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Forensic Loan Audits and Foreclosure Rescue Companies are a Scam Says California Attorney General

Attorney General Edmund G. Brown Jr. today joined the California Department of Real Estate (DRE) and the State Bar of California in warning Californians to avoid forensic loan audits, the loan-modification industry’s latest “phony foreclosure-relief service,” in which homeowners pay up-front fees for a forensic review of their lender’s practices, but are provided no actual foreclosure relief.

“Forensic loan audits are yet another phony foreclosure-relief service hawked by loan-modification consultants trying to cash in on the desperation of homeowners facing foreclosure,” Brown said. “The foreclosure-relief industry continues to be long on promises, but short on results.”

Individuals and businesses who offer forensic loan audits use inflated and misleading claims to convince homeowners to pay up-front fees for services that produce no actual foreclosure relief. Homeowners are encouraged to pay for an audit of their mortgage loan file to determine their lender’s compliance with state and federal mortgage-lending laws. This audit is pitched to homeowners as a tool they can use to gain leverage and speed up the loan-modification process.

In truth, there is no evidence or statistical data to support claims that forensic loan audits-even if performed by a licensed, legitimate and trained auditor, mortgage professional or lawyer-will help homeowners obtain loan modifications or provide any other foreclosure relief.

“The State Bar is committed to dealing with all aspects of loan foreclosure fraud involving attorneys,” said State Bar President Howard Miller. “We will continue to work with all the other government agencies to prevent fraud and to move for disciplinary sanctions against attorneys who violate their obligations to their clients.”

By law, all individuals and businesses offering mortgage-foreclosure consulting, loan-modification and foreclosure-assistance services must register with Brown’s office and post a $100,000 bond. It is also illegal for loan-modification consultants and businesses to charge up-front fees for their services.

Brown has sought court orders to shut down more than 30 fraudulent foreclosure-relief companies and has brought criminal charges and obtained lengthy prison sentences for dozens of deceptive loan-modification consultants.

In 2009, the DRE investigated more than 2,000 complaints involving loan-modification scams. Nearly 350 individuals and companies received a Desist and Refrain Order to stop illegal activity.

“The DRE has aggressively pursued loan-modification scammers who prey on vulnerable and financially stressed homeowners, and those peddling false hope by promising mortgage relief with a forensic audit will be scrutinized,” stated Real Estate Commissioner Jeff Davi. “With consumer education efforts and warnings, we hope to keep consumers from falling victim in the first place.”

As part of today’s consumer alert, Brown offered the following tips to homeowners:

  • Don’t pay up-front fees. Foreclosure consultants are prohibited by law from collecting money before services are performed.
  • Don’t ignore letters from your lender or loan servicer. Responding to those letters is your best bet for saving your house.
  • Don’t transfer title or sell your house to a “foreclosure rescuer.” Beware! This is a scam to convince homeowners they can stay in the home as renters and buy their home back later. It could also be part of a fraudulent bankruptcy filing. Either way, a scammer can then evict you and take your home.
  • Don’t pay your mortgage payments to anyone other than your lender or loan servicer. Mortgage consultants often keep the money for themselves.
  • Never sign any documents without reading them first. Many homeowners think that they are signing documents for a loan modification or for a new loan to pay off their delinquent mortgage. Later, they discover that they actually transferred ownership of their home to someone who is now trying to evict them.

Forensic Loan Audits and Foreclosure Rescue Companies are a Scam Says California Attorney General
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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • 2000 loan

    Great! Thank for information, I’m looking for it for
    a long time,

  • http://www.mortgagefraudexaminers.com Storm

    This is old news, Mortgage Fraud Examiners exposed this problem a year ago in a press release: “Beware Of The Latest Foreclosure Rescue Scam–Loan Audits”

    • Jdiesel14

      Freedomlegal plans in Florida aka frontier plans stay away this so called scammer is a rip off and does nothing for you work it out directly with the lender if you can phone number is 877 427 5534 and they also use reaching u network another scammer and they use some bogus attorney in my and Florida called litvin torrens and assoc stay away people they took my my 5250 .00 to be exact and did nothing they gave me back 1 payment of 750.00 and stole the rest luckily I was smart enough to get away before they took any more money now I have to dig myself from the hole they got me into stay away if you are involved or are going to stop it because you will not be in any better position then before they called you or you called them run run run hopefully these assholes will be out of business very soon

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