U. S. Courts Freezes Assets of Five California Mortgage Companies

APR 9, 2012 9:11am ET
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A federal court has frozen assets at five California companies that are being investigated for trying to scam U.S. homeowners facing foreclosure. The Federal Trade Commission says it has opened an investigation into companies, which charged its customers up to $10,000 for legal advice and forensic audits.

Sameer Lakhany and his five Santa Ana, Calif.-based companies tried to convince homeowners to join a lawsuit against their lenders that could stop their foreclosures, reduce their delinquent payments and yield financial pay-outs, according to a complaint filed in U.S. District Court in central California on March 5.

At the request of the FTC, the United States District Court froze the assets of Credit Shop; Fidelity Legal; Titanium Realty; Precision Law Center Inc. and Precision Law Center LLC. The operation allegedly took in more than $1 million by allegedly selling homeowners bogus mortgage relief and foreclosure rescue products, including a scam that falsely promised to get help for homeowners who joined others to file so-called “mass joinder” lawsuits against their lenders. This is the FTC's first case against alleged scammers who pitch these kinds of lawsuits. Among other things, the agency will seek money for possible refunds for consumers.

Lakhany also did business using three websites, HouseHoldRelief.org, FreeFedLoanMod.org and MyHomeSupport.org. The complaint charges that the defendants victimized hundreds of consumers with two related scams.

In one scam, the FTC claims the defendants masqueraded as a specialty law firm, Precision Law Center, and sent out direct mail resembling a class action settlement notice, holding out the false promise to consumers that if they sued their lenders along with other homeowners in so-called “mass joinder” lawsuits, they could obtain favorable mortgage concessions from their lenders or stop the foreclosure process. In fact, the defendants allegedly operated a sham law firm and only engaged attorneys briefly to file the lawsuits, after which either the defendants neglected the suits, or the suits were dismissed. According to the FTC, they charged $6,000 to $10,000 in advance, but failed to get the results they promised. 

The FTC alleges that to convince consumers that they should hire Precision Law Center, telemarketers followed up by mailing material to them promising that the mass joinder suit would result in: “Forgiveness of all delinquent payments, fees and penalties,” “Halt and reverse (sic) foreclosure proceedings,” “Credit restoration,” “Possible compensatory damages in the amount of $22,500.00,” and “Possible punitive damages in the amount of $52,500.”

The material also allegedly claimed that 80% to 85% of these suits are successful, and that consumers might also: receive their homes free and clear; have their principal balance reduced to 70% of the current value and their interest rate reduced by half; be refunded any accrued interest, penalties, and charges; improve their standing with credit reporting agencies; and receive monetary damages.

In the other scam, the defendants allegedly promised but failed to deliver relief from mortgages and foreclosures, and typically charged the consumer between $795 and $1,595 for a so-called "forensic loan audit." According to the FTC, the defendants told consumers these audits would find lender violations 90% of the time or more, and that the resulting legal leverage would force their lender to give them a loan modification that would substantially improve their mortgage terms. The defendants falsely portrayed themselves as non-profit, free, accredited, or HUD-certified housing counselors with special qualifications to help obtain mortgage loan modifications and avoid foreclosure. They promised consumers that the forensic loan audit would be the only charge not covered by their “free” service, and that if the “audit” did not turn up any violations, consumers could get a 70% refund and still obtain a loan modification. They also told consumers their loan modification requests would be seriously delayed without the audit, according to the complaint.

In its complaint, the FTC charged the defendants with violating the Federal Trade Commission Act and the Mortgage Assistance Relief Services Rule. (ftc 3-22-12)




Rene Alvarez and Mariano Ortega, both of San Jose, pleaded guilty to defrauding about 400 homeowners out of nearly $2 million in a wide-ranging loan modification scam, according to the Santa Clara County District Attorney's Office. Both were co-owners of M&R Contemporary Solutions in Campbell and pleaded guilty and no contest, respectively to theft and foreclosure fraud charges.

Alvarez and Ortega ran the scam in 2008 and 2009 and mostly preyed on Hispanic homeowners, according to the District Attorney's Office. The men are scheduled to be sentenced May 21 and are facing a maximum of three years in the county jail.

Prosecutors say M&R lured homeowners who were in one of three stages of the foreclosure process by pitching a "principal reduction" program. Homeowners paid between $3,000 to $10,000 each to M&R depending on how far along they were in the process. Owners who were in the final stages of foreclosure—still in their homes but no longer titleholders—paid $10,000.

The collection of upfront fees from homeowners in foreclosure is a felony under California law regulating the conduct of foreclosure consultants, Fitzsimmons said. Homeowners were told M&R would save their homes by facilitating the purchase of their existing lender's loan by a third party at a discounted price. The homeowners were to be offered a new reduced-principal loan that would have significantly lower monthly payments.  But no M&R client ever received a new loan.

A third defendant in the case, Cyndey Sanchez, is still awaiting trial in the case. Sanchez, who owned and operated West Coast Mortgage and Horizon Property Holdings of Beverly Hills, was supposed to provide the investors to purchase the loans.

Investigators have seized $257,000 from M&R's bank accounts, which may be applied toward restitution. (sjmercnews326120)


Comments (2)
This is all well and good however, why isn't Archbay Holdings LLC alias Archbay Capital not being investigated? They are illegally trying to foreclose on loan they do not own ,, How long before they open this can of robo signing thieves?
Posted by | Friday, April 13 2012 at 10:38PM ET
Archbay holdings llc needs to have a class action lawsuite brought against them and I will do so as soon as we find a home to live in.
Posted by | Thursday, August 09 2012 at 10:45PM ET
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