Saturday, January 10, 2009

The Jackson Socialite, her home... and the $900,000













Update 1/11/09: More proof fraud probably occurred: Market analysis of all homes sold on Petit Bois over the last few years

It seems there is more to the Linda Harmon story than what was posted Thursday. A Jackson Jambalaya investigation reveals mortgage fraud probably took place when Ms. Harmon's Jackson, MS home was sold in 2006. (Yes, you regular readers just knew I was going to go there at some point). Ms. Harmon's former home was sold on December 7, 2006 to a Tracy Williams and Tracey Michelle Goins for $900,000. The loan was provided by WMC, a well-known subprime lender no longer in business) through 80/20 1st and 2nd mortgages. ( 1st Mortgage Deed of Trust & 2nd Mortgage Deed of Trust).

The first mortgage was for $720,000 and contained riders for both a balloon provision and adjustable rate. It was amortized as a forty-year mortgage (due in full in 2037) with an interest rate fixed for two years at 7.5% and would "adjust" every six months after the fixed rate period expired. The second mortgage was for $180,000 with a 25-year term with an undisclosed interest rate.

Here is where it gets weird. The house was foreclosed on exactly a year ago and was sold on September 12, 2008 for $373,500 to Litton Loan Servicing (It is now owned by Arch Bay Holding, a Miami, Fl. firm). Sources have told JJ the house will soon be put up for sale with a listing price of less than $400,000 (which would conform with recent sales of similar homes in that subdivision).

There are several facts about this transaction and the property's history that are suspicious in nature. The house is in a neighborhood where similar homes are approximately $400,000. (Listing of homes on same street and assessed values. Disclaimer: assessed values usually are below the fair market value of the home and don't jump up to $900,000 within a few years). Ms. Harmon built the house nearly ten years ago. (It sits on the River Hills Country Club tennis courts). The house was listed by Ms. Harmon several times with different Realtors in 2005 and 2006. It was withdrawn by Ms. Harmon each time. It was not listed by Ms. Harmon with an agent when she sold the home.

When Ms. Harmon sold her home, her mortgage was with WMC, the same lender who financed the sale on December 7, 2006. The people who bought the home were not residents of Mississippi. The transaction was closed by a notary public in Shelby County, Tennessee (Memphis).

So a house was sold which suddenly doubled in value compared to the homes in its subdivision, a subprime mortgage lender was used for 100% financing, the buyers were out-of-state, the closing took place in Tennessee, the house went into foreclosure soon after the sale, and the auction price was barely above a third of the original sales price. However, there are even more facts about this transaction and Ms. Harmon that show mortgage fraud "probably" took place.

In the post Thursday, JJ reported several hundred thousand dollars in liens and judgements were filed against Ms. Harmon by various creditors. Several liens were filed against the home prior to the 2006 sale yet the judgements were not satisfied until the middle of 2008. Mortgage lenders will NOT lend money on a property that is encumbered (I've been waiting to use that word in a sentence) by liens. Before a lender will provide a mortgage, it requires all liens be paid before or at closing. This is a pretty basic rule of mortgage lending and even a subprime lender will not deviate from this rule, especially for what is almost a million-dollar loan.

One creditor informed JJ the lien was satisfied by a claim against the title insurance policy. Translation: the liens were not paid at closing. If the attorney or notary had performed a the required title search on the home, the liens would have been discovered and WMC would have been notified about the liens and required them to be paid before the loan was closed. The obvious conclusion is no title search was ever performed or if it was ordered, it was probably altered so the lien information was hidden from the lender (the name where there is a space for a notary to sign is that of an attorney, Theresa Barnhardt, of Memphis).

Such a fraud initially seems fantastic until the facts are lined up side-by-side. Mortgage fraud is usually not hard to prove when one starts looking for it on a transaction as there is a great deal of paperwork by several parties on a transaction. Ms. Harmon was probably very familiar with how the mortgage industry operates as she has been on several mortgage industry websites. Several comments on Thursday's posts pointed out the following ads by Ms. Harmon (Broker Universe is a website for mortgage professionals and has pages where loan offices seek financing or advice on certain loan scenarios. These are not websites known to the average consumer or even realtor):

"Loan scenario: MS, $30,000, FICO, 75% LTV, Purchase, SF, full, OO
State: MS Amount: $30,000 Property type: SF Documentation: full FICO: LTV: 75%Occupancy: OO Loan purpose: Purchase SFR in MS looking for quick 25-20K hard money equity loan. House appraised at $785. Balance owed $500K Good income. No Fico requirements. lharmon@Trialfocus.com (615)481-8909 by gatorgirl June 21, 2006" (Translation: She is looking for a $30,000 second mortgage requiring no income documentation and no credit score. In other words, easy money. online ad)

