|For Immediate Release
|February 15, 2005
||Contact: Randall L. Hoth
414- 847- 6010
Mortgage Elimination Scheme Hits Wisconsin, warns Wisconsin
Better Business Bureau
(Madison) The Wisconsin Better Business Bureau is warning businesses
and consumers of a mortgage elimination scheme victimizing area lenders
while leaving homeowners facing dire consequences.
So far, the Wisconsin BBB’s investigation has found a Milwaukee
County property, two Waukesha County properties and three Dane County
properties that are involved in this complicated scheme, which attempts
to eliminate someone’s mortgage for a fee by filing false documents
with their lender. The BBB’s investigation has uncovered that two
individuals, D. Scott Heineman and Kurt F. Johnson
are the individuals filing these false documents.
“This is a widespread and very serious scheme that could cost mortgage
companies millions of dollars and is making the homeowner, perhaps unwittingly,
an accessory to a crime,” warned Randall Hoth, president and CEO
of the Wisconsin Better Business Bureau.
Here’s how it works: The homeowner pays a $3,000 fee and agrees
to place his/her home in a family trust naming D. Scott Heineman
and Kurt F. Johnson as trustees. A quitclaim deed is
recorded naming the new trust as the owner of the property. Next, the
trust presents the lender a document that contains 40-50 “legal”
challenges to the loan and claimed “violations” of federal
laws committed by the lender. The lender must respond with proof of the
validity of the loan. When the lender fails to respond, a power of attorney
is filed which gives the trustees authority to act on behalf of the lender.
Using the power of attorney, a “Discharge of Mortgage” is
filed certifying that the loan has been fully paid.
The next step is to apply for refinancing on the home. Once obtained,
the homeowner, the agent broker and the family trustees divide the funds.
This new loan is then “eliminated” using the same technique.
Of the six Wisconsin properties known to be involved in this scheme,
all of them had a quitclaim deed filed giving ownership of the home to
a trust. The two trustees named on these quit claims are D. Scott
Heineman and Kurt F. Johnson. These two individuals’
names appear on multiple quitclaim, power of attorney and discharge of
mortgage documents in several states.
In addition, Heineman’s and Johnson’s names appear on quitclaim
deeds in Tennessee, Ohio, Florida, North Carolina and South Carolina.
Although these two names are known perpetrators of this scam, the BBB
is warning that there could be other individuals or businesses involved
with it. Other names associated with this scam are the Dorean Group, Capital
Creation Resource and Redwood Trust in New York (not to be confused with
a California company of the same name).
The BBB believes that homeowners who participate in a mortgage elimination
scheme likely face several potentially serious legal problems –
default on their original mortgage, foreclosure, difficulty selling the
home due to the irrevocable trust and the title issues it creates, potential
liability for failure to pay any additional loans procured by the trust,
and a possibility of being an accessory to criminal activity.
Richard Jungen, a director for the Wisconsin Mortgage Bankers Association,
warned consumers that participation in these types of schemes could do
“The seller of these schemes will be long gone when the person’s
credit is permanently destroyed, or the title on their home is compromised,”
Attempts to contact Dorean Group have revealed that the address used
on trusts and other paperwork is a UPS Store mailbox. No record of the
company was found with the Secretary of State in California, the state
in which the company lists its headquarters, and there was no telephone
number for the company listed with information assistance. Mr. Heineman’s
phone number is unlisted.
This scheme is typical of other “mortgage elimination” schemes.
Most create documents that attempt to release mortgages then take out
second loans on the properties in order to pay perpetrators. These companies
often proclaim the entire U.S. banking system is flawed and use these
claims to persuade homeowners that mortgage elimination is legal and ethical.
The BBB advises businesses in the mortgage industry to advise their customers
to be skeptical of offers from any company claiming to eliminate their
mortgages for an advance fee. In addition, the BBB advises that homeowners
should consult an attorney before relinquishing their homes to an irrevocable
trust and agreeing to participate in these programs.
For more information or further inquiries, please contact Randall L.
Hoth, President/CEO at 414-847-60O0.