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Illinois AG Lisa Madigan announced the filing of a suit in Cook County Circuit Court against One Source Mortgage, Inc., and the president of the company, Charles G. Mangold. One Source operated on Chicago’s northwest side.[/font][/color]
“This company’s conduct is a prime example of the behavior of unscrupulous mortgage brokers that has led to a foreclosure crisis for many Illinois homeowners,” Madigan added.
One Source solicited consumers through advertisements in the Chicago Sun-Times and direct mailings that promised mortgages with very low monthly payments. These advertisements did not adequately disclose, however, that the low monthly payments were based on introductory “teaser” interest rates that expired after one month. The interest rate for the mortgage would then adjust every month thereafter. If consumers continued to make the advertised monthly payment, they would not pay any of the principal of the loan or even the full amount of interest that accrued on the loan each month. The unpaid interest would then be added to the principal of the loan, causing the principal balance of the loan to increase. One Source allegedly did not tell consumers any of these details about their loans.
As a result, some consumers believed that their teaser rate or low monthly payment would last beyond the first month of the mortgage loan and even for the life of the loan. One Source allegedly told an Illinois consumer that he would have an interest rate of 0.950 percent for the first year of his loan. In reality, the consumer’s interest rate increased to 7.5 percent after the first month. One Source allegedly told another consumer that the combined principal and interest payment on her two mortgages would be $1,357.47. Sixteen months later, the principal and interest payment on this consumer’s loans was actually $2,616.16. According to the complaint, One Source told another consumer that a minimum monthly payment of $700 would cover all the accrued interest on his loan. In reality, the consumer would have to pay $1,816 per month just to cover the monthly interest.
In addition to misrepresenting the nature of the mortgage loans sold to consumers, One Source also grossly overstated homeowners’ incomes so that consumers appeared to be able to afford a much larger mortgage amount. This was done without the knowledge of the borrowers, who had frequently submitted verifiable documentation of their true income to One Source. For example, One Source falsely listed one consumer’s monthly income as $9,000 on her mortgage loan application. This consumer had provided pay stubs and tax returns to the company to verify her income of approximately $2,200 a month. This consumer was unaware that the company listed her income as $9,000.
[color=#5F5F5F][font=tahoma]The complaint also details how One Source allegedly used high pressure sales tactics to rush consumers through the closing on their mortgage loans. On average, most consumers’ closings lasted less than 30 minutes. Some consumers had closings that lasted only 10 or 15 minutes. To entice consumers to close on their loans, One Source would promise to refinance consumers into loans with more favorable terms at a later date. One Source would often do this under the guise of helping consumers improve their credit. One Source allegedly promised one consumer that her credit would improve if she refinanced her home multiple times. This consumer refinanced her home three times in one year through One Source. The company received approximately $30,000 in loan origination fees alone from these transactions. Now, this consumer is facing foreclosure.

By the time the One Source consumers learned of their true loan terms, they were left with few options as the payments were unaffordable, the homes had been stripped of their equity and the mortgage loans contained stiff prepayment penalties, preventing refinancing. A number of One Source consumers are now having difficulty paying their mortgages and must sell their homes in order to avoid foreclosure.


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