Chapter 15

Foreclosure Rescue Scams (NY)

Josh Zinner is the founder and Coordinator of the Foreclosure Prevention Project at South Brooklyn Legal Services. The Project, the first of its kind in the New York City area, combines litigation, outreach, education and advocacy to combat predatory lending. Mr. Zinner is regarded as one of the foremost experts in New York City and the State on predatory mortgage lending and credit issues, and has litigated numerous predatory lending cases in federal and state court. Mr. Zinner has trained hundreds of attorneys and community advocates around the City and State, and has spoken at national conferences and forums on predatory lending. He was awarded the 2001 Denison Ray Award by the New York State Bar Association, given to a New York State attorney who demonstrates extraordinary commitment to providing zealous and skilled representation to low income and disadvantaged clients. Mr. Zinner speaks fluent Spanish. Jessica Attie is a staff attorney at the Foreclosure Prevention Project at South Brooklyn Legal Services (SBLS), where she litigates predatory-lending cases on behalf of low-income homeowners. Prior to coming to SBLS, Ms. Attie clerked for Judge Ricardo M. Urbina of the U.S. District Court for the District of Columbia, and was an associate with White & Case LLP in Washington, DC. Ms. Attie received her B.A. magna cum laude from Barnard College and her J.D. from Georgetown University Law Center, where she was a Public Interest Law Scholar. Section 15.1 is a federal court Complaint in foreclosure rescue scam case. It seeks a declaratory judgment that the purported sale of the homeowners home was mortgage, seeks rescission of the mortgage. Also, it alleges violations of the Truth in Lending Act resulting in claims for rescission, damages and attorney fees; violations of the Real Estate Settlement Procedures Act by accepting kickbacks and splitting fees entitling the homeowners to treble actual damages, misrepresentations under the Deceptive Practices Act entitling the homeowners to actual damages, fraud, civil conspiracy to commit fraud, and conversion entitling them to punitive as well as actual damages, conversion, unconscionablity, negligence, quieting title, and violation of a notary publics duties. Section 15.2 are interrogatories and 15.3 requests for the production of documents to the defendant lender that made a mortgage loan to the foreclosure rescue scammer at the time he took title to the home of the plaintiffs.

15.1 Federal Court Complaint

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK [Consumer 1], [Consumer 2], and [Consumer 3], Plaintiffs, Civil Action No.: [redacted] v. HOME SAVERS CONSULTING CORP. a/k/a PROPERTY INVESTMENT CONSULTANTS, INC., PHIL SIMON, HOWARD HUGHES, JDP SOLUTIONS LLC, FRED DOUGLAS WAY, III, ESQ., ROGER H. RODRIGUEZ, ARGENT MORTGAGE CO., LLC, AGA CAPITAL NY, INC., JOHN DOE and JANE DOE, the last two names being fictitious, said parties being individuals, if any, having or claiming an interest in, or lien upon, the premises described herein, and XYZ-1 CORP. and XYX-2 CORP., the last two names being fictitious, it being the intention of plaintiffs to designate any corporation having a legal interest in the premises described herein. Defendants. COMPLAINT

JURY TRIAL DEMANDED

[Consumer 1], [CONSUMER 2], and [CONSUMER 3], by and through their attorneys, South Brooklyn Legal Services, as and for their complaint, allege as follows: PRELIMINARY STATEMENT 1. Plaintiffs [Consumer 1], [Consumer 2], and [Consumer 3] are victims of a

predatory foreclosure rescue scheme that has placed them in jeopardy of losing their home. In the summer of 2004, plaintiffs, faced with increasing financial burdens, began looking for a way to lower their mortgage payments. They contacted a company called Home Savers Consulting Corporation, which had advertised its services as a mortgage broker and foreclosure prevention specialist, to inquire about refinancing their home. After being led to believe that they were

applying for a refinance loan, plaintiffs discovered that Home Savers, through fraud and subterfuge, had caused them to transfer ownership of their home. When plaintiffs learned the truth and attempted to rescind the transaction, Home Savers refused their request. Having lost title to their home, plaintiffs now live with the threat of imminent eviction. 2. Under New York law, the transfer of plaintiffs deed constituted an equitable

mortgage. In brokering and extending that mortgage, and leading plaintiffs to believe they were obtaining a new mortgage when in fact they were signing away ownership of their home, defendants violated numerous federal and state laws, including the Truth in Lending Act, the Real Estate Settlement Procedures Act, the New York State Deceptive Practices Act, the New York State Banking Law, and the common law doctrines of fraud, conspiracy to commit fraud, conversion, and unconscionability. JURISDICTION 3. This Court has federal question jurisdiction over plaintiffs federal claims

pursuant to 28 U.S.C. 1331 and 1343. 4. This Court has supplemental jurisdiction over plaintiffs pendent state law claims

pursuant to 28 U.S.C. 1367. 5. This Court has authority to grant declaratory relief pursuant to the Declaratory

Judgment Act, 28 U.S.C. 2201 et seq. VENUE 6. Venue lies in this District pursuant to 28 U.S.C. 1391(b). PARTIES 7. Plaintiffs [Consumer 2] and [Consumer 1] live at [Plaintiffs address] (the

subject property) with their 14-year-old niece, Nyasha, who is also their foster child and whom

they are in the process of adopting. [Consumer 2] is employed as a cabinetmaker and carpenter and [Consumer 1] works with her mother as a day-care provider. 8. Plaintiff [Consumer 3] is [Consumer 1]s mother and co-owner of the property at

[Plaintiffs address]. [Consumer 3] lives at [Consumer 3s address], where she runs a licensed day-care center. 9. Defendant Home Savers Consulting Corporation (Home Savers) is a

corporation organized under the laws of New York. Home Savers maintains its principal place of business at 946 Fulton Street, Brooklyn, NY 11238. Upon information and belief, Home Savers was not registered as a mortgage broker or banker with the New York State Banking Department at the time of the mortgage transaction described herein. Upon information and belief, Property Investment Consultants, Inc., which advertises itself as a foreclosure rescue, refinance, and credit-repair specialist, maintains the same address and acts as an alter ego for Home Savers. Upon information and belief, Property Investment Consultants is not and has never been registered as a corporation with the New York Department of State or as a mortgage banker or broker with the New York State Banking Department. 10. 11. Defendant Phil Simon is a principal and/or manager of Home Savers. Defendant Howard Hughes is a principal and/or employee of Home Savers and

Property Investment Consultants. Upon information and belief, the telephone number for Property Investment Consultants is registered in Mr. Hughess name. 12. Upon information and belief, Defendant JDP Solutions, LLC, which purported to

provide credit-repair assistance to plaintiffs, is organized under the laws of New York and is registered c/o National Registered Agents, Inc., Suite 501, 875 Avenue of the Americas, New York, NY 10001.

13.

Defendant Fred D. Way, III is a licensed attorney, notary public, and real estate

broker in the State of New York. Mr. Way maintains his principal place of business at 44 Court Street, Suite 807, Brooklyn, NY 11201. According to the New York State Banking Department website, Mr. Way was previously licensed as a mortgage broker and surrendered that license in August 1999. Upon information and belief, Mr. Way currently holds the cash proceeds from the alleged sale of plaintiffs home, which exceed $150,000. 14. Defendant Roger Rodriguez resides at [Defendants address 1]. On or about

October 22, 2004, plaintiffs unwittingly deeded their property to Mr. Rodriguez, and Mr. Rodriguez now appears in publicly recorded documents as the owner of plaintiffs home. One or two days before this fraudulent deed transfer, Mr. Rodriguez took out a $425,000 mortgage on plaintiffs home with Argent Mortgage Co., LLC. Mr. Rodriguez is also the owner of a property located at [Defendants address 2], which he bought on October 7, 2004. 15. Defendant Argent Mortgage Co., LLC is organized under the laws of Delaware

and licensed as a mortgage banker with the New York State Banking Department. Argent maintains its principal place of business at One City Boulevard West, Orange, CA 92868. Argent gave a mortgage to Mr. Rodriguez one or two days before the fraudulent deed transfer of plaintiffs home, before Mr. Rodriguez became the alleged title-holder. 16. AGA Capital NY, Inc. (AGA Capital) is organized under the laws of New York

and is licensed as a mortgage broker with the New York State Banking Department. AGA Capital maintains its principal place of business at 2663 Coney Island Avenue, Brooklyn, NY 11223. AGA Capital received $13,750 in fees, as well as a $8,500 yield spread premium, in connection with the Argent mortgage.

17.

