Virginia Feds Bag Operator Of Alleged Mortgage Elimination Racket Resulting In $10M+ In Losses

From the Office of the U.S. Attorney (Alexandria, Virginia):

• A federal grand jury [] indicted Linda Sadr, 51, of Manassas, Va., for her alleged involvement in a “mortgage elimination” scheme that caused more than $10 million in losses.

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• According to the federal indictment, from 2004 through 2008, Sadr is accused of marketing a scheme known as a “Mortgage Elimination Program.” Sadr allegedly falsely represented to potential homeowner clients that lenders were acting illegally with regard to refinanced mortgages and that she could obtain a discharge of newly refinanced loans because of the lenders’ illegal actions.

• Sadr allegedly proposed that she, acting through her businesses, would represent homeowner clients and challenge the lenders for their purportedly illegal actions, and any monetary settlements obtained from successful challenges against the lenders would be applied against the balances due on the refinanced mortgages, thereby eliminating the mortgages.(1)

• In general, those homeowner clients with sufficient equity in their homes who participated in the Mortgage Elimination Program were allegedly required to refinance their mortgages with maximum cash-out refinance loans.

• Subsequent to settlement, individual homeowner clients were required to pay 10 to 15 percent of the proceeds of the cash-out refinance loan as a fee to Sadr or to one of the entities she controlled. Clients were also required to give Sadr the equivalent of 12 to 18 months of advance mortgage payments to be held in “escrow,” an amount that Sadr allegedly claimed she would use to pay the refinanced mortgages for the homeowner clients until their mortgages were eliminated.

For more, see Manassas Woman Indicted for Alleged Mortgage Elimination Scheme.

(1) Presumably, the purported challenges to the mortgages were somehow based on alleged violations of the Federal Truth In Lending Act and the Home Ownership and Equity Protection Act (and, possibly, any applicable Virginia consumer lending statute).