Indiana Files 34th Suit This Year Against Foreclosure Consultants

Cracking down on foreclosure rescue scams this year has almost been a fulltime job for state officials across the country. In Indiana, Attorney General Greg Zoeller has filed what he says is his 34th lawsuit of the year against a foreclosure "consultant."

The suit was filed in Evansville, Ind., against Hope4Homes, Inc., a for-profit foreclosure consultant, claiming the company has been operating in Indiana illegally and has violated several state consumer protection laws.

Zoeller says Hope4Homes is located in California and is owned and operated by Mahan Abbasi, who is listed as a defendant in the suit.

Evansville residents Harold and Sharon Matthews paid Hope4Homes $1,800 to negotiate a home loan modification. According to the state's complaint, the Matthews were instructed by Hope4Homes to stop making payments on their mortgage while Hope4Homes negotiated a new loan.

The Matthews fell three months behind on their payments, which had been current, and new loan terms were not reached. Hope4Homes advertised a "100 percent Money Back Guarantee if we cannot achieve a loan modification for our clients," however no refund has been provided.

"So-called 'foreclosure consultants' are taking advantage of those who are facing desperate financial hardship and scamming them out of thousands of dollars when they are most vulnerable. They are operating illegally and this will not be tolerated in Indiana," Zoeller said.

$25,000 surety bond

 In Indiana, a foreclosure consultant or credit service organization must have a $25,000 surety bond registered with the Attorney General's office before demanding payment upfront before services are performed. The company's bond acts as an insurance policy for consumers in the event the company fails to perform the services and does not provide a refund. 

 HopeForHomes failed to meet those requirements and also did not register to do business in Indiana, Zoeller says.

 Consumer complaints against foreclosure consultants spiked in 2009 as the economy took its toll on the unemployed and homeowners who typically might ignore "too-good-to-be-true" promises. They were drawn to claims made on websites, late-night TV commercials and radio programs.

 The Attorney General's Homeowner Protection Unit is currently investigating more than 150 consumer complaints against foreclosure consultants. The majority of the complaints filed and the on-going investigations involve companies not located in Indiana.