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Mildred Avery thought she had a sweet deal to keep her house. Wrong.

When Mildred Avery met Jimmy L. Johnson, the Mesquite financial advisor made her feel hopeful again, despite her cancer and foreclosure notices. Soothing and compassionate, Johnson promised to help Avery save her house. She could sell her house to an investor and continue to live there.

Seller beware.

Less than a year after selling her home in a transaction Avery says Johnson arranged, Avery has been evicted from her home, and the bulk of her equity in the property has vanished. Her pleas for help to the Mesquite police, the Dallas County District Attorney's Office and state District Judge Anne Ashby went nowhere. The Texas Savings & Loan Commission is now investigating.

Mortgage scams usually rely on three things: a smooth talker, an inexperienced (or not too bright) home buyer or seller, and tricky paperwork. Avery's case had all three and more.

When Avery bought her East Dallas townhouse in 1989, she worked at AT&T and had no trouble paying her bills, but after leaving her job two years later because of poor health and depression, Avery survived on disability and Social Security payments.

In 1994, Avery filed for bankruptcy. Through the five years it took to pay off her debts, she clung to her two-bedroom home on Josephine Street. But last March, Avery received notice that her mortgage company was going to foreclose. Three months behind on her $582 payments, Avery was battling cancer of the fallopian tubes and had no way to pay.

"I was getting nervous and sick," says Avery, 57. "The mortgage company kept calling." When an acquaintance at church said she'd met someone who could help her stay in her house, Avery jumped at the opportunity.

She met Johnson at a Jack-in-the-Box on Interstate 30. His card read "J.L. & Associates," and "Capitol Source Plus: Creative Lending Solutions." Johnson explained that he was a middleman who would find an investor to buy the property then rent it back to her. In a year, Avery could buy her home back. She signed no contract with him, but a month later, Johnson came by with the news that he'd found an investor and a sample contract. Avery felt relieved but didn't ask important questions, such as how much the investor had agreed to pay for her house and how much she would net from the sale.

On June 11, 2004, Johnson met Avery at the Mesquite office of North American Title Co. to sign the papers. When a young man walked into the office, Johnson explained that he was the investor: Terrence Stenline. Avery had no further contact with him.

Avery met Cookie Ray, the loan closer, and signed documents selling her home for $110,000 to Stenline, but Ray ran through the papers so quickly, Avery says, that she became confused. (On vacation until April 18, Ray was unavailable for comment. Jimmy Johnson did not return phone calls from the Dallas Observer.)

Avery says Ray then gave her a typed page indicating how the disbursement--totaling about $27,000--should be made. This peculiar document listed eight lines: five spelled out "$1,000 check payable to Mildred Avery." Three additional lines show payments of $9,500, $9,500, and $3,587.94, with blank spaces showing the recipient.

Avery says she had not requested the $5,000 in five different checks, so she has no idea why Ray handled the transaction that way. Avery signed the document, cashed the five checks and believed she'd receive more the following week.

She admits it wasn't smart to sign something with blanks. Avery received only a few papers at closing; that document wasn't among them. "I wasn't thinking," Avery says. "I was relieved I was going to save my house."

Suddenly, Johnson wasn't answering his cell phone when she called. But he surfaced a month later to say he'd stop by to pick up her $765 rent. Avery asked if she should make the check payable to Stenline.

"No," Johnson told her. "Make it out to me." When she asked him about the rest of her proceeds, Johnson told Avery, "You know the investor has got to make some money." She later got another check for $280.

Avery made three rent payments but became suspicious because Johnson had never given her a lease to sign. The air conditioner needed to be repaired, and Johnson wouldn't give her Stenline's phone number. Mail to Stenline was piling up at her house. She sent Johnson certified letters, but he didn't respond. When she withheld her October rent because of undone repairs, however, Johnson called and demanded the check plus late fees.

"He called and got real irate," Avery says. "He was a totally different person."

Foreclosure notices to Stenline began to fill Avery's mailbox. Where was her rent going? A friend who worked at another title company put her in touch with a lawyer, who informed Avery that it sounded like a scam and she needed to call the police. "I got in the car and started to cry," Avery says.

Mesquite police Detective C.B. Johnson (no relation to Jimmy Johnson) talked to Johnson and Ray. Telling Avery that the sale seemed legitimate and no criminal charges were warranted, the detective recommended that Avery hire a lawyer. So Avery went to the Legal Aid Society, but her pro-bono lawyer said there was little he could do. She finally scraped some money together and hired Carl Oates, a real estate attorney.

An angry Jimmy Johnson later appeared at her house. "I've had the police to my house," she says Johnson told her. "I can't be hounded by the police." Shutting the door in his face, Avery told him to talk to her attorney.

When Oates became involved, the mystery deepened. The HUD settlement statement of the sale shows that Avery, as seller, should have received $27,847.94 from Sebring Capital Partners, a Dallas-based lender. Oates calculated that the title company owed Avery about $22,500. He tried to locate Stenline with no success. Was the buyer even a real person? Was it a case of identity theft? Oates talked to an investigator at the Dallas County DA's Office but was told that because the Mesquite police brought no criminal charges, they could do nothing.

