OLYMPIA – The Consumer Services Division of the Washington State Department of Financial Institutions (DFI) announced today they have filed 40 Statements of Charges against businesses preying on Washington homeowners facing foreclosure. None of the companies or individuals charged with offering these so-called mortgage rescue services are licensed with DFI, a requirement that provides essential consumer protections. In addition, none of the attorneys charged are licensed with the Washington State Bar Association (WSBA) to practice law in the state.
With this multi-company sweep, DFI intends to send a clear message to unlicensed individuals and companies taking advantage of Washington consumers — “You are not welcome in this state.”
“Since 2009, DFI has charged an ever-increasing number of unlicensed businesses with preying upon desperate homeowners who are trying to save their homes from foreclosure,” DFI Division of Consumer Services Director Deb Bortner said. “We took action against eight companies in 2009, 29 in 2010, and 45 in 2011. So far this year we’ve issued 69 more actions. All of them were unlicensed. Based on our experience, doing business with an unlicensed company or attorney will not save your home from foreclosure — instead, you will lose whatever you pay them for help, and very likely, your home, too.”
All of the companies are charged with unfair or deceptive practices, obtaining property by fraud or misrepresentation, and unlicensed activity. While the charges are identical, the consumers harmed by the fraud have individual stories of being repeatedly misled and defrauded by these businesses.
“DFI has received literally hundreds of complaints from Washington homeowners taken advantage of by these ‘rescue’ businesses,” DFI Director Scott Jarvis said. “Financially distressed homeowners paid advance fees of up to $5,000 and received nothing in return. Homes that could have been kept out of foreclosure by legitimate licensed or non-profit businesses were instead foreclosed upon, leaving families homeless and their homes empty, contributing to the depressed housing values and slowing the recovery here in Washington.”
In many cases, the companies failed to perform or presented loan modification offers to lenders that did not significantly improve the homeowners’ mortgage. Because many of the companies charged refused to comply with DFI subpoenas to provide records of Washington transactions, the charges provide notice of DFI’s intent to order the companies to provide a list of all Washington transactions.
DFI has obtained legal service on 21 of the 40 companies charged, including seven law firms and 14 other businesses.
“This agency rarely conducts enforcement sweeps of this nature,” Director Scott Jarvis said. “However, the continuing high numbers of complaints involving this fraud demands a new approach. As a result of these efforts, we hope the number of unlicensed businesses taking advantage of Washington homeowners will decrease significantly. Of the 40 businesses we have charged as part of this sweep, we are seeking in excess of $1.3 million in sanctions, including restitution for more than 200 consumers.”
Since 2009, DFI has received almost 700 complaints against unlicensed companies offering mortgage rescue services in Washington, and 72 companies were charged prior to this sweep.
NOTE: The Mortgage Broker Practices Act authorizes the Director to file charges against companies and individuals believed to have violated the Act. The charges are not a finding or order that the respondents have actually violated the Act; all named respondents have the right to request an administrative hearing on the charges.
Homeowners facing foreclosure need to check the licensing status of companies offering residential loan modification services with DFI, and to check the licensing status of attorneys offering those services with the WSBA.
Loan modification services are offered free of charge through Housing and Urban Development-approved specialists. Consumers are encouraged to see if a free HUD-approved housing counselor can help before paying for loan modification services. Never pay an advance fee for loan modification services! A list of HUD-approved counselors is available at www.hud.gov.
DFI also provides a number of resources for homeowners facing foreclosure at www.homeownership.wa.gov.
To verify whether a company offering residential loan modification services is licensed by DFI, go to www.dfi.wa.gov and click on the “Verify License” link. To verify whether an attorney is licensed to provide loan modification services in Washington, go to www.wsba.org and click on “Lawyer Directory.”