The following press release the Minnesota Attorney General, Lori Swanson, announced the filing of six new lawsuits in Hennepin County District Court against foreclosure consulting companies that charged Minnesota homeowners up to $2,375 to save their homes but failed to provide promised assistance that would help them retain home ownership.

“We do not tolerate mortgage foreclosure consultants taking advantage of struggling homeowners who are already between a rock and a hard place in the worsening mortgage meltdown,” Swanson said.

The lawsuits filed today are against: (1) National Foreclosure Relief, Inc., a Nevada corporation with a California business address; (2) Lewis Loss Mitigation, Inc. of Alabama, which also does business as Stop Foreclosure Center and Lewis and Associates Consulting; (3) D.R. Financial Services Corp. of California, which also does business as D.R. Financial and Superior Home Loans; (4) American Foreclosure Specialists, LLC, an Oklahoma limited liability company; (5) Mortgage Default Assistance, LLC, a Florida limited liability company; and (6) Home Assure, LLC, a Florida limited liability company that claims it has offices in the Empire State Building.

The suits allege that these companies used websites, targeted mailings, and/or the telephone to solicit homeowners by assuring that the companies could stop the foreclosure process. Consumers who contacted these companies were charged an immediate fee before any services were performed, in violation of Minnesota law. Homeowners have complained that these companies failed to deliver on promises of assistance after collecting these up-front fees.

The suits allege that these companies violated a 2004 Minnesota law barring “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 borrowers fees to assist in stopping, avoiding, or postponing a foreclosure, to have a written contract containing certain safeguards. All six lawsuits seek injunctive relief, restitution, civil penalties, and attorneys fees.

The Minnesota Attorney General’s Office has published a consumer guide, 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 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 agree to pay money in advance to a “foreclosure consultant.” Minnesota law bans foreclosure consultants from collecting a fee until after they deliver their services.

In December of 2007, Attorney General Swanson filed lawsuits against Foreclosure Assistance Solutions, LLC and American Housing Authority, Inc./American Housing Financial, Inc. over similar allegations. Prior to her inauguration, Swanson created a predatory lending study group that proposed legislation to reform predatory lending practices such as loans made without regard to a borrower’s ability to repay the loan and issuing adjustable rate mortgages without verifying that the borrower can pay not just the initial teaser rate, but also the fully amortized rate after the teaser period expires. The recommendations of the study group became law in 2007. Swanson has advocated for similar regulation at the federal level, testifying before the United States House of Representatives Financial Services Committee and the Board of Governors of the Federal Reserve System.

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.

In the following press release Illinois AG Lisa Madigan announced the filing of a suit in Cook County Circuit Court against One Source Mortgage, Inc., and the president of the company, Charles G. Mangold. One Source operated on Chicago’s northwest side.

“This company’s conduct is a prime example of the behavior of unscrupulous mortgage brokers that has led to a foreclosure crisis for many Illinois homeowners,” Madigan added.

One Source solicited consumers through advertisements in the Chicago Sun-Times and direct mailings that promised mortgages with very low monthly payments. These advertisements did not adequately disclose, however, that the low monthly payments were based on introductory “teaser” interest rates that expired after one month. The interest rate for the mortgage would then adjust every month thereafter. If consumers continued to make the advertised monthly payment, they would not pay any of the principal of the loan or even the full amount of interest that accrued on the loan each month. The unpaid interest would then be added to the principal of the loan, causing the principal balance of the loan to increase. One Source allegedly did not tell consumers any of these details about their loans.

As a result, some consumers believed that their teaser rate or low monthly payment would last beyond the first month of the mortgage loan and even for the life of the loan. One Source allegedly told an Illinois consumer that he would have an interest rate of 0.950 percent for the first year of his loan. In reality, the consumer’s interest rate increased to 7.5 percent after the first month. One Source allegedly told another consumer that the combined principal and interest payment on her two mortgages would be $1,357.47. Sixteen months later, the principal and interest payment on this consumer’s loans was actually $2,616.16. According to the complaint, One Source told another consumer that a minimum monthly payment of $700 would cover all the accrued interest on his loan. In reality, the consumer would have to pay $1,816 per month just to cover the monthly interest.

