Attorney General Salazar Announces Restitution Payments to Victims & Additional Settlement in Mortgage Foreclosure Scheme

Denver—Attorney General Ken Salazar announced today that his office has issued over a half million dollars in restitution checks to 52 consumers who suffered financial losses through their dealings with former Denver-area real estate agent Ryan Searle and his mortgage foreclosure assistance “Cure Program.” The restitution was obtained by the Attorney General’s Office through Stipulated Final Judgments approved by the Denver District Court in August and September 2003.

Fifty-two consumers in the metro Denver area will receive checks totaling $523,895. The checks range from $5,000 to $23,980. All but four of the restitution checks have been delivered to the consumers. The restitution checks compensate homeowners and former homeowners for amounts they overpaid defendants to regain the title to their homes and for the equity they lost when their homes were unlawfully acquired by defendants or other creditors following Cure Program transactions with defendants.

The restitution payments are in addition to approximately $630,000 in equity recovered by 21 additional consumers who had second mortgage loans payable to defendants canceled and titles to their homes returned or that received their homes back without further debt.

In total, defendants made over $1.1 million restitution to 73 homeowners to compensate them for lost equity and overpayments to defendants as a result of defendants’ mortgage foreclosure Cure Program. Under the Stipulated Final Judgments, defendants are also permanently enjoined from engaging in any deceptive real estate or lending practices in Colorado.

In addition to the restitution paid and cancellations of mortgages by the Searle defendants, Attorny General Salazar also announced the cancellation of approximately $145,000 worth of secured and unsecured promissory notes of 11 individuals held by two other individuals and their company in connection with the Searle "Cure Program."

Tim Fulton of Denver and Ted Fulton of Aurora and their mortgage foreclosure services business Real Estate Cures, LLC (respondents) purchased eight properties from Ryan Searle's Cure Program. The Fultons then returned titles to the consumers in exchange for large promissory notes.

Attorney General Salazar's Office entered into an Assurance of Discontinuance on December 19 with the Fultons and Real Estate Cures, LLC. As part of the agreement, the Fultons and Real Estate Cures agree to cancel the promissory notes. They further agree not to engage in any future misleading or deceptive mortgage foreclosure assistance business activities, any unlawful real estate transactions, or to otherwise engage in violations of Colorado's consumer protection, consumer credit and credit services laws. $10,000 in civil penalties will be waived by the State if the respondents fulfill the terms of the Assurance of Discontinuance. The Assurance does not constitute an admission to any wrongdoing by the Fultons or their company.

“These final restitution payments successfully conclude a major consumer protection prosecution by my office against a group of individuals that tricked financially distressed consumers into giving up their homes in exchange for the promise to bring their mortgage payments current,” Attorney General Ken Salazar said. “The type of high pressure trickery used to take people’s homes and any other similar predatory business practices are unacceptable in Colorado. I am very pleased that so many victims have received large monetary awards to help them move on with their lives.”

In December 2001, Attorney General Salazar filed a lawsuit against Ryan Searle and eleven other defendants alleging that defendants acquired title to over a hundred homeowners facing foreclosure under the guise of assisting homeowners to save their homes. The lawsuit alleges that the homeowners were tricked into signing over title to their homes in exchange for defendants advancing money for back payments to bring their mortgage payments current.

The homeowners were forced to lease their home back from defendants with an option to repurchase it at an inflated price. If they failed to make rent payments on time, they faced eviction and loss of their equity. Consumers believed these complicated Cure Program transactions were second mortgage loans and not the sale of their homes.

The state’s lawsuit alleged that defendants engaged in numerous deceptive business practices by making unlawful consumer loans and providing unlawful credit repair services in violation of a variety of state laws.

Defendants Ryan Searle and his related businesses are no longer operating their real estate and lending businesses in Colorado. Mr. Searle and his family moved to Texas soon after the State’s lawsuit was filed.

In a related enforcement action, the Colorado Real Estate Commission charged Mr. Searle with unlawful practices as a licensed real estate agent. Following a hearing in April 2003, his real estate license was revoked.

Of the approximately 120 homeowners who participated in the defendants’ Cure Program, approximately 30 settled claims against defendants through private counsel. Those transactions were not covered by the state’s final judgment against defendants.

Attorney General Salazar urges consumers facing foreclosure to beware of solicitations that require homeowners to transfer title by quit claim deeds and to rent back their homes. Homeowners should avoid real estate transactions in which the value of their home and equity are not discussed, and they should avoid entering any real estate transaction without a real closing conducted by a title company.

Homeowners have options when falling behind on their mortgages. They should understand that lenders prefer not to foreclose on residential loans. Lenders will work with homeowners who act responsibly. When facing foreclosure, homeowners should consider the following:

• Do not ignore foreclosure notices. Contact your lender and explore options, including catch-up plans.
• Make your home payment first—it is likely your largest investment and foreclosure may cost you all the equity you have put into your home over the years.
• Seek advice from unbiased professionals who are not seeking your business, such as an attorney, a loan officer at your bank, or a non-interested realtor.

Finally, if option to bring a mortgage loan current have been exhausted, selling your home to preserve your equity may be the wisest decision you can make. Colorado real estate laws give homeowners the right to sell their property anytime in the foreclosure process, including the redemption period of 75 days after a foreclosure sale. Given the increase in home values, the sale of a home, even in foreclosure, can yield thousands of dollars to a homeowner to assist them to get back on their feet financially.