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Miracle Mortgage Solution

How a helpful woman walked into people's homes and walked out with the keys.



Six years ago a woman named Kattie Austin drifted into the life of Katie Carter, a substitute teacher with the Chicago Public Schools who was then in her early 40s. Carter's son Shonie, who was studying art at Triton College and was on the wrestling team, had met Austin through a teammate. He vividly remembers the first time he saw her. "She was a middle-aged black woman, heavyset and wearing a wig," he says. "She was fast talking. I could tell she was self-educated--she would mix words up and speak in a lot of circles--but she did make some sense." During the conversation Shonie let slip that his mother had fallen behind paying the mortgage on the house in Maywood that she and her ex-husband owned. Austin seemed concerned, and Shonie took her home to meet his mother.

Katie Carter and Mearion Bickhem Jr. had purchased the three-bedroom brick house at 1936 S. Eighth Avenue in 1973, taking out a Veterans Administration loan of $17,500. The couple had three children--Shonie, Joey, and Tyffanni--before they divorced in 1980. Carter and the children remained in the house, and Carter continued to pay the mortgage, $116 a month, on her own.

"It wasn't no big house--just an upstairs, a downstairs, and a basement," says Tyffanni, now a manicurist on the west side. "It was all we knew." She remembers Joey covering the front door with stickers and the two of them melting crayons with a magnifying glass to decorate a windowsill.

Carter paid the mortgage down to $6,500, but then got behind. By 1994 she owed the mortgage company more than $9,000, and it was threatening to foreclose. "When I told Kattie Austin about this, she said she could save the house," says Carter, adding that Austin told her, "Trust me--I believe in the Word." Tyffanni remembers Austin telling Carter that she would bring the house up to code and pay off the mortgage, and then Carter could pay her back. "Kattie Austin had a knowledge of the Recorder of Deeds office, and she knew about banks," says Shonie. "My mom had a limited knowledge of such things." Austin took Carter out to dinner and let her borrow her car, a fancy white Chrysler.

One evening that May, Austin came over to talk with Carter. The two women settled in at Carter's dining room table. "We had a casual meeting," says Austin. Tyffanni says that Carter, who admits she sometimes had a drinking problem, had been on a three-week binge. She tried to persuade her mother to cut off the conversation with Austin, "but somebody who's been drinking like she had been just won't listen."

Carter says Austin placed some papers in front of her, and she remembers signing one of them. "I was very intoxicated--drunk as Cootie Brown," she says. "I thought I was signing an agreement to pay her back for fixing up the house. Really, I had no idea what I was signing."

A warranty deed on file at the Cook County Recorder of Deeds dated May 16 shows that Carter had put her house into a blind trust of which Austin was the beneficiary. In effect, Austin now owned the house.

Carter isn't the first person to turn property over to someone who promises salvation. "It happens every day," says Mark Helfand, Austin's attorney. "Somebody's behind in their mortgage, and their back is to the wall--they're losing a job or they can't get a job. The only solution is to go into bankruptcy, and so they sign over title to avoid being thrown out on the street--which is the last thing most of us want."

The warranty deed also bears the signatures of Kattie Austin and Mearion Bickhem, who, as co-owner, would have had to sign to make the document legal. But Carter's former husband, who now lives in Milwaukee, swears he never signed it. He says he met Austin only once, at Carter's house a year or more after Carter signed over the house. Asked about his signature, Austin says that by 1994 Bickhem had nothing to do with the house anyway, because he'd given his wife full title to it during their divorce. Yet there's no record of any such transfer.

The deed was notarized by Helfand, and Austin says the documents were signed in Helfand's office. But Carter says, "I never saw Mark Helfand in my life." Bickhem says he's never laid eyes on him either.

Helfand, a graduate of the University of Illinois at Urbana-Champaign and John Marshall Law School, practices by himself out of an office in the Loop. He says that Austin would sometimes call to tell him about someone whose property was about to be foreclosed on and ask him to set up a land trust into which she could put the property. He recalls that Austin would usually show up with the person, often without an appointment, and he'd have the appropriate documents ready. "Kattie did a lot of things herself too," he says, explaining that documents weren't always signed in front of him. "I had to get verification of the signature later, usually by talking to the person on the phone." He has no recollection of meeting either Carter or Bickhem.

Austin claims she paid Carter for the house. Asked how much, she answers, "I don't have the documents." Helfand says he knows nothing about what Austin paid Carter or anyone else for property. "I was never part of that scenario," he says. Carter insists she never received a cent.

Carter began paying Austin $535 a month, a sum she says Austin suggested. "I felt she was saving the house, repairing and remodeling it," says Carter, "and I thought I was paying her back for what she did. I was glad to pay the money. I was happy not to have lost my house."

On May 31, two weeks after Carter signed the deed, Austin took out a $51,100 mortgage on the house from Aetna Financial Company of Minneapolis. The annual interest on the loan was 12 percent, a rate typical of subprime lenders, which charge higher-than-market rates and fees to cover the risk of dealing with individuals who don't have a good credit history. (The high cost of such loans often pushes borrowers into foreclosure.) A mortgage-discharge document dated September 2 indicates that Austin paid off Carter's mortgage. At that point, Austin could have used the $535 Carter was giving her each month to pay off the new mortgage on the house and the taxes and still have something left over. But according to a foreclosure suit later filed by Transamerica Financial Services, which picked up the loan from Aetna, Austin never made a single payment.

That June a rehab crew arrived and took out walls, ripped up carpet, pulled down paneling, and set the kitchen sink and stove in the backyard. "We had to wash our dishes in the bathtub," says Tyffanni, "and we had to keep canned goods in the den." She says she was so embarrassed by the state of the house that she stopped inviting friends over. Then the crew began showing up later and later; within three months they stopped coming altogether.

