From the California AG: On July 7, 2009, as part of “Operation Loan Lies,” Brown, the Federal Trade Commission and the State of Missouri sued US Foreclosure Relief Corp., George Escalante, Cesar Lopez and Adrian Pomery who operated a number of fraudulent foreclosure relief companies including H.E. Servicing, Inc. On the same day the suit was filed, the U.S. District Court for the Central District of California entered a temporary restraining order appointing an independent receiver to closely examine the structure, operation and finances of these companies.
Los Angeles – Responding to a just-released report that exposes the inner workings of a loan modification boiler room, Brown warned homeowners to avoid “shadowy and unscrupulous” loan modification consultants who use aggressive telemarketing tactics and charge thousands of dollars in upfront fees for foreclosure relief.
The report, written by a court-appointed receiver, found that H.E. Servicing, Inc., a loan modification company that Brown sued last week, ran a “well-appointed telephone boiler room” focused on making money, rather than helping homeowners stay in their homes.
“From sun up to sun down, this shadowy and unscrupulous operation used high-pressure telemarketing tactics to bully homeowners into paying thousands of dollars for phony loan modification services,” Brown said. “In reality, the goal wasn’t to help these homeowners stay in their homes, but to rip them off and take their hard-earned dollars.”
On July 7, 2009, as part of “Operation Loan Lies,” Brown, the Federal Trade Commission and the State of Missouri sued US Foreclosure Relief Corp., George Escalante, Cesar Lopez and Adrian Pomery who operated a number of fraudulent foreclosure relief companies including H.E. Servicing, Inc. On the same day the suit was filed, the U.S. District Court for the Central District of California entered a temporary restraining order appointing an independent receiver to closely examine the structure, operation and finances of these companies.
After reviewing documents, tracing financial transactions, interviewing employees and speaking with state officials, the receiver made the following findings:
- “Even if most of the deceptive sales practices could be cured, this is not a lawful advance fee loan modification business. It is not operated and managed by a lawyer or a properly licensed DRE broker. It is a phone sales operation selling unlicensed loan modification services with more than 80 percent of its clients residing outside of California.” (p. 2)
- “At the outset, it is a challenge to precisely categorize this business. It is not a law practice. It is not a licensed mortgage or real estate company. Rather, I see this business as a high-pressure, cash-up-front telephone sales business targeting distressed homeowners. It appears that some homeowners may have been helped, but the overriding goal of the business was not to help homeowners, but to make money.” (p. 6)
- “The Sales Department is essentially a well-appointed telephone boiler room with phone cubicles for 44 sales people – ‘counselors’ – and separate offices or stations for 3 on-site managers.” (p. 9)
In addition to the excerpts above, the receiver’s report, submitted July 15, 2009, made the following observations about H.E. Servicing, Inc.:
- The sales department operated like a boiler room. Spread across 11,285 square feet of office space in Anaheim, the company operated as a “bustling enterprise” with phone cubicles for 44 sales people and offices for three on-site managers. Sales people handled approximately 500 incoming calls per day in staggered shifts from 5:00 a.m. to 5:00 p.m. Of the 60 employees, only eight “staff negotiators” communicated directly with clients and lenders about mortgage details.
- The typical commission was $450 for a fully paid sale (i.e. $2,500 upfront payment) with an extra $25 if the consumer paid by debit card or wire transfer. If the consumer could only handle a payment plan (minimum $1,000 down), the sales person received a percentage (10-15%) of the amount actually paid, with no commission on the later payment. Other sales incentives were also offered, including a Rolex watch.
- Sales people informed homeowners that the company successfully negotiated 10,000 loan modifications, when in truth, only 311 were completed. Sales people informed homeowners that the company had 10,000 confirmed and negotiated loan modifications, a 90% success rate, nationwide service and over 100 workers. According to company records, from November 2008 to July 8, 2009 a total of 2,960 loan modification files were opened with only 311 completed.
- The company spent $70,000 a week on radio and television advertising in 100 media markets and had plans to expand to $80,000-$100,000, producing an estimated $270,000 a week in new business. The company also planned to aggressively hire additional sales staff.
- The company advertised a money back guarantee, but just before being shut down it implemented a cap on refunds, regardless of the amount due to consumers.
