Legal Question in Real Estate Law in California

Alameda County Foreclosure

About a year ago, I was approached by a man in Alameda County (who is currently facing criminal prosecution)to help a woman avoid the foreclosure of her property. Here is what happened: The title of the house was transferred to my sister's name, she received 12 months worth of mortgage payments (about $21,000) and an additional $10,000 for her agreeing to do this. I received about $6,000 as a type of referral fee. The homeowners continued to live at the property while we made the mortgage payments out of the funds that were given to us. We were told that after 1 year we would return title to these people because they will be in a better situation as far as credit and finances go. What we did not know is that the man who was in charge of all this was taking the equity for himself during the course of this transaction. There have been many other cases like this he is involved in. What I want to know is, have I done anything wrong? I sincerely thought I was helping this woman while making a few dollars, I thought it was a win-win situation. I had no idea they would lose all of their equity.


Asked on 9/28/05, 12:59 pm

2 Answers from Attorneys

Philip Iadevaia Law Offices of Philip A. Iadevaia

Re: Alameda County Foreclosure

I've heard of this happening before, and it is a sad situation because people are getting screwed. The problem involves homeowners who don't know much about the perils of foreclosing and they are not fully informed when someone like you and another person are handling the money and making the mortgage payments. I do not know whether this type of transaction is illegal, but I would outlaw it. I don't feel that you've done anything ''wrong'' in the strictest sence, but you are vulnerable to civil lawsuit for breach of contract if something should go wrong with the deal. As far as the equity in the property, that was obviously used to bring the arrearages current, pay you guys and make the mortgage payments. Thus, debt was used to pay debt - a cardinal sin in finance - and the owners may not be any better off now than they were before, especially since they don't hold title anymore. Good Luck.

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Answered on 9/28/05, 1:26 pm
H.M. Torrey The Law Offices of H.M. Torrey

Re: Alameda County Foreclosure

from the facts given, there appears to be no criminal intent or culpability on your part, as you along with the original homeowners seem to both be victims of a "scam". however, as they say, ignorance of the law is no excuse, and you could be held accountable to some degree in a civil action, moreso than a criminal prosecution for your "role" in this seemingly fraudulent transfer. however, even in that event, you may qualify for indemnity or contribution from the "mastermind" behind the "scam". the Courts could hold that you should face some liability for not doing your due diligence in researching this fraudulent person or exactly what you were getting into before agreeing to participate in the "contract" at issue. thus, you definitely want to make SURE you exercise due diligence next time. however, for now, your best bet would be to contact an attorney ASAP for a more in depth consultation and present more facts, as you may be able to avoid criminal and/or civil liability by addressing what transpired ASAP with the victim homeowners thru GOOD solid attorney assistance. if you would like such a consultation or further help, contact us today.

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Answered on 9/28/05, 2:47 pm


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