Arizona Attorney General Tom Horne announced two lawsuits Wednesday against Phoenix- and Tucson-based mortgage modification companies that allegedly misrepresented their services.
Named in the lawsuits were the Phoenix-based Making All Homes Affordable LLC and owner Albert Figueroa and the Tucson-based La Paz Source LLC, owners Francisco Ramos and Maria Beltran, their new operation, La Placita Multi Services LLC, and Arturo Gomez Leon.
“There is still a significant amount of fallout from the mortgage crisis, and consumers need to remain vigilant when approached about mortgage modification services,” Horne said. “The legal actions that have been filed serve as a reminder that people need to be very careful about dealing only with reputable servicers.”
The lawsuit against MAHA alleges that Figueroa and MAHA violated the Consumer Fraud Act by misrepresenting the value and nature of the program. MAHA advertises its program exclusively in Spanish language media, selling its services in meetings at its office and at multiple retail outlets in Phoenix and Tucson, including at the office of La Placita.
Salespeople for MAHA allegedly told potential clients that the company can help them to obtain favorable, specific mortgage modifications, including principal reductions and lower interest rates. Homeowners allegedly paid MAHA close to $1,900 before realizing that the MAHA program is a do-it-yourself program allowing access to standardized forms and information. The forms and information are actually available for free on government sites such as MakingHomeAffordable.gov.
MAHA also allegedly used dozens of fake consumer testimonials on its website and charges clients a false sales tax of 9.3 percent.
The lawsuit against La Paz Source and La Placita alleges that La Paz Source advertised itself as a foreclosure consultant services provider that promised to stop the foreclosure process, communicate with lenders and servicers on the behalf of its clients, and obtain loan modifications for consumers. The defendants allegedly claimed that they were authorized to conduct that type of business in the state when they were not duly licensed to conduct such business in Arizona.
La Paz Source allegedly charged large upfront fees, which are prohibited by federal and state law. The company also allegedly failed to provide the mortgage loan modification services it charged for, causing some clients to lose their homes in the process.
In November, Beltran and Ramos dissolved La Paz Source LLC. On the same day, Beltran and Arturo Gomez Leon began La Placita, which allegedly stated it was a provider of mortgage loan modification services to consumers in Arizona.
The defendants allegedly engaged in deceptive and willful targeting of the Spanish-speaking community in Arizona to exploit the consumers’ Spanish/English language barrier. The defendants allegedly provided contracts written only in English, verbally explaining the terms of the agreement in Spanish, directly contradicting the written parts of the English contract.
The defendants claim that their business model has been changed to a retail outfit for MAHA.
Beltran, Ramos, Leon, La Paz and La Placita allegedly continue to falsely guarantee consumers that their services will prevent foreclosure and obtain favorable loan modification, continue to advertise themselves as experts in mortgage loan modifications, use deceptive means to lure distressed homeowners into parting with fees and take the money of the consumers without providing the services the consumers bargained for.
In addition, the defendants allegedly charge a sales tax fee that is not remitted to the Arizona Department of Revenue and state that they are compliant with federal and state laws when they actually violate the FTC M.A.R.S. rule that bans upfront fees for the services of mortgage assistance relief.