Foreclosed Homeowners Still Pursued by Texas Company for Second Mortgages

Saturday, May 26, 2012

Californians who thought their foreclosure nightmare had ended when they lost their homes to banks and other lenders have awakened to find themselves locked inside a new horror.


Texas-based Heritage Pacific Financial is aggressively pursuing more than 1,000 former homeowners who took out second mortgages on their homes, claiming that foreclosure doesn’t let them off the hook, according to California Watch. The company claims it is only after homeowners who lied on their loan applications by overstating their income or making other false “material misrepresentations.” 


Heritage Pacific Financial, which does not itself make loans, bought the second mortgages at a steep discount after borrowers had stopped making payments to the original lending agent. While the company argues that it only seeks payments in cases where there has been fraud, a class-action suit calls the practice an “insidious and illegal debt collection scheme.” Some homeowners said they were targeted because incomes listed on their loan applications dropped considerably after they lost their jobs and others said mortgage brokers had changed their income numbers without their knowledge.


Heritage Pacific first offers to settle with former homeowners but files suit if rebuffed  and typically combines claims against multiple borrowers into a single court action.

Three lawsuits filed in U.S. District Court in Los Angeles in 2009-2010 sought $46 million from 158 defendants who took out 143 loans. The company has filed more than 200 cases in federal bankruptcy courts in California. In one instance, a judge signed 21 default judgments ordering defendants who didn’t show up to defend themselves to pay $1.8 million.


The founders of Heritage Pacific, twins Chris and Ben Ganter, first came to public attention as stars of the reality TV show PayDirt, about investing in the Dallas-Ft. Worth real estate market.

–Ken Broder


To Learn More:

Texas Firm Targets Calif. Homeowners with Foreclosed 2nd Mortgages (by Rick Jurgens, California Watch)

Heritage Pacific Financial v. Rosita Gonzalez, et al (Santa Clara County Superior Court) (pdf)

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