Title company’s files subpoenaed

The Colorado Real Estate Commission has subpoenaed a Colorado Springs title company's files related to a series of house sales on Balsam Street that resulted in five foreclosures.

In April, El Paso County Assessor Mark Lowderman questioned the transactions and filed a complaint with the state's top real estate cop, Erin Toll, director of the Colorado Division of Real Estate. Toll immediately launched an investigation and called it a "high priority" for her staff to determine whether any wrongdoing led to the Balsam foreclosures.

On Thursday, in response to an Open Records request from The Gazette, her office released and discussed the subpoena, as well as a letter written to an area real estate agent demanding files related to the sales on Balsam, in the northeast Sundown neighborhood near Woodmen Road and Powers Boulevard.

"The subpoena shows our investigation is active and ongoing," said Marcia Waters, director of investigations and compliance at the agency.

The subpoena ordered Legacy Title Group to turn over all documents related to the sale of houses at 5134, 5144, 5164, 5174 and 5184 Balsam Street.

The letter asks Morning Star Real Estate on Lehman Drive to voluntarily surrender its files as the broker representing builder Contour Homes in the transactions. A Morning Star broker/associate, James Chiga, said Thursday another broker in the office had worked several months marketing the houses for Contour. But the builder canceled the listing about a month before the houses sold. As compensation, Contour paid Morning Star a $3,000 commission on each house, Chiga said.

"We were not involved in the transactions," Chiga said. "And our agent who worked with them left the company a short time later."
Toll's office said Chiga is cooperating with the investigation.

On April 15, Lowderman asked Toll to look into allegations and admissions made by Colorado Springs landscaper Andrew C. Aranda, who bought all five of the houses within a 48-hour period in November 2006, using $1.9 million obtained from five lenders.

Lowderman's request followed an investigation by The Gazette in which Aranda said he was part of a real estate kickback scheme involving a mortgage broker, real estate agent, appraiser and others.

In his complaint, Lowderman singled out real estate broker Robert B. Teegardin of Teegardin Realty and Investments for investigation. Aranda said he was approached by Teegardin, a business associate, to buy the houses.

On Thursday, Teegardin said he was cooperating with state investigators.

"I didn't do anything wrong," Teegardin said.

In April, Aranda, 27, told The Gazette that he signed documents suggesting he planned to live in each of the houses, though he never intended to. The deception allowed him to obtain 100 percent mortgages at lower interest rates than if he had described the purchases as investments for resale or rental.

The five houses ended up in foreclosure; four have resold, each for about $100,000 less than the price Aranda paid.

Lowderman said he initiated the complaint because he suspected mortgage fraud, which has created a crisis in the banking community. Lending institutions nationwide have lost millions, and the values of nearby properties can be devastated for years, hurting innocent homeowners like those on Balsam Street whose properties must be appraised in comparison with new homes that are reselling drastically lower than they did 18 months ago.

"I'm glad to hear the investigation is progressing," Lowderman said.

Waters said the subpoena issued to Legacy Title Group does not mean the company itself is under investigation or not cooperating.

"It's standard procedure for us to issue subpoenas to title companies," she said.

Matt Hall, a partner at Legacy Title, said privacy laws prevent him from opening his files without a subpoena.

"I have very sensitive information in my files in regards to Social Security numbers and confidential credit records," Hall said. "By law, I can't share any information with anyone until I receive a subpoena.

"We are fully cooperating. I am waiting to hear what the next step is. They are not accusing me of doing any wrongdoing. I gave them everything they needed."

Legacy's files are a key to the investigation because Hall was the closing agent for all five sales and the notary on several of the deals.

Aranda did not return calls on Thursday. Previously, he admitted signing the loans, which describe the married father of four as single and indicate his plans to live in each house.

Aranda also admitted that he expected to get money back to help pay for the mortgages until the houses were resold. He also expected to be rewarded with business for his Red Mountain Landscaping Co.

But Aranda says he didn't understand the details and ramifications, including possible criminal charges.

Lowderman said he suspects another five houses on Balsam and nearby Fossil Butte Drive were involved in a similar scheme with different buyers.

CONTACT THE WRITER: 636-0193 or bill.vogrin@gazette.