Michigan Reverse Mortgage Scam
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The Detroit News has reported on a [tag]Michigan reverse mortgage[/tag] scam incident that prosecutors say may be just the “tip of the iceberg”. Indications are that the scam may have reached dozens of senior citizens with more than $1 million being stolen.
A Romulus loan officer has been charged with bilking a Belleville woman out of $42,000 in a mortgage fraud scheme that he may have used to dupe dozens of other elderly homeowners at a loss of more than $1 million, authorities said Wednesday.
Anthony Darryl James, 43, is scheduled to be arraigned today in 34th District Court in Belleville on two felony charges stemming from a $103,000 loan he obtained for 84-year-old Shirley Schultz. Wayne County Prosecutor Kym Worthy said Schultz thought the loan was for $61,000 and didn’t know that James had secretly kept a $42,000 check for himself.
Schultz later learned the full amount when she started receiving bills for a loan that, with interest, totaled $131,000, Worthy said.
“We feel this is just the tip of the iceberg,” Worthy said, referring to the ongoing investigation against James. “This is a far-reaching scam.”
Worthy said James is suspected of defrauding senior citizens in Wayne and Oakland counties.
Reverse mortgages are legal, tax-free loans or credit lines homeowners can take against the equity they have in their properties. They are often used by the elderly, who frequently own their houses outright.
The loans can be repaid by heirs or from the proceeds of a property sale, making them even more attractive to seniors looking for additional income.
In November 2003, Schultz contacted Financial Freedom Senior Funding Corp. of San Francisco, seeking a reverse mortgage.
The company referred her to James, who was working for Park Place Mortgage Corp. of Livonia at the time.
Paul Verkerke, vice president at Park Place, said James left the company a year ago.
“We had no participation in his alleged activities,” he said, declining to comment further. “We’re going to have to let this run its legal course.”
James allegedly forged Schultz’s signature on the $42,000 check and deposited it into an account he controlled.
Financial Freedom has pledged to cooperate in the investigation.
The fraud claim James now faces is similar to earlier complaints against him. James has been sued at least twice by customers who said he cheated them on reverse mortgages he negotiated for them. Both cases were dismissed.
Romulus lawyer Steven P. Robinson, who has represented James before, declined to discuss the allegations or his previous cases. “I’m not in a position to comment at this point,” he said.
Inkster resident Willie Collins sued in 2004, saying James and his mother, Dorothy James, kept $38,000 in a pair of reverse mortgages gone wrong.
In one of them, Anderson Hughes began seeking a reverse mortgage from James in early 1999, according to court records. After Hughes died, Dorothy James put her name on his property deed, Collins claimed.
In a 2003 lawsuit, Annette Lewis of Detroit claimed she was evicted from her home after James kept more than $17,000 she obtained in a 2001 reverse mortgage loan.
James is charged with uttering and publishing, a 14-year felony, and with larceny, which carries up to 10 years. Worthy urged anyone with information or concerns about similar mortgage fraud to contact her office at (313) 224-6304 or (313) 224-0585.
Further details about this case are yet to emerge. But at this point, few things stand out:
- Anthony Darryl James, who is charged, apparently has a track record of similar misdeeds going back to as early as 1999. Yet in 2003, [tag]Financial Freedom[/tag] Senior Funding - the largest [tag]reverse mortgage[/tag] lender in the country - still was recommending James’ services to Detroit-area seniors. It seems a little more diligent background-checking might be called for.
- As noted in the story, “James allegedly forged Schultz’s signature on the $42,000 check and deposited it into an account he controlled.” This is similar to another reverse mortgage scam in the Sacramento, CA area a few months prior. Apparently, opportunities for [tag]forgery[/tag] are ripe, and seniors should be especially vigilant about protecting their checkbooks and not signing documents with blanks to be filled in later.
- The fraud apparently involved duping the homeowner into thinking the loan was for only 59% of its actual amount. What kind of loan closing process would allow this to occur? Was pre-loan counseling so inadequate that the homeowner didn’t have a clue as to the eligible loan amount? Obviously many questions about practices and procedures will be raised by this case.
Thanks to The Real Estate Bloggers, for bringing this story to our attention.
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