"Loan scenario: TN, $450,000, stated FICO, 70% LTV, Purchase, SF, full, OO
State: TN Amount: $450,000 Property type: SF Documentation: full FICO: stated LTV: 70%Occupancy: OO Loan purpose: Purchase Just found a gem! Four year old foreclosed home that needs some cosmetic work. Bank lien $375K, but asking more. Needs about 40K in repairs. Should appraise for $650-700K when finished. Want to make offer today!" Call 615-481-8909 if you can help.by 10sgirl September 8, 2006" (Translation: No income verification required. Looking for $100,000 in easy money again. Online ad)

So apparently Ms. Harmon was advertising for second mortgages requiring no income verification or credit scores for different homes in different states at the same time in 2006, several months before she sold her home.

So what does all this mean? In recap here are the facts:
1. The house was sold on December 7, 2006 for $900,000.
2. The closing took place in Shelby County, TN.
3. The buyers were from out-of-state.
4. Ms. Harmon, the seller, had no realtor when she sold the house.
5. A subprime mortgage lender was used.
6. The loan was closed without the payment of the liens, indicating either no title search was conducted (not likely, a lender always requires it in the file) or the lien information was concealed (more likely).
7. Foreclosure proceedings were filed against the house a year after the house was sold.
8. The home was sold on September 12, 2008 at a foreclosure sale for an amount little more than a third of the sales price.
9. Ms. Harmon has apparently been advertising for second mortgages requiring no income verification or credit scores on mortgage industry websites for multiple homes before she sold her Petit Bois residence.

As stated earlier, I can speak as an expert on mortgage fraud and this more than meets the criteria for a prima facie case. No underwriter or quality control spcialist for a mortgage lender would approve these loans given these facts. The purchasers have never lived in the house. Within four months after the sale, the home was listed again for sale at $910,000 or rent at $3850 a month (It rented.)

Given the known details of Ms. Harmon and the history of the home on 2027 Petit Bois South in Jackson, the authorities should thoroughly investigate the parties involved in the sale and determine if the buyers even existed, as there is more than enough evidence to suspect the buyers may have been fictitious and the seller walked out with nearly a million dollars after the closing. These details are typical in mortgage fraud cases where people have created completely phony borrowers in order to obtain large sums of money. (It usually requires the help of someone involved in the transaction). Ms. Harmon may indeed have more to answer for than just embezzling in Tennessee and running from the police.

Additional resources: Mortgagefraudblog.com

45 comments:

Anonymous said...

First, great work KF. This is an amazing and complex story. It is hard to fathom how the Peach has been so successful dodging the law, creditors and her scam victims all these years. My gut tells me she's had help and comments Thursday seem to indicate that locally she had a small cadre of people willing to run interference on her behalf.

Next, you wrote this:

The house was foreclosed on exactly a year ago and was sold by the county on September 12, 2008 for $373,500 to Litton Loan Servicing (It is now owned by Arch Bay Holding, a Miami, Fl. firm.

Can you tell me how the county ended up with the property?

s_baghaii said...

Good job on finding the details about this story.

Kingfish said...

I need to correct it to Property Asset Management. My mistake.

One other thing. Deed of trust from WMC says house will NOT be rented out and WILL BE OCCUPIED.

NO ONE was going to give ONE HUNDRED PERCENT on an INVESTMENT property. More fraud by someone.

By the way, the Realtor is in the clear here. I want to spell that out. The seller sets the price. If someone would have paid her cash for the house, then I'm not writing this post even if it was for two million dollars. The Realtors involved were all reputable.

Now I would love to see the appraisals. I have a feeling they were bogus or suspicious. Why did I use plural? Usually if not always for that much money a lender requires not one but TWO appraisals. Either an appraiser helped this deal or...... bogus appraisals were created.

Anonymous said...

Can you clarify this? The liens were paid post-sale by the title insurance. Therefore there was a title company involved somewhere, MS or TN, right? Wouldn't the title company have conducted a search or would they have gone forward based on some bogus information provided by the Peach? The title insurer must have lost their shirt on this deal. Wouldn't the firm get suspicious about fraud?

Kingfish said...

