New Predatory Scam: Mortgage Litigation Services

The subprime lending industry barfed out hundreds if not thousands of loan originators in 2008 who had a taste of the six figure lifestyle and didn’t want it to end. The predators quickly swarmed into the loan modification industry and when state regulators started clamping down, they morphed into predatory short sale negotiators like parasites steadily evolving to bypass an organism’s defenses.

halo 3 plasma pistolSo where might they go now that the Federal Trade Commission is using the Halo plasma pistol on upfront fees Jan 31, 2011? Do you think they might crawl under a rock and die? Of course not.  The newest scam is called “mortgage litigation services” and the scammers are already swarming my inbox with email spam telling me that I can make six figures a year with no experience. All I have to do is refer people to their company. So what is the new scam?  From their email marketing:

“This is not a loan modification. Mortgages can become free and clear! XYZ Legal Services has put together a turnkey system that allows you to start offering mortgage litigation to your clients in days. This turnkey system is designed to run side-by-side with your existing company. XYZ provides all the required backend services to support your sales operation and business objectives. Our focus is on providing the very best customer service and attorney services for your customers. I am very confident that we will be able to help you and I think you will quickly see why our customers find our attorneys to be the experts when it comes to helping them get their financial issues resolved. Here are just a few key components that separate XYZ from the competition:·
Provide a REAL service to homeowners
You collect NO paperwork
All you do is fill out a one-page form online
Highest Marketing Fees to Affiliates
Make a Huge Income by Helping Others

Someone with a law license please explain to raincityguide readers how this could be legal.  It looks like they want people to sign up to become an affiliate and send referrals to their company, and for that the company is going to send out a referral fee. Predators love scams where they do no work and collect a fee.  So if these ads are targeting loan originators and other people in the real estate and mortgage lending industry, it looks like the company wants referrals of consumers who are in a position to challenge their lender.

We already have a 2009 law in Washington State where the lender is required to prove they hold the note before foreclosing. I don’t see how this service can help struggling homeowners. I do see how people who will believe anything will once again be scammed out of an upfront fee before any work is performed.

About Jillayne Schlicke

Educator in the field of mortgage lending and real estate. Follow me on Google+

Comments

  1. As always, scams abound. It’s good Jillayne
    is blowing the (detailed) whistle as she does. J-

  2. Ugh! Will these predators just crawl back under the rock already? I’m all for government getting out of the way and allowing commerce to occur but people like these deserve to be forced out of business. When are people going to wake up and realize there ain’t no such thing as a free lunch? Pay your mortgage – or don’t – but do not try to blame it on somebody else.

  3. Sorry for delay in speaking up — I was trapped on a beautiful beach in Mexico with a steady supply of Coronas… Needless to say, it was awful and I am glad to be back. ;-)

    My $.02? This is not compliant AT ALL with the Rules of Professional Conduct, the rules promulgated by the state Supreme Court and administered by the WA State Bar Association that governs attorney conduct. First and foremost, per the RPCs an attorney cannot pay a referral fee. The model for this “legal services provider” — whatever the heck that is — is based entirely on a referral fee. Moreover, the relationship between the “legal services provider” and the actual client is not clear — is the person seeking a modification the client of the “legal services provider”? — and that implicates numerous RPCs. Finally, I love the notion that homeowners are best served by immediately suing the bank in all instances. Talk about bad legal advice! Litigation is expensive and the outcome is uncertain, particularly in this instance where the “sue ‘em all!” gameplan was formulated in different states that have very different laws and processes in this regard.

    In a nutshell — and as suggested by Jillayne — this is just another scam designed to prey upon vulnerable individuals who want nothing more than to save the family home. Sordid, to say the least. The problem with scammers, of course, is that they are fly-by-night with no assets and thus there is no incentive for real lawyers and their clients to sue them such that they are driven out of business. Instead, the consuming public must rely on governmental regulation — which is by definition always trailing the evolving models of the scammers, and is inefficient at best — and their own wits. And as P.T. Barnum sagely observed, there are a lot of people who fail to appreciate a scam when they see one.

  4. The big scam that we are seeing in the Phoenix area is on short sales. The slime– (oops I mean buyer) offers on a short sale, then while it is being negotiated with the bank they put it back on the market at a higher price (even though they don’t own it) When the bank approves the sale they do a same day close and sell to the higher priced buyer and make a dubious profit on the difference. Banks are beginning to cry foul and the FBI in Phoenix is looking at it but at this time it is legal if fully disclosed. The problem is that it is rarely fully disclosed because a bank wouldn’t agree to it if they knew. Seems like it would be easier to make an honest buck

  5. Hi Ralph,

    Yes, we’re aware of that same short sale fraud scenario and our Washington State Department of Licensing has prepared two Advisory bulletins, one for sellers and the second one for real estate brokers.

    http://raincityguide.com/2010/12/10/new-wa-state-short-sale-seller-advisory-and-licensee-guidance-bulletins/

  6. It is surprising that the IRS hasn’t created a way to make it economically too painful for these (ahem) ‘investors’to commit that sort of sleazy behavior.

