Ohio Upfront Fee Foreclosure Rescue Operator Snags Another Target

In Salem, Ohio, WYTV Channel 33 reports:

• "I had the place almost paid off and I refinanced it because I wanted to make it nicer on the inside, now I'm gonna lose it. It's crazy, it's all crazy", says Richard Singer of Salem. After thirty years in their Salem home, Richard Singer and his family are facing foreclosure. A fixed income and additions to the house have him in over his head. Then in April, a letter came from a company called Foreclosure Solutions out of Cincinnati. All they needed was twelve hundred eight five dollars from Singer to help save his home. [...] Singer says the company rep who came to his home even prayed with him. Turns out he was just preying ON him. Both the money, and the company are nowhere to be found.

***

• Foreclosure Solutions is one of several companies sued by former Attorney General Marc Dann in August 2007 for violating consumer laws and lying to Ohioans with false promises of saving their homes from foreclosure. Just this week, a letter came from the company telling Singer his house would go up for a Sheriff's Sale. Singer called the Attorney General's office to file a complaint, and warns other Ohioans not to fall into the same trap.

For the story, see Foreclosure Scam Finds Another Victim.

For the civil lawsuits alleging Foreclosure Solutions of screwing over homeowners facing foreclosure, see:

• Ohio: State of Ohio v. Foreclosure Solutions L.L.C. (or go here for Ohio AG press release),
• Ohio: Dorn, et al. vs. Foreclosure Solutions, LLC, et al. (or go here for Legal Aid Society of Southwest Ohio, LLC Press Release),
• Federal Trade Commission: FTC v. Foreclosure Solutions, LLC, and Timothy A. Buckley (or go here for FTC press release),
• Illinois: Illinois AG Sues Ohio Company For Mortgage Rescue Fraud (Madigan Alleges Company Takes Advantage of Homeowners on the Verge of Losing their Homes to Foreclosure).

Ohio AG Conducts Foreclosure Rescue Sweep; Hauls Six Upfront Fee Operators Into Court

From the Ohio Attorney General:

• "Attorney General Marc Dann today filed lawsuits against 6 different companies for preying on Ohioans with false promises of saving their homes from foreclosure. The attorney general’s investigations produced evidence that these companies may have violated at least five different consumer laws: Consumer Sales Practices Act (CSPA), Telephone Solicitation Sales Act (TSSA), Home Solicitation Sales Act (HSSA), Debt Adjusters Act (DAA), and the Credit Services Organization Act (CSOA). “Today, along with filing lawsuits against 6 foreclosure rescue firms, I am issuing a warning to companies who think they can get away with exploiting families who face the prospect of losing their homes: Stop Now or my office will stop you,” Attorney General Dann said [on Wednesday]."

Suits were filed against the following companies doing business in six Ohio counties: American Housing Authority, Inc. (Newport Beach, California), American Housing Financial, Inc., (Phoenix, Arizona), Cary Lavensky d/b/a Home Restoration Services (Cleveland, Ohio), F.A.S., LLC d/b/a Foreclosure Assistance Solutions and Mortgage Second Chance (Clearwater, Florida), Foreclosure Solutions, LLC (Cincinnati, Ohio), Richard Pinnix d/b/a Pinnix Business Services (Shaker Heights, Ohio), United Foreclosure Managers, LLC (Youngstown, Ohio).

For more, see Ohio AG Press Release - Foreclosure Rescue Scams Sweep (Attorney General Dann Files 6 Suits Against Companies For Foreclosure Rescue Scams)., or

See also, Attorney general's office sues six foreclosure rescue companies (Cleveland Plain Dealer), and Ohio Foreclosure Rescue Scams Sweep (All American Patriots).

For copies of the newly filed lawsuits (available online courtesy of Ohio Attorney General Marc Dann), see:

• American Housing Authority Inc. Complaint
• Foreclosure Assistance Solutions Complaint
• Foreclosure Solutions L.L.C Complaint
• Lavensky Complaint
• Pinnix Business Services Complaint
• United Foreclosure Managers, LLC Complaint
• Exhibit A

Go here for other posts on Ohio upfront fee foreclosure rescue services.