Austin says the man who headed the crew was "a private contractor who's now under investigation. He was contracted and paid to do renovation on my property. But she [Carter] called the police, and that ran him off. He was unable to return." Carter says, "I never called the police on anybody."

When Carter realized the rehabbers weren't coming back she stopped paying Austin the $535 a month. Austin demanded that she pay her rent. Carter had no idea what Austin was talking about. "Rent?" she remembers saying. "What do you mean rent? Look at this raggedy house. What's going on here?" Austin then threatened to evict Carter, and Carter replied, "No, this is my house."

Carter says that around this time Austin told her she could have the house back if she paid $60,000, its market value. "When she asked for that amount of money," says Carter, "I looked at her like she was nuts."

For over a year and a half Austin let the matter slide. Carter, still grateful that Austin had helped her but annoyed at the condition of the house, didn't think she owed Austin anything more. "There was no sink in the kitchen," she says. "I wasn't going to keep paying this woman. For what?"

In January 1996 Austin, using the house on Eighth Avenue as collateral, got a $22,500 home-improvement loan from South Central Bank & Trust Company, which specializes in small FHA-insured loans to contractors. Austin had never been a customer, and when she applied for the loan South Central ran a credit check. It showed only two old debts, a $175 fee owed to the village of Park Forest and a $110 bill to a collection agency, both of which had been paid. Twenty other creditors reported that they'd had good dealings with her. Apparently the default on the Aetna mortgage didn't show up. South Central's records show that Austin made only a few payments on its loan. "Once in a while bad things happen on these loans," says Marc Grayson, the bank's president, "and this was one of them."

On April 22, 1996, Austin sued to evict Carter. It wasn't the first time Austin had taken someone to court. A search by the Legal Assistance Foundation of Chicago shows that between 1984 and 1999 she went to court 38 times as a plaintiff, often, apparently, in eviction cases. She also turned up 45 times as a defendant.

Carter received a notice from the court telling her she had five days to pay the back rent she owed--curiously, Austin was asking for only $1,300. Carter says that this was when she finally realized that she had lost her house.

Tyffanni called her father, who was in town visiting other relatives. Bickhem hurried over to the house and found Austin there. "We got into an argument," he says, "and Kattie Austin told me to talk to my ex-wife, who was sitting there with her head bowed." Carter told Bickhem that it seemed she had deeded the house away. He says he stared at her, then burst out, "Oh my goodness, how could you have done that?"

Helfand represented Austin in the eviction case. Carter was represented by Alf Sanford of the Cook County Legal Assistance Foundation in Oak Park. A trial was set for June, and the case was transferred from the Daley Center to the Maywood courthouse. Unaware that the venue had been changed, Carter and Sanford missed the June trial, at which the judge ordered that she be evicted. Back in court on August 5, Sanford moved to forestall the eviction, arguing that neither he nor Carter had been notified of the transfer.

At 5 AM the next morning Carter woke up to find her back porch on fire. According to the Maywood police report, Carter told police that Austin had earlier told her that the "wiring in [the] house is really old and [that the house] would probably burn down soon." A witness told police he'd seen a man in his 20s running away from the scene carrying a gas can. An officer had found the can, but no evidence linking it to the crime. The Maywood fire department says the blaze--and a second fire in 1997--is still under investigation. Austin says she had nothing to do with either fire.

In a motion filed a month later, Sanford again tried to forestall the eviction, this time pointing out irregularities in the transfer of Carter's house to Austin. His motion says, "It was the understanding of the parties that Plaintiff [Austin] would re-deed the property back to Defendant [Carter] after payment of foreclosure fees and a reasonable profit to Plaintiff." Austin had also failed to give Carter "any documents and agreements executed between the parties in this matter....Without said documentation, Defendant is unable to ascertain her rights and obligations in this matter."

But on September 17 the judge gave Carter five weeks to pay up or get out. Sanford wasn't surprised that the judge found his arguments irrelevant. "Eviction court," he says, "is not the proper forum to raise fraud issues."

Carter, Shonie, Joey, and Tyffanni moved into Carter's aunt's house, in West Garfield Park on a block that's plagued by drug dealers. On October 25, says Carter, "I got a call from a neighbor [on Eighth Avenue] who told me, 'Katie, all your shit is being thrown out front.' And soon all our possessions were kicked out in the front yard."

In February 1997, Transamerica filed its foreclosure suit against Austin, charging that she'd repaid none of the $51,100 loan. Austin refuses to comment on the particulars of this or any other loan. "I don't get into what I've done on my own property," she says. "That's my own personal business."

Austin never appeared in court during the case. A court affidavit shows that a sheriff's deputy tried to deliver her a summons at court--where she sometimes showed up for other cases--at the house on Eighth Avenue, and at another house she owned in River Forest. "Ms. Austin lives downtown," said the man who answered the door at the River Forest house on March 6. A special process server tried 15 more times to deliver the summons at the River Forest address, then gave up. Under Illinois law, if the owner of a property that's being foreclosed on can't be notified, the judge in the case can't force the owner to forfeit anything beyond what the property brings at sale.

In April 1998 Intercounty Judicial Sales Corporation, a private firm that conducts foreclosure auctions, sold the house for $31,601 to Phillip Tick, a self-described "scavenger" of foreclosed-on houses. The proceeds went to Fairbanks Capital, which had taken over the mortgage from Transamerica, to help pay off Austin's debt. Tick tuck-pointed the place, patched the walls on the first floor and in the basement, repaired the scorched joists, and installed new windows, gutters, and siding. After pumping $32,000 into the house, he resold it for nearly double his investment.

South Central wound up writing off the home-improvement loan it had given Austin. According to Grayson, the bank didn't pursue her in court because that would be costly, and besides it could recoup 90 percent of the loan because it was insured by the federal government--the taxpayers would bail it out.