  7. Unfortunately some people live by the code of “it’s only illegal if you get caught”.

    But hopefully in the end they will be caught and prosecuted to the full extent of the law.

  8. I also received an email regarding marketing these services. Companies everyday pay people for marketing their services. Does that mean an “Attorney” or “Law Office” can not pay someone or a company to market their services? Or pay someone a “marketing fee” for referring clients to help a family from losing their home through an “illegal foreclosure.” I say illegal based on mortgage securitization. Most people might not have heard of M.E.R.S. illegally transferring(with out paying any recording or filing fees) and selling these M.B.S. to everyone they could including investors from other countries who have requested a repurchase of these securities last I heard of about $20billion from BofA.

    Indy Mac one of the largest lenders in the country was seized by FDIC in July 2008. Assets were sold Mar.2009 to One West Bank. The owner of One West Bank is VP of Goldman Sachs Steven Munchen, George Soros(billionaire), John Paulson. Who under Under his direction, Paulson & Co has capitalized on the problems in the foreclosure and mortgage backed securities (MBS) markets.

    All residential mortgages were purchased at 70% of market value and Helocs at 58% of value.
    FDIC was so kind to step up and cover 80-95% of losses due to short sale or foreclosure. By the way Loss Calculations are based on the ORIGINAL Loan Balance.

    Here’s an actual example $478k bal. late 6 pmts = $485,200 X 70% OneWest paid $334k. They get Short Sale Offer for $241,000 and according to FDIC formula of original balance $485k -$241k=$244k “adjusted loss

    • Krista Railey says:

      The problem is in what constitutes educating a consumer and what constitutes illegal practice of law. Any person who is not an attorney that gives homeowners advice to join a lawsuit could easily step over the line.

      There is also the issue of capping and running as well as splitting fees with non attorneys. I’ve seen the incentive structure that is being offered to non-attorney affiliates (or “ambassadors/in-take specialists”), and the commissions can go as high as 50% of the retainer.

      There is also the issue that distressed homeowners should speak to an attorney and discuss the merits of their case prior to hiring that attorney- this is something that a non attorney cannot do. Furthermore, having seen the marketing materials and heard the claims made by the marketers, I’m appalled at the representations that are being made. Steve Rhode even has a transcript of a call between himself, as a secret shopper, and a non attorney affiliate:

      http://getoutofdebt.org/26728/mass-joinder-mortgage-litigation-secret-shopper-call-transcript

      Please note that the DRE has reviewed some of the marketing and issued a Consumer Warning. Please also note that there appears to be infighting among some of the firms, and co-counsel on the Ronald vs. B of A case has filed a motion to remove Stein as co-lead counsel and for Stein to provide an accounting. The hearing on this issue is supposed to take place this week, and co-counsel did bring of the subject of the marketing and affiliates. Here are a couple of links to the story where you can view the filing and exhibits yourself:

      http://getoutofdebt.org/27066/mass-joinder-case-infighting-worse-than-high-school-co-counsel-mitchell-stein-gets-the-boot

      http://www.piggybankblog.com/2010/01/05/johns-daily-blo/

      Although it sounds lucrative, my best advise is that if you want to sell entry to the mass joinder lawsuits, become an attorney. Otherwise, contact the Bar Association in your state and provide them with the affiliate marketing materials you have received, and simply ask the Bar if they think its kosher.

      I am curious what company approached you, when they approached you, and what type of compensation structure they presented. I encourage you to consider what is being proposed and to do the right thing.

      • Here is WA, it is flat-out illegal for an attorney to either split legal fees with a non-attorney, or to pay a referral fee to anyone other than an approved, non-profit referral agency. I would avoid – like the plague — any business that flaunts these rules because the legal counsel you are getting is almost certainly going to be poor. I mean, the entire business model of these lawyers runs afoul of the rules governing lawyers – talk about not inspiring confidence…

  9. I was contacted by a consumer today who was approached by a person claiming to be with an attorney office asking the consumer to send a check for $5,000 to join in a lawsuit against Taylor Bean and Whittaker (TBW) and she could….get her mortgage cancelled and would own her home free and clear!

    Consumers please be very careful about parting with money before work has been performed! Just because they say they represent a law firm doesn’t mean they’re not LYING to you:

    http://mandelman.ml-implode.com/2011/02/attorney-phil-kramer-of-kramer-kaslow-takes-action-shuts-down-unauthorized-sales/

  10. Krista Railey says:

    Jillayne, thank you so much for writing about this issue. I always enjoy what you write. I spent a lot of time trying to get to the bottom of the Mass Joinder affiliate network, and have commented about the issue on multiple blogs including Mandelman Matters (I post on ML and Mandelman Matters under Do_the_math).

