In the following press release Minnesota Attorney General Lori Swanson announced today (8/18/2008) filed two new lawsuits against so-called mortgage “foreclosure consultants,” bringing to ten the total number of such companies her Office has sued. The new lawsuits are against Law & Associates, LLC, a Florida limited liability company, and Davis Mitigation, Inc. (also doing business as Davis Foreclosure Assistance), a New Jersey corporation with offices in New Jersey, New York, and Florida.

“We continue to see a disturbing trend of companies seeking to defraud Minnesota homeowners who are already in the financial pinch of foreclosure. These companies really kick people when they’re down,” Swanson said.

The suits allege that these companies used websites, targeted mailings, and/or the telephone to solicit financially-distressed homeowners by assuring them that the companies could stop the foreclosure process and save their homes from foreclosure. The suits allege that the Defendants unlawfully charged customers up-front fees of up to $1790, before any services were performed, failed to include required safeguards in their contracts with Minnesota homeowners, and failed to deliver promised services.

A 2004 Minnesota law bars “foreclosure consultants” from charging any compensation until after the foreclosure consultant has “fully performed each and every service the foreclosure consultant contracted to perform or represented he or she would perform.” The law also requires entities that charge homeowners fees to assist in stopping, avoiding, or postponing a foreclosure, to have a written contract that includes certain safeguards and allows the homeowner to rescind the contract for any reason within three days.

The Minnesota Attorney General’s Office has published a consumer bulletin, entitled Facing Mortgage Foreclosure, which offers tips for borrowers facing mortgage default or foreclosure, and warns homeowners to be on the lookout for potential scams. Among other things, Swanson provides the following guidance to homeowners facing mortgage default:

• Take immediate action to contact the lender if you are having trouble paying a loan. The lender may be willing to work out a repayment plan, loan modification, forbearance, reinstatement, etc. Don’t wait to contact the lender, as delays may jeopardize your options.
• Contact a reputable mortgage counselor. Borrowers may find legitimate counselors by contacting the Minnesota Housing Finance Agency (“MHFA”) or the U.S. Department of Housing and Urban Development (“HUD”).
• Don’t pay money in advance to a “foreclosure consultant.” Minnesota law bans foreclosure consultants from collecting a fee until after they deliver their services.

Swanson Also Permanently Bans Two Companies And Their Officers from Doing Mortgage Foreclosure Consulting Business in Minnesota

In a related development, Swanson also announced today Consent Judgments with two separate companies: (1) Foreclosure Assistance Solutions, LLC and (2) American Housing Authority, Inc. and American Housing Financial, Inc., for unlawfully charging Minnesota homeowners up-front fees to save their homes from foreclosure and failing to deliver promised services.

Under the terms of the Consent Judgments, both companies and their officers are permanently barred from doing mortgage foreclosure consulting business in Minnesota and must provide restitution to all affected Minnesotans. The Consent Judgment with Foreclosure Assistance Solutions was approved by Hennepin County District Court Judge John L. Holahan and the Consent Judgment with American Housing Authority and American Housing Financial was approved by Hennepin County District Court Judge George F. McGunnigle.

Homeowners who feel they have been taken advantage of by a mortgage foreclosure consultant who did not provide promised services for which the homeowner paid money may file a complaint with the Attorney General’s Office by calling 1-800-657-3787 or 651-296-3353. Consumers also may download a Consumer Complaint Form from the Attorney General’s website by clicking here and returning the completed form to: 1400 Bremer Tower, 445 Minnesota Street, St. Paul, MN 55101-2131.