Consumer Law

More predatory lending lawsuits...

By Kia Franklin

Atlanta might join the ranks of cities (from Birmingham to Cleveland) and states (from California to Tennessee) suing over predatory lending practices. Here's what an attorney from Atlanta Legal Aid Society had to say about that:

?The [lenders] offered loans to people who could not pay and they knew that,? said Brennan, program director for the Atlanta Legal Aid Society. ?The city?s tax base eroded tremendously. Now, [the lenders] are getting the bailouts and the cities are holding the bag.?

State Sen. Vincent Fort (D-Atlanta) said the City Council should have acted sooner, noting the city has business relationships with several major banks.

?What they ought to do is call in these companies and read them the riot act,? said Fort, who has been vocal against predatory lending and subprime lenders. ?[The council] fiddled while Rome burned. People have been foreclosed on and evicted over the last year and [the city has] done nothing.?

And because scandal often just opens the door for even more scandal, the predatory lending that contributed to the foreclosure crisis has made room for foreclosure rescue scams. Massachusetts AG Martha Coakley is cracking down on this by suing four companies for allegedly targeting people facing foreclosure and swindling ridiculous up front fees from them:

Coakley filed suit in Suffolk Superior Court against Florida-based Loan Modification Group Corp. and Mitigation LLC, as well as the companies' principal, Daniel H. Fox, and its website operator, Chris Fuelling.

Coakley said they allegedly preyed upon Massachusetts residents facing foreclosure.

..."Our office has seen an emergence of scams that prey upon Massachusetts residents on the verge of foreclosure," she said.

Coakley's office alleges the defendants offered to help homeowners negotiate loan modifications in return for up-front fees of as much as $2,000.

The complaint claims their practices were "unfair and deceptive" because they solicited fees in advance of services and failed to disclose details of what they would provide.

"Foreclosure scam" scammers swindling the already-swindled? That's a new level of dirty. Lining up ridiculously risky loans, then lining right back up for some bailout money? That double dipping is more disgusting than the guy who bites his carrot and then sticks it back in the bowl of ranch. Yuck. Clean it up. Or you fully deserve to get cleaned out.

Full post as published by TortDeform.com on April 08, 2009 (boomark / email).