Mortgage modification company accused of ripping off homeowners

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UPDATE: On Dec. 13, 2010, Attorney General Terry Goddard announced a $581,533 default judgement against Asset Creation and its owner Marvin Williamson. The judgment follows a lawsuit filed by the Attorney General earlier this year alleging that the company engaged in deceptive business practices.

According to the lawsuit, Phoenix-based Asset Creation advertised its loan modification services extensively throughout the Phoenix area, primarily in Spanish language media and violated the Arizona Consumer Fraud Act by making numerous misrepresentations regarding specific results that it could obtain for consumers, regardless of their situation.

Over the past two years, more than 2,500 consumers contracted with Asset Creation for loan modification services. The State also alleged that Asset Creation falsely stated that it had a money-back guarantee, when in fact any refunds were within the sole discretion of Asset Creation and rarely given.  Many consumers who paid Asset Creation fees ranging from $1,680 to $3,430 and who later ended up losing their homes to foreclosure were refused refunds.

The State also alleged that Asset Creation misrepresented that it had performed loan modification services since 2003 when, in fact, it had only done so since 2008.  The judgment ordered Asset Creation and Marvin Williamson to pay consumer restitution in the amount of $352,731, civil penalties of $208,000, and the State's costs and fees of $20,802.

The court order also prohibited Asset Creation and Marvin Williamson from engaging in any activities related to obtaining or modifying mortgage loans in Arizona.

PHOENIX - Emma Morales and her daughters have made a home out of the west Phoenix house they're now renting.

They moved into the place late last year after their home of 10 years went into foreclosure and was eventually auctioned off.

“They sold my house in one hour.”

Morales says she began having trouble paying the mortgage on her old home after she lost her second job last year.

That's when she turned to Asset Creation, a mortgage modification company that she says promised to reduce her mortgage to less than $1,000, if she paid $2,030.

“And that was really good for me because you know I'm a single mother and just was working one job,” Morales said.

As we said, her home was eventually auctioned off, so why -- if Morales paid Asset Creation so much money to prevent foreclosure -- did it wind up happening anyway?

“It's an epic example of buyer beware.”

Attorney General Terry Goddard says Asset Creation is just one of numerous Arizona companies looking to make a quick buck off desperate homeowners struggling to make mortgage payments.

Goddard's office recently filed a lawsuit against Asset Creation accusing it of 'misrepresenting to consumers that it could obtain specific results' and that 'consumers would receive a refund if Asset Creation was unable to obtain a loan modification.'

“There were thousands of customers that we know about,” Goddard said, “and we believe that many of them if not all of them have gotten some kind of deceptive statement at some point from Asset Creation.”

Earlier this week, our 3 On Your Side producer tried to talk with the owner of Asset Creation, Marvin Williamson, when we stopped by their Phoenix-based business.

“Meredith Yeomans with Channel 3 and 3 On Your Side. We'd like to talk with someone about the business practices of this company.”
Receptionist: “Ok, let me see if they're in.”

About five minutes later, the receptionist returned and told us he'd gone to lunch.

We went back Thursday to find the doors of business locked, and beer bottles sitting on the receptionist's desk.

Juan Hurtado was also there, handing out flyers to customers who he says were ripped off, just like him.

“We're struggling with our mortgages, and now we're struggling with this,” Hurtado said.

Meantime, Emma Morales, who says Asset Creation did modify her mortgage, but it wasn't the promised amount, claims that only happened because the company misrepresented her income to the bank.

“They said yeah, we did that, we put the information in your case because you don't qualify,” Morales said.

She says she wishes the company would've been more up-front so that perhaps she wouldn't be out thousands of dollars and the home she and her family so-loved.

Mr. Williamson did call 3 On Your Side to say that the accusations against him are untrue and that he is challenging the Attorney General’s lawsuit.

We haven't been able to reach him again to find out why his business suddenly closed or what all of his customers are supposed to do.

We will continue to follow this story.