State Files Suits Against Foreclosure Consultants – Loan Scams

Did you know that California attorneys are not allowed to collect any upfront fees from a homeowner for services rendered for a loan modification (or whatever other term they may want to use) until after the services have been performed?  Ref: California Civil Code, section 2944.6(a) passed Oct. 11, 2009.

However, they may still collect that fee whether you were granted a loan modification by the lender or not.  Read the following article to see what happens when they decide to scam homeowners.

Indiana Attorney General Greg Zoeller filed three lawsuits Monday against out-of-state foreclosure consultants accused of ripping off Northeast Indiana residents. One of the lawsuits was filed in Allen County.

Consultants Demand Upfront Fees

Foreclosure consultants often promise homeowners they can help lower home-loan payments or stop foreclosure by negotiating with lenders. Zoeller said many of these for-profit companies skirt state law by demanding upfront payments from customers and failing to render the promised services or provide refunds.

Zoeller has filed a lawsuit against Mortgage Auditing Solutions of California for allegedly entering into a contract with a Fort Wayne resident to lower his or her loan payments and taking off with a $495 upfront payment.

Loan Scams with Empty Promises

“Homeowners who are struggling to pay their mortgage along with higher heating bills need to know that illegitimate foreclosure consultants may target you with empty promises of saving your home,” Zoeller said. “My office’s Homeowner Protection Unit continues to diligently pursue these types of businesses and use all available resources to obtain restitution for victims who are already in difficult financial situations.”

Mortgage Auditing Solutions is accused of violating the Credit Services Organization Act, Mortgage Rescue Protection Fraud Act, Deceptive Consumer Sales Act and the Home Loan Practices Act.


Separate lawsuits were also filed today in Whitley and Adams counties against Mortgage Solutions Clearing House, Inc., of Florida and Federal Loan Modification Law Center, LLP, of California. These companies are accused of taking $1,995 total in upfront payments from two victims and not obtaining the promised home loan modifications. Defendants are accused of violating the Mortgage Rescue Protection Fraud Act and the Home Loan Practices Act.

All three companies did not register $25,000 surety bonds with the Attorney General’s Office which are required before services can be performed, including collecting money up front. Zoeller is seeking injunctions against the companies, restitution for the victims, civil penalties and investigative costs.

Distressed homeowners at risk of foreclosure need not pay a large fee to a for-profit company, when advice on avoiding foreclosure is available for free from the Indiana Foreclosure Prevention Network at 1.877.GET.HOPE. Hoosiers who believe they have been a victim of a foreclosure consultant scam can file a complaint with the Attorney General’s Consumer Protection Division at or by calling 1.800.382.5516.

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