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North Carolina Attorney General Problem |
DianeBarberio
5 Posts
Member Since: 05/02/2003
Henderson, NC
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Posted: 15:30 on 07-23-2004
This is Diane Barberio from North Carolina. Some of you have already heard from me in the past about a problem with our state Attorney General’s office. For some of you this is the first contact that I have had with you.
My husband and I started acquiring property by a means called “Subject To”. That is a way of getting property by taking over the payments of the underlying loan and lease/optioning out the home to a couple who have credit issues that prevent them from qualifying for a loan right now, but who will be able to qualify in the future. We do this with full disclosure to the “seller” that we are not going to be on the loan (the loan stays in their name), but we take on the responsibility of making the payments on time every month and keep up with any repairs, etc.
Most of our clients are professionals. They were unable to sell their homes after many attempts of listing their homes with an agency. For different reasons, they all choose to have us do a “Subject To” deal.
We did have one couple that was behind on their payments (six months) want us to take care of their problem. We knew them for over 4 months before we did the paperwork. We explained many times our program. They had been in bankruptcy in 1995 so this was nothing new to them. They moved out, we paid the back payments-over $6500.00 and then we paid to get the house carpeted and painted. All said and done, we had an outlay of over $8200.00. We got a young couple in the house on a lease/option. When we took over the house it had a tax value of $93,900.00. The payoff was $93,000.00. We had to paint and carpet to make it livable. It is in a neighborhood where several of the houses have gone into foreclosure and as a result, lowered everyone’s property values.
We were contacted over 45 times through emails by this couple. Most of the emails were thanking us for helping them out. Then they started asking for copies of the paperwork from their closing. This happened at least 3 times. They emailed us, “We took the paperwork to a lawyer and he said what you all did for us was a good thing. Sometimes my husband gets confused”. Then they received a letter from a mortgage broker about refinancing their home. She had already known them and didn’t know that they didn’t own the house. She told them that it was time to refinance again. I happened to know this person and called to tell her that they no longer owned the house. She kept pursuing them to refinance. We learned then that the attorney who was suppose to file the deed, hadn’t. In fact, the attorney couldn’t find the deed in their files either. So the Conyers signed another deed for us and we recorded it.
I called the mortgage broker and asked her how she thought that this couple could afford the new higher payments, when they were unable to afford the payments on the existing loan. She said that she told the couple that they could just not pay the taxes on the house. She went on to say that the county wouldn’t go after them for at least 3 years. In the meantime, they could get some money out of their property (equity). She assured me that she could get an appraisal that would be high enough for them to get money out. I asked her how much she would be getting out of brokering the transaction. She told me, “$7500.00”.
She had so convinced the couple that there was money in their house, that they were on a quest to get their home back. Before we even did the transaction on this house, I asked them how they got into this problem of not being able to pay their mortgage. The husband said that he had such a terrible feeling in the pit of his stomach since the last refinance, that it had affected his whole life, his job and everything. They had refinanced their house many times, because they said that they couldn’t resist all of the phone calls from mortgage companies and letters telling them to get the money out of their house.
Back to the details: The couple took their paperwork to yet another attorney (prepaid legal) and convinced the attorney that they had been taken advantage of. We got a letter from him saying that the Power of Attorney and the assignment of beneficial interest of the trust were revoked. After calling their attorney (Tim Gray) and telling him our side of the story, he knew that we were being reasonable and were willing to give them their house back (with a second put on the house for the $8200 that we felt they owed us). The couple were not happy about that decision. Before we could deed back the property to them, they decided to complain to the Attorney General, the Better Business Bureau and the Real Estate Commission. Their justification for doing this was, that they only had a 6th grade education plus the overwhelming fact was that they did not want to be obligated to pay anything back to us.