John Doe and Jane Doe are fictitious names representing individuals, if any,

having or claiming an interest in, or lien upon, the subject property. 18. XYZ-1 Corporation and XYZ-2 Corporation are fictitious names of corporations

that may have a legal interest in the subject property. STATEMENT OF FACTS 19. In March 2001, [Consumer 1 and Consumer 2] bought their first homea two-

family house located in the Bushwick section of Brooklynwhere they hoped to raise their niece, Nyasha, whom they are in the process of adopting. Using $8,000 of savings as a down payment, [Consumer 1 and Consumer 2] obtained a $225,837 FHA-insured mortgage from Allmoney Mortgage Bankers at an interest rate of 8.5 percent. (This mortgage was later assigned to Chase Manhattan Bank.) [Consumer 1]s mother, [Consumer 3], assisted [Consumer 1 and Consumer 2] with their purchase and became a co-owner of the property. 20. At the time the [Consumer 1 and Consumer 2] bought their home, [Consumer 1]

worked full-time for Fountain House, a research and advocacy group dedicated to the recovery of people with mental illness. In June 2004, an injury forced [Consumer 1] to take a leave of absence and collect disability and, in October 2004, [Consumer 1] left her job and began assisting in her mothers day-care business. With the reduced income, the [Consumer 1 and Consumer 2] fell behind on their mortgage and began looking for ways to lower their monthly payments. 21. In September 2004, [Consumer 1] came across an advertisement in the Caribbean

Life newspaper that proclaimed in large print: HAVING PROBLEMS PAYING YOUR MORTGAGE? Let Us Help You! The advertisement, placed by Property Investment Consultants, offered other enticements as well: Is Your Home In Foreclosure? We Can

Help! We Can Save Your Property And Even Give You Cash In Hand. We Can Pay Your Mortgage For One Year And Allow You Time to Recover. Our Program Requires No Down Payment Or Up-front Cash. We Are The Experts And We Have Helped Hundreds Of People. (emphasis in original). The advertisement provided a hotline number for callers to obtain a free consultation. 22. [Consumer 1] called the hotline number and spoke with a man who identified

himself as Howard Hughes. [Consumer 1] told Mr. Hughes that she was facing the prospect of foreclosure and wanted to refinance her home. Mr. Hughes suggested to [Consumer 1] that she come to his office that evening to discuss her refinancing options at greater length. He also alerted her that his company was not called Property Investment Consultants, as indicated in the Caribbean Life advertisement, but rather Home Savers Consulting Corp. 23. During the meeting at the Home Savers office, [Consumer 1] explained to Mr.

Hughes and his colleague, Phil Simon, that she hoped refinancing would enable her to pay off her credit cards and the arrears on her current mortgage, obtain money to make house repairs, and, most importantly, maintain her mortgage payments at an affordable level. Mr. Simon responded that he would have to run a credit check on everyone whose name appeared on the deed, and asked [Consumer 1] to write down her, her husbands, and her mothers dates of birth and social security numbers. Mr. Simon promised to contact [Consumer 1] once he obtained the credit reports. 24. A few days later, on September 22, 2004, Mr. Simon met with [Consumer 1 and

Consumer 2] and [Consumer 3] to discuss the refinancing process. At Mr. Simons request, this meeting was held at [Consumer 1 and Consumer 2]s home. Mr. Simon expressed confidence that [Consumer 1 and Consumer 2] would be approved for a new mortgage and explained that

Home Savers would submit applications to several lenders to see where they could get the best deal. Home Savers, he added, would commit to holding one year of plaintiffs mortgage payments in escrow as a way of proving to lenders that plaintiffs were acting in good faith and were able to make their mortgage payments. During this one-year period, a credit-repair specialist would work with plaintiffs to improve their credit. Mr. Simon also recommended that [Consumer 3] co-sign the mortgage because, he said, she had better credit than [Consumer 1 and Consumer 2]. As for his stake in the deal, Mr. Simon told plaintiffs that if they refinanced their home, he would take a six percent commission. 25. About one or two weeks after this meeting, Mr. Simon called [Consumer 1] and

requested that she, her husband, and her mother come to his office to sign and finalize their mortgage application. He explained that the closing would be held a few days after the application was submitted, assuming the application was approved. 26. Plaintiffs met with Mr. Simon at his office on Friday, October 22, 2004. Mr.

Simon informed them that he had prepared an application for a $425,000 mortgage. Concerned by the considerable increase in debt, [Consumer 1] asked for assurances that their mortgage payments would remain at less than $2,500 per month. Mr. Simon told her not to worry and, acting pressed for time, handed plaintiffs a set of documents to sign, none of which he explained in any detail. 27. Included with these documents was a Letter of Investors Program Mortgage

Agreement, which stated in large shaded letters: Helping You Keep Whats [sic] Yours. Written on Home Savers letterhead and addressed to Home Owner, this document claimed to legalize the initial agreements made on 22nd October between [Consumer 1 and Consumer 2] [sic] [Consumer 3] and Home Savers Consulting Corp., in the management and investment

sale of property located at [Plaintiffs address] (emphasis in original). The document provided that: Whereas for one year our mortgage saving program will pay your mortgage and return properties back to owner/seller on or about __________. It is further agreed that at the time of transfer owner/seller will not incur any financial charges for the transaction of deed and mortgage. As agreed and witness [sic] on the same day that all closing and sales documents will be retained at the business office of Home Savers Consulting Corp. Home Savers agrees to manage and assure that property deed and property title documents are registered back to Sellers within a reasonable time of no less that [sic] one month. (emphasis in original). The document further provided that for a $2,000 fee, a company called JDP Solutions would provide plaintiffs with credit repair assistance for one year. 28. [Consumer 1] inquired as to why the paperwork referred to her as owner/seller.

Mr. Simon responded that in order to obtain a mortgage, plaintiffs would have to sell their current mortgage with Chase Manhattan. The buyer, Roger Rodriguez, was a middleman who would negotiate a new loan for them with the bank. Having never refinanced a mortgage before, plaintiffs had no reason to doubt the veracity of Mr. Simons statement. Indeed, the Letter of Investors Program Mortgage Agreement stated that the buyer of said property has no legal responsibility or rights to use or occupy or make any request to ownership of said property for the one year investment period agreement. Mr. Simon explained that the one year investment period referred to the period of time during which plaintiffs would make their mortgage payments to Home Savers. At the expiration of this period, assuming plaintiffs credit had improved, plaintiffs would make their mortgage payments directly to the lender. 29. Mr. Simon also asked plaintiffs to sign a HUD-1 Settlement Statement and other

tax- and real estate-related documents. [Consumer 1] noticed that these documents were dated

October 21, 2004, and asked Mr. Simon why she was being asked to sign backdated documents. Mr. Simon responded that these documents, which he characterized as part of plaintiffs mortgage application, had been prepared on October 21, 2004, and he urged plaintiffs to complete the paperwork without further delay. 30. Troubled by Mr. Simons obvious impatience with plaintiffs questions,

[Consumer 2] asked Mr. Simon if they could change their minds after they signed the documents. Mr. Simon responded that although it would cause his partners and him a lot of problems, plaintiffs were free to cancel the transaction. [Consumer 1] later posed the same question to Mr. Simon, and again he promised that he would stop the whole process. 31. [Consumer 1] then pressed Mr. Simon to explain a document entitled Checklist

which appeared to set forth a number of charges associated with a $425,000 mortgage. Mr. Simon told plaintiffs that AGA Capital, which was designated on the Checklist as receiving $13,750, was an insurance company; that Karolyn Karcher, who was designated as receiving $800, was a loan officer; and that Core Abstract would receive $17,908.50 to pay off plaintiffs outstanding debts. Mr. Simon also told plaintiffs that the payoff for their mortgage with Chase Manhattan was $242,973.61, but that an extra $10,000 would be held in escrow in case the payoff turned out to be higher. For the same reason, Mr. Simon told plaintiffs that an extra $500 would be held in escrow to pay off a $2,000 lien with the Department of Social Services. Finally, Mr. Simon told plaintiffs that all the money would go through Fred Way, an attorney for AGA Capital, and that he would make out the appropriate checks. 32. Although several people came in and out of the office while plaintiffs were

signing the documents, they were not introduced to anyone and did not speak with anyone at length other than Phil Simon.

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33.

