Thursday, March 27, 2008

Mortgage broker sued for deceptive practices - What do you think?

Below is an article from today's Chicago Sun-Times. After reading it and some of the comments about it on the Sun-Times, I kind of agree with the poster who said "With all due respect to these elderly folks, we must remember that a contract is a legal binding instrument. If you do not understand it, hire a real estate attorney. The contract must still uphold all State and Federal laws. So, if there is fraud, then you have a legitimate complaint."

That said, this case sounds like legitimate fraud. Read the article below and share your thoughts.

Attorney general's lawsuit alleges deceptive lending practices by mortgage broker
March 27, 2008

Retirees Ozell and J.W. McBee are in disbelief. They never expected to be forced out of the home where they have lived with their three teen grandchildren for years, and they're left clinging to hope that an Illinois attorney general office's lawsuit will help restore their shattered world.

That's where they found themselves after agreeing in 2006 to refinance their home mortgage with Advantage Mortgage Consulting, a Chicago-based company that promised to lower their mortgage payments by $100 a month. Instead, the couple's mortgage doubled, they couldn't afford the payments on their fixed income and that led to foreclosure on their South Side home, they said.

"I never would have believed that a human being could do another human being the way Advantage Mortgage did us," J.W. McBee said Wednesday.

Attorney General Lisa Madigan filed a lawsuit Wednesday against the company and its president, Robert Enright, accusing them of engaging in deceptive lending practices.
"Those people don't deserve to be in business," J.W. McBee said. "They are hurting people. They are destroying people."

The suit alleges the defendants employed a variety of schemes to convince consumers, many on the brink of foreclosure, that they would pay lower monthly mortgage payments. Instead their monthly rates later increased significantly, the state claims.

Madigan's Consumer Fraud Bureau said it received 20 complaints against Advantage Mortgage Consulting. The lawsuit accuses the defendants of using deceptive refinancing schemes and alleges they padded loans with higher than stated fees, failed to disclose prepayment penalties and brokered adjustable-rate mortgages for consumers who thought they were agreeing to fixed-rate mortgages.
The McBees received a call from Advantage Mortgage Consulting offering to lower their $700 monthly payments by $100 a month. The couple decided to refinance through Advantage.

According to the lawsuit, the McBees were told that to get the lower payment, they would first need to be refinanced into a monthly mortgage with payments of roughly $1,400 for two months, and then they'd be refinanced into a mortgage with a payment of roughly $600 a month, about $100 less than they paid under their original monthly mortgage. The suit says the couple informed the company they wouldn't be able to afford a $1,400 monthly payment for long.

The couple said they had to use money from their credit cards to make the two payments on their 4½-bedroom, two-bath home, where they had lived since 1999. After they made the two $1,400 mortgage payments, Advantage refused to refinance them into the lower mortgage, the suit alleges. Ozell, 86, a retired nurse's assistant, and J.W., 67, a retired janitor, couldn't meet the increased payments, fell behind, the house was foreclosed and they were evicted. The lawsuit states Advantage misrepresented the McBees' monthly income in order to secure the loan.

They're renting a two-bedroom, one-bath apartment where they live with two of their teen grandchildren and a 21-month-old great-grandchild, paying $975 a month in rent. "I can hardly pay it," said Ozell McBee. "I can't sleep at night.

"I've just been so worried it's making me sick," she said. "I want my house back. They cheated me out of my house."

Enright did not return calls seeking comment.

The lawsuit seeks a court order prohibiting Advantage from engaging in deceptive business practices and a civil penalty of $50,000 for each violation, with an additional $10,000 penalty for those involving people 65 or older.

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