Arizona Department of Real Estate-Informational Alert
August 23, 2011
Judy Lowe, Commissioner, Arizona Department of Real Estate Advisory
During these challenging times, it is critical that all parties involved in the real estate industry are kept well informed as to any illegal misbehavior and/or activity. In a spirit of maintaining an open dialog with our licensees, the real estate industry and consumers, I am providing you with the warning issued on Monday, August 22, 2011 by the Arizona Attorney General Tom Horne.
AG HORNE WARNS HOMEOWNERS: MORTGAGE LAWSUIT SCAM HITS ARIZONA
PHOENIX (Monday, August 22, 2011) -- Attorney General Tom Horne today issued a warning to consumers to be wary of any notices or advertisements that claim to offer homeowners facing foreclosure “complete forgiveness of the loan” or other monetary relief if they join a class-action lawsuit. Such ploys are likely a pretext to collect illegal up-front fees for foreclosure assistance.
In class action litigation, consumers generally do not have to pay to join, and most reputable firms will not charge a fee for attorneys to review your case or to determine if you are eligible to join a lawsuit.
“The mortgage crisis is only made worse by predators who take advantage of consumers who are already facing the loss of their home,” Horne said. “State and federal law ban almost all types of up-front fees for foreclosure assistance. I am committed to prosecuting anyone who engages in this type of consumer fraud, and it is just as important that consumers be vigilant against these types of scams.”
The California Attorney General recently filed a lawsuit against California lawyer Philip Kramer, the Law Offices of Kramer & Kaslow, plus 19 other lawyer and non-lawyer individuals and companies, for deceptively marketing class action or “mass joinder” lawsuits. The defendants in that case are believed to have taken over $7 million in fees from homeowners in 17 states – including Arizona - after sending out hundreds of thousands of flyers advertising the program. The lawsuit alleges that the defendants advertised nationwide settlements against lenders that did not exist and that many servicers were not provided by lawyers or legal staff.
Notices may be mailed to homeowners or posted on their doors. Typically, the business claims that the fee they are charging is for a forensic audit of your loan documents to see if you are eligible to join the class action litigation. However, the Federal Trade Commission’s Mortgage Assistance Relief Services Rule (“MARS Rule”) contains a broad ban on requesting or collecting up-front fees for almost all types of mortgage assistance, including forensic audits related to foreclosure relief. Arizona’s foreclosure consultant statute also prohibits companies from collecting an up-front fee for assisting homeowners in foreclosure.
Foreclosure rescue companies may promise to refund your fee if you are not eligible to join the litigation. However, the Office’s experience with guaranteed refunds indicates that they are very difficult to obtain, or the company may disappear before the refund is paid. If you are facing foreclosure, refuse to pay up-front fees and instead contact the Arizona Foreclosure Prevention Helpline at (877) 448-1211 for free assistance provided by HUD approved housing counseling agencies.
If you feel you’ve been a victim of a class joinder scam or any other type of consumer fraud, please contact the Arizona Attorney General’s Office Consumer Information & Complaints Unit at (602) 542-5763 / (520) 628-6504 / (800) 352-8431. You can also file a consumer complaint online at: http://www.azag.gov/consumer/complaintform.html