PHOENIX (CN) – Scottsdale-based Discount Mortgage Relief fraudulently “guaranteed” thousands of people of loan modifications for $1,350 to $5,000 apiece, the Arizona attorney general says. Not only did clients lose homes to foreclosure, the company continued insisting it was “FBI Certified” even after the FBI executed a search warrant on its office this year, the state says.
Attorney General Terry Goddard claims the company told many clients they were “pre-qualified,” and “guaranteed” the loan modification, but failed to deliver, and that clients “in some cases, ended up losing their homes to foreclosure.”
The state also sued John Common and Bruce Spurlock, owners and managers of the company, and Discount Mortgage’s parent LLC, INQB8, in Maricopa County Court.
Discount Mortgage Relief has advertised “its mortgage loan modification services to consumers throughout the United States with television advertisements” and through its website since July 2009, according to the complaint.
People who contact Discount Mortgage Relief about mortgage loan modifications speak to a salesperson who claims the consumer is “pre-qualified” and “guaranteed” to receive assistance, Goddard says.
The sales reps tell customers they can “obtain specific results for them, including but not limited to reduced interest rates and principal and elimination of second mortgages, often quoting to the consumer a specific mortgage payment that was significantly lower than the consumer’s then-current payment based on the represented results,” according to the complaint.
But when the salespeople said this, they “had no knowledge of whether any given potential client’s lender would offer a loan modification whatsoever, let alone on any specific terms,” Goddard says.
The sales reps also told its victims – falsely – “that if they stopped making their mortgage payments that their lender could not report such non-payments to any credit bureau,” Goddard says.
Credit bureaus do report that information.
The sales reps claimed the business “had a 100 percent success rate of getting loan modifications from Morgan Chase Bank,” though that was malarkey, Goddard says.
Sales reps claimed that veterans were “guaranteed” loan modifications, though that’s not true either, Goddard says.
The sales reps told some victims that the company was “FBI Certified,” though neither the FBI “nor any other law enforcement or governmental agency has ever ‘certified’ or in any way approved of or endorsed” the company, Goddard says.
In fact, the FBI raided the company’s offices on April Fool’s Day this year – but even after that, the company kept telling its victims it was “FBI Certified,” according to the complaint.
Clients were promised a full refund of any fees they paid to Discount Mortgage Relief “if it cannot obtain a loan modification that saves the clients ‘a multiple of 15 times the service fee,'” but it repeatedly failed to refund the money to clients who got no loan modification, the state says.
And the sales reps told clients “that the loan modification process would take from 30 to 45 days to complete,” though Discount Mortgage Relief had hundreds of files that were several months old, Goddard says.
Goddard seeks an injunction and $10,000 fines for each violation of consumer fraud laws.