Arrests Made In Mortgage Fraud Scheme

Illinois Attorney General Lisa Madigan has made arrests in yet another crackdown on so-called mortgage rescue schemes.

Madigan said defendants Warren Jackson and Yolanda King, both of Chicago, were indicted on fraud charges. The charges stem from the now familiar pitch to desperate homeowners – help to stave off foreclosure, for an upfront fee.

“These financial predators targeted desperate homeowners and made claims that they would save people’s homes, but their action amounted to crimes,” Madigan said. “When homeowners engage with con artists as opposed to legitimate housing counselors, it puts borrowers one step closer to foreclosure.”

Possible prison time

If convicted, Jackson and King are facing six to 30 years and four to 15 years in the Illinois Department of Corrections, respectively.

Madigan alleges that Jackson orchestrated two mortgage-related schemes involving Chicago homeowners. King was charged for her role in helping Jackson perpetuate these schemes.

The first operation targeted homeowners at risk of foreclosure, promising to save their homes by negotiating lower mortgage payments. Madigan alleges that after collecting upfront fees, Jackson failed to negotiate or perform any services on behalf of the homeowners, placing their victims at even greater risk of foreclosure.

Sale-leaseback

In the second scheme, called a “sale-leaseback” to purportedly save the homeowner’s home, Madigan says Jackson used straw buyers to purchase homes from distressed homeowners, sometimes falsely promising them that they could pay rent for a year and then could potentially buy back the property.

Jackson also is also accused of tricking homeowners into unknowingly selling their homes to straw buyers by leading them to believe that they were signing paperwork for a new loan to help them avoid foreclosure. Madigan alleges that Jackson used the sale-leaseback scheme to transfer title from homeowners to straw buyers for the purpose of stripping the remaining equity from the home.

Individual homeowners lost from $70,000 to $150,000 of equity in their homes as a result of the schemes.

States, rather than the federal government, have been very active in targeting mortgage rescue scams. Madigan says she has made Illinois the most-active state.

In addition to these criminal charges, Madigan said she has filed 50 civil lawsuits, which have so far resulted in 28 injunctions against scam operations and the courts’ ordering defendants to pay back $2 million to affected homeowners. Madigan has also issued 622 cease-and-desist letters ordering rescue operations to stop illegally charging homeowners upfront payments for rescue services.