LV lender accused of preying on vulnerable homeowners

Brian Seals

Wednesday, Sept. 23, 1998 | 11:11 a.m.

David Sass's Unlimited Holdings Inc. was ordered to quit issuing loans in July.

But Sass now faces another lawsuit in U.S. District Court over his lending practices. The lawsuit, filed by Las Vegas attorney Leah Kane of Clark County Legal Services on behalf of Carol and Dan Russo, seeks class-action status.

"We just keep seeing more and more people coming into this office with the same circumstances," Kane said.

The suit alleges borrowers were typically delinquent on their first mortgages. Sass offered short-term loans to get them out of delinquency in return for a deed of trust that gave him a security interest in the borrower's home. The borrowers then were allegedly hit with extra costs they say they didn't know about when they agreed to the loan. Previous suits have claimed Sass used this technique to foreclose on homes.

The Russsos were not in foreclosure. Their suit seeks to rescind the loan agreement.

Kane estimated the class would number about 100 if class-action status were granted by a judge, but the number could be refined further by inspecting Sass's records.

Like other complaints, the Russo suit contends that Sass preyed on vulnerable people in an attempt to capitalize on the equity they had in their homes by offering loans with extremely high interests rates and hidden charges.

"Defendants have a pattern and practice of targeting vulnerable, less sophisticated consumers with substantial equity in their homes and limited income such that their deceptive practices will be more successful," the complaint states.

Sass denied the charges, calling them "lies." He said Unlimited Holdings did not target any age or economic group and that he offered money to people who could not get mainstream financing. He said his goal was not foreclosure, saying that was an aggravation.

"When someone needs money quickly, it's all 'thank you,"' Sass said. "You're a great guy then. But if you don't get paid and have to take a defensive position, then you're the bad guy."

The Russo suit states they obtained a $10,000 loan, in the form of a promissory note, to be repaid with 11 installments of $400 and a final balloon payment of $5,600. When they tried to arrange to make their final payment they allegedly were told they owed $8,000. They say they were told to pay that day or face more penalties, according to the complaint.

The suit contends Sass violated the federal Truth in Lending Act by not prominently disclosing all the costs of the loan. Kane said the issue is whether alleged violations of TILA give the homeowners the right to rescind their loan agreements.

"We'd like the court to make a declaration that they have that right," Kane said.

Sass countered that the Russos signed the loan documents. Moreover, he said he offered to settle at a loss but has received no response from Kane.

Earlier this year, two suits were filed by homeowners who claimed all the charges were not properly disclosed in loan documents and that they faced foreclosure by Sass. Kane said those suits were settled and the owners kept their homes.

Sass ran his mortgage company up until July under an exemption in state regulations that allowed him to operate without a license on the basis he was loaning his own money. The state has nullified the exemption.

However, state Financial Institutions Deputy Commissioner Lyndon Evans said those loans aren't void because of the revocation of Sass's exemption.

"Just the fact he lost his exemption wouldn't nullify the loans those people had," Evans said.

Sass said his business is now focusing on buying and selling real estate.