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Servicer Scam Costs Family $2.5 Million

Defunct Financial Express didn't disburse payoff proceeds to Furmans

August 19, 2004


The family that sues together settles together.

A Maryland family that filed 30 lawsuits against borrowers has reached a settlement with the Maryland Attorney General over $2.5 million in disputed mortgage payments to the now defunct mortgage lender that the family had invested in and done business with.

The Attorney General's Consumer Protection Division had alleged that four members of the Furman family -- Arthur and Ethel Furman, their son Alan Furman and his wife Suzanne -- violated the state's consumer protection laws by trying to collect mortgage payments from borrowers who had already paid off their loans.

"I've never seen a case like this," Maryland Assistant Attorney General Scott Bailey told the Maryland Gazette.

The case started in 1999 when the Furman's were making loans and working with a mortgage servicing company called Financial Express, the Attorney General's office said in a written statement.

Financial Express, which is no longer in business, allegedly failed to forward more than $2.5 million to the Furmans, according to the Attorney General.

Financial Express received the money as payoff amounts from consumers who had refinanced their mortgages with other lenders.

"When the Furmans were unable to recover their money from Financial Express, the Furmans filed 30 different lawsuits against the consumers whose mortgage pay-off amounts had been diverted by Financial Express," the Attorney General's office said.

"The lawsuits alleged that consumers should have made their mortgage payments directly to the Furmans, and not the servicer," according to the statement.

But the Attorney General said those loans had already been paid off and accused the Furmans of breaking Maryland's Consumer Protection Act.

None of the Furmans could be reached for comment. But Arthur Furman told the Gazette that he had been scammed by Financial Express and that he was a private investor in the company, not a lender.

"We did business with this company in good faith," Furman told the paper. "We thought they made legal mortgages people."

Furman also said lawsuits were only filed against borrowers who were not paying on their mortgages.

But the Attorney General's office determined that the loans were paid when the payments were sent to Financial Express.

As part of the settlement, the Furmans denied the allegations but agreed to reimburse consumers for any legal fees they incurred defending themselves against the family's lawsuits.

The Furmans also agreed to cease all attempts to collect payments from consumers that were already paid to Financial Express; to provide consumers who paid of their mortgage loans with suitable lien releases; and to not make loans to consumers unless they possess the required license.

"I am pleased that we were able to get restitution for consumers in this case," Maryland Attorney General J. Joseph Curran said in a statement. "These consumers had paid off their mortgages and the lenders should not have sought to collect again from them."

Patrick Crowley is a political reporter and columnist and former business writer for The Cincinnati Enquirer. Email Patrick at: [email protected]

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