The Florida Attorney General’s Office has opened five new investigations this year, with four centered in South Florida, involving foreclosure rescue and mortgage modification companies, a key enforcement concern for regulators.

Businesses being examined on allegations they took fees upfront for their services, in violation of state law, include: Foreclosure Relief Systems LLC, also doing business as Foreclosure Rescue Services, of Miami and Miami Beach; Pendulum Financial Group, also doing business as Blue Fox Financial, of Plantation; and Lender Forensics LLC, also doing business as National Modification LLC, of North Palm Beach.

 The law offices of Thomas Dvorak, of Fort Lauderdale, are being investigated on allegations an attorney allowed a foreclosure rescue group to operate out of his office under the firm’s name, state officials said.

 Save Our Dream LLC, of Orlando, is being examined for possible violations involving residential foreclosure proceedings.

Attorney General Michael A. Delaney, Banking Commissioner Peter C. Hildreth, and Carroll County Sheriff Christopher Conley announced today the arrest of Eric W. Eliason, aka Ricky Masci, (DOB 12/28/79) for Theft by Deception, as defined by RSA 637:2, with an extended term of imprisonment; Failure to Obtain a Debt Adjustment License, Untrue Statement and Fraudulent Business Practice as defined by RSA 399-D; and Failure to Obtain a Mortgage Originators License and Untrue Statements as defined by RSA 397-A.

Eliason, 30, of Tamworth New Hampshire, is charged with crimes that occurred in connection with his business, Deaf and Hard of Hearing Mortgage Consultants. The first set of complaints allege that the defendant took up-front money to assist hard of hearing victims in completing a loan modification of their home mortgage. The complaints allege that numerous representations were made to the homeowners that the modification was in process, and then that the modification was denied. It is further alleged that the defendant had never contacted the mortgage company to perform a modification. It is also alleged that Eliason intended to take advantage of the victim’s physical condition that impaired the victim’s ability to manage their property or financial resources or to protect their rights or interests.

A second set of complaints allege that the defendant attempted to broker a re-finance of a home loan for another hard of hearing couple. It is alleged that he obtained up-front fees with the promise that in the event the re-finance was not completed, money would be refunded. No loan was obtained, and no money was refunded. Eliason was not licensed to conduct any of these transactions. 

Arraignment will likely be scheduled for February 10, 2010 in the Southern Carroll County District Court. The charges range from a Class A Felony with a extended term of imprisonment, which carries a maximum penalty of 10-30 years in state prison and a $4,000 fine, to misdemeanors, which carry a maximum penalty of 12 months in the House of Corrections and a $2,000 fine. 

These criminal charges are a result of a joint investigation conducted by the New Hampshire Attorney General’s Office, the New Hampshire Banking Department, Carroll County Sheriff’s Office and the DeKalb County, Illinois Sheriff’s Department. 

According to the Attorney General’s lawsuit, the corporation solicited loan modification services to Florida homeowners by telephone, mail and internet marketing. An investigation conducted by the Attorney General’s Economic Crimes Division revealed that 21st Century Legal Services charges an up-front fee as high as $2,500 to homeowners seeking loan modification services. Additionally, consumers have complained that the company has not performed the promised services and that consumers are unable to get refunds.

The complaint alleges that, after initial contact is made with a homeowner, the company arranges for a “company representative” to visit the consumer at home. These representatives are, in fact, local notaries hired by the company to travel to the consumer’s home and execute the necessary sales agreements. The lawsuit states that the company instructed the notaries not to provide consumers with a copy of the written agreements, in direct violation of Florida law.

Other states have sued 21st Century Legal Services, and the FBI raided several of the company’s California offices in mid-September.

The Attorney General’s lawsuit requests full restitution for affected homeowners and civil penalties of up to $15,000 per violation. The Attorney General’s Office is also seeking a court order permanently prohibiting 21st Century Legal Services from further violations of Florida law.

The Attorney General’s Economic Crimes Division continues to review the practices of many companies providing foreclosure-related rescue services to ensure that they are in compliance with Florida law. More information about the Attorney General’s efforts in combating mortgage fraud, along with helpful information for homeowners in distress, can be found at http://www.myfloridalegal.com/mortgagefraud. Consumers affected by these or other practices may file a complaint by visiting the Attorney General’s website at http://www.myfloridalegal.com or calling the fraud hotline at 1-866-966-7226.

In addition, Sinclair must pay $60,000 in restitution to the victims of the scam. Sinclair was recently extradited from the Philippines, where he fled after learning of the indictment against him.

“This is one more example of how mortgage fraud scammers prey on Nevadans,” said Attorney General Masto. “We will continue to send the message that these scammers are unwelcome in our State. We will find you and extradite you, if necessary, to see that justice is served.”

Using a call center located in the Philippines, Sinclair and his business partner, William Vargas, operated Federal Housing Aid, a company that claimed to offer loan modification services to assist victims in avoiding foreclosure on their homes. The operation had been in business since February 2007. The two defendants charged the victims between $899 and $1500 in upfront fees and offered a 100% money back guaranty, claiming their company would refund the money if the foreclosure could not be stopped. After paying for services, the defendants failed to provide the services paid for and failed to provide refunds as promised in their advertisements.

