A consumer fraud lawsuit has been filed against two Tucson businesses Deed and Note Traders, LLC and 881 Home, LLC and the manager, David Kinas, alleging that they deceived consumers in real estate transactions.
In its lawsuit, the Attorney General’s Office (AGO) alleges that Kinas and his companies sold homes under a “wrap mortgage” arrangement and then failed to make payments on the underlying mortgages.
Wrap mortgages are arrangements where the primary mortgage holder (the Defendants in this case) makes a second loan to consumers who purchase the home. In these types of real estate transactions, the holder must continue to make payments on their underlying mortgage or risk a foreclosure that causes the consumer to lose their home. The AGO alleges that the accused failed to make their loan payments, despite taking thousands of dollars of down payments from consumers and promising to apply consumers’ monthly payments to the underlying mortgage.
In addition, the lawsuit alleges that by failing to provide consumers a title report and a minimum 15-year loan repayment term, the Defendants violated Deed and Note Traders’ 2006 Consent Decree with the State.
The AGO’s lawsuit seeks consumer restitution, up to $10,000 in civil penalties for each violation of the Arizona Consumer Fraud Act, $25,000 for each violation of the Consent Decree, injunctive relief, disgorgement, and attorneys’ fees and costs, plus the amount Deed and Note Traders owes on the 2006 Consent Decree.
David Kinas is not a licensed real estate agent nor a mortgage broker.
The AGO advises consumers to “protect themselves from mortgage fraud by conducting research before entering into a real estate contract. Contact the Arizona Department of Insurance Financial Institutions to determine whether the loan company is a licensed mortgage lender and whether it has a disciplinary record. Contact the Arizona Department of Real Estate to determine whether a sales person or broker is licensed and has any disciplinary actions against them.”