In addition to misrepresenting the nature of the mortgage loans sold to consumers, One Source also grossly overstated homeowners’ incomes so that consumers appeared to be able to afford a much larger mortgage amount. This was done without the knowledge of the borrowers, who had frequently submitted verifiable documentation of their true income to One Source. For example, One Source falsely listed one consumer’s monthly income as $9,000 on her mortgage loan application. This consumer had provided pay stubs and tax returns to the company to verify her income of approximately $2,200 a month. This consumer was unaware that the company listed her income as $9,000.

The complaint also details how One Source allegedly used high pressure sales tactics to rush consumers through the closing on their mortgage loans. On average, most consumers’ closings lasted less than 30 minutes. Some consumers had closings that lasted only 10 or 15 minutes. To entice consumers to close on their loans, One Source would promise to refinance consumers into loans with more favorable terms at a later date. One Source would often do this under the guise of helping consumers improve their credit. One Source allegedly promised one consumer that her credit would improve if she refinanced her home multiple times. This consumer refinanced her home three times in one year through One Source. The company received approximately $30,000 in loan origination fees alone from these transactions. Now, this consumer is facing foreclosure.

By the time the One Source consumers learned of their true loan terms, they were left with few options as the payments were unaffordable, the homes had been stripped of their equity and the mortgage loans contained stiff prepayment penalties, preventing refinancing. A number of One Source consumers are now having difficulty paying their mortgages and must sell their homes in order to avoid foreclosure.

Resources:
Press Release

In the second case announced by Illinois AG Lisa Madigan’s second lawsuit involves a number of fraud schemes orchestrated by defendant Dayton D. Vickers Ellis, a/k/a Dale Ellis, president of the following mortgage brokering and home repair businesses also named as defendants in the lawsuit: Advocate Financial Services, Inc., Alpha Construction & Development, Inc., American Heritage Building Consultants, Inc., Apollo Custom Builders, Inc., Illinois Restoration Program, Inc., a/k/a Illinois Lending Institution, Indiana Restoration Program, California Restoration Program, and New York Restoration Program. Ellis’ operation was headquartered on the north side of Chicago.

According to Madigan’s complaint, Ellis used three different schemes to defraud homeowners. Ellis’ fraudulent schemes all began with deceptive advertising and took different forms. Ellis sent direct mail solicitations to Illinois consumers describing an alleged government program that offered grants for home repairs. Ellis directed consumers who responded to these mail solicitations to submit mortgage loan applications to Advocate Financial Services. Ellis falsely told consumers that these mortgage applications were part of the purported government grant process. Ellis received substantial fees for originating loans. Before any home repair work was even started, Ellis would disburse money from the consumers’ mortgage proceeds directly to his construction company, American Heritage Building Consultants. In many instances, Ellis did not finish, or in some cases, even begin, the promised home repair work.

The complaint describes how Ellis’ first scheme worked to defraud consumers. For instance, in one case, a consumer owned her home free and clear prior to her transaction with Advocate. Ellis advised that consumer to take equity out of her home to pay for home repairs through his company and to pay off other unsecured debt. The consumer took out a mortgage for $105,000. During the mortgage underwriting process, Ellis advised the lender for the consumer’s loan that the consumer owed money to American Heritage Building Consultants. Ellis then recorded a mortgage in the name of American Heritage Building Consultants and secured this mortgage with the consumer’s property. In reality, American Heritage Building Consultants had not performed any work on the consumer’s home, and the consumer had not even entered into a contract for home repairs with the company. Nonetheless, American Heritage Building Consultants collected an approximately $20,000 disbursement at the consumer’s loan closing. The consumer never received any home repair work or a refund of the money.

Ellis’ second and third types of schemes involved taking consumers’ money for home repairs that were usually never performed on the basis that the government had a home repair grant matching program. In both of these schemes, Ellis would visit the homes of consumers who responded to his government home repair grant solicitation. At these home visits, Ellis explained that he was a government employee representing the fictional “Illinois Restoration Program.” Then, Ellis would explain two home repair grant programs, neither of which actually existed:

·         The “50/50 program.” Under this purported program, the government would match the money the consumer invested in a home repair project on a dollar for dollar basis. To obtain such a grant, the consumer first had to write a check to Ellis’ Illinois Restoration Program for the amount the consumer wanted the government to match.

·         •  The “10% down payment program.” Under this purported program, Ellis told consumers that the government would pay 90 percent of the estimated cost of a home repair project. To qualify for this program, the consumer had to provide Illinois Restoration Program with a 10 percent down payment on the project. Ellis then uses high pressure sales tactics to steer consumers into agreeing to more substantial home repair projects under the guise of the money-saving benefits of the “10 percent down payment program.”

