Friday, August 19, 2011

Real Estate Foreclosure Fraud!

August 19, 2011

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California Attorney General shuts down law firms accused of conning homeowners!

Santa Clara County
District Attorney
Warns of Foreclosure Scams!

Posted: 08/19/2011 08:11:22 AM PDT
Updated: 08/19/2011 08:11:29 AM PDT

Santa Clara County, CA -- With more con artists trying to dupe Santa Clara County homeowners facing foreclosures, authorities are asking residents to be more diligent and get the facts on mortgage laws. District Attorney Jeff Rosen said Thursday that his office recently sent two people to prison for running a scam business that preyed on San Jose homeowners who were beyond on their mortgages. The con artists told homeowners to pay them a fee up front and in exchange they would change their mortgage terms.

Rosen said it is illegal for even legitimate business people to request residents to pay an advance fee for loan modification services on a home mortgage.

To find a certified foreclosure counselor, call the DA's hotline at 408-794-1242. To report fraud, call 408-792-2879.

California Attorney General
Shuts Down Law Firms
Accused of Conning Homeowners!

Posted: 08/18/2011 04:31:47 PM PDT
Updated: 08/19/2011 06:16:05 AM PDT

SAN FRANCISCO, CA -- The state Attorney General's Office has shut down four Southern California law firms that allegedly conned about 2,500 California homeowners facing foreclosure into paying thousands of dollars to join a lawsuit against lenders that went nowhere. The law firms made false promises to the plaintiffs to entice them to sue the lenders, telling them that foreclosure proceedings would be stopped and their monthly payments reduced, Attorney General Kamala Harris said Thursday at a news conference. The attorney general is suing the law firms of:

Philip Kramer;
Christopher Van Son;
Paul W. Petersen; and
Mitchell Stein, which also has an office in Walnut Creek.

"It will bring justice to a number of homeowners of California who were targeted by predators," Harris said. The suit, which seeks civil penalties, alleges false advertising and violations of the business and professions code.

The State Bar Association has taken over the practices of the law firms. Since 2009, 20 attorneys in California have either been disbarred or given up their license after they got in trouble from loan-modification rescue scams.

Harris alleges that the Southern California attorneys banded together to file "mass joinder" lawsuits, which effectively folded cases with separate but similar circumstances into one legal filing. The law firms sent out mailers to homeowners in California and 16 other states who had trouble paying their mortgage. The mailers gave the impression that a legal settlement was within reach and that the homeowners would benefit by becoming a named plaintiff. Telemarketers gave homeowners misleading advice and information about the benefit of joining the case, according to Harris' suit. Call center companies were also named in the suit.

Unlike conventional civil cases, which typically work on a contingency fee basis, the homeowners were required to pay from $4,000 to $10,000 to be added as a plaintiff. To date, about 2,500 homeowners, all from California, have been identified as victims, said Harris. "They are really homeowners who have been victimized a second time," she said.

Representatives of the Van Son, Kramer, and Petersen law firms could not be reached for comment. A man named Toby, who declined to give his last name and identified himself as a senior paralegal for Mitchell Stein, said the law firm had an active case in Los Angeles Superior Court. "It's not as simple as Kamala Harris filing suit," he said.

No disciplinary charges have been filed against the attorneys by the Bar Association.

The attorney general's lawsuit does not indicate whether the cases filed by the four law firms have any legal merit. To that end, the Bar Association will look at the circumstances of each case to see whether they should be referred to other lawyers. Clients can call the Bar Association at 213-765-1672 for more information.

A state law makes it illegal to ask for an upfront payment for loan-modification services. The law applies to real estate licensees and attorneys. "Be wary of any person or company that asks for a fee in advance," said Ophelia Basgal, regional counsel for the U.S. Department of Housing and Urban Development, She reminded consumers that HUD-approved counseling agencies provide free help to homeowners facing foreclosure. Call 888-995-HOPE (4673) for more information.

California Attorney General:
Lawyers Scammed Homeowners
with Suit against Banks!

Posted: 08/18/2011 11:47:49 AM PDT
Updated: 08/18/2011 02:15:02 PM PDT

COSTA MESA, CA -- California prosecutors sued several lawyers and call center operators for allegedly duping desperate homeowners across the country into paying thousands of dollars to join dubious lawsuits against big banks. The complaint unsealed Thursday in Los Angeles County Superior Court accuses prominent foreclosure attorneys Philip Kramer and Mitchell Stein and at least 17 other individuals and businesses of ensnaring borrowers in a scheme that falsely promised a cut of future settlements.

The lawsuit portrays the defendants as the most recent in the chain of mortgage-related scammers who helped fuel the housing bubble and have cashed in on its collapse. The defendants previously worked in the fraud-ridden loan modification industry, in which lawyers offer to negotiate better mortgage terms on behalf of troubled borrowers in exchange for a fee.

They are accused of telling borrowers that they had a solid claim to being victims of predatory lending because courts had already found most lenders to have approved inappropriate mortgages.

"They essentially took advantage of what we know is a growing sentiment out there," California Attorney General Kamala Harris said Thursday. "They suggested that by joining this lawsuit, the banks would have to pay. But the only people who paid were those homeowners who were victimized for the second time."

