Mortgage relief fraud schemes are still around, according to the Federal Trade Commission.
Acting on a complaint by the F.T.C., a federal court has halted a mortgage relief operation that the commission accused of taking in more than $1 million by offering troubled homeowners “bogus” help in staving off foreclosure.
The F.T.C. filed a complaint March 5 in the Federal District Court for the Central District of California in Santa Ana against Sameer Lakhany and five businesses that he controlled. The complaint alleged that he and the companies victimized hundreds of borrowers with two related mortgage-assistance frauds. Last week, the court issued orders halting operation of the businesses, freezing their assets and appointing a permanent receiver to oversee the firms while the F.T.C. pursues the case. The agency said it would seek funds for possible refunds for consumers.
Jerry Werksman, Mr. Lakhany’s attorney, said in a brief telephone interview that his client “didn’t go into this business to cheat people. It’s unfortunate the F.T.C. put an end to it because he was trying to help.”
In the first fraud, according to the F.T.C., representatives of the companies pretended to be a law firm and offered to represent consumers in group lawsuits against their lenders, for an upfront fee as high as $10,000. The company hired lawyers briefly to file the suits, the F.T.C. said, but then abandoned the cases and “failed to get the results they promised.”
In the second version, the F.T.C. alleged, the companies promised to negotiate loan modifications, like a lower payment or principal balance, in exchange for upfront fees as high as $1,595. (Federal rules that took effect last year prohibit firms from taking upfront fees for negotiating mortgage modifications in most cases.)
Consumer advocates say borrowers seeking help with a troubled mortgage should seek out counselors certified by the federal Department of Housing and Urban Development. The Homeownership Preservation Foundation, for instance, an umbrella group that works with seven major nonprofit groups across the country that advise strapped homeowners free. The foundation operates a toll free number, 1-888-995-HOPE.
“That number will get you to a legitimate, HUD-certified mortgage counselor,” said Colleen Hernandez, president and chief executive of the foundation. “It’s a very confusing environment for consumers to wade through. They ask, ‘How do I know whom to trust?’”
The foundation’s Web site includes tips for avoiding fraud schemes. The counselors at the foundation and its affiliates are knowledgeable about the various mortgage assistance programs, she said, and can assist borrowers in evaluating their options and in dealing with their lenders on the phone.
A government Web site established to communicate information about the recent national mortgage settlement also warns borrowers about fraud and offers tips to help make sure you are dealing with a legitimate lender or mortgage help firm.
Source: New York Times
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