Monday, July 27, 2015

Head Of Northern Ohio Loan Modification Racket Gets 33 Months For Illegally Clipping 90+ Homeowners Out Of $286K; Used Heavily-Weighted One-Sided Agreements In His Favor, Allowing For Bogus Reasons To Void Contract To Purportedly Justify Stiffing Victims Out Of Promised Refunds

From the Office of the U.S. Attorney (Cleveland, Ohio):
  • A North Royalton man was sentenced to nearly three years in prison for operating a loan-modification scheme in which he defrauded more than 90 homeowners struggling to make their mortgage payments out of $286,000, said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, and Stephen D. Anthony, Special Agent in Charge of the FBI’s Cleveland office.

    Robert Walker, age 44, was sentenced ot 33 months in prison after previously pleading guilty to five counts of fraud.

    Walker convinced homeowners on the verge of foreclosure to pay himself and his company an up-front fee of at least $1,995 but then did little or no work to get a loan modification for customers. He also promised customers that, if not modification was obtained, 80 percent of the fee would be reimbursed. But Walker never intended to reimburse those fees and when he failed to obtain a loan modification, he regularly refused the promised reimbursement, according to court documents.

    According to court documents:

    Walker incorporated and owned The Modification Group, or TMG, where he supervised and directed the employees. TMG did business under various names, including The Modification Group 4, U.S. Modification Group and Loan Modification Group, among others. It had offices at various times in Broadview Heights, Middleburg Heights, Bedford, Parma Heights, Ravenna and Cleveland.

    ***

    Walker, through TMG, required consumers to pay $1,995 or 1 percent of the mortgage balance, whichever was greater, up front, before TMG worked on obtaining a loan modification.

    Walker directed his employees at TMG to solicit and accept clients for whom he knew TMG would not be able to obtain loan modifications on terms that that customers could realistically afford.

    Through TMG, he required customers to enter into written service agreements that were substantially one-sided, in favor of TMG. He also directed employees to tell potential customers that TMG would refund 80 percent of the fee paid if TMG failed to obtain a loan modification, when Walker had no intention of refunding the fee.

    Walker, through TMG, prohibited customers from contacting their lending institution and directed customers to send any and all correspondence from their lenders to TMG.

    TMG often failed to obtain any loan modification for the customer. In some cases, TMG never contacted its customer’s lending institution to discuss a modification even though the customer had paid substantial monies to Walker and TMG to do so.

    Walker and his employees at TMG often created illegitimate reasons that they claimed voided TMG’s contract to avoid refunding customer’s fees. For example, TMG often told customers that they had not provided requested documents quickly enough, and terminated their contracts without a refund.

    Walker, through TMG, told customers who attempted to cancel their contracts that doing so was a breach that voided their right to a refund. He often refused to issue a refund for customers for whom TMG had failed to obtain a loan modification unless the customer filed a complaint with a consumer protection agency.

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