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The Mortgage Graveyard
Failed, closed and a c q u i r e d mortgage-related entities.

Bankruptcy Sends Borrowers Scrambling

OPFM invested from HEL proceeds

September 24, 2007

WASHINGTON correspondent for

A Pennsylvania mortgage broker who specialized in creative refinancing filed for bankruptcy last week -- leaving 800 homeowners scrambling to find out what happened with their mortgage payments and the investment accounts the company managed for them.

Personal Financial Management and Image Masters Inc., also known as OPFM Inc., sent a letter to its customers informing them that the company had declared bankruptcy and that the borrowers would have to start making their mortgage payments directly to their mortgage lender.

OPFM's attorney, Dexter Case, told that $100 million in mortgages were involved.

The company listed assets of more than $60 million and liabilities of more than $100 million in its Chapter 7 bankruptcy filing. The legal action was filed in the U.S. Bankruptcy Court for the Eastern District Pennsylvania.

OPFM operated five offices in the Quaker state, including three in Berks and Lancaster counties and employed about a dozen employees.

Case described the situation as "particularly bad" as the broker's court filing affects a small geographic area. The company operated solely in Pennsylvania.

Nils Frederiksen, a spokesman for Pennsylvania's Office of Attorney General, said the office has received several hundred phone calls about the matter but that, at press time, no consumer complaints have been filed with his office.

The company's clients cut a wide swath through the professional Pennsylvania populace. Employees of the attorney general's office as well as those of a nearby newspaper participated. The broker regularly ran ads in the paper and advertised competitive mortgage rates. Distressed homeowners apparently weren't the target.

OPFM clients participated in a scheme that has left some scratching their heads.

Homeowners refinanced existing mortgages by taking equity out of their homes for OPFM to invest, allowing the broker to invest the equity and to make mortgage payments. The investment income was used to decrease the amount of the mortgage payment owed by the consumer each month.

In the letter to its clients, OPFM informed clients that they might be expected to make significantly higher mortgage payments than what they had been making.

OPFM evidently earned the complete trust of some of its clients.

Frederiksen OPFM clients told his office that in two or three years of investing with the broker, they never received a statement.

The company reportedly began as a financial counseling business in 1982 and then branched out into lending and investment activities.

Personal Financial Management has a satisfactory record with the Better Business Bureau. Frederiksen said his office had not undertaken any actions against the company prior to the bankruptcy filing.

The attorney general's office is working with Pennsylvania banking authorities and the state securities commission to investigate the matter and is looking into whether or not federal authorities should be involved.

The company's Web site has been taken down. Calls to the telephone numbers publicly listed as belonging to the broker went unanswered.

Lisa D. Burden is a legal analyst for and holds a law degree from the University of Maryland. She is currently a freelance journalist who previously wrote for Institutional Investor publications and the Baltimore Daily Record.

e-mail Lisa at: [email protected]

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