Using the equity of a house for personal gain as Austin did is known as equity skimming. "She milks the equity out of a property, and it gets foreclosed on--and it's gone," says Ira Rheingold, supervisor of the foreclosure-prevention project of the Legal Assistance Foundation of Chicago and the lawyer in another case filed against Austin. "Kattie Austin's not unique at this. She's just better at this than most." He says that because Austin's properties were often in blind trusts, her credit record might have been difficult to track, but he also says that banks and mortgage brokers don't always look very hard. Brokers, he says, sometimes "do what needs to be done to make the deal and get their fee," and subprime lenders sometimes overlook irregularities, either because they're getting higher interest rates or because they plan to bundle a loan with other loans and sell them to a larger bank or pension fund. And those banks and pension funds "are willing to look at all the loans they buy as a package, not individually. There's no accountability. The system fails miserably."

Kattie Austin was born in Arkansas. "I grew up with some people who adopted me," she says, then describes her adoptive parents as farmers. The family eventually moved to East Saint Louis, and after Austin graduated from high school, she and her adoptive mother and some of her sisters migrated north to Chicago.

Austin trained to be a nurse at Triton College, earning a certificate in practical nursing in 1984 and an associate's degree in nursing three years later. She passed the state exam and was licensed as a registered nurse. The Illinois Department of Professional Regulation has no record of any complaint against her.

Austin says she practiced as a private-duty nurse and as a critical-care specialist at "a lot of different places." Among her employers were the Chicago Osteopathic Medical Center and Loretto Hospital, located in Austin. Kate St. Gaelin, former manager of Loretto's intensive-care unit, says Austin was "a very bright and skilled nurse. And she was an entrepreneur, if I remember it right."

Austin began buying property to make extra income. She says a cousin referred her to Helfand 16 years ago, though Helfand says they worked together for only 6 or 7 years. "Mr. Helfand would call me and tell me that a property was for sale and to buy it," says Austin. Helfand insists he only did the paperwork. "I've never, ever seen or been involved with any of her properties," he says.

By the mid-1990s, Austin says, she owned 25 properties on the west and south sides and in fading blue-collar suburbs such as Maywood and Bellwood. "She made good money from the nursing," says Helfand, "and she was making lots of money [from real estate]." In 1995 she moved from west-suburban Berkeley to a four-bedroom ranch house in River Forest valued at more than $300,000. She had two grown sons, and in 1996 she married Jesus Santos, a construction worker. She also bought a 1984 yellow Rolls-Royce. "She seemed very easygoing, very pleasant, and everybody seemed to like her," says Helfand. "She was on top of the world, with no complaints."

Yet according to a police report, the year she moved to River Forest Austin ran a red light on Halsted Street in Lincoln Park. The officer who pulled her over discovered that she was wanted for failing to return a Toyota Camry to a Hertz rental agency. She pleaded guilty and was sentenced to one year's probation.

In 1973 Susie Walker, a factory worker, and her husband, Herman, a security guard, bought a small two-bedroom brick house at 8400 S. Hoyne for $21,000. Herman died two years later, and Susie continued to make the mortgage payments on the house, which was her family's gathering place. "For a small place, it meant a lot to us," says Rosia Holiday, Walker's only surviving child.

Holiday, a nurse's aide, raised her own children in the Rockwell Gardens housing project on the near west side, but in 1984 she and her son Byron bought a small house at 5748 S. Throop for $44,000. After a stroke disabled Walker in 1993, Holiday moved into the house on Hoyne to care for her. One of Holiday's daughters, Tyrna Anderson, and her children stayed behind in the Throop house.

Walker died on November 4, 1995, of congestive heart failure. Holiday says the estate consisted of just the house on Hoyne. She assumed it was hers, though she never had the title transferred. For some months she'd been paying both mortgages, $460 a month on the Hoyne house and $237 on the Throop. Then 57, Holiday was on disability, suffering from kidney disease, diabetes, and hypertension. Her mother had paid the mortgage on the Hoyne house down to $10,000, and Holiday was keeping up with the bills. But she soon fell a couple of months behind on the Throop mortgage.

Then Holiday's son-in-law Eric Seymore, who worked as a custodian, met Kattie Austin at New Mount Vernon Missionary Baptist Church. He told her he and his brother Robert, a laborer, wanted to become property owners. "She said, 'God put me here to help people,'" recalls Eric. "She led me to believe that she could help us get rental property. I figured if she's at church, she's OK." The Seymores decided to go into a real estate deal with Austin, and he also referred her to Holiday.

Susie Walker had been dead only a couple of weeks when Austin went to visit Holiday. Holiday says Austin told her she could help with her house troubles. When Austin said she'd worked at Loretto Hospital, Holiday believed she could trust her. "She presented herself as a real estate lady," says Holiday. "She's a fast talker, and she made me think I was her friend. She was dressed real well--in a wig, with diamonds on her hands--and she drove a white Crown Victoria."

Holiday says Austin told her that the delinquency on the Throop mortgage could affect the status of the Hoyne house, then suggested some kind of housing swap. "I told her I wasn't interested in any other property," Holiday would later testify in a deposition. But she did want to be rid of the burden of the Throop house.

A month went by, and then on December 21 Austin, accompanied by another woman, returned to the Hoyne address. Holiday later testified that Austin had her collect papers for both houses as well as Susie Walker's will. Austin and her companion then drove Holiday and Tyrna Anderson down to Helfand's office. Anderson says Helfand told her to stay in the waiting area while he "had mama signing things."

Holiday and Austin both signed papers that Holiday believed simply turned over the house on Throop to Austin. Byron later signed the papers under the same impression.

Helfand would later testify in a deposition that Holiday had turned over the house on Throop in exchange for a three-flat Austin owned at 1120 N. Orchard in Maywood and that the swap seemed to make sense for Holiday. "She wasn't in a great financial situation even to handle the existing property that she was passed. And here was, one, an income-producing property which would, ultimately, supposedly pay the mortgage, have her live basically rent-free on the place so she wouldn't have any obligations on it. So from a logic point of view, it seemed right." He also stated that the swap seemed fair: "The equities were around the same."