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Ohio AG Wins $300K+ Judgment In Loan Modification Foreclosure Rescue Scam; Fires Warning Shots Against 10 Others With Subpoenas, C&D Orders

From the Office of the Ohio Attorney General:

• Ohio Attorney General Richard Cordray [Monday] announced that a foreclosure rescue scam company operating out of Cincinnati has been shut down and now owes more than $300,000 in damages and civil penalties. The default judgment issued out of Hamilton County Common Pleas Court demands that Foreclosure Solutions and owner Timothy Buckley pay $225,000 in civil penalties and $79,565 in restitution for scamming Ohioans facing foreclosure.(1)

***

• Also, in an unprecedented move, Cordray [Monday] issued 10 cease and desist demands with accompanying subpoenas to businesses suspected of operating rescue scams in Ohio. The cease and desists demand that the companies halt all predatory practices, and the subpoenas require information to substantiate current practices. The sweep is the first in a widespread investigation into rescue operations targeting Ohio. “This is a strong, preventative measure to keep foreclosure rescue scammers out of Ohio,” said Cordray. “It is a warning shot announcing that we have no tolerance for these predatory practices in our state.”

For the entire press release, see Cordray Puts Heat on Foreclosure Rescue Operations (Attorney General pursues more than $300,000 in restitution and penalties; Launches multi-state cease and desist sweep).

For the Ohio AG lawsuit, see State of Ohio v. Foreclosure Solutions L.L.C.

Go here for other posts and lawsuits against Foreclosure Solutions.

(1) According to the press release, from January 2003 through May 2008, Foreclosure Solutions solicited Ohioans who were going through foreclosure via direct mail and offered services to save their homes. The company then arranged in-person meetings and entered into written agreements with the promise to act as an agent to stop the foreclosure. After charging amounts ranging from $750 - $1,300 the company never provided the services promised and some Ohioans lost their homes.

Foreclosure Rescue Service Sued In Cincinnati For Alleged Failure To Provide Promised Services

Cincinnati-area foreclosure rescue operator Foreclosure Solutions LLC, Tom Bien, and attorney John S. Brooking have been sued by four homeowners in a state court in Hamilton County, Ohio for allegedly running an upfront fee foreclosure rescue scam that promised to save their homes from foreclosure, but did little or nothing in exchange for an upfront fee of $1,150.

According to the lawsuit:

• "The 'Solution' that Foreclosure Solutions sells to homeowners is the false promise of a foreclosure defense in exchange for an up-front charge of $1,150. After the customer pays the fee Foreclosure Solutions hires an attorney who does nothing more than file an answer to the foreclosure. When the foreclosing lender files a motion for summary judgment, the attorney abandons the case and the house eventually goes to sheriff's sale."

In addition to the upfront fee, the foreclosure rescue arrangement allegedly required the homeowners to deposit their monthly mortgage payments into "escrow" with Foreclosure Solutions.

The lawsuit asserts the following claims: (1) violations of Ohio's Consumer Sales Practices Act & Home Solicitations Sales Act, (2) misrepresentation, (3) civil conspiracy, and (4) infliction of emotional distress. Representing the homeowners are the Legal Aid Society of Southwest Ohio, LLC and Cincinnati attorney Matthew Brownfield.

For a copy of the lawsuit, see Dorn, et al. vs. Foreclosure Solutions, LLC, et al. (lawsuit available online courtesy of WCPO-TV Channel 9 in Cincinnati).

For the WCPO-TV Channel 9 online story, see People With Homes In Foreclosure Say They Were Victimized By Blue Ash Firm.

For The Enquire online story, see Mortgage 'rescue company' faces suit (Homeowners mad at foreclosure group).

Go here for the Press Release (Legal Aid Society of Southwest Ohio, LLC.)

Texas AG Sues Upfront Fee Foreclosure Rescue Operator; Assets Frozen

National upfront fee foreclosure rescue operator Foreclosure Assistance Solutions of Clearwater, Florida has been sued again by a state Attorney General. Last month, it was sued by Ohio Attorney General Marc Dann (see State of Ohio vs. Foreclosure Assistance Solutions - doing business as Second Chance Mortgage). Now, it's the Texas Attorney General.

From the Texas Attorney General's Sept. 14 press release:

• Texas Attorney General Greg Abbott today charged a business with operating an unlawful foreclosure rescue scam that targeted struggling Texas homeowners. As a result, the 408th District Court issued a temporary restraining order and froze assets belonging to three businessmen who organized the scheme. According to court documents, the defendants fraudulently advertised that they could save homeowners from imminent foreclosures.

• The defendants named in the petition are: Foreclosure Assistance Solutions, LLC of Florida, and its principal operators, Herb Zerden and Adolfo Quintero, as well as J.W.W. Services, Inc. of California and owner John Woodruff. Under the temporary restraining order, the defendants must stop falsely soliciting distressed homeowners immediately. Although the temporary restraining order only applies in Texas, homeowners nationwide are protected by the state’s asset freeze.

