Lawsuits filed against 21 people, 14 companies suspected in loan rescue scams [Updated]
The Federal Trade Commission and California Atty. Gen. Jerry Brown unveiled lawsuits today designed to shut down 14 Southern California companies and 21 people accused of running loan-modification scams that ripped off thousands of struggling homeowners looking to avoid foreclosure.
The lawsuits were announced as part of a nationwide crackdown on foreclosure rescue scams known as "Operation Loan Lies," which pairs the FTC with state and local authorities to go after fraudulent companies preying on homeowners desperate for mortgage relief.
Under the operation, 189 lawsuits, cease-and-desist orders and other legal actions have been filed in 20 states, FTC Chairman Jon Leibowitz announced at a morning press conference held with Brown in downtown Los Angeles.
Such fraudulent schemes are rampant in California, Leibowitz said.
"Part of the reason why we're out here today is because California consumers have been among the most hard hit and also because a lot of these malefactors are based in Orange County," Leibowitz said. "It's one of the hotbeds of mortgage scam activity."
Brown and the FTC are demanding millions in civil penalties, restitution for scammed homeowners and permanent injunctions to prevent the defendants and companies from offering mortgage-relief programs.
In documents filed in U.S. District Court in Los Angeles and Orange counties, Brown and the FTC allege that the California firms charged from $500 to $5,500 in upfront fees for loan modification services, often promising to help modify mortgages to make payments more affordable.
Firms named in the suits include:
- U.S. Homeowners Assistance, based in Irvine, and its executives Hakimullah "Sean" Sarpas and Zulmai Nazarzai. U.S. Homeowners Assistance also did business as Statewide Financial Group Inc.
- U.S. Foreclosure Relief Corp. and its legal affiliate, Adrian Pomery, based in the city of Orange
- Home Relief Services, with offices in Irvine, Newport Beach and Anaheim, and its legal affiliate, the Diener Law Firm
- RMR Group Loss Mitigation and its legal affiliates Shippey & Associates and Arthur Aldridge. RMR Group has offices in Newport Beach, Orange, Huntington Beach, Corona and Fresno
- United First Inc. and its lawyer affiliate, Mitchell Roth, based in Los Angeles.
Representatives for the accused companies and individuals weren't immediately available for comment.
[Updated at 11:55 a.m., July 16: An earlier version of this post described We Beat All Rates and U.S. Homeowners Preservation Center as alternate business names of U.S. Homeowners Assistance. Those two companies aren't affiliated with U.S. Homeowners Assistance and were sued separately.]
-- Nathan Olivarez-Giles
Great News! I love hearing about this, but what took so long? It seems like I have been hearing horror stories about loan modification for years. The question I have, is how many of these clowns were "attorney-based" as opposed to brokers with an advance fee agreement?
Posted by: larealtyreport | July 15, 2009 at 06:42 PM
If all 189 companies were fraudulent and just taking money and doing nothing then how did it take so long to crack down? Hint: They were not all fraudulent. The actually usually had a higher success rate then the non-profit loan mod companies (which still charge fees in many cases by the way). Once the other side comes out the Government is going to look pretty foolhardy to approach this in this manner.
Posted by: Mr. Man | July 16, 2009 at 11:15 AM
Why don't they mention the firms who are doing a good job getting loans modified. The bottom line, get rid of the scum !!
Posted by: Luke Powell | July 16, 2009 at 12:31 PM
All of these Loan Modification Companies making money off desperate homeowners who don't know they could have done it themeselves. You can get a FREE do it yourself kit from Free Loan Mod Kit and pay only for shipping. You can find more information at www.freeloanmodkit.org.
Posted by: James Doan | July 16, 2009 at 04:46 PM
WE WERE SCAMMED OUT OF OUR HOME AND NOW WE ARE HOMELESS. BUT THEN AGAIN THE SAME FIRM WE USED GOT MORE THE ONE FRIEND A GREAT DEAL. WHAT DO I DO? HOW CAN WE GET OUE MONEY BACK
Posted by: KATHYWZKA | July 16, 2009 at 06:06 PM
It's good to see that something is been done against the scammers!!!Let the justice be done!!!
Posted by: Jacob Christensen | July 24, 2009 at 12:10 PM
There are a lot of firms that are doing a great job and stopping foreclosures and reducing payments for people. Just like taxes, some people choose to do it themselves and some peole choose to have an accountant do it. Not everyone qualifies and people go screaming fraud when they don't qualify becasue they make too much or too little. The rules are hard to navigate and that's why people get professional help. Why do you think the bank wants to negotiate with the borrower directly? Does the borrower know what a good modification is? Does the borrower know how to submit the paperwork or make contact every two weeks in order to stay in line? The banks are flat out lying to their customers. Yes there are scams but the FTC is conducting a blanket crackdown with no proof. It is unconstitutional what they are doing. They are shutting down firms based on internet reports without verifying if they are real or not. Imagine getting thrown in jail based on what someone said without the police verifying if it was truthful. That is what the FTC is doing. Firms are presummed guilty and shut down until a court date. Meanwhile, the clients who's sale dates have been postponed are going to lose their homes because no one is working on their files.
Posted by: Dan | July 25, 2009 at 10:43 AM
Maybe the homeowners should have never bought a home to begin with.. if they cant afford to pay what they agreed to when they bought the house then its time to MOVE OUT and go RENT like they should be doing anyways///// what is all this crying about modify my loan I cant afford it bottom line move out because its a great time for us investors with money that can afford it to buy!!
Posted by: jmeezee | July 25, 2009 at 07:05 PM
The Obama team have detailed sensitive information they don't want us all to know about because it will start a riot.
Government know that Bankers should of been responsible in the first place, consumers are being suckered into something everyday and big brother is there to protect us. If banks continue to evict folks out of their home, break up families, our society will be in such deep crap that our great country will be third world. Let's continue to think selfishly,
live selfishly and guess what? No more democracy.
Anyone know what that's like?
Posted by: tammy | August 08, 2009 at 04:11 PM
If you are looking for a way to sort out loan mod companies go to www.getloanmodified.com. They provide a FREE service to homeowners that allows you to post your loan modification request anonymously for companies to bid on them. You can look for the vendors that meet your criteria and price. They also give you FREE worksheets to do the mod yourself if you do not choose any of the bids.
Posted by: Brian | August 12, 2009 at 06:39 PM