    There are a variety of companies that are selling entry to the mass joinder suits, and if you Google Consolidated Litigation Group, you will find a plethora of companies with different addresses and phone numbers hawking client intake.

    If you would like a copy of the most recent lawsuit filed against Kramer et al from a disgruntled client, please email me and I will email it back to you.

    Please keep up the good work in continuing to be the voice of reason in an industry gone mad.

  11. Nicolette says:

    Actually, I work for an organization that is partnered with a legal firm, that specializes in multi plaintiff litigation. We consist of legal assistants that filter potential clients; completing questionnaires and reviewing client files to determine if they qualify to join our multi plaintiff litigation. No scams or creepy marketing. We only market our services to individuals who have/had loans with the lenders we’re suing, between 2002 and 2008. We review their Deed of Trust and Warranty Deed to ensure that the potential client meets at least half of the primary points of legal dispute. We’ve filed over 400 cases in the last 5 years, we have attorneys throughout the country, and we’ve only lost two cases. We don’t promise to get people free & clear on their homes. We strive for the best possible outcomes, which include reducing the principal balance to fair market value, reducing interest rates to 2%-4%, stopping foreclosure and providing clean title. Beyond the value of repairing clouded title, we tend to save people money on their monthly mortgage payments in addition to the overall lifetime of the loan. For those at risk of losing their homes, we can typically halt foreclosure efforts, and fight to reduce their payments to something they can afford.

    Our legal cases go to court, we have a 99.5% success rate, and we don’t target everyone and anyone, but only those who pass our careful qualification process. I’m certain that much like the short sale/mortgage mods industry, there are a lot of scams out there, and I’m a great skeptic – but I would never work for an organization taking part in unethical practices, and I do believe there are a number of law firms taking up multi plaintiff litigation (we also take on clients for individual representation) that ARE legitimate.

  12. Krista Railey says:

    Jill, check out the news on Kramer & Kaslow and Mitchell Stein, et al. They are shut down, files and assets seized and are being sued by regulators.

  13. What about The Residential Litigation Group, PA located in Florida? They are stating similar settlement cases and I am curious if they are legit or a scam. Any help is much appreciated.

  14. Annie, did anyone get back to you. I am also interested in the Residential Litigation Group in Florida. I hope they are not a scam

  15. As far as I’m concerned, Florida is the mortgage fraud headquarters of the world. ANYTHING coming out of Florida needs to be just assumed to be fraudulent and you need to make them work up from there.

    Just google the name of that firm with the word “complaints” and you’ll see what I mean. If you have parted with money and are getting nowhere, call your local state attorney general and file a complaint ASAP.

  16. In a response to “The Residential Litigation Group, PA” I got a letter from them, I did some research it looks like the company has moved from FLORIDA to WASHINGTON DC? Or so they claim. Mr. Marc Hoffman who is the attorney looks like he moved along with the company. The website, http://www.trlg.com points to http://www.theresidentiallitigationgroup.com, from what I see the site was created on February 2012, which again to me sounds fishy as to why would a company who has helped many people in the past, get a new registered website in the past year, and change locations? Also one of the reps direct phone number is not even from the Washington DC area, it is from Florida! This screams SCAM all over the place! Also why would anyone need to pay $6,000 for lawyer fees up front if they know they are going to win? I hope this helps..

  17. The Residential litigation group contacted me after I answer a email requesting
    help. A short interview with a non attorney qualified me for their “Group”
    litigations against Bank of America-promising $50K. Their “tell” was asking
    for $6K but later reducing it to $4995-; refusing mail processing and OFFICE Depot refused to process any of their faxing.These people are out of
    Boca Raton(mouth of the rat) Fl. I still need help-Who can I trust??

    • I gave a $1200 down payment to the Residential Litigation Group and then discovered that it was probably a mistake. I then went to the FSB Group, Inc. in Lake Worth, Florida – dealt with Fay Bedran and what a wonderful experience. She spent 2.5 hours with me BEFORE she took a penny. Exactly 8 days later, I had a modification with my mortgage company – an EXCELLENT modificaiton. Even Fay was surprised, she worked a miracle but we are thrilled! She is professional, thorough, and nice to work with. Their phone number is 866-981-5006. She has no clue that I am doing this but want others to have the same experience that I did! Now I am fighting with Residential Litigation Group to get some of the money back but am pretty sure that will not happen. GOOD LUCK!!