Investigators are aware of some 2,500 California residents who have been listed as Plaintiffs in the lawsuits, but there could be many more who paid fees and were never actually added to the suits or are out of the state, Harris said. Up to 2 million official-looking mailers advertising the lawsuits were sent to homes in at least 16 other states, including Arizona, Florida, Nevada, New York and New Jersey, Harris' office said in a release. Some borrowers had their homes foreclosed on after paying to join the suits filed by Kramer and Stein, according to the complaint.

Defendants in the complaint are all based in California, but the investigation could eventually ensnare associates in other parts of the country.

Florida bar spokeswoman Zannah Lyle confirmed that her organization was looking into allegations of rule violations concerning Tallahassee-based lawyer and lobbyist David Ramba's work with Kramer to recruit struggling homeowners to join lawsuits against banks. Ramba did not immediately respond to a message seeking comment.

The attorney general's complaint was unsealed a day after state bar investigators and state Department of Justice agents served defendants with copies of the complaint at 14 locations in Los Angeles and Orange counties. Officials loaded boxes of seized documents into moving vans Wednesday. Armed police guarded the entrances to emptied offices, which appeared to contain wall-to-wall cubicles for phone center workers. The Orange County raids took place in sprawling office parks with manicured lawns surrounding Irvine's airport.

Outside one office, a man in a business suit said he had worked for the raided company but refused to answer any other questions as he carried a stack of framed pictures from the building and oversaw the removal of a small refrigerator by younger apparent employees. At another office, a manager who would only give his first name, David, said he and his colleagues had been questioned about their connection with Kramer. He said they had done business with the lawyer two years ago but not since.

Prosecutors accuse the defendants of making false representations and three counts of unfair competition. They are seeking an injunction stopping the defendants from continuing with the business in addition to unspecified monetary damages.

No criminal charges have been filed in connection with the case.

Kramer's firm and the other defendants' were placed into receivership on Monday and have had their assets seized, the attorney general's office said. Harris said that bar association lawyers were reviewing the suits against the banks to determine whether any plaintiffs had legitimate complaints that could be pursued against the lenders. Calls to Kramer's office were being forwarded to a state bar phone number Thursday. Calls to Stein, who refers to himself on his firm's website and other communications as "The Doberman," went straight to a busy signal.

Prosecutors accuse Kramer and Stein of exploiting an existing lawsuit known as Ronald v. Bank of America NA filed in Los Angeles Superior Court in March 2009. Stein was one of the lawyers who first filed that case, which alleged on behalf of a few dozen clients that the bank committed mortgage-related improprieties. Kramer later joined as counsel to another defendant who was added to the case. The lawyers used the Ronald case to drum up business and have since filed separate lawsuits against JPMorgan Chase & Co, Wells Fargo Bank NA, Citibank NA and others to broaden their base of clients, the complaint alleges.

The lawyers and their associates sent mailers that looked like official class-action lawsuit notifications and stated that their recipients were potential plaintiffs in a litigation settlement. The letters claimed they could cut their mortgage to as little as 70 percent of their value, prevent foreclosure and get $75,000 in damages. They directed people to phone supposed law offices that were actually call centers staffed by operators with no legal expertise.

In addition to using mailers, Stein used his law firm's Facebook page to make overblown claims about bank behavior and his ability to seek retribution, according to the complaint. "Look for Patriot Act violations in your mortgage," Stein wrote in a Jan. 17 posting. "Talk to a lawyer. You might just cancel the mortgage."

Prosecutors estimated hundreds or even thousands of people paid between $5,000 and $10,000 to join the lawyers' suits. Kramer gloated in an October 2010 e-mail to another defendant about the virtues of their new undertaking compared with the loan modification business. "Only morons would prefer to 'sell' mods from this day forward," Kramer wrote, according the complaint.

Bank records show more than $7 million deposited in three of Kramer's accounts connected to the investigation, with millions more paid to call centers that provided answers to prospective clients responding to the mailers, the complaint said. Those workers are accused in the complaint of overstating lawyers' progress in the lawsuits, all of which are in their earliest stages, and of misrepresenting judges' apparent disposition toward the banks.

Some salespeople are alleged to have told borrowers that the judge in the Ronald v. Bank of America has told the lender it has "no defense" and that its main argument is "absurd." The salespeople also tell homeowners that the case's lawyers have proven banks have taken money from investors that can't be accounted for, the complaint says.

Philip Warmanen, a 71-year-old travel agent in Jacksonville, Fla., was among those who joined the lawsuit. Warmanen said he responded to a mailer that turned out to be from Kramer's law firm early this year after Bank of America failed to offer him a modification on his home that had lost about half its value since he paid $525,000 for it in 2006. Warmanen was told he should receive a modification and other settlement benefits in just a couple months when he paid $4,000 to join the lawsuit but has heard little of the case since then. "They said there was a strong likelihood that this would be successful and that they had a few cases where the judgment had come through positively in favor of the complainants," he said. "They led me to believe that that might be my case."

Help for those filing Foreclosure! (01:36)