Arizona Foreclosure Rescue Operator Ordered To Pay $1.2M In Home Sale, Leaseback Program

In Phoenix, Arizona, KTAR-Radio 92.3FM and 620 AM reports:

• A Phoenix company and its owner have been ordered to pay $1.2 million in restitution and penalties for violating the Arizona Consumer Fraud Act by claiming they could help homeowners who were behind in mortgage payments avoid losing their homes. Maricopa County Superior Court Judge Edward Burke ruled against Virtual Realty Funding Co. and Kenneth D. Perkins in a consumer protection lawsuit filed in 2005 by the Arizona Attorney General's Office.

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• ''This case represents the worst in our community,'' said [Arizona] Attorney General Terry Goddard. ''This company took advantage of homeowners desperate to save their homes from foreclosure and deceived them into turning over their homes.''

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• According to court documents, although neither VRF nor Perkins were licensed by the Department of Financial Institutions as mortgage brokers or bankers, VRF loaned money to more than 60 homeowners facing foreclosure or in need of money. VRF designed its loans, which it called reverse sales, to evade laws protecting mortgage borrowers by structuring them as an outright sale of the property by the borrower, who then rented back the home with an option to repurchase it. [...] If homeowners were late on a rental payment or unable to repay the loan and funding fee within two years, they could lose their homes and any equity in them.

For more, see Realty firm ordered to pay $1.2 million for mortgage scam.

From the Arizona Attorney General's Office:

• Court Judgment - State of Arizona v. Virtual Realty Funding Company LLC, et al.,
• Court Orders Realty Firm to Pay $1.2 Million for Violating Fraud, Banking Laws,
• Terry Goddard Files Fraud Suit Against Virtual Realty.