Arizona AG Brings Consumer Fraud Act Charges In Civil Suit Against Loan Modification Firm; Alleges Phony Refund, Debt Principal Reduction Promises

From the Office of the Arizona Attorney General:

• Attorney General Terry Goddard [...] filed a lawsuit against a Phoenix-based mortgage loan modification company, Asset Creation, LLC, and its owner, Marvin Williamson, for engaging in allegedly deceptive practices. This lawsuit is the latest action in the Attorney General’s crackdown on mortgage loan modification businesses that use misleading advertising or engage in other fraudulent practices. More than 2,500 consumers have contracted with Asset Creation for loan modification services in the past two years.

The lawsuit alleges that Asset Creation’s actions violated the Arizona Consumer Fraud Act by:

• Misrepresenting to consumers that it could obtain specific results,
• Falsely representing to consumers that they would receive a refund of their fees if Asset Creation was unable to obtain a loan modification on the consumers’ behalf,
• Misrepresenting that Asset Creation has been providing loan modification services to consumers since 2003.(1)

For the Arizona AG press release, see Terry Goddard Sues Loan Modification Company for Deceptive Practices.

For the lawsuit, see State of Arizona v. Asset Creation, LLC, et al.

(1) According to the press release, the lawsuit alleges that since January of 2008, Asset Creation falsely represented its loan modification services to consumers throughout the Phoenix metropolitan area on its web sites and in local Spanish language media. According to court documents, Asset Creation charged consumers upfront fees ranging from $1,680 to $3,430 for loan modification services, after representing in newspaper ads that it could obtain a 50 percent reduction in the homeowners’ mortgage payments and stating on its web sites that it could help any homeowner, regardless of their situation. In addition, the company provided all potential applicants a "Client Proposal" that highlighted a new mortgage payment that was approximately 20 percent lower than the consumer's current payment. The lawsuit also alleged that Asset Creation falsely represented that it would refund consumers’ money if it could not obtain a loan modification for them and that it had been performing loan modification services for consumers since 2003.