Michelle Kemper Brownlow: In 2006, in a small Amish town in southeastern Pennsylvania, a single mom of two signed on the dotted line. Having a college degree in business, she had covered all her bases and was certain that her plan to refinance was the best option for her family.
Ten years ago, Melissa Miller suffered a brain hemorrhage that left her comatose. When she came out of her coma, she spent time in a rehab facility relearning how to walk and talk. Years later -- after trying to return to work but finding herself unable -- she was struggling to pay off bills. She dipped into her savings because she was unable to resume her executive position at a large Philadelphia-based company.
When her pen hit the paper the day she refinanced with Head Mortgage Company, she knew that it was her last chance to save the house she lived in, the shelter for her children, the home that had been in her family for over a century. What she didn't know was that Head Mortgage was so crooked it would later be deemed by the California court system "Operation Homewrecker."
This company that advertised itself as a reputable mortgage solution was making millions destroying people's lives. Head Mortgage executives had devised a plan wherein homeowners would make a monthly rent payment that was less than the terms of their mortgage, thus repairing bad credit. As court documents confirm, the victims were told that if the payments were kept up, the investor would disappear in a year -- and they would be the sole owners of their property again.
I sat down with Miller to find out how her nightmare transpired.
Michelle Kemper Brownlow: The first question most people will ask is, why was there an existing mortgage on a home that had been in your family for a century?
Melissa Miller: We -- my ex-husband and I -- built an addition on the existing stone home, in order for me to take care of my grandmother who had Alzheimer's (she just recently passed). I have a modest life with my children. The mortgage was not for clothes, credit cards, cars or vacations. It was for a first-floor addition for my grandmother to live in order for me to take care of her. I had a mortgage previous to this; my goal was to make it more manageable (adding taxes and insurance).
MKB: After signing the refinancing papers with Head Mortgage, when did you realize something was wrong?
MM: I was getting notices because taxes were not getting paid. Finally, I did get word that the mortgage had been satisfied. I started to feel better. However, the taxes were not paid as they were supposed to be. I started really calling my contact at Head Mortgage a lot. I then got the notice that my taxes definitely were not paid.
MKB: So you were starting to feel like something was wrong. When were your concerns validated?
MM: When I received an e-mail from the Head Mortgage contact, telling me the company was seized by the FBI and IRS.
MKB: What did you do then? Who did you turn to?
MM: I found an attorney -- Bruce Baldwin, of Wolf, Baldwin & Associates -- immediately, who has been with me from the beginning. I also made hundreds of phone calls and e-mails to get to the bottom of all of this. I have records of all of that correspondence. I made a trip to the courthouse Recorder of Deeds to investigate on my own. I signed up for an online account so I could monitor if my deed was changing. I checked faithfully every day, for fear the shoe was going to drop and my house would not be mine. I called Washington Mutual [the bank the mortgage was through] to try to get information, but they said they could not discuss anything with me.
MKB: So, in the end, what had really happened to your home?
MM: Chester County deed records show that I "sold" the house to Kenneth and Marjorie A. Sly (people I have never met) of Lancaster, California, for $315,000 on September 12, 2006 -- although I received no money for that "sale." A quitclaim deed -- typically used to convey property among family -- was filed. The quitclaim deed on my house was not recorded with Chester County until February 15, 2007.
MKB: What about the Slys? You couldn't work this out with them?
MM: I wish, but apparently they are part of this scheme. In July of 2007, they filed for bankruptcy. They claimed assets of $1.6 million and liabilities of $1.65 million. Their combined annual income was $96,000 and they had mortgages on five houses, including mine and one in Cleveland Heights, Ohio, valued at $1.47 million.
MKB: Can you explain how this scam worked?
MM: Based on court documents, it went something like this: The Slys were what they call "straw buyers," meaning that their names appeared on the loan documents and deeds. Head Financial Services and its cohorts paid the straw buyers and added their names to property titles. According to federal documents, Head Mortgage applied for mortgages from major lenders to get the maximum cash equity from the homes, then they shared the proceeds and the "rent" that victims like me were paying. They made my house almost three times its "worth" to pocket the money.
MKB: "Victims," plural? You weren't the only victim here?
MM: No, there are 350 victims, to be exact! This can happen to anyone. These people were very good at convincing me that the right thing was being done and that I was in good shape and would be in even better shape after a year of paying this mortgage. A lot of single moms have been destroyed by mortgage scams like this.
MKB: So how did a judge not side with the victim -- you, in this case?
MM: County Judge Robert Shenkin agreed that Washington Mutual and I had been "innocent victims of fraud," but he determined in December that the burden of loss fell on me, because I had "agreed to the arrangement." I don't know what else I can do. I don't want to lose my home. I've got nowhere to go.
MKB: Your house is going up for sheriff's sale in July, correct?
MM: Yes. But I'm not going down without a fight. This is MY house. I reached out to Pennsylvania State Rep. Tim Hennessey; Pennsylvania Senators Casey and Spector; Pennsylvania Congressman Gerlach; Ann Weintraub, Sr. Attorney for the FTC; IRS Special Agent Chris Fitzpatrick; FBI Special Agent John Summercamp; Pennsylvania Governor Rendell's office; U.S. Disability Advocates, California victims unit; the U.S. Justice Department and the U.S. Attorneys Office. And I spoke to Joseph Clark of the Pennsylvania Mortgage Fraud Task Force.
MKB: Where are these Head Mortgage people?
MM: Nineteen were indicted and most of them pled guilty, which means probation and country-club jails. [Charles] Head -- the mastermind -- continues to prolong his day in court. He doesn't even have as much as an ankle bracelet; he's just out on bail. But his passport was taken.
MKB: Where is your family in all of this?
MM: It's just me. My extended family turned their backs on me when they assumed I was making a profit on the sale of the family home.
MKB: So, what's the end of this story?
MM: I don't know. I really don't know.
Schemes like "Operation Homewrecker" are big business these days, causing annual losses of between $4 to $6 billion. These schemes don't prey on the wealthy; they're after those who have fallen on bad times. They sink their teeth in and take them down. There are industry insiders who continue to practice "equity skimming" -- which is what brought Miller and her children to their knees. They are out there. Beware!