Deceptive Trade Practices Nipped in the Bud in Colorado

Mortgage companies need to note their bottom line does not take precedence over the law.

In the current economic climate, there are unfortunately so many financial scams, schemes and rip-offs that it’s hard to keep track of who is doing an honest day’s business anymore. One of the worst practices relates to negligent and exceedingly deceiving lending practices. In fact, there are a number of companies that have helped the foreclosure crisis along simply by following less than legal avenues to wring money out of unsuspecting homeowners.

A recent settlement, announced by the Colorado Attorney General, illustrates the way abuse can occur. Colorado Springs Independence Planning, doing business under the name Alternative Lending of Colorado, had two top employees called on the carpet for deceptive trade practices that now face an order to repay more than $78,000 in fines and restitution.

The two company officers will also have to surrender their mortgage loan originator licenses and inform the office of the Attorney General if they plan to work in any type of mortgage related business again. One will be paying $16,885 in restitution and $14,000 in civil penalties, while the other will be paying $33,700 in restitution and $14,000 in penalties. If both comply with the terms of the settlement, their totals will be reduced.

For example, all but $10,800 of the grand total for the female company officer will be suspended if she complies with the terms of the settlement and in the other’s case, all but $7,200 of his grand total will be suspended on compliance. This does, of course, raise some questions about the victims of their deceptive trade practices, a point the Attorney General’s office is endeavoring to address by arriving at a settlement with these two individuals that will see them exit the mortgage lending industry.

Two down and a few more to go. There is a warning inherent in this settlement that is intended to impress upon mortgage lenders that their financial bottom line should not be put ahead of the law.

One officer was cited for quoting monthly mortgage payments that didn’t include taxes and insurance, misrepresenting loan interest rates, and dragging out closings to pressure buyers into signing a mortgage. In addition, she worked with appraisers to over-value homes, meaning borrowers would owe more than their home was actually worth. She wasn’t present at closings which denied the borrower the chance to question their loan terms; over inflated applicant’s incomes, and did not offer complete and accurate disclosure to home buyers. It seems that the boss, while he knew what his employee was doing, allowed it to happen in the name of the company – bottom line.

The information concerning the settlement was obtained by reviewing the news releases from the Attorney General of Colorado. The lesson: companies need strict compliance programs to avoid abuses that can lead to potential civil and criminal penalties.

Miller Leonard is a Denver federal criminal defense lawyer and Denver state criminal defense attorney. To learn more, visit or call 303.623.2721.