Editor’s note: Federal investigators are looking into so-called mortgage elimination programs that claim to wipe out home mortgages or other forms of debt for consumers. In this three-part series, we provide a case study of one mortgage-elimination process. Part 1 explores the methods the group’s proponents use to try to convince title companies and lenders that it has successfully eliminated mortgages. Part 2 follows the group’s beliefs and why they think mortgage elimination is possible. Part 3 takes an in-depth look at the group’s business model.
In elaborate mortgage elimination schemes that have caught the eye of federal investigators, the Internet appears to be the favored tool perpetrators use to communicate their message and market their services to consumers. The schemes promote processes by which consumers can quickly dismiss mortgages through a morass of property and legal filings.
Groups behind the schemes keep a low profile in the brick-and-mortar world, while their communications are widely disseminated through e-mail, Web sites, audio and video recordings, online discussion boards and telephone conference calls. Principals of the groups have an extensive presence in litigation launched across the nation and in property documents recorded at county offices in many states.
The so-called mortgage- or debt-elimination groups advertise their services on major search engines and have posted ads at Craigslist.org, extensively promoting a process by which homeowners can cross out their mortgage debt.
And yet their actual, physical presence is very low-profile by comparison. Many of their Web sites do not contain an office address or direct phone number to contact an office manager or staff member.
For example, the principals of The Dorean Group, one name heavily associated with the mortgage-elimination process, refused during a phone interview in December to divulge their office location. They also did not comment on whether they maintain a business license.
A Web site affiliated with The Dorean Group stated that the principals of the company and their staff “include management, paralegals, attorneys, a CPA and approximately 10 customer service reps. Their offices are publicly accessible.”
But even some of the group’s agents said they do not have a mailing address or phone number to contact the principals of the company, and others refused to discuss The Dorean Group. A Web site for a Dorean-affiliated group states that Capital Creation Resource is a marketing agency for DTE Financial in Texas — a broker for the Dorean Group.
The Dorean Group uses a mailing address in Union City, Calif., while Capital Creation Resource has used a mailing address in Moses Lake, Wash.
City officials in Union City, Calif., said there are no business license records for The Dorean Group in Union City. The group uses a UPS Store mailbox in Union City as its mailing address. The California Secretary of State also has no company information for The Dorean Group.
Several of the Dorean-related Web sites are registered to an address in Simi Valley, Calif., though there are others that are registered in other states.
Rich Brimer, a painter and Web site designer who is listed as contact for many of the related mortgage-elimination Web sites, said he is not directly involved with the debt-reduction companies, and he refused to offer any other comments about these sites. Brimer’s other Web-design efforts include “Faith to Faith Friend: Dedicated to fostering the personal and spiritual lives of prison inmates,” and “Vita Stress Animal Supplements,” according to descriptions at his own Web site.
Farrel LeCompte of DTE Financial in Texas said he has “a contract to ‘broker’ the process for The Dorean Group, as do about 14 other people.” He refused to offer a phone number to contact D. Scott Heineman and Kurt F. Johnson, the principals for The Dorean Group. “Oxford Trust” and “Homeward Bound” have also been listed at Web sites as being affiliated with The Dorean Group.
A Nov. 29 posting by the administrator for a message board on a Capital Creation Resource Web site states that LeCompte and Travis Luedke “are the co-principals of CCR.” The posting also lists Guy Santeramo as marketing director for CCR and Joshua Kind as media director. Santeramo and Kind did not offer any comment about The Dorean Group.
Heineman said in a phone interview last month that The Dorean Group has no employees. “I don’t have people that work for me. I have people that I exchange resources with,” he said.
Tony Hilder, a resident of Newport News, Va., who said he works as an agent for a broker of The Dorean Group, said the group has “a proprietary elimination process,” and he has entered into the process himself. “Eventually, in the end you get a reconveyance of your property with clear title as well as title insurance. You are completely done and end up owning your property free and clear.” A reconveyance refers to the return of a property’s title to its previous owner. Documents relating to a “quitclaim,” “substitute trustee” and “reconveyance” are commonly used in The Dorean Group process.
Hilder said he believed that The Dorean Group is located “somewhere in the Bay Area” in California, though he never visited a physical office or met the principals of The Dorean Group in person. “It’s all done by phone.” He said that as an agent, he helps to draw people into the mortgage-elimination program, and he receives a portion of the refinancing proceeds for bringing people into the program.