In both of these schemes, consumers would write checks to one of Ellis’ companies and he would cash or deposit the checks, but consumers never received any grants or home repairs.

Resources:
Press Release

In the following press release Pennsylvania Attorney General Tom Corbett today announced that the Attorney General’s Bureau of Consumer Protection has filed suit against a Pittsburgh area man, along with several of his businesses, accused of orchestrating a multi-million dollar mortgage and real estate scheme in Allegheny, Beaver and Butler counties.

Corbett said the 13-count civil complaint was filed on November 15, 2007, in Allegheny County against Easy Realty Solutions Inc., Easy Realty Solutions LLC (doing business as Fieldstone Real Estate Co.) and Guaranteed Results Co., along with James C. Platts (pictured below), the only known employee or officer for these companies.

“Consumers came to Mr. Platts and Easy Realty looking for homes and a piece of the ‘American Dream’,” Corbett said. “Instead, their dreams of home ownership quickly turned into nightmares of inflated prices, undisclosed fees and bogus legal filings, all intended to squeeze as much money as possible from trusting consumers.”

Corbett said that since January 2004, Platts and his companies have allegedly received over $2 million in payments from consumers related to real estate sales and have extended or received at least 113 second mortgages, valued at over $1.2 million, despite the lack of a real estate license or secondary mortgage loan license. Additionally, Platts and his companies are accused of wrongfully filing more than 150 legal notices against property sellers in an effort to extract additional payments when their homes were sold.

Corbett said the Bureau of Consumer Protection is also seeking a preliminary injunction halting all unlicensed or deceptive real estate and mortgage activities by Platts and his companies, as well as freezing all bank accounts and assets. Additionally, the injunction will seek to have any unlawful second mortgages or wrongfully filed legal notices removed from the public record, and prevent Platts from accepting future payments for any of the unlawful second mortgages or unlicensed real estate transactions.

Unlicensed Real Estate Sales

Corbett said that Platts and his companies allegedly schemed to bypass state licensing requirements for real estate brokers. According to the lawsuit, Platts and his companies used their website ( www.easyrealtysolutions.com ), newspaper classified ads and direct mail solicitations to regularly advertise the purchase or sale of properties, despite the lack of a real estate broker’s license in Pennsylvania. Some of the listings shown on the Easy Realty website were actually properties listed by licensed real estate brokers in southwestern Pennsylvania.

Corbett said that, Platts and his companies are accused of inflating the prices of various properties - concealing the true asking price for the homes and showing only inflated “sale prices,” which were in excess of the actual listed prices for the properties.

To date, Platts and his companies have allegedly received in excess of $2,027,291 in payments as the result of various unlicensed real estate transactions.

Unlicensed Second Mortgage Lending

Corbett said that in situations where buyers needed additional money to purchase properties, Platts and Easy Realty would allegedly extend buyers second mortgage financing - despite the lack of a secondary mortgage loan license.

According to the suit, many of the second mortgages were disguised as “seller held second mortgages,” even though sellers were not aware of the mortgages and had not given their consent to offer any financial assistance to the buyers. After arranging for the “seller held second mortgages,” the mortgages were immediately assigned to Platts and his companies.

In other instances, Platts and his companies directly offered to extend second or third mortgage loans to buyers.

Corbett said that to-date, Platts and his companies have extended or have been assigned at least 113 second or third mortgages, worth at least $1,220,197.

Lis Pendens

Corbett said that Platts allegedly used legal filings to extract additional payments from property owners wishing to sell their homes. The filing, known as a “lis pendens,” serves as notice of a pending civil lawsuit against a property owner, and is used to establish a claim against that property.

According to the lawsuit, Platts filed at least 159 lis pendens notices against property owners in Allegheny, Beaver and Butler counties, even though it appears that no legal dispute existed with those individuals.

The filings served to cloud the titles for those homes, preventing any sale of those properties until the lis pendens were satisfied or settled.

Corbett said that Platts and his companies are accused of collecting “pay-off fees,” ranging from $1,198 to $78,599, in order to satisfy lis pendens filings and allow home sales to be completed.

According to the lawsuit, the fees were not clearly disclosed in various sales agreements, and consequently many buyers and sellers had no knowledge of the substantial payments being made to Platts. To date, Platts and Easy Realty have allegedly collected at least $1,813,025 in lis pendens pay-off fees.

