State moves against mortgage companies at W. Side building

  • By Jennifer Slosar
  • Environment Reporter
  • November 24, 2008 @ 6:37 PM

A state agency today revoked the Illinois licenses of two mortgage companies and filed complaints against an appraiser and a real estate company in connection with a mortgage fraud investigation at a West Side residential building.

The Daily News reported last week that tenants at 2754 W. Washington Blvd. suspect  their  apartments were sold to straw buyers by the building's former owner. The tenants say they remain unclear as to who actually owns the building, have stopped paying rent, and have banded together to take care of the building's utilities and maintenance.

The state Department of Financial and Professional Regulation became aware of the matter when a Daily News reporter interviewed one of the department's mortgage fraud experts about transactions at the building.

The department's investigation led it to strip the licenses of Envision Lending Group, a Utah-based mortgage, and Gateway Mortgage Group, based in Oklahoma. It is also revoking the licenses of Arthur Pascu, a loan originator at Envision, and Pawel Janowicz, a loan originator at Gateway Mortgage Group, of their licenses, according to a press release issued today.

The department accused Peter Petrovich, an appraiser, of violating appraisal standards.

LMB Properties, LLC, a real estate company that received commissions for some of the condominium units, was accused of operating without a valid license, the press release said.

John Douglas, attorney for Gateway Mortgage Group, says Janowicz has been terminated. He declined to discuss the state's allegations against Gateway.

Amy Anderson, president of Envision Lending Group, declined to comment on the pending license revocation. Danielle Matuszak, a receptionist at Envision Lending, said today that Pascu is no longer employed by the company.

Pascu and Janowicz could not be reached for comment.

Records from the Recorder of Deeds Office show Prospect Development and Management  bought the building in 2001.

Petru Cladovan, identified in real estate filings as Prospect's president, was indicted in May along with 14 others, including contractors, developers and seven city inspectors. Federal authorities accused him of attempting to bribe a building inspector to secure a certificate of occupancy for the West Washington building.

The building was deeded to another company with connections to Cladovan. That company obtained a condominium declaration, and in March, began selling the individual condominium units to KMA Construction Company. KMA then sold the units to individual buyers, according to mortgage documents.

Albert Marton is identified as the manager of both KMA Construction Company and LMB Properties in state records. He could not be reached for comment.

Both Petru Cladovan and his attorney, Ted Poulos, declined to comment.

Investigators with the fraud unit determined many of the individuals who purchased condo units in the building did so through LMB Properties. Envision Lending Group or Gateway Mortgage Group brokered the mortgages, according to the press release. 

Pascu and Janowicz completed loan applications using information about employment, occupancy status, and income that could not be verified, according to the press release.  They were also unable to verify the source of funding used for down payments, closing costs and the units’ appraisal values.

Janowicz was also unable to explain to investigators why he allowed a loan transaction to go forward with an appraisal report that had been questioned by a potential lender and after Petrovich admitted that “he had cloned over an appraisal he previously performed in the same building and forgot to make some edits,” according to the state's complaint against Gateway.

The complaint against LMB Properties alleges the company was employed by  KMA to broker sales of four of the units, despite LMB’s lack of a valid license. LMB received commissions of more than $7,000 for each of the three units.

Real estate records show that seven purchasers secured almost $2 million in funds from mortgage companies in transactions at the building.

Suspicions about the building began with Diane Mulvey, a medical student who studied law. In early spring, she received a Gateway mortgage notice addressed to a stranger.

Other tenants, too, began receiving mortgage notices addressed to strangers.

Then, Mulvey says, an unknown man visited her apartment, informed her that her unit had been turned into a condominium and requested rent payments.

Residents at the building say they did not receive advance notice that their apartments would be turned into condos, which is required under Chicago law.

Tenants are also entitled to the first right of refusal to purchase the unit, acccording to the Metropolitan Tenants Organization.

Mulvey says after she reported suspicious goings-on to Gateway Mortgage Group,  a person claiming to be her unit owner threatened to terminate her lease if she made further problems with the bank.

Confused about who held legal title to the building, eight tenants in the building, who include school teachers, a biomedical technician and a pastor,  pooled resources to keep utilities turned on in the common areas. They've changed the locks on the entrances to the building and hired their own maintenance man to clean and watch over the building, says Mulvey.

Residents are hoping to get assistance from the city to turn the building into a non-profit cooperative.

“This building could provide a real anchor to help stabilize a struggling neighborhood,” says Mulvey.

Matters are becoming complicated for the tenants, however.

Court records show the owner of Mulvey's unit, Tudor Hossu, is in foreclosure proceedings with Wells Fargo Bank.  Hossu cannot be located, according to IDFPR officials. Attempts to contact him were unsuccessful.

In addition, the city has filed a complaint listing 21 building code violations against Cladovan, KMA Construction, LLC, L&P Development, LLC, the Washington Condominium Association and seven condo owners in the building.

"Although this is just the tip of the iceberg, I am certainly pleased by how these agencies have worked in concert on a county, city, state and federal level," says Mulvey. "And, I can't wait for the rest of the sordid details to reveal themselves."

Jennifer Slosar is a Chicago-based freelance journalist. She covers environmental issues for the Daily News