Latinos are twice as likely to be have an underwater mortgage, and over the past several years, mortgage relief scams targeting Latinos have proliferated throughout the Southwest. We talk with an official from the NV Attorney General's office and a panel of experts on state efforts to crack down on loan modification scams in Latino community.
GUESTS
John Kelleher, Chief Deputy Attorney General, State of Nevada
Tina Sanchez, Foreclosure Counselor, Community Services of Nevada
Enrique R. Acuna, attorney
Jude Joffe-Block, reporter, Fronteras: Changing America Desk
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Home Loan Modifier Accused of Fraud; Targeted Latinos
Gustavo Anaya marketed his mortgage services to Spanish-speaking homeowners in Arizona and Nevada.
by Jude Joffe-Block
A Las Vegas-based businessman who advertised loan modifications in Spanish in multiple Southwestern cities is facing criminal charges brought by Nevada’s Attorney General. Gustavo Anaya, (aka Gustave Anaya), his wife, and their various companies are already the target of a civil suit by the Attorney General in neighboring Arizona.
Anaya was a prolific advertiser for his loan modification services on Spanish language media. But some of the homeowners who believed Anaya’s claims now say they were too good to be true.
“They promised everything, they going to lower your payment, you are going to have it at low cost and everything,” recalled Lluridia Raygoza, a Las Vegas homeowner and mother of three who speaks with a thick Spanish accent. “That never happened.”
Raygoza and her husband saw Anaya give his pitch on a half-hour TV infomercial that aired on the major Spanish-language television stations in Las Vegas. The couple was having trouble meeting their monthly mortgage payments so they went to one of Anaya’s companies, Executive Capitals, Inc., for a loan modification.
Raygoza claims the staff told her she could expect their monthly payment of over $1880 to be cut in half.
She and her husband paid the requested fee of three payments that added up to nearly $3000 – but nothing changed.
The most damaging part, according to Raygoza, is that the company’s staff told her to stop paying her credit card bills or mortgage payments so the bank would be more likely to renegotiate their mortgage.
Now the couple’s credit score has plummeted, they owe interest on their bills, and they must sell their home in a short sale. Raygoza has since learned from her bank that she never could have qualified for a loan modification in the first place.
“I just want him to tell the truth and give us the money back,” Raygoza said.
The Raygozas weren’t the only ones who had complaints about Anaya’s business.
In 2010, Nevada’s Division of Mortgage Lending denied Executive Capitals, Inc. a loan modification counselor license. The division citied violations of state regulations, and a failure to meet the standards for a “good reputation for honesty, trustworthiness and integrity.” The decision referenced reports from law enforcement in Fresno, Calif., that staff from the company may have offered loan modifications there without abiding by state regulations.
Last November, the Arizona Attorney General’s office sued Anaya, his wife Olivia Anaya, and a number of their companies, for allegedly defrauding clients through their loan modification activities in Phoenix and Tucson.
Then, on Feb. 22, Nevada’s Attorney General’s office filed criminal theft and mortgage fraud charges against Anaya and Executive Capitals, Inc. and Mortgage Capital USA. Anaya was arrested on a warrant in Arizona and is currently out on bond.
“You have to check that the company that is doing the modification is serious, and has years of experience,” Anaya said on the broadcast in Spanish.Nevertheless, Anaya was regarded by some in the Hispanic community as a model businessman. Last August, the Las Vegas Entravision station, even interviewed Anaya as an expert to give viewers tips on how not to be scammed.
These days, Anaya’s offices at 3430 E. Flamingo Rd in Las Vegas seem closed. His ads are off the air.
The parent company of the local Entravision station, KINC-TV, issued the following statement:
“KINC-TV has a strict advertising policy against fraudulent advertising on our stations, and KINC is no longer broadcasting advertisements for Executive Capital."
Sam Loya, a sales manager for Locust Broadcasting’s Spanish radio stations, including La Buena 101.9 FM, said he only dropped Anaya’s ads when the regular payments didn’t arrive at the end of February.
“I take it very personally when people prey on the less fortunate,” Loya said. “But if [advertisers] have not been convicted of a crime, they have the right to promote and move forward and promote as everyone else does. That is the American way.”
Anaya’s is the 18th criminal case of loan modification fraud currently being litigated by the Nevada Attorney General’s Mortgage Fraud Task Force. Attorney General Catherine Cortez Masto formed the task force five years ago to crack down on the problem of mortgage scams. At this point, the task force has received complaints about more than 300 loan modification companies operating in the state.
Additionally, Nevada’s legislature passed regulations in 2009 for loan modification companies, including licensing and bond requirements. It is now illegal under federal law for loan modification companies to charge up front for their services.
As a result of these changes, many of the “fly by night” loan modification companies that sprouted up when the housing bust hit have closed up, according to Chief Deputy Attorney General, John Kelleher. But some companies have adapted to the stricter rules by partnering with attorneys who are not subject to the same regulations.
And meanwhile, despite the efforts to crack down, scams persist.
“You have a higher degree of loan scams within the Latino population,” said Nelson Araujo of Consumer Credit Counseling Services, a Las Vegas non-profit focused on housing issues.
“You have language barriers there, and you have a very big advertisement campaign to target the Latino community,” Araujo said.
Plus, Latino homeowners were hit disproportionately hard in the housing crisis. A Pew Hispanic Center survey found Latino homeowners were twice as likely to be underwater in their mortgages compared to the general population. Those trends suggest Hispanic homeowners are more likely to be looking for mortgage relief.
“I hate to say this, but it is hard to trust anyone in this industry anymore,” said Kelleher, who is on the team that filed the criminal complaint against Anaya. “Now I will say that there are a lot of good legitimate people that are out there doing loan modification help for people, but differentiating between the legitimate ones and the scammers, is really difficult.”
Non-profit organizations that offer free services and are approved by the federal Housing and Urban Development agency (HUD) are widely considered to be the safest place for homeowners looking for mortgage relief. There are more than a dozen of these non-profits in the Las Vegas area, but they rarely have billboards or TV ads like their for-profit counterparts.
“There is no way to compete with advertising because we do not have the funds,” said Margarita Rebollal, Executive Director of Community Services of Nevada, a non-profit that counsels homeowners in English and Spanish about how to avoid foreclosure.
Rebollal says too few people know about her services. Instead, she says, they pay hefty fees to the companies and attorneys who advertise.
“And then they’ll charge them three thousand, four, five thousand dollars, and then at the end there is no results, there is nothing,” Rebollal said.
“And then they hear through a friend or relative that we exist, and then they come to us after they already paid money to these attorneys. And then we do it for free and we don't even get a donation,” she said.