Subprime crisis comes home to Hyde Park

¶ The Harrises watched a crooked broker destroy their home and savings.

Tommie and Louise Harris paid $854,000 to have their walls knocked down, squirrels running wild through their house and their home filled with carbon monoxide.

“We recently had a gas leak in two different places,” said Tommie and Louise’s daughter Pam. “That was a pretty big leak, by the grace of God, this house didn’t explode or the carbon monoxide didn’t make it upstairs.”

The Harrises contend Mark Diamond and OSI Financial and Terry Diamond and United Construction swindled them out of the money from two loans and home repair work was done below accepted standards and have filed a civil suit.

“It’s just fraud all the way around,” Tommie said.

The Harrises contracted with Mark and Terry Diamond in the spring of 2004 to secure loans and to remodel the home they’ve lived in for 42 years. Now, the Harrises are suing the contractor Terry Diamond and loan broker Mark Diamond because their once-solid home is falling apart and the remaining money from their loans is missing.

“It’s just a lot of problems,” Tommie said. “You just don’t know what the next problem is going to be.”

In June 2004, Tommie and Louise met with Mark Diamond, who had been recommended by construction workers in the Harris’ Hyde Park neighborhood. Mark told the Harrises he could arrange a loan for them and recommend a contractor, United Construction of America -- owned by Mark’s brother, Terry.

The Harrises signed what they thought was a fixed-rate loan for $354,000 with OSI on June 30, 2204.

According to documents filed in the case, the Harrises were not provided with all loan documentation at the closing. What they thought was a fixed rate loan, was an adjustable rate loan with an interest rate that could eventually climb from 7.34 percent to 14.34 percent.

“I asked [my father], ‘Did you understand what you were looking at or looking for?’” Pam said. “And he says, well, Mark said it was OK, and I trusted him.”

Pam said that Mark Diamond abused her parents’ trust and convinced them not to hire an attorney to look over the closing documents.

The Harris’ lawyer, Al Hofeld with Edelman, Combs, Latturner & Goodwin, LLC, said that even if the Harrises could understand the hundreds of documents at the closing, they wouldn’t have been able to comprehend the full scope of the loan they were being sold because they were not provided with all the required paperwork.

“These closings were rushed and there was pressure on them to sign sign sign,” Hofeld said. “Things weren’t explained to them, plus, they didn’t get any documents. There wasn’t really a lot that could have tipped them off.”

Work on the house progressed over the next eight months. Doors were removed, flooring was torn up and walls were gutted.

“When I saw that, I didn’t know what to think, I didn’t know if ripping out all the walls was necessary,” Pam said. “Some windows were gone, squirrels were running around on the third floor -- it was wild.”

In January 2005, Mark Diamond told Tommie and Louise Harris that there was not enough money to complete the renovation and encouraged them to take out an additional loan.

“First, they said the basement was included, then they said the basement wasn’t included,” Tommie said. Mark said they needed more money to do the basement, Tommie said.

“They stopped working for two weeks,” Louise said.

Mark facilitated a second loan for $500,000. According to documents filed by Hofeld in the case, closing documents were not provided to Tommie and Louise Harris, or their son Jeffery Harris or daughter Donna Harris, who had entered into the second loan with their parents.

The incomes of all four on the loan application had been inflated, Hofeld said.

“I think this guy, Mark Diamond, from everything I hear about him, is very smooth and charming.” Hofeld said. “I think he really did ingratiate himself with them and gain their trust -- something else that enabled him to pull the wool over their eyes was the fact that they never got any disclosures.”

“He’s a smart man, and he’ll get you,” Diane said.

Work began on the house again after the second loan was approved, but at a far slower pace, the Harrises said.

“I asked my dad, how many times a week do they come here to work? He said maybe twice a week,” Pam said. “At this point the house still didn’t have any walls on the second or third floor.”

“My baby girl [Pam] started getting suspicious,” Louise said.

“I said, give me this guy’s number, I’m going to call him,” Pam said.

“The only reason that any of this fraud came to light and was pursued was because the Harrises have one daughter [Pam] … who’s very well educated and sharp,” Hofeld said.

Pam said she started looking into the loan documents her parents had signed and Mark Diamond’s history.

“We didn’t know all this until Pam got involved,” Tommie said.

Pam said she started writing Mark request letters for the loan documents and got the run-around from Mark for a while, but he eventually relinquished the requested documents.

Pam said she worked on her parents’ situation to the point of exhaustion and eventually had to step back and concentrate on her job. She said her parents didn’t pursue the case either while the mortgage payments remained affordable.

“Once they got a letter saying that their mortgage was going to be doubled, then there was no way that they could continue those payments, that’s when I got involved again,” Pam said. “At that point I knew, I’ve got to get an attorney now or they’re going to lose the house.”

Through a coworker of an attorney at her church, Pam was put in contact with Al Hofeld. Pam took the documents to Hofeld to see if he would take her parents’ case.

“My initial reaction was revulsion at what had been done to them and a sense of outrage at the people who did this to them,” Hofeld said.

“I’m hoping as a result our case … we’re going to be able to get the FTC and the attorney general to enforce, hopefully, criminal sanctions against the Diamonds and OSI and United Construction,” Hofeld said.

Hofeld said cases like the Harrises are fueling the sub prime mortgage crisis.

“The root cause of this entire sub prime credit crunch is this kind of fraud, the kind of fraud you see in this transaction: Where brokers and sub prime lenders either intentionally -- usually the brokers intentionally -- committed fraud in the transaction and got people into loans that they couldn’t afford, and the lenders who are making the loans look the other way or condone what was going on,” Hofeld said.

Hofeld said people who suspect they are the victim of a predatory loan should consult “Predatory Home Loans: A Guide to Prevention and Rescue Resources” on the attorney general’s Web site, www.illinoisattorneygeneral.gov.

Pam said anyone considering getting home repair work done or refinancing their home should look into who the reputation of the company before signing anything.

“Get an attorney, that’s the most important thing,” Pam said. “Get an attorney to look over anything prior to signing any paperwork.”

Pam said their family still has a long way to go before they’re back on their feet, but they are making progress and hopefully the worst is behind them.

“We still have a long way to go because we’re not sure what’s going to happen down the line,” Pam said. “My parents and my family in this house are lucky to still be alive.”