CHICAGO (CN) – A recidivist, unlicensed mortgage broker and home repair contractor targeted elderly black women by draining equity from their homes through reverse mortgages and taking their money without doing repairs, three women claim in Federal Court.
Byrdell Walton, 85, and two other women sued Mark Diamond, his attorney Dennis Both, and a slew of mortgage, financial, title and construction companies.
All three plaintiffs are elderly, black women who live on fixed incomes on the West Side of Chicago.
“Diamond and his companies have been sued numerous times in state and federal court by individual homeowners, the Illinois Attorney General, the Federal Trade Commission, and others for misconduct very similar to that which plaintiffs allege in this case,” the complaint states. “Past allegations have included fraud, racial targeting, and taking money from customers to do home repairs then doing little, no, or substandard work.
“Diamond has engaged in a pattern and practice of fraudulent and deceptive practices with respect to borrowers similar to the plaintiffs in this case.”
Previous lawsuits alleged that “Diamond made misrepresentations, forged a check, and kept loan proceeds that were intended for the borrowers”; an “elderly disabled woman alleged Diamond engaged in a fraudulent home improvement and lending scheme and fraudulently induced her to transfer property title to him”; another one alleged that “Diamond conspired with (a woman’s) husband to take her name off the title by means of forgery in order to fraudulently obtain the mortgage”; that “Diamond promised to arrange certain home repairs and instead forged a deed transferring title to Diamond”; an “elderly disabled homeowner in foreclosure alleged that Diamond and affiliated companies fraudulently solicited home improvements and a mortgage loan that the homeowner could not afford by deceiving him about the actual costs”; and “longtime homeowners alleged that Diamond fraudulently arranged a $354,000 mortgage, took $163,000 for home repairs, then gutted the property, demanded more money, required plaintiffs to obtain a mortgage in the amount of $500,000, and violated TILA and other consumer protection statutes,” according to the complaint.
It adds that Diamond agreed to a consent decree in 2003 after being sued by the FTC and the Illinois attorney general, and that he and his companies violated the consent decree by preying upon the plaintiffs in this case.
Lead plaintiff Walton “has lived in her home for approximately 50 years,” the complaint states.
“In 2010, Walton needed some minor repairs done on the property, including repairing a few loose windows and the ceiling in her sun porch. She had seen a television advertisement for reverse mortgages, and learned that this was a way she could possibly finance the repairs,” according to the complaint.
Walton says a woman named Cynthia contacted her and told her that her boss, Diamond, “could get it all done with his home improvement company, [defendant] United [Residential Services & Real Estate]. She said he was ‘nice people’ and told Walton that they did good work and everything that needed to be done could be financed with the reverse mortgage,” according to the complaint.
Meeting with Cynthia, then with Diamond, Walton signed some papers but “she did not get copies and does not know what she signed,” she says.
Walton says she later received photocopied documents in the mail that “reflect a reverse mortgage to Urban Financial Group dated September 10, 2010, notarized by defendant attorney Dennis Both. The documents were not notarized in Walton’s presence. The filled-in handwritten dates of ‘9/10/10’ in the documents are in Dennis Both’s handwriting.
“The documents reflect an initial draw in the amount of $49,852.50, including
$2,218.26 in closing costs,” the complaint states.
Walton adds: “No one ever explained to Walton that she was supposed to receive a $47,634.24 ‘cash out’ from the reverse mortgage . She did not receive a check in that amount or any money from the reverse mortgage.
“On information and belief, based on the fact that Walton never received the loan proceeds check, and based on Diamond’s pattern and practice in other similar cases, Diamond obtained the loan check intended for Walton, fraudulently endorsed the check, and deposited or cashed the check without Walton’s knowledge.”
Walton says she believed that her home repairs would be paid for by the reverse mortgage and she would not have to pay anything out of pocket. But “In June, 2011, Walton received notice of a contractor’s lien recorded against her property by Contractors Lien Services, Inc., on behalf of Diamond’s subcontractor Stephan Slavov, in the amount of $7,132.33. According to Slavov, he had a contract in the amount of $12,500, and Mark paid him only $5,500. Walton is not aware of this contract and has not seen any written contract for work on her house.”
Neither Slavov nor Contractors Lien Services are parties to the complaint.
Walton adds: “The work that was done to Walton’s property has little or no value, and she was required to retain other contractors to complete and correct the work.
“Even though he never finished the work as promised, Diamond would come to Walton’s house, bringing food and ‘sweet talking’ her in an attempt to distract her from the work that was supposed to be done.
“This whole ordeal has caused Walton actual damages, including lost home equity in excess of $46,000, extreme emotional distress, aggravation and inconvenience. She was also unable to rent out the upstairs apartments as a result of the unfinished work.”
Co-plaintiff Wadie Morehead, 73, says she signed a reverse mortgage for more than $100,000 but never received a check for the money.
Plaintiff Louise Mason, 79, says she signed a reverse mortgage for more than $20,000 and never saw a dime, although she told Diamond that she did not want to mortgage her home.
When she called Diamond to cancel the transaction, “Diamond called Mason a ‘crazy old lady’ and told her it was too late to cancel,” according to the complaint.
Also named as defendants are Matthew Fefferman, United Residential Services & Real Estate, Urban Financial Group, Reverse Mortgage Solutions, Harbor Financial Group, United Construction Services of America, Able Title Insurance Agency, the Secretary of U.S. Department of Housing and Urban Development Shaun Donovan, the U.S. Department of Housing and Urban Development and Mortgage Electronic Registration Systems.
The plaintiffs ask the court to cancel their mortgages and award punitive damages for violations of the Truth in Lending Act, fraud, racial discrimination, violation of the Fair Housing Act, conspiracy, and breach of fiduciary duty.
They are represented by Michelle Weinberg of the Legal Assistance Foundation.