By James McNair
Enquirer staff writer

Now they can really call themselves homeowners.

U.S. District Judge William Bertelsman in Covington has approved out-of-court settlements that give clear title to the defrauded buyers of 32 Erpenbeck-built homes in Kentucky and Ohio. The settlements with U.S. Bank and Peoples Bank of Northern Kentucky call for the release of about $3 million in construction mortgages that the corrupt Erpenbeck Co. did not pay off with its customers' cash.

"They're getting their liens released," said Florence lawyer Jeffrey Blankenship, who filed the class-action lawsuit with his partner, Ed Monohan Sr. "It makes them whole, as if this never happened."

The buyers paid cash for their 31 condos and one house. But their money was diverted into Erpenbeck bank accounts, leaving their deeds in the grip of mortgages held by one of five Erpenbeck construction lenders.

Bank One, PNC Bank and Provident Bank absorbed the unpaid balances early on. Peoples Bank, which sold its banking operations in 2002 but lives on as a corporate shell, released six mortgages totaling $600,000. U.S. Bank, which held more of the cash buyers' mortgages than any other bank, released 26 mortgages of an undisclosed amount.

"It resulted in some headaches for the bank," said U.S. Bank spokesman Steve Dale, "but we've said all along that we would do what was just and fair for the homeowners."

News of the settlement ended a four-year headache for Whitney Remley, who bought a $200,000 Erpenbeck house in the Steeplechase subdivision in Walton in July 2000 with her husband, Steve. She blames the banks as much as Erpenbeck for the fraud scheme that took three years to attract regulatory action.

"Since they allowed him to conduct business, they should be the ones to reconcile it," Remley said. "To me, they're just as negligent as he was."

The release of the mortgages removes the threat of foreclosure against the homes by the banks. Further, it means that the homeowners will be able to sell, refinance and borrow against their homes.

A separate class-action lawsuit involving 211 people who used borrowed money to buy Erpenbeck homes was settled in 2002 when Peoples Bank agreed to pay off $16.8 million worth of construction mortgages on behalf of itself, other banks and title insurers.

E-mail jmcnair@enquirer.com