AG Brnovich files fraud lawsuit against two Tucson real estate companies
PHOENIX — Arizona Attorney General Mark Brnovich’s office filed a consumer fraud lawsuit Thursday against two real estate companies and a manager for allegedly deceiving consumers in transactions.
The lawsuit alleges Tucson businesses Deed and Note Traders, LLC, 881 Home, LLC, and the manager, David Kinas — all defendants in the case– sold houses under a “wrap mortgage” arrangement and failed to make their loan payments, despite collecting down payments from consumers.
“Owning a home is part of the American Dream, but sadly, that didn’t happen in this case,” Attorney General Brnovich said in a press release.
“Consumers made a down payment and monthly mortgage payments thinking they were getting closer to owning their home. Instead, they got foreclosure notices.”
Wrap mortgages are arrangements where the primary mortgage holder, the defendants in this instance, makes a second loan to consumers who purchase the house. The holder must then continue to make payments on their underlying mortgage or risk a foreclosure that causes the consumer to lose their home.
Also, by failing to provide consumers a title report and a minimum 15-year loan repayment term, the lawsuit alleges, the defendants violated the Deed and Note Traders’ 2006 Consent Decree with the state.
The lawsuit is seeking restitution for up to $10,000 in civil penalties for each violation of the Arizona Consumer Fraud Act, $25,000 for each violation of the consent decree, injunctive relief, attorney’s fees and costs, and the amount owed from Deed and Traders on the 2006 Consent Decree.
This is the fourth time in two years Brnovich has filed against a home warranty company.
Consumers are advised to conduct research before entering into a real estate contract.
The Arizona Department of Insurance Financial Institutions can verify whether a loan company is licensed and whether it has a disciplinary record, while the Arizona Department of Real Estate can verify if a sales person or broker is licensed and has disciplinary actions against them.
Anyone who believes they’ve been a victim of consumer fraud can file a consumer complaint form on the Attorney General’s website.