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Broker Helped Mfg Housing Companies Deceive Borrowers

Broker Helped Mfg Housing Companies Deceive Borrowers

NC attorney general files suit against Blain Stowe, others

August 17, 2005

By PATRICK CROWLEY

A mortgage broker, along with two North Carolina manufactured home companies, have been accused by the state’s attorney general of using deceptive practices to lure customers into buying properties they couldn’t afford.North Carolina Attorney General Roy Cooper has filed a suit in Wake County Superior Court against CMR Properties and Home Town USA, both of Fayetteville, N.C.

The suit also names Blaine Stowe, a mortgage broker who arranged financing for the companies’ customers, Cooper said in a written statement.

“These companies mislead their customers every step of the way, from the initial sales pitch to the closing,” Cooper said. “As a result, home buyers get stuck with mortgage payments they can’t afford on overvalued properties.”

CMR did not respond to an e-mail request seeking comment. Home Town USA and Stowe could not be reached.

Sales people, managers and an appraiser are also named in Cooper’s complaint.

Cooper has asked the court to permanently bar the companies and those named in the suit “from deceiving customers, entering into contracts with customers who they know do not qualify for financing, falsifying loan applications, arranging inflated land appraisals, failing to disclose the cost of loans, and any other unfair practices related to the sale of land or manufactured homes in North Carolina.”

Cooper said he is also asking the court to cancel all of CMR and Home Town’s contracts. In addition he is seeking refunds for customers and civil penalties for the defendants.

Ten consumers filed complaints with state officials about the companies, Cooper said.

Cooper said CMR and Home Town sell land and manufactured home packages. Using the Internet and local newspaper ads, the companies would target customers with credit problems who were new to North Carolina and needed to quickly find a place to live.

Cooper alleges CMR used a “sponsorship program” where the buyer would find a sponsor, typically a friend or older relative, who would help the buyer qualify for a mortgage loan. Customers were allegedly told that after a year they could drop sponsor and refinance the mortgage in their own name.

“CMR led buyers and sponsors to believe that they would both be cosigners on the loan,” Cooper said. “However, the mortgage turned out to be solely in the sponsor’s name and not in the buyer’s name at all, meaning that the buyer didn’t really own the home and wouldn’t be able to refinance the loan.”

Cooper has also alleged that when buyers closed their loans they learned that their payments would be “hundreds of dollars higher” than they had been told.

“When buyers complained,” Cooper said, “they were told that they could refinance the home after a year to lower their payments.

“However because the companies had appraised the homes at inflated prices, it would be nearly impossible to refinance the loans,” he said. “Many of these consumers felt pressured to follow through with the purchase despite changes in costs because they had nowhere else to move.”


Patrick Crowley is a MortgageDaily.com feature journalist and blogger, and a reporter and columnist for The Cincinnati Enquirer. e-mail Patrick at: PatCrowley@MortgageDaily.com

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