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Loan Modification Companies May Not Charge Up-Front Fees Says Florida Attorney General

Attorney General Bill McCollum announced that his office has filed a lawsuit against an Orlando loan modification company alleging the company was committing foreclosure rescue fraud. Three Angels Community Action Network and company president Sherrard A. Haugabrooks are named in the lawsuit filed in Seminole County Circuit Court. The lawsuit specifically alleges violations of Florida’s Foreclosure Rescue Law, §501.1377.

Members of the Attorney General’s Economic Crimes Division, working as part of the Attorney General’s Mortgage Fraud Task Force, began investigating Three Angels Community Action Network in February 2009. The company allegedly charged homeowners an up-front fee generally equal to a monthly mortgage payment prior to providing loan modification services. The lawsuit further states the company’s client contracts did not contain the contractual disclosures required by Florida’s Foreclosure Rescue Law, a 2008 legislative priority of the Attorney General.

The Attorney General’s Office has received over 15 complaints about the company, which also does business as 3ACN; US Loss Mitigation Services of FL, Inc.; Appraisal Technology and Valuation Inc.; and 3ACN Loss Mitigation Services, Inc. The lawsuit alleges violations of Florida’s Unfair and Deceptive Trade Practices Act, violations of Florida’s Foreclosure Rescue Act, and misleading advertising.

Florida Statute §501.1377, protects homeowners who are in foreclosure or nearing foreclosure from companies offering potentially fraudulent foreclosure “rescue” services. Specifically, the statute governs companies providing foreclosure-related rescue services including loan modification and short sale services. These companies are prohibited from charging homeowners an up-front fee for these services and must provide homeowners with a written agreement.

The Attorney General’s office continues to review the practices of many companies providing foreclosure-related rescue services to ensure that they are in compliance with the new law. Homeowners should exercise caution when seeking help to prevent mortgage foreclosure. Homeowners should first attempt to negotiate with their lender before turning to outside help.

Florida residents that feel they have been victims of loan modification fraud should visit this page for help.


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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.
  • Loan Modification Researcher

    With our economic status today, a loan modification may be the only way for a homeowner to save their home. But most banks that are big doesn’t reply with loan modification inquiries fast because they don’t care if they lose some loans to foreclosure.

  • Heather The Loan Modification Queen

    This is great information for the homeowners out there, especially in Florida. Do you know of other states that may have a similar law like this?

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