In this new scam, a fairly new variation of mortgage rescue fraud, con artists
falsely claim that an audit of a homeowner's mortgage will identify errors and
can reduce a homeowner's monthly mortgage payments. In some cases, Madigan said,
scammers specifically targeted struggling homeowners and convinced them that the
audit would reduce their mortgage as a way to help them avoid foreclosure and
stay in their homes.
Madigan filed lawsuits against Mortgage FACS Corp. and Enlightened LLC for
posing as professionals who can help consumers by completing so-called mortgage
loan audits. In exchange for illegal upfront fees, the scammers promised to
review whether lenders complied with state and federal lending regulations and
promised to identify errors that could help a homeowner's case for reducing a
monthly payment or modifying a loan. In reality, many victims of the scam paid
the upfront fee but received no assistance.
"These schemes put a new twist on the mortgage rescue fraud scam but generate
the same result by charging struggling homeowners huge sums of money for nothing
in return," Madigan said. "An audit can almost never be used to negotiate a
lower rate with your lender. The best way homeowners can work to secure a loan
modification is through a legitimate HUD-certified housing counselor, which
provides services for free."
In her lawsuit against Mortgage FACS, Madigan alleged the scam not only
baited homeowners with the promise of discovering errors in their mortgage, but
marketed its "forensic mortgage loan audits" as a way for consumers to obtain
loan modifications to lower their monthly payments and even avoid foreclosure.
Madigan alleged Mortgage FACS deliberately targeted homeowners who were
behind on their mortgage payments or already facing foreclosure, diverting money
these homeowners could have used to obtain legitimate help to stay in their
Victims of the scam paid hundreds of dollars for the audits, but some saw no
work come of the alleged audits. The scam targeted Chicago-area homeowners
living in Cook, DuPage and Will counties.
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Madigan's lawsuit against Enlightened LLC, which operated as AMT Auditing
Services LLC and the Mortgage Auditing Program, alleges the operation boasted
that their mortgage audits would discover savings for consumers from misapplied
payments and interest rates, though few, if any, received money back from the
audit. While AMT claimed it would refund consumers if no errors were found
during their review, the company made it nearly impossible to obtain a refund.
Madigan said AMT and its employees had no expertise in mortgages and instead
relied on third-party software to discover mortgage errors. Consumers who signed
up for audits were unaware the company had also signed them up for a mandatory
trial with their software without their consent. Consumers later discovered
monthly charges for the software on their bank or credit card statements.
In both suits, Madigan is asking the court to ban the companies from
operating in Illinois, void any pending contracts with consumers and provide
restitution. The lawsuits also ask the court to assess penalties based on
violations of the Illinois Consumer Fraud and Deceptive Business Practices Act.
Attorney General Madigan's office has filed more lawsuits over the illegal
collection of upfront fees by mortgage rescue operations than any other state.
Madigan urges homeowners struggling to stay in their homes to contact her
Homeowner Helpline, 866-544-7151, for guidance on avoiding foreclosure and to
seek help from a HUD-certified housing counselor to work out a solution with
Assistant Attorneys General Kaitlin Caruso, Paul A. Isaac and Junko Minami
are handling the cases for Madigan's Consumer Fraud Bureau.
[Text from file received from the office
Illinois Attorney General Lisa