  18. wfweems
    Contact the attorney general’s office in the state where you reside.
    If you’re in Washington State, you can also contact DFI.
    http://dfi.wa.gov/cs/loan_originator.htm

  19. Bill Leiber says:

    can someone please show me any PROOF that any of these “mass litigation”, “mass joinder”, “mass tort”, “complex”, “multi-plaintiff”, or other awkwardly named mortgage lawsuits (if you can consider it such) has yielded a result? so far all i have found is marketing companies that tout claims and make bold statements yet are generally nothing more than phone rooms with an attorney renting his credentials to them. i would think that if ANYONE other than a state regulator or federal agency had proven results of winning these cases it would be BIG news and would establish caselaw for others to tap into (kind of like mesothelioma). if someone could show me PROVEN results (settlements awarded, principle reduced as a direct result of the case, or other substanital relief that is worthy of a $6000 entry fee) i would gladly hire said firm. otherwise you must be VERY creative in doing due diligence and not get sold. these marketing companies are slick because it sounds so appealing and they sound so believable yet none that i have found can backup there claims and they are more like hopeful outcomes rather than real results. and for $6000 they dont need to be successful to make money. they have no skin in the game because at $6000 per client, if they never win the case they still make millions

    • John Rivers says:

      I think You are right on with your take on this newest selling of hot air. The mail is flooded with these “notifications”. Desperate sales people in need of a job are posing as the dreamer amateur “intake specialists” that are drinking this kool aid. Then there are the owner’s and their managers who are filling their pockets with their victim’s errr clients’ retainers. This sham has been going on for 3 years and nobody has won anything.Remember The banks are in bed with the government. The FTC will shut this crap down when enough victims come forward. Check out the many bad endings like the Resolution Law Center story. There they were yesterday…..now gone today .In addition isn’t it supposedly and allegedly against the law for any lawyer or law firm to share legal fees with a telemarketer in a boiler room….errrr intake specialist in a phony Law center? Any low life lawyer can file suit against anything. So far its been a cash cow for the lawyers and their expert intakers, but where are the wins for the people who are out 5-6 grand?. Well until this gets shut down….the fools who pay still have an ice cubes chance in hell….where you can find an abundance of intake specialists..

  20. Delores Fischel says:

    We are so getting screwed right now from a “so called” attorney in Florida for our loan mod. It has been 14 months and still no answers. Out 3, 000$ how stupid were we?

  21. Delores report the company to the attorney general’s office in the state where you live.

  22. Here is your answer as whether or not you should pay The Residential Litigation Group thousands of dollars…PASS

    http://www.palmbeachpost.com/news/business/real-estate/idaho-orders-north-palm-beach-law-firm-to-stop-sol/nT9Yh/

  23. Hoffman Law group aka The Residential Litigation Group. They scammed us into giving up front $6,000 for representation North Palm Beach Florida.

    I received a phone call from a Mark Lucas from the Residential Litigation Group in August 2012 (now they call themselves Hoffman Law Group. I think they changed their name because they were getting in trouble). He clearly stated that his company and firm would be doing a action suit against banks and that i would be eligible to receive a loan modification and compensation for my banks actions against me. I made a mistake. a Big Mistake. First in believing these people against my better judgment then they say over 6 months you can pay is $1,000 a month and you would get money back on settlement. After the $6000 up front was given to company they required a maintenance fee of $495 a month. I was told in beginning these matters usually take within 5 to 8 month to complete. That we the biggest lie in hindsight. To date we are going nowhere. They have my money up front and refused to answer my calls since October 2013 when i spoke to an attorney from the office and told him i want to discontinue being part of the settlement. I was told ” We would do it pro bono “. I said no. I had received foreclosure papers last February and called the company … I needed to respond within 20 days or else the judge would sign onto the default. I had to file the papers myself because they took so long to act on my behalf after saying before they took my money that they would provide representation. I have now received the loan modification through my own work. I did not have this company do anything for fear they would screw it up. I have been asking them for my money back that i laid out. I said.. ” Please return the $6000 and i guess you keep the monthly maintenance fee of 495 per month times 7 months. To date i have not received a reply. I was told it might take a couple of weeks to put file in order. I am waiting over 2 months and I’m sure the legal fee to leave the firm will negate any of the money i have coming back to me.
    Please be careful with sweet talking people from these kind of firms..

  24. Consumers: If a company is representing themselves as attached to a law firm in any way….attorneys, lawyers, “division of xyz law firm,” etc., contact your state’s BAR Association ASAP for help in confirming that the company is legitimately licensed to practice law in your state.

    You can ALSO contact your state’s Department of Financial Institutions which typically oversees laws and rules governing charges of “upfront fees” for services tied to foreclosure rescue scams.

    Here is the link for Florida
    http://www.flofr.com

    Florida typically ranks number 1 or 2 in ranking for mortgage fraud in the United States. All 50 states. Number 1. Think about it.

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