Judge Orders Compensation for Chicago Reverse Mortgage Scam Victims

An Illinois circuit court judge last week ordered a Chicago businessman behind a reverse mortgage scam to cease all business operations and to compensate several victims affected by the scheme. 

On January 22, Judge David B. Atkins of the Circuit Court of Cook County ordered Mark Diamond to pay a civil penalty of $340,000 for his role in a reverse mortgage and home repair scam targeted at elderly African-American homeowners living in Chicago’s south and west side neighborhoods.

Diamond, who served as president of United Residential Services & Real Estate Inc., has been embroiled in ongoing allegations that he helped elderly homeowners obtain reverse mortgages to pay for home improvement projects, which were either unfinished or not performed at all.

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Court documents published by The Chicago Reporter this week state that Diamond acted as a middleman between seniors and reverse mortgage lenders, brokers and originators, in efforts to help seniors obtain the loans to pay for home repairs.

Atkins also ruled that Diamond and his company, United Residential, engaged in deceptive practices by making misrepresentations to consumers, including those related to the cost of home repairs. In some cases, Diamond also used an alias name when meeting with homeowners and used a fake home repair company as a means of extracting a consumer’s home equity. 

In the case of victim Dorothy Hillman, court documents indicate that Diamond promised to do home repairs on Hillman’s home, for which he arranged a reverse mortgage and took $70,000 of her loan proceeds—almost the entire amount—as full payment for the promised repairs, yet failed to do any home repairs and did not refund any of Hillman’s money.

For plaintiff Dorothy Pruitt, court records note that she paid $85,118.03 to Diamond for work that was never performed. The court previously found that Diamond took the money upfront as payment for the home repairs, which included the tearing down and building of a rear porch on Pruitt’s home. 

“However, Diamond did not complete building Ms. Pruitt’s rear porch, did not replace the second floor, and did not refund Ms. Pruitt any money,” court documents state. 

A home inspector also testified that the unfinished porch is in “imminent danger” of collapsing and that the electrical service is “precariously secured to the house and could fall.”

Through testimony from the victims, the court also found the elderly borrowers were “unsophisticated financially,” death almost exclusively with Diamond, and that Diamond ended up with “large amounts of equity from their homes received by him at the time the loans were funded and prior to any substantial work being done.”

“It is undisputed that defendants were paid large amounts of money and did not do the promised home repairs,” states Judge Atkins’ court order.

As part of the court order, Diamond is required to make full restitution in the amount of $70,000 for Dorothy Hillman; $85,118.03 for Dorothy Pruitt; as well as $83,099.04 for plaintiff Levada Johnson; $67,901.90 for Clyde Ross; and $15,662.59 for Frankie Jenkins.

Last summer, Judge Atkins granted Illinois Attorney General Lisa Madigan’s request for an injunction agains Diamond, who was already at the time involved in a 2009 lawsuit that accused him of defrauding elderly African-American homeowners out of more than $1.3 million through the reverse mortgage/home repair scam.

Diamond’s actions has even led Illinois state lawmakers to develop legislation that further protects prospective reverse mortgage borrowers from falling victim to similar scams. 

The legislation, which took effect January 1, 2016, implemented a three-day cooling period, during which time a prospective borrower cannot be required to close or proceed with a reverse mortgage. Under the new law, the Illinois Office of the Attorney General is allowed to develop educational materials that provide consumer information on reverse mortgages, including potential alternatives to these loans. 

While Diamond has been sued by elderly homeowners on numerous occasions, he has yet to face criminal charges.

Written by Jason Oliva

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  • Is this the story of problems with reverse mortgages or with uncontrolled alleged recidivism in the state of Illinois? Just how ineffective is the Illinois legal system in stopping recidivism? Yet picking on reverse mortgage transactions seems easier than dealing with the real problem, preventing recidivism.

    It is troubling to read that somehow a home improver got home equity from seniors. That is a gross misstatement of fact. What he got was cash. But by saying he got home equity makes reverse mortgages seem like a culprit in the alleged fraud.

    What the seniors did was obtain a loan to get the promised work done using their homes as collateral which as a math problem means they had less home equity. However, if the loan had not been a lien against the home, the equity of the home would have remained as is.

    It seems that we still live in a world of legislative bias when it comes to reverse mortgages. It is unclear how a three day cooling off period would have helped the seniors in the blog above.

    Despite some in the industry who hate financial nomenclature, home equity and cash are not synonymous and not distinguishing them can end up in undesirable legislation as in this case.

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