In the mid 1970s, Jose and Carmen Ortiz left Puerto Rico to start a new life together in the mainland United States. The high school sweethearts married when they arrived and settled near Philadelphia, where Jose took a job as a butcher in a supermarket. Over the years, the couple had three children, and in 2002 they bought a house in Quakertown, Bucks County, the culmination of nearly 30 years of effort. “I’ve been working all my life and I’ve been working hard,” says Ortiz, now 55.
In 2006, the couple fell on hard times when a sharp increase in gasoline prices forced stores to trim costs. Ortiz had been working close to 60 hours a week to make mortgage payments on his house and a second home he had bought for his daughter, but his hours were cut way back. “With no overtime pay and spending more in gas money, I lost close to half my income,” he says.
Meanwhile, Carmen was suffering through a series of surgeries for chronic back pain, further stretching their finances. “I fell behind on my mortgage payments,” Ortiz says. “I was looking for any help, to refinance the house, you know?”
In the mail one day, help appeared to arrive in the form of a flier promising to “Stop Foreclosure—Save Your Home.” The offer boasted no up-front costs, no legal fees, no bankruptcy filing and an improved credit rating. “Call Steve now to schedule a free consultation,” it read.
Ortiz called Steve, who turned out to be Stephen Doherty, a Bucks County lawyer acting in the name of a business called Foreclosure Relief Services. Doherty recommended a mortgage company run by Ed McCusker, Ortiz says. “They told me my house was going to be refinanced. They threw me a bunch of paper,” he says. “I signed everything.” He was so desperate for money, he decided to refinance his daughter’s house, too.
But what he signed wasn’t for refinancing. It was a forged agreement of sale.
When junk mail began arriving to Ortiz’s house addressed to Jacqueline McCusker, Ed’s wife, “I really got it then,” Ortiz says. “They just stole my property. By then, it was too late.”
Ortiz lost $200,000 in equity through the false paperwork and was paying the McCuskers what he thought were mortgage payments of $1,600 a month. As he caught wind of the scam, he says Jacqueline McCusker bumped the payments, which were actually rent, to $3,300 and initiated eviction proceedings when he couldn’t pay.
With foreclosures on the rise, up 74 percent in Pennsylvania from 2008 to 2009 and another 9 percent last year, the risk of being scammed is much greater. But Philadelphia is fighting back. To complement a nationally recognized 2-year-old foreclosure prevention program, last week the city launched a mortgage-scam awareness campaign to warn homeowners in financial trouble that if an offer of foreclosure relief sounds too good to be true, it most certainly is.
On July 13, Philadelphia kicked off a marketing blitz to raise awareness about shady deals and to direct homeowners on how to find legitimate help from lawyers and housing counselors, by calling a “SaveYourHomePhilly” hotline at 215.334.HOME.
The campaign is operating in the entire five-county Philadelphia metro area and spreads the word through fliers, meetings with community groups and a scrolling notice on top of the PECO building in Center City.
“We’re working hard to crack down on [scams] as soon as they rear their ugly head,” says Don Kelly, director of community and economic development at the Greater Philadelphia Urban Affairs Coalition, which helped coordinate the foreclosure-prevention task force.
Prevention is the key behind the city’s outreach, because for those who get caught up in scams, justice can take years. Ortiz and his wife are now renting a house in Hatfield while waiting on a lawsuit initiated in 2007. Their lawyers joined up with a suit already under way by Warminster bankruptcy attorney Stuart Eisenberg, who had been previously approached by another homeowner facing the same situation as Ortiz. Suspicious of another abrupt raise in “rent,” the lawyer untangled a sordid trail of money, twisted through a fascinating network of straw entities, shady dealings and kickbacks.
But it was game over when Eisenberg discovered that after a supposed foreclosure rescue by the Doherty gang, the equity in the house was immediately extracted and distributed to all players under the guise of referral fees. “All of sudden it was an ‘OMG’ moment,” Eisenberg says.
Eisenberg’s suit now encompasses 15 cases involving Doherty, McCusker and company. However, all are held under a stay of proceedings, because the U.S. Attorney’s office brought criminal fraud charges against the defendants in December. The total scheme described by the indictment amounts to $14.6 million stolen through at least 35 fraudulent loans.
Doherty and his law partner pleaded guilty to the criminal charges and await sentencing in December, while the McCuskers and others pleaded not guilty, their trial set to start in October. Ed McCusker’s lawyer declined to speak about the case, and attorneys for the other defendants did not respond to request for comment.
“When you get letters from the bank, you want to talk to anyone who can help,” Ortiz says. “At least I’m healthy, I can still work.”
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