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The Scoop

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Verbatim: Indiana goes after foreclosure consultant

The Indiana Attorney General’s office released this statement Thursday:

Indiana Attorney General Greg Zoeller was in Fort Wayne today to file a complaint against Foreclosure Assistance USA, Inc. (FA USA), an Ohio-based foreclosure consultant company. According to the lawsuit, nearly 600 Hoosier homeowners signed contracts with FA USA believing the company would help prevent foreclosure based on claims made on websites, radio and direct mail advertisements and telephone solicitations.

“Out of state companies often don’t believe the Indiana Attorney General’s office has jurisdiction over their practices. That’s simply not true. The vast majority of foreclosure consultant scams originate outside Indiana and this enforcement action reflects that we are not bound by state borders,” Zoeller said. “We believe thousands of Hoosiers have been taken advantage of by foreclosure consultants and it is my duty to zealously pursue these organizations, to seek restitution for the victims and to continue to educate consumers about the available non-profit alternatives.”

The suit also claims FA USA violated Indiana law by failing to have a $25,000 surety bond while accepting money up front from customers for services that had not yet been performed. The company is also accused of deceptive acts including misrepresenting to consumers that the consultants were experts in the area of foreclosure prevention or possessed in-depth knowledge of the industry.

The Indiana General Assembly passed a new law that takes effect on July 1 requiring all foreclosure consultants operating in Indiana to have a $25,000 surety bond on file with the Attorney General’s office, regardless of whether the company demands money up-front for services or not. Consumers considering hiring a for-profit foreclosure consultant are advised to request confirmation the organization holds the legally-required bond. A bond acts as insurance for the customer in the event a company goes out of business before performing the services promised.

More than 300 people have filed complaints about foreclosure consultants with the Attorney General’s Homeowner Protection Unit (HPU) since the beginning of 2009. The HPU investigates and pursues violations of Indiana’s laws governing the activities of foreclosure consultants, as well as real estate appraisers, real estate licensees and involving mortgage fraud. More than a dozen lawsuits have been filed by the attorney general against foreclosure consultants in the past year.

Foreclosure consultants have several methods for targeting their victims. They reach people through the internet – creating sophisticated websites complete with testimonials and reputable-sounding endorsements. Advertisements for their services can be found online, in newspapers and on television. Often they will check local foreclosure filing notices – this is a public record – and target those homeowners whose lenders have recently filed a foreclosure notice. Sometimes they go door-to-door in neighborhoods known to have been affected by unemployment and the weak economy.

The Attorney General’s office encourages all homeowners facing foreclosure or looking for alternatives to foreclosure to call the Indiana Foreclosure Prevention Network at 1-877-GET-HOPE. This is a free service. Hoosiers who believe they have been a victim in a foreclosure consultant scam can file a complaint with the Attorney General’s Consumer Protection Division online – www.IndianaConsumer.com – or by calling 1-866-382-5516.

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