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RALEIGH — The deal Joshua Lang had been offered on a home in Snow Camp looked like an opportunity to start fresh in a new house with his soon-to-be second wife and a second child on the way.

Except the home he ended up buying from Southern Showcase Housing was far from new and came with a passel of problems.

“We just started noticing little things,” Lang said.

He found long black hairs in the shower that didn’t belong to him or his wife. The fireplace had soot marks when the couple hadn’t yet built a fire there.

Then when the refrigerator broke down, he called the service line he’d been given for warranty work on the house.

“She said that house had been foreclosed on and the warranty was no good,” Lang said. “When we signed the paperwork, they told us it was a new house.”

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.”

A phone number associated with K&B and its employees, some of who used to work for Phoenix, was out of service Friday.

In a written statement, Phoenix Housing Group President Gary Good said his company was still reviewing the attorney general’s suit and had not been contacted before the Department of Justice filed its complaint.

“Phoenix and its officers have and continue to conduct business lawfully and in keeping with the highest standards of ethics and customers service,” Good wrote.

He added that the filings “appear to concern alleged past actions by a few former Phoenix employees and companies and individuals other than Phoenix.”

Good also said that his company deals with customer complaints “promptly and in compliance with Phoenix’s obligations and its commitment to service and ethical practices.”

Lang said Friday he was struggling to make his mortgage payments. In court documents, he said he owned another property he had lived in with his former wife at the time he bought from Southern Housing but loan officers working with the company checked “no” to that question on application documents.

“Initially, all I wanted was a new refrigerator and a new hot water heater,” Lang said. “I don’t like the idea of basically being cheated.”

He said he hoped the state’s lawsuit might eventually reduce his mortgage to the actual value of the property.

Another affidavit filed as part of the attorney general’s suit tells the story of an Asheboro man who also bought from Southern Showcase Housing and said his purchase price was inflated by a “bogus appraisal.”

That same affidavit details how lending documents misrepresented his and his roommate’s income and rent.

“People who need an affordable place to live don’t deserve to get trapped in a tangled web of deception,” said Attorney General Roy Cooper. “Dishonest sales practices and tricky financing often leave consumers stuck with payments they can’t make on homes that are worth less than they paid for them.”

Contact Mark Binker at 919-832-5549 or mark.binker@news-record.com