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Post date: December 6 1999

Home Equity Lender Agrees To Forgive Loans

Attorney General Spitzer today announced a settlement with an Erie County home equity lender to forgive loans that were made using inflated appraisals.

Beneficial New York, Inc. of Brewster, a subsidiary of Household International, Inc., has agreed to discharge eight home equity loans worth nearly $250,000 for distressed property in the City of Buffalo.

The agreement is the first step in addressing several real estate questionable transactions by William Bursee of Buffalo. Bursee allegedly deeded over property for one dollar to individuals with the understanding that they would apply for home equity loans in order to pay him in full. Bursee brought these individuals to Beneficial, which granted them lines of credit based on inflated appraisals performed by an independent appraiser. Because Bursee failed to inform these individuals of large outstanding tax and water bills owed on these properties, and because Bursee failed to make promised repairs to the property, the credit lines soon fell into foreclosure.

The Buffalo properties involved in the settlement are: 34 Memorial Drive; 57 Thomas Street; 105 Grimes Street; 1891 Bailey Street; 88 Clark Street; 35 Arnold Street; and 168 Metcalfe Street.

Beneficial has agreed to compensate the invididuals by releasing the lines of credit and any liens on the properties and returning any money they have already paid on their loans. Beneficial also agreed to:

  • require their notaries public get oral acknowledgment from the person signing for loans;
  • ensure application and mortgage documents are not backdated or postdated;
  • not extend home equity lines of credit to customers where it has knowledge that the property was transferred by a person for the express purpose of having another party apply for a loan, the proceeds of which will be paid to the transferor.

Beneficial cooperated fully with the Attorney General's Office with the investigation and does not admit any liability in connection with these transactions.

An investigation continues into the activities of Mr. Bursee.

This case is being handled by Assistant Attorney General James M. Morrissey of the Buffalo Regional Office.