At [Consumer 1]s request, Mr. Simon provided her with copies of the paperwork

that she, her husband, and her mother had signed. Over the course of the day, [Consumer 1] became increasingly concerned that something was amiss with the paperwork. The following morning (Saturday), [Consumer 1] left two messages for Mr. Simon asking him to call her back as soon as possible. When Mr. Simon did not return her calls, [Consumer 1] pulled out the Yellow Pages and began leaving messages for attorneys who might be able to explain the true nature of the transaction to her. One of these attorneys returned [Consumer 1]s call, and after listening to her description of the documents, informed her that she had not refinanced her home but had in fact sold it. 34. On Monday morning, October 25, 2004, [Consumer 1] mailed a letter of

rescission to Home Savers Consulting Corp., Argent Mortgage Corp., Roger Rodriguez, and other individuals whose names appeared in the documents she had signed. In the letter, [Consumer 1] wrote: We hereby resend [sic] the transaction between all parties involved in the refinancing. If this was a sale it was without our authorization. Also who is Fred Way and why is he receiving all of our money. According to the Checklist that plaintiffs signed, Fred Way had received $133,815.41 out of the proceeds of a $425,000 mortgage. 35. Determined to prevent the sale of her home from going forward, [Consumer 1]

also contacted Chase Manhattan Bank, which owned plaintiffs mortgage, and the New York Department of Social Services, which held a lien on plaintiffs home, and asked them to reject any payoffs they might receive from an outside source. 36. On Monday evening, Mr. Simon finally returned [Consumer 1]s calls and agreed

to meet with her and her mother the following morning. At the Home Savers office on Tuesday morning, [Consumer 1] informed Mr. Simon that she wanted to cancel the transaction. Mr.

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Simon said it was too late and that Fred Way would send her a check. [Consumer 1] became distraught and left the office. 37. On or about Monday, November 1, 2004, [Consumer 1] was contacted by Bridget

Dehmler, an attorney for Chase Manhattan Bank. Ms. Dehmler had learned of [Consumer 1]s request that Chase reject a payoff of her mortgage, and although Chase had already accepted the funds, Ms. Dehmler decided to investigate [Consumer 1]s request. [Consumer 1] informed Ms. Dehmler that she had been trying to refinance her home and was tricked into selling it. 38. Ms. Dehmler then telephoned Phil Simon and asked him about [Consumer 1]s

allegations. Mr. Simon told Ms. Dehmler that plaintiffs knew they were selling their home and had probably decided to cancel the deal when they learned they could get a better price elsewhere. Ms. Dehmler asked Mr. Simon if plaintiffs had been represented by an attorney at the closing, and Mr. Simon replied that Fred Way had represented plaintiffs. Before concluding the conversation, Ms. Dehmler asked Mr. Simon to fax her the closing documents. Mr. Simon agreed and Ms. Dehmler gave him her fax number. 39. Shortly thereafter, Ms. Dehmler contacted Fred Way, who claimed not only that

he had represented plaintiffs during the sale, but that he had explained the sale and deed transfer documents to them, that they were not illiterate, and that he could not understand why they thought the sale was a refinancing. Ms. Dehmler asked Mr. Way to fax her the closing documents, and Mr. Way agreed. 40. 41. Neither Mr. Way nor Mr. Simon ever faxed any documents to Ms. Dehmler. At the time Ms. Dehmler made her inquiries, defendants had not yet submitted the

deed-transfer and mortgage documents to the New York City Department of Finance, where all real property records are maintained for public access. On December 7, 2004, those documents

12

became available to the public. An examination of those documents reveals that on October 20, 2004, two days before plaintiffs allegedly transferred the deed to Roger Rodriguez, Argent Mortgage prepared a $425,000 mortgage on plaintiffs home to Mr. Rodriguez. The document was signed by Mr. Rodriguez and notarized by Karalyn Karcher on October 21, 2004. According to the HUD-1 Settlement Statement, the closing on Mr. Rodriguezs mortgage with Argent was held on October 21, 2004 at the office of Ralph H. Pecorale in Hauppauge, NY. Plaintiffs did not attend the closing, do not know who Mr. Pecorale is, and have never been to Hauppauge. Plaintiffs did not sign any documents until October 22, 2004, after Mr. Rodriguez had already executed the mortgage to Argent. 42. Plaintiffs now understand that the HUD-1 Settlement Statement, which they had

signed on October 22, 2004 under the false belief that it was part of their mortgage application, actually sets forth the closing costs and other charges associated with Mr. Rodriguezs mortgage. For example, it shows that the contract sales price of the property was $425,000; that the sellers (i.e., plaintiffs) were made to contribute an additional $6,974.16 toward closing costs; and that AGA Capitalwhich is a mortgage broker and not an insurance company, as Mr. Simon had represented to plaintiffswas paid $13,750 in fees and a $8,500 yield spread premium. Also deducted from the $425,000 was a $242,973.61 payoff to Chase Manhattan and a $2,500 payoff to the New York City Department of Social Services (even though plaintiffs only owed the Department $2,000), leaving $159,982.23 unaccounted for. 43. The plaintiffs have not received any money whatsoever from defendants since this

transaction. In addition, the Department of Social Services has not received a payoff of the lien it holds on plaintiffs home.

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44.

An examination of the documents submitted to the Department of Finance also

reveals that Fred Way notarized plaintiffs signatures, despite the fact that he was not present when plaintiffs signed the documents and therefore did not witness plaintiffs signatures. 45. Plaintiffs now understand that they fell prey to the bustling foreclosure rescue

scam business that has flourished in cities like New York where housing prices have skyrocketed. See Sandra Fleishman, Judge Rules Against Foreclosure Rescuer, WASHINGTON POST, July 7, 2004, at B5. Typically, in these scams, the foreclosure rescue specialist uses offers of refinancing to trick the homeowner into signing over her deed, while still demanding increased mortgage payments from the homeowner. The original homeowner is then evicted when the payments inevitably fall behind or when the new title holder allows the home to go into foreclosure. 46. Indeed, in keeping with this pattern, Phil Simon and his colleagues have called

[Consumer 1] on at least two occasions to discuss mortgage payments with her and, upon information and belief, to enforce collection of plaintiffs mortgage payments to Home Savers. 47. As a result of defendants actions, plaintiffs now live with the uncertainty that

they may be evicted from their home. Plaintiffs cannot rent out the apartment in their house, as they had planned, because the property is no longer in their name. [Consumer 1], who is awaiting final approval to run a day-care center in her home, does not know if she will be able to operate a business in a home that no longer belongs to her. And finally, plaintiffs have no way of knowing if Roger Rodriguez is making mortgage payments to Argent, if he has sold their home again, or if defendants simply cashed out the property and are now allowing it to go into foreclosure.

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FIRST CAUSE OF ACTION Against All Defendants NEW YORK REAL PROPERTY LAW 320 48. herein. 49. The deed transfer from plaintiffs to Roger Rodriguez, although a conveyance of Plaintiffs repeat and reallege paragraphs 1 through 47 as though fully set forth

property on its terms, must be considered a mortgage as a matter of law. Under New York Real Property Law 320, A deed conveying real property, which by any other instrument, appears to be intended only as a security in the nature of a mortgage, although an absolute conveyance in terms, must be considered as a mortgage. 50. The Letter of Investors Program Mortgage Agreement of October 22, 2004, a

written instrument signed by plaintiffs and Phil Simon, demonstrates that the deed conveying the subject property to Roger Rodriguez was intended as a mortgage and not an absolute conveyance. Among other things, the document is entitled Mortgage Agreement and promises to Help[]You Keep What[]s Yours. The document assures plaintiffs that they will remain in possession of their property and that buyer of said property has no legal responsibility or rights to use or occupy or make any request to ownership of said property for the one year investment period agreement. Notably, the document characterizes the alleged agreement between plaintiffs and Home Savers as a mortgage saving program whereby Home Savers will pay plaintiffs mortgage for one year. As explained to plaintiffs by Mr. Simon, this program required plaintiffs to make their mortgage payments directly to Home Savers. 51. To establish that a deed conveyance was meant as a security, examination also

may be made of oral testimony bearing on the intent of the parties and to a consideration of the surrounding circumstances and acts of the parties.

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52.

Defendants acts and statements evinced an intent to mortgage plaintiffs home.

As described above, defendants represented to plaintiffs on numerous occasions that plaintiffs would be refinancing their home. In addition, the advertisement placed by Home Savers (a/k/a Property Investment Consultants) appeals to consumers who are looking for help paying their mortgages; nowhere does it mention buying or selling property. 53. Likewise, in the period before and after the subject transaction, plaintiffs

statements and actions manifested their intent to remain in their home. For example, in July 2004, [Consumer 1] began the process of applying for a license to operate a day-care center in her home. Plaintiffs have remained in possession of their home and have continued to pay property taxes. By contrast, Mr. Rodriguez, who owns at least two other properties in Brooklyn, has made no effort to take possession of [Plaintiffs address]. In addition, the plain language of plaintiffs October 25 rescission letter demonstrates that plaintiffs intended to refinance their home. 54. Accordingly, the deed transfer from plaintiffs to defendant Roger Rodriguez

constitutes an equitable mortgage by which defendants took a security interest in plaintiffs home. That security interest includes the whole value of plaintiffs property. 55. By attempting to collect mortgage payments from plaintiffs, defendants have

demonstrated their continuing intent to retain a security interest in plaintiffs home. 56. Plaintiffs therefore request a declaration that the October 2004 deed transfer was a

mortgage, and that they are entitled to all the rights and remedies accorded to mortgagees under state and federal law. In addition, it is within this Courts equitable powers to fashion a remedy that restores plaintiffs to their pre-October 22, 2004 status.

