FREA Scam Alert Update – First Mutual Group, Savant Claims Management, and Heritage Pacific Financial

Monday, May 4, 2015

In February 2014, we reported what we saw as a potential scam involving letters being sent to appraisers by a group called Savant Claims Management (http://www.frea.com/blog/appraisers-beware-possible-new-scam-discovered-frea). Since then, a lot has happened and we want to provide an update on the latest activities by entities related to Savant and give some tips to those who have actually been sued by First Mutual Group, L.P. from Plano, Texas. (First Mutual Group, L.P., is a Delaware limited partnership whose members are Alternative Capital Strategies, LP, (a British entity) and First Mutual Group, GP LLC (another Delaware entity).

By way of some additional background, First Mutual, Savant, and a predecessor entity called Heritage Pacific are all owned or controlled by two brothers from Plano, Texas, Ben and Chris Ganter. In the not too distant past, Heritage Pacific not only filed many lawsuits against appraisers for improper valuations, but also sued many borrowers over unpaid mortgage loans, alleging fraud by the borrowers (see, No. 1 below). After being sanctioned by several courts and after becoming the target of a class action lawsuit over violation of federal debt collection laws, Heritage Pacific filed for bankruptcy in January 2014 and ceased operating.

In spite of this, the Ganters pressed onward by first using the Savant name to send threatening letters to appraisers and more recently by filing waves of lawsuits as First Mutual Group, L.P., (FMG) in numerous states against appraisers. After having a number of cases it filed in the first wave of lawsuits in 2014 dismissed either by the court or by its own motion, FMG resumed filing another wave of appraiser lawsuits later in 2014. We view these lawsuits as largely frivolous since they involve alleged deficiencies in appraisal reports written as long as 10 years ago. The goal, based on the past practices of Heritage Pacific, is to use the threat of costly litigation to coerce a settlement from the appraiser/defendant, especially if the appraiser has E&O insurance that covers the claim.

In this wave of lawsuits, FMG is once again making a series of largely unsubstantiated claims that it owns the right to pursue appraisers for losses suffered by the lender that held the loan when the property was foreclosed on. FMG claims it acquired (but never says what, if anything, it paid) this right and (magically) did not discover the appraisal issue until long after the foreclosure was over. The trouble with this is that if the lender that held the loan when foreclosure occurred either knew or should have known about any issues with the appraisal, then FMG also inherited the lender’s knowledge when FMG acquired the rights it now seeks to assert. This means many of FMG’s cases have been filed long after the applicable statute of limitations ran. The bottom line is that FMG is hoping that appraisers and their insurance companies will pay FMG to settle rather than spend money to litigate the issues. Put another way, if FMG acquired the rights it claims it possesses for $1 and gets paid $5000 to go away, the return on investment is astronomical.

If you find yourself in the middle of one of these lawsuits, please call us or have your attorney contact us at 888-820-5700 x102. We are tracking these lawsuits so defense counsel can share strategy and pleadings with each other and put a stop to this latest wave of litigation by FMG.

For additional information on First Mutual Group, its affiliates, and their past activities go to:

1.     http://californiawatch.org/money-and-politics/texas-firm-targets-calif-homeowners-foreclosed-2nd-mortgages-16244

2.     http://www.appraiserlawblog.com/2014/08/who-are-mutual-first-llc-and-savant.html

3.     http://www.appraiserlawblog.com/2012/10/who-has-been-suing-most-appraisers.html

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