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Duped when They're Down, Then Forced Out

Jimmy Lathrop Aug. 9, 2008

by Staten Island Advance
Saturday August 09, 2008, 2:00 PM

To Gerthy and Lesly Alexandre, a couple struggling to fight off foreclosure on their West Brighton home, the proposition seemed to make sense: Refinance the mortgage and put someone else's name on the deed just until the couple could clean up their credit and catch up financially -- a year at the most, they were told.

What the pair didn't realize was that they were selling their dream house and forfeiting the rights to a home they had struggled to buy and keep -- a house that was about to fall into new hands and default for a second time.

People fighting off foreclosure often find themselves in a frustrating, time-consuming battle, but their vulnerable position also makes them more susceptible to quick-fix foreclosure rescue scams, which are flourishing in the city and Staten Island and leaving distressed homeowners paying a terrible price, legal experts say.

In most cases, homeowners are encouraged to surrender title to the house in the belief that they will be able to remain as a renter and buy back the house over the next few years. Instead, the new buyers take out even bigger mortgages and the house falls into foreclosure again.

"I worked so hard to get this house. I'm going to try to fight to keep it until the end," Gerthy Alexandre, a mother of three, said during a recent interview.

She is not alone.

The Homeowner Defense Project of Staten Island Legal Services in St. George dealt with a Clifton woman who interacted with the same company, AFG Financial Group in Garden City, L.I., as the Alexandres. In that case, the company allegedly forged the woman's name in a sale and took the deed to her house, which was already in foreclosure, even after she refused to do business with them, according to Jeff Gentes, an attorney with Legal Services.

The Staten Island district attorney is reviewing material on that case, according to a spokesman for the office.

"These folks come in and skim whatever equity is left," said Gentes, who brought AFG Financial and a broker, Patrick Jean Baptiste, to the attention of the district attorney. "The common thread for each of these cases is that regardless of the reason people were in foreclosure, they were desperate and ended up being swindled out of tens if not hundreds of thousands of dollars in home equity."

Numbers for the Garden City company are disconnected and attempts to reach Baptiste, who also worked with the Alexandres, were unsuccessful.

Legal Services alleges another foreclosure rescue scam in court papers.

That suit charges that a company called Revolutionary Capital targeted a West Brighton woman with a foreclosure rescue scam because she is an African-American living in a predominately African-American neighborhood.

The suit alleges the company violated her civil rights and the fair-housing and truth-in-lending acts when it convinced her to transfer the deed to her property to the company, which was expected to pay off the mortgage and make payments on a new mortgage for six months while the woman graduated from paralegal school and restored her credit.

Instead, she sold her home to an 18-year-old college student and alleged strawbuyer who lived in an apartment with his mother in Georgia. He lacked the resources to qualify for the new $390,000 in mortgages taken out on the Staten Island house, according to the court papers filed by Legal Services.

Payments were never made on those mortgages and the Alaska Street house went into default for a second time. Promises she was made of being able to lease the home until she could get on her feet and repurchase the house after one year fell far short of reality, according to court documents.

Casman Samuel, the CEO of Revolutionary Capital, denied any wrongdoing in a telephone interview.

He said he acted only as a consultant who advised the woman that she would lose her house to the bank if she did not sell it to someone else. He said he brought together the woman and the purchaser of her home.

"Anybody can say what they want in court," Samuel said of the allegations spelled out in court papers.

"I didn't promise nobody nothing," he added.

In the Alexandres' case, Gerthy Alexandre and her husband fell behind on mortgage payments near the end of 2005, after she needed surgery and was out of work on medical leave. She was eventually able to find new employment and her husband now works two jobs.

Both believed they were making the right move when they refinanced with New Century the following fall with the help of AFG Financial. They were told they'd need to make payments of $3,475 a month for a year before they could refinance again into a lower payment.

The two thought a name was being added to their deed to help them get the new loan. They didn't realize they were selling the house. They made payments for nearly nine months before New Century went out of business and sold the loan to Select Portfolio Services. When they had difficulty making the payments to Select Portfolio, they realized the house was no longer in their name, and the house entered foreclosure a second time.

Attorney Jaime Lathrop, who is representing the couple, plans to argue that the last mortgage was procured through fraud and should be canceled. He said subprime banks and brokers had a responsibility to do a certain amount of due diligence when lending money. Who can better bear the loss, the bank or the Alexandres? asked Lathrop. The point of the matter is the Alexandres were duped and someone at the bank should have been watching.

-Contributed by Karen O'Shea