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The Scoop

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Indiana sues foreclosure consultant

Statement issued Wednesday about a case involving at least one homeowner in Kosciusko County:

SHELBYVILLE, Ind. – Indiana Attorney General Greg Zoeller was in Shelbyville today to file a complaint against a California-based foreclosure consultant company. According to the lawsuit, homeowners in seven Indiana counties signed contracts with the company believing it would help prevent foreclosure based on claims made on the defendants’ website and advertising; but the company was operating illegally.

Named as defendants in the lawsuit were the company, Premier Legal Advocates which has addresses in Agoura Hills, Calif., and Westlake Village, Calif., and its owner, Brian Pascal. The Attorney General filed the lawsuit today in Shelby County Court.

“Most foreclosure consultant scams originate from out-of-state companies who make exaggerated claims and prey upon distressed homeowners in need. Hoosiers need to be aware of these frauds and seek help from legitimate housing counseling services or non-profit alternatives,” Zoeller said.

The Attorney General’s lawsuit states that Premier Legal Advocates violated Indiana’s consumer protection laws when it collected a nearly $1,000 fee from a Shelbyville homeowner before performing any services. Indiana law requires credit service organizations and foreclosure consultants to register a $25,000 surety bond with the Office of the Attorney General prior to performing any services as a foreclosure consultant, including collecting money upfront. The bond acts as an insurance policy for consumers in the event the company fails to perform the services and does not provide a refund. According to the lawsuit filed today, Premier Legal Advocates would not provide a refund despite repeated requests from the consumer.

The company also committed other violations of the Credit Services Organization Act, the Mortgage Rescue Protection Act and Deceptive Consumer Sales Act, by failing to provide the homeowner with notice of various legal rights or of the availability of nonprofit credit counseling, the complaint stated. The lawsuit also notes six other victims in Boone, Cass, Elkhart, Henry, Kosciusko and Lake counties.

More than 500 investigations have been opened concerning foreclosure consultants by 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 mortgage fraud. More than two 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 lawsuit filed today seeks restitution for the Shelbyville consumer, civil penalties of up to $5,000 per violation that would be paid into the Consumer Protection Assistance Fund and attorneys’ fees.

In response to issues with fraud committed by so-called foreclosure consultants that operate illegally in Indiana and other types of fraud within the mortgage industry that victimized borrowers, the Indiana General Assembly in 2009 and 2010 passed new laws to crack down on foreclosure abuses. Zoeller supported and recommended the new legislation.

Zoeller noted that distressed homeowners at risk of foreclosure need not pay a large fee to a for-profit company, when advice on avoiding foreclosure is available for free from the Indiana Foreclosure Prevention Network (IFPN) at 1-877-GET-HOPE. 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 -- http://www.indianaconsumer.com/ – or by calling 1-800-382-5516.

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