Tuesday, May 07, 2002

Couple surprised by murky home title

They bought house from an Erpenbeck company

By James McNair jmcnair@enquirer.com
and Patrick Crowley pcrowley@enquirer.com

The Cincinnati Enquirer

        Three months after buying a $198,000 house from an Erpenbeck company, an Independence couple learned that they didn't possess clear title — and that someone went to great lengths to keep them unaware of it.

        The episode is just one of many in which Tristate consumers entered a virtual Twilight Zone in their home purchases from companies headed by A. William “Bill” Erpenbeck. Many bought homes they don't own. Many paid down on homes that were never finished.

    If you have any information about the investigation of The Erpenbeck Co. or the inner workings or business practices of the company, please contact Enquirer staff writer James McNair at 513-768-8498 or at jmcnair@enquirer.com.
        In the case of Charles and Sherry Mitchell, the misadventures were capped by the receipt of a bank letter that the bank says was fabricated. Today, the Mitchells, their lawyer, a title company and three banks find themselves in a closing ceremony whodunit.

        The Mitchells stepped into the murky Erpenbeck realm last October when they closed on a house sold by Erpenbeck & Kennedy, a company run by Bill Erpenbeck, his brothers Jeff and Gary Erpenbeck and partner Mick Kennedy.

        Everything was lined up to transfer the deed. The Mitchells had already made a down payment. They obtained mortgage financing from Citicorp.

        A title company, Insured Land Title, consolidated the money and cut checks for the Erpenbeck & Kennedy side of the table, including a $139,489 draft to its construction lender, Kenwood Savings Bank.

        Kenwood never received the money. And because it hasn't, the bank never released its six-figure lien on the house. If the bank isn't repaid, foreclosure becomes an option.

        “My clients (the Mitchells) got hold of it because there was a mechanic's lien put on their house by a lumber company for $22,000,” the Mitchells' lawyer, Brandon Voelker, said Monday. “They immediately called Insured Land Title, which checked it out and saw Kenwood still had a lien on the lot that wasn't released.”

        Instead of giving the $139,489 check to Kenwood Savings, Insured Land Title — as was custom — entrusted the money with the Erpenbeck Co. Erpenbeck took the check to its bank, Peoples Bank of Northern Kentucky, where the money is believed to have entered Erpenbeck accounts. Peoples acknowledged last week that $15 million in such closing proceeds found its way into Erpenbeck accounts. Where it went from there is being investigated by, among others, the FBI. No charges have been filed.

        After Insured Land Title began its second title search on the Mitchells' home, Erpenbeck produced a Jan. 30 letter from Kenwood Savings Bank, confirming that its loan had been paid in full.

        That was news to Kenwood. On Monday, a bank officer denied writing the letter, which bore the signature of its chief executive officer, Thomas W. Burns. Although the fax sender line said Kenwood Savings, the fax number actually belongs to Erpenbeck, the Mitchells' lawyer said.

        “That letter was doctored,” said Tom Noe, chief financial officer of Peoples Community Bank, the West Chester-based parent of Kenwood Savings and not an affiliate of Peoples Bank of Northern Kentucky.

        Mr. Noe confirmed that Kenwood still holds a mortgage on the Mitchells' house.

        “Unfortunately, the home's sitting there with a double mortgage on it,” he said. “The issue is now going to have to be decided between the title company and the bank that handled the checks.”

        Charles Cain, a vice president at LandAmerica Financial Group — Insured Land Title's parent company — said the unpaid first mortgage on the Mitchells' house will be the subject of negotiations.

        “With an outstanding lien on it, money's still owed to Kenwood and would require some negotiation with Kenwood to resolve the issue,” Mr. Cain said.

        Insured Land Title, he added, has discontinued its former policy of allowing builders to convey closing proceeds to their lenders.

        The Erpenbeck Co. and Mr. Kennedy did not return phone calls Monday.

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