- Homeowners were led to believe that they were hiring a lawyer or law firm to save their homes. Sales people frequently referred to the company as “attorney-based.” One sales person had a note claiming that the attorney was “the most aggressive attorney in the mortgage industry.” By contrast, the receiver’s report says that the business is “not a law practice.”
- In the first six months of 2009, a report prepared by an outside accountant reported a net income of $4.5 million.
Last Friday, with the temporary restraining order set to expire, the U.S. District Court for the Central District of California held a hearing to consider the receiver’s report and other evidence presented by the Attorney General, the Federal Trade Commission and the State of Missouri. After hearing this evidence, the court issued a preliminary injunction to keep the terms of the temporary restraining order in place.
The Court set a hearing for July 28, 2009 to consider options to assist homeowners, particularly those facing foreclosure.
Brown has been leading the fight against fraudulent loan modification companies. In addition to last week’s legal action against 21 individuals and 14 companies, he has sought court orders to shut down several companies including First Gov and Foreclosure Freedom and has brought criminal charges and obtained lengthy prison sentences for deceptive loan modification consultants.
As part of today’s consumer alert, Brown’s office issued the following tips for homeowners to avoid becoming a victim:
DON’T pay money to people who promise to work with your lender to modify your loan. It is unlawful for foreclosure consultants to collect money before (1) they give you a written contract describing the services they promise to provide and (2) they actually perform all the services described in the contract, such as negotiating new monthly payments or a new mortgage loan. However, an advance fee may be charged by an attorney, or by a real estate broker who has submitted the advance fee agreement to the Department of Real Estate, for review.
DO call your lender yourself. Your lender wants to hear from you, and will likely be much more willing to work directly with you than with a foreclosure consultant.
DON’T ignore letters from your lender. Consider contacting your lender yourself, many lenders are willing to work with homeowners who are behind on their payments.
DON’T transfer title or sell your house to a “foreclosure rescuer.” Fraudulent foreclosure consultants often promise that if homeowners transfer title, they may stay in the home as renters and buy their home back later. The foreclosure consultants claim that transfer is necessary so that someone with a better credit rating can obtain a new loan to prevent foreclosure. BEWARE! This is a common scheme so-called “rescuers” use to evict homeowners and steal all or most of the home’s equity.
DON’T pay your mortgage payments to someone other than your lender or loan servicer, even if he or she promises to pass the payment on. Fraudulent foreclosure consultants often keep the money for themselves.
DON’T sign any documents without reading them first. Many homeowners think that they are signing documents for a new loan to pay off the mortgage they are behind on. Later, they discover that they actually transferred ownership to the “rescuer.”
DO contact housing counselors approved by the U.S. Department of Housing and Urban Development (HUD), who may be able to help you for free. For a referral to a housing counselor near you, contact HUD at 1-800-569-4287 (TTY: 1-800-877-8339) or www.hud.gov.
If you believe you have been the victim of a mortgage-relief scam in California, please contact the Attorney General’s Public Inquiry Unit at http://ag.ca.gov/consumers/general.php.
A copy of the court-appointed receiver’s report, submitted July 15, 2009, is attached.
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Related Attachments
•receiverblrroom.pdf [PDF 721 kb / 18 pg]
Other news:
Attorney General Koster said US Foreclosure Relief advertised that they would work with a homeowner’s lender to stop further foreclosure proceedings. However, the Attorney General’s office found the company would take customers’ money, provide no services, and subsequently refuse to respond to consumers who wanted to complain or get their money back.
The suit, filed in Kansas City, seeks an injunction to stop the company from continuing to defraud consumers as well as restitution and penalties.
we were told not to make payments until homeowners told us we were told that our payments would go down to $400.00 dollars amonth and we would be on a fixed rate of 6% or less for 30 years including taxes & insurance we paid $1000.00 down and two other payments of $375.00 for a total of $1750.00 we were supposed to make two more payments of $375.00 we are now facing foreclosure our other bills are behind and now we are having to come up with three months of house payments and don’t know how we are going to do it
I to have been mislead by this company. I called 4 times a day for several weeks to try and my money refunded. I did finally get an e-mail that claimed my refund was on the way, and then this court order came down. Now I have no idea what is going on, and no one is answering the phones any longer. These people, and the companies that practice these kinds of criminal acts should be made an example of. I will not let this go, and will do everything in my power to get my money back. Someone has it, and someone will be paying it back to me. I will not give up on this.
