- Posted September 14, 2009 by
LAS VEGAS, Nevada
This iReport is part of an assignment:
THE HOMELESS MORTGAGE HOLDER
Loan sweet loan
A banking mistake and the collapse of the financial system combine to leave one man homeless and on the hook for $238,000
CHRIS Deister conducts his business from the backyard. That's where he keeps his laptop and cell phone -- on top of a tool cabinet covered with notebooks, in the shadow of a cinderblock wall.
"I'm on the Internet 12 to 14 hours a day," he says. "My mom spends 14 to 16 hours a day on this."
The problem that consumes so much of Deister's life is a unique one. A bungled financial transaction by his mortgage lender -- and the subsequent failure and takeover of that lender -- left the would-be homeowner homeless and in the hole some $238,000. He and his two large dogs live in an attached garage near downtown's Arts District. All his belongings remain in three mobile storage units, one of which sits in the driveway of this house he bought but can't move into.
Deister, a dealer at the Rio, decided in January that the time had come for him to buy a home. He'd rebuilt his credit after a bankruptcy eight years earlier and wanted to take advantage of the $8,000 tax credit offered to first-time homebuyers. Prices in the Las Vegas housing market had tumbled, which put some amazing homes squarely within Deister's financial reach.
After losing on 11 straight bids, Deister submitted the highest offer for a house on Tranquil Stream Court, a foreclosure with a custom pool -- all waterfalls and gentle eddies. He took out a loan through Taylor, Bean & Whitaker, one of the largest mortgage lenders in the country, and closed on July 9.
But the money, which was supposed to be wired to First American Title Company, ended up with the seller, Citimortgage. After three weeks of frantic searching, Chris's mother Lynn Deister found the funds and arranged to have them sent back to the originating bank. That happened on Aug. 5, the same day Taylor, Bean & Whitaker funds, which were controlled by the failed Colonial Bank, were frozen by the FDIC.
The blunder leaves Deister in limbo. Because he closed on his loan, he is expected to make monthly mortgage payments. But since the title company never got its money, the transaction was never recorded by the county, so the house still technically belongs to Citimortgage, who could renege on the deal after 45 days and seek another buyer.
If that happens, Deister will lose his $5,000 deposit, and all the work he did to bring it up to code will benefit someone else.
"I just want the house," he says. "It's more than money. It's got my blood, sweat and tears in it."
Deister's dilemma has led him to some unexpected places. He called every lawyer in the phone book, the state commissioner of insurance, the FBI and even an obscure federal regulator, the Comptroller of the Currency. None have been able to release his funds from the frozen Florida bank account.
"Now the mortgage is on his credit record, so he can't get another loan," says his mother, Lynn Deister.
Chris Deister's case is unusual, a perfect storm of human error and macroeconomic disaster. But he isn't the only one with a mortgage through Taylor, Bean & Whitaker suffering because of the company's failure.
The bank, which filed for bankruptcy in late August, has frozen its accounts and is withholding information about its borrowers from other companies involved with the loans. That means that homeowners who are making payments in good faith may still be liable for taxes, insurance and other fees that are stuck in the account.
The FDIC filed an emergency request on Aug. 28 to have that information released.
"While hundreds of thousands of homeowners continue to make their monthly mortgage payments, those payments are now sitting in limbo. No insurance payments are being made on the underlying properties in the midst of hurricane season and no property taxes are being paid," the request read.
According to the request, the FDIC requires banks that come under its control to release information, documents and mortgage payments so they can transfer them to healthier financial institutions. Despite repeated letters and requests, Colonial Bank and Taylor, Bean & Whitaker have refused to turn over this information.
Desiter's best hope may be that the bankruptcy judge rules to release the information and funds. Although the spokeswoman for the Nevada insurance commissioner acknowledged that they are aware of the situation, she declined to elaborate on the case. A spokesman for First American Title company also asserted that company's innocence, insisting that they are just a middleman in transactions like these. And calling two phone numbers listed for Taylor, Bean & Whitaker yielded only busy signals.
In the meantime, Deister pays $800 a month to store his belongings. His first mortgage payment was due on Sept. 1, and although he hasn't paid it yet, he probably will next week.
If judge doesn't rule within the next month, and the window closes on Deister's purchase, then he may have to start his house search over again. Citimortgage did not return calls seeking information about whether they planned to resell the house.
"I've been advised to put a lien against the house so the bank can't sell it to someone else," he says.
He's also been told to squat the house and hold out until his day in court, but he's nervous about the possible consequences.
"It would be just my luck that I'd get arrested and thrown in jail," he says.
All he wants to do is move his dogs and his stuff into his home, and enjoy the pool he maintained himself all summer long. But as the season draws to a close, so to does the window on that possibility.