Tuesday, November 25, 2008

Illinois AG Sues 7 Mortgage Rescue Companies

Seven new lawsuits against so-called mortgage “rescue” companies have been filed. The following defendants were named in the lawsuits:

National Foreclosure Counseling Services, 7954 Baymeadows Way, Jacksonville, Fla.;

Foreclosure Solutions, 488 Pine Street, Burlington, Wis.;

Homestead Protection Services, 151 Southhall Lane, Maitland, Fla.;

Home Foreclosure Solutions, 17550 South Williamsburg Drive, Plainfield, Ill;

Foreclosure Experts, 220 S. State Street, Chicago, Ill.

Mason Capital Group, 18375 Ventura Blvd., Tarzana, Ca.

StopMyForeclosure.net, 3914 Abbotsford Road, Rockford, Ill.

In each of the lawsuits, the Illinois Attorney General Madigan alleges that con artists targeted homeowners who have fallen behind on their mortgage payments and promised that for an upfront fee, the scammers could negotiate with the mortgage lenders to reduced the payments and save their homes. However, according to Madigan’s complaints, these “consultants” collected the upfront fees, they failed to negotiate or perform any services on behalf of the homeowners, leaving consumers at risk of losing their home to foreclosure.

This tactic violates Illinois’ Mortgage Rescue Fraud Act, which prohibits mortgage rescue companies from requiring payment from consumers prior to completing all the terms of a rescue contract. The law also requires rescue businesses to fully disclose homeowner the exact terms and nature of the proposed rescue services and the homeowner’s right to cancel the contract. With these new filings, Madigan has brought lawsuits against 22 mortgage rescue fraud companies.

In each suit, the Attorney General is seeking a permanent injunction preventing the defendants from engaging in mortgage rescue. Madigan is also asking the courts to award restitution to consumers and to order each defendant to pay a civil penalty of $50,000, additional penalties of $50,000 for each act committed with intent to defraud an additional $10,000 for each act committed against a senior citizen, and costs for investigation and prosecution of the cases.

Madigan urged consumers to use caution when seeking help if they are at risk of losing their homes and to seek reputable sources for assistance. “Consumers need to resist offers of a ‘rescue,’” Madigan said. “These scam artists prey on desperate homeowners who are struggling to save their homes. I urge consumer avoid ‘rescue’ offers and, instead, reach out to trusted sources for help. My office assists homeowners attempting to avoid foreclosure. Anyone looking for help should call us immediately.”

Homeowners Should Watch Out For “Title Taking” Schemes

As she urged homeowners to avoid falling prey to mortgage rescue fraud, Madigan the opportunity to outline one type of rescue fraud scheme. In “title taking” scheme con artists convince homeowners to sign over the title of their home. The original owners then make “rent payments” to the rescue fraud scammer based on the promise that the scam artist will sign the home back over to the original owner at a later date after the home value increases and/or the homeowner’s credit is repaired. Usually, con artist is long gone before the victim realizes they’ve lost both their home and the equity that they had established over the time that they owned the home.

“This is especially devastating to older homeowners who often have their entire life savings wrapped up in their home’s equity,” said Madigan.

Homeowners Should Make the Call To Find Reputable Help

Madigan reminded Illinoisans not to wait for a rescue fraud scheme to happen to them.  “You do not have to be a victim,” she said. “There are a lot of reputable resources available, free of charge, and I urge homeowners to reach out for help.”

To prevent homeowners in crisis from losing their homes to foreclosure, Madigan urges them to immediately contact:

Attorney General Madigan’s Homeowners’ Referral Helpline at 1-866-544-7151 for guidance on avoiding mortgage foreclosure; A HUD-certified housing counselor for assistance in working out a solution with the lender (Madigan’s office can provide names and numbers for these counselors); and Their mortgage company, whose contact information is found on their month mortgage statement.

Madigan also directed homeowners to her Web site at http://www.IllinoisAttorneyGeneral.gov, to access her Mortgage Rescue Fraud Brochure and her Illinois Mortgage Lending Guide resource manual containing step-by-step instructions for those struggling to make loan payments and a list of HUD-certified counseling agencies that offer default counseling services. Homeowners who do not have easy access to the Internet should call the Attorney General’s Helpline, to quickly receive the guide or the brochure by mail.

Assistant Attorneys General Jennifer Franklin, Michelle Garcia, Junko Minami, Elizab Phalen, Rebecca Pruitt and Kimberly Slider are handling these cases for Attorney General Madigan’s Consumer Fraud Bureau.

mortgage fraud