Attorney General Announces Actions Against Seven Loan-Modification Companies As Part Of Multistate Sweep
DENVER — Colorado Attorney General John Suthers announced today the state has reached agreements with seven loan-modification firms that either failed to deliver results to Colorado consumers or engaged in deceptive advertising. The agreements will force these firms to either comply with Colorado law or not do business in the state.
Borrowers who are in default on their loans are literally bombarded with solicitations from companies that offer to help save their home. The Office of the Attorney General has received complaints about some firms that offer to save homes or modify borrowers’ loans by offering “negotiation services.” These complaints indicated that despite the fact that the borrowers paid substantial upfront fees, these firms failed to deliver on their promises. In many cases, the Office the Attorney General discovered these firms accepted consumers’ money, ranging from $2,000 to $3,500, and made little or no effort to modify the consumers’ loans. In some cases, the companies told consumers to stop making their mortgage payments, leaving Coloradans at risk of foreclosure. Some of these borrowers, therefore, end up suffering foreclosures as well as losing their up-front fees.
The Office of the Attorney General has obtained cease-and-desist orders or assurances of voluntary compliance from seven loan-modification companies: Eugene Alkana Law Firm (dba)/Legal Home Solutions (June 19, 2009); Infinity Group Funding (Dec. 1, 2008); NC Home Solutions (May 29, 2009); Traut Law Group (June 11, 2009); Nationwide Modification Center, Inc. (July 2, 2009); Rescue Home USA (July 7, 2009); and, Summit Resolutions (July 6, 2009).
The seven companies will be barred from doing business in Colorado unless they comply with state laws, such as requirements that only licensed mortgage brokers or attorneys perform loan modifications. The companies also will be barred from putting out deceptive or false advertisements. The companies also will be required to comply with provisions of the Colorado Foreclosure Protection Act. Under the Foreclosure Protection Act, a consultant cannot charge an upfront fee and must enter into a contract with the borrower that contains specific provisions.
The Office of the Attorney General’s actions come as part of “Operation Loan Lies,” a multistate sweep the Federal Trade Commission announced today. The sweep covers nearly 20 states and the District of Columbia.
“I would urge borrowers who are in foreclosure or struggling to make their mortgage payments to take the simple step of picking up the phone,” Suthers said. “Free help is only a phone call away on the Colorado Foreclosure Hotline.”
Consumers can contact the Colorado Foreclosure Hotline at 1-877-601-HOPE (4673). The hotline is staffed with HUD-approved nonprofit housing counselors who can talk with them about their mortgage. Studies have shown that four out of five homeowners who use the Foreclosure Hotline stand a good chance of saving their home at little or no cost.
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Tips for borrowers who are experiencing trouble with their loans
- Free help is available by calling the Foreclosure Hotline at 1-877-601-HOPE (4673)
- It is not necessary to pay for negotiation services.
- Never stop paying on your mortgage, if possible.
- Don’t ignore communication from your lender. Many lenders have loan modification programs that can help you save your home. In many cases getting these modifications is as easy as calling your lender and providing some current financial information.
- Check out the Better Business Bureau’s Web site regarding the reliability of any company that offers negotiation services. Some of the fraudulent companies that the Office of the Attorney General has investigated had an “F” rating with the BBB.
DateJuly 15th, 2009