On December 15, North American Title sent Oates Avery's file and a snippy letter. "This escrow is not outstanding," wrote Stephanie Moore, a legal assistant. "In fact, upon review of the file, there is evidence that shows the authorization by your client to disburse a portion of her proceeds to Jimmy L. Johnson."

The file included the document with the three blanks, now filled in with "Jimmy L. Johnson," who had no connection to the sale. Based on his attached hand-written instructions, dated three days after the closing, Johnson on June 15 received a wire for $9,500 and two checks for $9,500 and $3,587.94.

"It is unfortunate that Mrs. Avery has not received any money she feels is owed to her," Moore wrote. "However, this is between Mrs. Avery and Jimmy L. Johnson. North American Title has followed all procedures in closing this transaction."

But there are numerous problems with the transaction besides the unusual method of payments.

Realtor Patricia Ratcliffe of Keller Williams is listed as the broker, but she hadn't signed the sales contract and no commission is shown as having been paid. Ratcliffe says she had nothing to do with the sale and had left Keller Williams two months before the transaction closed. She knows Johnson but hadn't done any deals with him in years.

"He's a smooth talker," Ratcliffe says. "I never thought he'd cheat an old lady out of her money."

In addition, Stenline lied on his application, saying he was going to live in the house. His photo ID wasn't in the file. He put down no earnest money, and he'd never lived at the address listed for him on Ledbetter Drive in Oak Cliff.

The Dallas Observer found Stenline at a dumpy apartment in Rowlett. The Fed-Ex courier makes about $37,000 a year and lives with his mother. He'd met Johnson seven years ago when both worked at Fed-Ex.

"I was just trying to build some credit," says Stenline, 30. "Jim came to me and said he knew a lady who was going to lose her house, and it was a good investment."

Stenline says he didn't really read the documents he signed and assumed Johnson was applying Avery's rent toward the mortgage payments. Stenline got a shock last month while trying to buy a truck; his loan was declined because the mortgage was in arrears. He was astonished to learn Johnson had never made a single mortgage payment, instead pocketing the "rent."

"When it comes to money, I don't know anything," Stenline says. "I trusted him. Shame on me. Now I have to clear my name." He declined to say how much money he put into the transaction.

Cynthia Johnson (no relation), owner of Express 1 Mortgage, did the initial paperwork for Stenline's home loan and placed it with Sebring.

"Terrence had decent credit scores, and he made enough money," Cynthia Johnson says, but she declined to handle Jimmy Johnson's next deal after discovering the second applicant's income had been inflated and that she'd been evicted several times.

"I feel so bad for Terrence, because that poor child had no idea what was going on," Cynthia Johnson says.

Facing eviction, Avery tried to forestall the foreclosure by EMC Mortgage, which had purchased Stenline's note from Sebring, but Judge Ann Ashby refused to grant a restraining order. Avery then filed a lawsuit against EMC Mortgage.

"Based on my investigation, and what Ms. Avery says, I think she's been defrauded," says Mike McElroy, attorney for EMC. "[But] we are just as big a victim of the fraud. My client buys bundles of notes. It's not logistically possible that we would know anything about the transaction. Her remedy is against the people who defrauded her."

On April 1, out of legal options, Avery moved out of her home in return for EMC's "cash for keys" offer of $1,000. Her cancer is now in remission.

"It just hurts me, baby," says Avery, now living with her sister in Wills Point. "I learned you can be too trusting." --Glenna Whitley

No News
Members of the Dallas City Council have been asking questions in recent weeks about whether they can dethrone The Dallas Morning News as the city's "official newspaper."

To summarize the legal authority on this question: Sure they can. Just do it!

The official newspaper is where the city publishes all of that stuff in tiny black type beneath the city seal--requests for bids, zoning proposals, street closings and so on. It's a trade worth the better part of a million bucks a year to the Morning News.

At a recent council committee meeting, some members were under the impression that the Morning News was designated the official newspaper by the city charter. Assistant City Attorney Jesus Toscano told the Dallas Observer what he had explained to the council committee--that the charter requires the city to name somenewspaper its official newspaper but does not name the News.

But there is no state law requiring cities to name any official newspaper, Toscano said. He said state law sets out certain requirements that a newspaper must meet in order to publish official notices, but any newspaper that meets those criteria could be used.

So the city could publish its notices in several newspapers. Even in, say, sort of a muckraking alternative weekly.

In order to do that, however, Toscano told the council it would have to present a charter amendment to the voters removing the existing requirement.

Council member Dr. Elba Garcia said it's all about saving money. She thinks the advertising rates at the News may be too high. "For me, like anything else, I have to look for the benefit of the city of Dallas. If the state doesn't require me to pay, and I want to save close to $800,000 a year, why shouldn't I?"

Excellent, excellent question!

--Jim Schutze

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