Other Charges

Corbett said that Platts and Easy Realty are accused of deceptive advertising; failing to disclose the terms of real estate transactions to consumers; failing to provide buyers with federally required disclosures; fraudulently negotiating sales with lenders and the unauthorized practice of law.

“For many people, our homes are our most valuable possessions, which makes them prime targets for scam artists seeking to take advantage of unsuspecting consumers,” Corbett said. “The Attorney General’s Bureau of Consumer Protection will work vigorously to protect the rights of all of the consumers caught up in this real estate and mortgage scheme, and we encourage additional consumers to contact our office if they believe they are victims of similar scams.”

Corbett added that the Office of Attorney General has alerted authorities in Florida, where Platts is reportedly engaging in similar activities.

Corbett said the civil suit was filed today in Allegheny County Court of Common Pleas. The case is being handled by Deputy Attorney General Amy L. Schulman of the Attorney General’s Bureau of Consumer Protection office in Pittsburgh.

Resources:
Press Release

In the following press release The Securities and Exchange Commission (SEC) announced that on September 25, 2007, the Honorable John Antoon II, United States District Judge for the Middle District of Florida, granted the Commission’s motion for summary judgment against Patrick Kirkland, the primary architect of a fraudulent securities scheme involving the sale of real estate investments known as triplexes. The court permanently enjoined Kirkland from further violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, thereunder. The order also granted the Commission’s claim for disgorgement with prejudgment interest against Kirkland and will hold a hearing to determine the amount Kirkland must disgorge. In addition, the Court reserved ruling on a specific civil penalty amount Kirkland must pay, pending the Commission’s motion.

The Commission’s complaint in this matter, filed on February 16, 2006, alleged that from April 1999 until the date of the complaint, Kirkland and the other Defendants raised at least $59 million by offering and selling unregistered securities in the form of investments in real estate developments located in Florida, Georgia, and Texas. According to the complaint, the Defendants were selling investments called triplexes, which were apartments designed for shared senior rental living. The complaint further alleged that Defendants promised investors exorbitant profits of 23% to 55%, and through sales agents, falsely assured prospective investors that over 200 calls a day were coming in from seniors interested in leasing the properties, and that there was a waiting list. In fact, according to the complaint, the completed developments had rental rates of 34% or less, and investors who purchased triplexes lost money.

In his summary judgment order, the Court found the Commission had proved the violations alleged in the complaint, and that Kirkland violated the registration and anti-fraud provisions of the federal securities laws in selling the triplexes. The Court ruled that Kirkland’s representations to investors had no basis in fact, were often flatly false and his actions were deliberate and knowing. The Court also concluded, Kirkland’s conduct revealed a lengthy pattern of wrongful behavior, which included, among other things, falsifying leases, inflating appraisal values, promising rates of returns without a reasonable basis, and failing to mention investors’ class action and individual lawsuits, two desist-and-refrain orders and a temporary restraining order issued by the State of California.

For further information, see Litigation Release No. 19570 (February 17, 2006)

Resources
Press Release

In the following press release Maryland Attorney General Douglas F. Gansler announced that the Consumer Protection Division has filed a complaint in Baltimore City Circuit Court against a group of individuals and companies alleging they violated numerous laws in the course of providing services to homeowners who were facing foreclosure.

The complaint names Michael K. Lewis, Earnest Lewis, Cheryl Lynn Brooke, Winston Thomas, and two companies, In the House Technologies based in Upper Marlboro and Cornerstone Title & Escrow based in Laurel. The Division alleges that the defendants market their services to homeowners who are facing foreclosure or are in foreclosure, falsely promising that they can help save the consumers’ homes. Instead of helping homeowners retain title to their homes, the defendants attempt to take title and then strip the equity out of the properties by charging the homeowners numerous undisclosed fees.

After the defendants purportedly take the title to the homes, they charge the homeowners rents that are substantially higher than their previous mortgage payments. As a result, the homeowners find it exceedingly difficult to rebuild their credit and save amounts sufficient to retain their homes. The scheme results in homeowners losing both their homes and the vast majority of equity they had accumulated.

The complaint seeks to stop the defendants’ unlawful practices and impose fines for violations of the Protection of Homeowners in Foreclosure Act and the Consumer Protection Act. It also was filed to ensure that the original homeowners retain title to their homes and to provide restitution for homeowners who were harmed by the defendants’ actions.

