Foreclosure Attorneys in Hotseat

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MORTGAGE EXPERT
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Florida is investigating three law firms that might have used fabricated documents to speed up foreclosures. California successfully sued an attorney who collected fees to file frivolous lawsuits on behalf of his clients then strung them along while he earned more fees. Illinois is the home of an attorney who was recently convicted of a foreclosure rescue scheme.

Foreclosure rescue scams in Arizona will be up against $1.7 million in new funding announced last week by Attorney General Terry Goddard. A new six-person unit will be created from the grant.

A lawsuit filed in Maricopa County Superior Court in June against The Guardian Group LLC alleged deceptive claims by the company — the type that Goddard plans to police with the new funding. Up-front fees at Guardian were $1,595.

A $1.1 million judgment was obtained by California Attorney General Edmund G. Brown Jr. against Mitchell Roth, an Aug. 24 announcement indicated. The Los Angeles attorney is accused of filing “frivolous and phony” lawsuit on behalf of his clients — delinquent borrowers facing foreclosure.

Roth joined with United First Inc. in Nevada and the company’s owner Paul Noe to provide foreclosure relief services. United charged $1,800 in up-front fees, $1,250 a months and a share of loan balance reductions. In the lawsuits, Roth tried to prove the mortgages were invalid because the assignments from one investor to another had made it impossible to prove who owed the loans.

“Once the lawsuit was filed, Roth did next to nothing to advance the case and often failed to make required court filings, respond to legal motions, comply with court deadlines or appear at court hearings,” the state said. “Instead, Roth tried to extend the lawsuits as long as possible to collect additional monthly fees from clients.”

On the other side of the country, Florida Attorney General Bill McCollum announced last month that investigations have been launched by the economic crimes division into the Law Offices of Marshall C. Watson, P.A.; Shapiro & Fishman LLP; and the Law Offices of David J. Stern, P.A. The three firms handle foreclosures for servicers.

The state is trying to determine whether the companies used improper documentation to file with state courts to speed up foreclosure processes. Subpoenas have been served on each of the law firms.

“On numerous occasions, allegedly fabricated documents have been presented to the courts in foreclosure actions to obtain final judgments against homeowners,” the state said. “Thousands of final judgments of foreclosure against Florida homeowners may have been the result of the allegedly improper actions of the law firms under investigation.”

John Gilbert Mendoza was sentenced to 72 months in prison, ordered to pay a special assessment of $1,875 and also ordered to pay $881,514 in restitution to three victims, the FBI reported. Mendoza allegedly operated a shell corporation from Nevada and promised to help delinquent borrowers who were facing foreclosure.

But instead of helping the borrowers, Mendoza used straw buyers to strip the equity from the properties, the statement said. Fraudulent loan applications were used to obtain funding. He pocketed $431,000 from the scheme.

A complaint was filed in U.S. District Court for the Southern District of Florida against David J. Stern alleges he and his legal team violated the Racketeer Influenced and Corrupt Organizations Act by generating fraudulent mortgage assignments when pursuing foreclosures, the Palm Beach Post reported. The lawsuit, which seeks class action certification, also alleges that Stern pursued foreclosures on properties for lenders that didn’t own the properties.

Former Chicago attorney and radio personality Norton Helton was found guilty of taking money from distressed borrowers in a fraudulent foreclosure scam, the Chicago Tribune reported.

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Mortgage Daily Staff

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