Monday, December 15, 2008

Restraining Order Filed Against Mortgage Broker

David Coleman, a Methuen, Massachusetts mortgage broker who allegedly preyed upon financially distressed homeowners by representing himself to be attorney and a bankruptcy expert who offered to file bankruptcy petitions to save consumers’ homes from foreclosure has had a temporary restraining order filed against him by Massachusetts Attorney General Martha Coakley.  The temporary restraining order prohibits Coleman, his company Mortgage Finders of New England and his employees from contacting individuals to offer foreclosure related services or assisting individuals with filing for bankruptcy.  As part of its lawsuit, the Attorney General’s Office is also seeking a permanent injunction against Coleman, restitution for consumers, civil penalties and attorney’s fees.

According to the complaint, filed in Essex Superior Court, Coleman would target vulnerable homeowners on the brink of foreclosure by combing newspapers for victims’ contact information in foreclosure notices. He would then allegedly make unsolicited calls to the homeowners where he would offer to save their homes from foreclosure by assisting them in filing for bankruptcy in exchange for a $1,000 cash fee upfront. The complaint further states that Coleman held himself out to consumers as a bankruptcy expert and an attorney, even though he does not hold a license to practice law in Massachusetts or in any other state. Homeowners would meet Coleman at the Bankruptcy Courts located in Boston or Worcester and offer unauthorized legal advice and assistance in connection with the filing of bankruptcy petitions. After convincing the homeowners to file for bankruptcy, Coleman would decide under which Chapter of the Bankruptcy Code to file for bankruptcy and allegedly filled out the petitions without consulting homeowners. In many instances, the bankruptcy petitions were deficient and dismissed because they were incomplete or lacked the proper information.  Homeowners allege that when they attempted to contact Coleman about these deficiencies, he was either not reachable or, if reached, he brushed off consumers’ concerns.

This is the first lawsuit the Attorney General’s Office has filed alleging violations of the regulations it promulgated in 2007 that regulate foreclosure-related services. The complaint specifically alleges that Coleman violated the Attorney General’s regulations by taking an advance fee for foreclosure-related services and for advertising foreclosure related services without conspicuously disclosing the precise goods and services offered. Coleman also allegedly violated the regulations by failing to describe precisely how he would delay the foreclosure or address a default.  Additionally, the complaint alleges that Coleman violated regulations that govern mortgage broker conduct by making false and misleading statements to consumers and in his advertisements.

“Due to the bad advice Mr. Coleman allegedly gave these consumers, the foreclosures on their homes could still proceed despite the fact that the homeowners paid hundreds of dollars to Coleman for services that they thought would allow them to avoid foreclosure and save their homes,” said Attorney General Coakley. “This case is just one example of why the regulations we put into place last year to regulate foreclosure-related services were needed.”

A preliminary injunction hearing is scheduled for December 16, 2008, in Essex Superior Court in Lawrence, Massachusetts at 2:00 p.m.

mortgage fraud