Centennial mortgage broker Leo Shifrin and his companies have been ordered to pay more than $900,000 in civil penalties, consumer restitution and disgorgement for engaging in deceptive advertising and fraudulent loan-origination practices, Colorado Attorney General John Suthers said today.
The ruling, by Denver District Judge Brian Whitney, also prohibits Shifrin and his companies from engaging or otherwise participating, directly or indirectly, in mortgage brokerage activity, mortgage loan origination, foreclosure consulting, real estate activity, appraisals, underwriting and lending.
Suthers alleged that Shifrin and his former partner Jerry Johnson defrauded consumers between 2004 and 2007 through the use of deceptive advertising.
Specifically, the men and their companies were accused of luring consumers with low teaser rates and zero out-of-pocket closing costs and then misrepresented the terms and features of their loans at the closing table.
The consumers thought they were receiving traditional adjustable rate mortgages with fixed rates of one to five years, but instead ended up with “optional-ARM” loans, which are considerably riskier than the traditional adjustable rate mortgages, the attorney general alleged.
Whitney said the state presented evidence that the mortgages the consumers ended up with had a low teaser rate that “would change and do so rapidly after the term of the loan began.”
Whitney said there was testimony that when the defendants or defendants’ agents were taking consumers’ applications they “specifically set them into the option-ARM even knowing that the consumer wanted a fixed rate and lied about it or failed to mention that the rate was only for a short duration.”
“Even later, at closing, some consumers were again misled to believe they were getting the fixed rate even though the loan documents indicated otherwise,” the judge added.
Suthers applauded the ruling.
“This ruling is a victory for Colorado consumers who had relied on these mortgage brokers to put them in loans with low interest rates,” said Suthers. “In most cases, the low teaser rates these and other companies used to draw people in lasted a month and not years.”
Suthers called Whitney’s ruling a victory for consumers and said his office will “will continue to aggressively prosecute individuals and companies engaged in mortgage fraud.”
Shortly before Shifrin’s trial, Suthers’ office reached a consent decree with Johnson that provides for a $1 million judgment and prevents him from engaging in loan origination.
The companies involved in the mortgage brokerage activities were: Mortgage Planning & Lending Specialists Ltd.; Jupiter Lending; Mile High Mortgage; Shifrin Inc.; and Wholesale Mortgage Lending.
The companies operated out of an office located at 11551 E. Arapahoe Road in Centennial.
Howard Pankratz: 303-954-1939 or hpankratz@denverpost.com.
