Fear of a deadly contagion was great enough to prompt authorities to spare residents the threat of eviction, but it didn’t stop some people from losing their homes.
Mike Mullen’s $9 million mansion in Old Preston Hollow is fashioned like a French chateau, with more than 13,600 square feet of space. The former NFL linebacker and oil rig tycoon has lived there since 2005, according to property records.
But on May 5, his lender sold the house during a Dallas foreclosure auction that no one attended — during the height of the coronavirus scare, according to a lawsuit Mullen filed. The sale occurred despite a notice in red letters on Dallas County’s website, saying: “Due to COVID-19, all Foreclosure Sales are Cancelled Until Further Notice.”
Christopher Hankins said he learned on April 15 while at work that his lender repossessed the 32-foot travel trailer in which he lived — from a lot in Sanger. It was hauled away with all of his belongings, he said.
Mike Mullen, 70, a former NFL linebacker and oil rig investor, is suing after his $9 million Dallas house was foreclosed on during the height of the coronavirus panic.(David Woo / Staff Photographer)
Hankins, 40, who owns an auto garage, said he was up to date on his trailer payments. But his two dogs were put on the street, and his trailer was hauled off with everything else inside, leaving him homeless.
“I had to buy new underwear and socks,” said Hankins, who is now living in a motel. “I had nothing. He stole it all.”
Both men have sued to regain their homes. Their financing companies have denied the allegations. Although a handful of other states enacted moratoriums on repossessions during the coronavirus crisis, Texas was not one of them.
Most large, national financing companies decided to voluntarily halt or scale back repossessions and home foreclosures during the pandemic, while many “mom and pop” outfits continued with business as usual, legal experts say.
The situation is about to get worse, consumer advocates warn. Millions of Americans impacted by the economic crisis are skipping mortgage and other loan payments, and some COVID-19 hardship programs are set to expire soon. About 3 million auto loans and 9% of home mortgages are in some sort of forbearance plan, according to a report by National Public Radio.
The city of Dallas created a temporary assistance program that offers rental and mortgage relief to residents in need. It’s aimed at helping individuals and families who are at risk of eviction or foreclosure due to the coronavirus pandemic. More than 2.2 million Texans have filed for unemployment since COVID-19 began its spread in March.
Dallas County, along with Bexar and Harris counties, has also halted property-tax foreclosure auctions since the pandemic reached Texas. But no order is linked to the notice of canceled foreclosures on Dallas County’s website, and there is some confusion about it in the local mortgage industry.
Mike Mullen says his home on North Dentwood Drive in Dallas was the subject of a foreclosure during the height of the coronavirus scare.(Jason Janik / Special Contributor)
Marcus Leinart, a local bankruptcy lawyer, said home foreclosure postings in the county are “way down.” But he said he would be “nervous” about telling a client facing a mortgage foreclosure in Dallas that they had nothing to worry about due to a “one-sentence thing in red letters on this web page.”
He and other local bankruptcy lawyers say the only home mortgage foreclosures they are aware of that were suspended involve federally backed mortgages like Fannie Mae. Leinart said foreclosures at the George Allen courthouse in downtown Dallas happen on the first Tuesday of every month, regardless what date it falls on, and he can’t remember a time when it was ever halted.
The Texas Office of Consumer Credit Commissioner, which regulates non-bank financial services, urged lenders in March to work with borrowers during the coronavirus crisis, including suspending vehicle repossessions and property foreclosures.
Leinart said larger creditors are probably nervous about “bad press” if they become “too aggressive" with their customers. Many, he said, are taking a “much softer approach” or are ceasing foreclosures and repossessions altogether.
“The severity of the maliciousness of their actions is multiplied by the fact that their greed took place in time that they intentionally took gross advantage of great crisis and chaos of shutdowns caused by worldwide pandemic,” Mullen’s lawsuit said.
Mullen, 70, declined to comment about his case due to the litigation.
His lawsuit alleges that the note holder had “intentionally and shamefully taken advantage" of the pandemic for "unconscionable greed and personal gain.”
Mullen’s career in the energy service industry began in the late 1970s after playing football for the Miami Dolphins, who drafted him in 1973.
He started his own company in 1985 and began buying oilfield equipment such as offshore drill ships during market downturns and selling them for a profit when the economy sparked back to life. He and his partners also have leased out spacious and well-appointed oil rig housing units across the globe.
Mullen was back on TV in the late 1990s as an eligible bachelor oilman seeking love on the Oprah Winfrey show.
