Arizona Slams Outfit For Allegedly Peddling Home Refi Scam; Firm's Claims That It Would Buy Homeowners' Loans, Then Modify Terms Were Bogus, Says AG

From the Office of the Arizona Attorney General:

• Arizona Attorney General Terry Goddard [] announced he has filed a lawsuit against The Guardian Group, LLC (“Guardian Group”) for engaging in allegedly deceptive mortgage loan reduction services that have cost more than 2,500 consumers millions of dollars. Goddard also called attention to a new state law taking effect [last week] that prohibits foreclosure consultants and mortgage “rescue” companies from charging upfront fees. The Attorney General supported passage of the law.

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• The lawsuit, filed in Maricopa County Superior Court, alleges that the Scottsdale-based Guardian Group fraudulently represented itself as providing loan reduction services to homeowners struggling to make their mortgage payments. The company charged consumers an average advance fee of $1,595 for mortgage loan refinancing services, which it rarely provided. It collected fees from more than 2,500 consumers for enrollment in its Principal Reduction Program since August 2009.

• The company, which markets nationally, made claims it would negotiate with lenders to purchase a consumer’s note for less than face value and sell the note in an investment package to a third-party investor. Guardian Group then told the consumer that it would modify the rates and terms of the consumer’s mortgage loans and reduce the principal owed to 90 percent of current market value.

• Guardian Group fraudulently represented to consumers that it had $5 billion allocated for its “Principal Reduction Program” because it had multiple investors prepared to purchase mortgage notes. The Attorney General’s Office learned that not one of the supposed investors actually invested money in the company.

For the Arizona AG press release, see Terry Goddard Accuses Scottsdale Mortgage Company of Deceptive Practices.

For the lawsuit, see State of Arizona v. The Guardian Group, LLC, et al.