Brooklyn Grandmother Says Decades-Long Home Was Swiped Out From Under Her In Sale-Leaseback Foreclosure Rescue Scam; Now Resists Eviction, Refuses To Go Down Without A Legal Fight

 In Brooklyn, New York, The Real Deal (New York) reports:

• A new legal filing and old mortgage documents shed light on an eviction saga in Crown Heights in which a 98-year-old woman lost ownership and then tenancy of her family home of 70 years.
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• Last week, city marshals evicted Ida Robinson and her family from the stately row house at 964 Park Place. The Robinsons had in 1951 become the first Black family on the block. But facing foreclosure in 2015, the matriarch was tricked into a deal that stripped her of her house’s deed, according to her lawyer.
  
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• The lawyer, Adam Birnbaum, wrote that the type of title transfer likely used by the LLC buyer targets homeowners “who are almost always Black and usually elderly.”
  
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• The document filed in housing court by Birnbaum, a lawyer at Abrams Fensterman referred to Robinson by Attorney General Letitia James, states that the transaction between Robinson and the LLC has many of the elements of a scam used to trick homeowners out of their deeds.
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• In those schemes, Birnbaum wrote, an LLC is often created specifically for the transaction. The LLC characterizes the documents that it draws up as a refinancing, which Robinson believed her deal was. But they actually transfer the title to the LLC.
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• Once the LLC has secured ownership, it transfers the title to a second or third owner to ensure the process is “difficult or impossible to unwind,” Birnbaum wrote. The LLC that allegedly bought 964 Park Place from Robinson immediately transferred the title to another LLC. Five days later, Menachem Gurevitch, Robinson’s current landlord, transferred it to himself.
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• The attorney wrote that Robinson is adamant that she never authorized anyone to sell her home and that she never executed any documents transferring the title.
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• Robinson’s granddaughter [Sherease] Torain told Law360 that her “grandmother never received a dime” from the deal. Court records show that Robinson initially “refused to consummate the sale,” which resulted in a lawsuit, settlement and eventually, her transer of the deed, Law360 reported.
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• Torain said her grandmother was 92 years old when the transaction took place. “To force this on, that’s elder abuse,” Torain said. “These are white-collar criminals and no one’s talking about it.”
  
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• Birnbaum said the transfer that Robinson supposedly agreed to should have been void from the get-go. Andre Soleil, the attorney who represented her in the transaction, has since been disbarred after allegations that he took control of a Harlem nonprofit’s buildings and sold one for $1.4 million — funds the group never received, the New York Post reported.

For more, see Documents shed new light on Crown Heights eviction saga (Lawyer makes case for deed theft; owner took out mortgages during subprime bubble).

See also:

• Law360: Judge To Review Warrant In Heated Brooklyn Eviction Row,
• Brooklyn Paper: Crown Heights Family Fights Real Estate Mogul To Keep The Home They Owned For More Than 60 Years.

Sale Leaseback Arrangement Designed To Pilfer Home Equity Out From Under Elderly Homeowner Facing Foreclosure Goes Haywire For Scam Artist

The underlying facts in a 2019 California state appeals court case may serve as a cautionary tale for foreclosure rescue operators who effectively swindle the wrong financially distressed, elderly homeowner out of the title and equity in her home under the guise of a sale leaseback deal.
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In this case, the victimized homeowner ended up suing the scam artist and a slew of other defendants(1) who had some part in the ripoff transaction. After extensive litigation, the homeowner ended up relinquishing any ownership claim she had in her home in exchange for financial settlements from various of the defendants for amounts totaling $1,050,000, and left the defendants to fight amongst themselves in their efforts to salvage something out of a deal that blew up in their face and went haywire for them.
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For the court case, see EGB Group, Inc. v. Family Mortgage Options LLC (2019) No. B272467 (2d Dist., Div. 1) (unpublished).
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For case access to information from the trial court proceedings, go here, then enter Case # YC069066.
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(1) The victimized homeowner sued the slew of defendants variously for (1) violation of Home Equity Sales Contract Act (Civ. Code, § 1695, et seq.), (2) wrongful foreclosure, (3) violation of Mortgage Foreclosure Consultants Act (id., § 2945, et seq.), (4) declaratory relief, (5) cancellation of deeds, (6) quiet title, (7) intentional fraud, (8) negligent misrepresentation, (9) breach of contract, (10) rescission of contract, (11) financial abuse of an elder, (12) recovery of usurious interest, (13) equitable redemption of plaintiff's interest in property, (14) violation of Business and Professions Code section 17200, (15) intentional interference with contract, and (16) slander of title.

Institutional Sale Leaseback Peddlers Facing Equitable Mortgage Re-Characterization Threats?

There has recently been an apparent influx of companies entering the real estate market that seek to "institutionalize" the business of "peddling" sale leaseback arrangements that, at least in part, target financially-strapped homeowners, homeowners that are " cash poor" but "equity rich."(1)

The looming question with these arrangements is: Will courts recognize these deals as "true sale-leasebacks," or are they nothing more than disguised equitable mortgages (ie. secured loans), and in some cases, disguised usurious equitable mortgages(2) that are made in violation of the Federal Truth-in-Lending Act, state usury laws, and other consumer protection laws.

Well, there is at least one law firm (I imagine that there may be others), located in Houston, that is apparently going after these types of companies with lawsuits on behalf of Texas homeowners asserting that the arrangements are nothing more than equitable mortgages.(3)

For more, including a summary of the firm's basis for bringing these lawsuits, see Real Estate Fraud Lawsuit Against EasyKnock, Inc. and EK Real Estate Services of NY, LLC.

Editor's Note:

One company that has been targeted by this law firm has apparently taken umbrage at the firm's effort to recharacterize these sale leaseback deals as equitable mortgages, has responded by filing a lawsuit against them for defamation, and has requested a temporary restraining order in connection therewith. This request has subsequently been denied by the court,(4) and a Motion to Dismiss this case is currently pending.(5)

Footnotes:

(1) See, for example:

• Sale-leasebacks increasingly target struggling homowners (Companies like EasyKnock and Invitation Homes look to tap that investment option) (may be behind paywall),
• Real-estate power players and startups are getting ready to buy thousands of homes and lease them back amid a wave of foreclosures (may be behind paywall).

(2) See:

• Sale Leasebacks Or Disguised Usurious Loans; Substance vs. Form,
• Usurious Loans Masquerading As Sale Leasebacks?

(3) Recharacterizing Sale Leasebacks As Equitable Mortgages In Texas.

(4) Memorandum Opinion And Order (Denying Application for Temporary Restraining Order).

See also, Judge Blocks TRO Bid Against Law Firm In Defamation Suit (may be behind paywall).

(5) Defendants' Motion To Dismiss For Failure To State A Claim, Or Alternatively, To Stay Or Abate This Proceeding.