An Arizona-based mortgage company claims it has been forced to foreclose on 19 homes in the Kansas City, Mo., area because of a scheme involving inflated appraisals, false borrower information and stolen identities.
First Magnus Financial Corp. has sued six businesses and 28 individuals, saying it lent more than $2.5 million on houses worth less than $1.8 million, the Kansas City Star reported.
According to the lawsuit, all 19 loans have defaulted and First Magnus will lose more than $1 million because the foreclosed properties were not sufficient collateral for the loans.
The suit alleges loan officers at Star Equity Funding LLC obtained fraudulent appraisals that valued the homes at $3.1 million.
Jane Sanson, doing business as JS Appraisals, and Term Investment Group LLC are accused of falsifying information about comparable home sales in the area, misrepresenting features of the houses, and using comparable sales not applicable to the homes being mortgaged.
The suit said Sanson admitted to allegations of “fraudulent or altered appraisals” in a complaint by the Missouri Real Estate Appraisers Commission.
Gary Shartzer, Reis Enterprises, Joe Savaglia and Justin Cahow, who also are named as defendants in the lawsuit, were fined by Kansas banking officials last year under cease-and-desist orders that cited appraisal problems or failure to register with the state, the Star reported.