Illinois regulators have slammed the door on a mortgage rescue scam that, with the help of seven title agencies, defrauded Chicago homeowners facing foreclosure.
State regulators say Mutual Trust Funding Corporation “conned” Chicagoans into signing over their homes to investors for pennies on the dollar.
The state last week revoked the company’s license and suspended the registration of one of Mutual’s loan originators, Charles T. White, Jr. State regulators also closed seven title insurance agencies, charging them with complicity in the mortgage rescue company’s actions.
“It’s unthinkable that any business would exploit people’s vulnerability and use it to cheat them out of their most valuable asset. Not only is it appalling from a moral standpoint, but it’s illegal. For any lender out there who might think they can get away with that kind of fraud, let this regulatory action serve as a reminder that we will not tolerate violations of our consumer protection laws,” Gov. Rod R. Blagojevich declared in a written statement.
In a series of complaints filed last week, the Illinois Department of Financial and Professional Regulation said Mutual Trust, White and seven title insurance agencies worked together to defraud unwary Chicago-area homeowners.
The department alleged that White approached homeowners facing foreclosure and offered to find an investor who would borrow the money from Mutual Trust to purchase the property prior to foreclosure. Homeowners were told the new investor would then lease the home back to them while they attempted to regain their financial footing, and were promised that the new investor would repay the delinquent mortgage account and eventually resell the property back to them.
But the state found that up to $1.5 million of the loans arranged by White through Mutual Trust, which should have been paid to the original lenders and previous owners, were diverted to a real estate management company called Eyes Have Not Seen, owned by Mr. White.
And, documents detailing disbursements to previous lenders and current owners, which should have been notarized and filed with state, federal and financial offices, had been tampered with to show that the new owner was Mr. White, through his company “Eyes Have Not Seen.”
Illinois state regulators said the transactions could not have been completed and the money could not have been siphoned to White’s company without the “explicit and active” participation of the seven title agencies closed earlier this week. All seven of the title agencies are owned in part by Mr. Christy Jepson and his wife, Patricia Jepson.
The companies are All American Title Agency, EJF Title Agency, Palatine Title Agency, Popular Title Agency, Senior Title Agency, Skyline Title Agency, LLC and Title Zone.
State regulators were tipped off to the company’s alleged dealings by a lender who filed a complaint claiming fraudulent information was found in seven closed loan files. Catching up with the company’s workers may have been difficult as the examiners said they were unable to get into the company’s offices because the offices were “dark, closed and unstaffed.” Building personnel told the examiners that the company’s listed offices were rarely used.
Each of the companies has the right to an administrative hearing on the charges before the state’s actions are final.
Mutual Trust did not return calls for comment. Charles White could not be reached for comment.
