Wednesday, February 12, 2003

Erpenbeck settlement quickened

Judge OKs plan to get mortgages paid off sooner

By Patrick Crowley
The Cincinnati Enquirer

BURLINGTON - Concerned with the sluggish payoff of mortgages on about 100 Erpenbeck Co. homes, a Boone County judge gave approval Tuesday to a plan designed to speed up the settlement.

Boone Circuit Judge Jay Bamberger is overseeing a class-action lawsuit filed by 211 homeowners stung in the Erpenbeck Co. scandal. The homeowners faced not only having to pay off their own loans, but also the liens from construction loans not paid by Erpenbeck. Erpenbeck's primary bank, Peoples Bank of Northern Kentucky, agreed last year to front the $16.8 million needed to cure those first mortgages.

But Bamberger noted Tuesday that only 47 have been paid off.

Peoples, which has since gone out of business, wanted other lenders and title insurance companies to pay part of the $16.8 million, but an impasse in negotiations sent the matter before a court-appointed mediator last month. Bamberger said additional mortgages are in the process of being settled, although he did not have the exact number available.

Buck Wiseman, a lawyer for Peoples Bank, said that another $1 million to $1.5 million in liens are close to being paid off. He did not know how many homes that involved.

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Bamberger approved a motion Tuesday that assigns homeowners claims to Peoples Bank, which still exists as a corporation. The judge said that should quicken the release of mortgages because Peoples will be in a better position to negotiate payoffs of the liens.

"This means Peoples will be in the shoes of the plaintiffs," Bamberger said. "It can help settle the whole claim."

Bamberger also said that if settlement talks stall and mortgages aren't paid off, he would intervene again.

"If any of that would go south, the court can revisit that assignment on an individual basis ... per property owner," Bamberger said. "It's highly unlikely that the assignment (to Peoples) would ever be withdrawn by the court, but just in an abundance of caution if (homeowners) come back and say they did not pay my mortgage ... I would reassign those claims."

Cincinnati lawyer Terrance Goodman, who is representing the class of homeowners, approved of the assignment of the claims to Peoples Bank.

"The court has determined that temporarily assigning the liens to Peoples will expedite the process," Goodman said. "Apparently, if that turns out to be a detriment the court retains the jurisdiction to take the liens back."

The FBI is investigating allegations that Erpenbeck Co. employees took the money from home sales and instead of paying off construction loans, deposited the money in company accounts at Peoples.

Separately, the court-appointed trustee in former Erpenbeck president A. William "Bill" Erpenbeck's personal bankruptcy case said he hopes to obtain permission this week to sell Erpenbeck's mansion in Crestview Hills.

A hearing on the issue was postponed because of the weather Tuesday, but trustee Mike Baker said he believes he can obtain Bankruptcy Judge William Howard's consent without a hearing. Baker said the four banks that hold a total of $1.7 million in mortgages on the house have agreed to the order of their payoff. Baker would like to auction the home - and, in a different setting, its contents - on March 15.

Reporter James McNair contributed to this report.


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