Local lending company surrenders real estate license

February 18, 2011 6:55:38 PM PST
A Pleasanton company that claims it can help you get out from under water on your mortgage, has surrendered its real estate license. State regulators have issued a desist and refrain order against the company.

OF Lending offered something many homeowners can only dream of getting -- a chance to refinance your home at current market value. The pitch sounded good, but state regulators say the company was selling fool's gold.

Novato homeowner Molly Ostroff says she just wants her ordeal over with.

"It's awful," she said. "I just wanted it done."

Robin and Jeff Samuels of Felton love animals. They've rescued many that they've taken in as their own. Now they're hoping to find some way to rescue their Felton home from eventual foreclosure.

"I wanted to believe," said Robin Samuels. "I was so scared of losing our house, desperate for anything that could save it."

Both the Samuels and the Ostroffs paid OF Lending of Pleasanton $7,000 to $10,000 to help get their mortgages refinanced, but both now say they regret it because they claim they didn't get what they paid for. Their homes were under water before they paid OF Lending, and nothing has changed since.

"I am really hurt," said Robin Samuels. "It has hurt my trust in people."

"We were very angry, very upset, very angry, a little ashamed," said Benjamin Ostroff.

The spacious office of OF Lending is now shut down and pretty bare. This is in stark contrast to all the activity Jeffrey Samuels saw on his visit.

"It was very professional. It was very busy," he said. "There were people bustling around doing business. There were files on people's desks."

OF Lending offered its customers a chance at getting what's known as a short pay refinance. To get into the program your home must be under water, but you must be current on your mortgage

CEO William Hogarty talked about it last year in January on 'View from the Bay," saying "What a short pay refinance is, it's where we go to the existing lender, offer them 95 cents on the dollar and refinance them out of it. Yes, they take a loss, but not as much as a short sale and half as much as a foreclosure."

The homeowner then gets a new loan based on current market value. That didn't happen for the Ostroffs and Samuels. Both remain in their homes, but say it will now be difficult to keep up with their mortgage.

The Samuels sued OF Lendng in small claims court and won a $7,000 judgment. The Ostroffs plan to sue as well.

However, Olga Fluno of Pittsburg says the program worked for her.

"At first I didn't believe it. I was like, 'Oh no, it's not possible," she recalled. "But you know, after they did it, I was like, 'Oh my God.'"

Fluno refinanced her mortgage for $117,000. That is a significant savings from her original mortgage of $421,000.

However, the California Department of Real Estate remains skeptical of what OF Lending offered.

"It was on its face a complete scheme that would never have worked," said California Real Estate Commissioner Jeff Davi. "It was an effort to just confuse the public, take advantage of them, collect the money upfront, provide no service and leave the homeowner high and dry."

The state found Hogarty and OF Lending violated California's ban on advance fees. Hogarty has voluntarily surrendered his real estate license. He declined to talk to 7 On Your Side on camera, but by phone denied charging advanced fees and said his program really worked.

"I'm having luck with all the banks, except a couple of the biggies, and they are reluctant to go public with this because," said Hogarty during his 'View from the Bay' appearance.

Housing program supervisor Joe McQuillan of Consumer Credit Counseling Service of San Francisco says short pay refinances are rarely approved.

"You have to fall within a very set set of guidelines and we find that most clients don't fit these exact set of guidelines," he said.

McQuillan says to get into the program, your servicers and lien holders must all agree to it and that's difficult to arrange.

If you have any dealings with OF Lending, good or bad, you are asked to call the Alameda District Attorney's Real Estate Fraud Division at (510) 569-9281.

Load Comments