Three More Bagged In Alleged Bait & Switch Refi Scam; Suspects Acccused Of Replacing Key Pages In Loan Docs After Being Signed By Unwitting Homeowners

From the Office of the California Attorney General:

• In a continuing probe into a defunct Southern California mortgage brokerage, Attorney General Edmund G. Brown Jr. [] announced the arrests of president and co-owner Sean McConville and two associates who used "deceptive promises and forged documents" to steal almost $1 million from homeowners falsely guaranteed attractive home loan refinancing packages.(1) "These criminals employed a classic bait-and-switch in their refinance scheme," Brown said.

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• When homeowners were presented with closing documents, they bore the terms promised, but which the lenders never approved. After homeowners signed the closing documents, key pages were removed and replaced with pages bearing the terms that the lender had actually agreed to. The homeowners' signatures were then forged on the replacement pages, and ALG forwarded the forged documents to the escrow company.

• Homeowners only discovered they had been defrauded when they received the final loan documents with the true terms and their signatures forged on closing cost disclosures, Truth-in-Lending disclosures, loan applications and other documents. Additionally, ALG collected almost $1 million in undisclosed fees, charging homeowners up to $57,000 in broker fees.

• In total, dozens of homeowners were locked into almost $30 million in loans with terms they did not agree to. As a result of this scheme, many homeowners were forced to sell their homes, come out of retirement, or tap retirement savings. Others paid significant prepayment penalties, including over $21,000 in one case. Borrowers also rarely received the large cash-outs they were promised as part of the refinance.

For the entire California AG press release, see Three More Suspects Nabbed in Million-Dollar Bait-and-Switch Home Refinance Scam.

(1) In addition to Sean McConville, 30, of Austin, Texas, president and co-owner of the now-defunct ALG Capital, Inc., others arrested in the AG's most recent bust are: Matthew Bourgo, 27, of Thousand Oaks, and Joseph Nguyen, 37, of Woodland Hills. The suspects are each being held on $29.5 million bail. In September 2009, Brown's office arrested three others involved in the bait-and-switch scam, including Michael McConville, 32, of Simi Valley, Sean's brother and co-owner of the brokerage, Alan Ruiz, 29, of Huntington Beach, and Garrett Holdridge, 24, of Palmdale, who was convicted of seven felonies in March for his involvement in the scam.