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Foreclosure Relief Scams Continue To Plague MA

Saturday, March 09, 2013

 

Borrower beware in the Bay State. Attorney General Martha Coakley issued a new warning to the Commonwealth's consumers regarding scams that target distressed homeowners with the offer of foreclosure relief.

Coakley's office took separate actions against two financial companies and a law partnership, which alleged unfair and deceptive acts and practices in connection with foreclosure-related services, including the improper charging of advance fees. Under Mass. state law, consumers should not be charged advance fees on foreclosure-related services.

“We allege these defendants preyed on distressed homeowners, often requesting advanced payment in violation of the law,” Coakley said. “We continue to see many foreclosure and loan modification scams that prey upon borrowers who are desperately trying to save their homes. Homeowners should be aware of their rights and know that our office has resources available to help them.”

In the first action by the AG's office, a Brighton company and related law firm have agreed to shell out $20,000 in restitution to consumers and the state for allegedly charging illegal advance fees for loan modifications. According to papers filed on Wednesday in Suffolk Superior Court, iMod Corporation (iMod), and Lombardi and Stephenson, the affiliated law firm, charged Mass. residents advance fees for foreclosure-related services. In addition to restitution for consumers, the defendants have agreed to no longer charge consumers advance fees for foreclosure-related services, and will notify potential clients that free loan modification services are available.

Coakley's office pursued a second action against a Lawrence financial company and its owner, who have been sued for using the ongoing foreclosure crisis to prey on homeowners and dispense legal advice without a license. According to the lawsuit, filed in Suffolk Superior Court on Wednesday, Pinnacle Financial Consulting, LLC (Pinnacle), and its owner, Robert Burton, allegedly engaged in unfair or deceptive conduct while marketing, soliciting and providing loan modification, bankruptcy petition preparation and financial advising services. The allegations include misrepresenting to consumers the services they could provide, exaggerating the benefits of their services, charging unlawful advance fees, practicing law without a license, failing to take any action to provide the promised services after receiving payment, and refusing to provide refunds upon request. Defendants allegedly targeted minority and non-native English speakers desperate to save their homes from foreclosure. The AG’s Office has obtained a temporary restraining order prohibiting the defendants from dissipating or concealing assets and destroying records.

Back in 2007, the AG's office rolled out regulations that prohibited the solicitation or acceptance of advance fees in connection with foreclosure-related services or advertising services without disclosing exactly what is on offer to avoid foreclosure, as well as other unfair practices.

In light of these recent actions, the Attorney General’s Office offers the following advice for distressed homeowners:

  • If you are going to pay someone to help represent you in attempting to avoid foreclosure, it is ILLEGAL for them to demand or accept a fee in advance (with the exception of certain fees for legal services which may be charged by a licensed attorney in the limited circumstances of preparing and filing a bankruptcy or court proceedings to avoid foreclosure).
  • You should NEVER agree to any proposal where you are required to transfer title to your home to another party.
  • Do not ignore notices from the lender. And do not follow the advice of anyone who says that you should stop making payments - you will only get further in arrears, closer to foreclosure, and damage your credit rating.
  • Just because a party has information about your loan terms or your property does not mean that they are affiliated with your bank or a government program. That information can be obtained by various means, including through foreclosure filings. Be particularly careful not to share your personal information or credit information with someone whom you do not know.
  • Under law, the lender must provide you with a default notice and a 150-day "right-to-cure" period before they can foreclose on your home. Use this period to attempt to negotiate a loan modification with the lender.
  • If a foreclosure appears to be inevitable, speak with your lender about how much time you may have to find a new place to live, and consult with a social services agency in your community about assistance with the transition. Homeowners facing foreclosure should know that there are several organizations available to help.
  • If you are facing foreclosure, or the foreclosure has already occurred, HomeCorps may be able to help by offering access to a variety of foreclosure prevention or recovery services. Contact the HomeCorps Hotline at 617-573-5333. 
 

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