By Steve Thorpe
Legal News
When some area families faced the loss of their homes because of the fallout from the demise of a shady real estate company, the students and professor of a law clinic rode to the rescue.
University of Detroit Mercy School of Law’s Mortgage Foreclosure Defense Clinic was successful on Monday with a motion in Wayne County Circuit Court to protect 70 individuals and their families from foreclosure and wrongful eviction.
According to a release from the university, Paramount Land Holdings, funded in part by the Detroit Police and Fire Pension Fund, purchased foreclosed properties for as little as $10. It sold them on land contract at inflated prices to buyers who were told that Paramount had paid any back taxes. The taxes had not been paid and Wayne County began foreclosure proceedings. In reaction, many homeowners stopped making payments to the company.
“Paramount was a corporation that had as its business model buying foreclosed properties,” said UDM Law Professor Joon Sung. “It then sold them to low-income individuals on land contract. It was billed as ‘What we’re doing is a benefit to the community. We’re taking these foreclosed homes and enabling people to own their own home.’ It involved approximately 2,000 homeowners in Michigan.”
A receiver, appointed by the Wayne County Circuit Court to maintain Paramount properties, obtained a Court Order to “Terminate Land Contract Interests and to Gain Exclusive Possession.” In part, the order sought to strip the homeowners from their property and evict them from their homes.
“Instead of filing a complaint and obtaining a summons, the receiver filed a motion and obtained an order to strip the property rights of more than 70 of the homeowners,” Sung said.
The clinic successfully argued that the order was improper because the transactions were essentially a land contract scam. The clinic also argued that the homeowners could not dispute the claims because no complaint was filed and no summons was obtained or served. As a result of the clinic’s efforts, the order was set aside and the homeowners were able to remain in their homes.
“The courtroom was filled with the families whose homes were potentially going to be lost,” Sung said. “We filed a motion to set aside the order and the court granted our motion.”
Now that the foreclosures have been stalled, at least for now, the clinic is trying to help the homeowners with the next step.
“What we’re trying to do now is work out some type of agreement with the county to deal with the Paramount homeowners,” Sung said. “We’re looking for additional time to unravel the mess that was created by no fault of the homeowners.”
UDM Law was one of the first schools in the country to create clinics to simultaneously assist needy clients and allow students to acquire “real world” experience. It founded its Urban Law Clinic in downtown Detroit in 1965 and the program eventually expanded to 10 clinics dealing with a variety of legal specialties. The school recently opened the George J. Asher Law Clinic Center adjacent to the main building and it now houses the clinics, which served more than 1,400 clients last year.
Mortgage Foreclosure Defense Clinic students handle cases involving mortgage fraud, foreclosure rescue scams and loan servicing errors. In the process, they interview clients, argue motions and negotiate settlements. They also educate homeowners on foreclosure remedy options and rescue scams.
“This clinic has been in operation for about two years,” said Sung. “It was founded because we saw the need, based on the ‘tsunami’ of foreclosures the area was facing. We knew it was something that would not only be good for our students but answered a need in the community.”
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