A Westside Chicago man is accusing the Neighborhood Housing Services (NHS), a local non-profit regularly praised for protecting low and moderate income folks against predatory lending, with using the very same predatory lending tactics they claim to fight against. Beyond that, he claims that a plethora of government bureaucracies and local, state, and national politicians were unwilling or unable to help at all.
The NHS website reads, “NHS offers free foreclosure prevention workshops, counseling, and ‘Fix Your Mortgage’ events throughout Chicagoland. Gather the required documents and see if you qualify for a loan modification.”
Michael Henderson of 2949 West Washington said he initially went to the nonprofit because Mayor Daley’s office recommended them and because NHS was featured in a number of publications as leaders in foreclosure prevention.
Now, eight years later, Henderson says he was the victim of the very predatory lending tactics that NHS publicly claims to help protect homeowners from.
Henderson charges that NHS inflated his income, including even adding rental income (even though the property was a single family residence that was gutted at the time of the loan), and put that inflated income figure on all of his loan documents. Henderson says that he made just over $50,000 yearly at the time of the loan. Yet, the income listed on his application was $5232.12/monthly ($82,785.44 yearly) and the application claimed he would receive $1,650 in monthly rent. Henderson’s home is a single family residence that was gutted and unlivable also at that time, making it impossible to have any renters.
The recorded mortgage has a legal description that is inaccurate, adding about 1600 square feet to the lot. That extra land includes three additional empty lots the city now owns, according to the Recorder of Deeds office. Finally, the loan was a balloon that popped after only one year, a most unusual loan for a group that claims they protect against predatory lending.
Furthermore, Henderson says that for the last eight years he has been unable to receive even one mortgage statement or escrow analysis. Payoffs would routinely take months to prepare even though they are often done in real time by competitive banks.
Most insidiously, Henderson charges that he was allowed to make a payment of $185.83 for four years straight without once being penalized as late, even though $185.83 would be a negative rate on a $352,000 loan. $185.83 is, coincidently or not, the exact amount of the monthly taxes and insurance payment when this loan closed.
According to an analysis of the closing documents Henderson provided, numerous predatory and fraudulent entries were discovered. For instance, on the second page of the RESPA closing form, the first document in the entire closing document, there’s an entry that says, “construction escrow is held by Neighborhood Lending services.” NLS is the lender of record, at least on some of the documents. Yet, the very definition of an escrow is a third-party. The bank lending the money is clearly not a third-party, thus can not act as an escrow. As a result, Henderson has never seen a list of the contractors paid out of this loan or the amount paid to each. This would have made it impossible for him to track how much he owed.
The title company on this loan, Chicago Title and Trust, declined to comment on anything related to this story. NLS charged Henderson more than 4 percent in closing costs, even though the organization claims to be a non-profit.
While he never received a mortgage statement, his servicer, MB Financial, accepted payments for $185.83 monthly until 2007, three years after the loan was to have ended, according to the mortgage documents, and provided a receipt for acceptance. Henderson supplied numerous copies of these receipts. In a letter dated January 24, 2005, they made this startling admission: “the payments that you make to MB Financial in reference to your loan with NHS are purely to ensure the insurance (homeowner) is paid and that the real estate taxes are paid on the property.”
By doing so, MB Financial was effectively confirming that Henderson’s monthly payments were indeed strictly to cover the monthly insurance and property taxes.
Some closing documents list Neighborhood Housing Services while others list Neighborhood Lending Services. While both are part of the same organization, they are not one and the same. Only NLS has a proper mortgage license, and so NHS should be nowhere near any closing documents for a mortgage.
Taken together, these signs point to extreme negligence and shoddy service at best on the part of NHS. As Henderson says, “the definition of a loan is something somebody expects to get back,” continuing, “if all they were collecting was for my insurance and my taxes, they weren’t expecting to get paid back.”
In court filings Henderson charged “extrinsic fraud.” According to the legal definition, extrinsic fraud is defined as “fraudulent acts which keep a person from obtaining information about his/her rights to enforce a contract or getting evidence to defend against a lawsuit.” Henderson claims that because he never received monthly mortgage statements, yearly escrow analyses, and payoffs on time, this has barred him from “obtaining information about his rights.”
