State Officials Pointing Fingers In Mortgage Mess

Lawsuits, Charges Filed Against 'Mortgage Rescue' Companies

The role mortgage fraud has played in the recent financial crisis is a question that government auditors and FBI agents are investigating, but they're not the only ones looking.

Illinois Attorney General Lisa Madigan has filed a lawsuit against Martav Services, as well as 14 other so-called "mortgage rescue companies," and has charged them with consumer fraud.

"What they're doing is one of the evilest cons I've ever seen," Madigan said. "They're essentially stealing people's homes and they're stealing all the equity they have built."

One woman who lost her home to Martav Services is Lorraine Willis, who lost her home in March 2006. Records from the Cook County Recorder of Deeds show her house was refinanced at least twice by someone other than herself. One mortgage went into foreclosure and a series of lenders ended up with the resulting bad paper on their books.

In 2003, Willis had a $78,000 mortgage on her house that was in foreclosure. In 2004, Martav got a mortgage on her house for $123,500. Willis said she got $1,000. A month later, Martav sold the house to another buyer who took out a $148,000 mortgage.

One man told Unit 5's Renee Ferguson that he was the new owner of the house, but the name he gave was not in any of the records found.

What was found, Ferguson reported, is that four months after Willis was evicted, the $148,000 mortgage on the house was foreclosed by Deutsche Bank. On paper, though, the bad mortgage lived on. Over the next two years, records show, it passed through the portfolios of Fleet Financial, Select Portfolio Services, LaSalle Bank, Merrill Lynch and Ameriquest Funding.

"One in five of mortgage foreclosures is the result of mortgage fraud today," said Tim Grace, who heads a California company that has developed a computer program to detect mortgage fraud.

Grace added that what was a $2 billion problem six years ago has grown to $9 billion this year. Grace said he believes a major part of the nation's mortgage meltdown is directly due to fraud.

Ferguson reported that two years ago, she went looking for the owners of Martav. Company officials didn't comment then, and have not returned recent calls.

Willis' home was auctioned for $70,000, and is now on the market for $178,000. Willis said the fact that she is paying taxes to bail out Wall Street is not lost on her.

"The CEOs, the big time people, instead of bailing them out, they should bail me out," Willis said.

Contact Us