Austin drove Holiday home after the documents were signed, and Holiday remembers her saying, "Rosia, you need a building--a nice three-flat." She replied, "I just want my home." But one of the papers she'd signed was a swap agreement.

Two deeds filed with the Cook County Recorder of Deeds show that Holiday and her son had signed over to Austin not just the house on Throop but the house on Hoyne. "I signed the papers," says Holiday, "but I only thought I was signing away the house on Throop. I didn't know I was signing my mother's house away."

In his deposition Helfand stated that Holiday should have known: "I went through the document, virtually paragraph by paragraph, to both my client and to her." Holiday, he added, appeared to be "within her mental faculties" at the meeting. He still believes that. "She signed dozens of documents in front of me. She didn't know what she was signing? I explained everything to her."

"This was a transaction at that date and time," says Austin. "It's in writing. It's clear. Not even a federal judge can change it."

Helfand says he knows of no irregularities in the signing of the various deeds he's prepared for Austin over the years. And Austin contends that all the signatures on the deeds are valid. As Patricia Kelly, chief of the Illinois attorney general's consumer-protection division, says, "If you sign over your house, that may be stupid, but it's not illegal." Yet Ira Rheingold of the Legal Assistance Foundation argues that even if such signatures are found to be valid, there may still be cause to prosecute. "Just because people sign a document," he says, "that doesn't mean they know what they are signing." Other experts are dubious; they say that because equity cases are often pursued in civil court, where the standard of proof is lower than in criminal court, a judge or jury might well give the beneficiary of a deed the benefit of the doubt.

In his deposition Helfand also testified that the documents he prepared for Austin and Holiday included an affidavit from Holiday clearing up who owned the title to the Hoyne address, quitclaim deeds that ended Holiday's title to the Hoyne and Throop houses, and the swap agreement. He didn't mention a deed transferring the Maywood three-flat to Holiday, and there's no such document on file with the Recorder of Deeds, though Austin remembers signing one.

Helfand was the only attorney present at the meeting. He explains that Holiday, like many people he sees, couldn't afford a lawyer. "There's no question that they should get an attorney," he says. He didn't recommend that Holiday get one, and nothing in the Illinois Rules of Professional Conduct requires a lawyer to advise the other side in a real estate transaction to get one. But Michael Kim, chairman of the real property law committee of the Chicago Bar Association, says, "When the other side may not appreciate what's happening, it's a good idea to say, 'Are you planning to talk to a lawyer about this?'"

When Austin drove Holiday home the day of the signing she dropped her off at the house on Hoyne. Holiday says that Austin asked her to pay her something each month, so she paid her $400 for February and $500 for March. Then she stopped paying. Asked why, Holiday later testified, "I don't know....I talked to my son about it, and he says, 'Mom, you aren't supposed to pay no rent.'" Anderson says she paid Austin a couple of months' rent on the Throop house, but then she and her children moved into the house on Hoyne.

Relations between Austin and the Holiday family rapidly disintegrated. Both Holiday and Anderson say Austin would phone up and order them to get out of the house if they weren't going to pay rent. Anderson says she finally told Austin, "The police are involved," though they weren't. Austin stopped calling.

In May 1996, a few months after the signing at Helfand's office, Holiday went to see Jesse Miller, who'd just lost his seat as alderman of the 24th Ward. Miller convened two meetings in his office that included Austin, the Holiday family, Helfand, and Reverend Charles Robinson, pastor of the church Holiday belongs to, Holy Starlight Missionary Baptist in South Lawndale. It was at one of these meetings that Holiday finally realized that she had signed away both of her houses.

Miller asked Austin whether she was a realtor, and Austin said she wasn't. Robinson and Holiday both say that Austin offered to rectify the situation by returning the Hoyne house to Holiday for a sum. "She was talking about $80,000," says Robinson, "but I don't think the house is worth $30,000."

Holiday, accompanied by Miller, went to see Helfand. In his deposition Helfand said that she told him she didn't want the Maywood building and she wanted the Hoyne house back. He told her, "You have to, you know, see if you can work something out with my client."

After that meeting Byron Holiday drove out to look at the Maywood building. Rosia Holiday, who's never seen the place, says, "He said it wasn't worth living in."

"Mrs. Austin said Mrs. Holiday was better off because of this deal," says Miller, now a board member of the Illinois International Port District. "But whatever she said didn't make sense in the final analysis. I'm not a lawyer, but I'm not a damn fool either. A legitimate business deal goes straight and smooth, but this one didn't seem to."

Helfand says the meetings weren't productive. "There was no real solution as to what this was all about."

Meanwhile, on March 26, according to papers filed with the county, Austin had secured a $28,000 mortgage from Sterling Savings Bank on the Hoyne house. On July 24 she got a second mortgage--of $60,900, part of which may have been used to pay off the Sterling loan--from TMS Mortgage, or the Money Store, which was based in California. The Money Store--now a subsidiary of First Union Corporation, the nation's sixth largest bank--is identified as a major subprime lender in the Chicago market in a study released last November by the Woodstock Institute. Money Store communications manager Joanne Boyd says, "The Money Store determined that she [Austin] was a legitimate business. We were also satisfied that she did, indeed, own the property in question."

When it made its loan, the Money Store apparently wasn't aware that Austin had already defaulted on one of the loans taken out using Katie Carter's house as collateral. According to a September 1997 foreclosure suit filed on behalf of the Bank of New York, the current holder of the Money Store mortgage, Austin never paid anything on the $60,900 loan either.

