Drained of their savings and at risk of losing their Canyon Country home in an alleged illegal foreclosure, a local elderly couple is teaming up with a Santa Clarita real estate attorney in a pro bono fight for justice. 

An elderly couple, Ellen and George Elliot-Applegate, purchased a home in Verano at Aliento, a 55-year or older community on the east end of the Santa Clarita Valley in Canyon Country, to hopefully settle down in for the rest of their lives, but the couple is now at risk of losing their home to foreclosure by the hands of the same lender. 

When the couple first contacted Richard Szerman of Alta Realty Group in a desperate attempt to keep their home, Szerman uncovered repeated acts of fraud and unprofessionalism that had pushed the couple to the brink of foreclosure. 

“They came to me saying ‘we just bought this house and we’re already in foreclosure,’” Szerman said. “When they came to me two years ago, their $3,200 monthly payments turned into $4,500 payments and right away we knew that was a red flag.” 

In December of 2018, the couple purchased their house in Canyon Country as a home to soon retire in, but little did they know that the loans they obtained would be enough to push them into foreclosure, according to Szerman. 

“We should be looking at retirement, but my husband with a chronic illness was forced to start a new job at 62-years-old,” Elliot-Applegate said. “It’s been a nightmare. We’ve lost everything.”

A-Team Lending and A-Team Reality promised the couple a specific loan that allegedly “fell through” only after the Elliot-Applegates had sold their previous home, according to Szerman. 

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Chief Executive Officer Adrian V. Enriquez at Network Funding Group EM Capital Inc., previously A-Team Lending and A-Team Realty, ultimately forced them into a new, more expensive, loan, according to Szerman.

“Offering one loan, but forcing a consumer to agree to another, more expensive loan, under duress, is bait and switch and it is illegal,” Szerman said. 

Living in a motel while attempting to qualify for the home, the couple grew desperate and ended up accepting an additional second loan of $52,000 under the guise that Enriquez himself would loan them the money, according to Szerman. 

In order to qualify for the loan, the Elliot-Applegates needed to pay off $50,000 worth of their debt. 

Because they didn’t have the money on hand to do that, they were enticed to accept an additional $54,000 “secret loan” through Enriquez’s other company, EM Capital, to make it look as if the Applegate’s debts no longer existed. 

“All the Applegates needed to do was not report this secret loan on their mortgage application, which they didn’t know was omitted in the first place, and agree to repay the secret loan to Mr. Enriquez at some future date… at 12% interest,” Szerman said.

The Elliot-Applegates allegedly accepted these terms under duress, so that they could move out of their motel and into their new home, but little did they know that they would not be disclosing this new “secret” debt and that failing to do so was fraud, according to Szerman.

“Everything has been for his benefit,” Elliot-Applegate said. “During the process, he kept repeating ‘do what’s best for you, me and the investor’– the investor being himself.” 

Enriquez’s failure to inform the first lender of the additional loan is a violation of Regulation Z, a law protecting consumers from predatory lending practices, according to Szerman.

This “secret debt” that was not reported to the first lender reflects the strategy of a “bait and switch” fraud tactic, where a company posts “exceedingly low” mortgage rates, knowing that the majority of applicants are unable to qualify for the teaser rates and need to find additional financing elsewhere, according to Szerman.

“Just prior to the pandemic hitting, the Elliot-Applegates were hit with job losses and other financial troubles that caused them to fall behind on their mortgage,” Szerman said. “This was largely due to the now approximately $4,500 monthly payment they were forced to agree to if they wanted to move out of the hotel.”

That monthly payment does not include their payment on their second loan of $52,000 to Enriquez or any HOA fees, their solar system lease and home insurance. 

This is where the Elliot-Applegates reached out to Szerman for help. 

They first attempted to get a loan modification on the first mortgage, but the Elliot-Applegates did not qualify for any mortgage relief, partially because they “never should have qualified for the first mortgage in the first place,” according to Szerman. 

The Elliot-Applegate’s, at the first lender’s suggestion, applied for a short-sale due to the high mortgage rates from the combination of loans and was approved in November 2020. 

The first lender agreed to three different offers, three separate times, to finalize the short-sale, a much less damaging option than a foreclosure, however Enriquez continues to disrupt the process, according to Szerman.

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“However, the $52,000 second mortgage loan, created by Mr. Enriquez and controlled by Mr. Enriquez, which has now ballooned to $76,000 in just two years, refused to allow the short-sale and insisted on receiving all of the money they claimed they were owed,” Szerman said. 

Enriquez is claiming that his company is owed $80,000 from the couple, but is willing to settle between $30,000 and $65,000 — for an originally $52,000 loan that was illegally obtained, according to Szerman. 

Because the first mortgage is “over-encumbered in real estate parlance,” meaning that they owe more than their home is worth, all reputable lenders must agree to a discounted payoff, meaning that as a result of the short sale, the first mortgage must be paid off first and any excess funds are allocated to additional lenders, according to Szerman.

The first mortgage company offered Enriquez a maximum of $6,000, according to Szerman. 

“They have obstructed the short sale and are attempting to extort money that they have no right to and no ability to collect from potential buyers and anyone else associated with the attempted transactions,” Szerman said. “It’s disgraceful to see a lender (Enriquez) behave so poorly and in such defiance of the law and common sense.”

Two short-sales for the home have been attempted and accepted, but Enriquez continually changes the terms and offers little to no explanation as to why, according to Szerman. 

“We even had one buyer who was willing to pay the most unbelievable additional amounts Mr. Enriquez was demanding, but only with the understandable proviso that we did not violate any lender guidelines or laws,” Szerman said. “Mr. Enriquez turned down that offer and again made no attempt to offer anything as an explanation.”

The short-sale process has drained the Elliot-Applegates both mentally and financially, who cannot sell their home, but also cannot afford to keep it, according to Szerman. 

“I’m embarrassed,” Elliot-Applegate said. “I’m behind on the HOA and I don’t know where we’re going to get the money. I’m still working, but we’re just too far behind.”

The couple’s overdue bills to the mortgage companies, utility companies and the homeowners association continue piling up, alongside the debt of the illegal-obtained loan that Enriquez expects them to pay back, according to Szerman. 

“The Elliot-Applegates are being forced into foreclosure that would otherwise be prevented by an unscrupulous loan broker who is seemingly ignorant of the law, common procedure or anything resembling professionalism,” Szerman said. “He is, however, full of arrogance, ignorance and greed. The perfect stereotype of the untrustworthy lender every homeowner fears coming across.”

The KHTS Newsroom has made repeated attempts to reach out to Enriquez for comment, but have not received a response on any of the allegations. 

Enriquez has also allegedly not responded to any of Szerman’s emails in several weeks because he claims that they are “too long,” according to Szerman. 

“While this goes on, the HOA continues to go unpaid. The solar system remains unpaid. The taxes and insurance go unpaid,” Szerman said. “It is only a matter of time before Fannie Mae (the first lender) is forced to foreclosure despite their willingness to work with the Elliot-Applegates to avoid exactly that outcome.”

If the home does face a foreclosure, Enriquez’s second loan may be wiped out and go unpaid, according to Szerman.

“A short-sale gets him $6,000,” Szerman said. “A foreclosure gets him nothing. We want to warn the public about  Enriquez and A-Team Lending, Network Funding, EM Capital , United Trust Escrow and OGI Mortgage Bankers and any other companies this guy operates under.”

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