Over the past two years, Ygrene and other
The suit, filed in the
It seeks damages for the plaintiffs and prominent disclosure of risks the suit asserts are inadequately disclosed to borrowers, including that their loans are recorded as liens against their properties and that in nearly all cases must be repaid in full before a lender will approve a new loan on the home.
Ygrene, through its public relations agency, issued a statement saying that it acknowledges the seriousness of the allegations but vowed to "vigorously defend ourselves as the suit lacks merit.
"Complete transparency and a commitment to consumer disclosure, protection, and education are of utmost importance to Ygrene," the response states. "In partnership with more than 350 state and local governments, we hold ourselves to the highest ethical standards."
The suit states that Ygrene incorrectly markets its loans as transferable with the house, and in marketing materials "goes so far as to say, 'It's as if your house is borrowing the money.'"
Not only will almost all consumers be required to pay off their loans, some will be required to pay a 5 percent prepayment penalty while others will be charged a "pre-payment waiver fee" at closing to avoid the penalty, the suit charges.
Prepayment will be necessary, the suit says, because conventional lenders refuse to provide loans on properties encumbered by Ygrene's
Fannie, Freddie and other banks regulated by the FHFA backed nearly 60 percent of mortgages in 2013, according to a Reuters report.
Another federal lender, the
Four initial plaintiffs in the case include a
The other plaintiffs are a
The Smiths heard about the program — and that they could get their windows replaced with no money down — from a contractor who was repairing their roof, the suit states.
They ultimately found a window replacement contractor and agreed to finance
Disclosures in two documents signed by the couple were misleading because they state the "FHFA appears to have instructed [
The suit states the statement "is at pains to downplay the possibility that the
The suit also asserts that
The company charges
With fees, a 20-year term and a 7.11 percent interest rate, the Smiths will end up paying
Hiraldo said he found the Smiths after contacting fewer than 50 consumers listed with
In a column posted Monday on the website Florida Politics,
But a November news release by the
State and national political leaders are calling for expanded consumer protections.
A state law enacted in
A release by Cotton called residential
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