States in general have stepped up efforts this year against companies targeting distressed homeowners with mortgage modification or foreclosure “rescue” services.
In Illinois, Attorney General Lisa Madigan this week filed lawsuits against four Chicago area companies and licensed attorneys for operating what she said are fraudulent mortgage rescue or loan modification schemes that illegally charged consumers as much as $375,000 for little, if any, help to stay in their homes and avoid foreclosure.
Madigan’s actions are aimed at a new development in the industry – the hiring of lawyers to take part in the operations. The state's 2006 Mortgage Rescue Fraud Act allows lawyers to collect upfront fees from homeowners for mortgage rescue services in the course of legitimate legal work.
Lawyers do little, suit alleges
While the businesses use attorneys as the face of their operations in order to charge upfront fees, Madigan claims that, in reality, the attorneys performed no legal work on behalf of homeowners. Madigan said their failure to provide legal services left consumers at an even greater risk of losing their homes to foreclosure.
“By now, we’ve all seen the ads from so-called ‘loan mod consultants’ or ‘mortgage rescuers,’ claiming they’ll save your house from foreclosure,” Madigan said. “Please know these operations are run by con artists who have started to use attorneys as sham fronts. These operators are scamming families out of thousands of dollars and actually making foreclosure more likely.”
The suit filed in Cook County Circuit Court names ZeTrust Legal Services, of Chicago; Legal Modification Network LLC, based in Woodridge; Loan Litigators International LLC, a now defunct company that operated out of Lombard; and Exelpol Management & Consulting Inc, a dissolved corporation based in Schaumburg.
Task force
Madigan has formed a task force with a number of local, state and federal agencies to target this emerging trend among lawyers. Among the organizations in the task force are the Federal Trade Commission, the Illinois Department of Financial and Professional Regulation, the Cook County State’s Attorney’s Office, the City of Chicago and the Better Business Bureau.
Task force member Illinois Department of Financial and Professional Regulation has investigated almost 200 companies since December 2009, for illegal or unlicensed activities involving loan modifications and other financial transactions, leading to fines in excess of $600,000.
Oliver Max Gardner III (Thu, 29 Sep 2011 14:17:57 +0000): We need to expand this to really go after the mortgage servicers and their lawyers.