[...]

• Homeowners who contacted Foreclosure Assistance Solutions were urged to sign a $1,200 contract immediately. Under the contract, Foreclosure Assistance Solutions strictly prohibited homeowners from contacting their lenders. After homeowners paid the fee, they rarely heard from the company’s representatives again. When homeowners repeatedly called the company for answers, they were ignored. As a result, many homeowners still lost their homes to foreclosure.

[...]

• The Attorney General seeks court-ordered restitution for homeowners who were harmed by the defendants’ acts, as well as civil penalties of up to $20,000 per violation of the Texas Deceptive Trade Practices Act. Additionally, the Attorney General requests up to $5,000 per violation for the defendants’ failure to register the business as one that conducts telephone solicitations.

For more, see Texas AG Press Release - Attorney General Abbott Charges Foreclosure Rescue Firm with Operating Unlawful Scam (Court freezes assets of Foreclosure Assistance Solutions).

Go here for a copy of the Texas AG's lawsuit - State of Texas vs. Foreclosure Assistance Solutions, et al.

Go here for Texas AG's temporary restraining order against Foreclosure Assistance Solutions.

Go here for a sample of a solicitation used by Foreclosure Assistance Solutions to allegedly dupe homeowners in foreclosure.

Go here for a promotional video used by Foreclosure Assistance Solutions.

See Ripoff Report for links to other complaints against Foreclosure Assistance Solutions.

Florida Authorities Shut Down One Foreclosure Rescue Operator, Investigate Another

In two separate reports, Fox Channel 13 in Tampa, Florida reports that Florida authorities have shut down one upfront fee foreclosure rescue operator earlier this week and are investigating another.

According to one report:

• State consumer services investigators Monday ordered a Clearwater-based company that promises to assist homeowners with foreclosures to close its doors. Agents said the outfit is unlicensed. Foreclosure Assistance Solutions is also at the center of several fraud investigations. According to court papers, clients claim the company takes a $1,200 to $2,000 fee but does nothing to help them settle their mortgage paperwork.

In another report:

• Florida's Attorney General confirmed Tuesday it is investigating Mortgage Assistance Solutions. The company's owner, a California Attorney, said his company provides an affordable service. "It's not a fraud," said Michael Thomas Stoller [the company owner]. [An alleged ripoff victim] said Mortgage Assistance Solutions' sales pitch closely mirrors that of another Clearwater company, Foreclosure Assistance Solutions. State agents shut down Foreclosure Assistance Solutions on Monday, saying it was not licensed to do telemarketing.

Reportedly, both companies are located just two miles apart in Pinellas County, Florida, but they are not linked. For more, see:

• Company accused of exploiting the desperate,
• Second company accused of mortgage scam,
• Go here for Fox Channel 13 TV video - Part 1,
• Fox Channel 13 TV video - Part 2

Editorial Note

It sure looks like the Florida Attorney General's office got "caught with their pants down" on this story. Both of these companies have been doing business in Florida for quite some time, but it took lawsuits by the Attorneys General in Ohio, Illinois, and Texas against these foreclosure rescue operators in order to get Florida authorities to start doing something. It sounds like they used a technicality to shut down one company ("unlicensed telemarketing"), and have reportedly commenced an investigation on the other company.

The Florida AG had active investigations on both these companies at one time, but those investigations ended up being closed out without any mention in the AG's newsletters. Reportedly, they settled one case by making the company refund $80,000 to the homeowners. Compared to some other states, Florida authorities seem to be "a little late" when it comes to investigating and prosecuting (either by civil lawsuit or criminal prosecution) foreclosure rescue scams, especially considering that Florida ranks right near the top in the country in the number of new foreclosure filings. Hopefully, they will pay attention to what some of their colleagues are doing in other jurisdictions (ie. Ohio, Massachusetts, Illinois, Texas, Washington State, and Washington, D.C.) and then reevaluate the priority that they place on foreclsoure rescue scams.

Financial Hole Becomes Bigger For Struggling Homeowner After Hiring Loan Modification Outfit That Pocketed $2.5K By Promising Help

In San Antonio, Texas, the San Antonio Express News reports:

• When family medical bills soared, Norma Baker missed a mortgage payment. And when she decided to rectify that financial slip, she and her husband hired a San Antonio mortgage loan modification company to negotiate with Wells Fargo on their behalf. The firm, Xpert Loan Modifications, charged the Bakers $2,500 upfront for its services. But now the Bakers owe the bank around $9,000 and face foreclosure in January.

