Exploiting a loophole in federal law, scammers are using lawyers as front men to pose as legitimate foreclosure rescue companies, according to lawsuits filed last week by Lisa Madigan, attorney general of Illinois. Madigan sued four Chicago area companies and licensed attorneys, saying they stole thousands of dollars from Illinois residents while providing little or no help in return.
“Please know these operations are run by con artists who have started to use attorneys as sham fronts,” Madigan said in a press release. “These operators are scamming families out of thousands of dollars and actually making foreclosure more likely.”
The organizations under fire are taking advantage of the 2006 Mortgage Rescue Act, which allows attorneys to charge fees upfront for their work in preventing foreclosures.
What they are missing, Madigan says, is that they have to do actual work. ZeTrust, a Chicago-based company, marketed its services almost exclusively in Polish communities, according to the attorney general’s office. The company, owned by attorney Daniel Scott, allegedly took $1,000 from each victim with the promise that each person would meet with a lawyer, who would then negotiate with loan servicers to obtain a mortgage modification.
Victims didn’t even get to meet Scott himself, Madigan’s office says, and ZeTrust failed to get modifications for anyone.
[Featured Product: Need a loan?]
Similarly, the Legal Modification Network and the Law Offices of Matthew Wildermuth allegedly charged victims between $3,000 and $5,000 in upfront fees “for a loan modification obtained by an attorney that never materialized,” according to the AG’s office.
According to another suit, Loan Litigators International and the Law Offices of Michael E. Fleck reportedly advertised on radio stations that Fleck could obtain mortgage modifications within 45 to 60 days. At least one consumer paid nearly $1,500 but lost his house anyway, according to the allegations. Madigan’s office also sued a company called Exelpol and some of its employees, alleging that one consumer was “charged nearly $1,900 with the promise of obtaining a loan modification, but discovered later the modification was denied because the business failed to submit the right paperwork.” In total the four alleged scams raked in $375,000, Madigan’s office said.
[Related article: Mortgage “Relief” Company to Repay Consumers $1.8 million]
Image: mr. tee hee, via Flickr.com