An Illinois judge recently ordered a Chicago businessman to pay $2.4 million to the victims of a reverse mortgage scam he allegedly perpetrated for decades.
Cook County Judge David Atkins entered the judgement last week against Chicago businessman Mark Diamond, who has been at the center of allegations in recent years that he deceived senior homeowners into obtaining reverse mortgages to help pay for needed home repairs on their residences.
In 2009, Illinois Attorney General Lisa Madigan filed a lawsuit against Diamond, accusing him of bilking senior homeowners living in Chicago’s south and west side neighborhoods out of more than $1.3 million through the reverse mortgage scam.
As part of the scam, Madigan’s lawsuit alleged that borrowers would pay Diamond with the proceeds from their reverse mortgages in exchange for various home renovation projects, many of which were either performed to a “substandard” degree or left unfinished altogether.
The lawsuit also claimed that Diamond pocketed a portion of the money he received for his personal benefit, rather than completing the repairs.
As a result of the scheme, the lawsuit indicated that 12 homeowners ended up in default on their reverse mortgages, while two borrowers lost their homes to foreclosure.
At the time the suit was filed in 2009, Madigan’s Consumer Fraud Bureau had received 36 complaints against Diamond and his affiliated mortgage and home repair companies through which he operated.
The scheme also captured the attention of Illinois lawmakers, who introduced legislation that rewrites the state’s laws on reverse mortgages.
Dubbed the Reverse Mortgage Act, the legislation consolidated duplicative and conflicting state laws regarding reverse mortgages; and implemented a three-day “cooling-off” period, during which time a prospective borrower cannot be required to close or proceed with the loan.
The new regulations, which were signed into law by Governor Bruce Rauner in August 2015, also authorized Illinois’ Office of the Attorney General to develop educational documents that provide consumer information regarding reverse mortgages.
Madigan’s office did not respond to an RMD request for comment as of press time.
Written by Jason Oliva