** CONSUMER ALERT ** FRAUD WARNING REGARDING LAWSUIT MARKETERS REQUESTING UPFRONT FEES FOR SO-CALLED “MASS JOINDER” OR CLASS LITIGATION PROMISING EXTRAORDINARY HOME MORTGAGE RELIEF

18 Mar

The California Department of Real Estate has issued the following
“CONSUMER ALERT” warning consumers about claims being made by marketers
of “Mass Joinder” Lawsuits. I have provided two links to the California
Department’s Website containing the text of the “Alert,” but have also
re-posted it in its entirety to help broaden the distribution of the
document. Mandelman

California Department of Real Estate ** CONSUMER ALERT **
FRAUD WARNING REGARDING LAWSUIT MARKETERS REQUESTING UPFRONT FEES FOR
SO-CALLED “MASS JOINDER” OR CLASS LITIGATION PROMISING EXTRAORDINARY
HOME MORTGAGE RELIEF
By Wayne S. Bell, Chief Counsel, California Department of Real Estate
I. HOME MORTGAGE RELIEF THROUGH LITIGATION (and “Too Good to Be True”
Claims Regarding Its Use to Avoid and/or Stop Foreclosure, Obtain Loan
Principal Reduction, and to Let You Have Your Home “Free and Clear” of
Any Mortgage).
This alert is written to warn consumers about marketing companies,
unlicensed entities, lawyers, and so-called attorney-backed,
attorney-affiliated, and lawyer referral entities that offer and sell
false hope and request the payment of upfront fees for so-called “mass
joinder” or class litigation that will supposedly result in
extraordinary home mortgage relief.
The California Department of Real Estate (“DRE” or “Department”)
previously issued a consumer alert and fraud warning on loan
modification and foreclosure rescue scams in California. That alert was
followed by warnings and alerts regarding forensic loan audit fraud,
scams in connection with short sale transactions, false and misleading
designations and claims of special expertise, certifications and
credentials in connection with home loan relief services, and other real
estate and home loan relief scams.

The Department continues to administratively prosecute those who engage
in such fraud and to work in collaboration with the California State
Bar, the Federal Trade Commission, and federal, State and local criminal
law enforcement authorities to bring such frauds to justice.
On October 11, 2009, Senate Bill 94 was signed into law in California,
and it became effective that day. It prohibited any person, including
real estate licensees and attorneys, from charging, claiming, demanding,
collecting or receiving an upfront fee from a homeowner borrower in
connection with a promise to modify the borrower’s residential loan or
some other form of mortgage loan forbearance.
Senate Bill 94’s prohibitions seem to have significantly impacted the
rampant fraud that was occurring and escalating with respect to the
payment of upfront fees for loan modification work.
Also, forensic loan auditors must now register with the California
Department of Justice and cannot accept payments in advance for their
services under California law once a Notice of Default has been
recorded. There are certain exceptions for lawyers and real estate
brokers.
On January 31, 2011, an important and broad advance fee ban issued by
the Federal Trade Commission became effective and outlaws providers of
mortgage assistance relief services from requesting or collecting
advance fees from a homeowner.
Discussions about Senate Bill 94, the Federal advance fee ban, and the
Consumer Alerts of the DRE, are available on the DRE’s website at
www.dre.ca.gov.
Lawyer Exemption from the Federal Advance Fee Ban –
The advance fee ban issued by the Federal Trade Commission includes a
narrow and conditional carve out for attorneys.
If lawyers meet the following four conditions, they are generally exempt
from the rule:
1. They are engaged in the practice of law, and mortgage assistance
relief is part of their practice.
2. They are licensed in the State where the consumer or the
dwelling is located.
3. They are complying with State laws and regulations governing the
“same type of conduct the [FTC] rule requires”.
4. They place any advance fees they collect in a client trust
account and comply with State laws and regulations covering such
accounts. This requires that client funds be kept separate from the
lawyers’ personal and/or business funds until such time as the funds
have been earned.
It is important to note that the exemption for lawyers discussed above
does not allow lawyers to collect money upfront for loan modifications
or loan forbearance services, which advance fees are banned by the more
restrictive California Senate Bill 94.
But those who continue to prey on and victimize vulnerable homeowners
have not given up. They just change their tactics and modify their
sales pitches to keep taking advantage of those who are desperate to
save their homes. And some of the frauds seeking to rip off desperate
homeowners are trying to use the lawyer exemption above to collect
advance fees for mortgage assistance relief litigation.
This alert and warning is issued to call to your attention the often
overblown and exaggerated “sales pitch(es)” regarding the supposed value
of questionable “Mass Joinder” or Class Action Litigation.
Whether they call themselves Foreclosure Defense Experts, Mortgage Loan
Litigators, Living Free and Clear experts, or some other official,
important or impressive sounding title(s), individuals and companies are
marketing their services in the State of California and on the Internet.
They are making a wide variety of claims and sales pitches, and offering
impressive sounding legal and litigation services, with quite
extraordinary remedies promised, with the goal of taking and getting
some of your money.
While there are lawyers and law firms which are legitimate and
qualified to handle complex class action or joinder litigation, you must
be cautious and BEWARE. And certainly check out the lawyers on the
State Bar website and via other means, as discussed below in Section
III. II.
QUESTIONABLE AND/OR FALSE CLAIMS OF THE SO-CALLED MORTGAGE LOAN DEFENSE
OR “MASS JOINDER” AND CLASS LITIGATORS.
A. What are the Claims/Sales Pitches? They are many and varied, and
include:
1. You can join in a mass joinder or class action lawsuit already
filed against your lender and stay in your home. You can stop paying
your lender.
2. The mortgage loans can be stripped entirely from your home.
3. Your payment obligation and foreclosure against your home can be
stopped when the lawsuit is filed.
4. The litigation will take the power away from your lender.
5. A jury will side with you and against your lender.
6. The lawsuit will give you the leverage you need to stay in your
home.
7. The lawsuit may give you the right to rescind your home loan,
or to reduce your principal.
8. The lawsuit will help you modify your home loan. It will give
you a step up in the loan modification process.
9. The litigation will be performed through “powerful” litigation
attorney representation.
10. Litigation attorneys are “turning the tables on lenders and
getting cash settlements for homeowners”. In one Internet advertisement,
the marketing materials say, “the damages sought in your behalf are
nothing less than a full lien strip or in otherwords [sic] a free and
clear house if the bank can’t produce the documents they own the note on
your home. Or at the very least, damages could be awarded that would
reduce the principal balance of the note on your home to 80% of market
value, and give you a 2% interest rate for the life of the loan”.
B. Discussion.
Please don’t be fooled by slick come-ons by scammers who just want your
money. Some of the claims above might be true in a particular case,
based on the facts and evidence presented before a Court or a jury, or
