Complain about a product or service

California Puts Foreclosure Consultants On Notice

Attorney general threatens to prosecute 386 unregistered consultants

By Martin H. Bosworth
ConsumerAffairs.Com

August 12, 2009
Threatening possible criminal and civil prosecution, California Attorney General Edmund G. Brown Jr. today ordered 386 mortgage foreclosure consultants to post $100,000 bonds and register with his office.

He also ordered more than two dozen companies to justify suspicious loan modification claims made in "slick advertising," online and through the mail.

"There has been an unprecedented series of scams and exploitation in the state," Brown said at a press conference today. "Too many homeowners have been paying money in advance, because they were desperate, and were coming up with nothing."

"Hoping to lower their mortgage payments, thousands of homeowners were instead duped by slick advertising and money-back guarantees," Brown said. "The time for accountability is at hand, and this rogue industry must clean itself up or face legal action," Brown added.

Working in concert with the California Department of Real Estate (DRE) and the State Bar Association, Brown unveiled a new Web site that provides California homeowners with tips to avoid loan modification fraud, allows them to determine if a company is registered with his office and makes it easier to file complaints.

Attorney General Edmund G. Brown unveiling the new crackdown on foreclosure consultants. From left to right: Jeff Davi, head of the California Department of Real Estate, Brown, California State Bar Supervising Trial Counsel Suzan J. Anderson, and Los Angeles County firefighter Brian Batiste, who was victimized by a mortgage modification consultant. Photo by Martin H. Bosworth.

According to Brown, a total of 1,062 complaints against loan modification and foreclosure consultants have been filed with the Attorney General's office from January 2007 through July 2009. The office received 27 complaints in 2007, 163 in 2008, and 872 in 2009, an increase of 500 percent.

The agencies were sharing the complaints they received with each other and noticed a steady increase in allegations of mortgage modification fraud, said Robyn Smith, Supervising Deputy Attorney General, which led them to initiate a joint action against the consultants.

Additionally, Brown sent letters today demanding that 27 loan consultants substantiate suspect claims made on the internet and in direct mail advertising. For instance:

• Brown directed Irsfeld, Irsfeld & Younger, LLP of Glendale, Calif. to substantiate its claims including: "Our team has 10 years of success in negotiating 90% of all mortgage loan modification requests to a successful outcome...For the modification requests we accept, our modification failure rate is less than 1%."

• Brown directed 21st Century Real Estate Investment Corporation of Rancho Cucamonga to substantiate its written solicitations including: "[y]our proposed loan modification is a 30 year fixed/3.5% interest rate with a monthly payment of $495. Your monthly savings is $705. Total savings over a 30-year period is $253,800. . . . Your first payment will be negotiated to begin March 2009 - payable to your current lender for $495."

• Brown directed Mortgage Modification Solutions of Irvine to substantiate its claims including: "Our services are due to the FEDERAL MANDATE which makes it mandatory for mortgagees, upon the default of a single family mortgage, to engage in loss mitigation actions" and "Why $3995.00 is nothing compared to what you can accomplish in return? #1- It's 10 times more expensive to hire a CPA or a Financial Advisor to exclusively analyze & Research your financial affairs to create a plan acceptable to the Banking standards."

• Brown directed Alliance Law Center of San Diego to substantiate its letters to consumers stating: "Final Notice: 3/11/09, our review of certain information indicates you may be a victim of federal disclosure violations and/or predatory lending violations, therefore your loan may be invalid, and you may qualify for a loan modification saving you thousands of dollars."

Jeff Davi, head of the California DRE, said that the mortgage modification scams were an "abhorrent, terrible practice" that saw "unlicensed people doing business because the opportunity was there."

The State Bar of California, meanwhile, announced that it has obtained resignations from two lawyers and filed charges against a third for their loan modification activities. The State Bar's special team on loan modification complaints continues to investigate more than four hundred active complaints from consumers about lawyers' roles in loan modification scams.

Supervising Trial Counsel Suzan J. Anderson said that the State Bar has received hundreds of complaints this year alone, and that "this only seems to be the beginning."

Also speaking at the conference was Brian Batiste, a member of the Los Angeles County Fire Department who applied for mortgage modification assistance after his wife, a schoolteacher, lost her job and they had trouble paying the mortgage. Batiste said the company he spoke to was very receptive initially, but once he paid the upfront fee of $2,895, the company stopped returning his calls.

"Eventually my wife and I went down to the office and I threatened to act a fool and turn the place out if they wouldn't talk to me," Batiste said. When the company claimed they weren't getting his calls, he used his cell phone to call the company, seeing his number appear on their incoming call system, which was then promptly routed to voicemail.

Batiste was able to get assistance on his mortgage by dealing directly with the lender. Brown said that first and foremost, borrowers who are in trouble financially should talk to their lenders directly.

Brown also urged homeowners to contact his office or other state offices immediately if they were having problems with a loan modification company. "The sooner you contact us, the sooner we can work on getting some of your money back," Brown said.

As part of a nationwide sweep last month, Brown filed suits against 21 individuals and 14 companies who ripped off thousands of homeowners seeking mortgage relief. In total, Brown has sought court orders to shut down 32 companies and has brought criminal charges and obtained lengthy prison sentences for deceptive loan modification consultants.

The complete list of unregistered consultants released by Brown's office is available here (.pdf file).

Report Your Experience
If you've had a bad experience -- or a good one -- with a consumer product or service, we'd like to hear about it. All complaints are reviewed by class action attorneys and are considered for publication on our site. Knowledge is power! Help spread the word. File your consumer report now.

Share		Follow us on Twitter.

Back to the top |