Foreclosure Firms Face Civil, Criminal Actions

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MORTGAGE EXPERT
6 · 29 · 10

Many of the latest legal actions relating to foreclosures involve defendants who promise, for an up-front fee, to stop foreclosure but actually end up stealing all remaining equity utilizing mortgage fraud. Recent activity on two recent civil cases involves challenging the ability of Mortgage Electronic Registration Systems to foreclose.

An $11.4 million contempt order was issued against Bryan D’Antonio and his three companies, The Rodis Law Group Inc., America’s Law Group Inc. and The Financial Group Inc., the Federal Trade Commission said earlier this month. The defendants are accused of charging up to $5,500 up-front and claiming a 100 percent success rate in stopping foreclosures. They also wrongly advised borrowers to stop making payments and falsely claimed to utilize attorneys.

As part of Operation Stolen Dreams, Ohio Attorney General Richard Cordray announced this month a lawsuit filed against JLS & Associates Financial Services LLC in Lucas County Common Pleas Court. Cordray claims the company promised to rescue delinquent borrowers from foreclosure but instead wound up defrauding them out of thousands of dollars and leaving them worse off.

JLS reportedly charged $1,000 in up-front fees.

Cordray also announced a lawsuit filed in Franklin County Common Pleas Court against Freedom Equity Savings LLC, which allegedly charged $3,250 in up-front fees.

More than 180 cease-and-desist letters were expected to be sent to mortgage rescue companies by the New York Attorney General’s Office, a June 23 news release said. The letters are the result of an investigation into firms that collect up-front fees from delinquent borrowers facing foreclosure.

In addition to the up-front fees, the 182 firms allegedly failed to provide written contracts, didn’t allow cancellation of the contracts and used deceptive and misleading advertising practices about success rates and money-back guarantees. Some even allegedly fabricated consumer testimonials and appeared to be government sponsored.

Yesterday, the state said it was sending an additional 30 cease-and-desist letters — bringing the number of targeted firms to 213.

The U.S. Department of Justice announced this week that Gennaro Rauso was charged with several mortgage fraud related offenses tied to his promises to help more than 200 delinquent borrowers avoid foreclosure. Through his Pennsylvania company, D&B Property Investors, Rauso allegedly took title to the properties of desperate homeowners, leased the properties back to the borrowers and used tactics like bankruptcy filings to delay and obstruct foreclosures.

He collected rental payments while not making any mortgage payments — pocketing $400,000 in the process. Four of the loans were insured by the Federal Housing Administration. Rauso faces up to 247 years in prison if he is convicted.

Ronald Harris Jr., Sterling Bruce and Sabir Muhammad were arrested last week, the U.S. Attorney’s Office in Newark, N.J., announced. A complaint was filed in Newark federal court. The three allegedly promised borrowers facing foreclosure that they would prevent the foreclosures and repair damaged credit.

Through foreclosure rescue firms Harris Capital and Skyline Capital Group, both owned by Harris, the defendants allegedly convinced borrower to transfer title to straw buyers for six to 12 months — at which time they would transfer title back. Instead, according to the government, they extracted all the equity from the properties using fraudulent loan files.

Liens were fraudulently filed by the two companies, making it appear that the loans were legitimate refinance transactions.

In Greenbelt, Md., Rolando Alonzo Cousins, a/k/a “Junior,” plead guilty to his role at Metropolitan Money Store, the U.S. Attorney’s Office said. He faces up to 30 years in prison. In all, 11 defendants have been convicted in the case.

As a senior loan officer for Metropolitan, Cousins allegedly promised delinquent borrowers he could save them from foreclosure by taking title to their properties and giving it back at a later date. Instead, he allegedly used mortgage fraud to obtain loans on the properties and extract the equity. Cousins, himself, was responsible for $471,700 in lender losses.

Lawsuits have been filed in California and Nevada by a Reno, Nev., law firm against Mortgage Electronic Registration Systems alleging fraud because the company has no interest in loans where it is listed as owner, The Reno Gazetted-Journal reported. But MERS reportedly fired back saying that attorneys general of the two states declined to take on the cases and noting that the complaints were filed by the same lawyers who have unsuccessfully brought many lawsuits against MERS.

A foreclosure appeal filed by Tracie Mosley and Paula Kurnava against MERS was unsuccessful and affirmed by the Court of Appeals of Ohio, Eighth District, Cuyahoga County.

Mortgage Electronic Registration Systems, Inc., Plaintiff-Appellee, v. Tracie Mosley, et al., Defendants-Appellants.
Case No. 93170 (
Court of Appeals of Ohio, Eighth District, Cuyahoga County).

FTC v. Data Medical Capital Inc., et al.
Civil Action No. SA-CV-99-1266 AHS (EEx),
FTC File No. X000001 (Central District of California, Southern Division).

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