MD woman falls victim to growing real estate scam

Daily Record, The (Baltimore), Mar 4, 2005 by Kathleen Johnston Jarboe

Editor's note: This part one of a two-part series. Part two, which explores the laws being exploited and the legislative effort to change them, will appear next Friday.

Helen Cheeks' determination propelled her from welfare and the projects to a four-bedroom townhouse in Prince George's County. But street smarts and a strong will didn't save her home from a crafty real estate investor.

One night three months ago, when Cheeks still lived in her townhouse, she tried to sort out how someone who promised to help her keep her home out of foreclosure ended up with the title. She says she never received a dime of the $165,000 purchase price listed on land records.

The 48-year-old spread papers across the couch. They didn't all fit. So she continued arranging them on the floor. She keeps the documents in a few manila folders. There are court notices, receipts, police complaints, attendance charts, letters and other items.

Cheeks isn't sure what to make of them. Somewhere in the stack there must be an answer. There must be a hint.

I guess I really can't come to the grips of how this really went on, she said later.

Cheeks knows this: She fell behind on her mortgage payments in late 2003. Then she received literally hundreds of solicitations from businessmen offering to help. There are programs available where you do not have to pay the money back, states one letter she still has.

The situation grew more confusing after she contacted one of her callers for help.

How it works

Her case could bring criminal charges in what many consider a growing scam made possible by soaring home values.

Even though Cheeks was falling behind on her payments, she was building equity in her home. She had about $60,000 in equity in her home when she unwittingly became a target for what some lawmakers, prosecutors and regulators call equity skimming or foreclosure rescue cons.

The alluring promises to save homes appear just as homeowners are most desperate. Skillful real estate investors scan public postings for those in danger of foreclosure. Then they call, knock or mail fliers to the homeowners.

Prince George's prosecutors are looking at charging some investors with criminal counts, including the man who acquired Cheeks' property. Because no charges or lawsuits have been filed in this case, The Daily Record will not identify the investor Cheeks accuses of defrauding her. The investor did not return phone calls for comment for this story.

Maybe [homeowners] can't afford [their houses]. But they should get the appreciation on the property, and someone shouldn't be able to walk in and get it from them with shady promises and fast talk, said Doyle L. Niemann, a Prince George's assistant state's attorney focused on economic crimes and a state delegate.

Unscrupulous investors allegedly swipe homes through a number of methods. It usually starts with a stack of papers, the pressure of a pending foreclosure and phony promises. Investors rush the homeowner to sign papers. Buried within could be a power of attorney document, allowing another to make decisions about a property without the homeowner's presence, or a quit claim deed, changing the name on the title without requiring a formal settlement.

Often the deals are accompanied by a loose and unspecified agreement that the homeowner can rent, lease or eventually buy back the property. But the arrangement is often structured to ensure default.

Plans A & B

Cheeks, a federal police officer, jumped from document to document in December to tell her story.

She didn't have them all initially, like the papers she signed for the investor's lawyer in August. The lawyer didn't provide her with copies. Those August papers stand out in her mind.

The first time she dealt with the investor, he told Cheeks to call a legal associate to get on a monthly Chapter 13 repayment plan. But she couldn't afford it.

It was hectic, she said of the first plan. I couldn't pay no utilities.

The investor's second suggestion eventually involved the August meeting: Wait for my lawyer to contact you. Then dismiss all your creditors by filing a Chapter 7 bankruptcy, Cheeks recalled.

Last summer Cheeks waited like she was told. Weeks passed. When the investor's associate finally contacted her, it was an unannounced visit at work. Cheeks had to get permission to leave a training class to speak with him.

She didn't read the documents the lawyer brought. The man said the papers pertained to the bankruptcy filing. I didn't have a lot of time and [the lawyer] knew it, she said.

The August papers are the only ones Cheeks recalled signing that summer. But in a court filing he made, the investor claims to have acquired the house in July.

Cheeks gets angry about the court papers. The investor filed four trespassing cases against her and her husband Anthony in October.

One case claims her husband threatened the investor on a day and time her husband was at job training. Anthony's attendance sheet at the A-men! The Anacostia Men's Employment Network is another document Cheeks has in her paper puzzle.