| They left her with a flier for Property Solutions of New
Jersey. At the bottom, they wrote, "We can help you keep your home."
A year later, Alford faces homelessness. She and her family will be evicted
from her home of more than 38 years on Tuesday, and Property Solutions
will get the property. If experience is an indicator, the company will
sell the house within months and make hundreds of thousands of dollars.
"They are taking the house from out underneath me," said Alford,
40, choking back tears.
Property Solutions, based in Union City, says it helps homeowners save
their houses from foreclosure. It promises to pay off the house's mortgage
and help the homeowner find new financing.
But in the process, some homeowners like the Alfords lose ownership of
their properties. Offering foreclosure rescue services is not illegal.
But lawyers representing the thousands of homeowners who have entered
the deals say some companies use fraud and deception to lure people into
giving up their property.
"This is a way to steal homes from people," said Jeremiah Battle,
a lawyer with Northeast New Jersey Legal Services in Jersey City. "They
are set up for failure."
Almost home
Brenda Alford has lived at 241 17th Ave., Paterson, since she was 1. She
played there with her six siblings, raised her three children there with
her husband, Vonward, and took over the house in 1998 after her parents
died. Her brother lived upstairs and her sister below.
Alford inherited a $96,000 mortgage. She refinanced when rates were low,
and was paying $700 a month with rent payments from her brother and sister.
"That was reasonable," said Alford, who works as an office assistant
at Eastside High School. Her husband is a teacher's aide at a Paterson
middle school.
But Alford struggled to collect payments from her family members. Her
credit suffered as bills went unpaid. She refinanced her mortgage in 2003,
and her monthly payments almost doubled.
In 2004, Vonward Alford lost his usual summer teaching job. They fell
behind on payments. The mortgage holder asked for $2,000 a month to maintain
the loan. It wasn't an option. In June 2005, the Alfords received a foreclosure
notice.
They consulted a lawyer, who advised them to file for Chapter 13 bankruptcy.
This would allow them to cancel their loans and keep the house.
But before they could file for bankruptcy, Property Solutions showed up
outside Alford's door. She took their information, but didn't call. Days
before the house was scheduled for foreclosure, Alford said they came
back, informing her that a local lawyer intended to buy her house.
Alford was frantic and desperate, and the company's promises struck a
nerve.
"They said, 'In three months, it can be all better,'" she said.
The Alfords agreed to meet with Edward Toledo and Ray Vega of Property
Solutions in July. They offered to stop the foreclosure sale by paying
off the house's $96,000 mortgage. The Alfords could stay there and pay
a monthly fee of $1,338. Like their flier states, Property Solutions promised
to help the Alfords find new financing, fix their credit and save them
from losing their home.
At their dining room table on July 12, the Alfords signed the paperwork.
"It all sounded perfect," said Vonward Alford, 36.
Foreclosure rescue
Foreclosure prevention services have existed for decades, but lawyers
say they have become much more prevalent as foreclosure rates surge. Foreclosures
were up by 72 percent nationally in the first part of this year, as compared
with the same period in 2005, according to RealtyTrac, a national foreclosure
database.
The National Consumer Law Center, an advocacy and research organization,
issued a report last year finding that thousands of homeowners nationwide
have been misled by the companies. Minnesota's attorney general estimated
that a quarter of the state's 2,500 annual foreclosures resulted from
the mishandlings of rescue companies. One California outfit deceived 1,800
homeowners alone, according to a case brought by the state's attorney
general.
Finding potential targets is easy. The county sheriff's office publishes
foreclosure notices in area newspapers, and listings are available through
online databases and at county courts.
Those in foreclosure have typically lost a source of income or suffered
a sudden hardship. Many had an adjustable-rate or sub-prime mortgage that
suddenly became more expensive. They tend to be desperate for help and
easily deceived, according to the Consumer Law Center report.
"People just trust," said Melissa Huelsman, a Seattle lawyer
who has handled more than a dozen foreclosure rescue cases this year.
"It is scary and intimidating to them. And they have no idea of what
they are signing."
Typically, foreclosure specialists offer to pay off an existing mortgage
and sell the house back to the owner when they can afford it. The resident
remains in the house and pays a monthly fee, believing that the company
will help them find new financing.
But the new financing rarely materializes. And only later -- often when
they receive an eviction notice -- do residents realize that they actually
signed over their home's deed to the foreclosure specialists, as documented
in cases cited by the Consumer Law Center report. The company can then
flip the house for significant profit and evict the tenants.
There are no national statistics on the practice, nor are there specific
laws against it. It is not illegal for a third party to buy someone's
mortgage.
