Alameda County District Attorney's Office
Nancy E. O'Malley, District Attorney

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DA’s Office Successfully Resolves Homeowner Bill of Rights Case

OAKLAND – In 2013, the California Legislature enacted the Homeowner Bill of Rights to protect homeowners from unfair and illegal foreclosures by banks. In one of the first cases of active enforcement this Bill of Rights by a law enforcement agency, the Alameda County District Attorney’s Office has successfully obtained an injunction against Central Mortgage for engaging in business practices that contravene these rights.

The DA’s case against the Arkansas-based Central Mortgage demonstrated the company sent letters to distressed homeowners, steering them toward the short sale of their homes as opposed to other forms of mortgage debt relief, such as a loan modification.

Without admitting liability, Central Mortgage agreed to an injunction to refrain from sending homeowners letters highlighting, bolding, or displaying in a larger font any information, such as the words “short sale”. Central Mortgage also agreed to pay a civil penalty of $75,000 that will be used to investigate and prosecute future consumer protection actions by the Alameda County District Attorney’s Office.

The head of the Alameda County DA’s Real Estate Fraud Unit, Deputy District Attorney David Lim, noted that the relatively small civil penalty was due in large part to the cooperation of Central Mortgage to resolve this case early in the investigative process.

“We received only one complaint in this matter, and once we approached Central Mortgage, they showed a willingness to be good corporate citizens and fix the questionable language in their letters as opposed fighting this out in Court,” said Lim.

“This speaks well of Central Mortgage, and we hope other companies will use this as an example to come into compliance with the Homeowner Bill of Rights.”

District Attorney Nancy O’Malley applauded the settlement with Central Mortgage, saying it has ushered in a new era in protecting homeowners from foreclosure.

“While multi-million dollar settlements make splashier headlines, many of those large settlements occur only after hundreds of homeowners have lost their homes or been irreparably harmed,” said O’Malley.

“Our office is committed to protecting homeowners as early as possible. In this case, one homeowner complaint was all we needed in order to investigate this case and ask Central Mortgage to comply with the law.”

O’Malley added, “In the future, we will continue to use this model to protect each and every homeowner in Alameda County from predatory lending practices.”

The case is People of the State of California v Central Mortgage Company, Alameda County Superior Court case number HG15771827.

Posted on May 28, 2015