Surge in foreclosures attracts lawyers who promise to renegotiate mortgages but don’t
What is one of the biggest businesses out there in the real estate spectrum? Loan modifications. What real estate business is fraught with fraud? Loan modifications! Paul Elias from the Associated Press reports about a growing trend of “people” that are victimizing homeowners. He focuses on rogue attorneys who are comfortable in taking peoples money without delivering any service.
An important word in my rant is “rogue”. If a home owner wants to do a loan modification, a QUALIFIED attorney is a great place to start. That said, there are many people (attorneys or not) that are scamming people out of a tremendous amount of money when it comes to loan modifications. If your clients or friends are considering hiring a company to do a loan modification, make sure they check their credentials before they engage. A great place to start is the Better Business Bureau.
Remember, the home owner, if they have the time, can do this themselves.
Surge in foreclosures attracts lawyers who promise to renegotiate mortgages but don’t
By PAUL ELIAS
The Associated Press
“I nearly ended up in a homeless shelter,” Warren Jacobs said of his hiring United Law Group to renegotiate the mortgage on his Mesquite, Texas, home.
SAN FRANCISCO | Warren Jacobs was desperate when he received a “robo-call” that promised to help him stave off foreclosure of his home near Dallas.
The father of six had lost his construction job, lacked health insurance and couldn’t pay the bills for his 17-year-old daughter’s cancer treatment, let alone his mortgage.
So on Jan. 21, he dialed the return number and was connected to the United Law Group. Minutes later, Jacobs agreed to scrape together $2,000 to pay the Irvine, Calif., law firm.
Jacobs unwittingly became one of the many thousands of homeowners who authorities say have been taken in by unscrupulous or incompetent loan-modification lawyers who rushed into a burgeoning niche: helping struggling homeowners renegotiate their mortgages.
Ripoffs of homeowners have become so common that state bar associations from Florida to Arizona are warning their members of the many ethical pitfalls that await those who exploit the mortgage crisis.
The California State Bar is investigating more than 400 lawyers who are suspected of ripping off thousands of homeowners nationwide.
The first to be charged was Sean Rutledge, the founder of the law firm that purported to represent Jacobs and 13 other homeowners.
Just months after securing a law license, Rutledge had been flying high. His United Law Group added several lawyers and opened offices in other states.
Today Rutledge’s license is suspended, his nascent career lies in tatters and he is under investigation in California and Ohio for taking fees of up to $3,500 from desperate homeowners then allegedly doing little — or nothing — to save their homes.
The California Bar in July formally charged Rutledge with not only failing to perform vital tasks to stop foreclosures, but also calling his clients “losers” in the rare occasions he returned their phone calls.
Rutledge has denied the allegations and said he would contest the attempt to disbar him. He is appealing the dismissal of a lawsuit he filed against the California Bar, alleging that the group violated federal laws that protect people with disabilities. Rutledge is diabetic and alleges state bar investigators, when scheduling meetings, ignored his need for treatment.
Rutledge did not return e-mail messages seeking comment, and he could not be reached through the United Law Group, which remains in business.
January was the 11th straight month in which more than 300,000 properties nationwide were subject to foreclosure filings, according to Irvine-based RealtyTrac, which predicts a record 3 million foreclosures this year.
Jacobs told investigators that Rutledge’s law firm advised him to stop making mortgage payments and cease communicating with his lender.
When the bank moved to seize the house for which Jacobs paid $175,000 in 2003, United Law Group failed to formally request “forbearance,” as it promised, to delay foreclosure. On June 1, Jacobs hired another lawyer to file bankruptcy on his behalf to stave off foreclosure the next day. In September, he agreed to a new payment plan with his bank and continues to live in the 4,000-square-foot house in suburban Dallas.
“I nearly ended up in a homeless shelter,” Jacobs said.
Earlier this month, Ohio Attorney General Richard Cordray filed a lawsuit against Rutledge and the United Law Group, alleging they defrauded homeowners in that state.
Nina Vultaggio, a spokeswoman for United Law Group, and others contend that the financial industry is behind the crackdown on lawyers. Vultaggio said that the financial industry is the biggest villain in the mortgage crisis and wants to deprive their customers of legal representation during complicated negotiations to save homes.
“When you get into trouble, you need an attorney to talk to these negotiators,” Vultaggio said.
Vultaggio said United Law Group has filed class-action lawsuits against Bank of America, JP Morgan Chase and Washington Mutual, alleging unfair business practices. The banks deny the allegations.
Legal experts still strongly recommend homeowners in peril hire lawyers to counsel them in how best to deal with their lenders, but state bar officials warn clients to research a lawyer’s background.
Jacobs said he is still waiting for United Law Group to refund the $2,000 fee he paid in January.