The liens were placed on property well before the sale as you can see from the county judgement rolls. I can report claims were paid by the title insurance company.

Now HOW the title search was done or sumbitted, I've no idea. I am merely reporting the dates of enrollment, release, and what I was able to confirm, which was a claim paid. The part about altering or hiding I'm stating as an expert in the field as to what probably happened. Not even New Century or WaMu would've given a million dollars for a property loaded down with liens. Everyone would've required liens to be paid off.

Anonymous said...

No surprise there.

See what happens when you have crooked title companies involved in this crap?

A real title search performed by a real title company would have stopped this.

It wasn't and it didn't and now we've got what looks an awful lot like someone made off with more than a half-million bucks.

Noice!

Kingfish said...

That has nothing to do with. Turns out Ms. Barnhardt IS an attorney and I clarified that part of the story.

There are plenty of ATTORNEYS who have done the same thing. There is one in Greenville sitting in jail right now who was partners in a scheme with Jackson mortgage brokers to create phony creditors to be paid on the Hud-1 settlement statement.

Then there is Ed Benson, MC School of Law alumni in 95 who is disbarred for life for embezzling nearly $100,000 on real estate closings. He'd keep half the money meant for the sellers.

Kingfish said...

Actually, the closing (I've clarified the story) was conducted by a lawyer. Probably used an abstractor in Jackson to do the title search, which is perfectly legitimate.

Anonymous said...

Okay, but who sold the title insurance?

Anonymous said...

Regarding an earlier post above: you're darn tootin' she's had help. Her parents are Memphis millionaires who for years have just KEPT ON cleaning up & cleaning up after dear Linda.

Now that her run from the police has received so much publicity(especially the part about involving her SONS, turning them into criminals too [felony arrest] maybe her parents will finally WISE UP! Can you spell
"enabling"?

Furthermore, if the Peach does have a small "cadre" of friends and supporters in this community, SHAME ON YOU! Her "socialite" activities with you at the Club don't shine quite so brightly, do they, knowing she did it all with money she STOLE FROM some poor sucker. Watch ooooouuuout, you may be next!

Q: How can you tell the Peach is lying? A: When her lips are moving.

Anonymous said...

Peach is still taking people here in Franklin. After she was evicted from one of the two homes all contents were deposited in the street and she rented a Budget truck to load as much as she could and headed to a Quality INN. She did not return the Truck for over six months. After she got caught, she came up with enough money to pay the rental company and charges were dropped. There are judgements against her for the damages and unpaid rent in Williamson county. Sure wish you would keep your Socialites in MS.

Anonymous said...

Damn, this reads like DeCaprio's 'Catch Me If You Can'.

Anonymous said...

The appraisal was Bogus!!! I am an appraiser very aware of this house and all that goes with it. A very respected appraiser appraised the house (Way less than $900K) and his digital signature was forged and a fradulant report was made valuing the property in the 1 Mill Range. He was call up to the Appraisal Board and found to have not written the fradulant Appraisal Report. Scary!!

Anonymous said...

Over on your tigerdroppings.com, you have incorrect gossip. The Peach never drove expensive SUV's. She had an older Dodge Durango, a Tahoe, a friend's older Mercedes sedan, and then a van. Also, the birthday party was for her 7 and 11 year old sons together, since their birthdays are just a few days apart. The party was not $5,000. It was around $1,800, about $900 for each.

If you're gonna gossip, at least get it right.

Kingfish said...

1. I realize to some who drive Mercedes SUV's or Toyota Land Cruisers or Hummers a Tahoe may seem cheap but to alot of people it IS an expensive SUV.

2. The 5000 dollar figure came from the defendant herself. Well, I guess we all know how truthful THAT is. However, 1800 bucks for a birthday party for two boys is still pretty extravagant.

3. If I was gossiping over on TD I would've put story on the OT Lounge, not the Money Talk board. The Money Talk board has a lot of posters who are in investments or mortgages and find a case of possible mortgage fraud such as this very interesting.

4. About the appraisal, I strongly suspected something like that happened. If someone can get a copy of an appraiser's license as well as his numbers, they can create a phony appraisal. The lender usually doesn't verify the appraisal itself but rather the information in the appraisal. Usually on loans this size two appraisals are required however.

5. Next question. If the appraisal board knew it was phony, why didn't they turn it in for prosecution of possible mortgage fraud?

Anonymous said...

Harmon's amigos shoot the messenger again.

Kingfish said...

Are you surprised? How many of them probably still kiss up to Robbie Bell?

