During the go-go years of the real estate bubble, shady mortgage brokers [3] thrived, thanks to the sluggish response of regulators and law enforcement agencies. Amid the ruins of the crash, there’s a new boom attracting unscrupulous mortgage professionals: “Foreclosure rescue” companies promising — in exchange for a large up-front fee — to persuade lenders to modify desperate homeowners’ mortgages. And authorities are again finding themselves ill-equipped to deal with the deluge.
In a giant game of whack-a-mole, law enforcement agencies at all levels across the country have filed suit against 150 such companies, but they continue to proliferate, and the number of consumer complaints continues to rise.
“This is a very big scam,” says California Attorney General Jerry Brown. “They’re all over the place, and as soon as you get one, they migrate to somewhere else.”
The case of one particularly aggressive firm, 21st Century Legal Services, shows just how ineffective authorities’ moves against the companies often are.
Four states have sued 21st Century, and at least three more have open investigations. Over 150 consumers from more than 30 states have filed complaints against 21st Century with the Better Business Bureau. No active firm has more complaints.
Yet the company forges on. Operating under a new name, Fidelity National Legal Services, it continues to solicit consumers nationwide, even in states where authorities have won court injunctions.
Homeowners do not have to pay a company to negotiate on their behalf: they can always contact their mortgage servicer directly for a loan modification, at no cost. But consumers often find the process frustrating [4]. For those who want guidance, nonprofit housing counselors approved by the Department of Housing and Urban Development [5] will help for free.
Consumers should especially be wary of companies charging up-front fees or touting guarantees. The Illinois attorney general says that her office has yet to see any such company operate within the boundaries of state law.
Deception seems to be at the heart of the business model. Internal e-mails [6] from an Anaheim-based firm sued in July by the Federal Trade Commission alongside the states of California and Missouri reveal a boiler-room sales operation where management motivated its “counselors” with commissions and “Rolex races.”
When the company’s operations manager wrote that the firm ought to inform clients that it couldn’t stop foreclosure, a sales manager, Feisal Cortez, replied [6]: “If we say ‘WE DO NOT STOP FORECLOSURE’ we are going to lose 75% of our business. If they implement this verbage (sic) in customer service … excuse my language but WE’RE FUCKED!”
The ongoing suit charges that the company, US Foreclosure Relief, and eight associated firms deceived consumers. Steve Krongold, the lawyer for the firm’s owner, said there were “a couple errant rogue salespeople who lied in e-mails and on calls,” but that the company had been making progress in modifying its customers’ loans when a court order in the case this summer allowed authorities to take control of the company.
Real estate professionals and mortgage brokers are the driving force behind the boom. Indeed, some of the same brokers who stoked the housing boom are now making their living off homeowners stuck in the sort of toxic loans they peddled.
"The mortgage brokerage business dried up, and so the same loans that they went out and originated, they’re coming in to try and modify,” said Thomas McNamara, a former prosecutor appointed by the federal court to assess US Foreclosure Relief’s business.
Take the case of the Southern California-based 21st Century Legal Services, and its president, Andrea Ramirez.
In a lawsuit filed in federal court in California, former clients have accused Ramirez, then working as a mortgage broker, of fabricating documentation to support their application in 2006 for an adjustable-rate loan they couldn’t afford.
To read the original article click here
Other articles of interest...
Bankruptcy Judges, Justice Dept. Rip Mortgage Companies
Systemic abuse [1].” “Extraordinary incompetence [2].” “Reckless [3].”
Fed’s Strategy Reduces U.S. Bailout Pledges to $11.6 Trillion
The Federal Reserve decided to keep pumping $1.25 trillion of new money into the mortgage market to focus on rescuing the U.S. economy as the financial system revives and banks ask for less help.
How Many Modifications Has Your Mortgage Servicer Started?
Take a look...
Seven million strong foreclosure overhang to depress home prices
It seems all the positive housing sentiment is taking a turn for the worse again, thanks in part to a new report from Amherst Securities.
Subscribe to:
Post Comments (Atom)
Posts
No comments:
Post a Comment