Builder, Realtor, Mortgage Firm for Lending Scam
This news release was issued jointly by the Department of Banking, the Attorney General and the Department of Consumer Protection.
February 21, 2005
Banking Commissioner John P. Burke, Attorney General Richard Blumenthal and Department of Consumer Protection (DCP) Commissioner Edwin R. Rodriguez have sued Litchfield County Realty, Heritage Builders, LLC, and Approved Mortgages, Inc., for predatory lending practices in the sale of new homes at the Pine Meadow Farms development in New Hartford.
The Torrington-based companies worked together to scam buyers by illegally supplementing their mortgage payments, signing them up for mortgages they couldn't afford, temporarily giving them money so they falsely appeared to meet down payment requirements and submitting false information to lenders.
Blumenthal's office has so far identified four victims, some of whom are close to losing their homes to foreclosure, but believes there are significantly more.
According to Blumenthal, the scheme allegedly targeted first-time homebuyers for the new houses at Pine Meadow Farms, where 69 homes were planned and more than 30 have been built.
"These companies were insidious and inventive in turning the American Dream of homeownership into a nightmare, as our complaint powerfully claims," Blumenthal said. "They cynically scammed families into purchasing homes they could not afford, condemning them to foreclosure and financial ruin. My office will vigorously and aggressively seek restitution - money back to families so they can rebuild their lives - and appropriate penalties and forfeiture of profits."
"The department believes that Approved Mortgage, Inc., joined in misleading business practices which have harmed Connecticut's consumers," Burke said. "The agency is working closely with the Attorney General's Office to resolve this matter."
"The web of deception apparently created by these companies was ingeniously effective in exploiting the consumers' 'American Dream' of owning a home," Rodriguez said. "The evidence suggests that they collaborated to deceive and defraud their clients, turning their dream into a nightmare."
Sometime before 2002, Litchfield County Realty, Heritage Builders and Approved Mortgage allegedly devised a scheme to lure buyers into purchasing homes they could not afford. The companies worked together to falsify buyers' income and credit histories for mortgages they otherwise could not afford. They also collaborated to temporarily deposit funds into consumers' bank accounts so they would qualify for the loans. After closings, the defendants demanded and received the money back.
One or more of the defendants also gave homebuyers $400 a month to help pay their mortgages, but the assistance lasted only one year. When the payments ended, buyers were stuck with mortgages they could not afford, leaving them to face default and foreclosure.
The lawsuit seeks orders requiring the companies to cease these practices, pay homeowners restitution, pay civil penalties for violations of state consumer protection and other laws, disgorge all ill-gotten gains and reimburse the state for the costs of the lawsuit.