Attorney General's News Release

February 3, 2006

Nixon files lawsuit to shut down fraudulent St. Joseph foreclosure consultant service

St. Joseph, Mo. — Attorney General Jay Nixon is asking for a court order to shut down a foreclosure consultant business in St. Joseph. Nixon says Doug and Stephanie Heck, the owners of HomeSmartz Mortage, charged excessive fees, devised contracts that violated Missouri law and ultimately sought to strip one consumer of the very home they promised to protect.

In his lawsuit filed yesterday in Buchanan County Circuit Court, Nixon says the Hecks engaged in deceptive and unfair trade practices. The lawsuit alleges the defendants offered their services to a St. Joseph resident who was in danger of losing his home to foreclosure. The defendants approved him for a $20,000 loan, and then had him sign a general warranty deed on the house. The Hecks claimed the deed was a second mortgage that was needed to secure the original loan, but instead it was designed to turn the man’s home over to the defendants.

The lawsuit says the defendants charged the consumer excessive interest rates on the loan, demanding payments of $25,000, and later $30,000, under the threat of foreclosure. The payments were well above the maximum 10 percent rate that foreclosure consultants can claim, demand, charge, collect or receive as compensation for their services by Missouri law.

"The defendants in this case shamelessly preyed upon a homeowner who was in danger of losing his house, exploiting that fear to charge excessive interest rates and ultimately to try to take the victim’s home away from him," Nixon said. "Individuals who act in such a predatory manner should not be in business where they can harm Missouri consumers."

Nixon is asking the court to issue a permanent injunction that prohibits the defendants from advertising, offering for sale or selling foreclosure consultant services. The Attorney General also is asking that the court order the defendants to provide full restitution to all consumers from whom the defendants received payment who have been aggrieved by any of their unlawful or deceptive practices; to require that the defendants pay a civil penalty to the state of $1,000 per violation, plus 10 percent of the total restitution ordered against the defendants; and to require the defendants to pay all court, investigative and prosecution costs in the case.

Inquiries from consumers should be directed to consumer@ago.mo.gov or 1-800-392-8222 (from within Missouri) or 573-751-3321 (outside Missouri).

All media inquiries should be directed to Press Secretary John Fougere.

E-mail      Phone: 573-751-8844         Fax: 573-751-5818