• DYE CULIK PC | Consumer Protection Division

Homeowners Cheated of $83M in Mortgage Rescue Scams

The majority of Massachusetts consumers who contact us requesting assistance with loan modification or foreclosure defense have already received numerous unsolicited mail offers from firms promising to stop foreclosure or lower mortgage payments. Unfortunately, many have paid thousands of dollars and received no assistance at all. Often the firm goes out of business and the consumer is left in a significantly worse position. We advise anyone who calls us to make sure they find a reputable, local attorney to assist them and ignore mailed solicitations and out-of-state companies claiming an easy rescue.

ABC News conducted an investigation focusing on one attorney in California whose firm bilked hundreds of consumers in ten states out of at least a half-million dollars. Many of those defrauded were reassured by the “veneer of credibility” they perceived because it was an attorney offering to help.  Most lost everything they paid and received no help in return; many lost their homes to foreclosure. As the investigation shows, even after consumers and states took action and sued, the firm’s agreed-upon restitution thus far is only $50,000 – less than 10% of what consumers have lost.

Unfortunately, the firm targeted in ABC News’ segment is just one of many opportunistic predators that have sprung up around the foreclosure crisis.  The investigation found $83 million in documented losses thus far – and notes that this is just “the tip of the iceberg.”

Defending against foreclosure is a difficult and stressful endeavor.  Homeowners in default are highly likely to receive mailed solicitations from out-of state firms promising help.  Consumers should investigate any firm thoroughly before paying a retainer.  The risk of loss is that much greater when dealing with an out-of-state firm, as it is difficult and expensive to pursue legal remedies against an out-of-state firm.  Homeowners should only deal with attorneys licensed to practice law in their own state.

Many resources exist for distressed homeowners to find assistance.  The Board of Bar Overseers in each state maintains publicly available information about attorneys, including any history of disciplinary action.  State bar associations can provide free referrals to attorneys specializing in loan modification and foreclosure defense.  One of the best resources is the National Association of Consumer Advocates website, www.naca.net, which provides a wealth of information for consumers and a national listing of attorneys organized by area of practice.

#foreclosureprevention #loanmodification #mortgages