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SECOND CAUSE OF ACTION Against Home Savers a/k/a Property Investment Consultants, Phil Simon, Howard Hughes, JDP Consultants, Fred Way, and Roger Rodriguez TRUTH IN LENDING ACT 57. herein. 58. Upon information and belief, at the time of the subject transaction, defendants Plaintiffs repeat and reallege paragraphs 1 through 56 as though fully set forth

acted as creditors who regularly engaged in the making of (equitable) mortgage loans, payable by agreement in more than four installments or for which the payment of a finance charge is or may be required, whether in connection with loans, sales of property or services, or otherwise. Accordingly, defendants are subject to the Truth in Lending Act (TILA), 15 U.S.C. 1601 et seq., and its implementing regulations, Federal Reserve Board Regulation Z, 12 C.F.R. 226. 59. As a result of the subject transaction, defendants acquired an interest in plaintiffs

home that secures payment or performance of an obligation. 60. Upon information and belief, in the course of the October 2004 consumer credit

transaction described above, defendants violated the disclosure and rescission requirements of TILA and Regulation Z in the following and other respects: a. By failing to disclose properly and accurately the amount financed, in

violation of 15 U.S.C. 1638(a)(2) and 12 C.F.R. 226.18(b); b. By failing to disclose properly and accurately the finance charge fees

payable to third parties that were not bona fide or reasonable in amount, as required by 15 U.S.C. 1638(a)(3) and 12 C.F.R. 226.18(d) & 226.4; c. By failing to disclose properly and accurately the annual percentage rate

in violation of 15 U.S.C. 1638(a)(4) and 12 C.F.R. 226.18(e);

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d.

By failing to disclose properly and accurately the total of payments in

violation of 15 U.S.C. 1638(a)(5) and 12 C.F.R. 226.18(h); e. By failing to disclose properly and accurately the number, amount, and

due dates or period of payments scheduled to repay the obligation in violation of 15 U.S.C. 1638(a)(6) and 12 C.F.R. 226.18(g); f. By failing to disclose that a security interest was taken in the subject

property in violation of 15 U.S.C. 1638(a)(9) and 12 C.F.R. 226.18(m); g. By failing to provide two copies of the notice of the right to rescind and an

accurate date for the expiration of the rescission period in violation of 15 U.S.C. 1635 and 12 C.F.R. 226.23(b); h. By failing to delay disbursement of funds to Chase Manhattan, Argent

Mortgage, AGA Capital, and others until after the expiration of the rescission period in violation of 12 C.F.R. 226.23(c); and i. By failing to return to plaintiffs any money or property given as earnest

money, downpayment or otherwise, and failing to take any action necessary or appropriate to reflect the termination of any security interest created under the transaction when plaintiffs requested rescission of the mortgage, in violation of 15 U.S.C. 1635(b) and 12 C.F.R. 226.23(d). 61. The above violations of the Truth in Lending Act give plaintiffs an extended right

to rescind the equitable loan held by defendants pursuant to 15 U.S.C. 1635 & 1641(d)(1) and 12 C.F.R. 226.23. 62. In addition, defendants are liable to plaintiffs for:

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a.

The return of any money or property that has been given to anyone in

connection with the transaction and the termination of defendants security interest in the property; b. c. d. Actual damages in an amount to be determined at trial; Statutory damages as provided by 15 U.S.C. 1640; and Costs and disbursements.

THIRD CAUSE OF ACTION Against Home Savers a/k/a Property Investment Consultants, Phil Simon, Howard Hughes, JDP Consultants, Fred Way, and Roger Rodriguez REAL ESTATE SETTLEMENT PROCEDURES ACT 63. herein. 64. The October 2004 equitable mortgage transaction described above, in which Plaintiffs repeat and reallege paragraphs 1 through 62 as though fully set forth

plaintiffs allegedly deeded their property to Roger Rodriguez, is a loan secured by a first lien on a two-family residential property, the proceeds of which were used to pay off plaintiffs mortgage with Chase Manhattan. 65. Upon information and belief, defendants are creditors who make or invest in

(equitable) mortgage loans aggregating more than $1,000,000 per year. 66. The October 2004 equitable mortgage transaction described above is a federally

related mortgage loan as defined in 12 U.S.C. 2602(1), and therefore is subject to the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. 2601 et seq., 67. Defendants violated RESPA with respect to plaintiffs loan transaction by: a. Giving or accepting kickbacks or other things of value to defendants Fred

Way and others in violation of 12 U.S.C. 2607(a) and 24 C.F.R. 3500.14(c); and

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b.

Giving a portion, split, or percentage of charges made or received for the

rendering of a real estate settlement service in connection with a transaction involving a federally related mortgage loan other than for services actually performed, in violation of 12 U.S.C. 2607(a) and 24 C.F.R. 3500.14(c). 68. Defendants are liable to plaintiffs for actual damages, trebled under 12 U.S.C.

2607(d)(2), and for costs and disbursements. FOURTH CAUSE OF ACTION Against All Defendants NEW YORK STATE GENERAL BUSINESS LAW 349 (THE DECEPTIVE PRACTICES ACT) 69. herein. 70. Upon information and belief, defendants conducted a business and/or Plaintiffs repeat and reallege paragraphs 1 through 68 as though fully set forth

furnished a service as those terms are defined in New York State General Business Law 349 (the Deceptive Practices Act). 71. Upon information and belief, defendants violated the Deceptive Practices Act by

engaging in acts and practices that were misleading in a material way, unfair, deceptive, and contrary to public policy and generally recognized standards of business. 72. These practices and acts include: a. Misrepresenting to plaintiffs at the time of the subject transaction that they

would retain ownership of their home, when in fact defendants fraudulently induced plaintiffs to transfer title to Roger Rodriguez; b. Misrepresenting to plaintiffs the nature of the documents they were

signing and the nature and details of the transaction;

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c.

Mortgaging plaintiffs home to Mr. Rodriguez without first ascertaining

that Mr. Rodriguez had a bona fide interest in the property; d. Fraudulently notarizing plaintiffs signatures on the deed documents in

order to legitimize the transfer of their property to Mr. Rodriguez; and e. Falsely advertising foreclosure rescue services in the course of

conducting business, trade, or commerce in the State of New York. 73. In the course of extending an equitable mortgage to plaintiffs, defendants violated

the Deceptive Practices Act by: a. Failing to provide plaintiffs with a good faith estimate of settlement

costs three days after application for the loan, as is required by federal law; b. Hiding the cost of credit of the mortgage by failing to deliver the federally

required disclosures to plaintiffs; c. Failing to provide plaintiffs with a HUD-1 Settlement Statement on their

loan, as is required by federal law; d. Violating the limitation on advance deposits in escrow accounts set forth

in RESPA in violation of 12 U.S.C. 2609; and e. Misrepresenting numerous other critical and material aspects of the

financing transactions, as described above. 74. In addition, defendant AGA Capital violated the Deceptive Practices Act by

charging exorbitant fees in connection with the Argent Mortgage, including a $12,750 origination fee and an $8,500 yield spread premium, on a spurious mortgage, further skimming equity from plaintiffs home.

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75. practices. 76.

Plaintiffs suffered serious injury as the proximate result of defendants deceptive

Defendants practices have had and may continue to have a broad impact on

consumers throughout New York State. 77. Defendants are liable to plaintiffs for actual damages, costs and disbursements.

FIFTH CAUSE OF ACTION Against Home Savers a/k/a Property Investment Consultants, Phil Simon, Howard Hughes, JDP Consultants, Fred Way, and Roger Rodriguez FRAUD 78. herein. 79. Defendants fraudulently and knowingly induced plaintiffs to enter the October Plaintiffs repeat and reallege paragraphs 1 through 77 as though fully set forth

2004 equitable mortgage/deed transfer by making intentional misrepresentations and/or failing to provide material information. 80. Plaintiffs suffered serious injury as the proximate result of their reliance on

defendants intentional misrepresentations and failures to disclose. 81. Defendants actions were willing, intentional and knowing, rendering the October

2004 equitable loan/deed transfer null and void. 82. In addition, defendants are liable to plaintiffs for actual damages, punitive

damages, costs and disbursements. SIXTH CAUSE OF ACTION Against Home Savers a/k/a Property Investment Consultants, Phil Simon, Howard Hughes, JDP Consultants, Fred Way, and Roger Rodriguez CIVIL CONSPIRACY TO COMMIT FRAUD 83. herein. 22 Plaintiffs repeat and reallege paragraphs 1 through 82 as though fully set forth

84.