Since 2003, Henderson has also, with no success, reached out to nearly every government bureaucracy with any potential jurisdiction for relief. He went to the Cook County State’s Attorney, Anita Alverez, and the U.S. Attorney for the Northern District of Illinois, Pat Fitzgerald, and they both did nothing. Lisa Madigan, the Attorney General for Illinois, called the case a “private dispute,” and also refused to act.
Henderson also sent correspondence to the Office of Banks and Real Estate, Department of Housing and Urban Development, Treasury Department, Secretary of State Jesse White’s Office, both his senators, his congressman, state senator, state representative, and even his Alderman Bob Fioretti. Fioretti says he’s been frustrated by the bureaucracy and no one else did anything at all.
Only Dick Durbin’s office changed their stance upon being contacted by Austin Works when Christina Mulka, press secretary for Dick Durbin, issued this statement, “We reviewed the information and determined that the response sent from our office did not adequately address Mr. Henderson’s concerns. In order to address his concerns as soon as possible, I would encourage Mr. Henderson to call our Chicago office” and gave the office number. Henderson submitted the information and was given a case number about ninety days ago but hasn’t heard back from the office yet.
Henderson approached the U.S. Senator from Illinois Barack Obama in 2006. Obama’s office responded two years later with his office saying, ”Thank you for your recent correspondence to Senator Obama’s Chicago office. However, while we are committed to assisting all constituents, we are only able to assist in matters of federal concern.”
Ironically, in 2009, President Obama passed The Fraud Enforcement and Recovery Act of 2009. The bill begins, “To improve enforcement of mortgage fraud, securities fraud and commodities fraud.”
In Henderson’s letter to Obama, he accuses NHS of systemic mortgage fraud.
Finally, in March 2009, the toll became even more personal when Henderson says his body literally gave way. He collapsed on his way to work, spent about a month in the intensive care unit, and has had to go on disability ever since (Henderson had worked for the city prior to that.)
The physical stress he was under wasn’t helped by the callous actions of certain individuals at NHS. According to Henderson, he was forced to urinate on himself during what he characterized as a contentious confrontation between him and NHS CFO Kathleen Walsh when she had security block his way to a bathroom right after he was released from the hospital.
Then, in 2010, his U.S. Congressman Jesse Jackson finally gave him some support with a letter to NHS that read in part, “He (Henderson) requested but has not been provided a number of documents from NHS, including a copy of the promissory note he signed on May 30, 2003. Further, he claims he has not made a payment in over seven years and he is concerned that his home will be taken from him. Mr. Henderson seeks copies of the documents he requested and information regarding the status of his loan.”
Within three months of receipt of this letter, NHS turned around and filed a foreclosure notice on Henderson. Henderson says he was never formally served and only found out about the foreclosure proceedings because a foreclosure attorney sent him a flyer. It came nearly seven years after the loan documents indicated the loan would end. Henderson had never been given any of the documents he was entitled to. Nor were his payments, inflated income, or improper escrow holder ever explained.
NHS and NLS, through their attorneys, said they had no comment for this story.
Eventually, Henderson wound up in the courtroom of Judge John C. Griffin and, after a series of hearings and motions, on October 13, Griffin heard an NHS motion for summary judgment—essentially giving them his house without even a full hearing. Henderson had filed all the proper paperwork, including stacks of briefs, copies of documents like the plot survey, as well as exhibits. He put together overwhelming evidence of fraud, deception, and numerous inconsistencies by NHS.
Despite all this, Judge Griffin wasn’t buying any of it. Griffin said he didn’t see anything in the documents Henderson submitted to him that rose to a “material” violation of any codes against fraud. Griffin ruled for NHS summary judgment, and Henderson will have to vacate this property on January 14, 2012, unless he’s able to win on appeal.
“If I steal something from you, I’ll be arrested, how are they (NHS) allowed to commit crimes,” said Henderson. Henderson says that this supposed nonprofit has failed to fulfill its mission with regard to his loan. Furthermore, he says his plight has been ignored by almost every single representative, all the way up to the president of the United States.