Indiana Attorney General Greg Zoeller will file four more lawsuits this week against mortgage rescue companies accused of scamming Indiana consumers out of thousands of dollars.
These four lawsuits raise the total number of actions taken against foreclosure rescue companies to 95 since 2006.
Strategic Alliance of California, National Financial Services of Texas, United Capital of Maryland and LA Strattan Law Firm also of California are all accused of violating Indiana’s consumer protection laws and taking more than $4,300 from customers. Victims of the fraud are from Marion, Floyd and St. Joseph counties. The state seeks an injunction, restitution and civil penalties against the companies.
“These actions are part of our much broader effort to crackdown on those who prey on already struggling homeowners,” Zoeller said. “Indiana has made significant strides to protect consumers and these aggressive efforts will continue as the economy recovers from the national financial crisis.”
The lawsuits also allege the companies violated the Credit Services Organization Act, the Mortgage Rescue Protection Fraud Act, the Home Loan Practices Act and Deceptive Consumer Sales Act. The defendants each did not register a $25,000 surety bond with the Attorney General’s Office to conduct business as foreclosure consultants in Indiana.
Since 2006, the Attorney General’s Office has filed 95 lawsuits against foreclosure consultant companies in more than 30 counties across the state. In 2005, the Indiana General Assembly passed legislation creating the Homeowner Protection Unit to protect individuals from mortgage fraud and predatory lending. The unit files these civil court actions against individuals and companies committing deceptive and fraudulent business practices as mortgage brokers, foreclosure consultants, credit service organizations and others.
Default judgments against these types of companies do not often result in the victims receiving any payments for their financial losses. To help reimburse victims of foreclosure-rescue fraud, deceptive credit services or violations of the Home Loan Practices Act, Zoeller pushed for the creation of the Consumer Protection Assistance Fund (CPAF). To date, through this fund which was setup by the state Legislature, more than 70 victims of foreclosure-rescue and/or consumer mortgage fraud have received payments totaling $60,000.
To help prevent these scams, the Indiana Supreme Court’s Mortgage Foreclosure Task Force developed new guidelines intended to protect homeowners and deter abuses of the mortgage foreclosure process. The task force includes consumer advocates, judges, law professors, creditors’ attorneys and the Attorney General’s Office; and its recommendations are collectively termed the Mortgage Foreclosure Best Practices.
In a Supreme Court order, six of the task force’s recommendations submitted in a petition to the Court by the Attorney General became part of state statute through a bill the 2011 Legislature passed. Among other things, the new law strengthens borrowers’ rights to a settlement conference, where the distressed homeowner and lender can attempt to work out loan modification – and perhaps negotiate a repayment plan so foreclosure can be avoided, or arrange a “short sale” or deed in lieu of foreclosure so that the homeowner can give up the house and move on without protracted litigation. The new law also allows trial judges to hold lenders accountable through civil penalties and sanctions for violating borrowers’ legal rights.
Zoeller said homeowners at risk of foreclosure need not pay a large fee to a for-profit company, when advice on avoiding foreclosure is available for free from the Indiana Foreclosure Prevention Network at 1.877.GET.HOPE. Consumers who believe they have been a victim of a foreclosure consultant scam can file a complaint with the Attorney General’s Office by visiting http://www.indianaconsumer.com/ or by calling 1.800.382.5516.
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