Some 2,000 desperate homeowners who paid a lawyer thousands of dollars to file "frivolous and phony" lawsuits that didn't reduce a penny of mortgage debt for a single client are getting some relief.
Longtime Los Angeles attorney Mitchell Roth promised foreclosure relief through aggressive litigation, "but the frivolous and phony lawsuits he filed instead left 2,000 desperate homeowners in even greater debt," said California Attorney General Edmund G. Brown Jr. A $1.1 million judgment against Roth "prohibits him from ever again preying on new victims," Brown added.
In 2008, Roth joined with Nevada-based United First, Inc. and the company's owner, Paul Noe, to provide foreclosure relief services to homeowners struggling to pay their mortgages. Noe, who was previously convicted of wire fraud and the subject of a 2004 Department of Insurance Cease and Desist Order, operated the company and handled client solicitations, while Roth provided legal services.
Homeowners were told that if they worked with United First and hired Roth to pursue their cases in court, they could lower or eliminate their mortgage debt and save their homes.
Big fees, little action
United First charged homeowners some $1,800 in up-front fees, plus at least $1,250 each month, and 50 percent of the cash value of any settlement. If a homeowner's debt was eliminated altogether, the homeowner was required to pay United First 80 percent of the value of the home.
After collecting up-front fees, Roth filed lawsuits on behalf of homeowners, pushing a novel legal argument that a borrower's loan could be deemed invalid because the mortgages had been sold so many times on Wall Street that the lender could not demonstrate who owned it.
Once the lawsuit was filed, Roth did next to nothing to advance the case and often failed to make required court filings, respond to legal motions, comply with court deadlines or appear at court hearings. Instead, he tried to extend the lawsuits as long as possible to collect additional monthly fees from clients.
This approach did not generate a single victory in court and did not lower or eliminate the mortgage debt for a single one of the 2,000 homeowners who hired Roth and United First.
Restitution
Brown filed suit last July, alleging that Roth, Noe and United First engaged in unfair competition, made untrue and misleading statements and violated California's credit counseling and foreclosure consultant laws.
The settlement requires Roth to pay $1 million in restitution to defrauded homeowners plus $125,000 in penalties, and prohibits him from ever engaging in similar conduct in the future.
Homeowners who were defrauded by Roth and United First, or victimized by any other foreclosure rescue scam, should contact Brown's office at 1-800-952-5225 or file a complaint online.
Homeowners can also file a complaint against a lawyer, a legal specialist or a company purporting to operate as a law firm with the State Bar by calling 1-800-843-9053.
United First customers who are eligible for a refund will be contacted by mail.
By law, all individuals and businesses offering mortgage-foreclosure consulting, loan modification and foreclosure-assistance services must register with Brown's office and post a $100,000 bond. It is also illegal for loan modification consultants and businesses to charge up-front fees for their services.
