Monday, September 17, 2007

Foreclosure Rescuers Halted in Texas

Foreclosure Assistance Solutions, LLC of Florida, and its principal operators, Herb Zerden and Adolfo Quintero, as well as J.W.W. Services, Inc. of California and owner John Woodruff were charged, by the Texas Attorney General, with operating an unlawful foreclosure rescue scam that targeted struggling Texas homeowners. As a result, the 408th District Court issued a temporary restraining order and froze assets belonging to three businessmen who organized the scheme. According to court documents, the defendants fraudulently advertised that they could save homeowners from imminent foreclosures.

Under the temporary restraining order, the defendants must stop falsely soliciting distressed homeowners immediately. Although the temporary restraining order only applies in Texas, homeowners nationwide are protected by the state’s asset freeze.

“Foreclosure Assistance Solutions preyed upon vulnerable homeowners who fell behind on their mortgage payments,” said Attorney General Abbott. “Today’s restraining order and asset freeze should put an end to an unlawful scheme that attempts to profiteer from the mortgage crisis.”

Attorney General Abbott added: “Homeowners facing difficulty making their monthly mortgage payments should be wary of mortgage rescue scams. Schemes offering too-good-to-be-true solutions are usually just that. Texans who fall behind on their payments should contact their lender directly to work out a resolution.”

According to the Attorney General’s enforcement action, the defendants mailed cards and letters to homeowners whose mortgage payments were delinquent and thus facing foreclosure. Their correspondence with homeowners promised established relationships with mortgage companies and banks nationwide. As a result, they claimed, Foreclosure Assistance Solutions could stop the foreclosure process.

Homeowners who contacted Foreclosure Assistance Solutions were urged to sign a $1,200 contract immediately. Under the contract, Foreclosure Assistance Solutions strictly prohibited homeowners from contacting their lenders. After homeowners paid the fee, they rarely heard from the company’s representatives again. When homeowners repeatedly called the company for answers, they were ignored. As a result, many homeowners still lost their homes to foreclosure.

This action prohibits the defendants from making false representations to homeowners. Specifically, the company is prohibited from claiming that a home is at risk without providing proof of that risk. The court also ordered the defendants to stop offering assistance to homeowners without describing the alleged assistance.

The Office of the Attorney General’s petition states that Foreclosure Assistance Solutions deposited over $13 million in Bank of America accounts between 2005 and 2006. Most of those funds came from homeowners who faced foreclosure. That account and others are subject to today’s asset freeze.

The Attorney General seeks court-ordered restitution for homeowners who were harmed by the defendants’ acts, as well as civil penalties of up to $20,000 per violation of the Texas Deceptive Trade Practices Act. Additionally, the Attorney General requests up to $5,000 per violation for the defendants’ failure to register the business as one that conducts telephone solicitations.

The Office of the Attorney General is engaged in a variety of efforts involving residential mortgages. Last week, Attorney General Abbott launched the Texas Residential Mortgage Fraud Task Force, a partnership that involves key state regulatory agencies. The task force, established by House Bill 716, is required “to take a proactive stance towards tracking and prosecuting mortgage fraud and the perpetrators of mortgage fraud statewide.”

Earlier this year, Attorney General Abbott secured $21 million in restitution for Texas homeowners who were harmed by lending giant Ameriquest Mortgage Co. That case resolved allegations that the company and its affiliates did not clearly disclose certain terms to homeowners, including unpredictable adjustable rates.

Homeowners who believe they have been harmed by this or similar fraudulent businesses may call the Office of the Attorney General’s toll-free complaint line at (800) 252-8011 or file a complaint online at www.oag.state.tx.us.

mortgage fraud