Broker deceived dozens seeking a way out of home payments
11:32 PM CDT on Saturday, May 8, 2004
By TIM WYATT / The Dallas Morning News
Almost four years have passed since Jessie Cline answered the
classified ad of a Plano businessman, but she'll never forget the sales
pitch:
We'll sell your house at no cost to you.
"It seemed like the perfect answer to my situation," the 35-year-old
bookkeeper said in a soft Southern accent. "Now, I could just choke
him."
Dozens of people from McKinney to Dallas to Lancaster who also jumped
at the offer feel the same about Rocky Shaw, 50, a real estate broker
from Frisco who made similar deals with 75 homeowners through his two
Plano-based businesses, records show.
Resources
U.S. Department of Housing and Urban Development:
www.hud.gov/foreclosure
Home Loan Guaranty Services:
www.homeloans.va.gov/
paytrbl.htm
Repeated requests over the last three months for interviews with Mr. Shaw and his attorney have been declined.
Ms. Cline handed over the deed to her $95,000 home to Rocky Shaw in May
2000 after the two agreed he would sell her house and keep any profits
after the mortgage was paid off. She said Mr. Shaw promised to make her
house payments until he found a buyer for the small brick home in
Denton County.
For Ms. Cline, it seemed like a quick way out so she could move back to her native Mississippi to care for her ailing mother.
Instead, Mr. Shaw let the house payments fall into arrears, court
records show. Ms. Cline said she borrowed money to fend off
foreclosure, then struggled through a yearlong civil court battle
before a judge ordered that her deed be returned.
Mr. Shaw's business ended last spring, when federal authorities
indicted him after a three-year investigation. He was charged with mail
fraud, tied to more than $2.4 million in real estate deals across North
Texas.
He pleaded guilty to one count, admitting in writing that he knew the
scheme was illegal. His sentencing in federal court is expected soon.
He faces up to five years in prison and a $250,000 fine.
Each of Mr. Shaw's business arrangements was different, involving various types of loans, but authorities found a pattern:
• Mr. Shaw told desperate sellers that he would assume their mortgages.
He took their deeds, redirected their mortgage notices to a Plano post
office box and did not make the payments. Paperwork exchanged did not
include the promises to cover payments that Mr. Shaw made verbally.
• He then "sold" the homes to new buyers without clearing the first
mortgage, sometimes in the guise of a rent-to-own scenario.
• He pocketed monthly payments from buyers rather than using the money to make payments on the original loans.
Those caught up in the deals were left with ruined credit, tangled
titles and foreclosure problems. Their only recourse was to take Mr.
Shaw to court, and many have.
Others have said they could not afford attorneys and have little chance
of collecting money from a business based out of a post office box with
no obvious assets.
Federal authorities say they are powerless to fix the personal
financial devastation they have uncovered. Defrauding the government is
a crime, but defrauding an individual is a matter for the civil courts.
Mr. Shaw, the court records say, committed mail fraud when he
redirected mortgage notices to his Plano post office box for loans that
were not his.
The middleman
A story like that of Rocky Shaw and his clients is not uncommon.
Federal prosecutor Andy Williams, based in Plano, said Mr. Shaw isn't
the only broker who has preyed on anxious, sometimes desperate sellers.
Mr. Williams said his office has received calls from homeowners as
recently as last month complaining of similar scams.
Industry and government officials locally and nationally declined to comment on the prevalence of the problem.
McKinney lawyer Steve Lawrence, who briefly represented one of Mr.
Shaw's clients, said high foreclosure rates and a weak economy have
created a large market of financially strapped homeowners searching for
a quick way out of their mortgages.
"A lot of the folks who pull this kind of stuff realize that, too," Mr.
Lawrence said. "And a lot of people don't realize that when they sell a
property on an assumption, if the buyer fails to make the payments,
they're still struck with the note."
Federal prosecutors and investigators say that until Mr. Shaw is
formally sentenced, they will let court documents do the talking about
his crime and his business.
Court records say Mr. Shaw twisted the infomercial teachings of
get-rich-quick guru Ron LeGrand. Mr. LeGrand touts a legal method for
buying from distressed sellers to turn quick, large profits in the
resale.
But Mr. Shaw broke away from Mr. LeGrand's techniques by misleading
buyers and sellers, authorities charged – and pocketing money from
mortgage payments.
Dallas County business records show Mr. Shaw ran Premier Property
Specialists and Prestige Property Specialists out of a Plano house from
1998 to 2003.
Collin County records show he lives and runs a business out of a
$200,000 house in Frisco, listed under the name of one of his old real
estate businesses.
Former clients describe him as a clean-cut, middle-aged man with
pressed shirts and good manners. One former client said he told her he
had moved to the Dallas area from Midland after he retired from the oil
business.
He always offered to deliver paperwork to clients' homes or workplaces
for signatures rather than requiring them to come to him. His sales
pitches said that he would make his money from the buyer once the sale
was completed, the indictment read.
Court records don't explain how Mr. Shaw persuaded banks to send
mortgage notices to his Plano post office box because the loans
remained in the sellers' names. His indictment simply states that Mr.
Shaw rarely made the house payments and allowed the loans to fall
behind.
Many of the mortgage companies named in Mr. Shaw's indictment declined to comment.
Those carrying loans from the Veterans Administration and the
Department of Housing and Urban Development were protected by loan
guarantees. Investigators from both of those agencies declined to
comment on loans connected to Mr. Shaw's scheme.
