Colorado Mortgage Broker Barred from Making Deceptive Claims

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For Release

A federal district court has barred a Colorado-based mortgage broker from making false claims about home mortgage financing services and ordered him to pay consumer redress following Federal Trade Commission charges that he violated federal laws. According to the FTC, the defendant and his company deceptively claimed they could refinance consumers’ mortgages at the lowest available rates at no cost to consumers.

In May 2004, the FTC filed a complaint against Phillip W. Ranney and a group of corporate defendants, operating as PWR Processing, Inc., charging that the defendants promised consumers “no-fee,” low-interest home mortgages following a process of multiple refinances. According to the FTC’s complaint, the defendants told consumers that if they applied for two loans, one at a competitive rate and one at a higher-than-market rate, lenders on the higher-than-market rate loans would pay a premium to the mortgage broker that in turn would be used to pay fees associated with the lower-interest loan. The defendants allegedly claimed that the low-interest loan would then be used to pay the higher-interest loan, leaving the consumer with a low-interest, “no-fee” loan. The FTC charged that instead of receiving the promised loan, consumers were stuck with high-interest loans, often at rates higher than they wanted to refinance. The FTC also alleged that the defendants did not pay appraisal fees, leaving many consumers with liens on their properties. The FTC’s complaint also named Kathleen A. Ranney as a relief defendant – the Commission subsequently dismissed its case against her.

In August 2004, the court entered a default judgment against the corporate defendants, Armor Mortgage; Abacus Mortgage; Community Homebanc Mortgage Services, Inc.; Harbor Pacific Funding, Inc.; High Center, Inc.; Lending Strategies of Colorado, Inc.; Lite Realty Corp.; PWR Processing, Inc., dba First Source America Mortgage Corp. dba NexLoan; PWR Press, Inc.; and Source Funding Company, Colorado corporations; Kace, LLC dba Aristocrat Mortgage, a Colorado limited liability company; and Mortgage Watch, a California corporation. The judgment barred the defendants from misrepresenting: (1) that they can provide home mortgage financing at competitive, low-interest rates; (2) that the fees associated with processing consumers’ loan applications will be paid at no cost to the consumers; (3) that consumers will not be required to make any payments on an interim loan because they will be funded by a lower-interest loan or paid by the lender; and (4) that they are a licensed mortgage broker. The judgment also prohibited the defendants from violating the Truth in Lending Act (TILA) or Regulation Z by advertising credit terms other than those that actually will be offered.

The terms of the litigated judgment announced today are similar to those in the default judgment against the corporate defendants. The judgment bars Phillip Ranney from making misrepresentations about home mortgage financing and violating TILA and Regulation Z and orders him to pay $128,300 in consumer redress.

Copies of the default judgment and the amended permanent injunction and judgment against Phillip W. Ranney are available from the FTC’s Web site at and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish (bilingual counselors are available to take complaints), or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

(FTC File No. X040053)

Contact Information

Media Contact:
Jen Schwartzman
Office of Public Affairs
Staff Contact:
Sarah Schroeder or Kerry OBrien
FTC Western Region San Francisco