***

• Miguel Gonzalez of Xpert Loan Modifications said he has successfully guided many other families through loan modifications, and that his company provides a valuable service to people who don't have the expertise or time to call the banks themselves. “I didn't just pop up and say, ‘I'm going to scam people,'” said Gonzalez. “They are going to be in the house if she would just let us do our job.” The fee compensates Gonzalez for his work and will be used to hire an attorney,(1) if needed, to try to stop the Baker's foreclosure, he said.

***

• Baker said Wells Fargo recently told her there was no loan modification in the works for her property. She is concerned that her family could end up homeless next month.

For more, see Homeowners' woes unresolved.

(1) If the rules in Texas are anything like the rules in California, Florida, Ohio or other states, this character risks being accused of unlicensed practice of law for conduct as an intermediary in hiring out an attorney to represent the homeowner. An attorney taking a case on this basis also risks being slammed for aiding a non-lawyer in the unlicensed/unauthorized pratcice of law, among other things. See:

• California: ETHICS ALERT: Legal Services to Distressed Homeowners and Foreclosure Consultants on Loan Modifications,
• Florida: ETHICS ALERT: Lawyers should be very wary of loan modifiers,
• Ohio: Cincinnati Bar Ass’n v. Mullaney, 119 Ohio St.3d 412, 2008-Ohio-4541, 894 N.E.2d 1210,
• Ohio: Cincinnati Bar Assn. v. Foreclosure Solutions, L.L.C.,123 Ohio St.3d 107, 2009-Ohio-4174.

Ohio AG Tags Three More Foreclosure Rescue Operators With Civil Suits Alleging Outfits Ran Illegal Upfront Fee Loan Modification & Related Rackets

From the Office of the Ohio Attorney General:

• Ohio Attorney General Richard Cordray has filed three new lawsuits against foreclosure rescue operations for bilking Ohioans out of tens of thousands of dollars. In the lawsuits, Cordray is seeking to shut down these outfits in Ohio with full restitution to homeowners.

***

• In Franklin County Common Pleas Court, Cordray filed suits against National Homeownership Assistance Foundation Ltd. (NHAF),(1) located in Worthington, and Stephens Investment & Financial Services dba Lifeline Financial Legal Home Solutions,(2) located in Fort Lauderdale, Fla. [...] Additionally, Cordray filed a suit in Stark County Common Pleas Court against 1st American Law Center Inc.(3) based in Oceanside, Cal.

For the Ohio AG press release, see Cordray Sues Three Foreclosure Rescue Businesses.

(1) Cordray accuses NHAF and its managing partner, Casimir S. Suwinski of Delaware, its general manager, Casimir S. Suwinski Jr. of New Albany, and its president, Arden Banks of Grove City, of charging homeowners on average $2,500 for foreclosure prevention services, such as securing loan modifications from mortgage servicers, and then not providing the service. view the lawsuit against NHAF and motion for attachment, see State of Ohio v. National Homeownership Assistance Foundation Ltd. et al.

(2) In the case against Lifeline, Cordray accuses the operation of claiming that it could “reduce your payments up to 10-50%,” or “lower your interest rate.” After charging thousands of dollars, the company failed to deliver the service. Lifeline also misled consumers by misrepresenting its legal expertise and the availability of legal services, including “retained legal experts.” To view the lawsuit against Lifeline, see State of Ohio v. Stephens Investment & Financial Services.

(3) In the filing, 1st American is accused of charging homeowners as much as $4,000 for foreclosure prevention assistance services such as negotiating loans and accepting payment for these services without delivering on its promises. To view the lawsuit against 1st American, see State of Ohio v. 1st American Law Center Inc.

Ohio AG Tags Foreclosure Rescue Operator With Lawsuit For Allegedly Running Illegal Upfront Fee Loan Modification Ripoff

From the Office of the Ohio Attorney General:

• Ohio Attorney General Mike DeWine [] announced a lawsuit against foreclosure rescue company Diversified Real Estate Consultants LLC (DREC), its affiliates, and its owner for multiple violations of Ohio consumer laws.

***

• According to Attorney General DeWine's lawsuit, filed in the Cuyahoga County Common Pleas Court, DREC is a Florida registered company operating from Ohio that offered mortgage assistance relief services to Ohio consumers, even though it never registered to do business in Ohio. DREC charged and accepted fees of $500 to $3,495 from homeowners, promising them reduced monthly mortgage payments or better interest rates, and represented a "100% money-back guarantee." Despite the company's claims, consumers received no help and no refunds.

For the Ohio AG press release, see Northeast Ohio Foreclosure Rescue Company Sued for Consumer Law Violations.

