The good news is that there are people out there who are looking to help you. The bad news is that most of them are not out to help you but rather to help themselves. Check references carefully. Beware of big promises and too little information. Foreclosure defense in the mortgage meltdown and credit crisis environment brings out the worst vultures praying on people when they are at their most vulnerable.  Most of them are engaged in the unauthorized practice of law and are quite likely to go to jail. Emotionally you can fall apart later — for now, keep a cool, clear head and get some people around you who can help you with that. 

Chandler company must pay $1.2M in mortgage fraud case

36 commentsMay. 29, 2008 12:29 PM
The Republic | azcentral.com

The company advertised it could help homeowners who were behind in their mortgage payments avoid losing their homes. In fact, the transactions offered by the company were structured so that homeowners would transfer title to the company or sell the home to a business associate of the company.

“This case represents the worst in our community,” Attorney General Terry Goddard said in a statement. “This company took advantage of homeowners desperate to save their homes from foreclosure and deceived them into turning over their homes.”

The court ordered Perkins to pay $620,000 in civil penalties and $611,950 in restitution.

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STATE OF ARIZONA ANDREA M. ESQUER 

DEPARTMENT OF LAW PRESS SECRETARY 

1275 W. WASHINGTON STREET PHONE: (602) 542-8019 

PHOENIX, ARIZONA 85007-2926 CELL PHONE:  (602) 725-2200  

WWW.AZAG.GOV 

 

FOR IMMEDIATE RELEASE 

 

 

Court Orders Realty Firm to Pay $1.2 Million for Violating Fraud, Banking Laws 

 

(Phoenix, Ariz. – May 29, 2008)  Attorney General Terry Goddard and Department of 

Financial Institutions Superintendent Felecia Rotellini today announced that Maricopa 

County Superior Court Judge Edward Burke has ruled that Virtual Realty Funding 

Company (VRF) and its owner Kenneth D. Perkins violated the Arizona Consumer 

Fraud Act and state banking laws and ordered them to pay $1.2 million in restitution and 

civil penalties. 

 

In 2005, the Attorney General’s Office filed a consumer protection lawsuit against VRF 

after receiving multiple consumer complaints. The company advertised that it could help 

homeowners who were behind in their mortgage payments avoid losing their homes. In 

fact, the transactions offered by VRF were structured so that homeowners would 

transfer title to VRF or sell the home to a business associate of the company.  

 

“This case represents the worst in our community,” Goddard said. “This company took 

advantage of homeowners desperate to save their homes from foreclosure and 

deceived them into turning over their homes.” 

 

“The Department of Financial Institutions applauds this court’s order,” Rotellini said.  

“The message is clear: Obey the law or you will be held responsible.” 

 

According to court documents, although neither VRF nor Perkins were licensed by the 

Department of Financial Institutions as mortgage brokers or bankers, VRF loaned 

money to more than 60 homeowners facing foreclosure or in need of money. VRF 

designed its loans, which it called reverse sales, to evade laws protecting mortgage 

borrowers by structuring them as an outright sale of the property by the borrower, who 

then rented back the home with an option to repurchase it.   

 

The reverse sale agreements required homeowners to rent back their homes from VRF 

for a monthly amount equal to the monthly mortgage payment plus an additional charge.  

In the case of one homeowner, the monthly mortgage payment was $613 and the 

additional charge was $157, making a monthly rental payment of $770. In return for 

Office of Attorney General Terry Goddard 

Office of the Attorney General 

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“helping” the homeowners keep their homes, VRF agreed to transfer title back to the 

homeowner through a warranty deed if the homeowner met specific conditions.  

Conditions included the payment of all rent on time (and prior to a specified date, 

payment to VRF for bringing the mortgage current), unspecified escrow fees and a 

“funding fee,” which was at times as high as $9,000. If homeowners were late on a 

rental payment or unable to repay the loan and funding fee within two years, they could 

lose their homes and any equity in them.  

 

In an order issued by Judge Burke, Perkins and VRF are forbidden from:   

 

 Advertising or making any mortgage loan, regardless of how characterized, unless 

licensed as a mortgage broker or mortgage banker by the Arizona Department of 

Financial Institutions. 

 

 Participating in reverse sale or similar sale-leaseback transactions with a repurchase 

option involving residential real estate.  

 

 Making any false, misleading or deceptive statements in connection with the sale or 

advertisement of any product or service that is connected to a transaction involving 

real estate, mortgages or loans. 

 

The court ordered Perkins to pay $620,000 in civil penalties for violating the Arizona 

Consumer Fraud Act and Arizona banking laws and $611,950 in restitution.  James A. 

Busche, the Tucson agent for VFR, was ordered to pay $10,000 in civil penalties. 

 

This case followed investigations conducted by the Department of Financial Institutions, 

the Department of Real Estate and the Attorney General’s Office.  A copy of the order is 

attached.  Assistant Attorney General Bob Zumoff handled this case.

Filed under: bubble, currency, Eviction, foreclosure, GTC | Honor, Mortgage | Tagged: ARIZONA, foreclosure defense, mortgage fraud, mortgage meltdown |