promised would save her home.

Under the agreement, Miller believed Lievano would pay missed payments and fees on her mortgage, stopping foreclosure for a $35,000 fee. He would also continue making payments on Miller’s Florida home mortgage loan with the rent she paid him, which, she said she was told, would improve her credit to refinance the home and pay him back in six months.

Instead, Miller claims, Lievano slapped an eviction notice on her door and listed the property for sale. Miller stalled the sale by suing Equinamics, alleging fraud, usury, deceptive and unfair trade practices and violations of truth-in-lending laws, though Lievano still holds title to her home and collects rent. A hearing is set for July 25.

Over the past five years, records show that Equinamics has taken the titles to more than 100 homes in Miami-Dade County nearing foreclosure. In the past two years, Lievano sought to evict more than a dozen people, in some cases less than a year after they deeded their property to his company.

They were all facing foreclosure.

“I pay them rent every month, which is the same amount as my mortgage payment was,” Miller said. “The whole thing was so confounding. I didn’t know. I was not a mortgage person.”