Mo. AG sues alleging mortgage fraud

JEFFERSON CITY, Mo. -- Attorney General Jay Nixon has filed seven lawsuits targeting what he describes as mortgage fraud.

The attorney general's office said Monday that the lawsuits, filed in several different counties, are aimed at individuals and businesses that defrauded consumers through refinancing, advanced fees and foreclosure consulting scams. In some cases, Nixon said, residents lost their homes and ended up in a bigger financial hole.

The lawsuits fall into two general categories.

One targets companies that Nixon claims persuaded consumers facing foreclosures to sign over their property deeds and then rent back their homes, with the regular payments going toward the mortgage. But Nixon alleges that the firms failed to make the mortgage payments and forced the consumers to leave their homes or buy them back from the companies.

The lawsuits also target companies that promised good refinancing terms for loans that ended up being costly. Nixon claims that loan payments from one homeowner were tardy in being recorded, resulting in late fees and negative credit reports.

Lawmakers during their annual session passed legislation that is also designed to go after mortgage fraud. That bill allows real estate brokers, agents and appraisers to be fined or have their professional licenses revoked if they make false statements or fail to disclose material facts in their professional duties.

The bill allows for civil fines of up to $2,500 per violation and makes mortgage fraud a felony punishable by up to seven years in prison. Under the legislation, state appraisers and real estate commissions and the state finance division also will be able to investigate allegations of mortgage fraud and levy even higher fines -- up to $5,000 per violation.