Defendants entered into an agreement to induce plaintiffs to enter the October

2004 equitable mortgage/deed transfer transaction by making misrepresentations and/or failing to provide material information. 85. Defendants intentionally participated in the scheme by inducing plaintiffs to enter

into the October 2004 equitable mortgage/deed transfer by making misrepresentations and/or failing to provide material information, in furtherance of the agreement. 86. Plaintiffs suffered serious injury as the proximate result of their reliance on

defendants actions and representations. 87. Said conspiracy renders void and unenforceable the October 2004 equitable

mortgage/deed transfer. 88. In addition, defendants are liable to plaintiffs for actual damages, punitive

damages, costs and disbursements. SEVENTH CAUSE OF ACTION Against Home Savers a/k/a Property Investment Consultants, Phil Simon, Howard Hughes, JDP Consultants, Fred Way, and Roger Rodriguez CONVERSION 89. herein. 90. Plaintiffs owned and had a right to possession of the proceeds of the October 2004 Plaintiffs repeat and reallege paragraphs 1 through 88 as though fully set forth

mortgage/deed transfer, including the $159,982.23 cash proceeds of the mortgage. Upon information and belief, those proceeds were distributed to defendant Fred Way and other defendants to this action. 91. Upon information and belief, such funds were not given to plaintiffs and were not

disbursed for their benefit.

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92. funds. 93.

Upon information and belief, defendants acted to exclude plaintiffs rights to the

Defendants are liable to plaintiffs for: a. b. actual, compensatory, and punitive damages; and costs and disbursements.

EIGHTH CAUSE OF ACTION Against Home Savers a/k/a Property Investment Consultants, Phil Simon, Howard Hughes, JDP Consultants, Fred Way, and Roger Rodriguez UNCONSCIONABILITY 94. herein. 95. Throughout the course of the October 2004 mortgage/deed transaction, an Plaintiffs repeat and reallege paragraphs 1 through 93 as though fully set forth

enormous disparity in bargaining power existed between plaintiffs and defendants. Plaintiffs are first-time homebuyers who have never refinanced their home. In contrast, defendants are experienced entities and individuals that sought to profit from the disparity in bargaining power and did so by deliberately targeting plaintiffs with misinformation. 96. The terms of the October 2004 mortgage/deed transaction are so one-sided as to

be abusive and unconscionable. Defendants exploited the disparity in bargaining power to induce plaintiffs to transfer title to their home and enter into a highly disadvantageous equitable loan when plaintiffs believed that they were applying for a new mortgage. Said procedural and substantive unconscionability renders void and unenforceable the October 2004 equitable mortgage/deed transfer. NINTH CAUSE OF ACTION Against Argent Mortgage NEGLIGENCE

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97. herein. 98.

Plaintiffs repeat and reallege paragraphs 1 through 96 as though fully set forth

Defendant Argent Mortgage owed plaintiffs a duty of due diligence to verify that

Roger Rodriguez, as a mortgagor, possessed a bona fide interest in the subject property. Argent Mortgage was obligated to exercise this duty before accepting a mortgage and filing a lien against the property. 99. Argent should not have accepted a mortgage or filed a lien against the property

because it was on notice of plaintiffs interest in the property, based on land records; because plaintiffs remained in actual, open, and visible possession of the property; and because plaintiffs did not attend the October 21, 2004 closing and had not signed any deed transfer documents as of that date. 100. It was foreseeable that plaintiffs would be injured if Argent Mortgage performed a

deficient title examination, including its failure to discover that plaintiffs remained in possession and ownership of the subject, and then filed a lien purporting to encumber the entire property. 101. Argent Mortgage breached its duty because it failed to perform an adequate

review of the title history and because it failed to ascertain that plaintiffs were still plainly in possession and ownership of the property. 102. Plaintiffs suffered serious injury as the actual and proximate result of Argents

breach of its duty of due diligence. 103. As a result, Argents purported lien against the property should be declared void,

and Argent Mortgage is liable to plaintiffs for actual damages, costs, and disbursements.

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TENTH CAUSE OF ACTION Against Argent Mortgage and Roger Rodriguez NEW YORK REAL PROPERTY ACTIONS AND PROCEEDINGS LAW, ARTICLE 15 104. herein. 105. Plaintiffs bring this claim pursuant to Article 15 of the New York State Real Plaintiffs repeat and reallege paragraphs 1 through 103 as though fully set forth

Property Actions and Proceeding Law to compel the determination of any claims adverse to those of plaintiffs in the premises known as [Plaintiffs address]. Through this action, plaintiffs seek to quiet title to the subject property by having declared as void the fraudulent deed transfer from plaintiffs to Roger Rodriguez, and the mortgage held by Argent Mortgage. 106. Plaintiffs are the sole owners of the property. They initially acquired their interest

in 2001. They acquired a mortgage on this property in March 2001, which was assigned to Chase Manhattan in March 2001. The New York City Department of Social Services acquired a subordinate lien on the property in August 2004. 107. Public records suggest that defendant Mr. Rodriguez may claim an interest in the

property. His purported interest, and the documents upon which it rests, are void because they were obtained through a conspiratorial and fraudulent scheme that tricked plaintiffs into conveying ownership of their home without their knowledge. Alternatively, the deed transfer constituted an equitable mortgage and not a deed transfer. 108. Argent Mortgage may claim that it has a lien against the property for

approximately $425,000, which it obtained as security for a $425,000 loan to Mr. Rodriguez. However, Mr. Rodriguez has no valid interest in the property to give Argent Mortgage. Further, as described above, Argent Mortgage conducted an inadequate search of the title history, failed to ascertain that plaintiffs were plainly in actual, open, and visible possession and ownership of

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the property, and mortgaged the property before plaintiffs had ever been induced to transfer ownership to Roger Rodriguez. 109. Upon information and belief, no party who is or should be a defendant is or might

be an infant, mentally retarded, mentally ill or an alcohol abuser. 110. Upon information and belief, the judgment to be entered in this action will not

affect a person or persons not in being or ascertained at the commencement of this action, who by any contingency contained in a devise or grant or otherwise, could afterward become entitled to a beneficial estate or interest in the property; moreover, every person in being who would have been entitled to such interest in the property if such contingency happened immediately prior to the commencement of this action are parties hereto. 111. Accordingly, plaintiffs request that this Court issue: a. a declaration that plaintiffs are the lawful sole owners of the property and

are entitled to lawful, peaceable, and uninterrupted possession thereof as against all defendants herein, and as against anyone claiming under them; b. an injunction prohibiting all defendants, and every person claiming under

them, from claiming an estate or interest in, or lien or encumbrance on, the property; c. a judgment declaring as void the fraudulent deed dated October 21/22,

2004 purporting to transfer plaintiffs interest in the property to Mr. Rodriguez; d. a judgment declaring as void the mortgage claimed by Argent Mortgage

against the property;

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e.

damages stemming from plaintiffs lost rents and other damage in

connection with the loss of their exclusive right to use the property in the manner of their choosing; and f. any other relief that this Court deems just and proper. ELEVENTH CAUSE OF ACTION Against Fred Way NEW YORK STATE EXECUTIVE LAW 135 112. herein. 113. Defendant Fred Way is a licensed notary public in the State of New York. By Plaintiffs repeat and reallege paragraphs 1 through 111 as though fully set forth

notarizing the deed transfer of plaintiffs property without having the signatories before him, Mr. Way violated his duty as a notary public. 114. New York State Executive Law 135 provides that For any misconduct by a

notary public in the performance of any of his powers such notary public shall be liable to the parties injured for all damages sustained by them. 115. It was foreseeable that plaintiffs would sustain damages as a result of Mr. Ways

misconduct as a notary public. 116. Defendant Way is liable to plaintiffs for damages sustained as a result of his

fraudulent notarization of plaintiffs signatures.

WHEREFORE, plaintiffs [Consumer 1], [Consumer 2] and [Consumer 3] respectfully request that this Court: a. Declare that the October 2004 deed transfer be deemed a mortgage pursuant to New York Real Property Law 320;

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b.

Rescind the October 2004 equitable mortgage transaction; void the deed that transferred title from plaintiffs to defendant Roger Rodriguez; and terminate any security interest in plaintiffs property created by the transaction; Quiet title to the subject property by having declared as void the fraudulent deed from plaintiffs to Roger Rodriguez, and the mortgage held by Argent Mortgage; Award actual damages in an amount to be determined at trial; Award statutory damages as set forth above; Award punitive damages in an amount to be determined at trial; Award reasonable costs of this action as set forth above; Enjoin defendants from engaging in deceptive acts and practices that affect consumers in New York State under N.Y. General Business Law 349(h); and Award such other and further relief as this Court deems just and proper.

c. d. e. f. g. h. i.

