SOUTH SAN FRANCISCO, Calif. - Naira Costa, a 27-year-old housekeeper, met her husband at Message of Peace, an evangelical church that is a spiritual and social haven for Brazilians in the Bay Area. When the couple considered buying a house a few years ago, the church's head deacon, Soario Santos, ministered to that need, too.

Mr. Santos, a fellow Brazilian, served the Pentecostal church on nights and weekends. During the day, he worked as a loan officer at a mortgage brokerage owned by a Brazilian immigrant. Mr. Santos and other church officers also working at the same real-estate business routinely approached churchgoers to encourage them to buy homes.

Weak credit and low wages weren't barriers, Ms. Costa recalls. "He told us that a house easily would appreciate $100,000 in a year," enabling the owner to refinance, says Ms. Costa. "We trusted him implicitly. Everyone at the church was buying houses from him."

Today, Ms. Costa and other former Message of Peace parishioners claim that Mr. Santos was a key part of a mostly Brazilian ring that allegedly conspired to defraud people by persuading them to buy homes they couldn't afford. Ms. Costa, the housekeeper, secured a $713,000 sub-prime mortgage. In another instance, a Brazilian baby sitter borrowed $495,000. Now, the home buyers are beset by foreclosures and additional stains on their already-tainted credit.

Various immigrant groups have long been subject to financial scams. The subprime-mortgage boom offered new avenues for mischief - by real-estate professionals as well as home shoppers. Potential buyers, especially those paying high rents, became embroiled in schemes to take advantage of banks' easy-money policies.

Housing counselors say they have seen this type of activity across the U.S. Among the vulnerable groups: Latinos throughout California, Caribbean and African borrowers in the New York area, and Russian immigrants in Philadelphia.

"Immigrants with limited English just trusted what people from their country told them," says Katrina Vizinau, a counselor at Housing Development Corp., a nonprofit organization that educates homeowners in the East Bay area.

A lawsuit filed by Ms. Costa and several others in California superior court alleges that a network of real-estate agents, loan officers and mortgage brokers targeted "vulnerable immigrants," falsified financial records, forged documents and misled the home buyers about the real costs of their mortgages. The suit seeks unspecified damages for the plaintiffs.

The 15 defendants deny any wrongdoing. A formal response to the complaint, made by Mr. Santos and four other defendants, claims, among other things, that the plaintiffs committed fraud and made misrepresentations in their mortgage applications.

A key defendant - Gabriela Tigges, owner of a local Re/Max real-estate office as well as a mortgage-brokering business - doesn't hide her contempt for the plaintiffs. She brands them as "ignorants" who wanted to make a quick buck buying and abandoning homes, then sued for more. "I am trapped in the intrigue of a telenovela," she says, referring to Brazil's saucy soap operas.

An attorney for Mr. Santos and Ms. Tigges, who were business associates, declined to comment on the case further.

Mr. Santos drives a black Mercedes, wears a gold watch and owns more than one property himself. Now a pastor at the San Jose, Calif., branch of Message of Peace, he recently bellowed from the pulpit: "Forgive us, Lord, if we put faith in some extra dollars ... when true faith lies in you."

A portly man in his forties, Mr. Santos came to the U.S. in the 1990s and started out delivering newspapers and driving a taxi. By night, he studied to become a pastor. During the day, he held down a job as a mortgage-loan officer, a position that, unlike that of real-estate broker, didn't require a license.

In a local Christian Portuguese-language magazine, "Vem Pra Vida," or "Come to Life," a dapper Mr. Santos stands in the center of an advertisement. "Financing up to 100 percent. Zero down payment. No proof of income necessary," reads the copy.

He learned the business from Ms. Tigges. Her Re/Max real-estate agency and sister mortgage brokerage in the nearby town of El Sobrante had prospered by tapping immigrant customers. Ms. Tigges, who moved to the U.S. from Brazil about 20 years ago, ranked among the top 6 percent of all Re/Max agents in 2004 by total value of commissions earned. In March 2006 she was the company's eighth-best producer in California.

"I like to hire pastors," Ms. Tigges said recently in her office. "They are trusted, and churches are very important to the communities."

In summer of 2005, Ms. Costa and her husband, Samir Abdelnur, agreed with Mr. Santos to start house hunting. The first thing he did was give Ms. Costa several blank forms to sign, she says.

Mr. Abdelnur, a taxi driver at the time, earned $4,000 a month, twice as much as his wife. But his credit was weaker, so he says that Mr. Santos advised them to buy a house in Ms. Costa's name. Her FICO credit score at the time was 585, which placed her in the subprime range.

Mr. Santos introduced the couple to Suzel Serafim, a Brazilian real-estate agent. Ms. Costa says Ms. Serafim offered to add Ms. Costa's name to her personal credit-card account to help boost the buyer's credit score. When contacted for comment, Ms. Serafim confirmed that she had added Ms. Costa to her credit card. "I helped her," she said. (A spokesman for the National Association of Realtors, a trade group, says that such a practice amounts to misrepresentation.)

Ms. Costa's credit report from the time shows her as an authorized user of another person's credit card.

The couple says they told the agent and loan officer that they could afford a monthly mortgage payment of $3,500. Ms. Serafim and Mr. Santos steered the couple to Contra Costa County, across the bay from San Francisco. Ms. Costa and her husband chose a remodeled single-story, three-bedroom house in the town of Hercules. Mr. Santos said they would get a cash incentive at closing to help pay for repairs and any appliances they needed. Ms. Costa recalls him telling her, "Everyone who buys gets $20,000 back. I did."

