Sunday, September 23, 2007

Queens, N.Y. Woman Victimized in Brokers' Mortgage Scam

The NY Daily News reports:

The growing wave of foreclosures casting a shadow over the nation's economy just crashed over 63-year-old Eva Murphy of Queens.

The former airport worker says she became a homeowner after a representative of a company called 2000 Homes showed up on her doorstep in December 2005.

The sales rep told her she could afford to buy a house even though she had bad credit and lived on an amalgam of government subsidies.

The 2000 Homes sales rep promised Murphy a house with a mortgage she could afford. She says he suggested a two-family home on Roscoe St. in Jamaica, Queens, for $430,000.

After the closing, she discovered the price was actually $538,000.

Murphy says she was told monthly payments would be about $2,000. She later learned they would be $3,990.

She also learned that even though she has no full-time job, her mortgage application listed her as a $9,000-a-month "marketing manager" for a company owned by her loan officer's husband.

Ten months ago, her house ended up in foreclosure.

"It's a mess," she said.

Murphy's mess is increasingly common among vulnerable low-income borrowers, facilitated by questionable brokers like 2000 Homes, a Daily News investigation has found.

Last month, a survey by state Sen. Jeffrey Klein (D-Bronx) showed foreclosures "rising at an alarming rate" in the city as part of the nationwide subprime mortgage crisis.

Klein's survey found 14,561 foreclosures in the city, with nearly 6,000 in Queens, in the 13 months between July 1, 2006, and last July 31.

Most foreclosures involved subprime borrowers like Murphy, would-be homeowners with low credit ratings who did not qualify for conventional mortgages with lower interest rates.

That risky kind of customer is right up 2000 Homes' alley.

With an office in Queens Village and 20 licensed brokers, 2000 Homes has been fined $3,900 for violating regulations aimed at curbing aggressive sales tactics, officials say.

Next month, the company faces a hearing and possible loss of its real estate broker's license in the 2005 sale of a home in St. Albans, Queens, records show.

In that case, 2000 Homes, which was representing the seller, allegedly didn't disclose that one of its brokers was a principal in the company buying the home - as required by law. The buyers flipped the house five months later at a $160,000 profit.

The News also found two other borrowers who alleged that 2000 Homes brokers inflated income on their loan applications.

One was Darlene Smith, who settled a suit accusing 2000 Homes of exaggerating her and her niece's incomes to back up a subprime mortgage on their $259,000 house in Far Rockaway in 2005.

In Murphy's case, 2000 Homes showed up in December 2005. At the time, Murphy says, she was fighting with a landlord she says wanted to evict her.

A month later, 2000 Homes broker Jacob Atzmon told her she had bad credit - but he could help. She just had to cough up $2,250.

She said she borrowed the money from a friend. A handwritten note signed by Atzmon and dated Jan. 25, 2006, states, "I get $2,250 from Miss Eva Murphy for work on her credit report."

Four months later, Murphy went to 2000 Homes to sign papers. When she pointed out that the papers had not been filled out, she was told not to worry about it.

When she later learned what was put in those blanks, she couldn't believe what she saw.

Murphy says she gets $788 a month from Social Security and Workmen's Compensation, $260 a month in welfare benefits and some extra cash collecting cans.

On one of the mortgage applications, which she says was filled out by a 2000 Homes-affiliated employee, Murphy was listed as a $9,000-a-month "marketing manager" for a Diamond District jeweler. On another, she's listed making $7,875 a month at the same job.

This was news to Murphy.

"I haven't worked since Jan. 29, 1991, and now all of sudden I got a job in the diamond industry," said Murphy. "I'm supposed to be a manager or something. Oh, my God. How did they do that?"

One of Murphy's loan applications was signed by Tikva Davaran, who told The News she was a loan officer at Metro Elite Mortgage Corp., which regularly works in concert with 2000 Homes.

Davaran said she or one of her assistants filled out the application after interviewing Murphy. As it happened, Diamond Galaxy, listed as Murphy's alleged "employer" on her mortgage application, was owned by Davaran's husband, Shahriar.

The Davarans claim Murphy briefly worked for Diamond Galaxy. Shahriar Davaran said Murphy "was supposed to do advertising on a computer for us."

"I do not even know how to use a computer," Murphy countered. "I don't even know the man."

Tikva Davaran could not explain why one application lists Murphy's salary as $9,000 a month but another lists it at $7,875.

"I honestly don't recall what happened," Davaran said.

Murphy said she was in a rush at the May 26, 2006 closing because her girlfriend's daughter had been hit by a car.

"I'm trying to hurry out of this closing and they said, 'Wait, wait, wait,'" Murphy said. "I said, No, 'I got to go. ... I'm just signing these papers to get out.'"

She signed for two loans: a $430,400 adjustable rate mortgage starting with a 7.3% interest rate that would reset in 2008, and a $107,600 mortgage repayable in 15 years with a final $91,735.13 balloon payment and an 11.3% interest rate.

She borrowed $5,000 for the down payment.

What is Subprime?

Subprime loans are mortgages written for people with poor credit. Many are so-called exotic loans, including interest-only mortgages, or ones with low front-end rates that adjust later. Subprime mortgages peaked during the recent housing boom, when lenders relaxed credit requirements for borrowers. Some economists fear that large numbers of subprime borrowers could default on their mortgages, either because rates adjust higher or simply because they were poor risks to begin with.

Murphy said 2000 Homes provided her with a lawyer, Jason Oshins, but at the closing, another lawyer, Dean Mavrides, showed up.

A breakdown of Murphy's closing costs shows each lawyer got $750 for the closing, with another $13,182 listed simply as "Oshins, as atty."

Oshins told The News, "I could not answer any of your questions under the scope of privilege."

Mavrides did not return a call.

Eitan Sror, chairman of 2000 Homes, provided a copy of the sales contract, which was dated May 4, 2006, and signed by Murphy, showing the price of the house was $538,000.

"I can't see how she would think otherwise," he said.

Sror said he didn't know about Murphy's loan documents, adding, "We're not required to keep any information that has to do with the mortgage." He denied the company's brokers encouraged the other two accusers to exaggerate incomes.

Murphy says she doesn't know what she'll do if she loses the house.

"I didn't know there was so many dishonest people that they can just sell you a bunch of garbage," she said. "And this is what this is - a bunch of garbage."

No comments: