Today flyers posted on telephone poles advertising mortgage fixers are as ubiquitous in L.A. as gardeners' business cards. The collapse of the sub-prime mortgage market, combined with a plummeting economy and a questionable sense of rescue created by the Obama administration have led many Californians to believe in easy solutions to their mortgage problems. Yesterday's announcement by the state attorney general's office shows that in many cases, the only people who are benefiting from this false optimism are mortgage fraudsters who may employ advertising techniques far slicker than telephone pole flyers, but with the same goal in mind.
Friday's L.A. Daily News reports that three mortgage consultants from Los Angeles-based "ALG Inc." have been arrested for fleecing more than 70 mortgage re-finance clients, many of them elderly, out of nearly $1 million in bogus fees -- and leaving them on the hook for $30 million in loans.
"The suspects," the Daily News reports on a statement from the state attorney general's office, "lured dozens of borrowers into
refinancing home loans by falsely promising low interest rates and
brokers' fees. They then negotiated different terms with lenders,
forged the victims' signatures on loan documents and collected brokers
fees ranging from $20,000 to $57,000."
Only last month California Attorney General Jerry Brown
ordered 386 "mortgage foreclosure consultants" to register with his
office and post $100,000 bonds. Additionally taking aim at two dozen
companies specializing in mortgage refinancing, Brown ordered them to
prove claims they made in direct-mail and Internet campaigns.
Rancho Cucamonga's 21st Century Real Estate Investment Corp., for
example, was ordered to "substantiate its written solicitations
including: '[y]our proposed loan
modification is a 30 year fixed/3.5% interest rate with a monthly
payment of $495. Your monthly savings is $705. Total savings over a
30-year period is $253,800. . . . Your first payment will be negotiated
to begin March 2009 - payable to your current lender for $495.'"
Brown, who is widely expected to run for governor next year, summed up
the post-meltdown mortgage industry's misleading come-ons: "Hoping to
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lower their mortgage payments, thousands of homeowners were instead
duped by slick advertising and money-back guarantees . . . this rogue
industry must clean itself up or face legal action."
The AG's office has recently created a new Web site to help homeowners who are seeking loan modifications to avoid getting scammed.