When Holiday learned of the threatened foreclosure she hired attorney Barry Schmarak, who filed a complaint arguing that the bank couldn't foreclose on the property because Austin didn't own it. He asked the court to declare the deed Holiday had signed "illegal and void" and to order Austin "to repay any monies that she borrowed using [Holiday's] house as collateral."

The Bank of New York countered that the Austin-Holiday agreement was legal and that Austin did own the house on Hoyne. "You can say Rosia Holiday didn't make a smart business choice," says attorney Todd Rowden, who represented the bank. "But the document she signed isn't ambiguous, and there's her signature on the bottom." What if Holiday didn't comprehend what she was signing? "The law isn't charitable on the fact that you didn't understand a written document," he says, then points out that Holiday paid Austin rent. "Why would you pay one rent check, much less the two she sent? Rent means you realize you don't own the property."

Rowden argued in court that whether or not the Austin-Holiday agreement was legal, the bank had the right to foreclose on the house once the mortgage was defaulted on. On February 8, 2000, Judge Dorothy Kirie Kinnaird agreed. The bank, she said, "has standing, and they are entitled to their mortgage lien on the property." She didn't say whether Holiday would have to pay the mortgage if she wanted to stay in the house, though she did say, "Nobody is putting anyone on the street." Austin didn't show up for a single court date in this case either--the server had tried repeatedly to deliver a summons at her River Forest home but failed.

On March 14 Holiday went before Judge Kinnaird again in an attempt to get back title to the Hoyne house. She admitted that she'd never had the title to the house transferred after her mother died. "Your client never took steps to put the house in her own name," Kinnaird chided Schmarak. "I'm not a probate judge." Holiday also contradicted earlier statements she'd made, telling the judge she'd never signed any document deeding the house to Austin.

Kinnaird had also asked Schmarak to bring her the deeds to the houses on Hoyne and Throop and to the three-flat in Maywood. He'd shown up without them. "I can't give relief out of sympathy," a frustrated Kinnaird told him. "I have to follow the law." She again said the Bank of New York had the right to collect on the mortgage on the Hoyne house, but two weeks later she told Schmarak to reargue his case that Holiday shouldn't have to pay.

Holiday, now 62, isn't sure what would happen if she had to pay. "I'm just taking things as they come," she says. "I figure I'll be able to do some of it. But then I owe back taxes on the house too."

The other two buildings are long gone. Anderson says that for a while the house on Throop was occupied by renters, then it was boarded up and padlocked, in part because the water bill hadn't been paid; it was foreclosed on and sold at auction in December 1997. In January 1999 the Maywood building, which had been vacant for a year and had plumbing problems, was sold at a foreclosure auction.

The deals between Austin and Holiday's son-in-law Eric Seymore and his brother Robert--which involved a house in Bellwood and another three-flat in Maywood--went sour too. According to a lawsuit filed on the brothers' behalf in September 1996, they mistakenly deeded both to Austin and then were stuck with mortgages they couldn't pay because the tenants were paying their rent to Austin. The suit, which is still pending, asks that the deeds be declared "illegal and void" and that Austin reimburse the brothers for damages. Both buildings have been foreclosed on. Eric says that Robert is still out the $10,000 he paid Austin up front.

In March 1998, a few months after Holiday began going to court in an attempt to save her house, Austin lost a case another bank had brought against her. The judge ordered that her wages from Loretto Hospital be garnished, and shortly after that the hospital laid her off.

On May 8, according to a police report, a metal detector at the Daley Center picked up an unregistered semiautomatic pistol in Austin's purse. "The gun had no clip," says Austin. The case was dismissed, though the court file doesn't indicate why.

Helfand says that around this time, "Kattie started losing it--she wasn't easy to contend with. All of a sudden everyone she was dealing with was out to do this or that. People were after her. It was almost scary."

Austin had lost other court cases and was about to lose several other properties to foreclosure. By May 1998 she was so far in debt that she filed for bankruptcy in U.S. District Court. In her Chapter 13 petition she listed assets of $2.9 million and liabilities of $2 million. Among the liabilities were credit card debts, unpaid utility bills, and 20 mortgages, including one on Holiday's house on Hoyne and another on the three-flat in Maywood that Holiday supposedly acquired in the swap.

The court named Richard Fogel, a Loop lawyer, the bankruptcy trustee and gave him the job of sorting through Austin's affairs and coming up with a payment plan for her creditors. But Fogel soon discovered that Austin had overvalued her holdings--most of which were in poor neighborhoods--and understated the liens and mortgages. He says that most of the properties weren't insured, which further lowered their value, and he determined that they couldn't generate nearly enough money to pay off the creditors.

That July, Judge Robert Ginsberg allowed Austin to withdraw her petition on condition that she not file again for bankruptcy--in effect denying her protection from her creditors. Austin thinks Ginsberg was unfair. "The bankruptcy judge made remarks that he couldn't trust me," she says. "But he didn't know anything about me."

On the morning of August 14, a neighbor noticed a woman and a man trying to pry open a window at Austin's house in River Forest. The police report says that the woman identified herself as Austin, the man as her landscaper. Austin told police that the night before, a "group of people" had taken her keys and forced her from the house. "Ms. Austin appeared to be disoriented and mentally confused," says the report. The police called the Oak Park Family Service and Mental Health Center. Police and fire department officials entered the house and found no one inside. But they did find the place strewn with clothes, trash, mail, and decaying food, and they reported that insects and cockroaches were crawling everywhere.

When a social worker from Oak Park Family Service arrived, the report says, "Ms. Austin stated that her brother...was plotting against her because she is involved in an investigation with the ATF (Alcohol, Tobacco, and Firearms Agency)....She stated that her brother had successfully ran the State of Wisconsin through mind control tactics and was presently attempting to take control of the minds of the residents of the State of Illinois."

The social worker was authorized to take Austin to the hospital, but Austin refused to go and began screaming and kicking. The police handcuffed her and took her to West Suburban Hospital. According to the police report, another social worker "determined that Ms. Austin was not a threat to herself or others," and she was released. "The police told the doctors I was schizophrenic," Austin says. "But the doctors diagnosed me and told me to sue the police department."

