Judge Jernigan shed light on a mortgage rescue scheme:
On December 7, 2007, Judge Stacey G.C. Jernigan, Bankruptcy Judge for the Northern District of Texas, Dallas Division, Issued a Memorandum Opinion in the case of In re White, Bankruptcy Case Number 06-32324. This opinion discussed a type of mortgage rescue scam that I had not heard of until I read the opinion.
In this case, the Whites were involved in a Chapter 13 bankruptcy. They had filed the case to save their home from foreclosure. Unfortunately, after they had filed their case, they missed some post-petition mortgage payments. The servicer of the mortgage note, HomEq Servicing Corporation, filed a Motion for Relief from the Automatic Stay. An Agreed Order was entered which conditioned the continuation of the Automatic Stay as long as the White’s made future mortgage payments and added the missed post-petition payments into their Chapter 13 plan.
Unfortunately, the Whites got behind yet again on post-petition mortgage payments and the Automatic Stay terminated. At this point, the Whites testified that they got as many as 40 mail solicitations offering to help them save their home. The White’s being desperate, hired a company called North American Foreclosure. They spoke to This company sent a man who identified himself as David Curtis, who indicated that he represented a company known as Jireh Capital Services, LLC and that he was involved with North American Foreclosure. to the Whites’ home and told them about a process that they were told was “completely legal” wherein the White’s would deed a 1% interest of their home to a third party. That party would file bankruptcy in California and would stop the pending foreclosure. The Whites would pay this company $650.00 dollars a month for as long as it took to clear up the problem. Judge Jernigan referred to this scheme as “A new cottage industry of bottom feeders.”
Sometime after that, HomEq facsimile notice of a bankruptcy proceeding in California wherein, the facsimile indicated had an interest in the Whites home. HomEq stopped the foreclosure and filed a Motion to Show Cause in the bankruptcy case. At the Hearing, it was learned that the bankruptcy case in California was a pro se debtor who had absolutely no knowledge of the Whites’ bankruptcy, the purported 15 conveyance to her or the facsimile sent to HomEq that stopped the foreclosure. Evidently, North American Foreclosure perused the pro se filings in California for a pro se debtor and then used that case number and a phony conveyance instrument, a General Warranty Deed, that claimed to convey a 1% interest in the White’s homestead to the pro se debtor in California, to stop the White’s foreclosure.
Judge Jernigan noted that counsel for HomeEq indicated that this was not an isolated incident and that this scam had been taking place all over the Country. Judge Jernigan found that the White’s and the pro se debtor from California were complete innocent parties. Judge Jernigan did, however, set a new Show Cause Order Hearing for North American Foreclosure, David Curtis and Jireh Capital Services, LLC., for January 9, 2008.
At the end of this opinion, Judge Jernigan put in a paragraph that is entitled” Plea to the consumer debtor bankruptcy bar.” Judge Jernigan urged all attorneys representing consumer debtors to warn their clients about these type of schemes and to warn debtors not to deal with non-attorney Bankruptcy Services.
It will be interesting to see if someone for North American Foreclosure or David Curtis shows up for the January 9, 2008 Show Cause Hearing. Stay tuned!
