A trio of California foreclosure rescue companies targeted Hispanics with fake loan modifications, offering the false promise of mortgage relief in exchange for thousands of dollars, the Department of Housing and Urban Development alleged Tuesday.
HUD announced Tuesday that it is charging three California-based foreclosure rescue companies, The Home Loan Auditors, Century Law Center and SOE Assistance Center, with violating the Fair Housing Act by targeting Hispanic homeowners for “illegal or unfair loan audit and loan modification assistance because of their national origin.”
According to HUD, from 2008 to 2010 these three companies and nine of their agents lured struggling Hispanic homeowners into paying thousands of dollars for home loan audits that the homeowners never received and promised loan modification services that actually had little, if any, value.
HUD also said that the companies allegedly exploited the homeowners’ limited English proficiency and used deceptive marketing in Spanish, including making false representations, in order to mislead them into paying for loan modification services.
“Families struggling to stay in their homes need real help, not false promises that make a bad situation worse,” said Gustavo Velasquez, HUD Assistant Secretary for Fair Housing and Equal Opportunity. “HUD will continue to take appropriate action against individuals and companies that victimize unsuspecting homeowners because of where they come from or the language they speak.”
According to the complaint from HUD, The Home Loan Auditors allegedly created several Spanish-language promotional vides and other presentations that falsely presented the company’s ability to secure loan modifications.
HUD alleges that in one THLA video, a caption in Spanish stated “REMEMBER A LOAN MODIFICATION WITHOUT AN AUDIT IS LIKE GOING TO COURT WITHOUT EVIDENCE.”
HUD’s complaint notes that home loan audits are “useless” in securing a loan modification or any form of mortgage relief.
HUD’s complaint also alleges that THLA directly solicited some consumers with Spanish-language letters replete with misleading information.
In one example provided by HUD, the solicitation letter was an “official-looking” form that falsely stated in Spanish that the borrower’s mortgage provider was currently under investigation for fraudulent mortgage practices and promised that if the borrower became part of a lawsuit against the lender, the borrower could stop their foreclosure, reduce their monthly mortgage payments, reduce the balance owed on their loan, and/or receive monetary compensation.
In another example, a borrower was promised that their mortgage payment would be reduced to reflect the “current market value” of their home in exchange for $10,000.
The borrower was then instructed to stop communicating with their lender and stop paying their mortgage as well.
HUD notes that until contacting THLA and engaging in its services, the borrower had been current on their mortgage and only fell behind in their payments when instructed to do so by THLA.
HUD states that all the affected homeowners ultimately lost their properties due to foreclosure.
HUD notes that its charge will be heard by a United States Administrative Law Judge unless any party to the charge elects to have the case heard in federal district court.
If an administrative law judge finds after a hearing that discrimination has occurred, he or she may award damages to the complainants for their loss as a result of the discrimination.
The judge may also order injunctive relief and other equitable relief, to deter further discrimination, as well as payment of attorney fees. In addition, the judge may impose civil penalties in order to vindicate the public interest. If the case is heard in federal court, the judge may also award punitive damages to the complainants.
Recent articles by Ben Lane
Ben Lane is the Senior Financial Reporter for HousingWire. In this role, he helps set a leading pace for news coverage spanning the issues driving the U.S. housing economy. Previously, he worked for TownSquareBuzz, a hyper-local news service. He is a graduate of University of North Texas.