There actually is an ATF investigation. Martha Brass, a nurse's assistant, had unwittingly put a house she and her ex-husband owned in Bellwood into a trust for Austin in 1993. A year later Austin sued to evict her, and Brass sued to get back title to the house. In 1996 a Molotov cocktail was thrown at the house, causing extensive damage, and the ATF was called in to investigate. Later the agency began looking at possible irregularities in transactions involving other properties Austin owned. Steve Brezette, an ATF agent assigned to the case, won't comment on the investigation, nor will spokesmen for the agency or the U.S. attorney's office. But Katie Carter's husband, Mearion Bickhem, says he gave a copy of his signature to Brezette, who was going to compare it to the signature on the deed that transferred Carter's house to Austin, which Bickhem insists he never signed.

Even after several banks had taken Austin to court threatening foreclosure, she continued to acquire property. Lamont Lahmon's father died in 1994, leaving his son a two-flat with a finished basement at 4706 W. Van Buren. He'd bought the building in 1970 for $17,500 and was to make the last monthly payment of $141 in July 1995. When he died the remaining balance was only $687. His son, who was in his mid 20s, thought the mortgage had been paid off.

Lamont had worked as a dock loader at Marshall Field's to support his wife, Christina, and their two children. But then he lost his job and began trying to make it on the rent from the tenant upstairs, odd jobs, food stamps, and public aid. In 1997 he received notice that the bank was threatening to foreclose and soon learned that he owed more than $6,000 in principal, interest, and fees.

He thought about getting an attorney. "Lawyers had started sending me letters, and I did call some," he says. "They turned me down. They said my debt was too heavy." It didn't occur to him to contact a legal-aid organization.

On the evening of July 17 he and Christina, both deeply religious, prayed for guidance as they sat in their living room. Later they were watching television when the doorbell rang. And there stood Kattie Austin, in a black dress and a black leather coat.

Who is this? wondered Lamont, peering through the blinds. He let Austin in and remembers her telling Christina and him, "I'm here to help you. God told me to come. As I was driving this way, I felt the urge. This is a divine intervention." They talked for an hour, and Austin told the Lahmons that she'd helped many other people with real estate problems like theirs.

It wouldn't have been difficult to find the Lahmons. Under Illinois law, lenders who are trying to foreclose on a property must publish two notices in local newspapers--one at the start of the process and the second before a sale. The Law Bulletin carries most of these notices, and real estate speculators and people with a service to sell regularly consult the listings. "A home owner being foreclosed on will get up to 30 pieces of mail from financial advisers, bankruptcy lawyers, faith healers, and snake charmers," says attorney Harold Levine, an authority on home-mortgage scams. Home owners may also get phone calls or even personal visits. Ira Rheingold says, "It's not uncommon for scavengers to show up on the doorstep of people in foreclosure."

The next morning, says Lamont, Austin returned in a charcoal gray Lincoln Continental and whisked him and Christina downtown to Helfand's office, where they were presented with documents. "My wife and I read the information over and over," says Lamont. "We were in desperate need of help, and because we felt our prayers were being answered, we signed the papers. Kattie said this would be a hidden trust, protecting us from anyone else getting their hands on our property."

In fact, it was a warranty deed that put 4706 W. Van Buren into a trust whose sole beneficiary was Austin. Helfand signed the document as a notary public. A complaint filed in 1999 on Lamont's behalf states, "Austin explained that after the trust was created, she would be able to obtain the funds necessary to save the home, as well as provide them with additional money to pay off other debts....Austin never stated that she would have any interest in the property, nor did Mr. Lahmon intend that she receive any interest in the property."

According to the same complaint, Austin proceeded to pay off the rest of the mortgage and other tax liens against the property, which added up to $11,000. In early November she gave the Lahmons $5,000 in cash. Lamont remembers her saying as she handed him the money, "I'm doing God's work." He says she was vague about whether he had to pay her back--the complaint says, "Austin agreed that the Lahmons could begin paying back this 'loan' as soon as the Lahmons' income increased"--and he didn't question her. "I considered this a blessing," he says. "All my life, when my back has been against the wall help has come." He and his wife used the $5,000 to buy clothes and food and to settle other debts. They thought they still owned the building, but Austin was just about to sell it.

That summer Barbara Moseley, a 46-year-old medical assistant, had been referred to Austin by a manicurist. At the time she lived in a two-bedroom apartment in Austin with her husband, Stanley, a 63-year-old former maintenance-firm owner who had diabetes and was on disability. "Every lady wants a house," she says. "You work for years, and all you gain is a rent receipt. You help somebody else pay for their house. I wanted my own home."

The Moseleys had looked for houses before. "But the money hadn't been right," says Stanley. "I don't get much on my veteran's pension, and my wife makes around $25,000 a year. But Kattie Austin deals in foreclosures, and she seemed very influential. She is the kind of person who has all the answers. She talked like she knew what she was talking about." Barbara, a Baptist, was also drawn to Austin, a Pentecostal, because Austin said she'd been brought up in the church and her mother had told her never to mistreat others.

Austin began driving the Moseleys around the west side and near western suburbs in search of a house that was being foreclosed on. Barbara fell in love with a ranch house in River Forest that had big picture windows, but it was priced at $300,000. Stanley remembers being shown a two-flat on West Flournoy that was so shoddy he wouldn't get out of the car. He says Austin pleaded, "But this neighborhood is coming up." She took them to a four-flat on West Iowa where several young men were loitering out front. "Kids like that carry guns today, and I didn't want my wife frightened," says Stanley. He didn't like a sandstone building in Oak Park either. "Sandstone don't ring a bell with me."

