State sues loan companies for putting borrowers at risk

The Illinois attorney general's office Monday sued One Source Mortgage Inc. and another operator with multiple names, including Advocate Financial Services Inc., alleging fraudulent business practices.

The suits, filed in Cook County Circuit Court, alleged the Chicago-based companies had offered teaser interest rates and put borrowers at risk without regard for their long-term ability to repay loans, among other allegations.

The agency received about 100 complaints about the companies from victims in Chicago, Elmhurst, Glen Ellyn and elsewhere, Attorney General Lisa Madigan said.

"Unfortunately, these types of lawsuits won't be ending anytime soon," Madigan said. "We're investigating many other similar companies."

Madigan has filed eight previous suits against mortgage companies and is working with some lawmakers to strengthen existing laws and create new ones to help consumers regarding mortgages.

The attorney for One Source said they were still reviewing the lawsuit and unable to comment. The head of Advocate Financial was unavailable for comment.

The suits alleged the brokers put borrowers into complex mortgages, often with short-term teaser rates. The brokers often qualified borrowers for mortgages without documentation of the borrowers' income and assets, the suit contends. Unknown to the borrowers, their income and assets were frequently inflated by the brokers to qualify the borrowers for loans they could not afford, Madigan said.

The lawsuits seek to stop the companies and their owners from continuing in this type of business and also restitution for homeowners. The suits also seek a civil penalty of $50,000 per defendant, additional penalties of $50,000 for each act committed with intent to defraud, and an additional $10,000 for each act against a senior citizen.

To help homeowners identify HUD-approved counseling agencies in their area and to find other sources of legal and financial assistance, Madigan offers "A Guide to Prevention and Recovery Resources." This guide and other educational materials are available at www.IllinoisAttorneyGeneral.gov or by calling (800) 386-5438.