|Minnesota regulators recently suspended the mortgage originator and real estate salesperson licenses of a man accused of stealing equity, committing fraud and lying.
In an order issued last month, the Minnesota Department of Commerce summarily suspended the two licenses of Daniel C. Butterfield. The Minneapolis man reportedly operated as a real estate agent under the names of three property-investment partnerships and claimed to own St. Paul-based Equistar Mortgage LLC.
The 21-count complaint accused Butterfield of engaging in equity stripping, breaching of fiduciary duties, incompetence, fraud, failing to provide disclosures to consumers, misrepresenting facts to the Department and violating its order to produce records, among other things.
The Department said it requires that real estate firms have a licensed broker in order to operate and licenses real estate agents or salespersons. Butterfield was licensed to act as a real estate salesperson on behalf of Leon Meuwissen, the broker of Equistar Real Estate LLC who consented to revocation of his broker license after the firm’s license was suspended in December 2003. Butterfield has not applied to transfer his license on behalf of another broker, according to the order.
Mortgage origination company owners also require a license, but not individual loan officers, according to the Department. Although Butterfield executed Equistar Mortgage’s license application and renewal listing himself as the owner, in a sworn statement to the Department he said the company had always been owned by his parents.
Equity strippers target homeowners on the brink of or in foreclosure, according to Department spokesman Patrick Sexton. “Essentially, when people get to foreclosure, they should sell their home and get equity from it, but that’s what equity strippers do.”
Equity strippers usually offer to help the homeowners remain in their property by paying off their mortgage, under the condition that they pay the house back. Often, “through different and vague terminology,” the owners are lead to believe the payments will apply toward the repurchase of the house, when in reality they’re paying rent. Also, repurchase transactions are usually done at market value, resulting in thousands of dollars above the mortgage balance, which ends up in higher payments than the owner originally was making. The owner eventually defaults and the equity stripper keeps the house with all its equity, Sexton said.
In the four consumer complaints outlined in the order, Butterfield allegedly lead foreclosure-troubled homeowners to believe he and Equistar would help them. However, he allegedly negotiated transactions that resulted in consumers paying thousands of dollars in fees, and in two complaints, losing a combined total of about $145,000 in home equity.
The Department said it had originally set the contested case hearing date on June 9, but it was postponed and no new date has been scheduled. Whether Butterfield can continue activity as a real estate agent and Equistar can continue originating mortgages remains to be seen as the hearing will resolve whether Butterfield’s licenses get revoked.
Coco Salazar is an assistant editor and staff writer for MortgageDaily.com.