have a ring or hint of truth, but you must carefully examine and analyze
each and every one of them to determine if filing a lawsuit against your
lender or joining a class or mass joinder lawsuit will have any value
for you and your situation. Be particularly skeptical of all such
claims, since agreeing to participate in 4 such litigation may require
you to pay for legal or other services, often before any legal work is
performed (e.g., a significant upfront retainer fee is required).
The reality is that litigation is time-consuming (with formal discovery
such as depositions, interrogatories, requests for documents, requests
for admissions, motions, and the like), expensive, and usually
vigorously defended. There can be no guarantees or assurances with
respect to the outcome of a lawsuit.
Even if a lender or loan owner defendant were to lose at trial, it can
appeal, and the entire process can take years. Also, there is no
statistical or other competent data that supports the claims that a mass
joinder and class action lawsuit, even if performed by a licensed,
legitimate and trained lawyer(s), will provide the remedies that the
marketers promise.
There are two other important points to be made here:
First, even assuming that the lawyers can identify fraud or other legal
violations performed by your lender in the loan origination process,
your loan may be owned by an investor – that is, someone other than your
lender. The investor will most assuredly argue that your claims against
your originating lender do not apply against the investor (the purchaser
of your loan). And even if your lender still owns the loan, they are not
legally required, absent a court judgment or order, to modify your loan
or to halt the foreclosure process if you are behind in your payments.
If they happen to lose the lawsuit, they can appeal, as noted above.
Also, the violations discovered may be minor or inconsequential, which
will not provide for any helpful remedies.
Second, and very importantly, loan modifications and other types of
foreclosure relief are simply not possible for every homeowner, and the
“success rate” is currently very low in California. This is where the
lawsuit marketing scammers come in and try to convince you that they
offer you “a leg up”. They falsely claim or suggest that they can
guarantee to stop a foreclosure in its tracks, leave you with a home
“free and clear” of any mortgage loan(s), make lofty sounding but
hollow promises, exaggerate or make bold statements regarding their
litigation successes, charge you for a retainer, and leave you with less
money.
III. THE KEY HERE IS FOR YOU TO BE ON GUARD AND CHECK THE LAWYERS OUT
(Know Who You Are or May Be Dealing With) – Do Your Own Homework (Avoid
The Traps Set by the Litigation Marketing Frauds).
Before entering into an attorney-client relationship, or paying for
“legal” or litigation services, ascertain the name of the lawyer or
lawyers who will be providing the services. Then check them out on the
State Bar’s website, at www.calbar.ca.gov. Make certain that they are
licensed by the State Bar of California. If they are licensed, see if
they have been disciplined.
Check them out through the Better Business Bureau to see if the Bureau
has received any complaints about the lawyer, law firm or marketing firm
offering the services (and remember that only lawyers can provide legal
services). And please understand that this is just another resource for
you to check, as the litigation services provider might be so new that
the Better Business Bureau may have little or nothing on them (or
something positive because of insufficient public input).
Check them out through a Google or related search on the Internet. You
may be amazed at what you can and will find out doing such a search.
Often consumers who have been scammed will post their experiences,
insights, and warnings long
before any criminal, civil or administrative action has been brought
against the scammers.
Also, ask them lots of specific, detailed questions about their
litigation experience, clients and successful results. For example, you
should ask them how many mortgage-related joinder or class lawsuits they
have filed and handled through settlement or trial. Ask them for
pleadings they have filed and news stories about their so-called
successes. Ask them for a list of current and past “satisfied” clients.
If they provide you with a list, call those people and ask those former
clients if they would use the lawyer or law firm again.
Ask the lawyers if they are class action or joinder litigation
specialists and ask them what specialist qualifications they have. Then
ask what they will actually do for you (what specific services they will
be providing and for what fees and costs). Get that in writing, and take
the time to fully understand what the attorney-client contract says and
what the end result will be before proceeding with the services.
Remember to always ask for and demand copies of all documents that you
sign.
IV. CONCLUSION.
Mortgage rescue frauds are extremely good at selling false hope to
consumers in trouble with regard to home loans. The scammers continue
to adapt and to modify their schemes as soon as their last ones became
ineffective. Promises of successes through mass joinder or class
litigation are now being marketed. Please be careful, do your own
diligence to protect yourself, and be highly suspect if anyone asks you
for money up front before doing any service on your behalf. Most
importantly, DON’T LET FRAUDS TAKE YOUR HARD EARNED MONEY.
###########
Here’s another link to the California Department of Real Estate’s page
containing this fraud warning:
FRAUD WARNING REGARDING LAWSUIT MARKETERS REQUESTING UPFRONT FEES FOR
SO-CALLED “MASS JOINDER” OR CLASS LITIGATION PROMISING EXTRAORDINARY
HOME MORTGAGE RELIEF

