Homeowners Hurt by Mortgage Scam Seek Role in Ditech Bankruptcy
(Bloomberg) -- Homeowners in Chicago cheated by a mortgage fraud scheme are seeking to form a committee to protect their interests in the bankruptcy of Ditech Holding Corp., the company that owns their loans.
The Investor Protection Center at the Northwestern Pritzker School of Law filed a request for the creation of a committee of consumer creditors to represent borrowers who were victims of the scheme. The fraud targeted elderly African-American homeowners and coerced them into reverse mortgages with no benefits that left some in foreclosure, the filing states.
Ditech, the mortgage lender and servicer led by Tom Marano, filed for bankruptcy in February and has proposed a plan to restructure its debt that would release it from liabilities such as lawsuits filed by consumer borrowers. J. Samuel Tenenbaum, a professor of law at Northwestern, said the homeowners he helps represent will be harmed by such a release of liabilities.
The center's clients “are elderly, disabled, and lack the financial means to obtain representation, are the most vulnerable and at risk of harm in Ditech bankruptcy matters," Tenenbaum, who is the director of the Northwestern's Complex Civil Litigation and Investor Protection Center, wrote in the filing Friday.
Representatives for Ditech declined to comment.
Mortgage Fraud
Another issue that jeopardizes consumer rights is that Ditech alleges foreclosures should not be halted by the automatic stay ordered by bankruptcy court, according to the filing. Two of the homeowners who Tenenbaum represents are currently in litigation with the Ditech unit, Reverse Mortgage Solutions Inc., after the company foreclosed on them, the filing states.
Federal prosecutors charged Chicago businessman Mark Steven Diamond in 2017 in a $7 million reverse mortgage scheme that targeted elderly homeowners. Reverse Mortgage Solutions was a lender or a servicer on some of the loans made in the alleged fraud, Tenenbaum said.
“These are elderly African-American people who did it right, they saved up, owned their home, brought stability to their neighborhood,” Tenenbaum said over the phone. “This guy stripped away their equity. It's really sad. It's really heartbreaking.”
To contact the reporter on this story: Josh Saul in New York at jsaul15@bloomberg.net
To contact the editors responsible for this story: Rick Green at rgreen18@bloomberg.net, Nikolaj Gammeltoft, Shruti Date Singh
©2019 Bloomberg L.P.
-
Talking Points This Week: Tech Nerves, FII Buying, And A Faraway Banking Shock
The global markets are not shining this Diwali. The exception in the large markets is, India.
-
Midterm Rally Lasted A Day. The Hard Reality Of A Divided US May Last Two Years | Opinion
Between a contested AI boom, a debt ceiling that arrives in 2027 and a president with every incentive to act alone, the next two years may prove more volatile than the first day's rally suggests.
-
Blue Wave Will Derail the AI Trade but Won't Dismantle the AI Era | Unhedged Position
The Democrats' sweep of the US Congress will see politics collide with economic forces both over the long and short term.
-
It's Time To Take The GST Council's Bet On Trust Global
Payment records can prove India's services exports, and clear, proportionate rules can bring foreign digital sellers into the tax net.
-
Opinion | India at 38: From Innovation Overperformer to Innovation Powerhouse
India now has 453 VC-backed deep science startups, 18 of them late-stage, after 117 percent growth since 2020. Laurus Labs, at USD 9.3 billion, is the most valuable deep science company in any middle-income economy outside China.
-
Navigating Energy Crossroads: S Jaishankar's Call For Diversified Supply Chains At G20 Ministerial Meeting
As geopolitical fault lines continue to test maritime trade routes and commodity flows, Jaishankar's message remains pertinent: true economic resilience requires open markets, protected transit lines, and a genuine commitment to multilateral cooperation rather than coercion.
-
Indians Are Travelling, But Not Every Journey Is A Holiday | The Week In Whys
Pilgrims, patients and working women are the real travellers, and the system hasn't quite caught up with them.
-
Getting To Work Costs Women More | The Reason Why
It is not just about women paying more than men. It is about women paying much more in cities than in villages.
-
AI Bias In Investing Cannot Be Eliminated, But It Can Be Governed
Framing is a particularly important example as identical financial information presented in terms of gains rather than losses can lead an LLM to reach a different assessment.
