In re Walker
| Decision Date | 16 April 2009 |
| Docket Number | Adversary No. 06-2382.,Bankruptcy No. 00-29577. |
| Citation | 405 B.R. 300 |
| Parties | In re Eradean WALKER, Debtor. Eradean Walker, Plaintiff, v. Creative Loans, LLC, et al, Defendants. |
| Court | U.S. Bankruptcy Court — Eastern District of Wisconsin |
Barry S. Buckspan, Jeffery R. Myer, Milwaukee, WI, for Plaintiff.
Creative Loans, LLC, Costa Mesa, CA, pro se.
Head Financial Services, Inc., Costa Mesa, CA, pro se.
Nations Property Management, LLC, Costa Mesa, CA, pro se.
Laurie Bigsby, Law Office of Todd C. Buss, Pewaukee, WI, Patrick B. Howell, Milwaukee, WI, for Defendants.
Alliance Title Company, Woodland Hills, CA, pro se.
HFTA First Financial Corp., Prospect Heights, IL, pro se.
Cherri Redding, Milwaukee, WI, pro se.
Mercury Companies, Inc., Denver, CO, pro se.
FGO, Inc., Long Beach, CA, pro se.
Dana Capital Group, Inc., Irvine, CA, pro se.
Washington Mutual Bank, Seattle, WA, pro se.
This case involves an alleged "equity stripping" scheme foisted upon Eradean Walker (hereafter "Walker"), the debtor in this chapter 13 case. Walker asserts, using her words, that she was "ripped off" and "tricked" into signing documents which she thought was for the purpose of refinancing her existing mortgages. In fact, however, what resulted was the transfer of her ownership in two homes. She brought this adversary proceeding against all parties who she alleges were responsible for her loss of these properties. When this matter came on for trial on December 10, 2008, Walker stated that all she is requesting in this proceeding is a return to her of ownership in these properties located at 6589 North 84th Street, Milwaukee, Wisconsin ("84th Street property") and 3502 North 37th Street, Milwaukee, Wisconsin, ("37th Street property"). At the trial, she requested that her claim for damages in her amended complaint be dismissed, without prejudice.
This is a core proceeding under 28 U.S.C. §§ 157(b)(2)(A), (E), (H), (K), and (O).
Walker filed a petition in bankruptcy under chapter 13 on October 13, 2000. Her chapter 13 plan was confirmed on November 26, 2001. At the time she filed her bankruptcy petition, she owned and resided in the 84th Street property. She also owned the 37th Street property, where her daughter resided. The transactions involving the loss of these properties occurred after she filed her chapter 13 case, which case remains open.
Creative Loans, LLC d/b/a Funding Foreclosures.Com; Head Financial Services, Inc. d/b/a Funding Foreclosures.Com; Nations Property Management, LLC; FCO, Inc.; and Dana Capital Group, Inc. (hereafter "Head Defendants") are all entities owned and controlled by an individual named Charles Head. The Head Defendants are the prime parties in this alleged scheme. Although Charles Head is not personally named as a defendant in this adversary proceeding, he is a named defendant in a criminal indictment for alleged violations of conspiracy to commit mail fraud, mail fraud, and conspiracy to commit money laundering, involving a series of alleged foreclosure rescue scams targeted against California homeowners in financial distress. This criminal case is pending in the Eastern District of California, Case No. 08-CR-0093.
ASAP Financial, LLC ("ASAP") was originally a defendant in this adversary proceeding but upon stipulation of the parties has since been dismissed. ASAP is no longer in business. Cherryl Redding ("Redding"), a mortgage loan broker who worked with ASAP and who claimed she was an "outside contractor," remains as a defendant. Redding is the person who made the initial contact with Walker and subsequently referred her to the Head Defendants.
The Thurgoods were contacted by the Head Defendants and agreed to act as purchasers for the 84th Street and 37th Street properties. They were straw buyers who purchased these properties in name only. Because of the Thurgoods' credit worthiness, mortgage loans were approved for them with new lenders in connection with their purchases of these properties. Under the Thurgoods' agreement with the Head Defendants for their role in these transactions, the Thurgoods were to receive from the Head Defendants $5,000 for each property they purchased. The record in this case is unclear if the Thurgoods, in fact, received any payment from the Head Defendants.
Alliance Title Company is a wholly-owned subsidiary of Mercury Companies. Both are defendants in this suit. Alliance Title Company prepared the closing statements and settlement statements in connection with the transactions involving the sales of the 37th Street and 84th Street properties to the Thurgoods.
