A DIRTY DEED Real Estate Fraud,fbi

Couple loses house in real estate scam



Terry and Brenda Edwards sit outside the Royal Oak bungalow they owned until they fell victim to a mortgage fraud scheme called equity stripping. Now they are tenants facing eviction on March 28.



ROYAL OAK — Brenda and Terry Edwards wanted to take out a small home equity loan to pay back taxes.

That’s all.



Instead, the couple became targets of an unscrupulous lender who took them for all they have in a mortgage fraud scam that plays out in different variations every day in the United States.



The couple needed a quick $10,000 and decided to tap their biggest investment — a tidy bungalow on Hilldale Drive that they have lived in for 32 years and paid off in 1997.



The Edwards found a mortgage company in the phone book, but it didn’t handle loans that small. They said the loan officer referred them to a personal lender named Gustavo Aguilar with the now defunct Hispanic Financial Group of Southfield.



The couple said Aguilar offered them service with a smile, coming to their house with his children on a Sunday, delivering them paperwork to sign and then cutting the check to Oakland County to cover their delinquent taxes just before the March 2004 due date.



Sometimes Aguilar even stopped by unannounced to say hello and see how they were doing, Brenda Edwards, 54, said.



“He came in like a savior. He became our friend,” she said.



From April to October 2004, the Edwards said they called Aguilar repeatedly about a payment plan. To finalize the loan, the couple was told to go to a Farmington Hills office where they were presented with a stack of papers.



“There were some big figures in the papers, like $87,000 and $137,000,” Brenda Edwards said. “I didn’t know what was going on but I trusted Gus. I trusted him like you trust the doctor is going to take out your burst appendix and not cut off your leg. I signed things and we sold our house without knowing it.”



Now the Edwards are tenants facing eviction from the 79-year-old house they bought as young newlyweds, lovingly updated, and never planned on leaving.



Inside the white wood-frame house with a swing on the porch, the couple stripped and stained oak trimmed windows flanking the fireplace. They built cabinets and knocked out a wall to expand the kitchen counter space. They also put on a new roof and siding.



The two-bedroom house is where they raised a daughter and tragically lost another little girl on the first snowy day of the winter of 1979. A teen driver hit a patch of ice and swerved onto sidewalk as the eight-year-old pulled a toboggan with friends.



“That’s where I gave her CPR,” said Terry Edwards, 56, motioning to the dining room as tears welled in his eyes. “We were never going to sell our house. We love it.”



The cozy dwelling also is where the Edwards rebuilt their lives, creating happy memories again with five grandsons who make model cars in the basement with their grandpa, a disabled veteran of the Vietnam War who worked hard as a heavy equipment mechanic to pay off the house in 25 years.



Ordered out



Shuffling through a file of documents with allegedly altered dates and forged signatures, the Edwards pull out an order from 44th District Court notifying them that they must vacate the premise by March 28 or face eviction.



“I look around at 32 years of stuff and I want to fall apart,” Brenda Edwards said. “This is what we worked our whole life for. There may be recourse down the road for us, but that won’t help us now.”



The Edwards fell victim to a scheme called equity stripping, according to Ralph Roberts, a realtor, author and expert on mortgage fraud.



In the typical equity stripping transaction, a lender or investor purchases the homeowner’s interest in a property for a fraction of the value, pays off the owner’s debt against the property and then sells the home to a third party for a handsome gain.



Equity stripping, also called equity skimming, is one of a slew of mortgage scams growing at an alarming rate in the United States. The Federal Bureau of Investigation took 6,936 mortgage fraud reports in 2003. The number jumped to 17,127 reports in 2004 with industry insiders involved in 80 percent of the cases.



Roberts said these cases of equity stripping, loan flipping, packing and straw buyer schemes are just the tip of the iceberg. He said the FBI typically investigates complaints of losses totaling $500,000 or more. Roberts estimates one in four mortgage transactions involve some kind of fraud and he is urging Lansing lawmakers to tighten state laws to protect homeowners.



“This is the cancer of the American dream of home ownership,” Roberts said.



