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Nov 18, 2008 6:00 pm US/Central
Attorney Gen. Madigan Sues Mortgage Rescue Firms
CHICAGO (CBS) ―
Illinois Attorney General Lisa Madigan is warning struggling homeowners about mortgage rescue companies.
Madigan on Tuesday announced that she's filed seven new lawsuits against businesses she says offered false hope to homeowners trying to keep their homes. She's now filed 22 lawsuits against such companies.
The latest lawsuits were filed in Cook, Sangamon and Winnebago counties. They target mortgage "consultants" who got paid upfront but allegedly didn't help homeowners.
It's illegal in Illinois for mortgage rescue companies to require homeowners to pay upfront.
CBS 2's Derrick Blakley reports con artists are targeting people, like Bernice Holcomb, who are already in danger of losing their property.
Holcomb was four months behind on her townhouse mortgage and fearing foreclosure when she got a call from a man named Rick Allen.
"He sat right here and wrote up the contract and took my money," Holcomb said.
Allen claimed his Wisconsin company, Foreclosure Solutions, would work with the bank to save her house—for a fee.
"Two thousand ninety-five dollars I gave him totally. He never did. They never talked to him at the mortgage company," Holcomb said.
She had been fleeced by a growing plague: foreclosure rescue scams.
"The consultants collect their fees upfront and they fail to do any of the things they promise the homeowner they'll do to save the home," Madigan said.
Another operation being sued by the attorney general, Foreclosure Experts, operated out of a Loop office suite as recently as June. Now, they're long gone, allegedly taking their victims money with them.
Carol McClellan paid them $1,300, but when she went back to the office she said, "There was a big padlock on the door, all the furniture and everything was taken out."
Madigan warns that homeowners facing foreclosure should avoid anyone contacting them offering help, avoid anyone charging fees upfront for help, and most importantly, stay in touch with your lender, the best way to work out a solution.
Holcomb narrowly saved her home by filing Chapter 13 bankruptcy.
"To me, that's a cold-hearted person that would do something like that," she said.
Homeowners can get help for free from a variety of agencies. Madigan says struggling homeowners should call their lenders, reach out to a HUD-certified housing counselor or call her office for help.
Click here for more information on the Illinois Attorney General's Web site, or call the office at (866)544-7151.
Click here for information about the Department of Housing and Urban Development's HOPE for Homeowners program, wihch will refinance mortgages for borrowers who are having difficulty making their payments, but can afford a new loan insured by HUD's Federal Housing Administration (FHA).
CBS 2's Derrick Blakley and the Associated Press contributed to this report.
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