The sub-prime mortgage mess has become a real-life nightmare for a growing number of Nevada families and some are saying fraudulent lending practices are a big part of the problem.
Two lawsuits filed in Reno Federal Court charge companies specializing in buying up troubled mortgages are shielding the original lenders from public embarrassment.
The plaintiffs in these suits aren't saying they failed to read the fine print. They say they're victims of fraud.
Frank and Karen Stoffels thought they would live out their lives in the home they bought in a neighborhood in south Carson City ten years ago. Both are retired and disabled living on social security, but they say they were financially secure. Then two years ago, seeking to retire $7-thousand dollars in credit card debt and reduce their payments, they refinanced. The deal they say they signed called for the credit card companies to be paid out of escrow. When those companies started calling they say they learned the deal had changed.
"Pages we had signed were missing and others were inserted."
And to their surprise they found they weren't dealing with the lender they thought they were, their mortgage had been sold to GRP Financial Services. Their lawsuit charges GRP is in business to buy up fraudulent loans that other financial institutions wouldn't touch and take on the nasty job of foreclosure protecting the reputation of the original lender.
"They are bottom feeders, who buy up these fraudulent and 'scratch and dent' mortgages," says the Stoffels' attorney Bob Hager. "And when it comes to foreclosure, they take the heat."
Hager has sought an injunction, keeping the Stoffels' home safe for the moment. But Frank and Karen say they still check the local paper every day for a notice of auction and ponder a deal they say netted them next to nothing and now threatens their security.
"They've made their money," says Stoffels. "We're paying for their greed. It's fraud and greed, plain and simple."
The Stoffels say they hope others in the same situation will join in their suit. In fact, Hager has already filed a similar action for a 71 year old Fernley man and is preparing third. He's seeking to have them made class action suits.