Halling | Meza LLP filed a lawsuit on behalf of an active member of the United States military to quiet title and remove dozens of fraudulent deeds and a deed of trust from property he owned. While serving overseas, the client had leased his home to a tenant who agreed to pay the mortgage and taxes and to maintain the property. The tenant made several mortgage payments and then defaulted. Unbeknownst to the soldier, the home went into foreclosure. In an effort to stall the foreclosure the tenant created and recorded fraudulent deeds purporting to convey fractional interests in the property to fictitious persons and business entities. The tenant then caused bankruptcy petitions to be filed in the name of the fictitious parties. Under the Bankruptcy Act those petitions triggered an “automatic stay” of the foreclosure.
Investigation revealed that the tenant was involved in a countywide foreclosure rescue scam whereby, for a fee of $1,500 per month, she and others would have homeowners who were facing foreclosure sign deeds transferring interests to fictitious persons. Bankruptcy petitions were filed in the names of the fictitious persons triggering the automatic stay and stopping the foreclosures. This scam involved approximately 1,400 properties and outstanding loans of $725,000,000. The perpetrator of the fraud was convicted of bankruptcy fraud prior to trial.
Our client learned of the foreclosure when he applied for credit for the purchase of a vehicle. The client then listed the home for sale but a title insurance policy could not be obtained due to the existence of the fraudulently recorded documents. The title officer at USA National Title Insurance Company called the scam “probably the worst case of uninsured/erroneous deeds I’ve ever seen.”
Halling | Meza LLP filed suit to quiet title in the property to the homeowner and to cancel the fraudulent deeds. Service of process was effected by substituted service and by publication. A Notice of Pendency of Action (Lis Pendens) was recorded against the property and we obtained a suspension of the foreclosure. A Disclaimer of Interest was obtained from a lender on an alleged second mortgage. Halling | Meza LLP obtained an early setting for trial and judgment was entered at trial in favor of our client, quieting title to the property and canceling the fraudulent deeds. The judgment has been recorded and the title insurance company has confirmed it will issue a clean title policy to a new buyer.