Indictments Galore: Foreclosure Relief and Mortgage Modification Scams Squashings
Tuesday, August 5, 2014 -
Justin Fitzhugh - Nations Lending Corporation -
On July 23rd, 2014 the CFPB announced lawsuits again 3 companies and individuals who scammed troubled borrowers with promises of foreclosure prevention and loan modifications. On the same date, the FTC announced charges against six other companies for mortgage modification and foreclosure reversal misrepresentations. These companies violated Regulation O, also know as the Mortgage Assistance Relief Services, MARS; this rule bans mortgage foreclosure rescue and loan modification services COLLECTING FEES until homeowners have an acceptable written offer from their lender or servicer. I am still surprised by companies or individuals who break the law in this manner. It is so clear to me that this is no long term success, and rather a shortcut to hell, that I wonder why some companies and individuals DONT THINK, or if they do they UNDERESTIMATE herd determination, and dare to go this way. The CFPB and FTC actions were accompanied by 32 actions of 15 different States attorneys
Jessica Rich, Director of the FTCs Bureau of Consumer Protection said: Mortgage relief schemes like these target people who are already having financial problems and, all too often, inflict even further harm on them.... Were determined to stop operations that illegally charge up-front mortgage relief fees or make empty mortgage relief promises. ,Since 2008, the FTC has brought 48 actions against companies who defrauded borrowers with foreclosure prevention and loan modifications promises.
Companies prosecuted by the CFPB include:
- Clausen & Cobb Management Company, owners Alfred Clausen and Joshua Cobb, and Stephen Siringoringo and his Siringoringo Law Firm (California): the company charged retainer fees ranging from $1,995 to $3,500 in addition to monthly fees of $495 offering borrowers they could get loan modifications for borrowers. Not only the CFPB, even consumers themselves voiced the companies lack of ethics in yelp: http://www.yelp.com/biz/siringoringo-law-firm-upland
- The Mortgage Law Group and the Consumer First Legal Group: the CFPB alleges the company collected over $19 million dollars in fees from 10,000 distressed borrowers in illegal advanced fees for loan modification services. Named company principals include Thomas Macey, Jeffrey Aleman, Jason Searns, and Harold Stafford.
- Hoffman Law Group (Florida): the CFP alleges the company collected over $5 million dollars in upfront fees for an so=called class law-suit that would get plaintiffs the right for loan modifications or foreclosure relief. The company charged upfront $6,000 and $4495 monthly maintenance fees, but later would fail to return phone calls and/or emails from payors. The Florida States Attorney issued a restraining order, and the companys assets are frozen.
Companies prosecuted by the FTC include:
- Danielson Law Group: asked consumers to pay between $500 - $3,900 to get an attorney to help negotiate with the lender. Victims were told such attorneys either had a special relationship with lender, or could make strong arguments based on a mortgage analysis report generated by a proprietary software program, or had the ability to get 100%v debt relief. Furthermore, the company would urge troubled borrowers to stop their monthly payments and promise a refund if unable to deliver the promise. The FTC alleges the company has received more than $35 million from this operation.
- FMC Counseling Services, Inc. (Florida): claimed affiliation to the Federal Governments program HAMP, Making Home Affordable Program. The company used various Federal Agencies and Program logos to imply affiliation, and promise borrowers they could significantly reduce their monthly payments. Furthermore, they asked consumers stop communication with the lender, and submit all monthly payments to them. The FTC estimates the company collected more than $600,000 of mortgage payments. the U.S. District's Attorney has frozen Jonathan L. Herbert assets.
- Lanier Law (Florida): promoted itself with claims of above 85% success rate in a loan modification. The company would ask borrowers for an advance payment between $1,000 to $4,000.00 or a monthly fee of $500. The company would ask consumer to stop monthly payment to the lender while their modification was processed. Aside from MARS violation, the FTC charged the company with Do Not Call violations. Company assets are frozen.
- Mortgage Relief Advocates (California): claimed the company either claimed good relations with lenders or supposed violations in TLA which would come out through a forensic audit that could trigger a loan revision and modification, or the reversal of foreclosures. The company charged $1,000 to $3,2000 in advanced payments. The FTC requested a temporary restraining order.
- Home Relief Foundation (Texas): the company claimed an affiliation to attorneys, Federal Programs, industry knowledge, and relationship with lenders afforded the company the ability to lower consumer monthly payment and interest rates. The company charged fees ranging from $500 - $4,000, and the FTC claims they collected over half a million dollars. the company marketed its services through the websites: homerelieffoundation.org, ghardinlaw.com, and patlonglaw.com Companys asset are frozen
- CD Capital Investments (California): the company claimed affiliation to President Obama administrations HAMP program, to other government agencies, or to the consumers lender or servicer. They claimed they could reduce the consumers mortgage rate, payment, or principal. The company urged victims to stop mortgage payments and communication with the lender. The FTC alleges the company collected over $1 million asking victims to pay fees of $495 to process the application, and $399 for post-application monitoring.
Consumers may want third party help to negotiate a mortgage modification or prevent foreclosure. In these cases, your lender may require you to submit authorization for this third party help. This is possible, and the authorization may be exactly like this, or similar to this form:http://files.consumerfinance.gov/f/201407_cfpb_handout_allowing-a-third-party-to-work-with-your-mortgage-company.pdf
The CFPB listed red flags that signal potential scams:
- ask for upfront payment (this is actually prohibited by MARS, a.k.a regulation O)
- claims that a modification is guaranteed
- request for immediate payment
The CFPB Published an information pamphlet that helps borrowers identify and think about legal help foreclosure rescue offers:http://files.consumerfinance.gov/f/201407_cfpb_handout_real-legal-help-or-foreclosure-scam.pdf
Here, consumers who dont qualify for loan modification programs can find helpful information about government resources: http://www.consumerfinance.gov/askcfpb/278/what-if-i-do-not-qualify-for-a-loan-modification-programs-or-any-other-help.html
If you think you are a victim of mortgage fraud, a foreclosure rescue scam, or a modificaiton scam, here you can submit a complaint to the Consumer Financial Protection Bureau: https://help.consumerfinance.gov/app/mortgage/ask
For the rest of my peers in the mortgage industry, I ask you, lets follow the green brick road, b/c today, breaking the law or violating regulations doesnt pay off. Furthermore, we hurt the landscape of our industry b/c abuses prompt more regulations, more restrictions, and if you ask me, more expenses in compliance software, consulting, training and the works.
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