|In the wake of what the Massachusetts Division of Banks calls an effort to “crack down on abusive mortgage lenders and brokers,” emergency orders to stop conducting real estate transactions deemed unfair and deceptive have been issued to five individuals.
State Attorney General Tom Reilly announced that three businesses, including a real estate firm, are being sued by his office for allegedly preying on distressed homeowners and for fraudulent activity.
Dorchester, Mass.-based Champagne and Associates Real Estate, New Hampshire-based Zeus Funding, LLC and Arlington, Mass.-based New England Merchants Corp. have been accused of routinely making misrepresentations and falsifying information to qualify borrowers for larger loan amounts than they could afford.
Rachel Noyes of Zeus and former employee of New England Merchants told MortgageDaily.com she had been advised not to discuss details but that these allegations were simply “ridiculous.”
“It is completely false,” Noyes said. “It was really blown out of proportion.”
The attorney general’s office submitted six affidavits of what it said is a sampling of consumers who have been “victimized” by the defendants, according to a draft of the complaint provided by a source who requested anonymity.
Noyes and Roberta Robinson of Champagne and Associates held seminars covering topics that included, “the steps to buying your home,” “mortgage assistance,” “repairing, building and maintaining your credit” and “how to protect yourself,” the complaint said.
The defendant’s would then steer borrower’s to homes that were in a price range the homeowner could not afford, mislead the borrower by not disclosing total costs and in some cases, had the borrower take out two mortgage loans to finance the property 100 percent without telling them until the closing, the complaint alleged.
In one case, a 48-year-old woman claims with income from social security and child support totaling just $1800 a month, she was approved for the purchase of two multifamily homes worth $894,000 with monthly payment of $7,194.56, according to the complaint. One of the homes has reportedly been foreclosed.
The complaint also claimed that Noyes and employees of Zeus and New England Merchants had borrowers sign blank or incomplete mortgage documents.
But, Noyes denies that she was involved with any predatory lending or deceptive practices.
“I teach people about predatory lending,” Noyes told MortgageDaily.com. “I’ve never misled anyone. I want to help my clients, I don’t charge junk fees … everything I have I can back up, I have proof.”
“I’m going to fight this,” Noyes said. “I have to fight this because it’s my reputation.”
Robinson could not be reached for comment and the listed phone number for Champagne has been disconnected.
The court has reportedly issued a temporary restraining order against Noyes and Robinson and their respective companies (Zeus and Champagne), is seeking restitution and seeks penalty payment in the amount of $5000 per violation along with court and investigation costs.
The state has also filed suit against Walter Ribeck of Newburyport, Mass. and Alec G. Sohmer, his wife Jennifer, both of Pembroke, Mass. and their Nevada-based company Timeless Funding, according to its press release.
Both Ribeck and the Sohmers allegedly targeted financially distressed homeowners facing foreclosure.
Ribeck, who was convicted of bank fraud and making false statements to a federally insured bank in 1991, according to the AG’s office, had homeowners deed their homes to him and then created inflated repurchase terms that “far exceeded” the original mortgage debts.
Ribeck could not be reached for comment.
Alec Sohmer told MortgageDaily.com that his foreclosure assistance program had been approved by two separate bankruptcy judges and claims he did nothing wrong.
The attorney general’s office has obtained an emergency order to prevent Ribeck and Sohmer from evicting homeowners or selling their property, and is seeking restitution for the homeowners harmed and reimbursement of court and investigation costs, according to the press release.
Paula Parisot is a MortgageDaily.com feature reporter and a blogger at CloserBlog.com who has also worked in the mortgage industry.
e-mail Paula at: PaulaParisot@MortgageDaily.com
Refinance to a lower interest rate: If interest rates have dropped since you took out your original mortgage, refinancing to a lower rate can help you save money on your monthly payments and reduce the overall cost of your loan. Refinance to a shorter loan term:...