Resources:
Press Release

In the following November 1, 2007 press release New York Attorney General Andrew M. Cuomo announced that he is suing one of the nation’s largest real estate appraisal management companies and its parent corporation for colluding with the largest savings and loan in the country to inflate the appraisal values of homes.

In a scheme detailed in numerous e-mails, eAppraiseIT (“EA”), a subsidiary of First American Corporation (NYSE: FAF), caved to pressure from Washington Mutual (“WaMu”) (NYSE: WM) to use a list of preferred “Proven Appraisers” who provided inflated appraisals on homes. The e-mails also show that executives at EA knew their behavior was illegal, but intentionally broke the law to secure future business with WaMu.

“The independence of the appraiser is essential to maintaining the integrity of the mortgage industry. First American and eAppraiseIT violated that independence when Washington Mutual strong-armed them into a system designed to rip off homeowners and investors alike,” said Attorney General Cuomo. “The blatant actions of First American and eAppraiseIT have contributed to the growing foreclosure crisis and turmoil in the housing market. By allowing Washington Mutual to hand-pick appraisers who inflated values, First American helped set the current mortgage crisis in motion.”

As First American acknowledged in its 2006 annual report, appraisal fraud can damage the entire housing market, including consumers and investors alike. Consumers are harmed because they are misled as to the value of their homes, increasing the risk of foreclosure and hindering their ability to make sound economic decisions. Investors are hurt by such fraud because it skews the value and risk of loans that are sold in financial markets.

In April 2006, EA began providing appraisal services for WaMu, which became EA’s biggest client. Within weeks, WaMu began complaining to EA that its appraisals were not high enough. WaMu pressured EA to employ exclusively a new panel of appraisers that WaMu hand-selected as “Proven Appraisers.” This set of appraisers was chosen by WaMu specifically because they inflated property appraisals. WaMu profited from these higher appraisals because they could close more home loans, at greater values. Over the course of their relationship, between April 2006 and October 2007, EA provided approximately 262,000 appraisals for WaMu.

Attorney General Cuomo’s investigation uncovered a series of e-mails between executives at EA, First American, and WaMu that show EA officials were willingly violating state and federal appraisal independence regulations to comply with WaMu’s demands:

• On February 22, 2007, in response to a description of the WaMu “Proven Appraiser” program as one in which “we will now assign all Wamu’s work to Wamu’s ‘Proven Appraisers’… [and] Performance ratings to retain position as a Wamu Proven Appraiser will be based on how many come in on value,” eAppraiseIT’s president told senior executives at First American: “ we have agreed to roll over and just do it… ”
• On April 4, 2007, eAppraiseIT’s executive vice president stated in an e-mail to First American: “we as an AMC [Appraisal Management Company] need to retain our independence from the lender or it will look like collusion… eAppraiseIT is clearly being directed who to select. The reasoning… is bogus for many reasons including the most obvious – the proven appraisers bring in the values.”
• On April 17, 2007, eAppraiseIT’s president wrote an e-mail to First American explaining why its conduct was illegal: “We view this as a violation of the OCC, OTS, FDIC and USPAP influencing regulation.”
• E-mail evidence also shows that WaMu pressured EA to inflate appraisals as a condition for doing future business together:
• On September 27, 2006, First American’s vice chairman reported that a WaMu executive told him: “if the appraisal issues are resolved and things are working well he would welcome conversations about expanding our relationship…”

Attorney General Cuomo continued, “Just as my office stepped in when colleges and loan companies were profiting at students’ expense, this lawsuit and my ongoing investigation into the mortgage industry should send a clear message: companies must play by the rules or they will have to account for their misdeeds.”

Attorney General Cuomo’s lawsuit seeks to end the illegal relationship between First American and EA and WaMu. It also seeks penalties and disgorgement from First American and EA. The lawsuit alleges that First American and EA violated appraiser independence laws, which regulate the conduct of real estate appraisers. The lawsuit was filed in the Supreme Court of New York, New York County.

This case is being handled by Assistant Attorney General Christopher Mulvihill, under the supervision of Deputy Chief Trial Counsel Nicole Gueron and Executive Deputy Attorney General for Economic Justice Eric Corngold.

Resources:
Complaint
Press Release

In the following press release Texas Attorney General Greg Abbott (pictured left) today obtained a temporary restraining order and asset freeze against an unlawful Texas-based foreclosure rescue operation targeting struggling homeowners in the state and across the country.

