Once in possession of the home, Duran said, scammers siphon off equity through a series of sales and refinanced loans and then transfer the property through a legitimate sale or walk away with the spoils and let the lender foreclose and evict the original owner.
In Baker's case, according to the court documents filed in May, defendant Timothy Barnett would assume Baker's home loan, pay the outstanding mortgage debts, maintain and restore Baker's credit and advance him $12,000. For doing this, Barnett would take control of the property and hold title for three years. In return, Baker agreed to pay Barnett about $1,000 a month for three years. Baker said Barnett promised to transfer the title back to him at the end of the third year, the documents assert.
Reed said her client unknowingly signed away the rights to his home and his most valuable asset (currently valued at about $600,000, according to online valuation provider Zillow.com) to Barnett for $226,000.
Barnett's Encino-based attorney, Harris L. Cohen, said his client, who declined to comment for this article, is a legitimate businessman.
"All the documents support the idea that Mr. Baker knew what he was doing when he signed the documents but never exercised the option to repurchase the house. No one would buy a property, take a loss for three years and then give you back the property," Cohen said. "He was told that he would have three years to buy back the property."
"He's a lot like a real-estate pawnbroker," said Encino attorney John H. Thaler of Barnett, whom he is defending in another real property suit, which he would not comment on.
But pawnbrokers don't usually sell property before the deadline, which is illegal. Barnett sold the home within a month of Baker's signing, according to the court documents. Cohen said the reason why would be answered in depositions.
According to Baker's attorney Reed, Barnett sold the home to Buena Park-based Trusperity Acquisition Corp. for $285,000. From October 2005 to March 2007, Reed said, the home was sold twice, once for $440,000 and once for $560,000, and refinanced multiple times without Baker's knowledge. Default documents obtained by The Times show that the individual who purchased the home in March -- and is also named in Baker's civil suit -- went into foreclosure on Aug. 15, when a notice of default was recorded against the home.
Trust built and then broken
