THIS HOUSE IS STOLEN. The words are spray-painted in what was once black along the sidewalk directly in front of 2122 Ward Street. It's old graffiti. Over time, sunlight and foot traffic have reduced it to a shade of gray only slightly darker than the concrete.
But the message is unlikely to be overlooked. Just feet away, on the paved landing leading up to the steps of the gray, wood-paneled south Berkeley house, someone has stenciled DONT BUY THIS HOUSE in smaller, darker block letters. Just beyond, a six-foot chain-link fence encircles the rest of the property. Inches farther, on the same landing, are more stenciled graffiti: STOLEN PROPERTY and GIVE IT BACK and RETURN JIM & BRETT.
These unequivocal slogans began cropping up in the summer of 2005, just weeks after Jeff and Loren Toews bought Jim Hultman's house at an Alameda County trustee's sale. The Toews (pronounced "taze") brothers are retired NFL players turned San Jose businessmen who have made a small fortune in Bay Area real estate. It wasn't the brothers who "stole" the house, but they bought it after an unscrupulous mortgage servicing company foreclosed on the property fraudulently, according to Hultman. That's why he thinks the new owners ought to sell it back to him and his partner Brett for what the brothers paid, rather than to a third party at the market rate.
The graffiti has served half of what appears to be its intended purpose: Jeff and Loren Toews have been unable to make a sale. They balked at Hultman's offers and vice versa but haven't found anyone willing to buy the contested property. The two-year stalemate has whittled away at the patience of all the parties: The businessmen have a high-six-figure asset that is now essentially frozen, Ward Street residents have an eyesore and a headache for a landmark, and Hultman and his partner Brett are stuck living at Brett's mother's house. Hultman, meanwhile, is at his wits' end, and by many accounts has become reclusive. The Express, in fact, was unable to track him down for a photograph to accompany this article.
The way Hultman tells the story, his despair is understandable. The house had been in his family since 1911, when his maternal grandfather bought the property. Seventy years later, Hultman moved in to care for his ailing grandparents, and inherited the property when they died. In August 2001 he took out a $170,000 loan with Aames Home Loan to pay off some property taxes and do a series of long-overdue repairs. At the time, the house was appraised at $850,000, but many of its parts roof, plumbing, wiring hadn't been replaced since his grandfather bought it. Hultman, an assistant property manager and home stager for local real-estate agents, planned to do most of the work himself.
About a month later, he got a call from a representative of Fairbanks Capital Corporation asking for his mortgage payment. This was news to Hultman, who insisted he'd sent his $1,200 payment to Aames earlier in the month. The Fairbanks rep politely informed him that the company had bought servicing rights to his loan from Aames, and would be managing his payments thereafter.
Confused and a bit suspicious, Hultman immediately went online to research Fairbanks, which was then the nation's tenth-largest loan servicing company, owned by the PMI Group, a publicly traded mortgage insurance corporation.
What he found frightened him. Roughly a dozen Web sites warned of the company's practices. Among the many grievances of fellow Fairbanks clients: The company charged them unwarranted late fees, demanded payments already made, and falsely stated customers' account balances. "I knew it was trouble," Hultman recalls.
Still, he figured there was little he could do except pay on time and keep record of it: "I went ahead making my payments. They were never late, and I always mailed them before they were due."
Hultman provided the Express with photocopies of his canceled mortgage checks from the time he became concerned right up through the date his property was auctioned.
Sure enough, the homeowner says, the company would occasionally claim his payments were late. "But I knew that was one of their ploys," he says. "I would just argue with them and just get it straightened out."
In November 2003, the US District Court of Massachusetts settled a national class-action lawsuit Alana L. Curry, et al., v. Fairbanks Capital Corporation. While the company admitted no wrongdoing, the lawsuit represented the first significant legal action by a regulatory agency against a large mortgage servicer. The $40 million settlement sent a mixed message to customers. While both the settlement deal and an accompanying order from the Federal Trade Commission demanded that the company reform its exploitative business practices, they also confirmed customers' widespread suspicions.
Hultman qualified for the settlement but decided to opt out. "I had followed the lawsuit against Fairbanks," he says. "Everything I read said, 'Opt out; don't go along with it.' If you stayed in as a class in the lawsuit, you gave up all rights to ever sue the company." In addition, the settlement made little financial sense. The $40 million in consumer redress was split among nearly 300,000 homeowners for an average payout of less than $200.
The following February, a man appeared at Hultman's door hoping to buy the house. Hultman had defaulted on his mortgage, the man said, and the house was in foreclosure. Bewildered, Hultman dismissed the man from his property. The last time he'd spoken with Fairbanks, the rep had told him his account was current. Moreover, he says, he'd received none of the documents that always accompany a foreclosure.
California law requires a lengthy process 121 days at the very least for a lender or servicer to foreclose on a house, which gives homeowners the chance to "cure" their default. It begins with a Notice of Default, which must be recorded with the county and sent by certified mail. Even if this notice is lost in the mail, thrown out with the recycling, or simply overlooked, it's nearly impossible for homeowners not to know they're in foreclosure.