California Attorney General Jerry Brown Jr. on Tuesday shut down four mortgage lenders for providing what he characterized as “illegal and unconscionable loans.” The move was the California AG’s first mortgage bust since taking office — surprising given that California was the epicenter of the housing boom, and that a recent MARI study ranked California in the top five states nationwide for fraud activity. Lifetime Financial, Nations Mortgage, Greenleaf Lending, Virtual Escrow, Olympic Escrow and Direct Credit Solutions were shuttered for engaging in what Brown characterized as a “complex scheme” of bait and switch. “As the mortgage crisis worsens, a growing number of fly-by-night companies are employing utterly brazen tactics to push homeowners into illegal and unconscionable loans,” Attorney Brown said in a press statement. “The illegal sales practices of these companies, run by Eric Pony and his family, included psychological pressure, forgery, and outright lies.” The company used cold-calling tactics that promised unrealistic loan terms to consumers, and then used inflated appraisals to qualify borrowers for mortgages they couldn’t afford; mortgages were usually stuffed with vast amounts of hidden and junk fees, and borrowers — usually facing trouble on the their existing mortgage, or among the elderly — were often forced to sign incomplete loan docs under duress. Imagine your loan officer showing up at 11:45 at night saying you needed to sign incomplete loan docs because the deal was going away at midnight, and you’d have a good idea of how this company operated. Yesterday, the Los Angeles Superior Court, at Brown’s request, froze all the companies’ real estate and bank accounts and enjoined them from engaging in further predatory practices. The freeze order also included expensive cars and millions of dollars in private real estate owned by Eric Pony. Brown also said his office is seeking an estimated $20 million in penalties and restitution. San Bernardino District Attorney Michael A. Ramos also announced Tuesday that several individuals affiliated with Lifetime Financial were arrested this morning on charges including conspiracy, grand theft, forgery and elder abuse. “These predatory lenders have taken advantage of people who placed their trust, as well as their homes, in the hands of these unscrupulous business people,” he said. In the coming weeks, Brown said his office intends to bring additional legal actions, both civil and criminal, against other mortgage lenders and foreclosure consultants who he said are taking advantage of homeowners across California. The California AG’s press release provides great detail on the scheme, its perps and the victims. My question: who bought these loans?