Three companies to pay $4.3M in refunds in North Carolina

By Bryan Cohen | Jun 5, 2014


RALEIGH, N.C. (Legal Newsline) - North Carolina Attorney General Roy Cooper announced court orders on Tuesday against three companies that will obtain approximately $4.3 million in refunds for consumers.

Phoenix Housing Group Inc., W.R. Starkey Mortgage LLP and K&B Homebuilders allegedly lured consumers into buying manufactured homes for $500 down. Consumers allegedly ended up paying thousands of dollars for land/home packages whose values were inflated by faulty appraisals. Phoenix, Starkey and K&B allegedly falsified documents, forged buyers' signatures on loan paperwork and charged several hundred dollars more per month than the buyers agreed upon.

Several homeowners lost or are in the process of losing their homes to foreclosure because they could not make the payments or refinance the allegedly overpriced homes.

"This scheme turned the American dream of homeownership into a nightmare," Cooper said. "We moved aggressively to stop others from getting hurt and sent a strong signal that we won't tolerate this kind of fraud in North Carolina."

Cooper filed a lawsuit in November 2009 against Phoenix, Starkey and K&B, along with several individuals, attempting to stop the alleged scheme and win money back for consumers. Cooper's office recently obtained judgments against Ike Vinson, a former mortgage loan officer for Starkey; Dennis Setzer, a former sales agent for Phoenix; and Yo Xey Her, another former sales agent for Phoenix, to obtain restitution and civil penalties.

Cooper's office obtained approximately $4.3 million in refunds for 165 consumers. Starkey also paid $125,000 for consumer education and $25,000 for financial counseling.

Starkey is permanently barred from charging discount points unless requested and paid by a borrower to reduce the interest rate, collecting financial information about prospective borrowers from anyone other than the borrowers, and making loans when a manufactured housing dealer is party to the deal.

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