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06/09/11

Lawyers' Committee Files Lawsuit Against California Mortgage Scam Scheme

 

On June 8, 2011, the Loan Modification Scam Prevention litigation team of the Lawyers’ Committee, in conjunction with the Law Foundation of Silicon Valley and Orrick, Herrington & Sutcliffe LLP, filed a class action lawsuit in California on behalf of vulnerable local homeowners victimized by a network of scam artists. The plaintiffs believe that over 90 California homeowners have been injured by this scam.  This complaint is the second case brought by the Lawyers’ Committee as a part of its nationwide legal campaign to combatforeclosure rescue fraud and mortgage modification scams.  

The complaint, Ocegueda v. Nathanson, alleges that the defendants, which include an attorney and his law firm, and an individual and his real and sham corporations, used local and trusted real estate agents to solicit homeowners to sign-up for their services. The defendants advertised loan modification assistance from a Beverly Hills attorney with purported expertise in commercial litigation and real estate, which led homeowners to believe that the attorney would have extra leverage with the banks in negotiating better mortgage terms. 

The complaint further alleges that the defendants enticed vulnerable homeowners into paying as much as $4,995 in upfront fees for the promised loan modification and loan audit services, backed by a 100% money back guarantee if the victims were unable to secure a loan modification through their services, but then completed little to no work for the victims. After months of requesting the same paperwork and providing few updates, the defendants refused to refund the fees collected from the homeowners. As a result of this alleged scam, the already struggling victims have lost hundreds of thousands of dollars and none were able to obtain or sustain favorable loan terms.   

California has been and continues to be the state hardest hit by the foreclosure crisis. In efforts to retain their homes and secure their finances, homeowners in California have lost over 11 million dollars in mortgage modification fees paid to alleged scammers.  Latino homeowners, who make up over 40 percent of all those in or facing foreclosure, have been hit especially hard by these modification schemes.

Through its Loan Modification Scam Prevention Network (LMSPN), the Lawyers’ Committee leverages vast pro bono resources and its unique complaint database to provide relief to consumers targeted by loan modification scams.  The LMSPN includes representatives from key governmental agencies, such as the Federal Trade Commission, the U.S. Department of Housing and Urban Development (HUD), U.S. Department of Justice, the U.S. Department of the Treasury, and the Federal Bureau of Investigation, as well as national affiliates and state and local enforcement offices.

Click here to read the full press release. 

Click here to read the complaint.

Click here to read a fact sheet on the case.

Click here for further information on California foreclosures.