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Bank of America Sues Fidelity Land Trust With Foreclosure Action

Fidelity Land Trust Company, a Florida based company who claims they are the “only real cash buyer of properties with negative equity” (source), a company I’ve writen about before (here) has been sued by Bank of America in Volusia County, Florida.

I’m not sure if this is the first time they’ve been sued for foreclosure on one of the properties they’ve taken over as part of the program homeowners participate in for a fee.

A recent article in the Palm Beach Post described the Fidelity Land Trust plan fees and costs. Past requests for information by this author to Fidelity Land Trust have gone unanswered.

FIDELITY LAND TRUST PLAN

BENEFITS: If successful, the homeowner will have a canceled mortgage and owe a lower amount to the trust than the unpaid loan amount from the original mortgage.

RISKS: If unsuccessful, the homeowner has paid a fee to the trust and the lender could still pursue the homeowner for the unpaid loan amount.

HOW IT WORKS: Underwater homeowner signs the deed over to the land trust. The fee charged by Fidelity Land Trust for this is $3,500. The land trust becomes the owner of public record while the homeowner, now beneficiary of the trust, remains private.

NEW PAYMENT: Homeowner signs a 1-year, $1,000-a-month contract with the trust.

THE MORTGAGE: In an attempt to cancel the mortgage, the trust sues the homeowner’s mortgage servicer or lender, claiming fraud or legal violations. Upon favorable outcome of litigation or negotiations, the homeowner’s contract with the trust extends to 10 years.

NEW PAYMENT: If the trust wins its case, the homeowner is still liable for the debt or promissory note, but the trust tries to negotiate with the lender to pay the note off at a lower price. Because there is no longer collateral — the home — attached to the note, the lender may be motivated to settle for pennies on the dollar. If not, the lender may go after the borrower for the full amount.

SELLING THE NOTE: If the trust pays off the note and gets title insurance on the home, it can sell the promissory note on the secondary market, much like a mortgage-backed security.” – Source

In a new review of the Fidelity Land Trust site, fidelitylandtrust.com, the land trust services page doesn’t actually say they will prevent a home from being foreclosed on. Rather it appears to be focused on asset and liability issues.

  • Judgments and Liens: A Land Trust will provide protection from Judgments and Liens.
  • Avoiding deficiency judgment. If you expect your property to be foreclosed, you can deed it to a land trust and the foreclosure will then need to be filed against the trustee. This can help avoid a deficiency judgment.
  • Avoiding condo and homeowner association judgments. Some people who have lost their property in foreclosure to a bank have judgments for thousands of dollars entered against them for unpaid association fees. This could be avoided if the property was owned by a trust and not in their name.
  • Limiting liability. By having a land trust sign notes and mortgages you can limit your liability for a default judgment if there ever is a foreclosure. – Source

Other claims made on the Fidelity Land Trust site talk about the benefits of their approach is to engage in “preemptive litigation against mortgagees or their assignees.” In the Volusia County case I could not find a case filed by Fidelity Land Trust against Bank of America on this property in question prior to the foreclosure.

If I was a betting man I would imagine Fidelity Land Trust would next move to challenge the underlying note on 2936 Estill Street, Deltona, Florida. We shall see.

2936 Estill Street, Deltona, Florida

What makes this Fidelity Land Trust Case interesting is that Bank of America sued The Fidelity Land Trust Company who is the owner of the property under a quit claim deed in February of this year. – Source. Yet the mortgage remains in the names of the original couple. Bank of America also states the suit is against unknown tenants and others with unknown interests as well.

In this case Bank of America is the “servicing agent for the owner of the note” and states the mortgage on the property was executed on April 16, 2009 between the then homeowners and SurePoint Lending / First Residential Mortgage Network. The suit states the note and mortgage were subsequently transferred to Bank of America as servicing agent.

The suit provides a copy of the alleged transferred note:

According to the suit filed the owner of the property is listed as Fidelity Land Trust Company so there is an acknowledgement they are the owner but not the note or mortgage holder. The suit states mortgage payments on the property have not been made since May 2, 1011 and they declare the note to be accelerated and as of the date of the suit $171,677 is now due.

You can read the complete suit here.

So it will be interesting to watch to see what happens in this case and if Fidelity land Trust can live up to their press release title, “Homeowners Facing Foreclosure Protected from Creditors and Liens by Land Trustee Company.”

Some consumer statements online appear to feel as if the Fidelity Land Trust program will prevent foreclosures:

“I was told by Fidelity land trust that they could form a Florida land trust for me that would block the foreclosure, and they would prove loan was predatory through country wide, and would then sell me back the house at a reduced price, after suing the bank for peditory practice.” – Source

Fidelity Land Trust Marketing Representations

As Florida HRM, a marketing representative for Fidelity Land Trust says, “This program has been successful at helping 100% of its qualified homeowners obtain a new mortgage and regain their equity.” – Source

Additionally Florida HRM says once consumers sign up in the program the existing mortgage will be cancelled in 90 to 120 days. – Source. This is a claim that does not seem to be supported with facts from the Fidelity Land Trust site.

Interestingly, the marketer, Florida HRM, does not appear to be registered to do business in Florida as a registered company with the Secretary of State and is not registered under a fictitious name either. The BBB seal on the bottom of their site actually links to Homeowner Rescue Mission at the same address of 413 North Federal Highway, Hallandale, Florida.

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A search of Homeowner Rescue Mission could not locate a registered company under that name but is a registered fictitious name for CMG Marketing Firm. A similar named company, Century Marketing Group is at the same address. CMG Marketing Firm is actually a Nevada LLC that is registered to do business in Florida. – Source. State records list the managing member as Shane Frankovic. – Source

While Florida HRM is marketing to consumers about their skills to help people eliminate their mortgage, consumers should be aware this company labels itself as a marketing and advertising firm and not experts in real estate issues. – Source

Century Marketing Group sounded familiar to me so I went back and searched. I was right. Century Marketing Group was named in an action by the State of Florida to deal with timeshare resale scams. Century Marketing Group was part of a group of five marketers that were fined $31,000 as part of the Florida Attorney General sweep. – Source

Consumers Should Ask for More Information

It would be interesting to get a public comment from Fidelity Land Trust on the measured success of their program to determine its effectiveness in delivering the results promised. And as I observed, one of those promised benefits does not appear to be protecting homes from foreclosure. But do they even claim they can stop your home from foreclosure?

If the Bank of America suit is accurate, Fidelity Land Trust took over the property named in the suit, with a quit claim deed, nine months after the last mortgage payment had been made. Certainly you would think a foreclosure action was foreseen because of that.

But if there is some verifiable evidence the Fidelity Land Trust Company program can live up to the marketing claims there should be a number of cases where mortgages on properties of clients should have been cancelled by now. I for one would love to see them. And if Fidelity Land Trust Company can be forthcoming with that data it might show a new approach consumers can use to deal with obligations secured with their property. But if they can’t produce such performance data to back up their claims, consumers need to know that.


Damon Day - Pro Debt Coach

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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