A man described by the Denver grand jury as a “foreclosure chaser” has been charged with multiple counts of theft and forgery for allegedly stealing money from various financial institutions in the Denver area.
Indicted was Jay Donovan Jost, 63, who owned a series of companies, including Broomfield Lending LLC; MI-T Investments LLC; and Y-ZER Investments LLC.
According to the indictment, Jost is a “foreclosure chaser,” who — through his various companies — obtains title to properties in foreclosure by establishing a redemption position. This is usually done by buying out a debt against the property.
Jost then borrows money, usually from what are known as “hard-money lenders.” The hard-money lenders offer money for short periods of time at high-interest rates. The loans usually are secured by signing a deed of trust for the property to the hard-money lender.
Once he owned the property, Jost would do what was necessary to improve it for sale. He then sold the property and repaid the hard-money lender.
The grand jury alleged that beginning in April 2005, Jost — using his companies — devised a scheme in which he defrauded those who were lending him the money to redeem the properties.
Unknown to the lenders, said the grand jury, Jost had often already encumbered the properties. As a result, the deeds of trust offered for security often left the lender in an inferior position to another title holder.
In many of these cases, said the indictment, Jost was “playing the gap” — the time period between when legal documents from a closing on the property are presented to a county recorder and when the county actually records them.
The gap in Colorado can be from five days to two weeks.
During this gap period, title companies are unable to discover whether someone else holds title to a particular property.
Jost would use this “gap” to take out a mortgage from a second lender on a property that he, through one of his corporations, had recently purchased, the grand jury said. In some instances, Jost signed affidavits swearing the properties were unencumbered when, in fact, they were, said the indictment.
As a result, the lenders were left without repayment on their loans to Jost.
Not only were the lenders deceived, said the grand jury, but so were the title companies involved in the closings with the lenders and Jost. The title companies guaranteed the entity making the loan that the properties were unencumbered. As a result of Jost’s alleged trickery by playing the gap, said the grand jury, they were unable to discover that Jost had encumbered the properties.
The title companies were then obligated to pay the lenders for the money lost as a result, said the indictment.
Jost was arrested in Kansas as is awaiting extradition to Colorado.
Howard Pankratz: 303-954-1939 or hpankratz@denverpost.com
