Terry Goddard (D)

PHOENIX, Ariz. (Legal Newsline) - More than $1.37 million in civil penalties and restitution were recovered by Arizona's attorney general as a result of two mortgage fraud lawsuits filed earlier this year.

The lawsuits against Taken Care of Investments LLC, and Hope for Homeowners Now LLC, come as part of Attorney General Terry Goddard's crackdown on business that have preyed upon homeowners who are struggling to avoid foreclosure.

"The attorney general's Office will continue to aggressively fight mortgage fraud with all available tools," Goddard said. "These operations misled vulnerable homeowners for profit, with no apparent concern for the damage their actions caused. I will continue to work with local, state and federal partners to root out mortgage fraud and protect consumers."

Goddard filed suit against Taken Care of Investments in March following allegations that approximately 270 Arizonans had been defrauded by the company's alleged foreclosure rescue operation.

The suit alleged that Richard Winer, of Tempe, Ariz., and his limited liability companies -- Taken Care of Investments, LLC; Homeowner Solutions, LLC; Bourbon Street Property Management, LLC; and Filibuster, LLC -- used fraudulent offers to help homeowners facing imminent foreclosure.

The lawsuit charges Winer and his companies with numerous violations of state laws, including the Arizona Consumer Fraud Act and the Arizona Debt Management Companies Act.

Winer used public records of delinquent borrowers facing trustee sales to identify potential targets. The homeowners were then approached by Winer's salespeople who claimed to be experienced distressed property consultants and who said that they could, in many cases, stop foreclosure within 24 hours.

The homeowners were persuaded to deed their homes to Winer and his salespeople in return for assuming their monthly mortgage payments and paying off the full value of their delinquent homes. Winer then charged a monthly fee to the homeowners equivalent to their mortgage payment to remain in the home as a renter. The owner's mortgage lender and servicer were not notified of the transfer of title.

The owner-turned-renter was given the option to repurchase the house within one year for a fee of approximately $15,000 if all conditions of the sale-leaseback agreement were met. Any violation of the conditions set forth by Winer voided the option to repurchase the home and subjected the home to immediate eviction.

Homes obtained under the scheme were allegedly resold within two weeks to investors who paid a commission to Winer. Almost all of the owners-turned-renters were unable to repurchase their properties. The investor then sold or refinanced the home at full market value, earning as much as hundreds of thousands of dollars in profit.

Under terms of the settlement, Winer must pay $391,500 in restitution to victimized homeowners, $150,000 in civil penalties to the attorney general's office, $150,000 in civil penalties to the Arizona Department of Financial Institutions, and he must permanently refrain from participating in any any manner in any financial institution or enterprise licensed by the Arizona Department of Financial Institutions.

Goddard's lawsuit against Hope for Homeowners Now, LLC, was filed in July.

The Glendale-based company is alleged to have misled homeowners seeking mortgage modification.

Matthew Castaneda of Glendale, Ariz., and Michael Winding of Phoenix, Ariz., through Hope for Homeowners Now, LLC, a limited liability company, are alleged to have victimized homeowners facing imminent foreclosure with fraudulent claims of high success rates in modifying mortgage loans.

The loan modification service were advertised with an upfront fee of $3,195. Advertisements claimed, "Over 80% of our customers have tried to deal with their lending institutions on their own and failed," and "Loan modifications have a very small success rate if you try to do it with a non-profit organization or yourself."

Hope for Homeowners Now is alleged to have violated state laws by deceptively implying that it would be more successful at obtaining mortgage loan modifications on their own or with the assistance of non-profit organizations when, in fact, the success rate of Hope for Homeowners Now was no better than if the client had tried to obtain a loan modification on their own.

Hope for Homeowners Now is also alleged to have misrepresented that it was comprised of real estate and financial professionals as well as professional mitigation attorneys who would negotiate on behalf of clients.

The defendants in the Hope for Homeowners Now lawsuit did not appear in court or respond to the allegations against them. A default judgment was then issued as a result in favor of the state, with the defendants required to pay $424,935 in restitution to consumers and $155,000 in civil penalties to the state. The defendants are also permanently barred from providing loan modification or origination services in Arizona or on behalf of an Arizona consumer.

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