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Sen. Feinstein targets mortgage scams

Wednesday, March 26, 2008

Last year there were nearly 500,000 homes that went into foreclosure in the state of California. And while it may seem that many of those foreclosures are the result of people buying a home they couldn't afford, there are plenty of victims who were steered into bad loans - through no fault of their own - by unscrupulous mortgage brokers.

At a news conference on Wednesday announcing a Senate bill to eliminate scam artists in the mortgage business, Eyewitness News met L.A. resident Patricia Simmons. She bought a home in 1969, but is now facing foreclosure.

"They fell prey to a ruthless and illegitimate profiteer, who with the stroke of a pen ruined the peaceful home and life they've lived for nearly 40 years," said Los Angeles Mayor Antonio Villaraigosa.

When Patricia's husband got a stroke, they needed to re-finance to cover his medical expenses. Like many foreclosure victims of mortgage scams, their broker told them their new loan would have low monthly payments and they could get cash back. However...

"The real loan terms included an 11.2 percent adjustable interest rate, $5,300 in payments every month, no cash back. The closing costs totaled $24,000, with $19,500 going to this broker," said Sen. Diane Feinstein, D-California.

Those brokers, Eric Pony and his sister, Paulette, were arrested last week and are being held in San Bernardino County.

Attorneys who help such victims of scams say it's a nightmare story they hear all too often.

"We see hundreds and hundreds of victims like Mr. and Mrs. Simmons every month," said Hernan Vera.

"So the time has come for national licensing standards to replace this thin patchwork of state regulations," said Sen. Feinstein.

The new bipartisan legislation, called the Safe Mortgage Licensing Act, would require all mortgage loan originators nationwide to be licensed, provide fingerprints, consent to a background check, complete education requirements, take an exam, and be part of a national database.

"My husband and I are so happy [Sen. Feinstein] is doing something, finally, to help the people so this won't happen again to anyone else," said Patricia Simmons.

The Feinstein-Martinez bill is expected to go to a vote next week. A similar bill has been introduced in the house.

Meantime, victims of mortgage scams may be able to get some free legal help. They can call (213) 385-2977, extension 700.

 

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