Colorado AG Foreclosure Rescue Crackdown Hits 15 Firms

In Denver, Colorado, the Rocky Mountain News reports:

• [Colorado Attorney General John] Suthers [...] said he has taken action to protect homeowners who are in foreclosure from “rescue” firms that are not following Colorado’s Foreclosure Protection Act, which he supported and saw passed during the 2006 legislative session. So far, his office cease and desist agreements with 15 companies to prevent them from operating in Colorado until they follow this law.(1)

• Many distressed homeowners in foreclosure are bombarded with solicitations from companies that offer to help save their homes. Under the Foreclosure Protection Act, homeowners enjoy many protections against abusive tactics. Rescue firms cannot accept an upfront fee and must provide the homeowner with a contract that specifies the services to be performed. Rescue firms are also prohibited from taking a lien or interest in the title to the home unless they provide certain disclosures.

For more, see Suthers cracks down on mortgage fraud.

(1) Under the cease and Desist agreements, seven rescue firms have agreed to cease operations in Colorado until they comes into compliance with the Foreclosure Protection Act. Companies that have agreed to cease & desist during 2008 include: Crisis Management, LLC, in Glendale, Arizona; Davis Foreclosure Assistance, Englewood, N.J. Debt Advocacy Center; Cleveland; Franklin Equity, Santa Ana, Calif.; HomeAssure, New York, N.Y.; National Foreclosure Counseling Servicesl Jacksonville, Fla.; and New Hope Modifications, Bellmawr, N.J. An additional eight companies have previously reached cease and desist agreements with the attorney general since the Foreclosure Protection Act was enacted, including one Colorado company, Denver Home Rescue. ColoradoLoanModificationalpha

Fee-Based Loan Modification Firms Require State Mortgage Brokerage License When Working With Colorado Homeowners, Says State Regulator

In Denver, Colorado, the Rocky Mountain News reports:

• Only licensed mortgage brokers may provide home loan modifications in Colorado under the new Mortgage Broker Licensing Law, the Colorado Division of Real Estate reminded consumers on Wednesday.(1) The reminder came because of the increased number of complaints the division has received about loan modification companies.

For more, see Loan modifications require mortgage broker license.

See also, The Denver Post: Modified- loan services face scrutiny:

• "We are getting a considerable number of complaints from homeowners who are being charged high fees with no results," said Zachary Urban, division spokesman. [...] Struggling homeowners are paying $4,000 to $6,000 upfront and not receiving the services that were promised, Urban said.

Go here for the recently enunciated Colorado Division of Real Estate Position Statement on Loan Modifications.

(1) Loan modification companies purporting to assist homeowners in backing out of bad loans by analyzing mortgage documents to find errors committed by lenders in violation of Federal and state lending and consumer protection laws may also need a law license in the states they are operating in, judging by legal actions against such firms alleging, among other things, the unauthorized practice of law recently brought in a TennesseeAttorney General lawsuit, and a Florida Attorney General lawsuit.

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