- April 30, 2004
- All Issuing Offices
- Mortgage Avoidance Plan/Sham Releases
Escrow/closing and title examiners should be alerted to this scheme, or any scheme involving the steps described below, since some might otherwise overlook an unauthorized substitution of trustee and pass on a potential failure of title. Especially troubling is the fact this scheme is marketed to unsophisticated consumers.
" America 's Advantage," is offering a "Loan Elimination Process" by which financial institutions (banks and mortgage lenders) may be forced to cancel consumer mortgages and deeds of trust, without payment on secured promissory notes. Once a loan is eliminated, the consumer is free to refinance and use the plan again, since lenders cannot legally discriminate against America 's Advantage clients.
It appears the "procedure" may have several variations that should be of concern to title underwriters. Here are the steps:
1. Owner/borrower executes a substitution of trustee for the deed of trust against his or her property (which, of course, the owner/borrower has no authority to do). Substitution of trustee is recorded.
2. Substituted trustee executes and records a release (or reconveyance) of the deed of trust, or
3. Substituted trustee records a notice of sale pursuant to deed of trust, followed by a trustee's deed in favor of a third party (or trust). It appears the trustee's deed does not follow a legitimate foreclosure sale, and the third party is a 'straw man' or otherwise holds the title in trust for the former owner/borrower.
4. Later, property is refinanced (or possibly sold) with new title insurance being issued to include coverage against the supposedly released or foreclosed deed of trust. (Note the America's Advantage website stresses need for new title insurance, to provide for defense and indemnity against claims by the former lender.)
On its website, America's Advantage appears to have an address in Midvale, Utah, although its telephone and fax numbers use an area code dedicated to New Hampshire. Here's the link to their website: http://lep1121.americasadvantage.us/
If you have any questions, please contact the following individual:
Claims & Litigation Paralegal
Stewart Title Guaranty Company
1980 Post Oak Boulevard, Suite 710
Houston, TX 77056
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