Federal agents carried out a search warrant Thursday at the Logan Square offices of Mark Diamond, a Chicago businessman accused of a reverse mortgage and home repair scheme that targeted elderly black homeowners on the city’s West and South Sides.
FBI Special Agent Joan Hyde said the warrant authorized the agency to search the offices of United Residential Services and Real Estate and OSI Financial Services in Chicago.
Diamond is identified on the Illinois Secretary of State website as president of both companies. United Residential Services is listed as being in “not good standing,” and OSI Financial was dissolved involuntarily in October 2014, according to the website.
Eyewitnesses said 10 to 20 FBI agents went in and out of the office in the 2300 block of North Damen Avenue for much of the day.
Dave Slimp, who lives in the building, said he saw agents remove a push-button lock from the back door. The agents entered the office with empty boxes and left carrying documents, said Cesar Maza, a director at VPS Parking Management, located across an alley from the offices.
Dennis Both, Diamond’s lawyer, did not respond to repeated requests for an interview. Diamond’s activities were the focus of a Reporter story earlier this year.
Diamond has been the subject of mortgage-related lawsuits for decades. In October, Illinois Attorney General Lisa Madigan filed an injunction to prevent Diamond from doing business while a 2009 lawsuit she filed on behalf of dozens of elderly black homeowners works its way through federal court. The attorney general’s office will argue the motion for the injunction on March 30, a next step in efforts to put Diamond out of business, said spokeswoman Natalie Bauer.
A reverse mortgage is a financial tool that allows senior citizens to convert a portion of their home’s value into cash in the form of a loan that does not have to be repaid until the person moves out of the home or dies. Family members who want to keep the property must first pay off the debt.
Some of the complaints against Diamond allege that he enlisted the services of a woman named Cynthia, who gained residents’ trust by going door-to-door persuading them to purchase a reverse mortgage to finance home repairs. Diamond often took the money from the mortgages and did little, no or substandard repairs, according to the complaints. Some victims were forced into foreclosure.
The Rev. Robin Hood, founder of the Illinois Anti-Foreclosure Coalition that organized community members to protest at Diamond’s residence in the Loop, said the federal action sent a positive message.
“The victims of Mark Diamond needed to see that their government wasn’t going to allow him to continue his reign of terror,” said Hood, whose aunt, Lillie Williams, alleges she was victimized by Diamond.
State Sen. Jacqueline Collins (D-16) filed legislation in February aimed at stopping the exploitation of homeowners by reverse mortgage brokers like Diamond.
“He’s not the only one,” said Collins, who chairs the Senate Financial Institutions Committee. “We want to put some statute in place so that if [reverse mortgage] predators want to take the same direction, they’ll face some penalties.”
The law’s key features include creating a seven-day cooling-off period at the time a lender makes a written commitment to make a reverse mortgage during which the borrower could not be required to close on the loan. It also would provide prospective borrowers with additional information about the option for in-person counseling from a HUD-certified reverse mortgage counseling agency.
Bob Palmer, policy director for the non-profit Housing Action Illinois, the group that brought the legislation to Collins, said it intends to add a provision prohibiting people involved in making mortgages from getting money from homeowners for home repairs, as Diamond is alleged to have done.
The proposed sections of the legislation do not identify specific sanctions for offenders, but Palmer said existing residential mortgage law could be amended to include penalties.
Hood said a cooling off period, along with HUD-certified in-person counseling and attorney general oversight would serve as effective consumer protections.
State Sen. Patricia Van Pelt (D-5), who signed onto the legislation as a chief co-sponsor, is holding a hearing in Chicago on Saturday. She said she wants to gather more information from residents impacted by reverse mortgages. Van Pelt decided to hold the hearing after reading the Reporter story, she said.
“The Chicago Reporter was the reason I called the hearing,” she said. “It sounded the alarm.”