news-record.com

Full disclosure: This story involves at least one company that has been an advertiser in the News & Record - although this is probably not the kind of attention they want.

From a story in today's paper:

Southern Showcase Housing is one of several names under which Phoenix Housing Group of Greensboro does business.

The N.C. attorney general has sued Phoenix along with two other companies — K&B Home Builders, whose incorporation documents show a Connelly Springs address, and W.R. Starkey Mortgage of Plano, Texas — claiming the three companies sucked low-income clients into misleading deals and mortgages they couldn’t afford.

Documents filed in Wake County Court show the companies would place advertisements on billboards and in local publications such as the News & Record to lure customers with the promise of buying a new manufactured house for $500 down.

According to court filings, the companies would inflate the price of the houses so customers owed more on the mortgages than the homes were worth.

The complaint also alleges the companies put together mortgages — including federally backed loans — based on faked financial statements.

A Wake County judge issued a temporary restraining order against K&B Homes and four individuals connected with that company last week. A spokeswoman for the attorney general’s office said that company was actively engaged in the kind of practices the lawsuit sought to stop.

Phoenix was not named in that restraining order but is still the subject of the attorney general’s suit. As well, the N.C. Commissioner of Banks has summoned officials for Phoenix and the other companies to a February hearing into “unlawful mortgage fraud.”

Click here to read the whole thing.

For those who would like more background, click the following for:

• Attorney General's news release on Phoenix et al (MS Word) This has a detailed description of all the individuals subject to the suit as well as the companies involved.
• Attorney General's court filing (PDF) This is the legal motion filed with the court. It does not include all the affidavits, which make the file quite lengthy.
• Commissioner of Banks summons regarding Phoenix et al.(PDF) This is a separate action in addition to the AG's suit.
• Statement from Phoenix Housing (PDF) When I called Phoenix Housing on Friday, this is the response the company wanted to give.
• Phoenix Housing's website (Link)
• Affidavit of Joshua Lang of Snow Camp (PDF) I spoke with Lang for the story.
• Affidavit of Timothy Harvey Part I and Part II (PDF) I couldn't find a good phone number for Harvey, but his story is typical of those in the case file.