Authorities crack down on mortgage-relief scams nationwide
Federal and state officials filed lawsuits accusing dozens of companies of ripping off struggling homeowners by falsely promising help in avoiding foreclosures or lowering mortgage payments while collecting millions of dollars in illegal upfront fees.
The actions came in a joint law enforcement sweep called Operation Mis-Modification, which targeted law firms and counseling services offering assistance in modifying mortgage terms and payments.
Those firms misrepresented their services, including promising legal assistance that was never delivered, officials said. Among the defendants is Garden Grove lawyer Stephen Siringoringo and two business associates.
The suits, announced Wednesday, also alleged the companies violated a federal law prohibiting the collection of fees from homeowners until they have received a written modification offer from their lender or mortgage servicer.
The Consumer Financial Protection Bureau said three suits it filed against eight companies and their owners involved scams that cost homeowners more than $25 million in illegal upfront fees for services such as renegotiating mortgages or preventing foreclosures.
“These companies pocketed illegal fees, taking millions of hard-earned dollars from distressed consumers, and then left those consumers worse off than they began,” said Richard Cordray, the bureau’s director. “These practices are not only illegal, they are reprehensible.”
The bureau issued an advisory to consumers about how to identify mortgage modification scams. The red flags include demands for upfront payments and guarantees that a modification or other assistance will be obtained.
The bureau issued an advisory to consumers about how to identify mortgage modification scams. The red flags include demands for upfront payments and guarantees that a modification or other assistance will be obtained.
Among those sued by the bureau were lawyer Siringoringo and business associates Alfred Clausen and Joshua Cobb, who run Clausen & Cobb Management Co. Inc. in San Bernardino.
Since at least December 2010, the operation charged upfront fees of $1,995 to $3,500 from homeowners who in “numerous instances received none of the promised services or relief,” the bureau’s suit said.
Siringoringo did not immediately respond to an email requesting comment.
In 2012, the State Bar of California said it filed a disciplinary action against Siringoringo, accusing him of charging illegal upfront fees as part of a “large-scale loan modification scheme.”
In December, a judge recommended his law license be suspended for 18 months. The suspension is pending appeal, according to the state bar.
The state bar referred the case to federal officials, the bureau said.
Also participating in the crackdown were the Federal Trade Commission, which filed six lawsuits, and officials from 15 states, including Florida, Illinois and New York, who filed a combined 32 suits.
“These companies are nothing more than fronts for scammers, conning people out of thousands of dollars while putting them at higher risk for foreclosure,” said Illinois Atty. Gen. Lisa Madigan, who filed suits against Nationwide Marketing of Northlake, Ill., and LMA Processing of Chicago.
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