DATED:

December 15, 2004 Brooklyn, NY

[Attorneys for Plaintiffs] Attorneys for Plaintiffs

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15.2 Interrogatories to Rescue Scammers Lender

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK [Consumer 1], [Consumer 2], and [Consumer 3], Plaintiffs, Civil Action No.: 04-5427 (NG) (KAM) v. HOME SAVERS CONSULTING CORP. a/k/a PROPERTY INVESTMENT CONSULTANTS, INC., PHIL SIMON, HOWARD HUGHES, FRED DOUGLAS WAY, III, ESQ., ROGER H. RODRIGUEZ, ARGENT MORTGAGE CO., LLC, AGA CAPITAL NY, INC., JOHN DOE and JANE DOE, the last two names being fictitious, said parties being individuals, if any, having or claiming an interest in, or lien upon, the premises described herein, and XYZ-1 CORP. and XYX-2 CORP., the last two names being fictitious, it being the intention of plaintiffs to designate any corporation having a legal interest in the premises described herein. Defendants. PLAINTIFFS FIRST SET OF INTERROGATORIES TO DEFENDANT ARGENT MORTGAGE COMPANY, LLC PLEASE TAKE NOTICE that, pursuant to Rule 33 of Federal Rules of Civil Procedure and Rule 26.3 of the Local Rules, plaintiffs [Consumer 1], [Consumer 2] and [Consumer 3] hereby request that defendant Argent Mortgage Company, LLC (Argent) answer the following interrogatories in writing, under oath, within thirty (30) days from the date of service.

DEFINITIONS AND INSTRUCTIONS 1. In addition to the definitions and instructions set forth below, Plaintiffs hereby

incorporate by reference the Definitions and Instructions set forth in Plaintiffs First Request to 30

Defendant Argent Mortgage Company, LLC for the Production of Documents, dated June 3, 2005. 2. Complaint means the complaint, dated December 15, 2004, Plaintiffs filed and

served in the above-captioned proceeding. 3. Identify (with respect to Persons) means to give, to the extent known: a. b. c. the Persons full name; the Persons last known address; and if referring to a natural person, (i) the name of his or her employer; (ii) the

address and telephone number of such employer; and (iii) the position held by, or job title of, such person with such employer. 4. Identify (with respect to a Document), means to give, to the extent known: a. b. c. d. e. 5. 6. meaning. 7. Produce all documents which you identify in any answer to these Interrogatories the date of the document; the type of document (e.g., memorandum, letter); the author, addressee and other recipients of the document; the general subject matter of the document; and the current location of the document.

The present tense includes the past and vice versa. All terms not specifically defined in these requests shall have their ordinary

which are in your possession, custody or control.

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8.

Answer each interrogatory separately. Whenever subsections are used in these

Interrogatories, you are to provide the information requested by each interrogatory as it applies to each subsection. 9. If you cannot give a complete answer, answer as much of the interrogatory as you

can. In addition, state why you cannot give a complete answer. 10. If it is claimed that an answer to any interrogatory calls for information or an

identification of documents that are privileged or otherwise protected from disclosure and such privilege or other claimed protection is asserted: a. identify the nature of the privilege (including work product) that is being claimed; and b. provide the following information (unless divulgence of such information would cause disclosure of the allegedly privileged information): i. for documents: (1) the type of document (e.g., letter, memorandum, etc.);

(2) the general subject matter of the document; (3) the date of the document; and (4) such other information as is sufficient to identify the document for a subpoena duces tecum, including, where appropriate, the author, addressee, and any other recipient of the document, and, where not apparent, the relationship of the author, addressee, and any other recipient to each other; ii. for oral communications: (1) the name of the person making the

communication and the names of persons present while the communication was made and, where not apparent, the relationship of the persons present to the person making the communication; (2) the date and place of the communication; and (3) the general subject matter of the communication.

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Any part of an answer to which defendant does not claim privilege or work product should be given in full. 11. These Interrogatories are continuing in character so as to require you to file

prompt supplementary and amended answers or responses as required by the Federal Rules of Civil Procedure, if you obtain further or different information relevant to any of these Interrogatories prior to trial herein

INTERROGATORIES INTERROGATORY NO. 1: Identify all Persons with knowledge concerning the negotiation, execution, underwriting, origination, performance and/or non-performance of the Rodriguez Mortgage, and summarize the knowledge of each person concerning this subject. INTERROGATORY NO. 2: Identify all Persons with knowledge concerning the negotiation, origination, performance and/or non-performance of the [Comsumer 1 and Consumer 2] Mortgage, and summarize the knowledge of each person concerning this subject. INTERROGATORY NO. 3: Identify all Persons with knowledge concerning the negotiation, execution, performance and/or non-performance of Argents Title Policy, and summarize the knowledge of each person concerning this subject. INTERROGATORY NO. 4:

33

Identify all Persons with knowledge concerning the negotiation, execution, performance and/or non-performance of Rodriguezs Title Policy, and summarize the knowledge of each person concerning this subject. INTERROGATORY NO. 5: Identify all Persons with knowledge concerning the negotiation, execution, performance and/or non-performance of the Home Savers Letter Agreement, and summarize the knowledge of each person concerning this subject. INTERROGATORY NO. 6: Describe any screening procedures you have used from January 1, 2001 to the present to identify any persons or companies with which you would not conduct business or whose involvement in a mortgage loan transaction would cause you to scrutinize or reject a mortgage loan, including mortgage lenders, mortgage brokers, mortgage bankers, property appraisers, real estate sellers, and/or real estate brokers, including but not limited to subscription to any private mortgage fraud detection or risk management services such as Mortgage Asset Research Institute, Inc. or Appintelligence. INTERROGATORY NO. 7: Identify each person or entity affiliated with Argent who has ever been responsible for investigating mortgage fraud, fraudulent deed conveyances, or sale/leaseback agreements in connection with a mortgage application submitted to Argent, or a mortgage bought, sold, originated, or serviced by Argent, and describe the exact nature of his or her responsibilities and areas of investigation. INTERROGATORY NO. 8:

34

Identify all mechanisms that you use to ensure that properties for which you originate, service, or buy mortgages are free of defects or clouds in title. INTERROGATORY NO. 9: Describe all services provided by AGA Capital in connection with the Rodriguez mortgage, and explain the dollar amount, method of calculation, timing, and payment method of all compensation to AGA Capital. INTERROGATORY NO. 10: Describe all services provided by Core Abstract in connection with the Rodriguez mortgage, and explain the dollar amount, method of calculation, timing, and payment method of all compensation to Core Abstract. INTERROGATORY NO. 11: Describe the distribution of funds in connection with the Rodriguez Mortgage, including but not limited to the any fees, compensation or consideration given to any of the Defendants, plaintiffs or any third-party. INTERROGATORY NO. 12:

35

Identify the person or persons responsible for conducting your due diligence in connection with the Rodriguez Mortgage, including but not limited to your assessment of interests in the [Plaintiffs] Property; the [Plaintiffs] Mortgage; the condition and value of the [Plaintiffs] Property; Roger Rodriguezs ability to repay the Rodriguez Mortgage; Roger Rodriguezs right to occupy the [Plaintiffs Property] and use it has his principle residence; the Home Savers Letter Agreement; the mortgage saving services offered by Home Savers, and plaintiffs ability to repay a mortgage. INTERROGATORY NO. 13: Do You contend that Roger Rodriguez had an obligation under the Rodriguez Mortgage to occupy the [Plaintiffs] Home and use it as his primary residence within sixty days of executing the Rodriguez Mortgage. Unless Your answer is an unqualified positive response, enumerate and describe in reasonable detail each reason You assert in support of this contention. NTERROGATORY NO. 14: Explain Argents streamlined lending model and commonsense underwriting guidelines, as discussed in Argents online promotional literature.