Tensions and political unrest in the Middle East persuaded Mullen last year to transition to renewable energy with the development of offshore wind farms in Taiwan. His business ventures also have included buying and selling luxury aircraft.
Dallas County's website contains this announcement about the cancellations of foreclosure sales during the coronavirus pandemic.(Dallas County Clerk's Office)
In April, a company called MNP1 that held the note on Mullen’s house posted it for foreclosure, according to Mullen’s lawsuit.
MNP1 “secretly conducted an illegal foreclosure sale” of the home on the morning of May 5 without a single third party present at the auction, the lawsuit said. Mullen still lives in the home.
The suit accuses MNP1 of “grossly under-bidding” on the $9 million house and buying it for $5.5 million. Mullen was at the time in the “final stages” of negotiating a sale of his house, the lawsuit says.
“The fact that Dallas County ofﬁcially cancelled all foreclosure sales made it a foregone conclusion that no potential purchaser would possibly show up to bid at the illegal foreclosure,” the lawsuit said. “A foreclosure sale conducted in a county that had ofﬁcially cancelled all foreclosure sales was not only ‘irregular,’ but also illegal, improper and unconscionable.”
Mullen is also suing Ed Montgomery, of MNP1, records show.
Lawyers for Montgomery and the company declined to comment. But in a response to the lawsuit, they said Mullen defaulted on the loan and knew that MNP1 was foreclosing yet took no action to prevent it.
‘Everything I owned’
Hankins said he bought a brand new VIBE 268RKS travel trailer on Jan. 19 and financed it through a Fort Worth company called SaGo Financial.
While Hankins was moving the trailer in March, it sustained about $4,700 worth of damage. The insurance company cut a check, and Hankins said he decided to use some of it for his future trailer payments, “given the uncertainties" associated with the pandemic, his lawsuit said.
Hankins said he could have had the damage repaired for less money. A dispute arose over the balance of the insurance payment, which led to the sudden repossession, he said.
“Thankfully, Hankins’ neighbor witnessed the actions of SaGo’s repossession agent and was able to rescue Hankins’ dogs,” the lawsuit said.
When Hankins later went to pick up his property from the trailer with a police escort, he discovered that his belongings had been damaged. He said it was “everything I owned.”
“His belongings were smashed and scattered throughout the unit, and several items appeared to be stolen,” his lawsuit said.
An attorney for SaGo Financial declined to comment.
Auto Finance News reported that Texas and some other states have asked creditors to temporarily cease vehicle repossessions during the pandemic, without taking more restrictive steps like a moratorium.
But the Federal Trade Commission has warned that while many lenders have “begun to voluntarily forgo repossessions” during the pandemic, vehicles could still be taken if consumers got behind on payments — “sometimes without warning.”
How much longer?
An April blog post by the Bradley law firm said some Texas counties like Dallas decided not to “make county facilities available for sales to proceed.”
“It is unclear as to the authority of a county to refuse to make public facilities available in contravention of legislation," the post said, adding that other means like Zoom and Skype could allow the sales to proceed.
The law firm said the monthly foreclosure auctions are authorized by the Texas Property Code. The sales are generally held at the courthouse or another location chosen by the county, the firm said.
“These sales are of particular concern for local officials during a pandemic, as the large crowds that gather to bid on these properties can number in the hundreds,” the blog post said.
The Dallas County Sheriff’s Department, which handles property tax foreclosures, said the private mortgage company foreclosures are run by an Addison-based law firm. That firm did not return phone calls.
Foreclosure auctions like this one are typically held on the steps of the George Allen Courthouse in downtown Dallas on the first Tuesday of every month.(RANDY ELI GROTHEtaff Photograp / 73843)
The county’s monthly property tax foreclosures, held at the Old Red Courthouse in downtown Dallas, will resume in July and include properties from the canceled April and May sales, a sheriff’s spokesman said.
An official with Dallas County Judge Clay Jenkins’ office said Friday she was still trying to find out when the private mortgage foreclosure auctions will resume. But renters will continue to get at least a few more days of relief — Jenkins extended the moratorium on evictions to June 15.
“Essentially, people are getting a pass right now,” said Leinart, the local bankruptcy attorney.
It’s why bankruptcy filings remain low, he said. But creditors may not be willing to continue “backing off and not pushing foreclosure and repossession,” he added.
“How long they can financially do that, I don’t know,” Leinart said.