AG cracks down on mortgage fraud

September 27, 2011 2:45:56 PM PDT
Illinois Attorney General Lisa Madigan filed four lawsuits Tuesday against companies accused of siphoning funds from homeowners looking for debt relief help.

When Martina Sanchez and her husband bought their Chicago home, they were both bringing in incomes. But disabilities prevent them from working now. They paid a company $1,900 for a mortgage modification. They didn't get a modification and they are out their hard earned money.

Through a translator, Sanchez told ABC7, "I feel like I can't believe, I can't believe what's happening to me. I feel like it is all a dream."

Sanchez went to the Madigan's office for help. With the four filed Tuesday, Madigan has filed lawsuits against 44 companies, accusing them of foreclosure rescue schemes.

"They don't call your lender. They don't modify your loan. They don't save your home. They also don't represent you in court. What these illegal operators do, is they do is take your money and run," Madigan said.

Madigan offers a mortgage foreclosure help line and she says they've received more than 4,000 calls, half of which are complaints about mortgage rescue fraud. Some companies are using a loophole in state law to collect upfront fees, Madigan said.

"They're only getting the lawyers on board to make it appear more legitimate and try to get themselves out of some regulation," Steve Baker, Federal Trade Commission, said.

"These operations are run by non-lawyers who scam people out of money they can't afford to lose," Madigan said.

. With an injury, a bad market to sell real estate and tenants who were being laid off, Kim Williamson needed help to modify the loan on his rental property.

"I felt that I was under pressure to try come up with something. Hearing them on the radio, how they said they represented themselves as an attorney handling everything, I felt it was a company legitimate company that I could possibly trust," Williamson said.

Williamson eventually lost his rental property and is fighting to save his home. He and Sanchez went to the same company for loan modifications. Now they offer others advice.

"Don't seek people who charge you more money, because there are people who can help and it won't cost you a cent," Sanchez said through a translator.

One of the lawsuits names attorney Matthew Wildermuth and Legal Modification Network, neither of which responded to emails or phone calls from ABC7.

    Officials want homeowners to know that free assistance is available and no company should take money upfront:
    (866) 544-7151
  • US Dept of Housing & Urban Development
    HUD Approved Housing Counseling Agencies in Illinois

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