Kansas attorney general sues five firms over alleged mortgage fraud

TOPEKA | Kansas’ attorney general is accusing five companies of preying on struggling homeowners and has sued them as part of what he calls a new campaign against mortgage scams.

But an attorney for one of the companies said Tuesday that allegations against it are “sort of bizarre,” adding that Attorney General Steve Six “is getting bad information from his underlings” in its case.

The lawsuits allege that the companies engaged in deceptive and “unconscionable” practices. Six accuses three companies of collecting excessive fees from consumers who wanted to modify their mortgages and says the other two defrauded owners who faced losing their homes after foreclosures.

Six announced the lawsuits Tuesday, though his office filed the lawsuits in state district courts last week. He said his office also has updated its Web site to provide more information about potential scams and consumers’ rights when they face foreclosure.

Each lawsuit asks a judge to force the company to stop what Six considers deceptive practices and pay restitution. The attorney general also wants the companies fined, asking for at least $75,000 in four of the five cases.

“In several of these cases, the consumers have lost their homes and ended up much worse financially than they were before they received the help of these companies,” Six told reporters.

The two companies accused of harming consumers who faced losing their homes were sued in Johnson County, where they have their suburban Kansas City offices. They are Apple Asset, of Overland Park, and Rush Properties Inc., of Olathe.

Six accuses both of persuading struggling homeowners to give up “redemption” rights for a few dollars and lease their homes, with the company selling the property later for a profit.

Kansas law gives some homeowners up to 12 months to buy back their property after a foreclosure and sheriff’s sale and allows them to continue living there. The practice dates to 1893.

Officials with Rush Properties did not return telephone messages.

But Ken Jones, Apple Asset’s attorney, said it would provide a detailed response to Six’s allegations. He suggested Six’s office is confusing Apple Asset with the other company and said Apple’s leaders “categorically deny each and every allegation.”

“I challenge the attorney general to come up with any specific instance,” he said. “They cannot because it does not exist.”

The three companies accused of collecting excessive fees while actually providing little or no real help to consumers wanting to modify their mortgages were ABS Saveco of Canton, Ga.; Helping Hands Support Services Inc. of Costa Mesa, Calif., and Kirkland Young of Miami.

The lawsuits against them were filed in Shawnee County, home to the state capital.

A message left for Kirkland Young officials was not returned, nor was a message left with ABS’ resident agent. Two numbers for Helping Hands were repeatedly busy.

In all three cases, the lawsuits allege, the company solicits business and tells consumers it negotiates with mortgage companies, when it merely files paperwork that consumers can submit on their own. Fees charged can be $2,500 or more, the lawsuits allege.