California Real Estate Fraud Report

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FTC Puts the Brakes on Forensic Audit Firms

Real estate fraud schemes are ever-evolving. Whether the real estate market is strong or weak, there are always predators hunting for victims.

After Attorney General Edumund G. Brown (now California’s governor) outlawed charging advance fees for mortgage modification services in 2009, creative scammers have been hard at work looking for a work-around so they could soak their victims. The latest mutation seems to be the “forensic loan audit,” an impressive-sounding term that usually means nothing for the about-to-be-ripped-off homeowner.

The Federal Trade Commission has convinced a U.S. district court to put the brakes on one particular forensic loan audit operation that was charging $1,995 or more to homeowners in distress.  California-based Consumer Advocates Group Experts, LLC, Asset Management Corporation, Advocates for Consumer Affairs Expert, LLC and Ryan Zimmerman are the targets of the FTC investigation, which now includes freezing the companies’ assets and installing a receiver to oversee their operations.

The alleged ploy, per the FTC, is that through website advertising, the defendants claimed that “up to 95% of mortgages may be legally unenforceable due to defects like lost documents, improper notices, appraisal and/or predatory lending.” The websites posted testimonials of successes by the defendants (not verified as genuine or not by the FTC yet) and recommended that the homeowner cease contacting his/her lender so as not to confuse negotiations the defendants were engaging in. In many cases, the defendants allegedly did not contact the lender or perform follow-up.

According to an article in the Imperial Valley News, the FTC complaint charges the defendants with “violating the FTC Act and the Mortgage Assistance Relief Services Rule, known as the MARS Rule, by deceptively telling consumers that they could renegotiate mortgages, making payments substantially more affordable; that they could use the “forensic audits” to negotiate with lenders; and that if they failed to do these things, they would provide a refund. The complaint also charges the defendants with other MARS Rule violations, including collecting fees for mortgage foreclosure rescue and loan modification services before homeowners accept a written offer from their lender or servicer, and failing to make required disclosures.”

© Copyright 2007-2017 Monique Bryher

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The information and notices contained on The California Real Estate Fraud Report are intended to summarize recent developments in real estate fraud, mortgage fraud, short sale fraud, REO fraud, appraisal fraud, loan modification scams, loan modification fraud and other real estate related crimes occurring in Los Angeles and California. The posts on this site are presented as general research and information and are expressly not intended, and should not be regarded, as legal advice. Much of the information on this site concerns allegations made in civil lawsuits and in criminal indictments. All persons are presumed innocent until convicted of a crime. Readers who have particular questions about real estate fraud, mortgage fraud and appraisal fraud matters or who believe they require legal counsel should seek the advice of an attorney.

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