Brown Orders Mortgage Foreclosure Consultants to Post $100,000 Bond or Face Prosecution
Los Angeles - Threatening possible criminal and civil prosecution,
Attorney General Edmund G. Brown Jr. today ordered 386 mortgage
foreclosure consultants to post $100,000 bonds and register with his
office.
He also ordered more than two dozen companies to justify suspicious
loan modification claims made in "slick advertising," online and
through the mail.
"Hoping to lower their mortgage payments, thousands of homeowners
were instead duped by slick advertising and money-back guarantees,"
Brown said. "The time for accountability is at hand, and this rogue
industry must clean itself up or face legal action," Brown added.
Brown also unveiled a new website ( http://ag.ca.gov/loanmod)
that provides homeowners tips to avoid loan modification fraud, allows
them to determine if a company is registered with his office and makes
it easier to file complaints.
Brown today joined with the California Department of Real Estate
and the State Bar of California in a new partnership to combat loan
modification and foreclosure fraud.
Brown has sent letters directing 386 mortgage foreclosure
consultants to register with his office within 10 days and post
$100,000 bond, or demonstrate why they are not required to. If the
consultants are required to register and have failed to do so, they are
subject to criminal penalties of up to a year in jail and fines ranging
from $1,000 to $25,000 per violation. Eighty-five of these consultants
are based in Los Angeles County, 133 in Orange County, 47 in the Inland
Empire, 68 in San Diego County and seven in the Bay Area.
Additionally, Brown sent letters today demanding that 27 loan
consultants substantiate suspect claims made on the internet and in
direct mail advertising. For instance:
· Brown directed Irsfeld, Irsfeld & Younger, LLP as corporate
counsel for JL Richman, doing business as Home Retention Programs of
Glendale, Calif. to substantiate its claims including: "Our team has 10
years of success in negotiating 90% of all mortgage loan modification
requests to a successful outcome….For the modification requests we
accept, our modification failure rate is less than 1%."
· Brown directed 21st Century Real Estate Investment Corporation of
Rancho Cucamonga to substantiate its written solicitations including:
"[y]our proposed loan modification is a 30 year fixed/3.5% interest
rate with a monthly payment of $495. Your monthly savings is $705.
Total savings over a 30-year period is $253,800. . . . Your first
payment will be negotiated to begin March 2009 - payable to your
current lender for $495."
· Brown directed Mortgage Modification Solutions of Irvine to
substantiate its claims including: "Our services are due to the FEDERAL
MANDATE which makes it mandatory for mortgagees, upon the default of a
single family mortgage, to engage in loss mitigation actions" and "Why
$3995.00 is nothing compared to what you can accomplish in return? #1-
It's 10 times more expensive to hire a CPA or a Financial Advisor to
exclusively analyze & Research your financial affairs to create a
plan acceptable to the Banking standards."
· Brown directed Alliance Law Center of San Diego to substantiate
its letters to consumers stating: "Final Notice: 3/11/09, our review of
certain information indicates you may be a victim of federal disclosure
violations and/or predatory lending violations, therefore your loan may
be invalid, and you may qualify for a loan modification saving you
thousands of dollars."
The State Bar of California today announced that it has obtained
resignations from two lawyers and filed charges against a third for
their loan modification activities. The State Bar's special team on
loan modification complaints continues to investigate more than four
hundred active complaints from consumers about lawyers' roles in loan
modification scams.
Brown has made it a top priority to combat loan modification fraud.
As part of a nationwide sweep last month, Brown filed suits against 21
individuals and 14 companies who ripped off thousands of homeowners
seeking mortgage relief. In total, Brown has sought court orders to
shut down 32 companies and has brought criminal charges and obtained
lengthy prison sentences for deceptive loan modification consultants.
Copies of the letters and a list of consultants who have not registered are attached.
