Missouri is cracking down on companies and individuals that run scams preying on homeowners facing foreclosure.
Attorney General Jay Nixon this week launched what he called "Operation Stealing Home" in an effort to protect vulnerable homeowners. Nixon filed seven lawsuits against individuals and businesses that his office learned had defrauded consumers in Missouri and several other states through refinancing, advance fee, and foreclosure consulting scams.
In several of the cases, Nixon said, the consumers lost their homes and ended up with more serious financial problems.
"As more and more families are threatened with foreclosure on their homes during these tough economic times, unscrupulous people will try to take advantage of them under the guise of help," Nixon said. "With these lawsuits, we are working to stop the empty promises made to and the exploitation of homeowners who already are in dire straits."
Four of the defendants named in the lawsuits operate what Nixon called "foreclosure rescue scams." The companies search foreclosure listings in publications or online and approach homeowners with promises to stop the foreclosures by paying off the lenders. They then convince the homeowners to deed their property over and rent it back from the companies allowing them to stay in their homes.
The companies also tell the consumers their rent will be used to make the mortgage payments. But homeowners later discovered the companies did not use their rent to cover their mortgage payments and the foreclosure proceeding were not stopped.
Nixon also said the defendants in these cases gave the homeowners the choice of leaving their homes or buying them back from the company.In one instance, he said, a consumer was told she would be thrown out of her home unless she paid the company $230,000.
Nixon alleged the following defendants carried out these foreclosure rescue schemes:
• St. Anthony Avenue LC, based in St. Louis County;
• Private Funding Solutions, based in St. Charles, Missouri, and its president, Mike C. Rothweiler;
• Brian J. Thompson, of Springfield, Missouri, who does business as "All Decked Out";
• Access Mortgage and Financial Corp., of Lansing, Mich., and its agents, David Snyder and Josh Nowell.
Mortgage companies sued
Nixon also sued several mortgage companies as part of Operation Stealing Home. These companies promised to obtain refinancing the homeowners could afford.
The homeowners victimized by these companies, Nixon said, were already facing skyrocketing house payments because of their adjustable rate mortgages, and wanted to find more favorable loans. But the homeowners often discovered the actual terms of their loans were much less favorable than the mortgage companies promised, Nixon said.
Some homeowners discovered they were charged much higher fees at closing than promised. In another case, the company failed to credit loan payments from consumers in a timely fashion and then charged them late fee. The company also filed credit reports indicating the consumers were delinquent with their payments.
Another defendant charged advance fees of as much as $30,000 for loans that were never obtained, Nixon said.
He sued the following defendants in connection with these schemes:
• Christopher E. Cosma, of St. Peters, and three companies for which he was an agent -- America One Finance Inc., of Bellevue, Wash., Accredited Home Lenders, of San Diego, and Castle Point Mortgage Inc., of Elkridge, Md.;
• Fouquet Financial Services Inc., located in St. Joseph, and its president, Joseph M. Fouquet;
• Saxon Mortgage Services, of Austin, Texas.
Advocates for Missouri senior citizens applaud Nixon's effort to protect consumers facing foreclosure.
"Anyone taking advantage of needy Missourians, especially seniors, in this way needs to be stopped," said Dorothy Knowles, President of the Missouri Alliance of Area Agencies on Aging. "I am encouraged that Attorney General Nixon is taking this legal action to protect homeowners who are already facing difficult and frightening circumstances."
John McDonald, Missouri's state director for AARP, added: "In this economic climate, elderly Missouri homeowners need to have confidence in their financial advisors and lenders. Our hope is that a crackdown like this one will send a message to others who would try to take advantage of seniors who desperately need help with their housing situation."
In his lawsuits, Nixon asked the courts to:
• Void the deeds the companies illegally obtained;
• Award restitution to consumers who suffered losses;
• Impose appropriate penalties;
• Issue injunctions that would prohibit the defendants from future violations of Missouri consumer protection laws.
How can homeowners protect themselves from getting taken in a foreclosure scam? Nixon offered the following advice:
• Beware of anyone who asks for the deed to your home in exchange for fixing your mortgage problem;
• Be wary of any company that urges you to go ahead and sign confusing loan papers on the premise that you can always refinance later. This is a common tactic that usually traps consumers in unfavorable loans that cannot be refinanced;
• Remember that it is illegal to require you to pay a fee in advance in order to obtain a loan;
• Ask questions about any fees listed in the paperwork that you don't understand or didn't agree to pay;
• Take your time and read the fine print. Don't let anyone pressure you into signing quickly;
Nixon urged homeowners who were lured or duped by one of these scams to call his Consumer Protection Hotline at 1-800-392-8222. Consumers can also contact Nixon's office through his Web site: http://ago.mo.gov/.