Herring Holds Virginia Beach-Based Foreclosure Rescue Lender Accountable
Attorney General Mark R. Herring is holding ANE Investments LLC and its managing member Richard A. Maxino responsible for violating Virginia consumer credit laws.
This follows a lawsuit he filed against ANE and Maxino in December 2020. The lawsuit follows a complaint referral from the Bureau of Financial Institutions of the Commission des crown corporations.
Herring’s lawsuit alleged that ANE and Maxino made loans to distressed homeowners and charged interest or other compensation well in excess of an effective annual interest rate of 12%, without being licensed as a credit company. consumer, nor benefit from any other exemption from the Virginia usury laws.
Instead of charging traditional interest, ANE and Maxino demanded compensation for certain loans through a real estate ad and above-market sales commission, or, failing that, through a stock option. selling and buying below the market.
“I will not tolerate any lender who takes advantage of financially troubled Virginians, especially particularly vulnerable homeowners who are trying to avoid potential foreclosure on their home,” Herring said. “My consumer protection section and I remain committed to protecting Virginians from abusive practices and we will continue to tackle predatory lenders who prey on vulnerable people.”
The complaint provided details of a loan that ANE and Maxino granted in 2019 to a Virginia Beach homeowner. As alleged, while in her bank’s parking lot, an ANE representative presented the owner with an agreement to be signed late in the afternoon of June 3, 2019 before her Virginia Beach home was foreclosed. was scheduled for the next day.
The deal required that the owner, in return for the $ 4,000 she needed to stop the foreclosure, agreed to: (1) allow Maxino and his real estate agency employer to list and sell a separate portion of the property. Virginia Beach real estate that the owner owned at the significantly above-market real estate commission rate of 21% (where 6% is more standard), and, alternatively, (2) if the sale of the separate property did not take place for whatever reason, giving ANE the ability to purchase the separate Virginia Beach Property at a significantly below market price of $ 200,000. As further alleged, the separate property was appraised in April 2019 for a value of $ 430,000, known to ANE and Maxino.
After the owner signed the agreement, Maxino and his employer put the separate property up for sale and the property was eventually sold for $ 420,000, with a closing that took place around August 29, 2019. ANE and Maxino claimed in a separate lawsuit that the owner owed Maxino a real estate commission of $ 88,200 on the sale of the property under the agreement.
Virginia’s consumer credit laws prohibit anyone from making loans to individuals and charging fees above an annual rate of 12%, without having received a license from the State Corporation Commission, or without having received a license from the State Corporation Commission. benefit from another exemption from Virginia’s usury laws.
As alleged in the complaint, consumer credit laws make it clear that they are intended to cover anyone who seeks to evade their request by any “device, subterfuge or pretext”. An example provided in the law is “[t]the use of guarantees or related sales or purchases of goods or services, or sales or purchase agreements, whether real or simulated…. “
In its complaint, Herring alleged that the additional amounts Maxino had committed to receive from the Virginia Beach owner in the form of an above-market real estate commission, or the below-market option selling price that ANE had committed to potentially receive for the purchase of the Virginia Beach property constituted “loan interest, fees, compensation, consideration or expenses” for the purposes of the effective interest rate limitations imposed by law. on consumer credit.
As further alleged, if the owner had repaid $ 88,200 (or $ 84,200 in excess of the principal loaned) to ANE and / or Maxino on August 29, 2019 (the day of closing), the loan of $ 4,000 to the owner would have had an effective interest rate of 8.831%. Alternatively, even if one subtracted from the amounts paid a full standard real estate commission of 6% ($ 25,200) and assumed that the owner was only reimbursing ANE and / or Maxino $ 53,000 (or $ 49,000 beyond of the principal amount loaned), the loan of $ 4,000 to the owner would have had an effective annual interest rate of 5.139%.
Herring’s settlement with ANE and Maxino takes the form of a consent judgment, which was issued by the Richmond Circuit Court on August 16, 2021. The consent judgment prohibits ANE and Maxino from violating specific laws on the consumer credit, including making any “loan requiring collateral sale and / or purchase” to consumers in Virginia when the total compensation amounts collected in excess of the principal amount advanced exceed an effective annual interest rate of 12% .
In addition to the injunction, the Judgment on consent requires:
- ANE and Maxino to reimburse Commonwealth lawyers’ fees and expenses in the amount of $ 11,000.
- ANE and Maxino to identify other consumers in Virginia with whom one or both of them collectively made a loan requiring a sale and / or purchase of collateral during the period of January 1, 2018 until today.
- ANE and Maxino will provide restitution and / or forbearance relief to all consumers in Virginia who received loans requiring collateral sale and / or purchase during the period January 1, 2018 to present.
Any Virginia consumer who received a loan requiring a sale and / or purchase of collateral from ANE and / or Maxino during the covered period is encouraged to file a complaint with the Attorney General’s Office.
This case was handled by the Predatory Loans Unit of the Consumer Protection Section of Herring. The unit was created as part of Herring’s reorganization of its consumer protection section, which now focuses on predatory lending in addition to deceptive conduct, antitrust issues, charity canvassing, and more.
During Herring’s administration, the Consumer Protection Section recovered more than $ 410 million in consumer relief and offender payments.
For more information on the regulation or to file a complaint about a consumer protection issue, contact the Consumer Protection Section: