They paid thousands of dollars, deeded their homes to a land trust company, and waited for the payout — a canceled mortgage, lower monthly payments, regained equity in their homes.
Foreclosure defense attorneys doubted the soundness of the trusts’ legal maneuvering. Trust managers assured they’d never lost a case. Florida Attorney General Pam Bondi called it a “scam.”
She shut down 12 South Florida land trusts and related companies on Tuesday, freezing the assets of the firms and their owners and leaving scores of homeowners unsure of their next step or how to get their deeds back. Although owners may no longer have title, they still owe the note, or debt, to the bank.
“I had an uneasy feeling about it, like if it was too good to be true, it probably was,” said Lee County resident Irene Arcario, who is one of an estimated 290 homeowners statewide who signed their deeds over to the trusts. “I have a real sick feeling in my stomach right now.”
Arcario said she wanted to cancel her deal with Fidelity Land Trust Co. weeks ago when she started getting bills saying she owed it $900-a-month on top of $3,000 she paid in the beginning.
“They persuaded me to stay in the program,” Arcario said about the company, which has a Boca Raton address in state records. “Then I got a letter saying I needed to pay them for foreclosure defense.”
Fidelity managers have denied the attorney general’s claims, which include making false promises and representations to consumers. The complaint, filed in Broward County, calls Fidelity’s legal theory that it can cancel a mortgage and quiet title “frivolous.”
Attorney Spencer Kuvin, whose Delray Beach firm is representing Fidelity Land Trust and its managing director Paul Gellenbeck, disagrees. He said Friday that he hopes to meet with the attorney general’s office soon and explain Fidelity’s legal process so that it will drop its complaint. Kuvin is also representing attorney Peter Bowers, who is not named in the attorney general’s complaint but has filed some of Fidelity’s lawsuits.
“The client is playing out their legal strategy in order to effectuate a good resolution on behalf of their customers,” Kuvin said. “Their concern is if they educate the banks on what their strategy is, the banks will be able to be ready for that strategy and respond. They are fighting to keep consumers in their homes.”
“This is going to be a huge mess for homeowners who transferred their properties,” said Boca Raton real estate attorney Marlyn Wiener. “Unless the trustees voluntarily transfer the properties back to the homeowners — execute and record a deed conveying the property — the homeowner is no longer the record title owner,” Wiener said.
Without title, the homeowner will find it difficult to do anything with the property, such as negotiate a loan modification, short sale, or refinance a loan, Wiener said.
Fidelity’s paperwork to clients says it will deed properties back to homeowners in the case of an “unfavorable” legal outcome.
“This has never happened,” a May e-mail says to one client, “but I would like to explain all possible outcomes.”
Lora Potts, also of Lee County, said she got her deed and $1,600 of a $3,200 payment back when Fidelity said itcouldn’t help her because she filed for bankruptcy — something she said she told it before signing up.
“With phone call after phone call and nearly four months of being in the program they still had not prepared a court case as they said they were going to,” said Potts, who signed her deed to Fidelity in mid-April and got it back July 20, according to official records.
A Boca Raton man, who didn’t want to be identified because he owns a business in the area, said he was one of Fidelity’s first clients. He signed his deed into a group called Hunting Partnership in October last year, which deeded it to Fidelity Land Trust in January. The homeowner got it back in April after he said his case went nowhere and he “hounded” the company for the deed’s return. In the end, he said he lost $1,000 but “took it as a learning experience.”
Still, there may be more at stake than just the deed. Royal Palm Beach-based foreclosure defense attorney Tom Ice said one of his clients signed his deed to the trust as well as a promissory note to pay $176,500 for a new mortgage.
“It’s kind of messy,” Ice said, echoing Wiener’s statements.
Because the homeowner is still a beneficiary of the trust, the property can’t be sold and probably isn’t considered a frozen asset of the trust, Ice said.
Boynton Beach homeowner Marcie Lowe signed her deed over to Fidelity in April and has paperwork reflecting a proposed new $269,600 mortgage. She said she paid $2,600 up front, but didn’t realize there would be a monthly mortgage payment due to Fidelity.
Then she got a call saying she was late on her monthly payments, she said.
“They had all this paperwork we signed and I suspected something was going on but wasn’t really sure,” Lowe said. “I don’t need my $2,600 back. I just want their name off the deed.”
©2012 The Palm Beach Post (West Palm Beach, Fla.)
Visit The Palm Beach Post (West Palm Beach, Fla.) at www.palmbeachpost.com
Distributed by MCT Information Services