Nearly fifteen years ago, 48-year old Glen Alan Ward launched what appears to be the first “Trustee Postponement” scam, which included an elaborate bankruptcy scheme that was used to illegally stall residential foreclosures and collect illegal fees, according to Christy Romero, Special Inspector General for the Troubled Asset Relief Program (SIGTARP). Since the residential mortgage meltdown in 2007/08, trustee postponement scams have become one of the most prevalent ways to defraud homeowners by collecting monthly fees by illegally forestalling the foreclosure process.
Glen Alan Ward finally pleaded guilty to criminal charges in the Central and Northern Districts of California in April 2013. The criminal charges included identity theft, mail fraud and bankruptcy fraud. Ward faces up to five years in prison for each bankruptcy fraud count and a possible mandatory two-year sentence for aggravated identity theft.
Romero’s office explained that beginning in 1997, Ward advised distressed homeowners that he could delay their foreclosures for a fee of $700 per month. Once the homeowner paid the initial, up-front fee, Ward used a public bankruptcy database to find the name of a debtor in bankruptcy. He would then download the debtor’s bankruptcy petition and have the homeowner execute and record a deed transferring a small interest in their home to the unsuspecting bankruptcy debtor that Ward identified. It is also alleged that Ward forged a number of these deeds transferring the partial interest in the home without the homeowner’s knowledge.
Once the debtor’s name was attached to the home, Ward faxed a copy of the bankruptcy petition to the homeowner’s lender, advising the bank to stop the foreclosure sale while the bankruptcy was in process. Under the “automatic stay” protection in a bankruptcy case all foreclosure activity must stop while a homeowner is in bankruptcy.
Ward was able to collect monthly fees from the homeowner while the automatic stay was in place and the foreclosure was suspended. If the hijacked debtor completed or dismissed their bankruptcy case, Ward would identify another debtor in the public bankruptcy database and again transfer a partial interest to the new unsuspecting debtor to keep the bankruptcy fraud going.
"In addition, if a distressed homeowner wanted to complete a loan modification or short sale, they were left to the mercy of Ward to send them forged deeds, supposedly signed by the debtors, to re-unify their title as required by most lenders,” Romero explained in a press release. Finding the individuals that had their names added to the title of the home is extremely difficult and getting their cooperation in clearing title is nearly impossible.
In a more recent twist on the trustee postponement scam, homeowners are being asked to transfer ownership of their home into a family trust so that unsuspecting bankruptcy debtors can be added as beneficiaries to the family trust. This makes the crime easier to implement while also making it harder to detect. If you are currently being solicited by a Trustee Postponement Service offering to suspend your foreclosure, ask them specifically about what they intend to do. If they are evasive or try to tell you it’s a “trade secret,” DO NOT give out any information or allow them to act on your behalf. It is a fraud.