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  • He's No Angel

    They once called him a savior who helped people in need. Today, Edwin Parada is accused of taking money from Latinos unfamiliar with real estate laws.

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He's No Angel

Continued from page 2

Published on June 17, 2008 at 12:47pm

Sitting in the living room of his two-bedroom home in Bernal Heights, the 45-year-old roofer recounts the story of how he met Parada, a fellow immigrant who seemed to understand the challenges of living in a new land.

"He knocked on my door and said he wanted to talk to me," Marcelos recalls, adding that one of his co-workers had referred Parada to him. "He told me that I needed to buy a bigger house because my kids were getting older and needed separate bedrooms and that he could help me."

Marcelos told Parada that he was happy with his home and couldn't afford a bigger mortgage. But the agent wouldn't listen, repeatedly calling and coming by unannounced at least 15 times, Marcelos says.

Despite his initial protestations, Marcelos was eventually won over by the persuasive Parada. About a month later, Parada called and said that he had found a home in Portola Valley that was perfect for the family, and assured Marcelos that the down payment would be covered through a home equity line of credit, which homeowners often use to do repairs or to consolidate debt. The real estate agent said the mortgage payments would only go up nominally — by $100 at most.

To complete the closing documents on the home, Parada asked Marcelos to meet him at a Starbucks, according to a civil lawsuit Marcelos filed in January. But when Marcelos showed up, Parada was nowhere to be seen. In his place stood Lorenzo Parada, Edwin's brother and a notary public, who put a large stack of documents in front of Marcelos and pointed out places where he should sign, Marcelos recalls. (Despite repeated attempts, SF Weekly was unable to contact Lorenzo Parada for comment.) All of the documents were in English, despite the fact that Marcelos and Edwin Parada had always spoken Spanish to each other.

Marcelos had questions about the 100-plus-page pile of documents, but was told to wait until Edwin was back in town, he recalls. He left that day's appointment without copies of anything he had signed, a violation of basic real estate practices. It would be two years before Marcelos would see any of the documents, and only after incessant calls to Edwin by Marcelos' wife, Jackie.

When the Marceloses finally received the documents, they were shocked at what they saw. Instead of taking out an equity line as promised, Parada had actually refinanced their home, assigning himself a payoff of $200,000, according to the lawsuit.

"Parada put himself on the HUD1 [closing document], and the escrow company didn't make any inquiry whether that was a valid disbursement and gave him a cashier's check for $200,000," said Hochhausen, Marcelos' attorney.

Argent, one of the nation's largest subprime mortgage lenders, which underwrote the loan Marcelos took out to purchase the new home, declined comment pending litigation.

But Simone Katz, attorney for New Century Title Company, which was the escrow holder for the loan, said her client was simply following the instructions given by Mr. Marcelos and the lender, and so is not responsible for the money in question.

"The escrow company is there to process the paperwork and make sure the loan gets funded, not to police the transaction," Katz said, adding that the case has proceeded against all other defendants, including Commonwealth Land Title Company, which is the successor-in-interest to New Century, following New Century's dissolution.

"The escrow documents had written instructions, not from only from the lender, but from the borrower, which Mr. Marcelos had an opportunity to review," Katz says. He reviewed and signed those documents, so there would no reason for New Century to believe that this disbursement should not have been made."

When the Marceloses realized what had happened, they immediately contacted the San Francisco Police Department, the Department of Real Estate, and the San Francisco District Attorney's Office, but say their complaints fell on deaf ears. The Marceloses says the district attorney's office told them that there was such a backlog of cases that it would take three years before an investigation could begin.

"They didn't understand what we were talking about when we told them our real estate agent stole $200,000 from us," said Jackie Marcelos, who became so frustrated with what had happened that she began studying real estate.

Erica Terry Derryck, spokeswoman for San Francisco District Attorney Kamala Harris, said that a staffer met with the Marceloses last year and explained that the district attorney's office couldn't do anything until a criminal investigation had been completed and there was sufficient evidence to file charges against Parada.

In their frustration, the Marceloses also turned to the San Francisco Bar Association and several local nonprofits, who listened to their story, but couldn't do much. "Unless you have at least $40,000 in the bank for an attorney, you really can't do anything," Ricardo Marcelos says.

Mortgage fraud has jumped by 47 percent in the past year, with California considered one of the hot spots for the problem, according to the FBI. That's in part due to its size, but also because it's one of the few states where real estate agents can also work as brokers, eliminating the checks and balances meant to stop unscrupulous players, experts say.

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