From the Herald News:
Mortgage scam turns 40-year dream into a nightmare for Paterson family
“Are you Ms. Marshall?” Wilhemina Marshall remembers the contractor in the dark sunglasses asking, after he found her family in their temporary apartment.
“We’ve seen your burned-out house. We can help you renovate.”
Then she got an offer for help.
The contractor said he’d fix the Marshall home and help secure financing to cover the cost. But instead of getting a home improvement loan, the Marshalls say the contractor tricked them into taking out a second mortgage. When the contractor disappeared before the work was complete, the Marshalls stopped making payments. Then, they were hit with foreclosure notices from a bank they’d never done business with.
Today, the Sheriff’s Department will put the Marshall home up for sale. They have 10 days to leave.
“This is my castle,” said Wilhemina, 57, as her 2-year-old grandson waddled through her small kitchen. “I’ve worked for this for 40 years. Please let me keep my house.”
The Marshalls’ case illustrates how easily homeowners can be lured into a contract they don’t understand and can’t afford.
…
Then in August 2001, John Evans, head of East Coast Developers of Belleville, came calling. How and why he found them made the Marshalls wary, but Evans’ words gave them hope. He said his company would transform the couple’s house back into livable condition. When the Marshalls said they couldn’t afford it, Evans assured them he would find financing.Days later, Evans came back — he had found a willing lender. D&M Financial would grant the Marshalls a loan. The Marshalls would sign a $108,000 check from D&M over to East Coast for the repairs. Every month, the Marshalls would pay D&M $1,300 toward the loan.
…
Several weeks later, the Marshalls received a copy of the home improvement contract in the mail with the words “paid in full” penned in the top left corner. No work had been done yet. Confused, they tried to contact Evans. Unable to reach him, they called D&M’s president, Demetris “Jimmy” Michalaki.There was nothing to worry about, Michalaki said. The repairs would soon begin.
…
Copies of the documents revealed that D&M’s appraiser had overvalued the Marshalls home by $100,000. The Marshalls also say their signature was forged and earnings were inflated.“No one would have loaned (them) that kind of money. The house was clearly distressed,” said Brian Fowler, a Ridgewood lawyer representing the Marshalls.
> NEW JERSEY: Kara Homes buyers may lose deposits
6 unfinished developments sold
Posted by the Asbury Park Press on 04/10/07
BY DAVID P. WILLIS
BUSINESS WRITER
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TRENTON — Several prospective Kara Homes Inc. home buyers all but lost their deposits Monday after a bankruptcy court judge approved the sale of six uncompleted developments to developers and a bank.
An option now is to try to recover a portion of their money as unsecured creditors in the bankruptcy case, said Barry W. Frost, a lawyer for some of the Kara buyers. They would only recoup their money once secured lenders, such as banks, are paid.
Jerrold Fried, 42, of Berkeley, who put down $135,000 on a house at Kara’s Dayna Estates in Toms River, is not hopeful he’ll see any money.
“Unfortunately, in the end of the big bankruptcy, my wife and I are the ones that are going to suffer, and my children,” Fried said. “Everybody else goes before me even though he used my money to build the development.”
Two weeks ago, Kara sold six uncompleted developments for about $19 million at an auction that failed to generate much interest.
One, Dayna Estates, was purchased by Metropolitan Mortgage and Realty Inc. of West Orange and APS Contractors Inc. in Paterson.
Three others, Prospect Ridge Estates in Stafford, Hartley Estates in Little Egg Harbor and Sterling Acres in Monroe, were bought by Magyar Bank, the bank that loaned Kara Homes money to build the projects. Magyar will try to sell them on its own.
The two remaining developments, Woodland Estates and Park Meadow, both in Edison, were purchased by Fenix Investment & Development, a Morristown-based home builder that agreed in December to buy the developments. The sale was subject to the auction.
The projects were sold free of any contractual obligations.
“No great solutions”
more http://www.app.com/apps/pbcs.dll/article?AID=/20070410/NEWS/704100305
The story seems to be missing quite a few details with Wilhemina Marshall’s house.
1. Marshall buys house in 1970 for $14900 with 30-year fixed mortgage.
2. In 2000 (at which point, the mortgage from 1970 should have been paid off), fire guts the home, and the Marshalls “used their insurance reimbursement to pay off all but $10,000 of their mortgage”.
3. Later on: “It had been more than 30 years since Wilhemina had studied a loan application.”
Wha?? Either the writer of the story didn’t research the story properly, or the Marshalls are lying through their teeth.