They go to another attorney (prepaid legal) sent us paperwork again saying the Power of Attorney and Assignment was being revoked. This didn’t work so they decided to take matters into their own hands. They went to the courthouse and filed an eviction on our tenants, claiming that they had a verbal agreement with our tenants. They wanted back rent in order for them to afford the payments. That failed. We had to hire an attorney to put a stop to the eviction.
Then, over a holiday, they broke into their old home, destroyed our tenants property, changed the locks and put signs all over the house saying that they owned the property not our company. I wrote to our attorney at the time explaining the situation. When he finally told the assistant Attorney General what the couple had done, she just got a big kick out of it. Even though they broke the law, she felt it was the “little guy putting it over on big business”. See the letter below. This is a letter written to our first attorney.
September 8, 2003
From: Russ and Diane Barberio
Immediate Attention:
To: Tom Davis
Dear Mr. Davis,
I just wanted to let you know before you may have a chance to talk to Ms. Worley that we have verified the fact that the Conyers have changed the locks on the house at Knob Court. They have NO TRESPASSING signs in the windows. One of the signs gives their attorney’s name and phone number (Mr. Marcus A. Jackson-479-9793). It also lists another phone number to call-596-8597. They also have another sign that says, “Impel Investments, LLC do not own property.” They go on to give the phone number of the tax office in Durham and they have a copy of the tax value of the house to show that they own the property.
Meanwhile, the washer and dryer were taken outside and pushed off the deck and were smashed. Our tenant’s belongings must still be inside. Please let Ms. Worley know that these people are up to no good. All that they have done has been “immoral and deceitful” and these latest things are out and out illegal. The complaint that they filed against us was based on lies.
I still do not comprehend how they can claim that they didn’t understand the procedure we went through with them to acquire their property. Some of the details being overlooked by Ms. Worley are:
· We explained our process to the couple on more than one occasion with witnesses each time.
· That we received an email from the couple dated November 25, 2002 that states, “Dear Diane and Russ, The lawyers help us to see what you all did was a good thing, so every is alright it were just that my husband don’t understand thing at times, we are so sorry we trouble you all you all have a good thanksgiving. the wife's name“
· That in another email dated November 16, 2002, Mrs. XXXXX is asking for a copy of the deed that they signed. If she is referring to a deed in November, how does she claim that they “didn’t know” that they deeded us the property?
· Many attorneys (all pre-paid legal) were hired by the couple in order to try to build a case in their favor. They had requested (through emails that I have) several copies of their paperwork. I only guessed that the paperwork was being taken to attorney after attorney.
· If our reputation is in question by Ms. Worley, please ask her to call Mr. Tim Gray with Browne, Flebotte, Wilson and Horn, P.L.L.C. in Creedmoor. His phone number is 919-528-3061. Please refer to letter from him to the couple. He was offering about the same type of a deal that you are offering to the couple now. Only now I feel that we have lost any ability to use that as leverage, since they have already taken possession of the property-illegally.
Again, thank you very much for all of your help in this matter. Please bring up these situations with Ms. Worley. Thank you.
The couple have remained in their property since they took it back illegally. We were notified that they were in foreclosure and have since learned that they went into bankruptcy. The couple moved several times during the year and a half that we were caring for the property. One of the apartments that they were living in was subsidized housing. Which meant that they had to state that they owned no real estate. Of course, they know their way around, because even the truck that they drive is in their daughter’s name. This is not speculation, they told me themselves that this is the case. But, my question here is, if they told the housing authority that they didn’t own a home, then how did they suddenly think that they did own their old home? They can’t have it both ways-prove to the government that they had no assets in order to qualify for subsidized rent and at the very same time try prove to the law that they did own their own home-it’s just that they only have a 6th grade education and didn’t know that they deeded their property over to someone who paid all their back payments, kept their loan current and also improved their credit. They were being investigated for this by the housing authority several months ago. I also have an email from them that says that they still owned property in Granville county that they were hoping to put a mobile home on. This was at the very same time that they were living in subsidized housing.
