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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

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 

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.

12 Responses

  1. Billy

    Another typical “nonprofit.” Facilitating the problem themselves that they are in business to prevent.

  2. kevin

    I’ve witnessed Mr. Henderson and his wife endure the termoil associated with NHS preditory pratice and personly I wouldn’t recommend or use the there services. Just another example of a so called “nonprofit” organization who practice the very thing they claim to protect people from.

  3. vesta hill

    All not for profit organizations need overseeing as to how the funds that are given them is being utilized. This is taxpayer money and we need to know what they are doing with the funds they are supposed to be doing. we need to stand against this kind of corruption with all not for profit organization. IF YOU DON’T STAND FOR SOMETHING YOU WILL FALL FOR ANYTHING. LET’S STAND.

  4. Katrina

    I been knowing Mr Henderson and his wife for a very long time
    I’ve seen the suffering and turmoil they have indured with
    This morage company. Something needs to be done an done fast .
    Mr.Henderson and his wife should be compensated for all the suffering
    and stress I can go on and on of what they have been through with
    This company. I pray that God turn this whole situation around for there
    Good no one deserves to go through this.

  5. Deb

    I am amazed that with a major election year looming in sight, our government representatives are not more dilligent in dealing with the needs of the middle class that they say they represent. Politicians, if the words you have told us are true, then you will take Mr. Henderson’s cause to heart. If all we have received from you is a lot of hot air, then we don’t expect anything to be done in his behalf. Do the predatory lenders win or are your constituents to be protected? These are the types of cases that tell us who to vote for.

  6. maria

    I totally agree with Deb it certainly points to who we should be voting for. if they won’t do anything when issues are bought to them why should we believe the rhetoric. this organization is suppose to help the low to moderate but it appears they need more overseeing than whats being done. If it happen to one what makes us think it hasn’t happen to others. We as citizens need to come together against organization like this.

  7. meeme

    This NHS is bigger than it looks the headquarters is supposed to be in California and they have been going into urban neighborhoods for years.

    Check the secretary of state office and see who the board members are. Check who also financed their homes? One scheme is using CDC’s to get property that was in Land Trust and before that on dangerous buildings list from 20 years back. Hide the property removing it from county land records, then it shows up after money comes in from Washingon D.C. to do projects, get it tax abated the get certain local banks to approve loans for the property.

    Former city council have approved this project maybe 30 years ago and few folks know of this scheme. weird things happen to homes in the area to make it possible to grab this land without paying the owners including sub=prime loans which were deliberately targeted for neighborhoods for urban renewal. They do this knowing in time the loan will default, those who don’t bite and take a loan the city may write up for code violations and force the loan for home repairs, others they may try to condemn the property or youse emminent domain. There’s lots of folks making milllions and it’s not the jokers running the CDC’s they are just the patsies, They’ll do the grunt work and geyt a few dimes but it’s there bosses and you have to see who controls supports the candidates with cash then you might know the deal it’s maybe some one whose been in the mortgage lending business for dozens of years who has the right connections to control congress and those to stop regulations Also check on who really owns the senior citizen high rises? This thing is bigger than you think and has gone on because of the money involved see if you can get a true account of where the property tax money goes? Lots of folks being paid to keep this thing in check from judges to congress.

    The area that this is happening in nationwide was part of a urban development plan from the 1940-1950’s and this is another reason for all these bad loans.

    The government was paying for this thru HUD. There’s documents going back listing all the cities this would happen in. This was planned folks. A big money maker to take back neighborhoods, break up families and ruin people financially and credit wise.

    • maria

      Meeme, You better say it. People perish for the lack of knowledge that was good info. something to think and check.


    We’re a group of volunteers and starting a brand new scheme in our community. Your site provided us with helpful information to work on. You’ve performed a formidable process
    and our entire community will probably be grateful to you.

  9. Wilma Kimbrough

    In 2004 I too was a victim of Neighborhood Housing Service fraud. I took out a mortgage loan with NHS after my previous mortgage holder Fairbanks Capitol was charged with defrauding their customers and was forced by the federal government to close. I refinance my house with Neighborhood Housing Service and was giving a grant in the amount of $27,000 for property repairs. The client is given a list of contractors of which to choose from. However, chance are you will most likely end up with the contractor that their Construction Specialist select. I ended up with the contractor Columbus Construction Company and the nightmare began. Instead of performing repairs on my home they came in and literally demolished my home. The next day I sent a letter to NHS complaining about Columbus Construction, however, it fell on deaf ears. I sent letter after letter until I was finally forced to contact Attorney General Lisa Madigan’s office. Eventually I received a response from NHS attorney, he delibertly lied about how I came in contact with NHS and tried to falsify and mislead Attorney General Madigan. He eventually retracted every statement he had made followed by an apology. Nevertheless, Columbus Construction performed such shoddy work on my home I was forced to pay out of pocket to correct the mistakes and damages they left behind. I could not get NHS to send someone out to do a walk-through so that they could see the damages that Columbus Construction did to my home.


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