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State Stops Fictitious Financier’s Foreclosure

Court order issued against Michael O’Donnell, Setter Financial

January 9, 2006

By PATRICK CROWLEY

It took a court order obtained by the Massachusetts attorney general to prevent an alleged bogus mortgage lender from foreclosing on the home of a 71-year-old woman.Attorney General Tom Reilly said in a statement he filed a complaint in Massachusetts Superior Court against Michael W. O’Donnell, who had been doing business under the “fictitious” business name Setter Financial.

Reilly said O’Donnell allegedly provided a mortgage loan to Carol Rebello, 71, “with the intention of foreclosing on it and taking possession of her home” in Taunton, Mass.

The loan was made to Rebello so she could bring the single-family house up to city and state sanitary codes. It had been condemned by the Taunton Board of Health in February of 2004 after it had been not been lived in for years.

Reilly said Rebello sought the loan to bring the house up to code, but that O’Donnell only wanted to get possession of the property. The court order not only prevents O’Donnell — who could not be reached to comment — from moving forward with the foreclosure, but he is also banned from visiting the property or contacting Rebello through a temporary restraining order obtained by Reilly’s office.

Reilly is also seeking civil penalties and legal costs from O’Donnell as well as a permanent injunction that would prevent him from any future dealings with Rebello or her property.

“My office will not tolerate predatory lending, whether it’s by big companies or a lone scam artist,” Reilly said in the statement. “And in this case the loan was needed not only to rebuild a home but also to improve the city of Taunton.”

In the 22-page complaint Reilly explained that Rebello had left the home in the late 1980s “for personal reasons” and returned in 2005.

“During this time,” according to the complaint, “the house fell into disrepair.”

The property is assessed at $201,300, according to documents on file with the city.

O’Donnell was a board member of a nonprofit development organization called Pro-Home, which was aware of Rebello’s situation. He used that knowledge to target her, Reilly charges in the complaint.

“O’Donnell, knowing (Rebello’s) predicament, approached the woman and offered her assistance finding a loan and contractors to rebuild her home and steered her away from the services of Pro-Home,” Reilly said.

Rebello closed a $58,000 loan with Setter Financial on April 15 of this year. The 20-year loan carried an interest rate of 10.4 percent with $14,000 going to the city, $40,000 going for work on the house and $4,000 in closing costs and fees, according to the complaint.

Almost immediately after making the loan O’Donnell allegedly began harassing Rebello, claiming she was already in default of the mortgage, Reilly said.

O’Donnell allegedly made several unannounced visits to Rebello and “yelled and insulted her,” according to the complaint.

Rebello was making mortgage payments with checks payable to Setter Financial.

“Those checks that were cashed were endorsed by Setter Financial and deposited into an account with Sovereign Bank,” according to the complaint. “That bank accounts stands in the name of Michael O’Donnell, doing business as Boston Financial.

“On information and belief,” Reilly alleges in the complaint, “O’Donnell provided the mortgage loan to Rebello with the intention of foreclosing on the mortgage.”


Patrick Crowley is a MortgageDaily.com feature journalist and blogger, and a reporter, blogger and columnist for The Cincinnati Enquirer. e-mail Patrick at: PatCrowley@MortgageDaily.com

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