IL Mortgage fraud led to property changing hands 3 times as son of owner sat dead inside
Indigo Ace
This house was a steal
TRIBUNE INVESTIGATION: How fraud led to this property changing hands 3
times as son of owner sat dead inside
By Susan Chandler, TRIBUNE REPORTER Tribune reporter David Jackson
contributed to this report
February 24, 2008
The new buyers of a rundown graystone on the South Side showed up Jan.
9 to look at the house they won at a foreclosure auction. They took
the plywood off the front door and went inside to make sure the
utilities had been shut off. Then they called the police.
Sitting upright in the corner of a bedroom off the kitchen was a human
skeleton in a red tracksuit. Next to him lay a dead dog. Neighbors
told police the corpse was almost certainly Randy Johnson, a
middle-age man who lived alone in the North Kenwood house.
The cause of Johnson's death has not yet been determined, but it is
just one of the mysteries about 4578 S. Oakenwald Ave. Somehow,
Johnson's house was transferred three times to new owners without
anyone noticing he was inside. It's a story involving forged deeds, a
corrupt title company and a South Side family that has been under
investigation for mortgage fraud.
Left holding the bag is Countrywide Home Loans, the nation's largest
mortgage lender and a company whose practices are being scrutinized by
the Illinois attorney general's office. Countrywide made mortgages of
$450,000 on the property. Now it is likely to lose it all because it
financed the sale of a home whose rightful owner was in no condition
to sell.
The intrigue surrounding the Oakenwald house offers a glimpse into the
strange and murky world of mortgage fraud. Lenders duped into making
loans have every incentive to unload the properties, and almost none
to blow the whistle on wrongdoers. If borrowers or government
watchdogs fail to cry foul, the same home can change hands again and
again before anyone is the wiser.
"They foreclose. They don't care. They just foreclose," said Daniel
Lindsey, a supervisory attorney with the Legal Assistance Foundation
of Metropolitan Chicago. Most of the time, he said, the foreclosures
go through because no one with an interest has the legal firepower to
stop them.
As lenders prepare to move an unprecedented number of troubled
properties off their books, it's buyer beware with a vengeance.
Illinois Atty. Gen. Lisa Madigan has called it a looming crisis.
Lenders filed 91,000 foreclosures in Illinois last year, a number
expected to go higher in 2008. If fraud was involved in only a small
percentage of those loans, it still translates into thousands of homes
with troubled histories that could come back to haunt lenders, owners
and entire neighborhoods.
Last week, Countrywide vacated the recent sale of 4578 S. Oakenwald
and returned the buyer's money. That happened only after Cook County
officials announced they would fight to put the house back in the
Johnson family's name.
Known in neighborhood
All the longtime neighbors at the south end of Oakenwald Avenue knew
Randy Johnson and his mother, Arrellia Johnson.
Randy Johnson had never been quite normal, they said. He was
standoffish, almost aloof as a child. They said he didn't work except
for tinkering with cars in front of his house, and as he got older he
became reclusive.
There were "Keep Out" and "Private Property" signs posted all over his
small back yard, which was crowded with six city garbage cans. A metal
shopping cart blocked the concrete stairs to the basement door, and a
collection of jury-rigged chains and padlocks held outside doors shut.
Oakenwald neighbor Craig Cox remembers that it took years for Johnson
to respond to him when he waved. Scott Clayton, whose garage faced
Johnson's across the alley, recalled a few run-ins with him.
One time Johnson complained when Clayton was clearing snow from his
garage door and piling it next to a brick wall that served as
Johnson's back fence. Clayton didn't understand why until later, when
he saw Johnson climbing over the brick wall because his gate was
broken.
Whatever his quirks, Johnson was a neighborhood fixture, sitting on
his front stoop in a butterfly chair with his dog, Prince, beside him.
He loved animals and adopted strays.
Things got worse for Johnson, neighbors say, after his family began to
fall apart. One sister, Joe Ann Harris, died in 1996. Another sister,
Bobbiette, moved to the East Coast.
Then his mother died in 2001, and Johnson was left alone in the
three-story house.
In November 2005, Johnson was arrested for brandishing a "short sword"
when a female friend wanted to go home, police records show. He didn't
stop her, but police charged him with aggravated assault. He posted
bond and was ordered to return for a court date in early December
2005. Johnson never showed up, records show, and his bond was
forfeited.
When Johnson hadn't appeared outside for weeks in early 2006,
neighbors called the city's non-emergency number asking for well-being
checks, fearing he might have had an accident. Firefighters broke down
the front door and searched but didn't locate Johnson. His death
remains under investigation.
Red flags missed
Someone without Johnson's best interest at heart also noticed his
absence.
In October 2006, a deed was filed with the Cook County recorder of
deeds indicating Johnson's mother, Arrellia Johnson, had transferred
the house to a woman named Rhonda Evans.
The deed appeared to have been drawn up 10 years earlier, in 1996,
when Arrellia Johnson was still alive, which should have been a red
flag that something unusual was going on, real estate attorneys say.
