Indiana Goes After Foreclosure Consultants and Loan Modification Companies

Infomercials, websites, radio advertisements, and word of mouth are being monitored by Attorney General Greg Zoeller’s Homeowner Protection Unit (HPU) are using to track down foreclosure consultant companies that may be operating illegally in Indiana or have failed to strictly comply with Indiana’s new laws meant to protect consumers. Zoeller today filed lawsuits against three for-profit foreclosure consultant companies claiming they have not complied with Indiana’s statutes in demanding money up-front for services not yet performed.

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“Indiana requires strict compliance with statutes meant to protect consumers. We don’t want to wait for someone to tell us they lost their home because they gave their last dime to a foreclosure consultant,” Zoeller said. “Foreclosure consultants pose a serious risk to the financial stability of hundreds of homeowners and protecting consumers means stopping them before they have a chance to hurt people.”

Lawsuits were filed on August 6, 2010 against:
FHA All Day.com – Filed in Bartholomew County
Home Loan Modification – Filed in Hamilton County
Foreclosure Relief Services National, Inc. and Patrick Kirby – Filed in Marion County

In Indiana, a foreclosure consultant or credit service organization must have a $25,000 surety bond registered with the Attorney General’s office before demanding payment for unperformed services. The company’s bond acts as an insurance policy for consumers in the event the company fails to perform the services and does not provide a refund.

The Attorney General’ HPU has filed16 lawsuits and reached six settlements this year against foreclosure consultants, which is already double the number of lawsuits filed last year. More than 150 consumer complaints against foreclosure consultants are currently being investigated by the attorney general’s office.

“Hoosier hospitality does not extend to those who might take advantage of those in finance trouble,” Zoeller said.

Consumer complaints against foreclosure consultants spiked in 2009 as the economy took its toll on the unemployed and homeowners who typically might ignore “too-good-to-be-true” promises. They were drawn to claims made on websites, late-night TV commercials and radio programs. The attorney general’s investigation into these three cases revealed these companies are believed to be violating multiple state consumer protection laws. The lawsuits were filed as a preemptive strike in order to prevent the victimization of Hoosier consumers.

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The majority of on-going investigations involve companies not located in Indiana, however the complaint filed in Marion County today is against an Indianapolis man, Patrick Kirby and his organization Foreclosure Relief Services National, Inc.

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