Lenders First Choice, another wholly-owned subsidiary of Mercury Companies, acted as agent for United General Title Insurance Co., the title insurance company which provided title insurance to the Thurgoods and to the new mortgage lenders when the properties were sold to the Thurgoods. Neither Lenders First Choice nor United General Title Insurance Co. are defendants in this suit.
Alliance Title Company has since filed for bankruptcy under chapter 7 in the Northern District of California on June 5, 2008 (Case No. 08-52979). Mercury Companies has also filed for bankruptcy under chapter 11 in the District of Colorado on August 28, 2008 (Case No. 08-23125).
Washington Mutual Bank and Long Beach Mortgage Company were the new lenders who made the mortgage loans to the Thurgoods. Washington Mutual Bank holds the mortgage on the 84th Street property, and Long Beach Mortgage Company, a wholly-owned subsidiary of Washington Mutual Bank, holds the mortgage on the 37th Street property. Hereafter, when reference in this decision is made only to Washington Mutual Bank, it shall be referred to as "Washington Mutual." When reference is made only to Long Beach Mortgage Company, it shall be referred to as "Long Beach." When Washington Mutual and Long Beach are referred to collectively, they shall be referred to as "Washington Mutual Defendants."
In December of 2005, Redding, acting for ASAP, contacted Walker to explore possible refinancing of her mortgage debts on the 84th Street and 37th Street properties. Redding learned from her review of Walker's real estate tax records that Walker was delinquent in payment of real estate taxes. Redding thought Walker might qualify as a potential customer. However, upon further investigation, Redding testified that Walker did not qualify for a loan from her company. Redding then referred Walker to the Head Defendants.
In April of 2006, the Head Defendants, after contacting Walker, entered into agreements with her. Walker testified she thought these agreements enabled her to refinance her mortgage loans on the 84th Street and 37th Street properties. However, that was not what happened. The documents which Walker signed for the 84th Street and 37th Street properties in April of 2006 consisted of: (1) a Sales and Purchase Agreement for each property requiring Walker to convey title to these properties and fixing purchase prices of $139,000 for the 84th Street property and $132,000 for the 37th Street property and (2) a "Residential Lease and Sale Agreement" for each property which Walker signed as tenant under a 1-year renewable lease. Nations Property Management Inc. (one of the Head Defendants) was designated as the landlord on both leases. Neither lease contained a provision giving Walker the option to repurchase her properties. Walker testified that she signed all of these documents without having first contacted her attorney. When asked at the trial why she did not consult her attorney, Walker's response was that she made a mistake.
On August 8, 2006, Redding, upon request from the Head Defendants, met with Walker for the purpose of obtaining Walker's signature on warranty deeds for the 84th Street and 37th Street properties. Redding notarized Walker's signature on both warranty deeds. Redding testified that Walker did not ask her any questions about the documents and that she simply asked Walker to sign them and Walker complied. Walker's version of what occurred, however, is different. She testified that she was pressured into signing and that Walker was "in a hurry." Redding acknowledged that she did not explain to Walker that the warranty deeds involved the sales of her two homes. Redding further testified that she received a fee for her role in these transactions. The amount of payment she received was never disclosed at the trial. Walker further testified that she was never told by anyone that her properties were being sold.
The real estate closings for these properties took place on or about August 25, 2006. Universal Mortgage Corp. (which held the mortgage on the 84th Street property) and HFC (which held the mortgage on the 37th Street property) were paid in full the mortgage balances due to each of them. Other closing costs (including unpaid real estate taxes) were also paid. In addition, the outstanding balance needed to complete Walker's chapter 13 plan was also fully paid to the chapter 13 trustee from the 37th Street property closing. After the payment of all the closing costs, approximately $61,000 remained (in connection with the 84th Street property) and $57,000 remained (in connection with the 37th Street property), which were labeled in the closing statements as "proceeds due seller." (Exhibits 30 and 33) No portion of these "proceeds due seller" was remitted to Walker. Instead, the proceeds were turned over to the Head Defendants, which were obtained by wire instructions and authorizations (Exhibits 35 and 36) containing the purported signature of Walker. Walker testified that her signatures on these wire instructions and authorizations are forgeries.
Walker further...
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In re Ronald G. Anderson And Sandra M. Anderson, 11–22650.
...on behalf of Fannie Mae.4 The debtors further contend that they are entitled to the same relief afforded the debtor in In re Walker, 405 B.R. 300 (Bankr.E.D.Wis.2009), wherein the defrauded debtor was entitled to set aside the contract and the parties' interests were restored to the state p......