We also had a second complaint from a previous owner. She and her husband got a divorce and she remarried. I am sure that after her new husband found out about this situation that still kept her somewhat tied to her first husband, they came up with a plan to rectify the “problem”. An attorney friend of theirs contacted the attorney for the NC Real Estate Commission to complain about a “land trust scheme”. We immediately gave them their property back. In fact, if they had just told us of their plans to get the house back, we could have saved them both time and money.
Now the AG’s office thinks that we are scum of the earth. They contacted us initially back in May of 2003. We agreed to do no business until this problem was resolved. We have complied. How much longer does this need to go on?
Back in 2003 I foolishly went to the AG’s office like they asked. We had a talk and they accused me of being immoral, deceitful and told me that I was scamming people. In trying to make the AG’s office understand what we do, I likened it to adoption. We take a house that cannot be cared for by its original owners and place that house in the hands of a couple who needs a second chance at homeownership. I told her that there was a time adoption wasn’t looked on with much favor. Sometimes the mother changes her mind and fights to get her baby back after previously making a decision to give the baby up for adoption. Just because this happens in some instances, doesn’t mean that all adoptions should be outlawed.
Well, since this has been going on, we have found that other investors have been called in like we were to explain themselves. The AG’s office feels that we are all guilty from the word go. There is no changing this AG’s opinion about what we are doing is immoral. We have asked repeatedly for them to tell us what we have done that is illegal. We have never been told. She just says (for over a year now) that we will be charged soon. She says that “Subject To” is not a legal way to buy a house (yet it is on HUD-1 statements and is described in the manual that real estate agents use as a resource). She also says that because we used to advertise “We Buy Houses” that we are guilty of deceiving the public-we don’t go to the bank and get a new loan to buy property properly. She has made statements like, you have committed mortgage fraud and could go to prison for what you’ve done. We know that this is only a way of strong-arming us. But, they are also calling our previous owners and telling them this. In a conversation that I had with Worley, she insinuated that because our previous owners participated in this transaction, that they could be held liable for mortgage fraud, too.
By the way, our NC Real Estate Commission is involved with this also. They have determined that $10.00 is not sufficient to pay for an option on a property. I asked if they could please tell me what they thought would be enough. They refused to say. It’s just that $10.00 was too little. I said, “What if I gave a car in consideration for an option or anything else of value?” They said that that was O.K. They called us immoral and deceitful, yet they told us that we needed to get our real estate license. I wanted to ask them if this is the type of people with our immoral, deceitful character that they want to invite into their fold.
There was another investor who ended up getting out of the business because of this AG’s office. A terrible news article from the AG’s office was sent to the newspaper that was actually filled with lies and innuendo.
A third investor was doing these types of deals a few years ago has been called into the AG’s office. He had already given back properties that he took “Subject To”, or refinanced them before the AG’s call. However, he is being instructed by the AG’s office to record the Trust Agreement of the land trust. It is never recorded and he wonders why they are asking him to do such a thing. He has his real estate license as well as his broker’s license. He is so afraid of what they are up to. Needless to say, we are very worried about what this is going to lead to in not only North Carolina, but all states.
With all of the investors who I know who have been called by the AG’s office, the questioning is the same:
Do you buy houses? How do you buy houses? Who did you learn this from?
They are going through the classified ads and calling those who are advertising. They may also be calling from signs that they see at the side of the roads.
There was an article that went to all attorneys in North Carolina. It is a newsletter that State Wide Title puts out. The article said in so many words-BEWARE. There are people out there advertising “We Buy Houses”. Do not do any business with them. The article states, “This doesn’t fit strictly into the ”predatory lending” heading, but it is a common method of perpetrating consumer fraud and often has involved attorneys”.
I know that this is a very long letter. I am hoping to get someone out there who can help us put a stop to this challenge we are going through. All investors stand to lose creative ways to buy and sell property if this goes unchecked. Please feel free to call me at 252-438-8491. We need all the help that we can get. Thank you so much for your time.
