RealEstateEconomyWatch.com

Since 2007, Los Angeles area homeowners got more debt and less cash than they bargained for when they refinanced through a local brokerage, ALG Inc., three of whose loan officers were arraigned today on a complaint listing 44 criminal charges.

Michael McConville, 31, Garrett Holdridge, 23, and Alan Ruiz, 28, bilked homeowners for nearly $1 million by falsely promised low interest rates and brokers’ fees and other attractive terms, according to the complaint from the California attorney general’s office.

The attractive terms were never approved by the lender and after homeowners signed the documents, key pages were removed and replaced with pages bearing the terms that the lender had actually agreed to. The homeowners’ signatures were forged on the replacement pages, and ALG forwarded the forged documents to the escrow company.

Homeowners only discovered they had been defrauded when they received the final loan documents with the true terms and saw their signatures forged on disclosures of closing costs, Truth-in-Lending disclosures, loan applications and other documents. ALG often collected between $20,000 and $30,000 in undisclosed broker fees. In one transaction, they collected over $57,000 in such fees.

“After victims signed their closing papers, McConville and his associates doctored the loan documents, forged borrowers’ signatures and slipped in hefty fees that were never disclosed,” said California Attorney General Edmund Brown. “This was not some clerical error but a criminal conspiracy to steal nearly a million dollars from borrowers.”

Some homeowners were forced to sell their homes, come out of retirement, or tap into retirement savings. Others paid significant prepayment penalties — in one case, over $21,000. Borrowers often never received the significant amounts of cash-out they were promised.
The ALG scam was not McConville’s first brush with the law. Brown sued him and his brother Sean San Diego County Superior Court for $2.5 million earlier this year for allegedly ripping off homeowners seeking help in reducing their property tax assessments.

The brothers billed tens of thousands of homeowners throughout California nearly $200 each for property tax reassessment services that were almost never performed and are available free of charge from local tax assessors.

“These scam-artists ripped off thousands of homeowners for property reassessment services readily available free of charge,” Attorney General Brown said. “This lawsuit seeks to end the deception and blocks these companies from continuing to scam homeowners.”

In July, Brown also filed suits against 21 individuals and 14 companies who ripped off thousands of homeowners seeking mortgage relief. In total, Brown has sought court orders to shut down 32 companies and has brought criminal charges and obtained lengthy prison sentences for deceptive mortgage consultants.