According to court documents, Southern Residential, LLC, and its director and manager, Edward Casey, fraudulently advertised that the company could save homeowners from imminent foreclosure. The enforcement action also names affiliated defendants National Homeowners Assistance, Stephanie Casey, Matthew Casey and Linda McCann. Under the temporary restraining order, the defendants must stop falsely soliciting distressed homeowners immediately. Although the order only applies in Texas, homeowners nationwide are protected by the asset freeze.

“At a time when regulators, policy makers and stakeholders are working to help struggling homeowners, a few unscrupulous operators are scheming to profiteer at homeowners’ expense,” Attorney General Abbott said. “These defendants charged large fees and failed to deliver on their false promises. This court order shuts down an unlawful scheme to defraud Texas homeowners.”

Attorney General Abbott added: “Homeowners facing difficulty making their monthly mortgage payments should be wary of mortgage rescue scams. Schemes offering too-good-to-be-true solutions are usually just that. Texans who fall behind on their payments should contact their lender directly to work out a resolution.”

According to the attorney general’s enforcement action, homeowners who were delinquent on mortgage payments responded to the defendants’ television and newspapers advertisements. The defendants also advertised online through various Web sites, including House911.com and Stop911.com. The company’s so-called “stop foreclosure specialists” boasted that their established relationships with mortgage lenders and banks nationwide could stop the foreclosure process. The defendants also told homeowners that they would only accept clients whom they could help.

Homeowners who contacted Southern Residential and its affiliates were pressured to sign contracts and pay fees of up to $2,000 immediately. Under the contract, Southern Residential strictly prohibited homeowners from contacting their mortgage lenders. After homeowners paid the fees, many never heard back from the defendants’ representatives.

Others complained that Southern Residential’s “renegotiations” with lenders required immediate, upfront balloon payments totaling tens of thousands of dollars. Despite the defendants’ promises, many homeowners lost their homes to foreclosure or went into bankruptcy.

The attorney general’s legal action prohibits the defendants from making false representations to homeowners and deceiving potential clients about the services they provide. The state estimates that Southern Residential receives between $100,000 and $150,000 per month in fees paid by homeowners facing foreclosure. To protect funds already paid by homeowners, the court froze a trust fund and several bank accounts that belong to the defendants.

The Attorney General seeks court-ordered restitution for homeowners who were harmed by the defendants’ acts, as well as civil penalties of up to $20,000 per violation of the Texas Deceptive Trade Practices Act. Additionally, the Attorney General requests up to $5,000 per violation for the defendants’ failure to register their business as one that conducts telephone solicitations.

Attorney General Abbott reminded the company’s customers that they should not wait for Southern Residential to contact them about the status of their mortgages. Homeowners need to call their lenders immediately and ask what preventative measures, if any, the defendants have taken on their behalf.

The Office of the Attorney General is engaged in a variety of efforts to protect Texas homeowners. Last week, Attorney General Abbott secured a temporary injunction against Foreclosure Assistance Solutions, a Florida-based “foreclosure rescue” scheme that targeted Texans who fell behind on their mortgage payments.

In September, Attorney General Abbott launched the Texas Residential Mortgage Fraud Task Force, a partnership that involves key state regulatory agencies to take a proactive stance towards tracking and prosecuting mortgage fraud.

This month, Attorney General Abbott urged three of the largest mortgage lenders and servicing companies doing business in Texas to take steps to address the high foreclosure rates in the state. In meetings with EMC Mortgage, Countrywide Mortgage and Litton Loan Servicing, he outlined five measures that the companies should implement to restore borrowers’ financial stability, including stepping-up efforts to convert adjustable rate mortgages to fixed-interest loans; subjecting more delinquent loans to mitigation first rather than immediately submitting them to an antagonistic collections process; improving communication and outreach with consumers; waiving penalties and fees while companies work with troubled homeowners; and promptly addressing complaints filed against them with the Office of the Attorney General.

Earlier this year, Attorney General Abbott secured $21 million in restitution for Texas homeowners who were harmed by lending giant Ameriquest Mortgage Co. That case resolved allegations that the company and its affiliates did not clearly disclose certain terms to homeowners, including unpredictable adjustable rates.

Homeowners who believe they have been harmed by this or similar fraudulent businesses may call the Office of the Attorney General’s toll-free complaint line at (800) 252-8011 or file a complaint online at www.oag.state.tx.us .

Resources:
Press Release
Attorney General’s lawsuit against Southern Residential
Temporary restraining order against Southern Residential
Southern Residential TV Commercial