Consumer Law

CA Attorney General Shuts Down 2 Fraudulent Mortgage Companies

By M. Stan Herring

Attorney General Jerry Brown, a candidate for California governor in 2010, has posted an article on his website about how he shut down two fraudulent foreclosure-assistance companies and provided $1 million in restitution for the victims used by the companies.

Last July, Brown filed suit against U.S. Foreclosure Relief Corp. and H.E. Servicing, Inc., and the companies' executives, George Escalante and Cesar Lopez, and legal representative Adrian Pomery claiming that they "used their loan-modification companies to sell false hope to hundreds of Californians facing foreclosure."

The suit was filed jointly with the Federal Trade Commission (FTC) and the State of Missouri as part of "Operation Loan Lies," a massive federal-state crackdown on loan-modification fraud.

An investigation found that both companies used "aggressive telemarketing tactics" to convince underwater homeowners to pay anywhere between $1,800-$2,800 in fees or loan modification services that they claimed included reductions in principle and lower interest rates.

In sales calls, H.E. Servicing, for example, claimed it had successfully negotiated 10,000 loan modifications. However, a full review of internal records found the company opened only 2,960 loan-modification files and completed only 311. It is estimated that California homeowners accounted for 15 to 20 percent of the company's opened loan-modification files.

Brown's judgment shut down the two companies and permanently barred those individuals from working in the loan modification or real estate industries again. Brown's decision also distributes $1 million in restitution to repay victims of the scam. The restitution money came from the freezing of company funds and the sale of Escalante's 2 Mercedes, Toyota and jewelry. Lopez declared bankruptcy last June and sold off various expensive cars as well.

The full judgment requires total payment of $8.6 million from Escalante, US Foreclosure Relief and H.E. Servicing as well as $3.3 million from Lopez and $3.4 million from Pomery.

If you would like more information on foreclosure, please check out our articles The Three Stages Of Foreclosure In Alabama and Wrongful Foreclosures In Alabama.

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Full post as published by Alabama Consumer Blog on April 12, 2010 (boomark / email).