Litigation Advisory Services Blog

Beware of Mortgage Release Scam: You Cannot Release Your Mortgage Yourself

Residents should be on the lookout for anyone soliciting them that “there is a little known loophole that allows them to release their own residential mortgage.”  Residents may be duped in person or know of someone that has paid for such mortgage relief assistance. This is not a telephone scam. 

An individual has shared with me just how he can save people from foreclosure and further advised that he will be filing such documents in the future as he has several clients waiting for his services.  The Lake County Prosecutor and Ohio Attorney General are investigating the mortgage scam. 

A County Recorder cannot lawfully reject a document that meets the State of Ohio recording standards even if it is perceived to be fraudulent.

Beginning in July, a handful of these documents were filed – just as the fraudster initially promised.  To date, more than six individuals have fallen victim to this scam and unfortunately even at this time they may not even know that they have been scammed.  

Recording fees alone in each instance cost the resident approximately $300.

Only the mortgage holder, not the individual who took out the mortgage, can lawfully and effectively file a release of a mortgage.

Documents that have been drafted, signed and filed with the Lake County Recorder include the following: 

  1. Appointment of Successor Trustee/Substitution of Trustee
  2. Appointment of Superceding Successor Trustee
  3. Validation of Debt/Proof of Claim Requested
  4. Notice of Right to Cancel
  5. Affidavit
  6. Notice of Lender’s Default

Previously, two other documents have been presented for recording.

  • Modification of Mortgage Note
  • Release of Lien and Full Reconveyance

This individual’s legal argument is based on the fact that the mortgagor (unsuspecting resident) had requested to view the actual promissory note from the mortgage company (bank). The lending institutions have not supplied them with the actual note.  As a result of not being provided with the promissory note as requested, in this individual’s mind, the mortgage is no longer effective and thus enables the resident to file a release from their mortgage. 

The name of the individual behind these filings does not appear on any of the filings. Rather, the preparer is listed as the resident.  On some occasions, the fraudster filed the documents for the resident and other times he even accompanied the residents to file the documents.  

These filings concern officials greatly in that it is apparent that this individual is preying on, or at best misrepresenting the ramifications of the various documents that he is assisting these taxpayers file in Recorders’ offices, while likely charging these unsuspecting individuals for these very questionable services. The individual is not an attorney.

But this is no laughing matter.  At the end of the day, these people, with little financial resources available to begin with are now out the cost of the recording fees as well as any “consulting fees” paid to this individual. Unfortunately, these folks are throwing money (they desperately need) out the window.

This scam does not appear to be targeted to the elderly – as many scams do.  This individual has targeted those that may be desperate, in financial dire, behind on their mortgage payments, or worse, on the verge of losing their home due to foreclosure. I have a real problem with people that attempt to take financial advantage of the unsuspecting and as a result, trust such a false misrepresentation.

Have questions on the mortgage release scam? Post a comment below or contact our Valuation & Litigation Advisory Services Group at 440-449-6800.

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