A North Carolina firm that promised to provide foreclosure relief to delinquent borrowers has been ordered to cease business.
A Wake County Superior Court judge ordered Mortgage Assistance of the Carolinas Inc. to stop operating due to alleged unfair business practices and debt adjusting, the North Carolina Attorney General office announced Wednesday. The order also named the company's predecessor, Carolina Mortgage Relief Inc., and owner and president, Alan Steve Seabolt.
"This outfit took money from desperate homeowners, promised to help them avoid foreclosure and then left them in the lurch," Attorney General Roy Cooper said in the written statement. "Foreclosure assistance scams kick consumers who are already down, so we're working to shut down the scammers."
Many of the targeted borrowers were having trouble keeping up with their mortgages due layoffs, illness or death in the family, the office said.
Cooper's lawsuit seeks to permanently prohibit Seabolt and his companies from continuing illegal foreclosure assistance services and require them to cancel all contracts with consumers and pay refunds and penalties, according to the announcement.
The complaint reportedly alleges the Charlotte-based operation obtained names of borrowers facing foreclosure through court records and then sent direct mail solicitation claiming, "WE CAN HELP YOU … WE ARE THE FORECLOSURE CONSULTANTS THAT REALLY CARE!"
Mortgage Assistance would tell respondents it had special expertise and a high success rate in saving borrowers from foreclosure, although they actually did little or nothing to help, the office said. The firm collected an upfront fee, typically one month's mortgage payment, promising to negotiate with mortgage lenders on the homeowner's behalf. Borrowers were told to not talk to their lenders and advised to let Mortgage Assistance's "experts" handle all communications.
Consumers who complained to the office reportedly indicated they rarely heard from the company after paying the money. Seven complaints have been filed against Mortgage Assistance and its predecessor.
"Not only did these consumers lose money when they could least afford to," Cooper said, "They also lost precious time they could've spent negotiating with their lender on their own and possibly avoiding foreclosure."
Last year, an amendment to state law made it illegal for foreclosure assistance companies to charge an upfront fee. While the law is set to expire in October 2007, Cooper plans to urge legislators to make it permanent, the office said.
Another North Carolina-based firm, Homesavers USA, has been sued by the Illinois attorney general, has already settled with attorneys general in Missouri and Idaho and recently stopped offering its services in North Carolina because of the new law.