Until the threat of foreclosure begins to ease, the threat from unscrupulous foreclosure rescue companies remains. That's the warning from Indiana Attorney General Greg Zoeller, who says homeowners in his state continue to be scammed.
Zoeller has sued USA Mortgage Aid, Inc., a California-based foreclosure consultant company, which he says scammed a St. Joseph County homeowner out of $1, 700.
"We often see bad actors attempting to capitalize on a crisis situation such as charity scams in the wake of Hurricane Katrina and the earthquake in Haiti. The economic downturn and housing crisis have created a breeding ground for financial scams, " Zoeller said. "We are now faced with a legion of foreclosure consultants that prey on homeowners desperately seeking a solution that will allow them to stay in their home."
The lawsuit alleges USA Mortgage Aid deceived consumers and violated several state consumer protection laws when the company demanded money up-front for services that had not been performed and without being properly bonded. The company is also accused of deceptive acts including misrepresenting to consumers that the consultants were experts in the area of foreclosure prevention or possessed in-depth knowledge of the industry.
Zoeller said more than 300 people have filed complaints about foreclosure consultants with the Attorney General's Homeowner Protection Unit (HPU) since the beginning of 2009.
The HPU investigates and pursues violations of Indiana's laws governing the activities of foreclosure consultants, as well as real estate appraisers, real estate licensees and involving mortgage fraud. More than a dozen lawsuits have been filed by the attorney general against foreclosure consultants in the past year.
Multiple methods
Foreclosure consultants have several methods for targeting their victims. They reach people through the Internet -- creating sophisticated websites complete with testimonials and reputable-sounding endorsements. Advertisements for their services can be found online, in newspapers and on television.
Often they will check local foreclosure filing notices -- this is a public record -- and target those homeowners whose lenders have recently filed a foreclosure notice. Sometimes they go door-to-door in neighborhoods known to have been affected by unemployment and the weak economy.
To counteract the mixed and false messages that questionable foreclosure consultants are perpetuating, the attorney general's office has partnered with the Indiana Foreclosure Prevention Network and the Department of Workforce Development's WorkOne Centers to hold free foreclosure prevention workshops across the state. These one-hour workshops are free and are open to the public.