[ Edited by DianeBarberio on Date 08/16/2004 ]
[ Edited by DianeBarberio on Date 08/16/2004 ]
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rmdane2000
560 Posts
Member Since: 05/12/2004
West Des Moines, IA
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Posted: 13:15 on 07-24-2004
I thought there was a subject-to guru on this board somewhere...
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Stockpro99
2170 Posts
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Salt Lake City, UT
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Posted: 14:07 on 07-24-2004
I guess that what I would really like to know is what your attorney is doing and what is his take on this situation? DO you have a good attorney? I don't mean prepaid legal either..
I have been to court many times and fortunately have won in all cases. I do not use prepaid legal, I use the biggest gun I can find in the field that I am doing battle in, I suggest you do the same.
As to the $10, I would suggest that a lot of property has been bought and sold for "$10 and other good and valuable consideration. Was there no equity in the property? and didn't you pay the owner something other than the $10 to make the contract binding?
I am in deep sympathy to your case and hope to see a favorable outcome for you.
As to the previous owners taking the property, what about a forcible detainer action against them or some other legal proceeding.as you did "record the deed" didn't you? Or a simple tresspass? If I sell a house and then 6 months later break in, change the locks, and take possession I will be charged with criminal tresspass.
If you have the deed recorded as in John's course, and you are the trustee, why are you not excercising your fiduciary powers to the trust by removing this person?
All you have to do is show the deed to the police showing that you are either the owner or the trustee of the trust. Then you have them for breaking and entering, criminal tresspass, and or a host of other things. Period! No exceptions. According to you you have only a "verbal" issue with the AG's office. Without an order, something in writing, this is insubstantial and would/should in no way interfere with your taking the property back and pressing charges. The worst that the previous owners could do is tell the mortgage company, big deal! Refinance, or simply assume the note. YOU have been paying it after all, you are on title, why wouldn't they want to keep getting paid..?
Why would you let them (CONyers)get away with this? and once again, what does your attorney say?
The only thing that I can infer is that you have not followed the process, and that when in legal trouble didn't get a good attorney or good legal advice?
There is still some information missing here..
Best of Luck!
_________________
"Chance favors the prepared mind..."
[ Edited by Stockpro99 on Date 07/24/2004 ]
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ncboater
140 Posts
Member Since: 12/17/2003
Denver, NC
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Posted: 22:38 on 07-24-2004
Finally,
Thanks stockpro I been waiting for somebody to address the issues of what wasn't done right! Not what the NC AG is doing. What can we do to prevent this? What steps are missing....There has to be something missing.
[ Edited by ncboater on Date 07/24/2004 ]
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mindyhicks
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Member Since: 01/30/2004
Harrisburg, PA
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Posted: 22:54 on 07-24-2004
How about the tenants? What are their rights? Why haven't they gone to the police, or somebody, and pressed charges for their belongings being destroyed? I agree, there is something missing here. With or without an attorny, I'd be at the front door with a cop wanting my property back. I'd have copies of the recorded paperwork in my hand.
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Stockpro99
2170 Posts
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Posted: 23:12 on 07-24-2004
I learned with my ex wife that rolling over isn't going to get you very far 
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kenmax
977 Posts
Member Since: 08/28/2003
Christiana, TN
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Posted: 23:23 on 07-24-2004
if the ag's office is coming after as you say. you can't wait for them to "see the light" they have made their opinion , right or wrong, about you and thats not going to change. they don't, admit to that is, make mistakes. if you "bow in there court" they will smell weakness and verb. and fin. beat you to dealth, they enjoy it. get a "good" lawyer and make them "put up or shut up"........good luck........kenmax
[ Edited by kenmax on Date 07/24/2004 ]
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arborlis
137 Posts
Member Since: 05/30/2004
Memphis, TN
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Posted: 23:39 on 07-24-2004
Creative investors are substantially out numbered by the real estate giants. These guys have the BIG guns and it appears they are using them in NC. It sounds like the AG's have been brainwashed by the big boys. I spoke to my cousin who is a RE agent and he filled my head with so much hot air about how Sub To is illegal and immoral and how I would never make a dime and end up in jail, I felt like weeping and giving up entirely. I feel like these guys are on a mission because their livelyhood is at stake. He said 65% of their houses for sale are foreclosures and this is their best year to date. If creative RE investors continue to multiply they could theoretically reduce that 65% number to 0%. It appears the brokers are making millions from the rehab and sale of REO's. Small investors are their eternal enemies.