For the lawsuit, see State of Ohio v. Diversified Real Estate Consultants, LLC, et al.

(1) In addition to DREC, the Attorney General's lawsuit names defendants DREAM Management USA (DREAM) and Precision Processing Solutions International LLC (PPSI) – Ohio companies that provided DREC research, analysis, and documentation processing services, in direct connection with DREC's mortgage relief assistance services. The suit also names North Canton resident Daniel J. DePasquale, owner and operator of DREC, DREAM, and PPSI.

The lawsuit charges the defendants with violations of Ohio's Consumer Sales Practices Act, Debt Adjusters Act, and Telephone Solicitation Sales Act. It seeks a declaratory judgment, injunctive relief, civil penalties, and full restitution for consumers.

86 Year Old Ohio Woman Ripped Off By Foreclosure Rescue Service; Demands Full Refund

WKYC-TV Channel 3 in Cleveland, Ohio reports on Sadie Booker, an 86 year old woman holding down three jobs who was facing foreclosure on a predatory mortgage loan on her home. She paid a $500 upfront fee to Foreclosure Solutions and Mediation and Michael Shafran, a local foreclosure rescue service in Macedonia who reportedly told her they can stop the sheriff's sale. A week before the sale, they sent Sadie a letter informing her that they would be unable to help her. When she asked for a refund, they refused, saying that they get $100 an hour for their time.

Fortunately for Sadie, a member of ACORN stepped in at the last minute and reportedly was able to stop the foreclosure of the predatory mortgage on her home at no cost to her. Feeling energized by the last minute reprieve, she, backed by a gang from ACORN (and presumably a WKYC cameraman trailing behind capturing the events on video), marched over to Shafran's house demanding all of her money back.

To see what happened, watch the WKYC-TV Channel 3 report (no longer available online), or to read the online report, see Homeowners facing foreclosure are targeted again.

For a story of another Ohio foreclosure rescue service, this one being sued for allegedly ripping off homeowners out of an $1,150 upfront fee, see Foreclosure Rescue Service Sued In Cincinnati For Alleged Failure To Provide Promised Services.

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Nationwide Loan Modification Scam Sweep Begins As FTC Announces Coordinated Effort Of 25 Federal, State Agencies Involving 189 Legal Actions

The Federal Trade Commission announced yesterday:

• Federal Trade Commission Chairman Jon Leibowitz, joined by California Attorney General Jerry Brown, [Wednesday] announced Operation Loan Lies, a coordinated national law enforcement effort to crack down on mortgage modification scams. The operation involves 189 actions by 25 federal and state agencies(1) against defendants who deceptively marketed foreclosure rescue and mortgage modification services. The FTC actions, which affect consumers throughout the nation, are being announced in southern California, where the scams originated.
  
  “These con artists see the high foreclosure rates as an opportunity to prey on people in distress,” FTC Chairman Jon Leibowitz said. “They promise to rescue homeowners in troubled financial waters, but after they take their money they throw them an anchor instead of a lifeline. People facing foreclosure should avoid any company or individual that requires a fee in advance, guarantees to stop a foreclosure or modify a loan, or advises the homeowner to stop paying the mortgage company.”
  
  The FTC announced four lawsuits,(2) bringing to 14 the number of mortgage foreclosure rescue and loan modification scam cases the Commission has brought since April. Twenty-three state attorneys general and other agencies are participating in the operation, taking action against 178 companies engaged in these types of deception. The FTC also announced a settlement in a lawsuit filed last November.

***

• The FTC also released “Real People. Real Stories,” a three-and-a-half minute video about keeping your home. It features people targeted by foreclosure rescue scammers sharing lessons learned from their experiences. The FTC is distributing the video, and a version in Spanish, to more than 5,000 housing counseling and consumer protection organizations around the country, and posting them at FTC.gov/yourhome and YouTube.com/FTCVideos.

For the entire FTC press release, see Federal and State Agencies Target Mortgage Foreclosure Rescue and Loan Modification Scams (FTC Leads “Operation Loan Lies” to Stop Fraud and Help Distressed Homeowners).

