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Illinois Attorney General Sues Loan Modification Firms for Fraud

Last month, Illinois Attorney General Lisa Madigan filed suit in Cook County against several "mortgage rescue" companies for allegedly scamming homeowners out of over $375,000. The suits claimed that several Cook County loan modification companies were charging up-front fees and never delivering the results they promised.

Allegations Against the Firms

The Attorney General's office claimed that the four firms that were targets of the lawsuit were taking advantage of a provision in the 2006 Mortgage Rescue Fraud Act which allowed attorneys working on mortgage rescue work to collect fees before beginning work on the cases. The suits alleged that the firms hired attorneys to front their operations in order to be able to collect fees up front, but in reality the attorneys never did any work on mortgage modification cases.

The Attorney General argued that these firms actually made it more likely that homeowners would face foreclosure because the firms were taking money from these homeowners that the homeowners could not spare.

Actions by the Illinois Attorney General

The suit asked the court for an injunction to prevent the companies from providing mortgage modification services in Illinois in the future. Additionally, the suit asked for restitution for the victims, as well as a $50,000 civil fine for each defendant and further fines of $50,000 for each act the defendants committed with intent to defraud.

The Cook County State Attorney's office also filed suit against some of the same parties against whom the Attorney General's office filed suit. The suits stem from a multi-agency effort at cracking down on Illinois loan modification firms and participating attorneys who were abusing the Mortgage Rescue Fraud Act.

People in the middle of the foreclosure process are in crisis and more vulnerable to scam artists. As such, they need to be sure they investigate any organization they go to for help with their situations thoroughly. If you are facing the possibility of losing your home to foreclosure, contact a trusted attorney who can advise you of your options.

Source: Daily Herald, Illinois sues mortgage rescue firms, Anna Marie Kukec, 27 September 2011

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