A mortgage company that advertised home loans with low initial "teaser rates" without disclosing their risks will pay $1.15 million to Arizona to settle a lawsuit.
The state alleged that Home Loan Center Inc. advertised payment option mortgages to consumers from August 2004 through July 2007 and overemphasized their benefits while downplaying or not disclosing the risks. The company sent an estimated 600,000 ads to Arizonans and sold nearly 400 of the loans. The company then resold them.
Irvine, Calif.-based Home Loan Center did not admit wrongdoing when it settled the suit on Friday. It is a subsidiary of Charlotte, N.C.-based Tree.com Inc.
Arizona Attorney General Terry Goddard says his office will use the money to pay for its efforts to prevent mortgage or loan modification fraud.