Illinois regulators shut down a 'mortgage rescue' scam that defrauded vulnerable Chicago metropolitan area residents of their homes. The alleged scheme preyed on homeowners at risk of foreclosure and conned them into signing over the title and any earned equity from their properties, allowing investors to purchase the homes at a fraction of their market value.

“It’s unthinkable that any business would exploit people’s vulnerability and use it to cheat them out of their most valuable asset. Not only is it appalling from a moral standpoint, but it’s illegal. For any lender out there who might think they can get away with that kind of fraud, let this regulatory action serve as a reminder that we will not tolerate violations of our consumer protection laws,” said Gov. Blagojevich.

Following the Governor’s direction to aggressively enforce consumer protections, the Illinois Department of Financial and Professional Regulation (IDFPR) issued an emergency suspension of the loan originator registration of Charles T. White, Jr., and revoked the license of Mutual Trust Funding Corporation. IDFPR shut down seven title insurance agencies being charged with complicity in the “mortgage rescue” operation.

In a series of complaints, IDFPR charged that Mutual Trust, Charles White and seven title insurance agencies worked together to defraud unwary homeowners. Each of these entities has the right to an administrative hearing on the charges before the Department’s actions are final.

IDFPR alleged that in his capacity as a loan originator at Mutual Trust, Charles White approached homeowners facing imminent foreclosure and offered to find an investor who would borrow the money from Mutual Trust to purchase the property prior to foreclosure. Homeowners were told the new investor would then lease the home back to them while they attempted to regain their financial footing, and were promised that the new investor would repay the delinquent mortgage account and eventually resell the property back to them.

Instead of keeping the promise to repay delinquent mortgages and allow the original homeowners to re-purchase their properties, IDFPR found that up to $1.5 million of the loans arranged by Charles White through Mutual Trust, which should have been paid to the original lenders and previous owners, were diverted to a real estate management company called “Eyes Have Not Seen,” owned by White.

Further, documents detailing disbursements to previous lenders and current owners, which should have been notarized and filed with appropriate state, federal and financial offices had been tampered with to show that the new owner was in fact White, through his company “Eyes Have Not Seen.”

These fraudulent transactions could not have been completed and the money could not have been siphoned to White’s company without the explicit and active participation of the seven title agencies closed earlier this week. All seven of the title agencies are owned in part by Christy Jepson and/or by Patricia Jepson (his wife). The companies are: All American Title Agency, EJF Title Agency, Palatine Title Agency, Popular Title Agency, Senior Title Agency, Skyline Title Agency, LLC, and Title Zone.

IDFPR also charged that White failed to disclose to his customers that he maintained a financial interest in one of the seven interconnected title agencies shut down earlier this week, Title Zone. Elnora White, White’s grandmother, is a 30% owner of Title Zone, and All American owns the remaining 70% of Title Zone. White is the executor of Elnora White’s estate. Additionally, the Department found that White used these companies exclusively when closing mortgages relating to his ‘rescue’ transactions.

“Illinois consumers have the right to know that when they do business with companies licensed by our state, they will receive the best possible service by ethical and appropriately trained professionals,” said Dean Martinez, Secretary, Financial and Professional Regulation. “We will use all the tools available to us to discipline companies which violate the laws and regulations designed to protect Illinois homebuyers and help homeowners retain their properties.”

IDFPR recommends that homeowners in financial difficulty should first talk to their mortgage lender to explain the situation and to see if the loan can be restructured or refinanced. If the lender is not responsive, an owner should consider selling the house or engaging the services of a reputable real estate firm.

Regardless of the circumstances for selling or refinancing a home, it is extremely important that homeowners:

Read everything before signing and get all "promises" in writing. Verify all the figures at the closing for accuracy and completeness. Some schemers will offer to complete paperwork for the homeowner or ask that he or she sign a stack of documents, supposedly to secure a new mortgage. Victims later learn they signed a quit-claim deed to their home;

Be wary if a foreclosure "rescuer" or mortgage "broker" discourages the homeowner from contacting the mortgage company or an attorney;

Never sign a contract under pressure and never sign away ownership of property. Remember, signing over the property deed to someone else does not necessarily relieve the original owner of his or her obligation to repay the loan.

Ask a trusted family member, attorney or a financial professional to review paperwork before signing.