2008-02-06 — ml-implode.com
Exclusive: for immediate release.
A class action suit has been filed (Jan 24., 2008) in the Eastern California US District Court by Josefina Quezada et al. against Loan Center of California and its financiers, alleging Truth-In-Lending-Act (TILA) violations.
The key allegation appears to be that LCC misrepresented the true cost and impact of Pay Option ARM loans it made to borrowers. In fact, the suit alleges LCC obscured the very nature of the loans as pay option loans, instead presenting them as normal loans without negative amortization:
Defendents failed to clearly disclose to Plaintiff and Class Members, and fraudulently omitted, that there were payment options, instead providing Plaintiff and Class Members with a deceptive payment schedule that indicated borrowers would enjoy low payments without negative amortization.
The full filing is available here.
LCC is a Solano-county (Bay Area)-based mortgage lender which specializes/d in Pay Option ARM loans. 2005 HUD data shows that the company made most of its loans to Hispanic borrowers.
The company owns and operates/d a number of web sites including RatePrice.com and eNegAm.com (which appear to have served the role of retail and wholesale portals, respectively). While the latter site now appears to be down, a June 2007 snapshot is available from archive.org, for the inquisitive. The following current WHOIS snippet confirms LCC is indeed the owner of this site:
Registrant: Loan Center of California 1 Harbor Center suite 188 Suisun City, California 94585 United States Registered through: GoDaddy.com, Inc. (http://www.godaddy.com) Domain Name: ENEGAM.COM Created on: 21-Nov-02 Expires on: 21-Nov-09 Last Updated on: 01-Feb-08
Click here for an LCC/eNegAm.com product sheet obtained last year (dating to October, 2006).
So did LCC make the neg-am nature of the loans as clear to borrowers as it did to brokers? This suit will undoubtedly help shed light on that question.
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