A document titled “Commission Addendum” that was posted at a Capital Creation Resource Web site appears to suggest that agents can make a commission of 10 percent of the refinance value of a property, along with a flat commission of $600 for a first mortgage that is brought into the program, $1,000 for each bridge loan, and $400 for each second mortgage.
With 20 sales per month, an agent might expect to make “$304,000 within 6-8 months,” a table on the document appears to suggest. The table is based upon a number of assumptions, the form states, including an “average property value of $200,000 with a $160,000 refinance . . . leaving a remaining balance of $135,000 for cash distributions as a net over and above the bridge loan payoff ($25,000).”
“Immediately upon client’s application approval, commissions are distributed by e-mail,” the form states. “These Qchexs can be downloaded and printed within a few minutes.”
Hilder said he does not receive a salary or health benefits for his work. “It’s a pure sales-driven company.” While he said he has heard of people who have succeeded in eliminating their mortgage payments, he provided no specific examples and said his own reconveyance process has not yet concluded.
A culture of secrecy surrounds The Dorean Group. Agents are instructed by a form at www.ccresource.net, a CCR-related Web site, to “maintain complete confidentiality regarding the methods and procedures that have been disclosed by the company,” and each breach of this agreement will be paid by a “penalty/lien of 1 million ($1,000,000) U.S. dollars per breach, payable to Capital Creation Resources.”
Another form, titled “Agent Disclaimer of Participation,” releases CCR from “any and all liability, claims, demands, actions and causes of action whatsoever arising out of or related to any loss, damage or injury that may be sustained while participating in CCR programs, or while in, on, or upon any activity where the programs are being conducted, including but not limited to the website, forum and chat room.”
A separate “Agent (Referrer) Policy Agreement” provides that each agent “will operate as a Private Contractor.”
A Colorado couple, Patricia and Larry Morrow, said they are responsible for “paperwork and flow-through” in the mortgage-elimination process for The Dorean Group, and they work for Capital Creation Resources.
Larry Morrow said, “We’re just employees. Once a client signs up and they’re going through this program, we’re the ones who facilitate this paperwork. We’re not licensed. The licensing part is done by The Dorean Group.” And while the couple works to facilitate The Dorean Group process, Morrow said he didn’t know how to contact The Dorean Group.
Morrow and his wife also are participating as clients in the mortgage-elimination program, he said.
Web sites affiliated with The Dorean Group have advertised that more than 700 clients have participated in the program, and the minimum up-front cost to enter a first mortgage into the program is $3,000 — which amounts to at least $2.1 million in up-front fees alone. Homeowners can enter a second mortgage into the program for $1,500. The group’s program also promotes a process through which homeowners attempt to refinance their home, and Dorean principals and affiliates take 75 percent of these refinancing proceeds, according to Web site descriptions.
Under the program outlined on various Web sites relating to Capital Creation Resource, once the original loan “is satisfied,” refinancing begins and “the purpose of this new refinancing is for you, the client, to compensate the provider and (Capital Creation Resource),” with the remainder of funds going to the client. This “provider,” which Web sites have identified as The Dorean Group, receives 50 percent, Capital Creation Resources receives 25 percent, and the client receives 25 percent of the refinancing proceeds, according to a Web site description.
Heineman said he didn’t want to talk about whether he has profited from refinancing activities. “I’m not going to get into the refinance. I’m not confirming or denying,” he said.
Agents of the company “don’t receive any compensation from us,” Heineman said. “We don’t pay them. They charge a fee.” Heineman said he doesn’t know how many agents are out there. “I’m not keeping track of all the agents.”
A Web site for Capital Creation Resource promotes an upcoming convention in Las Vegas in February, in which participants can “Meet Scott and Kurt of The Dorean Group.” The site also advertises the sale of business cards, DVDs, and Web sites for its agents — each of these products is priced at $100.
Affiliates of The Dorean Group are very active in a number of Internet discussion boards, posting message after message promoting the cause of mortgage-elimination programs while refuting those posts that suggest mortgage elimination is a scam or doesn’t work.
Mortgage and title industry experts have said that despite efforts by mortgage-elimination supporters to discharge mortgage debts through property filings and lawsuits, lenders and the courts are not likely to accept the documents or the lawsuits as valid.
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