Three firms have filed a class-action lawsuit representing California homeowners who have allegedly been victimized by a network of scam artists taking advantage of individuals facing foreclosure.
According to the complaint, Ken Nathanson and his law firm Sherman & Nathanson PC, Nathanson Law Center and a false corporation called rewiremyloan.com are operating this scheme. The defendants have allegedly stolen hundreds of thousands of dollars from the homeowners.
The website supposedly referenced homeowners to contact Nathanson who would help them get a loan modification. In order to use the defendants’ services, homeowners who were facing foreclosure had to pay nearly $5,000 for the promised loan modifications and loan audit services, and were told that they would obtain a “100% money back guarantee” if a loan modification did not occur.
The complaint claims that the distressed borrowers never received any type of modification from the defendants, who also failed to refund the homeowners victimized by this scam.
“These for-profit loan modification operations are making a bad situation worse,” said Jon Greenbaum, chief counsel and senior deputy director of the Lawyers’ Committee. “Vulnerable homeowners come in contact with someone posing as an expert and offering to help them negotiate better mortgage terms. Little do they know it’s a scam. We hope that this lawsuit will not only help victims recover their losses, but also will serve as a deterrent against future scams.”
The Law Foundation, the Lawyers’ Committee and pro-bono counsel Orrick, Herrington & Sutcliffe LLP are defending the homeowners in this case. They are looking to recover upfront fees that were paid and are seeking punitive damages.
“Through this lawsuit, we’re seeking an immediate halt to the exploitation of desperate and struggling homeowners, and to deliver a measure of justice that these victims have been denied,” said Elizabeth Howard, a partner at Orrick.
As of April 2011, California was one of the hardest hit states in the nation where one in every 240 homes received a foreclosure filing, according to RealtyTrac.
Since the Lawyers’ Committee launched its loan modification scam prevention network database in February 2010, more than 14,600 homeowners nationwide have reported possible scams, totaling over $37 million in lost money. Out of the reported scams, more than 3,000 of the complaints came from California, where state residents have lost over $11 million in mortgage modification fees paid to alleged scammers.
“The housing crisis has been devastating for many Californians,” said Kyra Kazantzis, directing attorney of Fair Housing Law Project. “The individuals who ran this scam operation led people desperate to save their homes from foreclosure to believe that they could be trusted, but instead charged them thousands of dollars for doing nothing.”
