Judge: “Clearly you set a trap for unwary buyers”
Fraud in foreclosure auctions can cost even experienced real estate investors to lose big money buying Florida property. Here is a case where $458,000 was lost forever were it not for the work and advocacy of an attorney, experienced in detecting foreclosure fraud.
$458,000 was the winning bid on a beachfront condominium at public foreclosure auction. But that money didn’t get them a property. Instead, the was going to a recently established company that was pretending to be a lender. After discovering a first mortgage lien on the property, the investor wanted his money back so they hired WeidnerLaw who asked the court to set aside the foreclosure sale and return the money
It was a hotly contested hearing, sometimes treading on complex legal arguments. After carefully examined a series of documents Pinellas County Circuit Judge Jack St. Arnold found that the investor was tricked which tainted the entire foreclosure sale and ultimately returned all the money.
(Photo Credit Tampa Bay Times)
Judge St. Arnold characterized as “conniving”, the scheme of setting up a company with a bank-sounding name – “Deutsche Residential Lending”, which has no relation to the large German bank, to appear as a lender that would be paid off at the foreclosure sale. Deutsche appeared to be a lender and the scheme was working.
Though on its face it appeared to be a legitimate lender, Deutsche acknowledged it never made a loan. The whole thing was a scam. With harsh words for setting up this scheme, the judge vacated the sale. Attorney Matt Weidner, representing the purchaser at this hearing, says “this case is a good example to show how even experienced investors can lose money even after doing routine due diligence, just as my client did”.
According to Weidner, even an experienced real estate attorney may not have been able to detect the lender is a fake. “We’re dealing with these entities all the time and can recognize when something isn’t right. In this case, after uncovering the scheme used against our client we argued both the fraud and the law to get his money back. It’s not a good idea to go it alone if you are investing in properties subject of foreclosure”. He urges investors to get legal and professional guidance. Indeed, most lawyers would agree the schemes are getting more complex and sophisticated.
In this case, the court has vacated the sale and in doing so erased Houde’s loss of nearly half million dollars. As with all stories like this one: Buyer Beware. It’s a bit scary out there.
Read the entire series and the excellent reporting done by the Tampa Bay Times: (and keep in mind there are so many more issues)
Image courtesy of Tampa Bay Times
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AND HERE IS THE FULL STORY THAT STARTED THE SERIES:
On June 8, a condo overlooking the Gulf of Mexico in North Redington Beach sold at a Pinellas County foreclosure auction for $458,100.
The winning bidders, an Orlando couple, thought they had gotten a good deal on the 1,500-square unit in the Ram-Sea Condominiums with heated pool and Jacuzzi. Owners can use their condos as permanent homes or lucrative vacation rentals.
But the Orlando couple won’t do either. After the electronic auction was over and the money paid, they made an alarming discovery: A bank has a superior first mortgage on the condo and could soon foreclose.
AND THIS STORY HERE:
“One of the (many) things that is so dangerous and deceptive about this scheme is that even with a formal title search, a bidder wouldn’t be clearly warned about what was occurring here,” according to a motion filed Tuesday by attorney Matthew Weidner, who represents the winning bidder for the Largo townhouse.
After realizing he would not own the home outright, the bidder declined to pay the $112,300, which was due Monday. However, he will still forfeit more than $5,500 in deposits unless he can convince a judge there was a problem with the auction.
