Lawyers’ Committee Applauds Anti-Foreclosure Rescue Scam Sweep to Protect and Educate Vulnerable Homeowners Nationwide
WASHINGTON, D.C. – July 28, 2014 – (RealEstateRama) — The Lawyers’ Committee for Civil Rights Under Law (Lawyers’ Committee) applauds and supports the anti-scam enforcement sweep against certain legal operations and others by the Consumer Financial Protection Bureau (CFPB), Federal Trade Commission (FTC) and several state agencies announced this week by the CFPB. Since 2010, the Lawyers’ Committee has been working closely with its partners in the Loan Modification Scan Prevention Network (LMSPN), including governmental agencies, fair housing groups and other nonprofit organizations, in combatting such scams through education of market participants, outreach to consumers and through private enforcement actions against scammers. “Through its LMSPN Project it has been the Lawyers’ Committee’s privilege to ensure that all that the organization learns about foreclosure rescue fraud activities is made available to these enforcement agencies and all others that are bringing actions against these scammers,” said Yolanda McGill, manager of the LMSPN.
The Lawyers’ Committee also welcomes CFPB’s new education materials that will help consumers avoid fraud and ask the right questions to avoid falling victim to unscrupulous loan modification operators, including some attorneys, who take consumers’ money but do not provide the promised assistance. The disturbing trend of attorney involvement in these scams is on the rise as evidenced by the increasing number of homeowners reporting that an attorney, or promises of legal representation, was somehow part of the scam. One critical component of these new materials is a model Third Party Authorization Form, which homeowners are encouraged to fill out and use anytime they decide to stop working with their lender directly and instead wish to authorize a housing counselor or other third-party to talk to the lender on his or her behalf.
“Homeowners trying to avoid foreclosure are still getting ripped off because scamming operations are bombarding consumers with websites and web ads, telephone solicitations, radio and TV ads, all promising quick relief in exchange for some type of payment,” added McGill. “The current environment is dangerous for all homeowners trying to find real help among all of these scam solicitations. It is my hope that if a distressed homeowner declines to use a free HUD-approved housing counselor and decides to pay for assistance, the homeowner uses this new form to find out if the third party is qualified and really licensed to do the services he or she is selling.”
Using its multi-pronged approach to fighting foreclosure rescue fraud over the last four-plus years of the LMSPN, the Lawyers’ Committee has become familiar with parties such as these defendants who appear to be engaging in large-scale fraud operations impacting hundreds of homeowners in several states. The national Loan Modification Scam database permits us to observe when a critical mass of scam complaints have been submitted against particular actors, to assess the manner in which these parties solicit and engage with homeowners, and to examine demographic and geographic trends that provide snapshots of scam tactics, targets, and alleged perpetrators.
The Lawyers’ Committee is also familiar with these operations through its own litigation. It has been in the forefront in bringing private litigation to assist homeowners affected by scamming operations and operators and has successfully shut down scamming operations and operators and recovered money for the affected homeowners since filing its first of 14 lawsuits in 2011.
“Seven of our 14 lawsuits include attorneys and their law operations as defendants, which is a disturbing trend and one that further erodes confidence in our profession,” according to Linda Mullenbach, senior special counsel at the Lawyers’ Committee, who heads the Lawyers’ Committee’s loan scam litigation. “We continue to shut down these supposed legal operations and lawyers associated with them through our private litigation efforts, and look forward to these newly filed governmental actions and other state and federal enforcement efforts successfully shutting down more of these operations and recovering compensation for the affected consumers.”
The Lawyers’ Committee is well aware of the harm that these particular defendants have caused, and others like them continue to cause, distressed homeowners all across the country. In fact, our analysis of the homeowner complaints that the LMSPN has compiled in our database led us to identify some of these defendants as among the most prolific. The agency actions are the kind of forceful assault required to combat this ongoing crisis
Stacie B. Royster