April 20, 2009
Kansas City, Mo. -- Attorney General Chris Koster today announced his "zero tolerance" campaign against mortgage scams in Missouri, pledging he will "aggressively investigate any suspicion of mortgage deception and use all means in the legal system to prosecute and shut them down or end their deceptive practices." As part of the "Zero Tolerance" campaign, the Attorney General today filed lawsuits against two businesses that sent misleading direct-mail advertisements for mortgage refinancing to consumers. These two lawsuits follow a similar lawsuit filed by Koster last week against a California-based mortgage broker doing business in Missouri.
The Attorney General filed suit against Goldstar Home Mortgage, which sent direct-mail letters to consumers with the consumers' own bank name at the top of the letter, making it appear that the consumers' bank was encouraging them to refinance. In addition, Goldstar marketed mortgage-refinancing products that were inappropriate for the homeowners they targeted. In at least one case, the business offered a loan that likely would have left a homeowner with a mortgage that was higher than the home was worth.
Attorney General Koster also filed suit against Oxford Lending Group, which made deceptive representations regarding the "Economic Stimulus Act of 2008" in its mailing to appear that consumers had a special opportunity to refinance, and using the HUD (U.S. Department of Housing and Urban Development) label and name to mislead the recipient that the letter was related to the federal government.
"This Attorney General's office will have zero tolerance for any mortgage broker or refinancing lender that uses deception to lure consumers into doing business with them," Koster said. "The Attorney General's office will use all its powers to investigate and prosecute businesses that use deception and fraud in advertisements to Missouri consumers."
The Attorney General said he is concerned that consumers are particularly vulnerable to mortgage scams now, as foreclosures continue to increase, interest rates are at historic lows for refinancing, and the federal government is launching its plan to help struggling homeowners. He noted that while the federal government's program puts measures in place that can help homeowners, unscrupulous businesses are luring consumers into scams that can actually leave them in worse financial condition. Koster warned that Missouri seniors are particularly at risk to such scams.
"Increasingly, mortgage brokers are using deceptive ploys to draw Missourians back into the refinancing game," Koster warned. "Our goal is to alert consumers that these scams are out there and to sue every mortgage broker who crosses the line."
The Attorney General urged consumers to be very skeptical of every piece of mail they receive related to mortgage refinancing, loan consolidation, loan modification and foreclosure relief. He said consumers should check with their bank or call the Attorney General's consumer hotline at 800-392-8222 or go online at ago.mo.gov if they are unsure about an offer's validity. He also said he wants consumers to send him the offers they are receiving in the mail.
"Pack them up and send them to our office in Jefferson City," Koster said. "We will look at what you send us, investigate each new deceptive tactic and prosecute to the fullest extent of the law," he said. "That's what 'Zero Tolerance' for mortgage scams means in Missouri."
The Attorney General said consumers can learn more about the federal government's help for homeowners, as well as mortgage scams, at www.makinghomesaffordable.gov.