Prosecutors Target Sham Loan Fixers

(AP)  Prosecutors nationwide filed 189 legal actions Wednesday against loan modification consultants accused of bilking homeowners who are desperate to make their mortgage payments more affordable.

The lawsuits and cease-and-desist orders announced by Federal Trade Commission Chairman Jon Leibowitz and California Attorney General Edmund G. Brown were part of a nationwide sweep of alleged sham consultants conducted by the federal agency and 23 states.

In Colorado, Attorney General John Suthers announced Wednesday that seven loan modification companies agreed not to do business there until they follow state laws.

Brown said the lawsuits his office filed in Orange and Los Angeles counties include allegations against five companies and their subsidiaries and staff members. In all, 21 individuals and 14 companies were named.

Authorities said they also arrested a Newport Beach man Tuesday who was accused of using the names of the Department of Housing and Urban Development and other government agencies as part of his business.

The lawsuits seek millions of dollars in civil penalties, restitution for victims and a permanent injunction to keep the companies and the defendants from offering mortgage-relief services, Brown said.

"The loan modification industry is teeming with confidence men and charlatans who rip off desperate homeowners facing foreclosure," he said. "Despite firm promises and money-back guarantees, these scam artists pocketed thousands of dollars from each victim and didn't provide an ounce of relief."

One defendant, Irvine-based U.S. Homeowners Assistance, is accused of collecting up to $3,500 each from dozens of borrowers in danger of losing their homes.

The suit says one victim had her signature forged and financial information falsified on documents filed with her lender.

Another company, Orange-based U.S. Foreclosure Relief Corp., collected more than $4.4 million from borrowers during a nine-month period, but failed in most instances to provide any services and avoided responding to consumers' inquiries, the officials said.

"These con artists see the high foreclosure rates as an opportunity to prey on people in distress," Leibowitz said. "They promise to rescue homeowners in troubled financial waters, but after they take their money they throw them an anchor instead of a lifeline."

Leibowitz said the FTC was working on rules that would prohibit a mortgage modification service from accepting upfront payments. He said he hoped to have the regulations in place by the end of this year.

Also named in the lawsuits are Home Relief Services LLC, with offices in Irvine, Newport Beach and Anaheim; RMR Group Loss Mitigation, which has offices in Newport Beach, Orange, Huntington Beach, Corona and Fresno; and Los Angeles-based United First Inc.

A voicemail message seeking comment was left Wednesday at the offices of U.S. Homeowners Assistance. Calls to the other companies led to messages saying the phone numbers were no longer in service.

[SecureLawCenter]

This is why people should only contact a licensed attorney to represent them.

[SusanStoHelit]

These companies either act as if they are part of the government, the bank, or are lawyers who will help you pressure the often very uncooperative banks into letting you refinance. When you're about to lose your house, the bank won't respond to your calls (they've been pretty awful, more interested in foreclosure than in refinancing even for those who could afford their homes with a simple refinance) - I can see how people can be taken in. I've gotten plenty of calls from these people - and I'm not in any trouble with my mortgage.

[whitemale08]

Had Obama passed Lyndon Larouche's HPBA(Home Owners Bank Protection Act) we would not be in this mess.

The bill required that no one would be evicted from their home until the monetary system was replaced.

The bill also protected small community chartered banks from BIG FAILED ZOMBIE so-called investment banks like Goldman Sucks.

[SamThornton]

These are the folks who advertise their "services" on broadcast and cable TV, including CBS. Although generally one should treat any TV advertisement as a tissue of lies, it seems to me that the networks and cable companies ought to have some responsibility for allowing outright confidence gamesters access to their audiences. Maybe the FCC should require greater due diligence from broadcasters and Congress reign in the cable operators.

[jack20083]

I don't understand this one. If the bank or the servicer for the bank see a homeowner that is in default, why won't they have something setup up for this type of program instead of outside companies cheating the homeowners more and putting them deeper in a hole of no return. It's going to take a very long time for these people to recover from this lost. We still have too much fraud going on in the banking industry. I think more heads at the top need to go to jail in order for the small ones to stop. They look at each others as petty criminals but when the top goes to jail, the story is treated much differently.

[formrusmcsgt]

These folks exploited the fact that anyone foolish enough to buy a home they can't afford or not save for a rainy day is probably foolish enough to be taken.