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Domestic dispute 

For some homeowners, foreclosure investors aren't saviors

click to enlarge Kim Powell, a friend and former neighbor of Melody Pritchard, has been trying to help Pritchard keep her house. - CREIGHTON SMITH
  • Creighton Smith
  • Kim Powell, a friend and former neighbor of Melody Pritchard, has been trying to help Pritchard keep her house.

M elody Pritchard had no idea that a group of Denver investors had gotten their hands on half of her house, until they started calling her with offers to buy the other half from her.

Pritchard, who lives in Florida, had owned a three-bedroom ranch house on Pawnee Avenue in Manitou Springs since 1983 along with her ex-husband, Barry Delmolino, whom she divorced in 1990. Under the divorce settlement, she was supposed to sign the house over to him. But he never submitted the paperwork to her, she says, and so the house remained in both of their names.

Meanwhile, Delmolino failed to pay Pritchard child support for the couple's four children, to the tune of more than $30,000. Pritchard tried to get Delmolino to sign over the house to her to meet his obligations, but to no avail.

Last year, Delmolino was sent to the Douglas County Jail for sexual assault on a child, for which he has since received a prison sentence of four years to life. He stopped making payments on the house, and it went into foreclosure.

That's when a group of Denver-based foreclosure investors moved in, persuading Delmolino to sign over his interest in the house to a company called J & A Holdings -- reportedly for a mere $3,000.

Soon, the investors began calling Pritchard, offering to purchase her interest as well. At first, they were nice. But as she kept declining their offers -- the highest of which she says was a mere $5,000 the gloves came off. She says the callers became increasingly hostile, pledging they would get the house one way or another.

"They just kept harassing me and harassing me," Pritchard recalled.

At one point, the investors even listed the house for sale without her consent.

A friend of Pritchard's has since brought the mortgage loan on the house up to date, thereby stopping the foreclosure process. But Pritchard is still at an impasse with the investors. Rather than selling her interest in the house to them, she wants to sell to her friend. However, J & A has put a $100,000 lien on the house, making a sale impossible unless she strikes a bargain with the company.

"I think it's just totally outrageous," Pritchard said.

No protection

Variations of Pritchard's predicament are increasingly common as the economic recession drives up the number of foreclosures in El Paso County and elsewhere. So far this year, the public trustee's office recorded an average of 150 foreclosures per month in the county, the highest rate since the local real-estate market collapsed in the late 1980s.

As homes go into foreclosure, opportunistic investors pore over the lists and inundate owners with offers to bail them out. They typically pay a small amount for the title to the house, and turn around and sell it at a significant profit.

Though such arrangements can sometimes benefit homeowners, they frequently do not. Desperate homeowners are often sweet-talked into bad deals, and some even sign over their house without realizing it, says Holly Williams, the county's public trustee.

"Individuals in foreclosure are very easy prey -- one, because they're scared, and two, because they're afraid to ask questions," Williams said.

Most of the time, what the investors are doing is legal. "Unfortunately, there's just not anything in the law protecting the homeowner," Williams said.

Legal loopholes

In Pritchard's case, no proof of wrongdoing has been found, according to her attorney, David Calvert.

"I don't think there's any evidence of fraud," he said.

Nonetheless, Pritchard considers the investors' dealings underhanded.

At one point, a company called the Denver Investment Group, which appears closely associated with J & A Holdings, had a local realtor list the house for sale, without asking Pritchard's permission. The realtor, Jack Caton, put up a for-sale sign and conducted showings of the house, until a friend of Pritchard's told him to take the sign down.

Caton declined to comment.

Also, after buying Delmolino's interest in the house, J & A Holdings filed a deed of trust giving another Denver company, Blue Rhino Investments, a $100,000 lien on the property, which was appraised last year at $196,000.

According to Williams, a lien is typically placed on a house if some sort of service has been performed and not paid for.

In this case, "I think it probably could be proven to be a spurious lien," Williams speculated. "Because, what have they done for $100,000? There's supposed to be a reason behind that lien."

However, Williams says there might be legal "loopholes" making the lien legitimate.

Legitimate and shady

The exact relationships between J & A, Blue Rhino and the Denver Investment Group are unclear, though all three companies appear interconnected. That's typically the case in these deals, says Kitty Berkman, a foreclosure specialist in the trustee's office.

"It's all the same people," Berkman said. "They all do stuff back and forth between each other, and it's all legitimate -- it's just shady."

The president of J & A, an Arvada man named Darin Heiter, also works in the office of the Denver Investment Group. The president of the Denver Investment Group, Gary Clark, has in the past been an associate of Stephen Caragol, who heads the Blue Rhino company.

Two years ago, Clark's company listed as its principal address the same Denver office suite that has been used by Caragol, dubbed the "King of Foreclosures" by the Denver Post, which examined Caragol's business activities in a lengthy 2001 news article.

That year, an investment company owned by Caragol settled a lawsuit filed against it by an unhappy homeowner, after the judge in the case scolded one of Caragol's associates -- Gary Clark -- for the way the deal had been conducted. According to the Post's account, the angry judge at one point read Clark his rights and threatened to refer the case for criminal investigation.

Heiter, the president of J & A Holdings, didn't respond to a request for comment for this story. Clark, the president of the Denver Investment Group -- which listed Pritchard's house for sale -- declined to answer most of the Independent's questions, referring them to his attorney, Joseph Murr.

"My attorney is more than willing to talk to you," Clark said.

Murr, however, did not return phone calls by press time.

Clark did offer an explanation for why the $100,000 lien was granted to Blue Rhino, saying it was because "Blue Rhino loaned money against the house."

Clark also dismissed the notion of any underhanded dealings.

"From what you're probably getting, someone's 'getting taken advantage of' -- yadda, yadda, yadda," Clark said. However, "There's no fraud; there's nothing like that," he added. "I'm ethical."

tlangeland@csindy.com

  • For some homeowners, foreclosure investors aren't saviors

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