Foreclosure Consultants Are The New Swindlers, Coming From The Ranks Of Unethical Mortgage Brokers In Many Cases

15 01 2009

Until recently, defrauders tried to bilk homeowners out of the equity in their homes. Now, with that equity often dried up, they are presenting themselves as “foreclosure rescue companies” that charge upfront fees to modify loans but often do nothing to stave off foreclosure.

“That’s all I’ve been doing for the last year,” said Angela Rosenau, a deputy attorney general in California, citing more than 300 complaints about fraudulent companies last year, not counting those made to local prosecutors.

 

http://www.nytimes.com/2009/01/15/us/15mortgage.html?_r=1&ref=us&pagewanted=print

As home values across the country continue to plummet, the authorities say a new breed of swindler is preying on the tens of thousands of homeowners desperate to avoid foreclosure.

 

The Federal Trade Commission brought lawsuits last year against five companies representing 20,000 customers, and state and local prosecutors have brought dozens more. In Florida, Attorney General Bill McCollum recently sued a company that he said had more than 600 victims.

“There’s no way for the consumer to sort out the legitimate companies,” said Mr. McCollum, who added that he had limited resources to fight what he called “a sheer volume question.”

The companies under suspicion typically charge an upfront fee of up to $3,000 to help borrowers get lower rates on their mortgages from their lenders. But borrowers often cannot afford the fees, the service can be bogus and, in the worst cases, the homeowners lose their chance to renegotiate with their bank or to file for bankruptcy protection because of the time wasted.

There are companies that provide legitimate foreclosure services, but the industry is largely unregulated, making it difficult for homeowners to separate the good from the bad. Some of the fraudulent companies — often run by former real estate agents or mortgage brokers — are local; others are national. Many have official-looking Web sites that suggest that the companies have government affiliations and give homeowners a false sense of security.

“That’s all I’ve been doing for the last year,” said Angela Rosenau, a deputy attorney general in California, citing more than 300 complaints about fraudulent companies last year, not counting those made to local prosecutors.

Experiences like those of Maria Martinez, of Stockton, Calif., are playing out with greater frequency across the country, the authorities say. Ms. Martinez struggled to pay her mortgage last summer. She had no shortage of people offering to help. Fliers for rescue companies filled her mailbox.

At a seminar for troubled borrowers near her home, one company offered a service that promised just what Ms. Martinez needed: for $1,000, the company said it would negotiate with her mortgage company to lower her interest rate.

“I was desperate,” said Ms. Martinez, 57, a clerk at the San Joaquin County Jail. She made an initial payment of $500 and paid another $500 a few weeks later.

Now the house is in foreclosure, and Ms. Martinez is waiting for the sheriff to evict her. She cannot reach the man she paid to modify her loan.

In California and 20 other states, including New York, companies are prohibited from collecting payment until they have completed their services, something Ms. Martinez did not know. In Colorado, the attorney general’s office has closed 15 mortgage rescue companies that charged fees up front.

Carol McClelland, 46, fell into foreclosure on her Chicago home when she lost her job as a waitress in two restaurants. She received a call from a company called Foreclosure Solutions Experts, promising to stop the foreclosure and lower her mortgage payments to around $550 a month, from $1,056, Miss McClelland said.

“She showed me other clients’ files, and they were paying $650 a month,” she said. The charge for the service was $1,300, which Miss McClelland paid in installments, borrowing the money from friends and relatives.

When the loan servicer notified her that the house was still in foreclosure, Miss McClelland said, the representative from Foreclosure Solutions Experts told her that the matter had been taken care of.

“She told me everything was all settled; I don’t have to worry about anything,” Miss McClelland said. “All I had to worry about was getting the rest of the money to her.”

 





Beware New Fraud From “Foreclosure Consultants” Who Collect Fees Illegally And Don’t Perform

19 11 2008

“…the seven companies collected upfront fees and then failed to negotiate or perform any services on behalf of the homeowners, leaving them at risk of losing their homes…”

“…the company promised a “money-back guarentee (sic)” on its web site and that it has a 97 percent success rate and a “combined 25 years of real estate, financial and lending experience.” By this evening it had removed the misspelled “guarentee.”

http://www.rrstar.com/news/x1720658976/Attorney-general-sues-Rockford-company-for-mortgage-fraud 

A mortgage-rescue company with a Rockford office was one of seven sued by Illinois Attorney General Lisa Madigan today.

Madigan’s office filed the lawsuit in Winnebago County Circuit Court against StopMyForeclosure.net, which appears to have a location on the 3900 block of Abbotsford Road, for violating the state’s Illinois Mortgage Rescue Fraud Act. The act prohibits companies from requiring payment from consumers before completing all terms of a rescue contract.

Madigan claims the seven companies collected upfront fees and then failed to negotiate or perform any services on behalf of the homeowners, leaving them at risk of losing their homes.

A record wave of foreclosures locally and nationally have pushed the economy to the brink of recession. As foreclosure actions have increased, so have the number of companies promising help to homeowners behind on payments.

Madigan has sued 22 companies, including those sued today, so far this year for violating the state mortgage rescue fraud act.

“There are so many of these companies, and most have no idea that the state has a law that restricts what they do,” said Bob Campbell, executive director of the Rockford Affordable Housing Coalition, a U.S. Housing and Urban Development-certified housing-assistance organization. “Since they don’t know that the law is in place, most of these for-profit companies end up violating the law.”

Early today, the company promised a “money-back guarentee (sic)” on its web site and that it has a 97 percent success rate and a “combined 25 years of real estate, financial and lending experience.” By this evening it had removed the misspelled “guarentee.”

The site also displays two seals of approval by the Better Business Bureau.

Dennis Horton, executive director of the Rockford office of the Better Business Bureau, said he believed both BBB symbols are pirated.

“This company is not registered with the BBB anywhere in the United States,” Horton said.

Rhonda Poshka, who said she is owner of the Queen Oak, Ariz.-based company, said the company is registered with the Arizona Better Business Bureau but not accredited.