Washington County families are accusing an Oregon City man of fraudulently taking their homes
First in a series on the local fallout from the collapse of the sub-prime loan market
A year ago, Yulanden Moore owned a two-story, five-bedroom house in Aloha with her husband, Jimmy, where they helped former prison inmates get back on their feet.
But now, the Moores are the ones relying on the kindness of others.
That's because when the Moores fell behind on their mortgage payments last year, they signed up with a 'foreclosure rescue' service that promised to turn their financial nightmare around through a complex series of financial deals.
But instead of ensuring that the Moores could keep their house, the deal they signed with DK Investments gave ownership of their house over to a group of investors and had the Moores 'rent' their house back.
The Moores fell behind on the rent, set higher than the previous mortgage payment, and were eventually evicted.
'It's really devastating. I mean, you're in your late 50s and you're homeless,' Yulanden said.
Help could be on the way, but it is too late for the Moores.
Last month, the Oregon Legislature passed House Bill 3630, which prevents foreclosure rescue agents from taking ownership of houses and installs a 72-hour cooling-off period for people who sign up with them. While the sub-prime mortgage collapse has gathered the spotlight, homeowners all over Oregon have become the targets of last-ditch mortgage crisis services.
'People who run 'foreclosure rescue' operations are the lowest of the low,' nationally known mortgage expert Richard Hagar said during a seminar in Portland last month. 'They offer an individual in dire circumstances false hope - and then shaft them.'
The Moores are suing Jeremy Killian, the Oregon City man behind DK Investments, and his associates, for $1.1 million in damages.
In a lawsuit filed in Washington County Circuit Court in April 2007, the Moores allege that Killian's offer of help was a ruse and that he intended all along to take their property.
For Killian's part, he said he genuinely tried to help people whose options had dwindled, and that he lost money on at least one of the mortgage deals.
Two other property owners, Enrique Moreno, of Hillsboro, and Ron Knox, of Portland, have filed similar suits. Killian's former business partners have also filed a lawsuit against him, accusing him of siphoning off money into his own accounts and participating in 'unlawful business practices.'
And a lawyer at the U.S. Trustee's office has lodged filings in bankruptcy court that accuse Killian of understating his assets and filing for bankruptcy to avoid the flurry of lawsuits. In the bankruptcy filings, the Trustee's office states that Killian and his wife, Mikkel Lesser, spent hundreds of thousands of dollars on jewelry, clothing and trips to Hawaii and Las Vegas between 2005 and 2007, when Killian's foreclosure rescue business was booming.
Yulanden Moore said it all started when she fell behind on her mortgage payments.
The Moores had gotten a mortgage through a friend, Lori Lucas, in order to get a lower rate.
The mortgage on their house was in Lucas' name, but the Moores paid the payments and taxes and lived in the home.
Lucas started having financial troubles, Moore said, and they decided the best thing to do was to get the house back into the Moores' names. The family's first effort to secure an independent mortgage on their house failed when a lender turned them down.
Before they could secure another loan, the Moores fell behind on their mortgage payments and the mortgage company began the foreclosure process on the house.
Moore said she called a company known as United Home Solutions, Inc., based in Happy Valley, to help her avoid foreclosure. United Home Solutions directed her to Killian's company, DK Investments.
She said both firms told her they would help her keep the home.
'My clients believed their property was being saved from foreclosure by a refinance, basically,' not that they were handing over ownership of their house, said Raylynna Peterson, the Moores' attorney.
The plan was to have the Moores and Lucas meet with a DK Investment representative and sign paperwork that would put the house back into the Moores' names and arrange for DK Investment to help them stay out of foreclosure.
But Moore said the DK agents, Jason Lesser and Killian, changed the plans. They had Lucas come alone to sign the paperwork, still thinking it would put the house in the Moores' name.
But that didn't happen. It wasn't theirs in the first place.
Instead, the house was signed over to investors Daniel and Trisha Garvey.
With the house now legally in their possession, the Garveys started charging the Moores rent - $700 more per month than the mortgage payments the Moores couldn't make before.
When the Moores couldn't make their lease payments, Killian and the investors evicted them from the $285,460 home.
'We were put out of our home,' she said. 'We're homeless … We lost everything we had. We had five bedrooms worth of stuff. Now we're staying with people from our church.'
Angela Martin of Our Oregon, a group that worked hard to get a package of mortgage reforms passed through the Oregon Legislature in February, said Oregon's rules are partly to blame for the mess the Moores are in.
'Our rules haven't kept pace with the development of these exotic products,' Martin said.
Indeed, that was the consensus of a workgroup formed by Gov. Ted Kulongoski last summer to craft legislation that would impose new rules for mortgage lenders and foreclosure rescue firms.
Chris Ambrose, former president of the Oregon Mortgage Lenders Association, said that there isn't any hard data about how many people like Killian are operating in the state.
'That's, quite frankly, been part of the frustration,' Ambrose said. 'It's a growth industry and to try to pinpoint how many people are out there doing it, I can't say.'
The set of reforms that went into effect with HB 3630 wouldn't outlaw Killian's business model, but it will give those who sign up a chance to get out of the deal within 72 hours and, if their home is sold within two years, they could get a cut of the sale.
Ambrose said that the workgroup decided not to outlaw foreclosure rescue in order to give some flexibility to homeowners who are stuck with a mortgage they can't pay.
'A legitimate leaseback is certainly not something that I as a homeowner would choose as my first resort,' Ambrose said.
But by the time a foreclosure rescue firm comes into the picture, first resorts are usually a distant memory.
'In many cases there simply are no other alternative than letting the property go into foreclosure,' Ambrose said.
Additional reporting for this story came from Steve Law of the Portland Tribune, Christian Gaston of the News-Times and David F. Ashton of the Sellwood Bee.