California AG Orders 386 Loan Modification Outfits To Immediately Register & Post $100K Bond Or Face Prosecution

From the Office of the California Attorney General:

• Threatening possible criminal and civil prosecution, Attorney General Edmund G. Brown Jr. [Wednesday] ordered 386 mortgage foreclosure consultants to post $100,000 bonds and register with his office. He also ordered more than two dozen companies to justify suspicious loan modification claims made in "slick advertising," online and through the mail. "Hoping to lower their mortgage payments, thousands of homeowners were instead duped by slick advertising and money-back guarantees," Brown said. "The time for accountability is at hand, and this rogue industry must clean itself up or face legal action," Brown added. Brown also unveiled a new website ( http://ag.ca.gov/loanmod) that provides homeowners tips to avoid loan modification fraud, allows them to determine if a company is registered with his office and makes it easier to file complaints.

• Brown [Wednesday] joined with the California Department of Real Estate and the State Bar of California in a new partnership to combat loan modification and foreclosure fraud. Brown has sent letters directing 386 mortgage foreclosure consultants to register with his office within 10 days and post $100,000 bond, or demonstrate why they are not required to. If the consultants are required to register and have failed to do so, they are subject to criminal penalties of up to a year in jail and fines ranging from $1,000 to $25,000 per violation. [...] Additionally, Brown sent letters [Wednesday] demanding that 27 loan consultants substantiate suspect claims made on the internet and in direct mail advertising.

For the entire press release, see Brown Orders Mortgage Foreclosure Consultants to Post $100,000 Bond or Face Prosecution.

For copies of the seemingly idiotic claims that 27 of these loan modification rackets are making in their advertising to the general public in marketing their services, along with the California AG's formal written demand under Section 17508 of the California Business and Professions Code (relating to prohibitions against false advertising) to each of these outfits to substantiate their claims within 20 days, see California AG's August 12, 2009 "Prove It" Letters.

For more from the California Attorney General on this matter:

• List of 386 companies that have been ordered to register their companies with the state and post $100K bond,
• Sample letter sent to the 386 firms.