36

INTERROGATORY NO. 15: State with reasonable detail when, how and under what circumstances you set the interest rate for the Rodriguez Mortgage. INTERROGATORY NO. 16: Other than the Rodriguez Mortgage, state whether you have originated any mortgage loans that also involved agreements wherein the mortgagor promised to return title to the previous owner after a certain period of time, and if so, identify the address of each such mortgaged property. INTERROGATORY NO. 17: Other than the Rodriguez Mortgage, during the period from Argents formation to present, state whether there are or have ever been any agreements, business relationships or residential real estate transactions between or involving (a) Argent, (b) Core Abstract, (c) AGA Capital , (d) Home Savers, or (e) Fred Douglas Way, III, Esq. If so, identify any such agreements, business relationships or residential real estate transactions. INTERROGATORY NO. 18: Explain the process by which Argent screens mortgage brokers and bankers who submit loan applications on behalf of borrowers, and state whether Argent has ever declined to work with or terminated a relationship with a mortgage broker or banker, identifying by name and address the mortgage broker or banker and stating the reason for such decision. INTERROGATORY NO. 19: Identify all communications you received from Plaintiffs, stating the person(s) who received such communications, and any investigations, inquiries, conversations, meetings,

37

discussions, correspondence or other written or oral conversations concerning such communications or responses thereto. INTERROGATORY NO. 20: Identify all information concerning property value, property sale history, chain of title, and Loan to Value (LTV) ratios that you require to process mortgage loan applications. INTERROGATORY NO. 21: List all information you obtained concerning Roger Rodriguezs ability to pay the Rodriguez Mortgage, including but not limited to household income and savings, maximum debt ratio, credit reports, assets, and liabilities, the sources of any such information, the dates you received it and how such information was used to process the application for the subject transaction. INTERROGATORY NO. 22: With respect to any meetings or communications you had with plaintiffs, any of the Defendants, Core Abstract, or Chicago Title Insurance Company concerning the (a) the [Plaintiffs] Mortgage, (b) the Rodriguez Mortgage, (c) Argents Title Policy, (d) Rodriguezs Title Policy, and (e) the Home Savers Letter Agreement, identify the date and place of each meeting or communication, identify all participants, summarize in reasonable detail what was discussed and state who initiated the meeting or communication and why it was initiated. INTERROGATORY NO. 23: Identify each person who provided information or other assistance in responding to these interrogatories, identifying for each person (a) the interrogatory or interrogatories for which such person provided assistance and (b) the information they provided for each interrogatory. Dated: New York, New York June 7, 2005 38

[Attorneys for Plaintiffs]

By:_____________________________ [Attorneys for Plaintiffs] Attorneys for Plaintiffs [Consumer 1], [Consumer 2], and [Consumer 3] CERTIFICATE OF SERVICE I, [Attorney for Plaintiff], an attorney, hereby certify that on June 7, 2005, I caused a true and accurate copy of the foregoing Plaintiffs First Request to Defendant Argent Mortgage Company, LLC for the Production of Documents, to be served on the following: VIA FACSIMILE and U.S. MAIL [Attorneys for Defendants] _____________________________ [Attorney for Plaintiffs]

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15.3 Document Requests to Rescue Scammers Lender

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK [Consumer 1], [Consumer 2] and [Consumer 3], Plaintiffs, Civil Action No.: 04-5427(NG)/(KAM) v. HOME SAVERS CONSULTING CORP. a/k/a PROPERTY INVESTMENT CONSULTANTS, INC., PHIL SIMON, HOWARD HUGHES, FRED DOUGLAS WAY, III, ESQ., ROGER H. RODRIGUEZ, ARGENT MORTGAGE CO., LLC, AGA CAPITAL NY, INC., JOHN DOE and JANE DOE, the last two names being fictitious, said parties being individuals, if any, having or claiming an interest in, or lien upon, the premises described herein, and XYZ-1 CORP. and XYX-2 CORP., the last two names being fictitious, it being the intention of plaintiffs to designate any corporation having a legal interest in the premises described herein. Defendants. PLAINTIFFS FIRST REQUEST TO DEFENDANT ARGENT MORTGAGE COMPANY, LLC FOR THE PRODUCTION OF DOCUMENTS PLEASE TAKE NOTICE that, pursuant to Rules 26 and 34 of the Federal Rules of Civil Procedure and Rule 26.3 of the Local Rules, Plaintiffs [Consumer 1], [Consumer 2], and [Consumer 3] hereby request that Defendant Argent Mortgage Company, LLC (Argent) produce the following documents for inspection and copying at the offices of [Attorneys for Plaintiffs], within thirty (30) days from the date of service. DEFINITIONS

40

12.

The terms all, any and each shall be construed as all, any and/or each as

necessary to bring within the scope of the discovery request all responses that otherwise could be construed to be outside of its scope. 13. The terms and and or shall be construed either disjunctively or conjunctively

as necessary to bring within the scope of the discovery request all responses that might otherwise be construed to be outside of its scope. 14. AGA Capital means defendant AGA Capital NY, Inc., including, but not

limited to, its employees, officers, directors, accountants, attorneys, agents and all other persons or entities acting on its behalf, as well as any parent, subsidiary or affiliates. 15. Argent means defendant Argent Mortgage Company, LLC, including, but not

limited to, its employees, officers, directors, accountants, attorneys, agents and all other persons or entities acting on its behalf, as well as any parent, subsidiary or affiliates. 16. Argents Title Policy means title insurance, dated October 21, 2004, issued

under policy number 7210732-143308, by Chicago Title Insurance Company, for a $425,000 mortgage by and between Roger Rodriguez and Argent. 17. Chase means Chase Manhattan Bank, including, but not limited to, its

employees, officers, directors, accountants, attorneys, agents and all other persons or entities acting on its behalf, as well as any parent, subsidiary or affiliates. 18. Chicago Title Insurance Company means Chicago Title Insurance Company,

including, but not limited to, its employees, officers, directors, accountants, attorneys, agents and all other persons or entities acting on its behalf, as well as any parent, subsidiary or affiliates. 19. form. Communication means the transmittal of information of any kind and in any

41

20.

Concerning means comprising, consisting of, concerning, describing,

mentioning, referring to, reflecting, regarding, supporting, evidencing, relating to, prepared in connection with, used in preparation for, or being in any way legally, logically or factually concerned with the manner or document described, referred to or discussed. 21. Core Abstract means Core Abstract Corp., including, but not limited to, its

employees, officers, directors, accountants, attorneys, agents and all other persons or entities acting on its behalf, as well as any parent, subsidiary or affiliates. 22. Defendant means any of the defendants to the above-captioned litigation,

including, but not limited to, their employees, officers, directors, accountants, attorneys, agents and all other persons or entities acting on their behalf, as well as any parent, subsidiary or affiliated entities. 23. Document means any written, typed, printed, recorded or graphic matter of any

kind, however produced or reproduced, and all non-identical copies thereof, whether different because of notes made thereon or otherwise, including, but not limited to, and by way of example only: letters or other correspondence, messages, telegrams, telexes, memoranda, e-mail, notations, reports, analyses, summaries, charts, graphs, studies, tabulations, statements, notes, notebooks, work papers, telephone toll records, invoices, books, pamphlets, brochures, press releases, minutes of meetings or conferences, transcripts of telephone conversations, transcripts of testimony, orders or decisions or citations or summonses issued by any court or governmental administrative agency, cost sheets, financial reports, accountants' work papers, opinions or reports of consultants, checks (front and back), check stubs, receipts, ledgers, purchase orders, pictures, photographs, contracts, agreements, advertisements, motion picture films, tapes, tape recordings, videotapes, indices, microfilm, other data compilations, including computer data,

42

computer diskettes, hard drives, zip drives or the memory units containing such data from which information can be obtained or translated into usable form, drafts of any of the foregoing and all similar documents. 24. EJ Appraisals means EJ Appraisals Services, including, but not limited to, its

employees, officers, directors, accountants, attorneys, agents and all other persons or entities acting on its behalf, as well as any parent, subsidiary or affiliates. 25. Ralph H. Pecorale, Esq., P.C. means Ralph H. Pecorale individually and/or

Ralph H. Pecorale, Esq., P.C., including, but not limited to, its employees, officers, directors, accountants, attorneys, agents and all other persons or entities acting on its behalf, as well as any parent, subsidiary or affiliates. 26. Home Savers means defendant Home Savers Consulting Corp. (a/k/a Property

Investment Consultants, Inc.) including, but not limited to, its employees, officers, directors, accountants, attorneys, agents and all other persons or entities acting on its behalf, as well as any parent, subsidiary or affiliates. 27. Home Savers Letter Agreement means the Letter of Investors Program

Mortgage Agreement, dated October 22, 2004, by and between Homes Savers and Plaintiffs. 28. Identify has the meaning set forth in Rule 26.3 of the Local Rules, which is

incorporated herein by reference. 29. Including means including, without limitation or in any way qualifying, limiting

or restricting the foregoing. 30. [Plaintiff] Mortgage means a mortgage, dated March 13, 2001, to secure the

sum of $225,837, by and between Plaintiffs and Allmoney Mortgage Bankers, Inc; as assigned to Chase on March 13, 2001.

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31. 32.

