The collapse of MCA Financial Corp. continues to send shock waves throughout metro Detroit, unsettling thousands of renters and mortgage holders with questions about their future. On Monday, Michigan Attorney General Jennifer Granholm’s office said the collapse has also triggered a criminal investigation.
Caught in limbo are people such as Cathy Burgess, who fears fallout from the megamortgager’s bankruptcy ("House of cards," MT, April 7-13) could devastate her family. Like many others, she is having difficulty finding anyone in authority to answer her questions.
"I just don’t know where to turn," says Burgess, a civilian employee at Selfridge Air National Guard Base in Macomb County. She and her truck driver husband obtained a $134,700 loan from MCA last December, she says, but they now find themselves forced to live with relatives.
Eighty percent of Burgess’ loan was paid to the contractor building her first home, according to Burgess; the remaining 20 percent – $27,643 – was supposed to be placed in an escrow account, which MCA would release to the contractor when the home was completed.
But on February 10, the Southfield-based mortgage company filed bankruptcy.
Burgess says that her contractor is refusing to complete construction; he fears MCA will not be able to pay him the remaining 20 percent.
The concern could be well-founded.
The office of the state-appointed conservator overseeing MCA’s bankruptcy told Burgess the escrow account does not exist, she says.
Problems with escrow accounts seem to be widespread.
According to conservator B.N. Bahadur, rather than set up separate escrow accounts for home insurance and taxes, funds were placed in the company’s general operations account and used in a failed attempt to keep the company afloat.
Will people like Burgess get their money back?
The Detroit City Council held one public hearing on the matter, and there’s been one bankruptcy hearing. Neither, however, was able to directly address the concerns of most people attending.
When Burgess finally made it through to the conservator’s office, the only advice offered was for her to obtain an attorney, she says.
Chris DeWitt, spokesman for Granholm’s office, says that MCA’s business dealings are under investigation. "There are concerns as to what exactly happened at MCA and it is being investigated by the criminal division." He says no charges have been rendered at this time.
Burgess and about 28,000 other creditors have until July 15 to file claims against the company in the U.S. Bankruptcy Court. Bahadur says many people may be out thousands of dollars because MCA’s assets fall about $90 million short of its debts.
While the courts navigate MCA’s financial maze, Burgess and her husband are making a $1,300 monthly payments on a loan for a house that does not exist. She says the builder only completed initial construction.
"I have four small children … and have been living between my parents and in-laws since the closing of this loan in December 1998," she says. "I’m basically homeless."
The next bankruptcy hearing is tentatively scheduled at the City-County Building in downtown Detroit on April 28, at 1:30 p.m. For more information regarding MCA Financial Corp.-related matters, call 1-800-688-4398 or see the Web site at www.aeg1.com/bbk/mca.htm.
