The F.B.I. has been searching for Charles Head, who operated out of Southern California and stole millions of dollars from homeowners, leaving them without their homes and sorting through a maze of paperwork. Mr. Head’s various companies advertised on the internet and through unsolicited faxes to mortgage brokers and the like. He and his companies victimized hundreds of people, including about 15 Washingtonians.
All his scams were directed at people who were behind on house payments — people in distressed circumstances and often frantically looking for a means of saving their homes. There were many variations on the standard scam. Generally though the it was proposed that the debt would be paid off if the victim conveyed title to a third person who would hold title for one to three years, at which time the victim would buy the house back. Meanwhile the victim would stay in the house paying rent. Usually it was acknowledged that the price to buy the home back would be slightly higher than the balance on the loan that was being paid off.
The third party to whom title would be conveyed used his or her credit to pay off the victim’s mortgage. (This scam could only be done when credit was reasonably easy.) This “investor” would then be in title and would wait to convey the property back to the original owner at a profit. The “investor” understood that one of Mr. Head’s management companies was collecting the rent and paying the mortgage. Typically the “investor” was not sophisticated in real estate transactions and did not understand the details of what was occuring with the raft of papers.
Meanwhile Mr. Head arranged for an appraisal at the highest amount he could get and applied for a loan for the “investor” at the full appraised value of the home. When the “sale” to the “investor” closed the loan proceeds were used to pay off the victim’s mortgage and all of the rest of the money was wired to Mr. Head. When the victim paid rent after closing, Mr. Head kept al the money and paid nothing on the mortgage taken out by the “investor.” After a few months, the mortgage company would begin a foreclosure, usually taking title to the home from the investor and evicting the homeowner. The investor’s credit is ruined the victim’s is homeless and Mr. Head ends up with all the money.