Spanish Speaking Borrowers Duped

The settlement requires Mortgages Para Hispanos.Com Corp. to pay $10,000 in consumer redress and prohibits the company from misrepresenting the terms, costs, or other conditions of any mortgage loan, the FTC announced last week. The settlement also names Daniel Moises Goldberg, the company’s president and owner who is also known as Daniel Martinez.

“In English, Spanish, or in any other language, scams lead to the same result — dashed hopes and empty pockets,” said FTC Chairman Deborah Platt Majoras in the announcement. “That is why our battle against fraud aimed at Spanish-speaking consumers remains in high gear.”

Mortgages Para has offered mortgage lending services with a focus on refinance loans to Spanish-speaking consumers since 2000, enticing them to refinance their mortgages by “promising to secure loans with lower monthly payments, lower interest rates shorter repayment terms, and large disbursements of cash back from the consumer’s home equity,” according to the FTC’s complaint this January.

The company routinely solicits prospects who have little understanding of the English language and gains their trust through Goldberg’s Spanish fluency and familiarity with the Hispanic community. Because most of the targeted borrowers do not read or write English, they rely on Goldberg to provide accurate information about the loan documents.

The Plano-based broker frequently rushes the loan closings — some lasting just a few minutes — and presents borrowers with a stack of English-only closing documents that they have not been given an opportunity to review. And when consumers do question loan terms, the significance or meaning of the terms is often misrepresented, according to the complaint.

It is after the closing that borrowers discover their monthly payment amounts, charges and rates are higher than originally promised, or that the repayment terms are substantially longer than represented and cash back is much less than expected, the FTC said.

Such problems may be prevented with the Spanish translations of conforming residential loan documents announced by Fannie Mae and Freddie Mac this week. The non-executable translations are available on 83 uniform instruments.

“The mortgage process is daunting for anyone, but especially when the materials are not in your native language,” Freddie executive Paul Mullings said in a written statement. “These easily downloadable translations are a step in the right direction to help individuals understand the mortgage documents before they sign on the dotted line.”

In addition to paying $10,000, the company must now provide a disclosure statement and a consumer education brochure to every consumer it offers a mortgage to — and Spanish-speaking consumers must receive their brochure in Spanish, the FTC said. Also, Mortgages Para must provide an independent closing agents at no cost to the consumer.

The mortgage broker must pay the entire $10,000 within 10 days of the entry of the order to avoid liability of paying the $240,000 judgment — which was entered then suspended based on the company’s inability to pay, the FTC said.