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The Scoop

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Indiana sues out-of-state foreclosure consultants

VALPARAISO, Ind. – Indiana Attorney General Greg Zoeller filed a lawsuit today against two out-of-state credit services and foreclosure consultant companies that were operating illegally in Indiana.

Zoeller said Hoosiers in 13 Indiana counties – including Porter, Kosciusko and St. Joseph – signed contracts with Community One Law Center based in Florida and National Law Partners based in Florida and California. The lawsuit alleges both companies collected money up front and failed to provide refunds to customers after services were not provided.

"Many desperate consumers with bad credit or near foreclosure see offers of this kind as their last chance to improve their financial situation,” Zoeller said. “Despite believable sales pitches, services were not rendered and promised refunds were not returned. It’s important that Hoosiers are aware of these scams and seek foreclosure counseling services from legitimate, non-profit sources.”

Community One Law Center and National Law Partners are accused of violating Indiana’s consumer protection laws by not registering $25,000 surety bonds with the Office of the Attorney General. Indiana law requires credit service organizations and foreclosure consultants to register bonds prior to performing any services, including collecting money up front. Zoeller said the bond acts as an insurance policy for consumers in the event a company fails to perform.

According the suit, these companies are separate entities, but both worked interchangeably on files and shared employees. Zoeller said deposit amounts illegally collected from Hoosiers range from $499 to $2,699.

This lawsuit alleges both organizations violated the Credit Services Organization Act, the Mortgage Rescue Protection Act, the Home Loan Practices Act and Deceptive Consumer Sales Act. Community One and National Law Partners also failed to obtain a certificate of authority from the Indiana Secretary of State’s Office to conduct business in Indiana.

Zoeller said the state seeks restitution for the 15 victims, civil penalties and attorneys’ fees. Counties with other victims include: Allen, Fulton, Hamilton, Hendricks, Johnson, Lake, Madison, Marion, Miami and Monroe.

The Indiana Attorney General’s Homeowner Protection Unit investigates and pursues violations of Indiana laws governing the activities of foreclosure consultants, as well as, real estate appraisers, real estate licensees and investigates 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.

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 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 -- www.indianaconsumer.com -- or by calling 1.866.382.5516.

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