Expert: Dick Dennis - 7/16/2011

Question
QUESTION: My friend just told me about a quit claim she did with her two properties that were in foreclosure and it sounds crazy. She had to give up the titles and the company is supposed to negotiate with the bank, but she now owed the mortgage amounts to the bank as unsecured loans. Is this legal, don't they have to give her some sort of payment or something for the titles. She feels like they took her titles (and are now having the people who rent the properties pay the new owner directly) and are not going to do anything about what she owes to the bank. When she calls the bank they don't really tell her anything. Is there anything she can do? Thanks

ANSWER: You said, "She had to give up the titles and the company is supposed to . . ." What company? It sounds like she was scammed. Please explain it more clearly. If she gave a quit claim to someone, that person or company should have given her something of value to her for those quit claims. Forgiving of the mortgages is considered something of value.

If she gave the bank who owned her mortgage a quit-claim deed then she did what is called "keys for title," which means she probably was behind in her payments on the mortgage or she was coming awfully close to foreclosure. If the new owners of her property IS NOT THE BANK, then she may have been a victim of a fraud. You will have to explain it more clearly to me. I do wish you well. Zai gezunt.

Dick Dennis
dixiedee13@aol.com

---------- FOLLOW-UP ----------

QUESTION: She was either close to or in foreclosure. She said she signed papers and agreed to give the titles to a company called Nationwide (not the bank) which she did, and they are supposed to negotiate with the bank. But when she calls the bank they just tell her that she still owes the whole mortgage amount. On her credit report it now shows what used to be the mortgage as an unsecured debt, but I don't understand how that happens. I thought they would have to give her something in exchange for the titles, either money or, once the bank loan had been negotiated then she could get the title. But she gave the titles up front. And the tenant she had is now sending the checks to the new owner, but she still seems to owe all the money.

I looked up scams like this online, and it seems like most of the scams are the other way around, where the seller is the one doing the scamming; they don't have clear title but they can do the transaction because it's a quit claim. My friend was told by an attorney that it will cost at least $3500 to try to help her but they can't guarantee anything, so she doesn't want spend that money (that she doesn't have) because she feels they're just going to take her money and she's going to get nowhere. Have you heard of this where someone does a quit claim but gets nothing in return and still owes the money to the bank? Does she have any recourse?
Thanks

Answer
It's definitely seems like  a scam, Maureen. In my opinion, Two states are noted for scams: Utah and Florida. Further, Florida attorneys are big on stealing property from especially older people. You may have heard of an attorney named Stern who came away with millions in stealing from Florida property owners. She needs to contact the Florida Attorney General's office. She should explain just what happened and hopefully she will be helped.

How those kind of scams work is that an attorney, or some kind of real estate expert offers to help the property owner. One of the ways this is done if the property owner does not give an up-front fee to the "company" is that they get the owner to give them the title with a quit claim  deed. In the meantime, they put a tenant in the property and collect the rents.

The owner still is in foreclosure and the bank forecloses and they take the house because the quit claim does not supersede the mortgage. In Florida, the foreclosure process is about a year long. There is one other thing to consider. The Nationwide "company" might be hired by the bank to collect the rents because the mortgage, when it is in default, may collect the rents that are due when the mortgage is in default. This happens usually when the bank finds out that the owner has been using the property as a rental. In this case, it would NOT be a scam. That's why the attorney wanted a fee to help her get the property back with no guarantees. The attorney knows full well he would not be able to get the property back as long as she remains in default.

I do wish you well.

Dick Dennis
dixiedee13@aol.com