The deed bears the signature and notary seal of Mae Evans, who is
Rhonda Evans' mother, Missouri birth records show.
Mae Evans also is the mother of Edwin Evans, a convicted rapist and
armed robber, who was indicted on mortgage fraud in September. (See
accompanying story.)
The deed is a "forgery and fraudulent," according to a motion filed in
Chancery Court by Cook County Public Administrator Michael Bender.
Bender's office represents the estates of people who die without wills
in Cook County.
To back up the forgery claim, Bender noted that the purported 1996
deed was drawn up on the stationery of Cook County Recorder Eugene
Moore, which is not possible because Moore did not take office until
1999. Jesse White was recorder of deeds in 1996.
Phony 'straw buyer'
That discrepancy did not stop the warranty deed from being recorded.
Rhonda Evans then sold the house to Donald Franklin of Harvey for
$450,000 in late January 2007, documents show.
On the same day, Franklin took out a $360,000 first mortgage and a
$90,000 second mortgage from Countrywide -- 100 percent financing.
Franklin was a "fraudulent straw buyer," who was working with the
Evanses, according to Bender's motion. The title company that handled
the closing, TriStar Title, has had its Illinois license revoked and
is under investigation for mortgage fraud in Missouri and Illinois.
The company has gone out of business.
Franklin never moved into the house. The next month, he stopped making
mortgage payments. Countrywide filed a motion to foreclose on the
property May 29, documents in the case show. Tribune efforts to locate
Franklin were unsuccessful.
Then Countrywide's attorneys asked the judge to speed things up
because the house appeared to not be lived in, a special status under
Illinois law known as "non-residential," documents show. Judge Carolyn
Quinn granted the motion, a decision that cut a month off the usual
seven-month period an owner would have had to reclaim the property.
In January, Countrywide held an auction for 4578 S. Oakenwald and
accepted a bid of $93,000. It was more than a 75 percent discount from
the original mortgage debt and one-third what a nearby vacant house
sold for a few months earlier.
Still, the sale needed a judge's final approval, which usually comes
about six weeks after an auction. Before that happened, the Cook
County public administrator stepped into the case, and Countrywide
decided to walk away from the sale.
Countrywide, which is based in Calabasas, Calif., declined repeated
requests for comment.
The public administrator's office has said it will open an estate in
the name of Arrellia Johnson, the last person who held legitimate
title to the house, and already is searching for her heirs.
Ultimately, the house will be sold and the proceeds split among those
who are legally entitled to a share.
A lengthy process
Chicago attorney Arthur Rosenson knows how hard it is to unravel a
fraudulent mortgage transaction.
For a year now, he has been fighting to undo another back-dated deed
with Rhonda Evans' name on it that was filed in October 2006, the same
month the Johnson house was transferred.
Rosenson's client is Mary Fredericks, an elderly Chicago woman who
moved into assisted living, leaving her longtime home at 9220 S. Union
Ave. unoccupied. Her niece noticed something wrong when she checked on
Fredericks' house and saw someone had changed the locks with her
aunt's belongings still inside.
The niece called the Chicago Bar Association for help, and the group
referred her to Rosenson, who is working on the case for a reduced
fee.
Rosenson quickly figured out that Fredericks had never met Evans, and
he asked Chancery Court Judge Peter Flynn to declare Fredericks'
signature on the deed a forgery. The judge did so in November.
Buyer called a victim
But the attorney is still trying to get title to the house back in his
client's name. The case is complicated by the fact that two months
after the deed to Evans was recorded, Evans transferred title to Ricky
Walker of Chicago.
Walker then took out a $123,000 mortgage from BNC Mortgage, the
subprime-lending arm of investment house Lehman Brothers. Lehman
shuttered BNC in August.
Walker is arguing he is a victim too. He bought the house in good
faith, fixed it up and has rented it to a tenant, said his attorney,
Robert Habib.
"Ricky is legitimate, and that's one reason why the judge entered the
order putting him back on the title. Ricky only met Rhonda Evans once,
at the closing," Habib said.
Next week, Flynn will set a schedule to hear arguments about who
really owns 9220 S. Union.
Rosenson is confident Fredericks will eventually win because the
original transfer was fraudulent.
"The system works. Within a year, we achieved a fair amount. It will
take another few months to clean it up completely," Rosenson said. "We
didn't beat them, of course, because by the time we found them, they
had taken out the loan. Right now there is a cloud on the title. No
third party would feel comfortable buying the home right now."
It could take many more months before the public administrator's
office gets to the same point with the Johnson home. Already,
investigators have located two possible grandsons of Arrellia Johnson,
both of them in prison. The search for other heirs continues.
As for Randy Johnson, who would have turned 48 in December, he will
benefit in a way. The public administrator will bury him privately in
the South Side cemetery close to where his mother is interred.
It's not exactly a happy ending, Cook County officials say, but it is
better than the pauper's grave that likely would have awaited him
otherwise.
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Copyright © 2008, Chicago Tribune
http://www.chicagotribune.com/business/chi-sun_fraud_0224feb24,1,4086473,full.story
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