[Plaintiff] Property means the property located at [Plaintiffs address]. Local Rules mean the Local Rules of the United States District Courts for the

Southern and Eastern Districts of New York. 33. Person means all natural persons, corporations, partnerships or other business

associations and all other legal entities. 34. 35. Plaintiffs mean [Consumer 1], [Consumer 2] and [Consumer 3]. Rodriguez Mortgage means a mortgage, dated October 21, 2004, to secure the

sum of $425,000, by and between Roger Rodriguez and Argent. 36. Rodriguezs Title Policy means title insurance, dated October 21, 2004, issued

under policy number 7210632-68251, by Chicago Title Insurance Company, for a $425,000 mortgage by and between Roger Rodriguez and Argent. 37. 38. The terms you and your means Argent, as defined herein. The use of the singular form of any word shall include the plural and vice versa. INSTRUCTIONS 1. Continuing Requests. These requests are continuing in character so as to require

Argent to supplement its responses and produce additional documents pursuant to Rule 26(e) of the Federal Rules of Civil Procedure if Argent locates or obtains possession, custody or control of such additional responsive documents at any time prior to trial. 2. Time Period. Unless otherwise specified herein, the period of time covered by

these requests is from January 1, 2002 through the present. 3. Privileged or Proprietary Matter. If any request is deemed to call for the

production of privileged or work product materials and any documents or information are not produced because such privilege or work product is asserted, Argent is instructed to provide: (a)

44

the nature of the privilege (including work product) that is being claimed; (b) the type of document being withheld based upon the asserted privilege; (c) the general subject matter of the document; (d) the date of the document; and (e) such other information as is sufficient to identify the document for a subpoena duces tecum, including, where appropriate, the author of the document, the addressee of the document, and, where not apparent, the relationship of the author and addressee to each other. 4. Lost or Destroyed Documents. If any document requested herein was at one time

in existence, but has been lost, discarded or destroyed (including the deletion from any computer of any responsive document), Argent is instructed to identify such document completely, providing as much of the following information as possible: (a) the type of document; (b) its date; (c) the contents, subject(s), title, subtitles, nature, or scope of the document; (d) the date or approximate date the document was lost, discarded or destroyed; (e) the circumstances and manner in which the document was lost, discarded or destroyed; (f) the reasons for disposing of the document (if discarded or destroyed); (g) the identity of all persons authorizing or having knowledge of the circumstances surrounding the disposal of the document; (h) the identity of the person(s) who lost, discarded or destroyed the document; and (i) the identity of all persons having knowledge of the contents thereof. 5. The applicable definitions and rules of construction set forth in the Federal Rules

of Civil Procedure and the Local Rules are incorporated herein by reference. 6. If you object to any Document Request or part thereof, all documents to which

your objection does not apply shall be produced. REQUESTS

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1.

All documents and communications concerning the Rodriguez Mortgage,

including, but not limited to, documents concerning its negotiation, execution, implementation and any drafts thereof, loan files (including photocopies of front and back covers), underwriting documents, disclosure documents, closing documents, bill statements, billing history, escrow history, and proof of payment. 2. All documents and communications concerning the [Plaintiff] Mortgage,

including, but not limited to, documents concerning its negotiation, execution, implementation, and satisfaction, and any drafts thereof, and any documents or communications between Argent and Chase regarding the [Plaintiff] Mortgage and the [Plaintiff] Property. 3. All documents demonstrating the manner in which funds were disbursed from the

Rodriguez Mortgage, including but not limited to copies of the front and back of all checks issued in connection with the Rodriguez Mortgage. 4. All documents relating to compensation, points, fees or any other funds paid to or

received from any person, company or entity in connection with Rodriguez Mortgage. 5. All documents and communications concerning to the chain of title of the

[Plaintiff] Property, and the source of such documents. 6. All documents and communications concerning Argents Title Policy, including,

but not limited to, documents concerning its negotiation, execution, implementation and any drafts thereof. 7. All documents and communications concerning Rodriguezs Title Policy,

including, but not limited to, documents concerning its negotiation, execution, implementation and any drafts thereof.

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8.

All documents and communications reflecting any investigations, inquiries, or

communications concerning a letter sent by Plaintiffs to Argent on October 25, 2004. 9. All documents and communications concerning the Home Savers Letter

Agreement, including, but not limited to, documents concerning its negotiation, execution, implementation and any drafts thereof. 10. Any and all executed agreements by and between any of the Defendants and any

third party containing provisions identical or similar to the following provisions contained in Home Savers Letter Agreement: Whereas for one year our mortgage saving program will pay your mortgage and return said property back to owner/seller on about ____. Home Savers agrees to manage and assure that property deed and property title documents are registered back to Sellers within a reasonable time of no less that one month [sic]. 11. All applications from persons seeking to apply for mortgage loans with Argent

that also involved agreements containing provisions identical or similar to the following provisions contained in Home Savers Letter Agreement: Whereas for one year our mortgage saving program will pay your mortgage and return said property back to owner/seller on about ____. Home Savers agrees to manage and assure that property deed and property title documents are registered back to Sellers within a reasonable time of no less that one month [sic]. 12. All documents and communications concerning the following exclusion listed in

Schedule B of Argents Title Policy: Policy exceptsd [sic] the terms and conditions of an unrecorded agreement dated October 22, 2004 between the insured and the seller.

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13.

All documents and communications concerning the following exclusion listed in

Schedule B of Rodriguezs Title Policy: Policy excepts the terms and conditions of an unrecorded agreement dated October 22, 2004 between the insured and the seller. 14. From Argents formation to present, all documents and communications

concerning any agreements, business relationships or residential real estate transactions between or involving Argent and any of the following: (a) Home Savers; (b) Phil Simon; (c) Howard Hughes; (d) Fred Douglas Way, III, Esq.; (e) Roger H. Rodriguez; (f) E.J. Appraisals; (g) Ralph H. Pecorale, Esq., P.C.; (h) AGA Capital; (i) Core Abstract; (j) Karalyn Karcher; and (k) Chaiyot Wattanachaiyot. 15. All documents concerning Argents standards, criteria or guidelines for approving

loans, including but not limited to written rules, policy manuals, handbooks, videos, notes, memoranda, or correspondence that constitute, describe, reflect, record, mention, comment upon, or otherwise refer to any training, guidance, or instruction regarding compliance with federal and state consumer protection and fair lending laws. 16. All documents that constitute or reflect Argents policies, procedures, and

instructions concerning the screening, underwriting and approval of loans, including but not limited to written rules, underwriting guidelines, training and policy manuals, handbooks, notices, notes, memoranda, and correspondence.. 17. All documents and communications concerning any training, guidance or

instructions you have conducted or provided regarding potential or alleged mortgage fraud, fraudulent deed conveyances, and sale/leaseback agreements in connection with a mortgage application submitted to Argent, or a mortgage bought, serviced, or originated by Argent.

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18.

All documents and communications reflecting any investigation you have

conducted regarding potential or alleged mortgage fraud, fraudulent deed conveyances, and sale/leaseback agreements in connection with mortgages bought, sold, serviced or originated by Argent or in connection with mortgage applications submitted to Argent. 19. All documents relating to Argents methods of pricing interest rates, points and

fees (including discount points and/or discount fees), yield spread premiums, closing costs and other fees, including but not limited to rate sheets or matrices and fee charts. 20. All documents and communications concerning any due diligence Argent

performed in connection with the Rodriguez Mortgage, including but not limited to its review of title of the [Plaintiff] Property, the condition of the [Plaintiff] Property, Plaintiffs ability to repay a mortgage and Roger Rodriguezs ability to pay the Rodriguez Mortgage, including his credit history, savings, age, household income, assets, and liabilities. 21. All documents and communications concerning the loan approval conditions

associated with the Rodriguez Mortgage. 22. All documents indicating the identities, duties, functions, and responsibilities of

all employees, agents, or representatives of Argent who were directly or indirectly involved with the Rodriguez Mortgage, including but not limited to (a) Colleen Kearns; (b) Carl Carr; (c) Angel Calderon; (d) Gary Hernandez; (e) Orson Benn; and (f) Michael Ryan. 23. All documents and communications that constitute, describe, reflect, record,

mention, comment upon or otherwise refer to any complaint, including administrative complaints, court filings, and/or informal complaints, arising from or related to mortgages bought, services, or originated by Argent.

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24. Mortgage. 25.

Any insurance policies or indemnification agreements related to the Rodriguez

All documents concerning private mortgage insurance obtained by defendant

Roger Rodriguez, and all documents concerning Argents policy for requiring borrowers to obtain private mortgage insurance. Dated: New York, New York June 3, 2005

[Attorneys for Plaintiffs]

By:_____________________________ [Attorneys for Plaintiffs] Attorneys for Plaintiffs [Consumer 1], [Consumer 2], and [Consumer 3] CERTIFICATE OF SERVICE I, [Attorney for Plaintiffs], an attorney, hereby certify that on June 3, 2005, I caused a true and accurate copy of the foregoing Plaintiffs First Request to Defendant Argent Mortgage Company, LLC for the Production of Documents, to be served on the following: VIA FACSIMILE and U.S. MAIL [Attorneys for Defendants] ____________________________ [Attorney for Plaintiffs]

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