Credit and Debt Blog

Several California mortgage companies were recently shut down by Attorney General Edmund Brown for duping homeowners into “illegal and unconscionable loans.” Lifetime Financial, Nations Mortgage, Greenleaf Lending, Virtual Escrow, Direct Credit Solutions and Olympic Escrow, all owned by Eric Pony and his family, have been forced to cease all operations and have had their assets frozen by the Los Angeles Superior Court.

The Scheme

According to the California Attorney General’s Office, the companies including Lifetime Financial, Nations Mortgage and Greenleaf Lending lured unsuspecting homeowners into refinancing their loans, promising that they were preapproved for interest rates between 5 and 6%. However, homeowners found out that there were often as much as $20,000 in hidden fees built into the loans.

Some of the reported violations include:

• Promising to repay original lender fees but failing to do so
• Providing inaccurate loan documents, pressuring homeowners to sign, and falsely promising to change the disputed terms
• Forging documents and failing to provide proof of signed documents
• Using cash back to cover high fees charged in the loans
• Falsification of income information on loan documents
• Failing to honor formal cancellation requests

The forced closure of these companies should bring justice to Eric Pony and involved family members. However, it may not save the many homeowners that are facing foreclosure or other financial hardships.

The total number of loans is unknown. According to Lifetime Financial President Eric Pony, the companies involved have arranged “thousands of loans.”

This scheme is likely one of hundreds of instances in which predatory lenders conspire to defraud homeowners out of thousands of dollars in equity, charging high fees and leaving homeowners with little choice but to sell or face foreclosure. Homeowners that would like to refinance are encouraged to fully investigate offers to ensure that the companies are in good standing.

For starters, make sure your lender is a Better Business Bureau member with a good or satisfactory rating. Look to see that they have been in business for several years. Most fraudulent companies are fly-by-night, meaning they could be gone in a few months with your money.

Also, check with the Attorney General’s Office in your state to ensure that there have been no serious complaints received against your proposed lender. Doing a little investigating now can save you headaches and heartache later.