Alleged mortgage scam lands in Obama's backyard
The mortgage crisis consuming recent talk on the campaign trail has landed in Barack Obama's backyard.
Tommie and Louise Harris, who live behind the Obamas, say they're victims of a mortgage repair scam that nearly cost them their Kenwood home of 44 years.
(Richard A. Chapman/Sun-Times)
They recently won a federal court settlement against a broker named Mark Diamond, who they say sweet-talked them into taking on mortgage debt that rose from $142,000 to $500,000 in less than a year.
They sought to renovate their home -- including their coach house that they've rented to the U.S. Secret Service as a base of operations for Obama's security team.
But, according to the lawsuit, once Diamond won the confidence of the Harris family, he had them sign loans saddled in bogus fees, including a $15,000 "origination fee," that he allegedly pocketed.
"He made them believe that he was their friend," said the couple's daughter Pam Harris. "I had to try to convince my parents that this guy was no good."
The Harrises say Diamond told them they had no choice of a contractor for the home repairs. The chosen firm was his brother's.
In 2003, the attorney general's office and Federal Trade Commission fined Diamond's company and restricted his work as a broker.
One year later, Diamond was acting as a broker to the Harrises, their lawyer, Al Hofeld, said.
Diamond and his Chicago firm, OSI Financial Services Inc., are the subject of civil and federal suits and under investigation by the Illinois attorney general's office, which has 27 pending complaints against him or his companies, a spokeswoman said.
"We're aggressively investigating his activities," said attorney general spokeswoman Natalie Bauer.
The Harrises say they signed a second loan with Diamond after the rehab work stopped in mid-construction and workers demanded more money. Diamond led them to an interest-only loan that later caused payments "to explode" to $5,000 a month, Hofeld said.
He said Diamond lied about the terms of the loan and "maintained control over the money at all times."
The Harrises say they would have lost the house in foreclosure without a lawyer. The settlement terms are confidential. The case is ongoing against the lenders.
Diamond's lawyer, Dennis Both, said the Harrises are "full of baloney" and their case is about "people looking for money after the fact."
Diamond settled the case to avoid court costs but categorically denies the allegations, Both said.
"They got exactly what they were promised," Both said. "They went in with eyes wide open. . . . No one forced them to sign the papers."
He said the home was in "horrible" condition before the work.
The irony of fighting a fraud case while living behind a presidential hopeful is not lost on the Harrises.
While they never asked Obama to intervene, they are calling on their neighbor to protect homeowners.
"I would actually like to see Obama put some kind of safeguard into place that would protect citizens from con artists," Pam Harris said. "Especially seniors."
Obama spokesman Ben LaBolt said, if elected, Obama will ensure: "that families like the Harrises are protected from predatory lenders and that Americans looking for homes are not tricked into signing mortgages they cannot afford."