Benito Cristobal is surveying the house he lost last year to a foreclosure defrauder, and he is emotional as he recalls the $30,000 worth of improvements he made to the home. The 51-year-old Mexican-American maintenance man, his son Efrem, a high school senior, silent by his side, steps slowly around what he once possessed, his gestures grand, his voice regretful. He says he got rid of the garden and laid concrete walkways. He covered the ground under the three lemon trees with redwood chips. He bought a new water heater, new windows, gutters. He built a patio with a roof, though he had to remove the roof and saw off the struts once the city discovered the unpermitted structure. He built a low cement-block wall, with a black wrought-iron fence atop, to surround the four 30-foot palms. For seven golden years, this three-bedroom, two-bath, two-car-garage abode was his and his family’s — at least on paper.
The home at 700 East Washington Avenue in Escondido cost Cristobal $390,000 in 2004. After he lost the 1144-square-foot home a year ago, it was sold for $145,000 — a 63 percent drop. Now, in 2012, it is for sale again at $237,500. A banner above the garage reads, “Buy this home for 3% down!” (Weren’t these teaser loans precisely what drove borrowers like Cristobal into the mortgage meltdown?) Today, the beige house with brown trim sits unloved and empty on an indifferent corner in central Escondido.
After living in the home for six years, in early 2010, Cristobal was laid off from one of his maintenance jobs in Vista. Soon, he fell behind on payments to Bank of the West. He paid the mortgage with his savings until that fund was exhausted. He called the bank, repeatedly trying to set up a loan modification. The bank never called back. His debt mounted.
In July 2010, a friend told him there was a Spanish-speaking business, Sunset Beach Management, in Downey, California, that would modify his loan. He and his friend drove to Downey and heard the pitch, he remembers, from a host of operatives: Alex Canjurra and Yesenia Mendoza; a money-handler, Eddie Teran; and the office boss, Lucy Delgado.
How much to save the Escondido house from foreclosure?
The processing fee was $2995. On top of that, Cristobal needed to pay the monthly mortgage, $1534, to Sunset Beach. Cristobal went home, thought it over, then got cashier’s checks — he shakes his head now, showing me his receipts — and hand-delivered them to the Downey office the following week. Lucy Delgado told him, “Not to worry. We take care of everything.” One other catch: before leaving, she asked him to sign a quitclaim deed. This would clinch the deal: his Escondido home would be signed over to the David Zepeda Trust — the only way to avoid foreclosure.
Who was David Zepeda? The head of the company.
Beginning in July 2010 and for the next five months, Cristobal made payments first to Sunset Beach, then, after a company name change in September, to “FWHLA,” Financial Wellness for Homeowners of Los Angeles. In early 2011, parking his truck in his driveway, he saw a notice tacked on the garage door. His house was up for auction. He called the money-handler, Eddie Teran. “Fax me that paper and don’t worry,” Teran told him. “Everything’s going to be all right.”
The day before Cristobal drove to Downey to deliver the next check, someone from Financial Wellness called and said that the company had changed hands. It was part of Zap Group Legal, in Woodland Hills — no longer David Zepeda’s but now run by Eddie Teran. Cristobal froze in his tracks. He had never received any loan-modification papers — from his new or his old lienholder. He threw his keys on the counter and slumped into a chair. He was done getting cashier’s checks and rushing them to Teran.
Last summer, the property went into foreclosure and Cristobal was evicted. Broke, his only option was to declare bankruptcy. Benito and Efrem left the Washington Avenue house and moved in with Benito’s daughter, about three blocks away.
Though he has restarted his life with a backyard nursery — a sign out front reads Muchas Plantas Diferentes — he is still angry. He filed suit in Vista small claims court against Sunset Beach and won a judgment, $7500, by default. Shaking his head again, he says that is money he will never see. He holds a scintilla of hope that someday after both Zepeda brothers are convicted he might get a small portion of the thousands of dollars he’s lost.
Last February, John Zepeda pled guilty to forgery, filing false deeds, and rent skimming. (David Zepeda’s case has yet to go to trial.) At John’s sentencing in superior court, Cristobal spoke, the only victim to come forward. “Everybody is scared,” he said. “These two [Zepeda brothers] and the others” — referring to office managers and bagmen — “are like the Mafia. I was told I would get a modification for my loan. It never happened. Please, Judge, let justice be done.”
Outside the courtroom, recounting his ordeal to reporters, he halted in midsentence. Under the light of a TV camera, he teared up. “What they promise is not true,” he said, his voice cracking, a touch of shame leaking through. “It is so hard to trust people now. Please don’t trust anyone who says they will help you.”
Like an octopus, the massive loan-modification scheme, beginning in January 2006 and created by the Zepeda brothers, reached its tentacles into the lives of hundreds of Southern Californians. Starting in San Bernardino and moving into adjacent counties, the fraud netted millions of dollars in mortgage payments and fees as the crooks bamboozled desperate homeowners.
The Zepeda brothers ran one of three prominent rings that operated in Southern California over the past six years. The rings were composed of families or employees of those families who set up operations in dozens of Hispanic neighborhoods, including Orange, Los Angeles, and San Diego counties, Ventura, Riverside, and Kern counties, as well as urban areas of Nevada and Arizona. (One term used for schemes that involve ethnicity is “affinity fraud.”) Members of the rings would teach — and game — each other. A group of employees would organize its own cadre and bring in new people to do the dirty work.