On November 3, 2009, Vargas pled guilty to one (1) Count of Theft-Obtaining Money in Excess of $250 by Material Misrepresentation from a person over the age of 60, a Category B Felony in violation of NRS 205.0832(1)(c), NRS 205.0835(3) and NRS 193.167 and one (1) Count of Attempted Theft-Obtaining Money in Excess of $250 by a material misrepresentation, a Gross Misdemeanor in violation of NRS 205.0832(1)(c), NRS 205.0835(3) and NRS 193.330. As part of his guilty plea, Vargas is required to pay restitution to the victims in the amount of $21,000.

Sentencing is scheduled for June 3, 2010 before Judge Villani in District Court Department 17

The case was investigated and prosecuted by the Attorney General’s Mortgage Fraud Task Force, which was created by Attorney General Masto in early 2008 to address mortgage fraud scams throughout Nevada. The task force works closely with other State agencies, including the Mortgage Lending Division, to investigate and prosecute mortgage fraud crimes in Nevada.

Consumers who wish to report mortgage fraud are asked to contact the Attorney General’s Bureau of Consumer Protection in Las Vegas at 702.486.3194 to obtain a complaint form.

Three men have been indicted on theft charges in an alleged foreclosure rescue scam that bilked people out of thousands of dollars to modify loans, the state Attorney General’s office announced Thursday.

Jason Todd Wilhite, Ronald Quilang and Benjamin Moraleda allegedly operated a document preparation and loan modification business called Rescorp between June 2008 and January 2009 in Las Vegas. Rescorp charged between $1,200 and $2,200 “for loan modification and document preparation services and misled customers by falsely claiming that their services would prevent foreclosures on their homes and/or that they would obtain loan modifications,” according to a statement released by Nevada Attorney General Catherine Cortez Masto.

The Attorney General’s office received numerous complaints about misrepresentations the men made, including several clients who said they paid Rescorp thousands of dollars for its services but said the company never contacted the clients’ lenders to obtain loan modifications, Cortez Masto said.

Prosecutors claim the services were never performed, but they also say customers were further defrauded when the men had them sign false documents that gave the men liens on the victims’ homes.  (Read more)

Attorney General Lawrence Wasden says Idaho homeowners who were duped into paying a New Jersey company to help them modify their mortgages will get more than $19,000 in a settlement.

Wasden says the investigation into Weston, New Jersey-based Best Interest Rate Mortgage Co. LLC began with a complaint about a direct-mail advertisement.

The ad offered a special loan modification programs as part of the “Economic Stimulus Act of 2008″ and appeared to have come from the U.S. government.

The attorney general’s office says the company charged Idaho homeowners upfront fees ranging from $1,000 to $1,800 before the mortgage modifications were completed, which Idaho law prohibits.

The company, which has denied wrongdoing, was ordered to pay the 12 homeowners $19,710.

But many don’t realize that entering a trial mortgage modification can actually hurt their credit.

CNNMoney recently received a flood of e-mails from readers complaining about the impact of trial modifications on their credit reports.

To be sure, many people who apply for the president’s plan are already delinquent in their mortgage payments, which wrecks their credit backgrounds. And obtaining a trial modification should affect borrowers’ scores because it shows they cannot meet their original obligation, experts said.

But being in a months-long trial period may only add to the pain.

Jason Axelrod learned that the hard way.

Axelrod, a municipal employee who lives outside Chicago, entered a trial mortgage modification program this spring.

He had not fallen behind in his mortgage, but he was finding it harder to make ends meet after his overtime was cut and his property taxes skyrocketed. Told it would not hurt his coveted 750 score, Axelrod secured a $565 reduction in his monthly payments.

Eight months later, Axelrod is still stuck in the trial modification, trying to satisfy his loan servicer’s endless requests for documents.

And to his horror, his credit score has plummeted to 644.

“It’s completely destroyed my credit,” said Axelrod. “If I had known it would affect my score, I would have never entered the program.” (Read more)

South Florida Business Journal – by Susan R. Miller

The days of simply hanging out a shingle and opening up a loan modification business are coming to an end in Florida.

As of Jan. 1, individuals or companies providing loan modification services must be licensed by the Florida Office of Financial Regulation (OFR).

 A Coral Springs lawyer is being investigated by the Florida Bar Association for her involvement with a South Florida foreclosure rescue company, as trade regulators continue to file actions against attorneys involved in similar operations.

Bar officials confirmed they are investigating Karen Grun and her ties to Housing Assistance Law Center, of Deerfield Beach. The Florida Attorney General’s Office filed legal action against the company and three afilliates in July, claiming they illegally took payments in advance and, in some cases, guaranteed a mortgage could be modified in 30 to 60 days.

The bar has increasingly scrutinized partnerships between lawyers and foreclosure rescue firms, concerned the relationships were forged to skirt state laws barring upfront fees for loan modification work. The professional association, which monitors and disciplines lawyers, opened 195 cases regarding foreclosure rescue practices this year

“They’ve really put a lot of heat on attorneys who were doing this,” said Susan Spurgeon, a Tampa real estate lawyer who has lectured on mortgage modification.

Grun did not return phone messages the Sun Sentinel left at her home and office.

Aventura real estate lawyer Daniel Henry Fox was disbarred, following an investigation, in October after he allegedly? abandonned some of his residential loan modification clients. His office phone has been disconnected and an e-mail from the Sun Sentinel was not returned.

Grun’s name and the phrase “a private law firm” were on Housing Assistance Law Center documents, and state corporate records listed her as the center’s director/president from April through June. Housing Assistance since has been dissolved and it’s telephone number has been disconnected. (Read more)