Friday, March 10, 2017

Reverse Mortgage Scams Target Elderly Minority Homeowners

According to a recent article in the Chicago Reporter, consumer protection advocates continue to seek justice in Chicago for elderly homeowners who were targeted by a reverse mortgage scam. As the article explains, this particular scam began back in 2009, at the height of the foreclosure crisis, when a Chicago business person named Mark Diamond started orchestrating a reverse mortgage scam that largely targeted elderly African American homeowners in the city. Illinois Attorney General Lisa Madigan has been seeking justice for these victims for nearly a decade, yet many still have not received any form of restitution.
Details of the Reverse Mortgage Scam
Before we get into the details, it is important to understand what a reverse mortgage is and how it works. In brief, as the National Reverse Mortgage Lenders Association website explains, a reverse mortgage is “a loan available to homeowner, 62 years or older, that allows them to convert part of the equity in their homes into cash.” It can help retirees who do not have a lot of cash to make use of the equity in their homes to pay for expenses.
Back in 2009, Attorney General Madigan “filed a complaint on behalf of dozens of elderly black homeowners who alleged that Diamond and other mortgage and home repair companies had stripped nearly $1.3 million in equity from the homeowners,” according to the article. However, most of the victims have not received any compensation. Yet the lack of compensation is not due to a similar lack of court findings against Diamond. Rather, the inadequate compensation concerns the difficulty of actually recovering the money from Diamond’s assets.
In January 2016, for example, Judge David B. Atkins of the Cook County Circuit Court determined that Diamond had violated the Illinois Consumer Fraud Act “by misleading elderly residents into signing reverse mortgages and agreeing to have repair work that was shoddy or never completed.” According to the article, “victims unknowingly signed for loans and were liable for insurance and other fees they could not afford.” For violating the Illinois Consumer Fraud Act, Atkins assessed a civil penalty of $340,000.
Restitution May be Ordered, but Obtaining Money Can be Difficult
In July 2016, Atkins ordered that Diamond pay $2.3 million to compensate 47 different victims targeted in his reverse mortgage scam. Atkins specifically ordered repayment plans to the victims, which ranged from $4,000 to $107,000 depending upon a specific victim’s losses, but the money has not been paid. Madigan’s office has used several tactics to obtain Diamond’s assets in order to provide restitution for his victims, such as issuing citations to Diamond’s family members and to the estate of his wife, as well as to title companies and banks. However, as the article underscores, “getting any money from these efforts will take time.”
Madigan spoke about the limits of restitution—the difficulty of actually getting the compensation to victims—and, as such, the limits of the system: “It is deplorable that he [Diamond] got away with his scheme for so many years . . . .  We have prevented additional people from losing their homes and savings to one of Diamond’s reverse mortgage scams, and my office continues to pursue restitution for those who have already lost so much.”
Seek Advice from an Oak Park Consumer Protection Lawyer
If you have questions about reverse mortgages, consumer protection issues, or foreclosure, an experienced Oak Park consumer protection attorney can help. Contact the Emerson Law Firm today to discuss your situation with a consumer protection advocate.
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