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marv_wi
55 Posts
Member Since: 06/24/2004
Cameron, WI
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Posted: 01:41 on 07-25-2004
I know there a lot of realtors that are members, and do not want to offend anyone but this statement directs why my feelings of why I dislike the way the RE business is run by the liscensed thieves.
"our NC Real Estate Commission is involved with this also. They have determined that $10.00 is not sufficient to pay for an option on a property. I asked if they could please tell me what they thought would be enough. They refused to say. It’s just that $10.00 was too little. I said, “What if I gave a car in consideration for an option or anything else of value?” They said that that was O.K. They called us immoral and deceitful, yet they told us that we needed to get our real estate license. I wanted to ask them if this is the type of people with our immoral, deceitful character that they want to invite into their fold.
be condemded or join us?
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kenmax
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Christiana, TN
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Posted: 03:52 on 07-25-2004
being a rei you have freedom to act, independence, almost as our forefathers intended. this we the rei must protect at all cost. it is very slowly being taken away.........do you agree or not? ................KENMAX
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Stockpro99
2170 Posts
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Posted: 11:35 on 07-25-2004
I would hesitate to lump all realtors together on this. I am for all intents and purposes a realtor. I have never sold a house for anyone else but I do like a commission on REO property and I figure that 3% to sell my houses is a reasonable cost for great exposure. I plan on never using it to work for other people. It is a tool the same as my contractors license is, how good a tool remains to be seen over the years..
I however am a CRI first, I can't see why a realtor would not like to see Sub To deals done? in fact I know several that have participated in the process. A commission is a commission ( I do know that everything is geared to protect the commission in Oregon!) Still in many Sub To deals there is room for a commission.
_________________
"Chance favors the prepared mind"
Randall Wall
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Stockpro99
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Posted: 11:41 on 07-25-2004
I am waiting to hear back from Diane,
I think however that there were a few "I"'s not dotted and a few "T"'s not crossed as per my first post here. NOw I could see taking a property for $10, but certainly not all of them... I am a student of John Locke and basically believe Sub To is a way to get a great deal and not steal property. If every deal I did was only tking the property for $10 I might not be on the up and up. If in NC $10 isn't good enough then make it a hundred, or $500. Surely all houses there are not bought for $10, some must have some equity, and all investors are not out to take advantage of people and take their house for $10.
_________________
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Randall Wall
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maggyldy
44 Posts
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Aurora, IL
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Posted: 14:57 on 07-25-2004
Diane,
Have you heard from any of the so-called gurus? Have you tried contacting John Locke? It would seem to me that you could get some good advise. We're still waiting to hear from you about what your attorney is doing about this mess. After a year, he should have had time to be a little more pro-active. Clearly you made a few mistakes (no compensation at all for the deed), but I can't see how they can stop you from doing business. AND....what's your attorney doing about them taking over the property? WOW! All I can say is that if it can happen there, it can happen here. I'm still have analysis paralysis, so I'm hoping to learn whatever I can from this situation.
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InActive_Account
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Member Since: 02/26/2002
AnyTown, NY
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Posted: 03:14 on 07-28-2004
I think someone needed a couple more
CYA forms!!
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bencase3
11 Posts
Member Since: 07/26/2004
Raleigh, NC
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Posted: 06:14 on 07-28-2004
I'm in raleigh and the AG can be useless at times. A good attorney is worth the extra $. So much for helping people with a 6th grade education.
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