Austin drove the Moseleys by the Lahmons' building on Van Buren, but they had reservations. "I didn't go see the backyard," says Stanley, "but there might have been a mad Doberman pinscher there." Barbara says, "I didn't want it. It was in a terrible neighborhood, and the tenants were nasty."

Barbara says that Austin persuaded her to borrow $16,000 in cash on three credit cards so that Austin could buy a house someone was about to lose in foreclosure, promising to pay the credit card bills until the deal went through and then repay the rest with interest. Barbara had cashier's checks written for the total on August 11 and three days later gave the checks to Austin, who wrote her a receipt. A receipt signed by Austin on that date, which became part of a foreclosure suit filed against the Moseleys in 1998, says the money was to be used "for the purpose of investments." But Stanley says Austin told him, "This is going-away money. If you find somebody who's been foreclosed on, you have to give them something to start new."

Barbara wanted a clearer sense of when she'd get the $16,000 back, so she and Austin agreed on a statement and both signed it. It read, "She [Austin] agreed to pay my money back if I didn't find any property."

Barbara turned her credit card bills over to Austin, and for two months Austin paid only the minimums. Upset, Barbara asked Austin to immediately pay back the total, and Austin told her it had already been invested in 4706 W. Van Buren. Stanley guesses that part of the money went to pay off the mortgage on the building and part became the $5,000 gift to the Lahmons.

Barbara claims that Austin then told her she would repay the $16,000 out of a loan she was applying for and asked Barbara to help by co-signing the loan. On November 7 the Moseleys went to Nations Title Agency of Illinois for a meeting attended by Austin and Helfand. Believing she was simply co-signing a loan, Barbara apparently signed an agreement to buy 4706 W. Van Buren. Stanley remembers Austin telling him, "Mr. Moseley, your wife is not strong enough credit-wise, so I need you to sign this." He signed. They signed other papers too. Stanley says that Austin announced that she'd already signed the documents, so there was no need for her to do it again.

Among the documents signed by the Moseleys and filed with the recorder's office are a deed transferring the Van Buren building from the trust to the Moseleys and two mortgages totaling $120,000 from the National Lending Center of Deerfield Beach, Florida. As a brief later filed on behalf of the Moseleys notes, they "did not apply for any loans, submit credit applications or process any other documents normally associated with obtaining a home loan" until they signed the documents in Helfand's office. Austin's signature isn't on either mortgage.

A standard form filled out by the National Lending Center shows that on November 1 it sent a check for $103,156.44 to Helfand; nearly $17,000 had been deducted to pay fees, taxes, and two mortgages. The Moseleys say they never received any of the money. Helfand says he served simply as an intermediary and passed the money on to Austin. Asked if she knows what happened to the money, Austin says, "I can't go into this matter--the case is in court." But later she adds, "The money can't have gone to anybody but Barbara and Stanley Moseley."

The Moseleys say that they began to understand what they'd done when they received a statement from IMC Mortgage Company, which was handling the mortgages for National Lending. Barbara says that she paid for two months and Austin paid for the next three, and then no one paid. When Richard Davenport, vendor-relations specialist with IMC, demanded that someone pay, the Moseleys offered to deed over the building instead. They haven't heard from him since, and Davenport won't comment on the matter.

Later that spring the Moseleys broke off relations with Austin. Barbara says Austin called and told her that Stanley had tried to seduce her and then had threatened to kill Austin and her husband. Outraged, Barbara told Austin that her husband didn't threaten people, then demanded her $16,000 back.

Stanley denies Austin's charges. "The woman was talking crazy," he says. "Kattie Austin and I had been talking about O.J. [Simpson]. I said the man has his troubles, but I said I wouldn't do that kind of thing. I'm no goody-goody, but I love my wife."

Austin responds, "He was having problems with Barbara, and he didn't want to live with Barbara and her son," who was living with the Moseleys at the time. "He just said that he loved me, and he wanted a relationship. I said it can't be, and I told Barbara that I am straight-up business."

In September 1998 IMC sued the Moseleys for defaulting on the mortgages (they're now tens of thousands of dollars behind). That December they went for the first time to see the building on West Van Buren.

Until that day the Lahmons had thought they still owned the building. "Mrs. Lahmon was crying," says Barbara, "wondering where they were to go without any money." Christina was only occasionally getting temporary-services jobs, and Lamont was taking odd jobs--cutting grass, painting, picking up aluminum cans--to supplement the $537 they got in rent from the upstairs tenants. They were also behind on their real estate taxes. The two couples discussed their legal options, and the Moseleys assured the Lahmons that they could remain in the building rent free. "Mr. Lahmon has four small children now and little means of livelihood," says Stanley. "Why should I put him out when he's in the process of getting his rights established, just like me?"

In May 1999 Ira Rheingold, who'd taken the Lahmons' case, filed a third-party complaint in the IMC foreclosure suit that asked the court to void the trust agreement and the transfer of the building to the Moseleys. It also accused Austin of making "fraudulent misrepresentations and violation of the Consumer Fraud Act."

Asked about the complaint, Austin says, "He [Lamont] was paid more than $16,000. But if he was paid one dollar, what does the state have to do with this? He knew what he was signing. You better believe he did."

Lawyers at the Loop firm of Wildman, Harrold, Allen & Dixon, who are defending the Moseleys in the case, are also charging fraud--on the part of both Austin and the mortgage company. IMC, says their brief, "knew that Austin had engaged in a pattern of fraudulent activity. Plaintiff [IMC] conspired with Austin by knowingly providing the loan money necessary to further her fraudulent activity against Mr. Lahmon and the Moseleys." The lawyers asked for both actual and punitive damages in the case, which is still pending.

Helfand says he stopped handling Austin's affairs about a year ago and that since then she's had trouble retaining another lawyer. When she appears in court, she frequently acts as her own counsel. Dressed in bold colors and a braided wig, she addresses the court in lightning-fast bursts of opinion, accusations, and legalistic jargon.

