Emergency motion: $458,000 condo sale should be voided because of fraud
Tampa Bay Times
By Susan Taylor Martin
06 July 2017
The $458,100 foreclosure sale of a gulf-front condo in North Redington
Beach should be set aside and the money returned to the bidders because
of "unauthorized conduct, misconduct and fraudulent acts" leading up to
the auction, a new court filing says.
In an emergency motion filed this week in Pinellas County Circuit
Court, an attorney for John and Christine Houdes' Orlando Realty Group
LLC asks a judge to vacate the June 8 sale because of a "well-executed
and sophisticated scheme" to deceive bidders in order to obtain a
"windfall" profit from the auction.
In the meantime, an experienced Tampa investor who bid at the same
auction said he — like the Houdes — also thought the foreclosure was on
a first mortgage. Had that been the case, the winning bidder would have
gotten the condo free and clear.
"Holy, cow!" was Rob Isbell's reaction when he learned from a Tampa Bay
Times story that the auction was only on a second mortgage and that the
condo remained subject to a bank foreclosure.
"It took somebody being very creative" to create the impression that
the auction was on a first mortgage, said Isbell, who has bought dozens
of homes at bay area foreclosure sales.
Isbell said he also found it curious that the condo was recently on the
market for $675,000 with no mention of a pending foreclosure. The
listing was withdrawn June 7 — one day before the auction.
As the Times reported Monday, Outbidya, Inc., a company started by
Clearwater lawyer Roy C. Skelton, bought the unit in the Ram-Sea
Condominiums two years ago for $157,800 after the condo association
foreclosed on owner David Kapes.
In March, 2016, Wells Fargo started foreclosure proceedings against
both Kapes and Outbyida. Less than a month later, Skelton created
Deutsche Residential Mortgage, and Deutsche issued a mortgage to
Outbidya and Parkes Investments LLC, which had a 50 percent interest in
the condo.
This spring, Deutsche — no relation to the giant German bank — obtained
a final judgment against Outbidya and Parkes Investments. Deutsche
claimed that the two companies owed a total of $377,000 with interest
not only on the condo but also on other properties owned by Skelton's
Obidya.
Outbidya and Parkes Investments, both of which had Sketon as their
attorney, did not contest the amount, allowing Deutsche to move quickly
toward the June 8 auction.
"The sudden and convenient creation of the notes and Deutsche
(Residential) Mortgage is itself suspicious," attorney Jon McGraw said
in his emergency motion. "But, considering the extensive insider
relationships among the conspirators and their principals… fraudulent
intentions of the conspirators is undeniable."
By beating the bank to foreclosure, Skelton's Deutsche Residential
already has received $380,000 from the sale and could get even more.
Had the bank foreclosed first, Skelton's companies would have gotten
nothing.
As it stands, the Houdes and their Orlando Realty Group LLC are out
$458,000 and could also lose the condo when the lender forecloses.
Experts strongly advise anyone interested in buying a foreclosed
property to get a title search before bidding. But Isbell, the Tampa
investor, said he did his own informal title search and the second
mortgage was not readily apparent.
A search of Pinellas official records showed that the only mortgage
ever issued to Kapes, the condo's previous owner, was in 1997, Isbell
said. The second mortgage — issued by Deutsche Residential last year —
did not have Kapes' name on it .
The first and second mortgages on a property typically have the same borrower's name.
Isbell said that when he saw only one mortgage with Kapes' name, he
presumed the auction was on Wells Fargo's foreclosure of the 1997 first
mortgage.
Skelton's Deutsche Residential obtained its final judgement of
foreclosure under the same case number as the Wells Fargo case. But in
his emergency motion, the Houdes' attorney says Deutsche never received
court approval to become a party to the case and failed to notify, as
required, Wells Fargo's attorneys of its foreclosure action.
Deutsche, Skelton and others "consistently dodged unwanted attention to
their efforts by failing to properly reflect the existence of the
unauthorized'' action, the motion says.
In an email response to a request for comment Thursday, Skelton did not
address most of the allegations in the emergency motion. He did say,
though, that the cross-claim, final judgment and notice of sale were
publicly recorded "for all to see."
Skelton also said that the Houdes, through their Orlando Realty Group
and another company, have bought dozens of other properties at
foreclosure auctions.
"Kind of changes the complexion of your article doesn't it?" he said.
If the Houdes can't get the sale vacated, Isbell said their best
recourse might be to negotiate with the lender about paying off the
$162,000 first mortgage plus any interest and fees owed. That way, they
would have outright ownership of the condo, which is valued for tax
purposes at $467,542 but is likely worth more.
Including the $458,100 the Houdes bid at auction,'' they overpaid for
the property but it's not like they'd lose everything," Isbell said.
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