12:57PM

Oak Street files civil complaint alleges fraud against broker, closers and appraisers

In August 2006 Oak Street Mortgage filed a civil complaint against a number of individuals and businesses (see below) alleging fraud in a number of mortgage loans taken out on properties in South Bend, Indiana.  So far no date has been set for a trial.

Oak Street alleged that a mortgage brokerage, appraisers, realtors, sellers and straw borrowers took out five mortgages on homes on which the valuations had been inflated.

Fundz R Us, Inc dba Tri-State Mortgage – Broker
Property Group, L.L.C – seller
Progressive Land Title of Indiana
The Title Search Company
Edgin Residential Appraisals
Appraisal Connection, L.L.C
Brenda C. Buck
Michael Sheneman
Jeremie Sheneman - broker
Karl Newbourne - broker
Karen Haverland - closer
Amber Dutton-Gwinn – closer
Nicole Smetanka – closer
Todd Decker – closer
Bobby Edgin – appraiser
Harry A. Wyman – appraiser
Robert F. Knecht – appraiser
David Dolittle – borrower
Steven Reeves – borrower
Curtis Turner – borrower
Renate Turner – borrower
Kenneth Hoops - borrower

The five borrowers (see above) were allegedly recruited by the Sheneman’s and Newbourne and promised they would be buying investment properties that already had tenants. As an inducement to do this each was paid a $2,000 fee per property they bought/mortgage they obtained. In one example Reeves is said to have bought 17 such properties (only two were with Oak Street). All 17 loans were said to have been brokered by Tri-State and closed by Progressive.

The mortgage loans on the properties were brokered by Fundz R Us Inc, dba Tristate Mortgage, Inc. The application packages are alleged to have contained false appraisals, false or inaccurate title records and misrepresentations about funds to close and occupancy.

The five loans mentioned on the complaint are:

1. David Dolittle - 520 Madison Street, South Bend, which was given an appraised value of $56,000 by Harry Wyman of Allied Appraisals. A subsequent appraisal puts the value at $24,500. Page 14 of the complaint lists 5 reasons why Oak Street believes the appraisal to be false.

The loan was closed by Karen Haverland on behalf of Progressive Title on June 13 2003 as an owner occupied mortgage. The HUD-1 shows that the seller was Property Group who were paid $39,072.

Oak Street state that Dolittle took out another loan on the same day and two more mortgages on June 30, 2003. The sellers were Property Group and Homebuyers LLC who share a common address.

2. Steven Reeves – 1022 Huey Street, South Bend , which was given an appraised value of $55,000 by Bobby Edgin of Edgin Residential Appraisals. A subsequent appraisal puts the value at $40,500. Page 18 of the complaint lists 5 reasons why Oak Street believes the appraisal to be false.

The loan was closed by Amber Dutton-Gwinn on behalf of Progressive Title in May 2003 as an owner occupied mortgage. The HUD-1 shows that the seller was Property Group who were paid $38,341.

3. Steven Reeves – 133 South Illinois Street, South Bend , which was given an appraised value of $60,000 by Harry Wyman of Allied Appraisals. A subsequent appraisal puts the value at $39,900. Page 21 of the complaint lists 3 reasons why Oak Street believes the appraisal to be false.

The loan was closed by Amber Dutton-Gwinn on behalf of Progressive Title on May 2nd, 2003 as an owner occupied mortgage. The HUD-1 shows that the sellers were Walter and Lynda Johnson who were represented by Karl Newbourne who acted as a power of attorney and they were paid $41,287.

4. Curtis and Renate Turner – 1033 North Brookfield Street, South Bend , which was given an appraised value of $65,000 by Robert Knecht of Appraisal Connection. A subsequent appraisal puts the value at $45,000. Page 25 of the complaint lists 7 reasons why Oak Street believes the appraisal to be false.

The loan was closed by Nicole Smetanka on behalf of Progressive Title on November 21st, 2003 as an owner occupied mortgage. The HUD-1 shows that the sellers were Walter and Lynda Johnson who were represented by Karl Newbourne who acted as a power of attorney and they were paid $41,287.

4. Curtis and Renate Turner – 1033 North Brookfield Street, South Bend, which was given an appraised value of $65,000 by Robert Knecht of Appraisal Connection. A subsequent appraisal puts the value at $45,000. Page 25 of the complaint lists 7 reasons why Oak Street believes the appraisal to be false.

The loan was closed by Nicole Smetanka on behalf of Progressive Title on November 21st, 2003 as an owner occupied mortgage. Oak Street state that the Turners completed two other purchases 1 month prior to this which were not declared on the 1003. Both of those were brokered by Tri-State

5. Kenneth Hoops – 1517 Kendall Street, South Bend , which was given an appraised value of $59,000 by Robert Knecht of Appraisal Connection. A subsequent appraisal puts the value at $21,000. Page 29 of the complaint lists 4 reasons why Oak Street believes the appraisal to be false.

The loan was closed by Todd Decker on behalf of Title Search on January 30th, 2004 as an owner occupied mortgage. Oak Street state that the Turners completed two other purchases 1 month prior to this which were not declared on the 1003. Both of those were brokered by Tri-State.

The true extent of this fraud in not yet known although it is clear that there are many other properties involved. Please click here to read the complaint.

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