Missouri AG Sues Mortgage Companies

In late April, ""Missouri Attorney General Chris Koster"":http://ago.mo.gov launched a zero tolerance campaign against mortgage scams in his state, pledging he will ""aggressively investigate any suspicion of mortgage deception and use all means in the legal system to prosecute and shut them down or end their deceptive practices."" As part of this crusade, Koster recently filed lawsuits against two businesses that he says sent out misleading direct-mail advertisements for mortgage refinancing and a foreclosure assistance company accused of defrauding distressed homeowners.
The attorney general has brought charges against Columbia, Missouri-based Gold Star Home Mortgage for deceptive marketing. Koster says Gold Star sent direct-mail letters to consumers with the consumers' own bank name at the top of the letter, making it appear that their bank was encouraging them to refinance. In addition, Koster claims Gold Star marketed mortgage-refinancing products that were inappropriate for the homeowners they targeted. In at least one case, he said, the business offered a loan that likely would have left a homeowner with a mortgage that was higher than the home was worth.
Koster also filed suit against Oxford Lending Group, a company headquartered in Ohio with regional offices in Arizona and Florida. Koster says Oxford Lending made deceptive representations regarding the ""Economic Stimulus Act of 2008"" in its mailings to consumers in Missouri, offering homeowners a special opportunity to refinance and using the HUD label and name to mislead the recipient that the letter was related to the federal government.
The attorney general said in a statement to the press, ""Increasingly, mortgage brokers are using deceptive ploys to draw Missourians back into the refinancing game. Our goal is to alert consumers that these scams are out there and to sue every mortgage broker who crosses the line.""
Koster urged consumers to be skeptical of every piece of mail they receive related to mortgage refinancing, loan consolidation, loan modification, and foreclosure relief. He said consumers should verify the offer's validity and send any suspicious solicitations they receive to his office for further investigation.
Koster has filed a similar lawsuit against a California-based mortgage brokerage doing business in Missouri and offering troubled homeowners assistance to avoid foreclosure. He says the company, US Foreclosure Relief, took money from victims but did not provide them with any help.
According to Koster, US Foreclosure Relief advertised that they would work with a homeowner's lender to stop further foreclosure proceedings. However, the attorney general's office found the company would take customers' money, provide no services, and subsequently refuse to respond to consumers who wanted to complain or get their money back.
The suit, filed in Kansas City, seeks an injunction to stop the company from continuing to defraud consumers as well as restitution and penalties.
In most instances, the attorney general's office explained, US Foreclosure Relief charged homeowners a fee of $1,850 for its services, along with a processing fee of $500. The company demanded payment upfront - a direct violation of Missouri law which states that charges may not be collected until the foreclosure consultant's service is performed.
Koster said, ""People need to be very cautious when considering turning to foreclosure consultants. In fact, in most cases, people are better off working directly with their lenders
Missouri's Attorney General said he is concerned that consumers are particularly vulnerable to mortgage scams right now, as interest rates are at historic lows for refinancing, foreclosures continue to increase, and the federal government is launching its plan to help struggling homeowners. His zero tolerance policy is aimed at protecting Missouri's homeowners from ""unscrupulous businesses that lure consumers into scams,"" which Koster says often leave the homeowner in worse financial condition.