(1) The 25 Federal & state agencies are:

• U.S. Federal Trade Commission,
• U.S. Attorney's Office for the Central District of California (Los Angeles),
• Arizona Attorney General's Office,
• California Department of Justice,
• California Department of Real Estate,
• State Bar of California,
• Colorado Attorney General's Office,
• Idaho Attorney General's Office,
• Illinois Attorney General's Office,
• Iowa Department of Justice,
• Kansas Attorney General's Office,
• Maine Attorney General's Office,
• Maine Department of Professional and Financial Regulation, Bureau of Consumer Protection,
• Maryland Department of Labor, Licensing, and Regulation, Office of the Commissioner of Financial Regulation,
• Massachusetts Attorney General's Office,
• Michigan Attorney General's Office,
• Missouri Attorney General's Office,
• New Jersey Attorney General's Office,
• New Jersey Department of Banking and Insurance,
• New Mexico Attorney General's Office, Consumer Protection Division,
• North Carolina Department of Justice,
• Ohio Attorney General's Office,
• Oregon Department of Justice,
• Texas Attorney General's Office,
• Washington Attorney General's Office.

(2) The four lawsuits (with links to the FTC complaints) filed by the FTC target three California firms:

• Aliso Viejo-based Lucas Law Center (other defendants: Future Financial Services, LLC, Paul Jeffrey Lucas, Christopher Francis Betts, and Frank Sullivan),
• Orange-based U.S. Foreclosure Relief Corp. (firm used eight aliases – U.S. Foreclosure Relief, Lighthouse Services, Pacific Shore Financial, California Foreclosure Specialists, H.E. Service Company, Safe Harbor, Pomery & Associates, and Homeowners Legal Assistance. Other defendants are George Escalante, Cesar Lopez, and Adrian Pomery, Esq.), and
• Santa Ana-based Loss Mitigation Services Inc., (other defendants: Synergy Financial Management Corporation (d/b/a Direct Lender), Dean Shafer, Bernadette Perry, and Tony Perry),

and Coeur d'Alene, Idaho-based Apply2Save Inc. (other defendants: Sleeping Giant Media Works, Inc., and Derek Oberholtzer).

In addition to these cases, the FTC reached a settlement with Foreclosure Solutions, LLC and Timothy Buckley (Plaintiff's Complaint, Settlement/Stipulated Final Judgment) who claimed that, for a fee often exceeding $1,000, they would stop foreclosure (see press release dated April 29, 2008).

Foreclosure Mediation Now Available In All 88 Ohio Counties

In Columbus, Ohio, WTTE-TV Channel 28 reports:

• The Ohio Supreme Court says a foreclosure mediation program it launched less than a year ago is now available in all 88 counties. The high court provides step-by-step instructions to common pleas courts around the state to try to reach solutions in foreclosure cases. The local courts gather information from homeowners and lenders to reach a mutual agreement.

• Some courts are using court staff, while others are using contract mediators. Others are using volunteers. Counties began joining the program after it launched in February. Local courts are to submit data to the Supreme Court so that the effectiveness of the county programs can be measured.

Source: Foreclosure mediation available in Ohio counties.

For the Ohio Supreme Court's "11 Step Program," see The Foreclosure Mediation Program Model.

Cincinnati Bar, Ohio Supreme Court Slam Attorneys Teaming Up With Upfront Fee Loan Modification, Foreclosure Rescue Operators

In a 2008 court decision, the Ohio Supreme Court disciplined three attorneys for professional misconduct in connection with working with the customers of foreclosure rescue operator Foreclosure Solutions, L.L.C. Among the types of conduct that landed the attorneys in hot water were:

• using a person or organization to recommend or promote the lawyers’ services,
• aiding nonlawyers in the unauthorized practice of law,
• improperly sharing legal fees with nonlawyers,
• failing to seek lawful objectives of clients by failing to assess their individual needs, and
• handling legal matters without adequate preparation.

For the specific facts and surrounding circumstances that led to the filing of the complaints with the Cincinnati Bar Association by the homeowners facing foreclosure, see Cincinnati Bar Assn. v. Mullaney, 119 Ohio St.3d 412, 2008-Ohio-4541 (2008).

Go here and go here for other posts on issues relating to attorneys, loan modifications, and the unlicensed/unauthorized practice of law. UnauthPractOfLawKappa

Feds File Civil Charges Against Ohio-Based Foreclosure Rescue Operator

The Federal Trade Commission announced earlier this week:

• The Federal Trade Commission has charged Foreclosure Solutions, LLC and Timothy A. Buckley with operating a nationwide mortgage foreclosure “rescue” scam that charged consumers as much as $1,200 to save their homes from foreclosure but failed to do so. The FTC seeks to bar them from further law violations and make them forfeit their ill-gotten gains. According to the FTC’s complaint, the defendants market their services through direct mail to consumers named in court records of foreclosure actions and through Internet Web sites, including www.program10.com and http://www.foreclosuresolutionsusa.net/ (if link expires, try here).

