Loan Modification News

Maryland DLLR Orders 5 Mod Companies To Shut Down Operations

Nicholas Sohr, The DailyRecord

State officials have ordered five companies to shut down illegal home loan modification schemes that targeted Maryland residents facing foreclosure, the Department of Labor, Licensing and Regulation announced Tuesday afternoon.

Homeowners paid thousands of dollars in upfront fees to companies that promised to modify their loans in order to avoid foreclosure, according to DLLR. Not only did the companies fail to deliver, but they stopped returning phone calls, misrepresented the loan modification process and ignored requests for refunds, the department alleged.

“Today’s actions are part of an ongoing effort to protect consumers from scams where desperate borrowers pay up-front fees to so-called consultants who promise assistance in getting a loan modification or otherwise avoiding foreclosure,” DLLR Secretary Alexander M. Sanchez said in a written statement.

The Federal Trade Commission and U.S. Department of Justice announced 118 similar cease and desist orders delivered by 26 federal and state agencies on Tuesday as part of the ongoing “Operation Stolen Hope.”

Companies served notices in Maryland were:

Equity Recovery Services, Towson;

U.S. Equity Solutions, Owings Mills;

GIAN Inc., Laurel;

Save My Home USA Co. Inc., Michigan;

Help Modify Now Inc., California.

None of the companies could be reached for comment Tuesday evening. At least one company Web site listed a phone number that was no longer accepting calls.

DLLR’s Office of the Commissioner of Financial Regulation is still looking into the companies’ dealings in Maryland to determine how many customers were duped and for how much, Assistant Commissioner for Enforcement Stephen Prozeralik said.

The cease and desist orders are usually enough to bring the companies to the bargaining table to discuss refunding consumers’ upfront fees, which typically amount to about $3,500, Prozeralik said. It is illegal for foreclosure consultants and credit services companies to charge such fees.

“We’ve been successful in the past with Maryland companies,” he said “They’ve sat done with us and worked something out. It is a little more difficult with these entities in California and Florida.”

RealtyTrac Inc., a California-based research firm, reported 6,661 foreclosures were filed in Maryland in October, a slight dip from the previous month, but a 124 percent increase over last year. The distressed housing market and economic recession have given rise to many schemes similar to those announced Tuesday.

“We have well over 120-odd cases under investigation,” Prozeralik said. “And then when you look at those cases, they’re multiplied by the number of consumers under them. It adds up to thousands of consumers who have been ripped off.”

Homeowners who believe they have victimized by such practices can call the Office of the Commissioner of Financial Regulation at 1- 888-784-0136, or the FTC at 1-877-FTC-HELP.