"Judge, your Honor, I would like to start from the beginning," she told Judge Julie Nowicki, who was hearing a foreclosure case involving one of Austin's commercial buildings this past March. "These two attorneys standing before the court," she said, motioning toward two attorneys for the bank, "are giving you a lot of information that has no basis in law." She said that the building in question was owned by a trust, not by her, and that the process server who was charged with giving her a subpoena had given it to a white woman, not to her (the server would later identify Austin as the woman he'd handed the subpoena to, but admitted that he'd circled "white" on the form instead of "black"). "We're dealing with facts here," she said, "not with allegations." The judge looked at Austin briefly and then commented to no one in particular, "Do you have any idea what she's talking about?"

On May 17 Nowicki granted the bank the right to sell the building, and she told Austin, "I don't feel you're being truthful." Austin snapped back, "You are making a serious mistake on the bench to say I'm not truthful....I only want justice here." She vowed to appeal Nowicki's decision. On May 25 she was back in court to ask that Nowicki not be allowed to hear any more of her cases. "You have violated my civil rights," she told the court. A nonplussed Nowicki replied, "Good luck to you. I do the best job I can."

Austin has also been writing out her own pleadings. In January 1999 Corus Bank filed to foreclose on her house in River Forest for nonpayment of the mortgage. When Austin failed to make the back payments, Judge Lester Foreman authorized the Cook County sheriff to sell the property. Austin was evicted this past February, and the house went for $431,000, considerably more than the balance due to Corus Bank. Saint Paul Federal Bank for Savings argued successfully that it was entitled to collect $24,000 it was owed by Austin in another mortgage case.

Austin wrote to the U.S. Treasury Department's Office of Thrift Supervision in Washington, D.C., to complain: "Please be advised of the illegally, fraudulent, robbery, conspiracy, concealment, malicious, unethical, dishonesty conduct obstruction of justice, unconstitutional actions of St. Paul Federal Bank and their attorney Mark E. Leipold." She argued that Foreman should award her a share of the sale profits. "Defendant Kattie Austin is without money for food....There is no heat, or electrical services in the home. Defendant has no money to leave, for another place....Defendant place of living unfit for human occupancy....No money for medications. No money for the doctor. Wherefore, Kattie Austin-Santos pray this honorable court to release surplus money...unto defendant. This is life and death situation." She didn't get any of the proceeds.

A few days after she'd been evicted from the River Forest house, Austin sat in her nephew's sparsely furnished apartment in Marquette Park, wearing a loose-fitting dress made of leopard-print fabric. She said she hadn't worked as a nurse since she'd been laid off by Loretto because of the emotional stress of dealing with the lawsuits against her and the ATF investigation. She added that in her spare time she walked for exercise and read the Bible. She wondered where her Rolls-Royce had gone to. She said she had unpaid attorney bills totaling $100,000, but said she still owned two Austin-area buildings, though she admitted that they were being repossessed. "That's not all the property she has," says Barbara Moseley. "Kattie always told me that if she got caught they'd never find out all she owns."

Austin, now 43, blames a lot of people for her problems. She blames officials at Loretto Hospital for laying her off. She blames Katie Carter, insisting that Carter sold her house legitimately. She claims that Rosia Holiday lied about not signing documents and that Alderman Jesse Miller turned Holiday against her. At first she won't talk about the Moseleys' case, but then she says, "I can tell you the Moseleys lied. They must have done something."

Austin says she always paid for houses she bought. "That was money I made working as a nurse and investments. That was my own money. Even though a black person is a millionaire, white people have a problem with a black person being successful." Asked what happened to the mortgage money she received using the Carter and Holiday houses as collateral, she answers, "That's my personal business. That's not even for my children to ask me. It's an invasion of my civil rights."

She also blames Steve Brezette, the ATF agent, claiming he told her tenants to stop paying rent. "If they'd paid, I'd have taken the money to the mortgage company," she says. "I'm going to send the state and federal agent to prison. He can't put words in people's mouths. The state and federal agent caused all my problems." She adds, "All the judges I go before have an attitude toward me because of the [ATF] investigation."

And she claims that Helfand too bears some responsibility. "I don't do paperwork. He does it. I'm not a lawyer. I've never prepared a deed in my life. All the real estate cases I've been involved in, I've been represented by Mark Helfand. He tells you he doesn't know what's going on? I don't know what's going on. He's the lawyer."

She goes on, "I am the black scapegoat for all the big white people downtown. It's a conspiracy. They were trying to deplete me of all my money and property to come down on federal charges. But they didn't know I understand the world of business." In February she said she was going to Washington to tell Attorney General Janet Reno and FBI director Louis Freeh about the conspiracy.

People Austin has dealt with have complicated feelings toward her. Katie Carter, who's still living in her aunt's house, says, "Kattie hurt my family, and I want her to pay her dues for that." But she says she wouldn't go after Austin. "What's kept me sane is that I didn't want to go to jail for one moment of emotion."

Asked about Austin, Rosia Holiday shrugs her shoulders. "Kattie Austin is a con lady. She goes up to people and presents herself as a real estate lady. Had I known she was different, I wouldn't have bothered with her."

Lamont Lahmon also refuses to be bitter. "I don't hate Kattie Austin, because if I hated her it would destroy me," he says. "I'd be getting my own blood pressure up, feeling crazy, and that would be giving her power over me."

In January Barbara Moseley went to a Century 21 office to see about looking for another house, but an agent told her she already was paying on one mortgage and wasn't a good risk. "I probably won't get a house now after all," she says. "Kattie Austin'll get hers. God don't like ugly, and he's not crazy about pretty either. When you mess with his children he'll whup ya. Kattie thinks she's catching it now--just wait."

Art accompanying story in printed newspaper (not available in this archive): photos/Nathan Mandell.

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