Madigan Sues Mortgage Rescue Companies

CHICAGO -- Attorney General Lisa Madigan filed three lawsuits against mortgage rescue companies for allegedly violating the Illinois Mortgage Rescue Fraud Act, which she initiated in 2006, and the Consumer Fraud and Deceptive Business Practices Act.
The suits are filed against Homeowners Assistance Association, Lender’s Foreclosure Relief, Inc., and United Home Servers, LLP alleging that the companies falsely promised to help save customers’ homes after they fell back on their mortgage payments, according to a release from Madigan’s office.

The suit against the Homeowner’s Assistance Association, which also names Foreclosure LMS, an affiliated company, claims that the company deceptively claims to be affiliated with the city’s foreclosure prevention program, the release said.

The lawsuit alleges that the defendants charged homeowners illegal upfront fees of between $500 and $2,000 for mortgage foreclosure rescue services, which either were never authorized by the consumer or proved ineffective, according to the release.

The suit against Lender Foreclosure Relief, Inc, alleges the company charged homeowners illegal upfront fees of $1,395 for a “Pre-Mortgage Workout Program” while the third suit, against United Home Savers, LLP, says the company similarly required an illegal upfront fee of $1,200 for services, the release said.

All three companies allegedly violated either the Consumer Fraud and Deceptive Business Practices Act or the Illinois Mortgage Rescue Fraud Act, which became law in January 2007 and prohibits mortgage rescue companies from requiring payments from customers prior to completing all the terms of the contract. The law also requires rescue businesses to fully disclose to a homeowner the exact terms and nature of the proposed services and their rights to cancel the contract, the release said.

In each case, Madigan is asking the court to order the companies in question to stop all deceptive business practices and pay restitution to defrauded homeowners. Each also seeks a civil penalty of $50,000 and additional penalties of $50,000 for every violation found to have been committed with the intent to defraud, according to the release.

These three lawsuits create a total of 11 mortgage rescue companies sued by Madigan.

Madigan urges homeowners who are unable to make their mortgage payments to contact lenders to work out a plan to avoid foreclosure. She says many lenders have set up special units to assist borrowers in trouble, the release said.

In addition, the release advises that Madigan’s office has compiled a guide called “Predatory Home Loans: A Guide to Prevention and Rescue Resources,” which lists many HUD-approved counseling agencies to assist consumers. The guides are available through the Attorney General’s website or by calling the Consumer Fraud Hotline at (800) 386-5438.

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