O.F. Lending offered its clients a chance to get their homes out from under water. The company said it had come up with a way to refinance at current market value. Many of those who bought into the program now say they were victims of fraud.
"I am really hurt. It has hurt my trust in people," said Robin Samuels of Felton.
"We were very angry, very upset, very angry, a little ashamed," said Benjamin Ostroff of Novato.
Ostroff and Samuels are two homeowners who each paid thousands of dollars to O.F. Lending for a chance to get what the company called "a short pay refinance." A lawsuit filed on Wednesday in Alameda County Superior Court accused O.F. Lending of bilking homeowners out of millions of dollars.
"The fraud is telling my clients, 'I can do the short pay refinance and save you hundreds of thousands of dollars,' to demand upfront payments, take that money, allegedly put it in a trust account, but when it's time to pay the clients when OF Lending is unsuccessful, tell them that there's no money in the trust account," said David Tubman, a plaintiff attorney.
Bill Hogarty is the man identified as the CEO of O.F. Lending. That company has been shut down by the Department of Real Estate. Hogarty filed for bankruptcy and listed his clients with O.F. Lending as creditors. Federal bankruptcy trustees have challenged that bankruptcy filing.
The complaint accuses Hogarty of illegally accepting loan modification fees, not placing funds in a trust account, and instead using the funds for personal benefit. He is accused of doing this with the intent to hinder, delay or defraud creditors.
"These people put money in good faith, hoping, wishing to save their homes. Three of them have lost their homes to date. We want some compensation for that," said Tubman.
O.F. Lending's attorney was not available for comment, but in court filings stated that his client denied taking advance fees for short pay refinances between 2009 and 2011. He also denies Hogarty had any knowledge the money wasn't put into a trust account. For O.F. Lending's former clients, it has been an emotional rollercoaster.
"It's awful. I just wanted it done," said Molly Ostroff of Novato.
The Samuels sued O.F. Lending in small claims court and won. The Ostroffs are one of 21 families named in the class action lawsuit.
