Choice Loan Consulting Shuts Down

December 22, 2009

Choice Loan Consulting in Gilbert is out of business.

( Phoenix, Arizona ) A troubled loan-modification company has met its end. For much of this year, KJZZ has followed the story of Choice Loan Consulting. The Gilbert-based firm once employed more than 100 people in the US. But after one of its partners was convicted of fraud, the business model fell into disarray.

Now it's unclear what will happen to the 2,500 files the company had promised to modify.

JEFF FERM: It's no possibility of success now. None.

Ferm resigned as the customer service manager in October. He is one of nine Choice employees who have come forward with a description of the inner workings of the company in the days leading to its collapse. Chief among their complaints: since late September, they worked for periods of several weeks without getting paid.

JEFF FERM: The wheels came off when they stopped paying people. The vast majority of negotiators left.

With a depleted staff, the employees confirm the fears of so many clients who say Choice Loan Consulting failed to work with banks, even as their homes inched closer to foreclosure. Former General Manager Darrell Neff says business started breaking down in August. That's around the time a former partner named Jeffrie Harper was convicted of running a foreign-currency investment scheme. A judge put him on probation so he could work and repay his victims. Neff says Harper was in charge of the business even though he officially gave up ownership after his indictment. He says Harper asked him to manage a constant stream of unhappy customers who wanted to know what progress had been made on their file.

DARRELL NEFF: His thing was just tell them we're working on it and we'll get them a response in three to five days. I said, I am not going to lie to these people. If you don't want me tell the truth, then I don't want to deal with the clients.

After Neff quit, he confronted Harper through a text message about the company's decision to hire new workers, even though Choice still hadn't paid former employees. Harper responded to Neff with a voice mail.

HARPER VOICEMAIL: Darrell, call me. We don't have a full staff. All the staff we have haven't been paid in over a month. We do have some volunteers who came in yesterday who want to help, knowing they won't get paid, because we have 2,300 people we need to take care of so they don't lose their homes.

Harper did not comment for this story. Neither did Jordan Ruzicka, who took over when the company's leadership scattered after Harper's indictment.

Last month, dozens of concerned clients contacted KJZZ. They said their phone calls were ignored, and promised refunds never arrived. Most paid $3,500 per file up front, with a money-back guarantee.

Choice Loan Consulting is just one company in a troubled industry that has come under scrutiny this year after President Obama announced a loan modification program that was designed to save millions from foreclosure.

Choice employees say business skyrocketed around the president's announcement, but the banks were slow to respond. Former customer service manager Jeff Ferm says the infrastructure wasn't in place to handle the new business.

JEFF FERM: You couldn't stop bringing in new files even though you knew you couldn't work them.

The employees say the pressure was on to bring in fresh money, even if the homeowner's application had no chance of success. Ernest Henriquez worked at Choice up until the final days. He recalls the time he told Jeff Harper that a new customer did not meet the requirements for a modification.

ERNEST HENRIQUEZ: He grabbed the file from my hand and said, is there a credit card number? I said yes. He went into the other room and ran the card. He said we have the file. It was all about bringing in the money there. There was no way we could do anything for that client.

The nine employees I spoke to say the company's leadership is reorganizing. Jordan Ruzicka has filed paperwork with the Arizona Corporation Commission to start a new firm.

It's called Complete Freedom.