Sacramento- I spoke to Scott Henley Monday afternoon. Henley, like Kayden Kross, is facing arraignment in October. October 14, to be exact, which means that Kross will probably miss the Berlin show if she had any plans of going. And there appears that she did.
Henley’s been a mortgage broker but served in a different capacity- as an independent consultant- when a Vietnam vet named TJ lost his home. Kross is facing four felony counts for her role in a case of alleged real estate fraud which put TJ out on the street. Coincidentally, Kross got her loan through Washington Mutual which went under last week for authoring questionable loans like hers.
Last week I also spoke to Kross’ OBF [old boy friend] who told me that with what Kross was declaring on her income tax records for 2004, 2005 she couldn’t buy a page of advertising in AVN let alone a home. I asked Henley how could this be.
Kross is supposedly in trouble with the IRS, and when you see some of the discrepancies in the case it’s easy to understand why.
“How was she able to swing a house?” I asked Henley who told me Kross wasn’t required to show her full tax records.
“Now everything is what they call full documentation,” explains Henley. “I wasn’t the loan officer but I’m familiar with the way these things are underwritten. In 2005 when she started preparing her loan documents, all she had to do was state her income that I’m a stripper and I work at such and such place and make this much money. All that happens is that the broker will call and do a verification of employment.
“And it’s illegal to ask how much she makes,” adds Henley. “You just verify that she works there. The lender underwrites the loan. They underwrote the file on her making the purchase of this property, showing her making $7400.”
But that’s per MONTH. Kross, however, in 2004 claimed an income of $6830. Kross was working as a stripper at the time but her income tax statement never mentions stripper income. The income reported was from the sale of a horse for fair market value.
In the real estate deal, though, it was understood that Kross was making $7400 a month and that she was a stripper.
“That was enough to qualify her to buy this property,” states Henley. “The way they do it is this- debt to income ratio. The way she would qualify was a debt to income ratio of 55%. That means her mortgage payment could be no more than 55% of what her income was. The mortgage on the house was $1500 a month. As long as she could prove that her payments weren’t costing her more than 55% of $7400 she’s approved. So she was. It was a straight up deal. Straight up within the terms of the lender’s guidelines. She also had the sellers carry back 10% so she had a 90% loan.”
According to Henley, Kross “extorted” him.
“What she was supposed to do as soon as the escrow closed, was take that 10% carry back note and record it so that the sellers had an equity position in the property. She balked at that. Finally, after me agreeing to pay her $4,000, she agreed to do it.”
“In principle it was a very important part of this whole structure,” says Henley. “And she knew that. But she was pissed. She felt that she needed to make more money. Well, she made a ton and more than she should have.”
Henley said he put up all the closing costs for Kross and not one dollar came out of her pocket. Accordingly, Henley also guaranteed the “Section 1” items that needed to be fixed on the house before the loan to proceed. Henley also made three payments to the foreclosure consultant who also happened to be romantically involved with Kross.
“I put all this money up front- if that deal didn’t go through,” I lose,” says Henley. “That was the risk I was willing to take because it was the last ditch effort to save TJ’s house. And it was an opportunity for her to own real estate with a potential of making a good profit. She would own a piece of property with not one dollar coming out of her pocket. In fact she made a ton. But what she elected to do, instead of following through with the agreement, was fuck everybody.”
What Kross did, according to Henley, was also take the money for herself that she was supposed to use in reserve.
“She was given a check for $15,000 to cover the difference between her mortgage payment of $1532 and TJ’s rent of $1050. That was supposed to be used as a cushion for up to 18 months to make the mortgage payments. She didn’t make the mortgage payments. She did not make one mortgage payment. That shows you her intent. She took that $15,000 then sold it to these jackasses down south- [i.e. her accomplices Tim Ngo and Ed Axelrod]- knowing full well what they were going to do. They paid her off $10,000 to sign the title over and then they pulled this scam.”