Family facing foreclosure says lawyer stole mortgage payoff
JOHNS ISLAND, SC (WCSC) - A Charleston County family says they have been fighting foreclosure for years and worry time is ticking down to save their home.
William and MaryJohn Palmer say their former attorney stole more than $100,000 from them when they refinanced their house in 2012.
Now, years later, the situation is still haunting them.
"We've put a lot of hard work into the house. We've got a beautiful yard. We've been here now thirteen years. We're raising our son here. We love it. It's our home," said William Palmer.
South Carolina Federal Credit Union loaned them about $100,000 in October 2012 as a payoff to their original mortgage with Bank of America.
They simply hoped to save money with a better interest rate. The Palmers hired then-attorney Brian Nathan Davis in Charleston to help the handle the closing.
According to Davis' disbarment paperwork with the South Carolina Supreme Court, "The lender wired the funds into trust account on October 19, 2012."
DISBARMENT PAPERWORK: http://www.judicial.state.sc.us/opinions/HTMLFiles/SC/27480.pdf
However, the court documents continue, Davis, "failed to issue the payoff of the existing mortgage of $100,824,12. In response to inquiries about the payoff from and the new lender, repeatedly made false assurances that the check had been sent. The balance in the trust account d ropped below the amount necessary to cover the remaining disbursement on approximately forty-nine occasions."
Following Davis' interim suspension, there were insufficient funds in his trust account to cover the payoff.
As a result of the "misappropriation of funds," Bank of America with its servicing company filed a foreclosure action against the Palmers in August 2013.
At first, William Palmer says he was confused and assumed the collection calls and foreclosure warnings had to be a mistake.
But he said after Davis stopped communicating and SCFCU expressed concerns about receiving the foreclosure paperwork, "I think that's when I got the ah-ha moment. It was like, we've been duped. We've been screwed, we've been ripped off. I'm not sure how he did it or what he did but something is not right and he's the bad guy."
According to the disbarment paperwork, Davis was misappropriating funds, issuing fraudulent title commitments and title insurance policies, and neglecting litigation matters. The court documents list more than thirty clients affected in various ways, including the Palmers, who are referred to as Matter VII Client F.
"I just couldn't believe it. I couldn't believe it was real," said William Palmer. "We're good citizens. Good people. We pay our bills."
His wife MaryJohn added, "It's still really hard to wrap your head around."
William said with their new attorney, they've tried to mediate and negotiate with the banks to reach a settlement. The SC Bar Lawyer's Fund for Client Protection paid the Palmers $40,000 to help out.
But Bank of America, he claimed, "Put on top of the original payoff- missed payments, late fees, and attorney costs."
So they haven't reached an agreement, and their foreclosure is still pending at this time.
MaryJohn said, "We're not a McMansion here. We're a 1,500 square foot 1970's ranch-style house. It's not going to kill you to give us a break."
Brian Davis lived or lives in West Ashely. Court paperwork and various attorneys indicate he's been nearly impossible to track down.
Local Attorney Donna Taylor successfully sued Davis on behalf of clients who had a situation very similar to the Palmers. A judge issued a $300,000 judgement against Davis in that case. Taylor said the judge was clearly disgusted with what happened.
However, Davis didn't respond to the court and Taylor said he was difficult to find. She's not sure if her clients will ever get paid. They don't think Davis actually has many assets at this point. His own home in West Ashley is facing foreclosure.
Taylor's clients were able to work it out with their bank and, with some monetary help from the SC Bar Lawyer's Fund for Client Protection, did not lose their home.
The Palmers are hoping for such a resolution.
The couple eventually filed a police report to seek criminal charges against Davis. The Charleston Police Department said a warrant has been issued in the case, but the department spokesperson said they haven't been able to serve it yet. A copy of the warrant is not available until it is served.
Davis has not responded to multiple requests for comment.
"How could this guy be out there walking around living while he's done this to this many people?" William questioned.
Mark Weeks, a local attorney and partner with Weeks & Irvine, LLC, said cases such as the Palmers are rare. "I'm not saying it couldn't happen again, but that is definitely not the norm," he explained.
Weeks said in his firm, there are multiple layers of financial protection internally and externally. He said they handle almost entirely real estate and have a track record of helping clients 24/7.
He said the right closing attorney is an essential relationship before, during and after buying a home or refinancing. "We make sure title's clean, we make sure all mortgages are paid off and satisfied, we make sure there's no liens or judgements out there or anything outstanding or owing. It's a huge process."
Weeks also said regulations in the Consumer Finance Protection Bureau have tightened up in the last couple years, which he thinks would make it even harder for an attorney to steal from his or her clients.
"The Supreme Court, South Carolina Bar, and attorneys- 99.9% of attorneys- they do it right. This is just one of those where it's unfortunate for this family and those people that were hurt that you've had one rouge lawyer out there that's caused this panic."
William and MaryJohn would still like to see more protections in place. William questioned, "What checks and balances are there for this not to happen to people? And the answer is jail. However, that doesn't fix our problem."
"It appears we're on the titanic and there's not a whole lot we can do," said MaryJohn.
They suggest other homeowners or homebuyers double check their attorney's title insurance and malpractice insurance.
The attorney representing SCFCU said in a statement, "South Carolina Federal Credit Union has offered to help the Palmers. However, neither South Carolina Federal Credit Union nor I as their attorney are at liberty to publicly discuss specifics regarding any ongoing litigation or concerning member accounts. South Carolina Federal Credit Union is working in the best interest of its membership to help the Palmers resolve their situation."
Bank of America's servicing company, Ditech, said in a statement, "While Ditech cannot comment on matters in active litigation, we remain optimistic that the matter can be resolved in a manner that is helpful to the Palmer family."
The Palmer's court date for next week has been postponed for now. Anyone with information is encouraged to reach out to CCoyle@live5news.com.
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