Foreclosure scam ring busted

LOS ANGELES
November 4, 2008 9:03am


Three Southern California residents have been arrested, accused of being part of a foreclosure scam ring, says California Attorney General Edmund Brown Jr. Two others are being sought.



“It’s appalling how these scammers took advantage of desperate homeowners and ripped them off for thousands of dollars,” says Mr. Brown. “Our campaign against mortgage scams masquerading as foreclosure assistance will continue and even intensify.” 



The Attorney General’s Office has filed a 39-count complaint that includes multiple grand theft, money laundering and conspiracy charges against the suspects. 



The arrests came after an investigation into First Gov, also operating as Foreclosure Prevention Services, uncovered that the company was soliciting hundreds of homeowners with mail flyers offering to help them stop the foreclosure process on their homes. The scammers falsely told homeowners that they would renegotiate their mortgages, reduce monthly payments, and transfer any delinquent loan amounts to the renegotiated principle, Mr. Brown says.

The company demanded an up-front fee, ranging from $1,500 to $5,000, to participate in the loan-modification program. The company also told the victims to stop any mortgage payments or communications with their lender, claiming they would interfere with the company’s effort to negotiate the loan modification. 



When victims complained that they were still receiving delinquency or foreclosure notices from their lenders, fraud-ring members told the victims that the mortgage loans had been renegotiated, but the lenders needed a “good faith” payment to secure the new accounts, investigators say.

Homeowners made payments to accounts under business names such as “Reinstatement Department” or “Resolution Department” that made it appear as if the payment had been applied toward the loan.

Bank records indicate that more than $700,000 was stolen from homeowners who fell victim to this scheme. 





California homeowners should be aware the fraud ring’s flyer is still being circulated, the attorney general’s office says.

The flyer is printed on goldenrod-colored paper in a yellow envelope. Occasionally, the contact name and number that appear on the bottom are changed. A copy of the flyer and mailing envelope are attached. 



“Loan-modification scams are becoming more and more prevalent across the country, particularly in California,” Mr. Brown says. “California homeowners should be aware of the warning signs of foreclosure scams, so they don’t fall victim to these cynical schemes.” 



Homeowners considering paying for foreclosure-assistance services, such as loan modification, should beware of anyone who tells them not to contact their lender or charges an upfront fee, Mr. Brown says. It’s unlawful for companies that promise to help consumers in foreclosure to collect any money from them before they've done what was promised. Also, consumers should remember that they may not transfer title on their property to avoid foreclosure without the consent of their lender.