A buyer's tale
Four months after signing a lease-purchase agreement with Mr. Shaw,
Cornelius and Valerie Griffin said they learned the broker had no right
to sell them the three-bedroom brick home in southern Dallas County.
Weeks after giving Mr. Shaw a $4,000 down payment toward what she
believed was a rent-to-own deal in the fall of 1999, Ms. Griffin called
the mortgage company to inquire about a foreclosure notice posted on
the home in someone else's name.
"They didn't know Rocky Shaw, had never heard of him, and they wouldn't
talk to me about it since my name wasn't on the mortgage," Ms. Griffin
said.
When she called Mr. Shaw with the news, she said that he got upset and
told her to ignore the postings, and that he would sort it out. He said
the bank had made a mistake.
Soon after, Ms. Griffin said the mortgage payments were caught up, so her suspicions waned.
Three months later, a home inspector knocked on their door and asked to
look the house over before it was put on a foreclosure auction block,
she said.
The couple received an eviction notice from a constable three days
later. Ms. Griffin said she attended the eviction hearing with the
papers given to her by Mr. Shaw and showed them to the judge.
"I told the judge everything," Ms. Griffin said. "And the judge
apologized and said, 'Y'all have just been swindled out of your money.'
"
The Griffins had a month to find another home.
"I still can't get it out of my head. I still can't believe it," Ms.
Griffin said. "We should have backed out, but we didn't know anything
about buying a home."
Homeowner's nightmare
It took about a month for Shannon and Randy Jones to realize that they
had made a terrible mistake when they signed over the deed to their
2,300-square-foot McKinney house to Mr. Shaw in March 2003.
They thought their contract with Mr. Shaw would save time and money as
they scrambled to recover after Randy was laid off three months
earlier. They were moving to a new job in Pittsburgh.
In April 2003, they heard that Mr. Shaw was under indictment for a long
string of real estate deals in which he never made good on his promise
to cover a customer's mortgage.
But the news soon got worse.
The Joneses said they couldn't sell their old house without the deed, and Mr. Shaw refused to give it back to them.
To avoid foreclosure, the Joneses kept up payments on the house in McKinney as well as their new home.
"We just trusted someone we shouldn't have," said Ms. Jones, a mother
of two who took on a full-time job and borrowed money from relatives to
pay for the extra mortgage note.
By February, the couple "threw in the towel," Ms. Jones said, and let
the bank foreclose on the McKinney house. Mr. Shaw still has the deed
to their home, they said.
Fannie Mae is now listed as the owner of the property. No one at the national mortgage association would comment.
"We couldn't afford to sue him, and the government couldn't make him give us our deed back," said Ms. Jones.
What angers her more than the foreclosure, however, is that no one
could stop Mr. Shaw from cutting more deals with homeowners until he
was indicted.
"He found a way to do things where he's protected in some ways, and
we're left hanging out there," she said. "The only thing we could do
now is sue him, and we don't have the money for that."
No compensation
Ms. Cline, the Mississippi bookkeeper, hired an attorney after Mr.
Shaw's first check for a partial mortgage payment on her house bounced
in 1999. The lawyer told her to move back into the house so it could
not be sold to someone else.
When Mr. Shaw tried to lock her out, Ms. Cline said, she changed the
locks and reprogrammed her garage door opener and security system.
She took Mr. Shaw to court the next year and won a $55,000 judgment in
August 2001 to recoup costs and fees she had paid to straighten out her
problems.
Mr. Shaw didn't show up for the court hearing, and Ms. Cline has never been paid.
She got her deed back through a court order, eventually sold her house
with a licensed Realtor and moved back to Mississippi to care for her
mother.
Though her experience was not mentioned in Mr. Shaw's indictment, Ms.
Cline's ordeal left her deeper in debt and feeling foolish.
"It was devastating," she said, "and a major learning experience that I wouldn't wish on anybody."
She holds little hope of ever getting a dime from the man who took her deed. She waits for a judge to decide Mr. Shaw's fate.
"That way, maybe he can get what's coming to him," she said.
E-mail twyatt@dallasnews.com
TIPS TO AVOID SCAMS
SELLERS
• Contact mortgage lenders and ask about alternative payment plans
rather than seeking a quick sell. Most of the time, mortgage companies
prefer to avoid foreclosure if a new payment schedule can be agreed
upon.
• Borrowers should be wary of anyone seeking to profit from their
financial hard times: Check for licenses, references and complaints to
governmental and licensing agencies.
• Be wary of anyone who asks you to sign a deed conveying your home.
Unless the mortgage company issues a formal release of your obligation,
transferring a deed does not relieve your financial responsibility to
the lender.
• Don't sign any papers you don't understand, and make sure all promises in the deal are put in writing.
• Check with the mortgage company or an attorney before agreeing to any deal involving your home.
• Beware of phony counseling agencies. Some groups may offer to perform
certain services for a fee. These could well be services you could do
yourself, such as negotiating a new payment plan with your lender or
pursuing a pre-foreclosure sale. For more information, call 
800-569-4287
for a list of agencies approved by the U.S. Department of Housing and Urban Development.
BUYERS
• Always check to make sure the seller has legitimate references or place of business.
• Ask the seller for evidence of ownership and any existing mortgages
on the property. County real estate records are public, and can show an
existing mortgage and who really owns the property or hire a title
company to do this.
• When buying a house, purchase a policy of title insurance that protects your interest in the property.
![[Photo: Avoid Foreclosure]](http://www.hud.gov/foreclosure/foreclosure.jpg)