***

• According to the complaint, the defendants hire attorneys to respond to the foreclosure complaints filed against consumers. In many instances, the attorneys file the same form response to every complaint, usually without investigating consumers’ individual circumstances that might identify defenses or counterclaims unique to particular consumers.

For more, see FTC Charges Mortgage Foreclosure “Rescuers”.

To view the lawsuit and a copy of a sample solicitation (at pages 10-12 of lawsuit), see FTC v. Foreclosure Solutions, LLC, and Timothy A. Buckley.

Mortgage Firm Faces "Appraisal Shopping" Allegations In Ohio AG Civil Suit; State Settles Similar Claims Against Three Others For $160K+

From the Office of the Ohio Attorney General:

• In an ongoing effort to hold the mortgage industry accountable for its part in the foreclosure crisis, Ohio Attorney General Richard Cordray [...] filed a lawsuit against Weststar Mortgage, Inc. In the lawsuit, Cordray charges the Washington D.C. area home appraisal company with improperly influencing Ohio appraisals.

• According to the complaint filed in the Court of Common Pleas of Belmont County, Weststar violated Ohio law through a series of actions including using pre-printed “estimated value” forms for appraisals and shopping for a higher appraisal amount on behalf of clients. “Appraisal influence is a damaging practice that often goes undetected until it’s too late,” said Cordray. “With this case, we advance one more step in cleaning up the destructive actions that led to the foreclosure crisis.”(1)

For the Ohio AG press release, see Cordray Holds Home Appraisal Industry Accountable.

(1) In addition to this lawsuit, three other companies accused of attempting to influence Ohio home appraisals have recently settled lawsuits with the state, resulting in a combined total of more than $150,000 in restitution and civil penalties, according to the Ohio AG press release:

• Cordray settled with First Ohio Banc and Lending to resolve a lawsuit alleging the company engaged in unfair and deceptive home appraisal practices including deceptive advertising violations. In the agreed entry, First Ohio agreed to pay the state $52,400, which includes restitution to consumers;
• In another agreement, Fiserv Lending Solutions, based in Connecticut agreed to pay $95,000 to the state, which is the largest undue influence settlement in Ohio to date;
• In September, Cordray entered into a similar agreement with Nations Lending, which agreed to pay the state $15,000 and will keep all appraisal records for three years.

Ohio AG's Servicer Lawsuit Gets Go-Ahead As Court Denies Dismissal Motion; Conduct In Giving Loan Mods Subject To State Consumer Sales Practices Act

From the Office of the Ohio Attorney General:

• Ohio Attorney General Richard Cordray’s lawsuit against Barclays Capital Real Estate dba HomEq Servicing, headquartered in New York City, just took a legal step forward with a recent decision by a state court. [Last] week, Montgomery County Common Pleas Judge Timothy N. O’Connell overruled the defendant’s motion to dismiss, clearing the way for Cordray’s case to move forward.

• “This ruling takes us one step closer in our overall strategy to hold loan servicers accountable for unfair loan modifications in foreclosure cases,” said Cordray. “For too long, servicers have stood idly by, talking the talk but failing to provide any real solutions to the foreclosure crisis. Ohioans are losing their homes and servicers have aggravated the situation with noncompliance and out-right incompetence.”

• Cordray sued HomeEq last December for multiple violations of Ohio’s Consumer Sales Practices Act (CSPA), including unfair and deceptive business practices. The lawsuit marked the third filed by Cordray against a loan servicer operating in Ohio. Cordray was the first state attorney general to file a lawsuit against a loan servicer for CSPA violations in the wake of the foreclosure crisis.

• [Last] week’s ruling is the first state court decision to hold that mortgage servicers are accountable under the CSPA, serving to create a precedent in this first-of-its-kind legal strategy.

For the Ohio AG press release, see Court Affirms Cordray's Case Against Loan Servicer.

To view the court decision and lawsuit, see State of Ohio v. Barclay's Capital Real Estate Inc. dba HomEq Servicing.

CNNMoney On Foreclosure Rescue

CNNMoney.com ran an online story today on foreclosure rescue scams, which among other things, summarizes some of the tactics used by those offering services to financially strapped homeowners, and recounts an experience of one Columbus, Ohio homeowner who did business with Foreclosure Assistance Solutions ("FAS") an upront fee foreclosure rescue operator. Coincidentally, FAS is one of the six foreclosure rescue operators that Ohio Attorney General Marc Dann has filed civil lawsuits against (See Ohio AG Conducts Foreclosure Rescue Sweep; Hauls Six Upfront Fee Operators Into Court).

