N.J. firms named in rent-to-own housing scam

The New Jersey Attorney General filed mortgage-fraud lawsuits yesterday in three counties against 36 defendants, including a South Jersey company accused of running a "rent-to-own" housing scam.

In that lawsuit, filed in Camden County, the attorney general said Ultimate Real Estate Solutions in Williamstown set up a scheme to acquire 18 properties through fraudulent mortgage applications.

Customers with bad credit were promised they could rent the properties - and eventually own them - while Ultimate paid the mortgages.

Instead, the attorney general said, Ultimate collected the rent and allowed the properties to fall into foreclosure.

"It is imperative that we root out alleged mortgage fraud like this and protect the victims of these predatory lending practices," Attorney General Anne Milgram said.

The lawsuits all center on so-called subprime mortgages, generally given to people with bad credit.

In recent months, the national economy has been rocked by the property foreclosures that followed the collapse of the subprime market.

New Jersey has the nation's 13th-highest foreclosure rate, with estimates that as many as 16,500 residents could lose their homes.

Greg and Jewel Brown saw one of Ultimate's advertisements in a newspaper and inquired about buying a house through the rent-to-own program.

They settled on a place in Monroe Township, for which they put up nearly $11,000 in fees and deposits. They made monthly payments of $2,278 for almost a year, until they got a letter telling them their house would be sold at a sheriff's sale.

"Ultimate Real Estate kept telling us, 'Don't worry about it, just keep paying,' " said Jewel Brown, a pastor at a Woodlynne church.

The couple went to a lawyer, who examined their paperwork and told them everything Ultimate had done was illegal, Jewel Brown said.

"We didn't have a place to live," she said. "We were just homeless."

A phone listing for Ultimate Real Estate was disconnected yesterday. The company and its president, Halimah Prater, were both named in the lawsuit.

In all, the three lawsuits filed yesterday named 15 corporations and 21 individuals. The two other suits were filed in Passaic and Essex Counties.

Lee Moore, a spokesman for the Attorney General's Office, said each case was evaluated individually, and investigators decided to pursue these three in civil court.

The defendants could face fines up to three times the loss to consumers, along with other penalties, he said.

"This office is going to be very aggressive in pursuing mortgage fraud, both civilly and criminally," he said.

The three lawsuits involve 25 properties and more than $5 million in fraudulent loans, the attorney general said.

The Camden County complaint said Prater sought "investors" with good credit who could buy houses for people with bad credit.

At least 16 properties were bought in the names of two men, Herbert Coleman and Yusef Hason, according to the complaint.

Prater told Coleman, who had recently moved from a homeless shelter to a group home, that the properties would be in his name for only 30 to 90 days and that he would make "a few thousand dollars" on each sale, the complaint said.

For both men, Ultimate listed false information about their incomes and employment on the mortgage applications. Several applications said the men intended to live in the houses, even though they were going to be occupied by tenants.

First Metropolitan Mortgage Services in Mount Laurel handled the mortgages, receiving "thousands of dollars in fees and commissions for completing the loans," the complaint said.

The mortgage company and two employees were named as defendants in the attorney general's lawsuit. A phone listing for the company reached only a fax machine yesterday.