Anonymous said...

I doubt any of Robbie Bell's friends even knew Linda Harmon.

Anonymous said...

Her "socialite" activities at the Club typically involved drinking alone and never paying her bills. Always the come early, leave late type of tramp. She was notorious for accosting (borderline assaulting) employees for little or no reason. What goes around, comes around.

Anonymous said...

An $1800 birthday party for TWO boys???? I don't know where Peach is from, but where I come from, that's extravagant to say the least!

Then again, I guess it doesn't matter if you're paying for it with someone else's money--that you STOLE from them!

Anonymous said...

Whoever above called her the "lowest of the low" hit the nail right on the head!

Anonymous said...

$1000 reward for her arrest
http://www.franklintn.gov/police/pdf/LindseyR%20-%20Fraud%20Suspect%20Harmon%20Wanted%20%20UPDATE%20-%20For%20Immediate%20Release%20-%2012%2031%202008.pdf

Anonymous said...

She is still trying to scam people on her web site
http://www.griffinscottproperties.com/currentspecials.html

Check out the Villa she has for sale Only $18,500,000

Anonymous said...
This comment has been removed by a blog administrator.
Anonymous said...

Oh my lord. Now she's pretending to sell real estate! There's an email address for her.

Anonymous said...

http://www.manta.com/coms2/dnbcompany_6w40xd

Anonymous said...

http://mortgagegrapevine.com/thread/?thread=456131

Anonymous said...

http://griffinscottproperties.com/images/villacollina.pdf

Anonymous said...

Hotlinks to the above.

Griffin Scott
Mortgage Grapevine
Villa Collina

Anonymous said...

The seller and buyer were probably working together and split the difference in the real price and the inflated price. There also had to be an appraiser involved, in order to come up with the necessary fraudulent appraisal. Sounds like a typical flipping scheme.....and possibly not the first for this group.....

Somewhere on Glenway said...

Congrats on getting this story picked up by the Mortgage Fraud blog Kingfish.

When it comes to Linda and her schemes you can be sure we're only seeing the 10% of the iceberg visible above the waterline. The more the news of her latest exploits circulate here in Jackson the more we will learn about her Mississippi criminality and the trail of victims left in her wake.

I feel very sorry for her sons. People need to pray that the rest of their family can help them through these difficult times. Linda is going to go to prison. It is only a matter of time.

Kingfish said...

anon at 8:34, could be but I don't think so. She probably had to have two appraisals. Easier to send create two bogus appraisals, get a copy of someone's license, and do it that way. Its not like Lenders verify the appraisal licenses.

As for flipping, I don't think she was looking to flip. I think she was looking to completely sell out and get out of town. May have been strawbuyers but I don't think they were trying to follow a classic flipping scheme but were instead creating fictitious borrowers or straw buyers.

Anonymous said...

Fish, I pinged the email addresses below to verify that they are still operational. If the Peach, while on the lam, has a laptop or other device she can still use the following.

lharmon@trialfocus.com
lharmon@focus1research.com
lharmon@griffinscottproperties.com

AND, per this comment from your other post this address.

djones@trialfocus.com

Anonymous said...

lhufkd@aol.com Add this to your email addresses. Linda Harmon u fkd. See is a bottom feeder

Anonymous said...

And this relates to the Harmon story how??

Kingfish said...

zapped.

Kingfish said...

zapped.

vandyfan said...

can't find anywhere where griffinscott is licensed to sell real estate in TN nor can I find where the 18MM "villa" is listed for sale.

Anonymous said...

The villa is discussed here:

http://www.businesstn.com/content/home-home-market

It was pulled off the market. There is a Scott Griffin Properties that is legitmate in Franklin. She probably just used that to try to prove it's real.

Anonymous said...

That Mortgagegrapevine place is full of scam artists. I would say 90% of all the posters there are crooks and cheats.

Anonymous said...

Harmon's parents don't live in Memphis. How does the poster who stated Harmon's parents are millionaires know this? And do they know it for a fact?

Kingfish said...

My understanding when this first broke was they lived in Eastern Tennessee a couple of hours away from Franklin and dad was retired from Federal Government. Didn't write it because I had no way to confirm it and I wasn't going to bother them for something like this.

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Anonymous said...

As a friend of both of her sons, i hate coming across these sorts of articles. I know everyone has an opinion, but please keep them out of your comments, they've had enough to deal with. Thank you.....

Anonymous said...

She has changed her name legally to "Linley Patrick"

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