But first, says Ms. Costa, the couple needed to find $5,000 to make a deposit on the house, listed at $688,000. Ms. Costa says she borrowed $3,000 from her father and another $2,000 from Ms. Serafim. Such assistance from a real-estate agent is improper, lawyers say, because it deceives the lender about the borrower's ability to afford the house.

Ms. Costa says she tried to back out a week later, when Ms. Serafim said they would need to offer more than $700,000 to get the house. But the couple decided to go ahead, says Ms. Costa, because Ms. Serafim said they would lose the deposit.

Mr. Santos handled the mortgage application and never discussed financing options, Ms. Costa says. On the day she was to close escrow, Ms. Costa learned that she would be receiving far less than the $20,000 in cash that Mr. Santos had promised. Ms. Costa says she again wanted to walk away from the deal.

But after a telephone exchange with Mr. Santos, who wasn't present at the title company's office, she signed the loan documents. As part of the closing settlement, she was refunded most of her deposit, and she says she also received about $8,000 from the seller for repairs.

The latter payment would later become a contentious point in the lawsuit. In recent sworn testimony, Ms. Costa acknowledged that she had prepared a bogus receipt for repairs in order to get the cash back. She said that the brokers urged her to do so and that she now regrets making the receipt.

Ms. Costa also maintains that no one ever explained to her that she was actually signing on to two loans to cover 100 percent of the home price: a $570,400 primary mortgage and a $142,600 so-called piggyback loan for the remaining 20 percent of the house's price. The primary adjustable-rate mortgage had an initial rate of 7.15 percent for two years, after which it could eventually rise to as high as 13.65 percent. Both loans were risky because they entailed huge final installments - so-called balloon payments - totaling nearly $500,000.

Ms. Costa says she didn't understand the actual costs involved, although she admits she didn't read all the loan documents.

The couple moved into the house in October 2005. They say they ended up spending most of the $8,000 on repairs and new appliances such as a refrigerator.

Then the first set of mortgage bills arrived: one for about $3,600 and another for nearly $1,400. The total was almost the equivalent of the couple's combined monthly income. A property-tax bill followed. "I panicked," recalls Ms. Costa, who says repeated calls to Mr. Santos went unanswered. At Sunday church services, she says, he avoided the couple. They quit the congregation.

Barely three weeks after moving into the house, the couple decided to abandon it and left without making any payments. Eventually, the house slipped into foreclosure.

About a month after their departure, Ms. Costa says, Mr. Santos called hurling threats. "I can prove you are the one who brought me fake papers," she recalls him telling her.

When Ms. Costa said she had done nothing wrong and would find a lawyer, she says he warned: "If the FBI or Immigration gets involved, you're done with because you're illegal."

Ms. Costa, who originally entered the U.S. as a teenager, had overstayed her tourist visa. Her husband was awaiting approval for a green card after being sponsored by his brother, a naturalized U.S. citizen.

During the call with Mr. Santos, Ms. Costa says she refused an offer of $5,000 from him in exchange for keeping quiet. She says his last words were "Get smart."

Ms. Costa turned to lawyer Daniel Iannitelli, whom she met through friends, for help. Her loan application, which the lawyer had obtained from lender WMC Mortgage Corp., included bogus claims and documents intended to qualify the housekeeper for a loan that was far beyond her means to pay. In sworn testimony, Ms. Costa said she had no knowledge of the fake documents and hadn't seen all the completed forms.

The loan application falsely stated that Ms. Costa was a "U.S. person" and earned $12,500 a month - six times her actual wages. Ms. Costa, who had given Mr. Santos her Bank of America statements, says she was shocked to see them altered to fabricate how long she had been a depositor and how much she held in assets. One checking-account statement, dated July 19, 2005, showed a balance of $50,180.33. Her actual statement from that period showed just $42.22 on hand.

WMC Mortgage, a unit of General Electric Co., declined to comment on specific loans. The company says it stopped doing business with Ms. Tigges's mortgage company in early 2006 because of concerns about the quality of the firm's loan applications.

Last spring, shortly after defendants in the lawsuit had been served, agents for Immigration and Customs Enforcement knocked on the door of Ms. Costa and Mr. Abdelnur's apartment at 6 a.m. The couple was placed in removal proceedings, with an immigration-court hearing set for June 7.

But on the day of the hearing, the judge abruptly dismissed the case, court documents show. People familiar with the situation say the case was closed because Ms. Costa and Mr. Abdelnur agreed to cooperate with a federal criminal investigation into some of the defendants in the civil lawsuit. The couple decline to comment on the matter.

At least one defendant in the civil lawsuit has fled to Brazil. Others are under scrutiny in an investigation by Immigration and Customs Enforcement, or ICE. Suspected crimes range from money laundering to visa fraud, including abuse of religious visas, according to people familiar with the matter.

An ICE spokeswoman declined to comment on specifics of the probe. In a written statement, the agency said: "ICE works aggressively to ensure that this type of criminal scheme involving fraud and exploitation does not go unchecked or unpunished."

In September, Ms. Costa was deposed for two days with Ms. Tigges and Mr. Santos present. The defendants' lawyer sought to undercut Ms. Costa's claim for damages by establishing that she didn't lose money on the house because she never made any mortgage payments.

Fernando Carvalho, the founder of Message of Peace, praises Mr. Santos as a "wonderful student" of religion and a person of integrity. "I haven't seen any proof he has done something illegal or against the word of God," he says.

Ms. Tigges is shifting out of real estate and into a new moneymaking venture: YTB International Inc., a multilevel-marketing enterprise to create online travel agencies.

In a largely deserted office that once hummed with 30 to 40 property and mortgage agents, Ms. Tigges lamented that the real-estate business is dead. The only growth in the sector, she said, is lawsuits.

Reprinted from The Wall Street Journal of Thursday, December 6, 2007.