August 28, 2012
Arizona AG files lawsuits against 3 loan-modification companies
Arizona Attorney General Tom Horne is accusing three mortgage-modification businesses in Phoenix and Tucson of deceiving Spanish-speaking homeowners into paying upfront fees for phony loan services and false promises of helping people dodge foreclosure.
Horne filed civil lawsuits in the Maricopa County Superior Court on Wednesday against La Paz Source LLC and La Placita Multi Services LLC, operating in Tucson, and Making All Homes Affordable LLC in both Phoenix and Tucson, asking the court for injunctions, thousands of dollars in fines to the state and reimbursements to victims, according to the court records.
“There is still a significant amount of fallout from the mortgage crisis, and consumers need to remain vigilant when approached about mortgage modification services,” Horne said in a prepared statement. “The legal actions that have been filed serve as a reminder that people need to be very careful about dealing only with reputable servicers.”
Attemps to reach the three companies prior to this story posting online were unsuccessful.
The La Paz and La Placita complaint, in which the business’s managers Maria Beltran and Francisco Ramos are also defendants, accuses the companies of various instances of consumer fraud and violations of state and federal law.
Victims have reported, according to Horne, that La Paz and La Placita promised to stop the foreclosure process and obtain loan modifications by communicating with lenders and loan servicers on behalf of its clients. Ultimately, the firms failed to do so, and many clients lost their homes.
Court records list the issues with La Paz and La Placita as the following:
Luring customers, via Spanish-speaking radio, television and Internet advertisements, by representing themselves as properly licensed and bonded to perform loan originator, loan modification and foreclosure consulting services as required by state law, which they are not.
Charging “exorbitant upfront fees” ranging from $1,500 to $4,000 for loan-modification services, a violation of state and federal laws.
Making verbal guarantees in Spanish of certain results and outcomes, while customer’s “Consulting Agreements” were written almost entirely in English, which disclaim any such guarantees.
Advising clients, verbally and in Spanish, to stop making mortgage payments entirely and cease communication with their loan servicer or lender;
Failing to follow through on the services clients paid for and, in many cases, not even contacting the lender/servicer at all.
The Making All Homes Affordable complaint, in which managers Albert and Esmerelda Figueroa are defendants, also alleges various acts of consumer fraud. Horne’s lawsuit said issues involved allegedly misrepresenting the nature and value of services and charging fake sales taxes as part of its fees.
Making All Homes Affordable brought clients exclusively through Spanish-speaking radio, television and Internet advertisements, and on its website placed dozens of fabricated testimonials praising the positive results of its program, the lawsuit states, according to the lawsuit.
The firm conducted face-to-face interviews at “retail outlets” in Phoenix and Tucson, one of which is housed at the same location of La Placita Multi Services LLC, the lawsuit states.
During interviews, representatives of Making All Homes Affordable told prospective clients that for a nearly $1,900 program fee, the firm can slash their mortgage payments in half, obtain new, fixed-rate mortgages of 2 percent, and get principal reductions that reflect their homes’ current values, court records show.
Once consumers buy into the program, however, they learn it is nothing more than access to standardized forms and information that is already offered free on federal government websites, such as for President Barack Obama’s Making Home Affordable program, the lawsuit states.
Clients were charged a fake sales tax of 9.3 percent, which the firm has not been assessed. Money it collected for that purpose has not been remitted to any lawful taxing authority, court records state.
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