New action on dietary pills, warranties

Dieters taking herbal pills for weight loss may be at risk from hidden drugs. Fulton County taxpayers are losing out on more federal funds for affordable housing. A home warranty firm is sued, and some Sunshine Mortgage customers face glitches.

This week Spotlight updates some of our recent investigations:

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Chris Hunt/chunt@ajc.com

A number of dietary supplements have been found to be spiked with prescription drugs.

SPOTLIGHT: BY ALISON YOUNG

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Fulton loses more housing money

• What we reported: More than $6 million in federal money for affordable housing was misspent or left unused since 2000 by Fulton County’s housing department.

• What’s new: The U.S. Department of Housing and Urban Development is withholding more money because of ongoing management problems.

For the second year in a row, HUD has rejected Fulton’s plan for using federal HOME Program funds, which support affordable housing. The county has historically received about $1.5 million a year from this HUD program. HUD recently rejected Fulton’s plan for fiscal year 2009, just as it did for 2008, said HUD spokeswoman Jerrie Magruder. The county could still receive the funds if problems are fixed.

Melvin Richardson, acting director of Fulton’s housing department, said the department has been reorganized to ensure greater oversight and financial accountability. He said he’s hopeful HUD will release the money later this year.

HUD still hasn’t decided whether Fulton will have to repay any of the $6 million auditors said was misspent. Spotlight reported on these funds in November.

New warnings about dietary pills

• What we reported: A growing number of dietary supplements are spiked with prescription drugs, especially those marketed as all-natural sexual enhancements.

• What’s new: It’s not just Viagra-like drugs in vitamins that you need to worry about. The Food and Drug Administration now is warning about nearly 70 supposedly all-natural dietary and herbal pills sold for weight loss.

Recent FDA tests on pills marketed to dieters found several types of undeclared pharmaceuticals in weight loss supplements that go by names such as Slimtech, Starcaps, Cosmo Slim, Slim Burn and Venom Hyperdrive 3.0. Here’s the link.

The FDA found they contain potentially harmful ingredients not listed on their labels or in advertisements. They include sibutramine (a controlled substance with risks of addiction), rimonabant (a drug that has failed to get FDA approval due to concerns about side effects) and phenolphthalein (a suspected carcinogen that has laxative effects).

In November, Spotlight investigated this hidden health risk.

Sunshine Mortgage holders get new servicer

• What we reported: Consumers are at risk of glitches when their mortgage lender closes or files for bankruptcy — and that Sunshine Mortgage customers needed to be on alert as their Feb. 1 payments approached.

• What’s new: U.S. Bank of Owensboro, Ky., has taken over servicing mortgage loans for customers of Smyrna-based Sunshine Mortgage, which closed last month.

But it appears some Sunshine customers’ loans —which include one held by this reporter — are being transferred without the generally required 15 days advance notice of where to send payments.

According to a U.S. Bank letter dated Jan. 26, postmarked from Kentucky on Jan. 30, and not received until after a Feb. 1 mortgage payment was due, my loan was transferred to them back on Jan. 16. It says Sunshine stopped accepting payments on the transfer date — thanks for the advance notice!

I suppose I should consider myself lucky. AJC photo editor Bita Honarvar, another Sunshine customer, hasn’t received anything.

U.S. Bank officials, in a written statement, said payments made to Sunshine during the transition will not incur penalty fees or negative reports to credit agencies. Sunshine is forwarding to U.S. Bank checks sent to them in recent weeks. Because U.S. Bank acquired Sunshine’s portfolio under “unusual circumstances” involving an abrupt closure, the bank is allowed to notify customers up to 30 days after the transfer, they said.

About 150 customers like Honarvar, who have very recent Sunshine loans, should receive written instructions from U.S. Bank within a week, the bank said. Customers can call U.S. Bank at 1-800-475-0782.

HUD is the federal agency that enforces the Real Estate Settlement Procedures Act that mandates notice of transfers.

Under the law, for 60 days after a transfer, consumers cannot be charged a late fee if they send timely payments to the old lender. “The main thing is to have proof you made your payment and that you made your payment on time,” said Rod Carnes, a deputy commissioner at Georgia’s banking department, which has posted information here.

For more on consumer protections, check out tipsfrom HUD and from Spotlight.

Home warranty company sued

• What we reported: Home warranty companies get mixed reviews from consumers. Some love them, others complain that warranty companies like National Home Protection wrongly deny claims.

• What’s new: The Texas Attorney General’s Office has sued National Home Protection, accusing the firm of deceptive trade practices and doing business in that state without a license.

The suit seeks restitution for Texas homeowners who purchased warranties from National Home Protection but didn’t receive the services they were promised. Unlike Georgia, Texas regulates companies selling home warranties and residential service contracts.

Rick Sanders, customer service manager for the New York-based National Home Protection, did not respond to interview requests.

After Spotlight reported on home warranties last month, several readers called the AJC to complain about problems with warranty firms — including National Home Protection.

“I love the concept of the home warranty,” said Ira Sherman of Lawrenceville. But he said he’s had non-stop problems with National Home Protection — beginning with the company balking at sending the “free” $50 Home Depot gift cards promised on the warranty company’s Web site. And Sherman said he’s had problems getting claims paid.

Even the American Arbitration Association has refused to do business with National Home Protection because the company “has not complied with our request to adhere to our policy regarding consumer claims,” according to an October 2007 letter Joe Phillips of Roswell received after he sought their help in a $500 dispute over an air conditioner problem.

Home Depot has repeatedly told National Home Protection to stop using the retailer’s orange logo in warranty sales promotions, said Home Depot spokeswoman Sarah Molinari. “We have no affiliation with this company,” she said.