We also in VA were victims of H.E Servicing Inc.
We paid our $2,500.00 up front and was informed not to talk to our mortgage company unless it was through them in an effort to save our home we have been living in for 20 years. We actually thought we had hired an attorney Brandon Moreno with a mediator through Steve Hauk.All of this was recorded.) After countless emails and phone calls (( which I have all the documentation) Insted they took our hard earned money( in our time of need and the decline of our economy. This money could have been put to better use, and ran off with it. We were given this company’s name by a well respected bank in our Hometown of Tappahannock, VA. This is a situation of robbery and grand lanceny not to metion Fraud and we want our money back NOW!! They have our debit card number, which now has to be reissued. They have our bank statemnt and SS#’s which could lead to identity theft. If this situation is not cleared up soon, we will be pressing charges against the state of California, and the Federal Trade Commision, which I have done. and the Attorney General office’ which I have called on 7.31.09. I have filed a complaint with our local police Department. I know $2,500.00 is not a lot of money to you guys, but we worked for that money. And I want a full refund. I will need someone from the FTC office to call me or email me immediatley. If this money is not back in my account within the a couple of weeks, you leave me with no other choice. I will not let this go either, and for all those who were taken for granted by this fraudlent company not only do we deserve a full refund, but restitution for the greif and agony by the pressure put upon us , because we were in forclosure due to illnes. Just becasue H.E Servicing is being investigated, does not mean we we should have to wait to gt a full refund. This is between H. E Serving and the sate of California with Govenor of California
Thak you for your quick response to this matter.
Penny T Minter
What has happened here is just the American Way. People figure out a way to scam the public and before anyone figures it out, they have collected millions of dollars and have probably sent that money to an off shore account never to be seen again. We will never see that money even if we sue them you might get a dollar back after its all said and done. I have come to believe that most attorneys are crooks with a license to steal there are a few good one’s out there but they are few and far between. The people that stole the money have no conscience. I’m buying a plane ticket and looking these people up they gave us there names.
We were told that if we paid 1000 down and then pay 750 two more times to make 2500 then they would get our interest down and our monthly payment down to at least 850 a month. Of course we paid the 2500 and they did not do anything they promised. We have put our savings into this and we want our money back.. We are back on our mortgage and we are getting foreclosure letters from our lender. This is high way robbery we all need to get our money back…….
I was also misled by these people too. They asked me how much money we had and told me to send half, which was$1175 and I had another month to send the other half. They told me they could help us by getting our monthly payment reduced and the interest rate dropped. We were behind in our payments because of layoffs, and then my husband had a stroke while telling me. He has since had another one. After the company pulled the rest of the money out of the bank, they told me there was nothing they could do. All of a sudden their confidence was gone. The power they first had they no longer had. Yes, I want my money back too. Every last cent. They took money that we could have put toward our homes, so let them take money from theirs and give us ours back.
Victimized by the USForclosures Pomeroy and Associates. Destroyed my credit, almost lost my home, lying to me. Not to talk to my Mortgages Bank. I’m a Veteran’s Widow. I paid them $3700.00 with my credit cards. Suppose to help me with a Loan Modification for my home. They order me not to talk to anyone for my Mortgages Company which is the Bank who handle my home loan. I was desperate I need help when I got a call from them. I thought they were legit. They promised me it will take 2 to 3 months only so my credit won’t go that bad. They ordered me not to make any payments they even ordered me to transfered my Social Security to the other bank so my Bank who I got my loan can’t withdraw my payments. My social security check deposited in that bank automatic from the social security. so I did. After, I paid them twice, its getting harder and harder to get hold of them every time I call different people will answer the phone always very sure that they will help me. Then is getting harder and harder to get hold of them until now. This is a long story I can’t write it all here I have to leave for an appointment soon. My question is when do I get my refund if I ever get it. I need your help. Thank you and greatly appreciated.
Sincerely,
D. Peyton