California AG Continues Assault On Loan Mod Rackets; Exposes Outfit Said To Be A "Well-Appointed Boiler Room" Operation Holding Itself Out As Law Firm

In Los Angeles, California, Legal Newsline reports on H.E. Servicing Inc., a loan modification company that was sued last week jointly by the Federal Trade Commission and the Attorneys General for the states of California and Missouri . The outfit is accused of using aggressive telemarketing tactics to swindle homeowners out of thousands of dollars, and is briefly described below in the following excerpt from a report prepared by a court-appointed receiver:

• A court appointed receiver said the following: "Even if most of the deceptive sales practices could be cured, this is not a lawful advance fee loan modification business. It is not operated and managed by a lawyer or a properly licensed DRE broker. It is a phone sales operation selling unlicensed loan modification services with more than 80 percent of its clients residing outside of California. I see this business as a high-pressure, cash-up-front telephone sales business targeting distressed homeowners. The Sales Department is essentially a well-appointed telephone boiler room with phone cubicles for 44 sales people- 'counselors'- and separate offices or stations for 3 on-site managers."

• The company had about 60 employees who screened 500 calls per day, in a twelve hour shift. Commission for a fully paid sale was approximately $450 with an extra $25 when consumer paid by debit or wire transfer. Sales people told homeowners that the company successfully helped 10,000 homeowners, when in reality of the 2,960 loan modifications filed only 311 were completed.

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• Homeowners are said to have believed they were hiring a law firm but in reality they were hiring a money-making machine, the attorney general's office said. In the first 6 months of 2009 they had a net income of $4.5 million.

For the story, see Brown sues loan modification firm.

For more from the California AG on this company, see:

• Press release: Brown Exposes Inner Workings of Loan Modification Boiler Room,
• Preliminary Report of Temporary Receiver: FTC, The People of the State of California, and The State of Missouri v. U.S. Foreclosure Relief Corp., et al.