SAN BERNARDINO, CA — April 4, 2008 — Prosecutors cracked down on a California mortgage fraud ring on March 18. The fraud ring, allegedly led by 25-year old real estate agent Eric Pony, reportedly took advantage of thousands of homebuyers in Southern California. Many of the victims, including the elderly, lost their homes to foreclosure. An investigation into the predatory lending practices of the mortgage fraud ring led to the arrest of five people by the San Bernardino County District Attorney’s Office, another two turned themselves in that afternoon. The California State Attorney General’s Office shut down the lending companies run by the fraud ring including Greenleaf Lending, Lifetime Financial, Virtual Escrow, Nations Mortgage, Direct Credit Solutions and Olympic Escrow.
Eric Pony and his associates face charges of conspiracy, grand theft, forgery and elder abuse–the price for processing thousands of home loans in California through their alleged refinancing scam. The group is accused of targeting unsuspecting homeowners whose homes had increased in value, offering low financing mortgage rates with lower monthly payments, and even promises of cashback. Instead of the promised “good deal,” victims of the subprime lending scam found themselves in financial peril, locked into high-interest rate loans, excessive fees, unfavorable terms and no cashback.
Attorney General Jerry Brown said the companies used bait and switch tactics, and is seeking $20 million in penalties and restitution. “This is among the worst we’ve ever seen,” Brown said. “This is not just exaggeration and puffing. This is straight out deliberate stealing and fraud.” (Inside Bay Area, March 18, 2008)
Lies and Deception–Suspects Target Subprime Borrowers and Non-English Speakers
According to the lawsuit filed in Los Angeles Superior Court, the suspects deceived consumers into agreeing to excessive loans, exorbitant fees, and unaffordable home payments. In addition, they face charges of forging signatures when the consumer refused to sign. In fact, Eric Bremner, senior investigator in the real estate fraud unit of the San Bernardino County District Attorney’s office, found evidence of documents that were doctored to remove signatures and notary seals on loan applications, escrow agreements and other documents. In particular, Lifetime Financial Inc., Nations Mortgage Inc. and Greenleaf Lending Inc. managed to convince homeowners to take out loans with payments higher than the homeowner’s entire monthly income. Sadly, many of the people swindled by the mortgage fraud ring’s alleged predatory lending practices lost their homes.
“The illegal sales practices outlined in the lawsuit included psychological pressure, forgery and outright lies,” Brown said. (CBS 5, March 18, 2008)
California District Attorney, Michael A. Ramos believes that subprime borrowers and non-English speakers were the biggest targets of the scam. A nine-month investigation revealed that many of the victims were either elderly or non-English speaking.
Brown described one victim, identified as 76-year-old Luis Garcia. Mr. Garcia only speaks Spanish but the mortgage documents he was given to sign were in English. He was promised a 50-year loan with a fixed rate at 4.5% and was led to believe that his monthly payments would only be $1,000. Instead, he received a letter stating that his loan rate was 7.95%, increasing his monthly payment to $2,254. Furthermore, Lifetime Financial had fraudulently altered his income and work history. As a result, Mr. Garcia could not afford the payments and his home is now in foreclosure.
Mortgage Industry has Become a Breeding Ground for Subprime Lending Scams
The mortgage industry has become a breeding ground for predatory subprime mortgage lending. The California housing crisis has hit thousands of people hard who have subprime mortgages with adjustable rates, and has led to foreclosures across the state. Subprime loans are risky because they carry a higher rate of interest than prime loans to compensate for increased credit risk. Unfortunately, some subprime lenders engage in predatory lending practices, such as intentionally lending to borrowers who could never meet the terms of their loans.
Have You Been a Victim of Predatory Lending Practices? Brayton Purcell Can Help
Not everyone facing foreclosure loses their home. Some are able to sell their homes before foreclosure; others arrange a payment plan with their lender. In some circumstances you can file for bankruptcy which will stop foreclosure proceedings. For more information on homeownership and foreclosure, visit the HUD web site.
If you have a legal problem involving predatory lending practices or mortgage fraud, our attorneys are here to help. You may contact our attorneys through this website or at any of our law offices. We will arrange a convenient interview time and advise you of your legal rights. There is no charge for an initial consultation. We have offices in Portland, Oregon (serving clients in Oregon and Washington), in Northern California, in Southern California and in Salt Lake City, Utah.