The North Carolina Attorney General filed a civil lawsuit against CMR Properties, Home Town USA, managers Christopher P. Wollin, Jason Gonzales and Kendrick Jackson, former sales associate Wendell Lindo, Blaine Stowe, a mortgage broker and Jerry Honeycutt, a former appraiser.
CMR Properties and Home Town USA sell parcels of land with manufactured homes in Cumberland, Moore and Robeson counties, North Carolina. The complaint alleges deceptive sales and lending practices related to the sale of the land/home packages and seeks to permanently bar the defendants from deceiving consumers, entering into contracts with customers who they know do not qualify for financing, falsifying loan applications, arranging inflated land appraisals, failing to disclose the cost of loans, and any other unfair practices related to the sale of land or manufactured homes in North Carolina. The Attorney General is also seeking cancellation of all of CMR and Home Town’s contracts, refunds for consumers and civil penalties.
At a hearing last week, a Wake County Superior Court ordered the defendants not to close any loans pending a preliminary injunction hearing.
According to the complaint, CMR advertises the companies’ land/home packages in local newspapers and via the Internet at www.gotohometown.com, soliciting customers with credit problems and people who have just moved to North Carolina and need to find housing.
According to the complaint, consumers who contacted CMR were asked how much they could afford to pay in monthly rent and then told that they could purchase a land/home package for that amount. CMR told consumers who weren’t able to qualify for financing that they could purchase a home through the companies’ “Sponsorship Program” by finding a sponsor, usually a friend or older relative. After a year, the companies claimed, the buyer’s credit rating would improve and they would be able to refinance the home and drop the sponsor from the mortgage. CMR led buyers and sponsors to believe that they would both be cosigners on the loan. However, the mortgage turned out to be solely in the sponsor’s name and not in the buyer’s name at all.
The complaint further alleges that CMR also misled customers who purchased land/home packages without using the “Sponsorship Program.” At the loan closing, home buyers frequently learned for the first time that their loan costs and monthly payments would be hundreds of dollars higher than CMR had told them. When buyers complained, they were told that they could refinance the home after a year to lower their payments. However because the companies had appraised the homes at inflated rates, it would be nearly impossible to refinance the loans. In some cases, CMR had allowed buyers to live rent-free in a mobile home while waiting to move into their new home. Many of these consumer felt pressured to follow through with the purchase despite changes in costs because they had nowhere else to move.
The complaint also contends that CMR falsified down payments and information on loan applications without customers’ approval in order to secure loans.
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Rachel Dollar, the editor of Mortgage Fraud Blog is an attorney and Certified Mortgage Banker who handles litigation for lending institutions and secondary market investors.