The small print
What the Alfords say they didn't realize was that on July 12, 2005, with
a few pen strokes, they had lost ownership of their home.
Copies of the paperwork reveal that on that day the Alfords signed over
their home's deed and title to Property Solutions in exchange for $96,000
to buy the property out of foreclosure.
They also signed a "use and occupancy agreement," which stated
that the Alfords agreed to the sale of their home to Property Solutions
and would now be "licensees" of the property, allowing them
to stay in their home for a monthly fee. A "licensee" is allowed
to use a property solely based on the terms of the owner -- which was
now Property Solutions.
To get back the house, the Alfords would need to pay $159,000 -- an amount
determined by Property Solutions -- by October 2005. If the Alfords didn't
find new financing by October, they would receive $30,000 from Property
Solutions for moving.
The next paragraph of the document said the $30,000 payment option would
be rescinded if the Alfords didn't leave by Oct. 15.
None of the documents say that Property Solutions would find financing
for the Alfords.
The Alfords say Toledo and Vega rushed the signing process, and read sections
of the contracts out loud instead of letting the Alfords thoroughly study
them. Eager to stop the foreclosure, they signed anyway.
"They kept saying that they didn't want the house," Alford said.
Toledo and Vega did not return calls for comment. Joseph DeFuria, their
attorney, would not speak on what he called "an open matter."
For the next three months, the Alfords remained in their home and paid
the monthly fee. There was no word about new financing, but Brenda Alford
got calls from Property Solutions constantly about unrelated matters.
"They wanted to know everyone I spoke to," she said. "And
they didn't want me to talk to a lawyer."
Alford said the calls made her suspicious, but Vega continuously reassured
her that they were on her side.
Then, in November, the Alfords received a letter from Property Solutions
stating they needed to take the $30,000 and move since they had not found
financing. But on the phone, Vega reassured the Alfords that the holidays
were coming and they could remain in the house, Alford said.
In February, they received an eviction order from Superior Court in Passaic
County. Property Solutions had been petitioning the court for the Alfords'
removal since November, court documents show. The Alfords said they had
no prior warnings that they were going to be evicted. They panicked. Unable
to afford a private attorney, they went to Northeast New Jersey Legal
Services.
Their attorney, Jeremiah Battle, said he suspected fraud.
Their case went before Judge Glenn Wenzel in May. Based on the judge's
reaction during that appearance, the Alfords said they didn't feel confident
about their case and asked to negotiate a settlement. Judge Wenzel signed
off on a mutual agreement on June 28 that said the Alfords needed to buy
the house back for $210,000 ? another amount set by Property Solutions
and accepted by the Alfords -- by Aug. 1 or leave.
Wenzel said through a court representative this week that the matter "was
a settled case," and that he could not recall it in detail and didn't
want to comment further.
The Alfords said they entered the agreement because they had found someone
willing to co-sign on the house and provide a mortgage. They had the house
appraised and started making some repairs. But when it came time to negotiate
a deal, Property Solutions would not accept the terms of the sale, the
Alfords say.
"They never intended for us to have our house back," Vonward
Alford said.
Aug. 1 passed, and the Alfords received another eviction notice. This
time, there was no recourse. They must move by Tuesday.
Property Solutions stands to make thousands on the deal. The company paid
$96,000 to buy the house back from foreclosure, but it's valued at $370,000,
according to the Alfords' appraisal. Property Solutions also received
approximately $18,000 in fees from the Alfords on the deal.
When they talk about the situation, Brenda Alford gets quiet, the legal
documents sitting in a stack in her lap. Vonward Alford becomes angry.
"If I went down the street and robbed a store, I would go to jail,"
he said. "So should they."
Who are they?
Property Solutions was founded in March 2005 by Edward Toledo, 41, a North
Bergen real estate agent who lives in Dover. The company has purchased
nearly 40 properties throughout the state, including houses in Paterson,
Passaic, Haledon, West Milford and Pompton Lakes, according to state property
records. Purchase prices range from $20,000 to $255,000.
Foreclosure specialists tend to be real estate agents who solicit funds
from other "investors," individuals who front the mortgage money
and are promised a part of the later profit, according to Huelsman. The
Consumer Lawyers report found that foreclosure specialists and investors
learn about the trade during get-rich-quick seminars.
Most of Property Solution's property transfer records list other individuals
as buyers. Dellanara Palma of Clifton is listed as a 40 percent owner
in the Alfords' home.
