Mortgage FACS Corporation and Enlightened LLC are the subjects of two lawsuits for allegedly taking advantage of struggling homeowners by falsly claiming that an audit of the homeowner’s mortgage would identify errors resulting in a reduction in monthly mortgage payments.
The lawsuits seek to crack down on a new form of “mortgage rescue fraud,” whereby alleged fraudsters prey on struggling homeowners and promise loan assistance while actually adding to their targets’ financial hardship.
In this new scam, a fairly new variation of mortgage rescue fraud, con artists falsely claim that an audit of a homeowner’s mortgage will identify errors and can reduce a homeowner’s monthly mortgage payments. In some cases, scammers specifically targeted struggling homeowners and convinced them that the audit would reduce their mortgage as a way to help them avoid foreclosure and stay in their homes.
Mortgage FACS Corporation and Enlightened LLC allegedly posed as professionals who can help consumers by completing so-called “mortgage loan audits.” In exchange for illegal upfront fees, the scammers promised to review whether lenders complied with state and federal lending regulations and to identify errors that could help the homeowner’s case for reducing their monthly payment or modifying their loan. In reality, many victims of the scam paid the upfront fee but received no assistance.
The lawsuit against Mortgage FACS alleged a scam that not only baited homeowners with the promise of discovering errors in their mortgage, but marketed its “forensic mortgage loan audits” as a way for consumers to obtain a loan modification to lower their monthly payments and even avoid foreclosure.
According to the lawsuit, Mortgage FACS deliberately targeted homeowners who were behind on their mortgage payments or already facing foreclosure, diverting money these homeowners could have used to obtain legitimate help to stay in their homes.
Victims of the scam paid hundreds of dollars for the audits, but some saw no work come of the alleged audits. The scam targeted Chicago area homeowners living in Cook, DuPage and Will counties.
A.M.T. Auditing Services LLC
The lawsuit against Enlightened LLC, which operated as A.M.T. Auditing Services LLC and the Mortgage Auditing Program, alleges the operation boasted that their mortgage audits would discover savings for consumers from misapplied payments and interest rates, though few, if any, received money back from the audit. While AMT claimed it would refund consumers if no errors were found during their review, the company made it nearly impossible to obtain a refund.
AMT and its employees had no expertise in mortgages and instead relied on third-party software to discover mortgage errors. Consumers who signed up for audits were also unaware the company had also signed them up for a mandatory trial with their software without their consent. Consumers later discovered monthly charges for the software on their bank or credit card statements.
In both suits, the court is asked to ban the companies from operating in Illinois, void any pending contracts with consumers and provide restitution. The lawsuits also ask the court to assess penalties based on violations of the Illinois Consumer Fraud and Deceptive Business Practices Act.
Attorney General Lisa Madigan filed the lawsuits.
Attorney General Madigan’s office has filed more lawsuits over the illegal collection of upfront fees by mortgage rescue operations than any other state. Madigan urges homeowners struggling to stay in their homes to contact her Homeowner Helpline, (866) 544-7151, for guidance on avoiding foreclosure and to seek help from a HUD-certified housing counselor to work out a solution with their lenders.
Assistant Attorneys General Kaitlin Caruso, Paul A. Isaac and Junko Minami are handling the cases for Madigan’s Consumer Fraud Bureau.
“These schemes put a new twist on the mortgage rescue fraud scam but generate the same result by charging struggling homeowners huge sums of money for nothing in return,” Madigan said. “An audit can almost never be used to negotiate a lower rate with your lender. The best way homeowners can work to secure a loan modification is through a legitimate HUD-certified housing counselor, which provides services for free.”