Troubleshooters Uncover Secret Foreclosure Rentals

Jan and Marie Ouelette are laying down roots in Connecticut. They searched Craigslist for a rental home and found a list in in Andover with an 860 phone number and were sold at first sight.

"We like it here. It's a beautiful piece of property," Marie Ouelette said.

In early June, they say a man named Jimmy from New Haven Investments presented them with a hand-written lease without doing a credit check. Marie Ouelette said that was the first red flag.

"I asked him who to make the check out to and he said, 'We prefer cash,'" the young mother explained.

The cashiers' check shows the Ouelettes paid $1,875 for the first month's rent and a half month's security deposit. The Ouelettes moved in, but four weeks later, another red flag appeared at the front door.

"In the beginning of July, I get a knock on the door, and it's Henry saying, 'Who are you, and why are you here?'" Marie Oulette said.

Henry McDonald, who owns the house, moved across the state several months ago and received a letter in April from Realty Partners Group expressing interest in buying the property, which is going through foreclosure.

In May, a man named Bill met him at the home to propose a deal, according to McDonald.

"He told me it wouldn't be a quick sale. They'd buy the house and my name would be cleared, and I'd be able to get financed on another house," said McDonald.

McDonald signed three one-page documents: a management agreement that makes reference to renting the property, a third-party authorization letter and an indemnification agreement. In return, he says Bill agreed to pay him $2,000.

“He paid me $1,000 and said the other thousand would come once all the other paperwork was signed,” McDonald said.

Longtime Connecticut real estate attorney Chuck Shimkus reviewed the documents and said they're so vague, he questions their legitimacy, but said they would undoubtedly be attractive to certain homeowners and entice them to sign.

"As a homeowner that in a difficult situation with a foreclosure in financial dire straits, it's awfully tempting to enter into this arrangement, to basically put this worry aside move on in your life," said Shimkus.

Now, McDonald and the Ouelettes are now at an impasse, frustrated with Bill and Jimmy. Both have hired attorneys to sort things out.

"The house is still in my name, and they made their own lease. They're renting out my house and the mortgage is still in my name," said McDonald.

On their lawyers’ advice, the Ouelettes have stopped paying rent, but Jimmy’s real estate activities continue.

Last month, the Troubleshooters inquired about another listing on Craigslist with the same 860 contact number. We sent a producer and photographer to tour a property in New London that's also in foreclosure.

Our hidden cameras were rolling as Jimmy introduced himself and took us through the house.

We started asking questions about his real estate portfolio.

"We own 89 properties, myself and my three partners,” Jimmy said.
“Did your partner just pick this house up?” our producer asked.

“No, he’s had it for a while as an investment,” Jimmy said. “He bought it from an individual named Don Pardy.”

We tracked down Don Pardy, who has moved to western Connecticut, and showed him our video shot in New London. He said Jimmy also goes by another name.

“That is Bill,” Pardy said.

Pardy moved for work and his New London home went into foreclosure this summer. He’s hired a real estate agent to continue to market the property.

He received that same letter from Realty Partners Group in July.
"I considered it a no-lose situation to at least call and find out what the options were," said Pardy.

He signed the three one-page documents in hopes that "Bill" would negotiate with his lender to buy the house, but became skeptical very quickly.

"My real estate agent got a call from a potential renter who said they saw the property listed on Craigslist," said Pardy.

In fact, the day our Troubleshooters crew was in New London, we observed "Bill/Jimmy" remove the "for sale" sign that was in front of the property. We also pressed him for more answers.

"We have a management agreement with whoever you talked to, giving our company permission to rent the properties," said Bill/Jimmy.

"Henry McDonald in Andover didn't know anyone was living in his house," our producer said.

"That's not true. Totally untrue. He signed a management agreement giving one of our partners. So you're here for another purpose," said Bill/Jimmy.

At that point, we identified ourselves as journalists and he referred any further questions to his attorney. That attorney didn't return any of our calls or e-mails.

The bank is scheduled to foreclose on Pardy’s New London home later his month. Pardy believes that “Bill/Jimmy” was looking to take advantage of the situation and collect rent on the property until someone got wise to his plan.

“If it was with a national bank and it took a year or two to go through the process, that could be a substantial amount of money," said Pardy.

Neither the Oulettes nor McDonald have heard from Bill/Jimmy in more than two months. The relationship has become strained and the Oulettes are planning to move.

"As a parent, you need that piece of mind that you have a stable place to live, and he ruined that for us," said Marie Ouelette.

McDonald’s hopes of escaping foreclosure have faded. Now, he just wants his story to serve as a warning to others.

“I don’t want to see someone else get hurt,” McDonald explained.

Our real estate expert says a business is legally required to be licensed to serve as a rental agent or negotiate with a mortgage company. Neither Realty Partners Group nor New Haven Investments holds any sort of real estate license in Connecticut, and neither one is registered as a business with the Secretary of the State.

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