Single Dad Faces Eviction Due to Refinancing Snafu

What happens when you refinance your mortgage, but the mortgage broker doesn't pay off the first loan? Just ask Keon Williams of Milwaukee.

Williams came home one day to find the locks on his home changed. Now he and his attorney are fighting to keep Harris Bank -- which acquired the one-story bungalow at a sheriff's sale in January -- from seizing his home. According to Williams's attorney, the mortgage broker he refinanced through failed to pay off the first mortgage note held by Amcore Bank, which was acquired by Harris Bank in April 2010.

"He found it necessary to go to court this morning to protect the home from the lender," attorney Geoffrey Gnadt told AOL Real Estate on Tuesday while taking a very brief break from writing the injunction motion against Harris.

Williams, who dropped from a whopping 12.5 percent interest rate to 6.625 percent when he refinanced through the now-defunct Central States Mortgage Co. about three years ago, never thought his savings would turn into his nightmare on North 44th Street.

"These last four, five months -- it's been very hard for me to even sleep at night," Williams said. "To know that you may be kicked out of your own house that you've been paying on is just ridiculous," he told the Milwaukee Journal Sentinel.

Williams, a 38-year-old single father of three teenagers, originally bought the home for $98,500 as an investment. He took out a $128,000 mortgage with no money down to add a larger master
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bedroom and a second bathroom, for a total of four bedrooms. Eventually, he moved in with his children and has made monthly payments on his new note, sold to Flagstar Bank, ever since the refinance. He just had no idea that the Amcore mortgage was still due, making total amounts owed $265,000 between the two mortgages.

It is alleged that Central States' affiliate, Interim Funding LLC, used the $130,444 in refinance funds to pay off other lenders, a lawyer for Interim told the paper. Interim Funding typically provided funds to borrowers who would either sell the properties in a year or so, or clean up their credit enough to get a conventional loan through Central States.

So in 2010 when he learned that his house was being foreclosed upon, he called up the only lender he knew he had: Flagstar Bank, who told him he was current and it must be some mistake. So Williams ignored foreclosure notices from Amcore, figuring it had just screwed up. But after learning Harris Bank bought the home for $66,200 at the January sheriff's auction, he stopped making payments to Flagstar and got himself a lawyer. (See timeline.)

The sheriff's sale was stayed by a Milwaukee County judge until May 15 to give Williams time to determine how to save the home. He has a hearing with Amcore on May 12. So Williams was quite shocked when he discovered Harris Bank had changed a lock on one door and left a different door ajar.

"I did everything I was supposed to do, but I'm being evicted," the ex-Marine told the paper.

At least in a Tuesday morning hearing, Harris Bank acknowledged it made a mistake when it changed the locks. As a result, it agreed to cover the cost for installation of a new lock, Williams's attorney fees and other related costs, according to court documents. Still, Williams has only about three weeks to figure out how to save his home.

Sheree R. Curry
, who remembers the Harris Bank commercials from her childhood, is a three-time award-winning journalist who has covered real estate for six years. During her 20-year career, her articles have appeared regularly in the
Wall Street Journal, TV Week, and Fortune. She's been writing for AOL Real Estate since 2009 from a Minneapolis-area rental. She seeks a book publisher -- or at least a lender who'll give a reasonable mortgage rate to a self-employed mom.

For more insight on mortgages and refinancing see these AOL Real Estateguides:
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