Shady Mortgage Outfits Reinvented

Loan Brokers Forced Out of Business
by Collapse of Housing Market

In late 2007, PacWest Funding's CEO stood by as competing mortgage brokerages, lenders and banks fell into the fire of the deteriorating housing market. Afraid his company could be next to go, Curtis Melone reorganized his mortgage company to provide what he thought people needed most: assistance with their heavy mortgage payments.

Melone re-launched his company as Green Credit Solutions, company dedicated to modifying loans for people facing fast spiraling payments on loans most of them could no longer keep up with the payments, which they couldn't to even afford begin with. The metamorphous from subprime lender into an alleged homeowners' loan modification company has been an on-going post-meltdown journey of Southern California mortgage subprime brokers.

Loan brokers forced out of business by the collapse of housing market started looking for their next big scam - and "Eureka" it was in the mortgage loan modification business, which gave them a method to cash in on the tribulations they were instrumental in creating. Many of those companies, including Green Credit Solutions, which have now been shuttered and are looking at state and federal criminal investigations intending on proving that they ripped off their customers.

"Many of the same parties who were for many years engaged in enticing people into mortgage loan origination schemes are back again," said Benjamin B. Wagner, a U.S. attorney based in Fresno, who co-chairs a multi-agency nationwide mortgage fraud task force. As an example, prohibited by a judge from operating in the loan-modification business after Bernardette Perry assisted in transforming Synergy Financial Management Corp, a lender based in Fountain Valley into a foreclosure relief company named Loss Mitigation Services Inc. State and Federal Regulators say the company did little if anything to assist their 1,400 clients after they paid up to $5,500 apiece.

However, Green Credit, dwarfed them with some 6,400 individual loan modification accounts in its Foothill Ranch offices the day state officials raided them in the late part of 2009. Green Credit had elevated itself to the zenith of a nationwide broker network that sent it clients and made it possibly the largest loan modification firm in the nation to come under legal investigation, examiners said. "The sheer volume and the fast way in which they branched out ... they were right at the epicenter of it," stated John Noonen, the California bar investigator who led in the raid. The California attorney general who began investigating Green Credit after clients began complaining they each had given the company thousands of dollars for mortgage loan modifications that never materialized. The California Department of Real Estate filed complaints that prompted Melone and other company officers in April to give up their real estate licenses.

Spokeswoman Becca MacLaren for the attorney general's office said criminal charges are yet to be filed as the investigation by her office is ongoing. 36 year old Melone refused to be interviewed, although a previous company mortgage representative provided a bit of insight into PacWest, was started in 2003, and evolved into Green Credit Solutions. "There wasn't too much outright fraud happening at (at PacWest) but there was plenty of areas where the income was overstated the salesperson said, who spoke out of anonymity as he was afraid his participation with the company would hurt any job opportunities down the road. "You didn't even need a job. And you could still obtain financing. You just needed to state you had a job." Some of in Real Estate Brokerage called these "Liar Loans"

Among the loans PacWest marketed were adjustable-rate mortgages with low initial rates that could leave borrowers in huge financial trouble when the loans ballooned to significantly higher levels at a later date, he said.

Article Source: Gene Wright, Wright Realtors,   Mar 8, 2011

Real Estate Finance