Mortgage Daily Logo

Bankruptcy Sends Borrowers Scrambling

Mortgage News

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 MortgageDaily.com 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.

Related Posts

Centex Home Equity Announces Name and Brand Change to National Mortgage, LLC

Third-Quarter 2012 Mortgage Litigation Index

Lawsuits involving excessive fees, servicing fees and loan fees beyond state maximums. Defendant Plaintiff Court Amount Overview Case Title Case Number Date Filed Date of Activity Link to Story Fannie Mae and Freddie Mac Orangeburg County, Richland County, South...

Centex Home Equity Announces Name and Brand Change to National Mortgage, LLC

Net Branch Lawsuits

Litigation involving net branch operations. Defendant Plaintiff Court Amount Overview Case Title Case Number Date Filed Date of Activity Link to Story PHH Mortgage Corp. Mathews Supreme Court of Virginia na Court held that the term "branch office" includes not only...

Centex Home Equity Announces Name and Brand Change to National Mortgage, LLC

Whistleblower Lawsuits

Litigation related to loan servicing, including escrow issues, transfer of servicing and servicing borrowers in bankruptcy and foreclosure.   Defendant Plaintiff Court Amount Overview Case Title Case Number Date Filed Date of Activity Link to Story Bank of...

Popular posts

How Long Does It Take to Refinance a Mortgage
How Long Does It Take to Refinance a Mortgage

So, you’re interested in refinancing your mortgage. Maybe you want some extra capital to do that home project you’ve always dreamed of, interest rates are nearing record lows, or you want to start consolidating debt. Regardless of the motivation behind the refinance,...

How Does Refinancing a Mortgage Work
How Does Refinancing a Mortgage Work

A home purchase is considered an investment, and a robust one at that. Savvy owners are constantly looking for new ways to reduce debt, save money, pay less in interest, and ultimately build equity. Refinancing is one way to leverage your investment and do just that....

What Does It Mean to Refinance Your Home
What Does It Mean to Refinance Your Home

You can think of refinancing your mortgage as a debt redo. Essentially, you’ll swap out the existing loan for a new one - ideally with better terms and conditions. Only this time it could help you save money on high mortgage payments, rather than just borrow it....

Setting up the Utilities in My New House
Setting up the Utilities in My New House

All the tedious, time-consuming paperwork has been signed, sealed, and delivered. Your belongings are packed into what seems like a million boxes and you have a solid plan to haul all your existing furniture to the new place. Just as your boxes and furniture need to...

When Is My First Mortgage Payment Due?
When Is My First Mortgage Payment Due?

Navigating your way through a brand-new mortgage loan can be a difficult task, especially for first-time homeowners.   After handing over a large sum of money for the down payment and closing costs, it’s important to pay attention to the timing of your first...

Newsletter

Don’t worry, we don’t spam