CHICAGO - In early April, Jeff Franson refinanced his mortgage, switching it from Chase to SecurityNational Mortgage Co.

On a sunny Saturday in early October, as he was mowing the front lawn of his Mokena, Ill., home, a process server drove up and handed Franson papers that showed Chase was planning to foreclose on his home.

Franson was current on his mortgage with SecurityNational. But the $93,702.51 check cut by Counselors' Title Co. to pay off the Chase loan bounced. After months of phone calls and letters between Franson, his attorney and the companies involved, Chase filed foreclosure papers.

For consumers refinancing mortgages, sitting down in a sterile conference room of a title company is considered the last step, a formality, in the loan process. After signing a thick stack of documents, borrowers leave happy that they've just saved money by obtaining a lower interest rate.

But like any business transaction involving the transfer of large sums of money, risks loom, and trusting consumers can pay the price. Franson and at least seven other Midwestern homeowners who did business with Counselors are wondering what's in store for their homes and what happened to the $1.6 million that was supposed to pay off their loans.

The Illinois attorney general's office confirmed last week that it is investigating the now-shuttered Counselors' Title, a real estate title insurance agency that had six offices in Illinois, Indiana and Ohio, after receiving three consumer complaints. The state also began investigating two other, but unspecified, title companies in the past several months. All the complaints involve mortgage refinancing and situations in which the payoff checks to the original mortgage holders bounced or wire transfers were never deposited in accounts.

"There's a very similar fact pattern we're looking into," said spokeswoman Natalie Bauer. "These are homeowners who were trusting these companies to protect their interests and take responsible actions, and now you have consumers in danger of potentially losing their homes."

Late Friday, the Illinois Department of Financial and Professional Regulation issued a cease and desist order against Counselors and its three principals, James Erwin and Shari Erwin of Chicago and Damian Sichak of Homer Glen, Ill., meaning they cannot easily operate a title agency in Illinois.

"It will be on their records with the state of Illinois," said spokeswoman Sue Hofer. "We have no authority to make victims whole. We can stop them from doing it to the next person, but don't have the legal authority to reverse the financial loss."

The department also said it is assisting the attorney general's office in its investigation.

Title insurance is an important but rarely questioned part of the mortgage process. In a home purchase in Illinois, a seller pays for an owner's policy that protects the buyer's interest in the property up until the point of sale. The buyer pays for a policy protecting the lender. When a homeowner refinances a mortgage, they are required to buy a new lender's policy. Few opt to purchase a new owner's policy, which some experts say could protect a homeowner if problems occur with the refinancing.

"People say, 'I've owned this house for years, and I've not had any claims, so why should I spend the money?'" said Frank Pelligrini, president of Prairie Title in Oak Park, Ill.

Join the discussion

The Miami Herald is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. In order to post comments, you must be a registered user of MiamiHerald.com. Your username will show along with the comments you post. Thank you for taking the time to offer your thoughts.

     Showing: Oldest first Newest first Most-recommended first Least-recommended first

@Nyx.AuthorDisplayName@ wrote on @Nyx.PostedAtTime@:

@Nyx.repliedToText@

@Nyx.replyAnswerText@

Reply to this Comment @Nyx.Recommender@ @Nyx.AbuseReporter@