LOS ANGELES (Legal Newsline)- H.E. Servicing Inc., a loan modification company, has been sued by California Attorney General Jerry Brown.
The loan company is accused of useing aggressive telemarketing tactics to swindle homeowners out of thousands of dollars. Their goal is to line their own pockets rather than help home owners, the Democratic attorney general said.
A court appointed receiver said the following: "Even if most of the deceptive sales practices could be cured, this is not a lawful advance fee loan modification business. It is not operated and managed by a lawyer or a properly licensed DRE broker. It is a phone sales operation selling unlicensed loan modification services with more than 80 percent of its clients residing outside of California. I see this business as a high-pressure, cash-up-front telephone sales business targeting distressed homeowners. The Sales Department is essentially a well-appointed telephone boiler room with phone cubicles for 44 sales people- 'counselors'- and separate offices or stations for 3 on-site managers."
The company had about 60 employees who screened 500 calls per day, in a twelve hour shift. Commission for a fully paid sale was approximately $450 with an extra $25 when consumer paid by debit or wire transfer.
Sales people told homeowners that the company successfully helped 10,000 homeowners, when in reality of the 2,960 loan modifications filed only 311 were completed.
The company advertised money-back guarantees, which a cap was put on just before they were shut down.
Homeowners are said to have believed they were hiring a law firm but in reality they were hiring a money-making machine, the attorney general's office said. In the first 6 months of 2009 they had a net income of $4.5 million.
Brown's office offers the following tips to homeowners: Do not pay money to people who promise to work with your lender to modify your loan; do call the lender yourself; do not ignore letters from your lender; do not transfer title or sell your house to a "foreclosure rescuer." Do not pay your mortgage payments to someone other than your lender or loan servicer; do not sign any document without reading them first; do contact housing counselors approved by the U.S. Department of Housing and Urban Development (HUD).