Loan Officer Gets 12 Months Prison Time For Swindling Victims' Home Equity In Sale Leaseback Foreclosure Rescue Ripoff

From the Office of the U.S. Attorney (Baltimore, Maryland):

• U.S. District Judge J. Frederick Motz sentenced James Dan, age 46, of Annapolis, Maryland [] to a year and a day in prison followed by three years of supervised release for conspiracy to commit wire fraud in connection with a mortgage fraud scheme which promised to help homeowners facing foreclosure keep their homes, but left them homeless and with no equity. Judge Motz also ordered that Dan pay restitution but withheld determination of the amount until receiving further submissions from counsel.

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• James Dan met James Fox in Annapolis when both were loan officers for a mortgage lender. Although Dan left the mortgage company in 2005, Dan and Fox stayed in contact with each other.

• According to their plea agreements, beginning in 2006, Fox began to identify prospective borrowers who owned and had equity in their homes, but who could not afford their mortgage payments and were at risk of losing their homes because they were either in foreclosure, bankruptcy or financial distress. Fox, and sometimes Fox and Dan, told potential victims that they could "rescue" them and save their houses.

• The promises involved transferring the home to Dan or Fox, who would obtain a new mortgage loan. Dan and Fox promised to make the payments on the new mortgage loan for six months or a year, during which time the individual would "repair" their credit, refinance the property and reacquire it. During this six month or one-year period, the individual was to continue living in the house.

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• None of the victims is in title of their homes. Three victims are trying to regain title to their homes through civil law suits. Five victims have lost their homes.

• Dan, as a mortgage loan officer, was aware of the implications of the sale: that the seller who deeded away his or her home lost control of their home; that the person who was facing foreclosure today would not likely be able to afford a mortgage loan at a higher amount a year from now; that the individual who could not qualify for re-financing today would not qualify for a mortgage loan in a year and could not re-purchase their home; that Dan and his associate could not likely afford to make the mortgage payments for more than six months or a year and might default on the new mortgage; and that the house had equity which Dan and his associate were taking out at settlement for their own uses.

• Judge Motz sentenced James William Fox II, age 40, of Crofton, Maryland to 27 months in prison on January 28, 2011 for his participation in the conspiracy and ordered that Fox pay restitution in an amount yet to be determined.

For the U.S. Attorney press release, see Annapolis Loan Officer Sentenced to Prison For Mortgage Fraud.

See Criminal Prosecutions Of Sale Leaseback Peddlers In Equity Stripping Foreclosure Rescue Deals for other incidents that led to criminal prosecutions in sale leaseback deals.