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5 Responses to “** CONSUMER ALERT ** FRAUD WARNING REGARDING LAWSUIT MARKETERS REQUESTING UPFRONT FEES FOR SO-CALLED “MASS JOINDER” OR CLASS LITIGATION PROMISING EXTRAORDINARY HOME MORTGAGE RELIEF”

  1. kim March 25, 2011 at 7:35 pm #

    All I can honestly say is WOW!!! Just when a homeowner believes that thru all of the efforts made to right the wrong…here one goes again, having a whole new set of “professionals” ready to do more life lasting damage to one american dream gone bad homeowner. Talk about pouring salt into a very deep wound! Damn! Is the entire corporate america who illegally takes ones dream turns it into a very bad nightmare in with these masslitigators or what? You dont kick a dead dog, and you dont kick someone when their down, for a few bucks! Itssimple! Why would anyone want to even take the risk of being one of he bad guys associate. wronged then wronged again! I cant find the justification in any righteoussness in this recent screwed up news. how san it is! Really really sad!

  2. Steve April 15, 2011 at 6:08 pm #

    The DRE also use to have their own recovery account page on their website for possible fraud victims based on a one year discovery statue. In a response letter from my complaint the DRE stated I discovered fraud when I went back to my mortgage broker gathering the missing loan application showing only his signature in August of 2009.

    I replied, “Great.It’s only been eight months. I’m within the statue.”

    DRE replied saying, “Oh, wait. You discovered fraud when you had a forensic audit performed in March of 2009. Your pass the statue.”

    I replied, ” Where did I discover fraud? I haven’t discovered fraud. How did you discover fraud?”

    I had to go to the Commissioner just to express an investigation needed to be done. The DRE investigated and said. “Sorry. No fraud here.” I wrote back requesting what the DRE had found in making that determination. Of coarse, they wont reply. Case closed.

    The broker who screwed me gets to remain licensed and in business. I on the other hand got defraud and became homeless. Stated Income my Aunt Fannie Mae. He had my taxes. The loan originator is bankrupt and gone. Letters come back rejected and unable to forward. Phones disconnected. The Servicer who was affiliated denies being affiliated with originator and wont provide originating documents. The Title Company wants a subpoena. You can only retrieve documents they select and they still foreclose stealing the home. What’s a borrower suppose to think.

    Not to say DRE is incorrect about these mass joinder suits. But in my experienced reference above you can’t trust know one.

  3. Christopher May 25, 2011 at 10:09 pm #

    Have you ever heard of N.O.A.H national organization of assistance for homeowners. Checkout their website http://www.homeownersclassaction.org. Click maxine walters. Are they legit???

  4. Steve May 27, 2011 at 7:59 am #

    Signs say NO!

    Anyone can copy and paste making their website look pro. I just went through this with a group called Consumers Protection Assistance Coalition in the same place Santa Anna Calif.
    The BBB has no complaints on NOAH but rates as an F. Then Google searched NOAH and they have a class action.

    http://www.scribd.com/doc/48808961/National-Organization-of-Assistance-for-Homeowners-vs-Wells-Fargo

    Then look at the attorney. Roy Chester Dickson Esq.

    Google search- http://www.orangecountyda.com/home/index.asp?page=8&recordid=926

    The scam is the class action itself. Class Actions are suppose to be free but these guys will feed you the paper work and employee crap charging you 6k plus whatever other monthly fees just to get in.

    6k times 100 people is a pretty good profit just to say sorry we lost.

  5. r. boseck August 18, 2012 at 12:46 pm #

    I recently had to use the services of Consumer Protection Assistance Coalition. I had the pleasure of working with Dee Williams. I found Williams to be extremely professional yet compassionate to my situation. Williams treated me and my family like it was her own. You have a very great asset in Williams. In my opinion you should do what ever it takes to keep her. Williams was a god-send in my very troubling times with a very tight time frame to accomplish what I thought was impossible. Williams was very knowledgeable and made no promises, but told it like it was…….

    Thank you is not even enough and I can not say that enough. Williams came in early and stayed late to accommodate the time change that affected me. I was past my breaking point and Williams brought me back.

    Williams went well above and beyond. I wish there was more I could do than to say thank you but, Thank you very much. I could go on and on but I will end it here, Please feel free to contact me.Sincerely,
    R. B – Deputy Chief of Police

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