He wants to be the chemotherapy. A self-described crusader in the industry who discovered one of his agents participating in shady deals, Roberts contacted the FBI and started lobbying to close the legal loopholes.



“A loan officer doesn’t even have to be licensed in Michigan,” Roberts said, pointing to one of flaws in the system. “That has to change. You can scam someone, get fired for it and go to work somewhere else with no record of it.”



Unraveling the scam



The scam against the Edwards began on the Sunday when Aguilar had the couple sign a document they thought was related to the tax payment and home equity loan, according to Roberts.



“I don’t know what document they signed because Brenda didn’t get a copy of it,” Roberts said. “It might have been a quit claim deed. They were misled all the way along.”



The Edwards said they kept asking questions related to the $10,000 home equity loan they thought they were putting in writing at the Farmington Hills office.



“We wanted to know the total of what we owed and the payments,” she said. “They kept saying we’ll get to that.”



The home equity loan, however, wasn’t discussed at the meeting, which an FBI investigator said actually was set up for Aguilar to sell the Edwards’ house to a man named Oscar T. Bernal.



“This is a sad case,” the special agent said. “This couple signed what was put in front of them. They signed a purchase offer and a closing statement. It’s a difficult case. But there might very well be criminal wrongdoing with a check forged for $33,000.”



Weeks after they unwittingly signed away their house, the Edwards said Aguilar told them how they would repay him for the supposed home equity loan.



“Finally, we figured it out over the phone with Gus,” Brenda Edwards said. “We agreed to pay back $650 a month to Hispanic Financial Group.”



The couple made six payments totaling $3,900 before they realized something was wrong in April 2005. That’s when a man claiming to be Bernal showed up at their house and tried to put a for-sale sign out front.



Brenda Edwards said Bernal didn’t look like the same person they had met before. Whoever it was, he delivered stunning news.



“That’s when I found out we didn’t own our home,” Brenda Edwards said. “All of this happened behind our backs. You wouldn’t think something like this could happen, but it was so easy for them.”



Looking for recourse



Undoing the mess won’t be easy, however. Bernal didn’t keep up with his mortgage payments and the house went into foreclosure last year and was sold at auction to U.S. Bank National Association for $137,723.73. Now the owner of the property is listed as Specialized Loan Servicing, which got the termination of tenancy order against Bernal “and all occupants.”



“These two companies are legitimate companies also duped in the process,” Roberts said. “The district court judge did his job. The local court can’t handle ownership issues, only possessions so we have to try to settle this in circuit court.”



Roberts holds out hope the Edwards will be able to keep the house they once owned free and clear. In their favor, Terry Edwards signed some of the documents even though he is disabled from post-traumatic stress syndrome and can only be represented by someone with legal power of attorney.



Terry Edwards grew up in Berkley and got his mother’s permission to join the U.S. Army when he was just 16. He was assigned to a base in Germany, but begged to go to Vietnam with the men he trained beside. He returned with emotional problems and counts on his wife to fill in memory gaps.



“Mr. Edwards shouldn’t be party to any transactions; he’s disabled,” Roberts said.



He also believes the Edwards have evidence of forged documents, including the $33,000 check made out to them. It was cashed but the couple said they didn’t endorse it and they got no money from it. “If the judge has compassion and we can explain this simply, we might be able to get the injunction to stop the eviction,” Roberts said.



As the case enters the court system, the FBI agent, who asked not to be identified because he does undercover work, said he is investigating several complaints against Aguilar.



“The Edwards can’t count on the FBI to keep them in their house, but we will follow up on this,” he said. “These things take a lot of time, however. We can react quickly to violent crimes and kidnappings but paper trails with a lot of people involved are complicated.”



The agent has a stack of mortgage fraud cases on his desk.



“Sometime you feel like a one-armed juggler,” he said. “It’s tough.” In the meantime, the Edwards don’t know what to do. The fireplace mantle and walls of their house are bare with precious pictures and mementos put into boxes.



“We started moving our stuff into storage,” Brenda Edwards said. “But some people say I should chain myself to the house and refuse to leave. After all, if my car was stolen and recovered, it would be returned. My stolen house should be returned, too.”




[addsig]