South Florida foreclosure rescue firms ordered to shut down

A Palm Beach Circuit Court judge granted an emergency ruling that four mortgage modification operations who are currently under investigation by the Attorney General's Office must cease doing business. The companies are: FHA All Day.Com, Safety Financial Services, Housing Assistance Law Center and Housing Assistance Now.

Two of the companies named above have been shut down. However, when investigators showed up at the businesses, they found employees shredding documents. Investigators reported that among the about to be shredded documents was personal information belonging to alleged clients of the firm.

State regulators have launched 81 investigations against mortgage modification operations, including 14 where lawsuits have been filed. Officials said investigators are looking at 86 additional companies and that the numbers may grow. The Federal Trade Commission also has launched a major crackdown on foreclosure rescue firms with its Operation Loan Lies, announcing 189 actions in 25 states earlier this month.

Florida Foreclosure scams: how low can they go?

Four more South Florida mortgage loan modification companies have been sued this week for violations of the Florida Foreclosure Rescue Fraud Prevention Act. FHA All Day.Com, Inc., Safety Financial Services, Inc., Housing Assistance Law Center PA and Housing Assistance Now, Inc. were named in the suit, as well as FHA All Day and Safety Financial owner Jason Vitulano. To date, the Attorney Generals office received over 300 complaints about the Delray Beach and Boca Raton based businesses.

The four related companies allegedly targeted homeowners with telemarketing calls, using President Obama's voice, charged upfront "document review fees" and "legal costs".

Vitulano reportedly told the Sun Sentinel that said he only had rented space to Housing Assistance Law Center and denied any connection with Housing Assistance Now. He and the Attorney General's Office had discussed settling for $15,000 in investigative costs and $20,000 in restitution regarding FHA earlier this year but Vitulano said negotiations broke down when he refused to also permanently abandon the mortgage modification business.

While the Attorney General's office appears to be vigorously pursuing companies who violated the Foreclosure Fraud Prevention Act, it appears that these actions alone are not enough to prevent the widespread fraud and resultant damage from companies and individuals who seek to profit illegally from the misfortune of Florida homeowners. Until the public is sufficietly educated about the foreclosure fraud law, thus able to avoid paying large fees to companies who will do little or nothing to assist them, it appears that the fraud will continue.

Former mortgage brokers profit from foreclosures by offering loan modification services

Many people are earning less these days as a direct or indirect result of the subprime mortgage crisis. But not those who had a hand in issuing the loans that caused it. Former mortgage brokers, many of whom arranged for dubious and questionable loans for riskier borrowers, are now making money as loan consultants. In essence, these former brokers are offering to assist borrowers now facing foreclosure as a result of the loans they should not have obtained in the first place. It should come as no surprise that these loan modification services are no more helpful to borrowers than the advice given to them in the first place.

In Los Angeles, former high risk broker Jack Sousanna reorganized his office under the name Federal Loan Modification Law Center. The new business venture charged large up front "retainer" fees, as much as $3500, and, according to a New York Times investigation, often produced little result for its clients. FedMod, the company who ran the modification center, is now defending itself in a lawsuit brought by the Federal Trade Commission.

As discussed in a previous post, Florida passed the Foreclosure Fraud Prevention Act to guard against such questionable business dealings. In Florida, foreclosure assistance firms or "rescue consultants"- defined as anyone who is not a lawyer, cannot charge upfront fees and must complete work as promised before collecting a fee.

But there is a relatively easy way to circumvent this law. A foreclosure consultant firm (which can be any set of individuals with little or no experience in law or real estate) can bring in an attorney partner and claim that they are operating as a law firm, as FedMod attempted to do. While this may ultimately land the attorney participating in such a scheme in considerable trouble, not to mention facing the loss of his/her license to practice law, that will be little consolation to anyone who gets caught up in such a scheme, and who may lose their home as a result of trusting an unscrupulous company masquerading as a law firm.

Foreclosure consulting firms sued for fraud

In the last post, I discussed the Attorney Generals attempts to prevent fraud against homeowners facing foreclosure. The following are several companies under investigation for allegedly fraudulent practices:

National Foreclosure Counseling Services Corp: The Attorney General's Economic Crimes Division determined that National Foreclosure Counseling Services Corp sent mailings to homeowners facing foreclosure implying that they were a government agency, claiming that the recipients had been selected for special programs and stating that this was the last attempt to assist the homeowner before foreclosure. The Attorney General has filed suit, claiming that National Foreclosure charged up front fees and failed to perform services following payment.

Keep Your Property Inc: The Attorney General's investigation revealed that Keep Your Property promised homeowners facing foreclosure that it would prevent foreclosure, negotiate a lower interest rate with the lender and lower the principal balance of the mortgage. Keep Your Property Inc also charged a large upfront fee and it was reported that the company made no contact with the lenders.

Mortgage Crisis Solutions LLC: The Miami based firm is accused of charging large up front fees, not providing services and improperly advertising legal services and counsel.

Homeowners facing foreclosure should be familiar with the Florida foreclosure fraud law and know that non-attorney firms and "foreclosure consultants" cannot charge upfront fees. Non-lawyers cannot provide legal advice either. And no one can guarantee that there services will "stop" a foreclosure. Homeowners should be suspicious of any of these tactics.

If you have been sued for foreclosure, it is highly recommended that you consult with an attorney and discuss your rights and options.

Foreclosure rescue scams: beware of consultants, counsellors and other means of fraud

Facing foreclosure is scary enough, but those Floridians seeking to avoid foreclosure have to be wary of foreclosure scams as well. There are numerous "foreclosure assistance" and "foreclosure counselling firms" who promise to stop foreclosure, only to take money and give nothing in return.

About a year ago, the Florida foreclosure fraud protection act became law. In a nutshell, the law requires any non-lawyer offering to help stop, delay or avoid foreclosure to provide a written agreement and to accept payment only when all services have been provided. The law is designed to deter those "foreclosure consultants" who, with little or no credentials, take money from unsuspecting homeowners and simply disappear.

The act will not stop scam artists from trying to take money from people facing foreclosure. However, homeowners who know their rights are better able to avoid such scams.

Be wary of anyone who calls unsolicited offering to "stop foreclosure" or any advertisement promising something similar.

The Florida attorney general's website offers more useful information on avoiding foreclosure scams as well as a list of companies currently under investigation. For more information visit www.myfloridalegal.com