State records show that Property Solutions has sold at least six of its
properties in the state. A property on Van Dyke Avenue in Haledon was
purchased in February 2006 for $302,653. It was sold just three months
later for $368,000, a more than $65,000 increase. A Passaic property was
sold for an $86,000 gain. A Paterson house was sold for $51,000 more than
its purchase price. All had been in foreclosure and all were redeemed
with money paid by Property Solutions, according to Bill Maer, spokesman
for the Passaic County Sheriff's Department, which handles foreclosure
sales.
Northeast New Jersey Legal Services has another case pending against Property
Solutions. Mary Price, a Bayonne widow, entered into foreclosure in 2005.
Toledo and Vega contacted her days before the sheriff's sale, promising
to give her a $30,000 loan for home repairs and allowing her to remain
living there, according to her lawyer's countersuit.
She paid a monthly fee of $1,850, but this was not applied to the loan.
Within three months, the company threatened to evict her.
A Hudson County judge overturned the eviction. Joseph Murray, Price's
lawyer, is countersuing for deception and fraud. According to the claim,
Price was never given copies of the contract, nor was she informed about
the possibility of eviction.
Murray wouldn't comment on the case's specifics, as he said they are negotiating
a settlement with Property Solutions.
Prosecutors in several other states have begun trying foreclosure specialists
on fraud charges. In 2004, California's attorney general shut down one
company, Housing Assistance Services, and forced them to pay $500,000
in penalties and refunds to client. In 2005, six individuals were charged
with defrauding Long Island homeowners. Florida has also brought criminal
charges in several cases.
California, George, Maryland, Minnesota, Missouri and New York have passed
state laws allowing homeowners to cancel contracts with foreclosure specialists.
Some of these states also cap the fees and amount of equity that companies
can take.
New Jersey has no cases against foreclosure specialists, nor has the state
received complaints about Property Solutions or other companies, according
to the attorney general's office. The spokeswoman for the state Division
of Consumer Affairs said DCA is aware of scams associated with foreclosure
rescues, but did not know of pending state legislation on the issue.
The Alfords intend to report their case to the state attorney general,
but that's little solace to them now. The ordeal has left the couple heartbroken,
potentially homeless, and on the verge of separating.
"It's stressful," said Vonward Alford, looking away. "It
makes you see your wife through eyes filled with so much pain."
TIMELINE OF THE ALFORD'S CASE
June 2005: After missed payments, the Alfords' Paterson home enters foreclosure.
Late June 2005: Alfords are visited at their home by Dee and Carmen, two
Property Solutions representatives offering to help them with their situation.
July 5, 2005: Sheriff's sale begins on property.
July 12, 2005: The Alfords meet with Edward Toledo and Ray Vega at their
home. They sign Property Solution's paperwork to have them redeem their
house from the sale and enter into a use and occupancy agreement.
July - October 2005: Alfords pay $1,338 monthly, along with home insurance.
Oct. 15, 2005: The Alfords are supposed to vacate their home and receive
$30,000, based on the original contract. Property Solutions tells them
they can remain there while they jointly look for financing.
Nov. 15, 2005: The Alfords receive a letter from Property Solutions restating
that their contract has expired. Vega continues to reassure them about
finding financing.
November 2005 - January 2006: The Alfords search for a new mortgage. They
find one, but Property Solutions does not accept the terms, the Alfords
say.
Jan. 31: Property Solutions issues an eviction notice to the Alfords.
March 29: The Alfords miss their first court hearing.
April 6: They consult with Jeremiah Battle, a legal aid lawyer who takes
their case.
May 1: Battle attempts to postpone the trial, but is denied.
May 19: Both sides submit discovery.
May 25: The case is adjourned until June 28. The parties are expected
to reach a settlement.
June 28: The Alfords and Property Solutions settle the case. The Alfords
can buy back the house if they obtain $210,000 in financing by Aug. 1.
They remain there and continue to pay rent.
July - August: The Alfords find financing, but Property Solutions does
not accept their offer.
Aug. 1: The Alfords receive an eviction notice.
Aug. 29: The Alfords must vacate their home. Property Solutions will take
over the property.
FORECLOSURE TIPS
Beware of companies that call or advertise their services after you have
entered foreclosure.
Be skeptical of those who claim to save your credit, buy your house "as
is," pay cash for homes, or provide immediate refinancing.
Never sign over your house's title or enter a transaction concerning your
property without consulting a lawyer.
Do not pay your mortgage to anyone other than the bank.
Never make verbal agreements. Make sure it's in writing, and inspect the
small print.
There are various programs and payment plans available to stop foreclosure.
Consult a financial counseling agency to learn about them.
If foreclosure is imminent, consider filing for bankruptcy or selling
the house.
Get advice from a HUD-approved counseling agency by calling 800-569-4287.
Reach Heather Haddon at 973-569-7121 or haddon@northjersey.com
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