Attorney General Threatens “Slick” Loan Modification Companies

“Thousands of homeowners were…duped by slick advertising and money-back guarantees,” Brown said.

Threatening possible criminal and civil prosecution, Attorney General Jerry Brown Wednesday ordered 386 mortgage foreclosure consultants, mostly based in the Southland, to post $100,000 bonds and register with his office.

Brown also ordered more than two dozen companies to justify suspicious loan modification claims made in “slick advertising,” on-line 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 also unveiled a new Web site 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.

While making the announcement, Brown said he had 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.

In targeting mortgage foreclosure consultants, Brown said he had 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, Brown said.

Of these consultants, 85 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, Brown said.

Additionally, Brown sent letters demanding that 27 loan consultants substantiate suspect claims made on the Internet and in direct mail advertising.
 

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