Two mortgage brokers and an appraiser have been sued by the State of Ohio. In addition to allegedly failing to provide required disclosures, the companies are being sued because they listed property values on appraisal orders.
The Ohio attorney general's office and the Ohio Department of Commerce filed a complaint in the Franklin County Court of Common Pleas against Highland Banc Inc. and loan officer Eric B. Johnson, an announcement yesterday said.
The defendants are accused of failing to provide accurate disclosures as required by the Ohio Consumer Sales Practices Act, Real Estate Settlement Procedures Act and Ohio Mortgage Broker Act. Highland, based in Columbus, and Johnson are also accused of violating the Ohio Homebuyers Protection Act, which was enacted last year.
They allegedly underestimated closing costs, neglected to disclose yield spread premiums and failed to inform customers when fees increased.
The complaint also cited the use of appraisal order forms that included the sales price and loan amount, which "potentially resulted in inflated appraisals." In addition, customers were allegedly asked to sign blank documents.
A second lawsuit was filed in the same court on Thursday against Magellan Mortgage Corp. and Thomas E. Heflin, a real estate appraiser with Heflin & Associates.
Like Highland, Magellan is accused of providing estimated values on appraisal requests and failing to make required disclosures. Magellan also allegedly violated the Truth in Lending Act.
The broker, also based in Columbus, is additionally accused of placing borrowers in loans they could not afford to repay and churning borrowers by refinancing them even when there was no tangible benefit.
Heflin charged appraisal fees that were substantially higher than his competitors, according to the complaint. He failed to respond to a May 2008 request from the attorney general's office for appraisal records in connection with loans made by Magellan.
The state seeks to force the defendants in both cases to reimburse harmed borrowers. Penalties of $25,000 per violations are also sought.
In addition, the attorney general is requesting that the court prohibit the defendants from engaging in any business practices until the case is resolved and penalties are paid.
State of Ohio, ex rel., Nancy H. Rogers, Attorney General of Ohio, 30 East Broad Street, State Office Tower, 14th Floor, Columbus, Ohio, 43215 and John Reardon, Superintendent, Ohio Department of Commerce, Division of Financial Institutions, 77 S. High Street, 21st floor, Columbus, Ohio 43266 v. Highland Banc Inc., 5025 Arlington Centre Blvd., Suite 240, Columbus, Ohio 43220, c/o Chad Kiner, Statutory Agent, 5025 Arlington Centre Bvld., Suite 240, Columbus, Ohio, 43220 and Eric B. Johnson, 1299 Woodcroft Rd. E., Columbus, Ohio 43204
Case No. 08CVH8 11343 (Court of Common Pleas, Franklin County, Ohio, filed Aug. 7, 2008)
State of Ohio, ex rel., Nancy H. Rogers, Attorney General of Ohio, 30 East Broad Street, State Office Tower, 14th Floor, Columbus, Ohio, 43215 and John Reardon, Superintendent, Ohio Department of Commerce, Division of Financial Institutions, 77 S. High Street, 21st floor, Columbus, Ohio 43266 v. Magellan Mortgage Corporation, 6230 Busch Boulevard, Suite 420, Columbus, Ohio, 43229 c/o Thomas S. Davis, Statutory Agent, 3155 Ardmore Court, Powell, Ohio 43065 and Thomas Heflin, D/B/A Heflin & Associates, 2750 Bardwell Road, Columbus, Ohio 43219
Case No. 08CVH8 11344 (Court of Common Pleas, Franklin County, Ohio, filed Aug. 7, 2008)