Bay State Regulator Goes Undercover In Effort To Bag Illegal Loan Modification Rackets "Saturating The Airwaves" With Upfront Fee Come-Ons

In Boston, Massachusetts, the Boston Herald reports:

• More than half of “foreclosure-prevention” companies that heavily advertise on local radio or other media allegedly demand upfront fees that Massachusetts law might prohibit, the state Office of Consumer Affairs says. “It’s really outrageous and it’s really despicable,” said Undersecretary of Consumer Affairs Barbara Anthony, whose office recently conducted an undercover probe of such firms.

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• Consumer Affairs staffer posing as a homeowner seeking a mortgage “modification” contacted 13 foreclosure-prevention firms that ran ads on WBZ-AM (1030), cable TV’s Travel Channel or Google.com. Five firms never responded, but six of eight that did allegedly told the tester he’d have to pay $500 to $750 up front.
• That’s despite a state law that bans soliciting or accepting “an advance fee in connection with offering, arranging or providing foreclosure-related services,” although exceptions exist for some services provided by lawyers, lenders or mortgage brokers.
• Anthony said she plans to refer the six firms — Creative Loan Modification, HomeRecovery.org, Massachusetts Home Loan Modification Center, Mass Home Relief, National Mortgage Help Center and US Mortgage Relief — to Attorney General Martha Coakley for further investigation.
• The consumer-affairs chief said she ordered the undercover tests after getting fed up hearing the ads on her car radio. “I would practically go off the road sometimes listening to this stuff and calling the office to say: ‘Get this (advertiser’s) name down before I forget it,’” she said. “The ads on the radio are frankly terrible, and they’re saturating the airwaves.”

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• Hub lawyer Richard Ravosa of the Massachusetts Loan Modification Center said he charges up to a $2,500 advance retainer, but said that’s to counsel homeowners about filing for bankruptcy.
• However, Anthony countered that her undercover tester specifically asked all the companies for help modifying a mortgage, not for assistance filing a lawsuit or declaring bankruptcy. “The regulation (does not include) a blanket exemption for attorneys,” said Anthony, a lawyer herself.

For the story, see State raises red flags over ‘foreclosure-prevention’ companies.