Chicago Nonprofit “Neighborhood Housing Services” Accused of Mortgage Fraud Michael Volpe November 3, 2011 Rebel Pundit 12 Comments 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. 12 Responses Billy November 4, 2011 Another typical “nonprofit.” Facilitating the problem themselves that they are in business to prevent. Reply kevin November 4, 2011 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. Reply Karlos November 5, 2011 This is sad! I hope God deliveries double for Henderson’s trouble! Reply vesta hill November 5, 2011 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. Reply Katrina November 6, 2011 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. Reply Deb November 8, 2011 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. Reply maria November 9, 2011 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. Reply yvette November 9, 2011 IT APPEARS NHS has broke more laws than ACORN. makes you go hmmmmmmmm. Reply meeme November 26, 2011 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. Reply maria December 2, 2011 Meeme, You better say it. People perish for the lack of knowledge that was good info. something to think and check. Reply khabartools.com July 2, 2013 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. Reply Wilma Kimbrough August 1, 2013 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. Reply Leave a Reply Cancel ReplyYour email address will not be published.CommentName* Email* Website Save my name, email, and website in this browser for the next time I comment. Currently you have JavaScript disabled. In order to post comments, please make sure JavaScript and Cookies are enabled, and reload the page. Click here for instructions on how to enable JavaScript in your browser. Notify me of follow-up comments by email. 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Billy November 4, 2011 Another typical “nonprofit.” Facilitating the problem themselves that they are in business to prevent. Reply
kevin November 4, 2011 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. Reply
vesta hill November 5, 2011 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. Reply
Katrina November 6, 2011 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. Reply
Deb November 8, 2011 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. Reply
maria November 9, 2011 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. Reply
meeme November 26, 2011 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. Reply
maria December 2, 2011 Meeme, You better say it. People perish for the lack of knowledge that was good info. something to think and check. Reply
khabartools.com July 2, 2013 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. Reply
Wilma Kimbrough August 1, 2013 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. Reply