Included in the article is an anectdote of a Brooklyn, New York homeowner who fell prey to an equity stripping scam.

For more on today's CNNMoney article, see Foreclosure fallout: Rescue scams (Scammers are taking advantage of mortgage holders at their most vulnerable: when they're about to lose their homes).

Illinois AG Files Civil Charges Against Upfront Fee Foreclosure Rescue Operator

The Illinois Attorney General announced:

• Illinois Attorney General Lisa Madigan today continued her aggressive battle against those taking advantage of homeowners in crisis by filing a lawsuit against an Ohio-based company(1) allegedly engaged in a mortgage rescue fraud scheme. The lawsuit claims the company violated the [Illinois] Mortgage Rescue Fraud Act and the [Illinois] Consumer Fraud and Deceptive Business Practices Act by preying on vulnerable homeowners on the verge of foreclosure. This is the 13th lawsuit Attorney General Madigan has brought against mortgage rescue fraud companies.

For more, see Illinois AG Sues Ohio Company For Mortgage Rescue Fraud (Madigan Alleges Company Takes Advantage of Homeowners on the Verge of Losing their Homes to Foreclosure).

(1) According to her press release, Madigan filed suit against Foreclosure Solutions, LLC and company president Timothy Buckley of Maineville, Ohio, based on allegations that the defendants falsely promised to help consumers save their homes after falling behind on their mortgage payments. The defendants charged consumers $1,250 and promised to provide mortgage foreclosure rescue services, which either were never performed or proved to be ineffective, according to the complaint.

Cincinnati Feds Bust 4 Sale Leaseback Peddlers Accused Of Running F'closure Rescue, Equity Stripping Racket Targeting No Cash, High Equity Homeowners

From the Office of the Ohio Attorney General:

• A federal grand jury has indicted four people(1) who ran a Cincinnati real estate business known as American Equity Group (AEG) with fraudulently obtaining more than $13 million in loans through a loan fraud scheme that targeted homeowners or builders in or near foreclosure.



• Ohio Attorney General Mike DeWine, Carter M. Stewart, United States Attorney for the Southern District of Ohio, and Edward J. Hanko, Special Agent in Charge, Federal Bureau of Investigation (FBI), announced the indictment today. These agencies are members of the Greater Cincinnati Mortgage Fraud Task Force.

***

• According to the indictment, they conspired to locate distressed properties that were in or nearing foreclosure or that needed to be sold quickly. They would typically promise the sellers that they could continue to live in the property as a renter, then purchase the property back after AEG assisted the homeowner with repairing their credit.



• The defendants are accused of finding "investors" to purchase the property, often at inflated values, with the promise that the mortgage would be paid through rent payments from the original seller and that the original seller would purchase the property back within a short period.



• After the properties were stripped of any equity, they would be back in foreclosure again, and the distressed homeowners wouldn't have any standing in court because they no longer owned the properties. The "investors" who bought the houses were left with the debt.

For the Ohio AG press release, see Attorney General DeWine Announces Foreclosure Rescue Actions.

(1) According to the press release, the indictment charges Adam Moellers, 33; Gary Dailey, a.k.a Gary Klump, 32; Perry Bensick, Jr., 35; and Gary Dailey's mother, Mary Dailey, 50; all of Cincinnati, with wire fraud, mail fraud and conspiracy. The indictment alleges that the four worked together at AEG, which also operated under the names Equity Financial Solutions and Equity Financial Group, and carried out the scheme between July 2006 and October 2007.

Ohio AG Files Civil Suit Charging Alleged Loan Modification Racket Of Pocketing Upfront Cash, Then Failing To Deliver Promised Services

From the Office of the Ohio Attorney General:

• Ohio Attorney General Mike DeWine [] announced a lawsuit against Christopher Rojas of Irvine, Calif., for running a foreclosure rescue operation that used multiple business names and failed to deliver on its promises to lower consumers' mortgage payments. The lawsuit charges Rojas with multiple violations of Ohio's consumer laws.

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•  Christopher Rojas, working out of California, promises consumers that he will reduce their mortgage payments in exchange for fees of approximately $3,000 per consumer. Despite accepting substantial down payments, Rojas fails to provide beneficial services to consumers and fails to refund their money.
• According to the Attorney General, Rojas also routinely changes his business names when consumer complaints begin to surface. Rojas has done business as National Juris Solutions, US National Legal Solutions, Weston & Wyatt, Merrill & Warren, and Legacy Holdings Group.

For the Ohio AG lawsuit, see State of Ohio v. Rojas.