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Minnesota attorney general sues Source Lending over mortgages

CHICAGO
Thu Aug 14, 2008 1:15pm EDT

CHICAGO (Reuters) - Minnesota Attorney General Lori Swanson said Thursday she filed a lawsuit against mortgage broker Source Lending Corp, alleging it engaged in abusive predatory mortgage lending practices.

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"Source Lending engaged in the very types of abuses that created the mortgage lending crisis that has hurt both homeowners and the American economy," Swanson said in a statement.

The lawsuit claims the company used "bait-and-switch" tactics to sell adjustable rate and interest-only mortgages to borrowers who believed they were low-interest, fixed-rate loans. Source Lending was also accused of making false promises of serial refinancings.

Source Lending declined to comment.

Minnesota ranked 33rd among states in terms of mortgage foreclosure filings in July, RealtyTrac reported on Thursday.

(Reporting by Karen Pierog; Editing by Tom Hals)
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