The mortgage-modification scam
Dubious mortgage-modification firms like 21st Century Legal Services help homeowners renegotiate their mortgages, but only in exchange for big upfront fees. Steve Henn reports on how these companies rip off desperate homeowners, then disappear.
A sign in the sales office of a company called U.S. Foreclosure Relief. It says "Numbers don't lie ... people lie!" Someone wrote on it: "And sales people" (ProPublica)
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TEXT OF STORY
Kai Ryssdal: Every crisis brings with it new business opportunities. Not all of those businesses, unfortunately, are on the up and up.
21st Century: You have reached 21st Century Legal Services. If you know your parties' extension, you may enter it at any time.
21st Century Legal Services is what's called a mortgage-modification company. It promises to help homeowners who are in over their heads renegotiate their loans. After they pay big fees, upfront.
21st Century: It's a wonderful day at 21st Century. How may I help you?
Joanna Williams: Yes, good afternoon. My name is Joanna Williams. And I saw your site on the Internet.
That woman's name isn't really Joanna Williams. She's an undercover investigator at the North Carolina attorney general's office. And the tape you're hearing is part of a sting they were running. They were looking into companies that are ripping off desperate homeowners and then disappearing.
Paul Kiel at ProPublica, the investigative newsroom, got the tape for us as part of our joint investigation into mortgage-modification scams.
From Washington, Marketplace's Steve Henn picks up the story.
STEVE HENN: Federal, state and local law enforcement have filed more than 150 suits against mortgage-modification firms. But the companies keep popping up. As the story of 21st Century shows, anything short of forcibly shutting them down can be ineffective.
Williams: Hello?
Mr. Parker: Are you a homeowner?
Williams: Yes. I'm a home owner.
Mr. Parker: Are you interested in cutting your payment down?
Williams: Yes.
Salesmen here live on commission.
Mr. Parker: This is 21st Century Legal Services. Our attorney can get you 3.5-4 percent, 30-year fix. Does that sound good?
Williams: Of course, it... Wait a minute, 3.5 to 4 percent fixed?
Mr. Parker: Yes, 30-year-fixed or whatever kind of fix you need.
Three-and-a-half percent? That's a too-good-to-be-true interest rate. And the salesman hadn't even asked her name. But at 21st Century, promises like this are routine. The only catch is a big fee -- upfront.
When Williams said she couldn't afford that, the salesman suggested she stop paying her mortgage. After all, it would make it easier to pay him.
Mr. Parker: But it looks better. Because when they see that you're behind, you're falling behind. You understand what I'm saying?
Williams:Yeah.
Mr. Parker:That looks better on you.
That advice -- stop paying your mortgage -- has ended with many of 21st Centuries' clients facing foreclosure. And because of that many states, including California, ban these kinds of upfront fees. But that hasn't stopped 21st Century Legal Services from collecting them.
Mr. Parker: We're in Rancho Cucamonga, Calif. We have four offices out here, we're opening up a fifth. We have been doing this for years.
Actually, 21st Century was founded less than a year ago by Andrea Ramirez. She's a former mortgage broker with a record of selling exotic loans her clients can't afford.
But she's moved on. Ramirez now generates fees by promising to fix the kinds of mortgage nightmares she helped create.
TOM MCNAMARA: It's the flip side of the mortgage-brokerage business.
Tom McNamara is an attorney in San Diego. He worked as a court appointed receiver with the Federal Trade Commission, and helped shut down a similar firm.
MCNAMARA: What I found, which was relatively interesting, is that most of the folks who were doing these were mortgage brokers.
McNamara says they're boiler room operations.
MCNAMARA: As soon as the caller called in, it was a really hard sell. It was to scare the daylights out of the homeowner, and they were pretty good about it.
And this industry is booming. In the past year more than 800 mortgage-modification firms have set up shop in Southern California alone.
Law-enforcement officials believe most of these are violating the law.
JERRY Brown: This is a very big scam.
California Attorney General Jerry Brown.
Brown: In terms of overt violation of the criminal and civil law, these so-called loan-modification companies, they take the prize.
But Brown compares enforcement efforts to playing whack-a-mole.
Brown: We are shutting them down, and they open up.
Firms change names, change locations and get back in businesses. But 21st Century Legal Services stands out.
Its founder, Ramirez, was convicted in 2008 of forging prescriptions for OxyContin. And that could soon cost her her real-estate license.
Customers have filed more complaints against this company with the Better Business Bureau than any other similar firm in Southern California. More than 150 complaints from at least 30 states.
State officials in Arkansas, Indiana, Ohio, and North Carolina have sued the firm, barring it from doing business within their borders. Other states have open investigations.
But the company hasn't stopped making calls like this one...
Mr. Parker: All that stuff on the news about fraudulent companies asking for money upfront is a bunch of garbage. OK. We ask for a percentage upfront because it's a retainer fee for our attorney for representation.
Company officials didn't respond to Marketplace's calls. And 21st Century's attorney hasn't responded to suits or letters from legal authorities from at least six states. Instead the company changed its name to Fidelity National Legal Services. And it's still in business.
In Washington, I'm Steve Henn for Marketplace.
RYSSDAL: Thanks to Paul Kiel at ProPublica for his help with that story.
Comments
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From Indian Mound, TN, 11/20/2009
I was hired as a notary via the internet service to do an application here locally. I was trying to collect my fee and discovered the scam. I called the other party and was told she had put stop payment on her checks when she got a bad feeling about her contact. I guess I am out my fee.
From Rancho Cucamonga, CA, 10/26/2009
Andrea Ramirez is a scam artist. She is known as Angie Ramirez, Andrea Rodriguez, Angie Rodriguez, among 14 other aliases.
From Troy, MI, 10/18/2009
This is a very unfortunate situation as such companies sprout taking advantage of the troubled home owners. I've been talking to a lot of people and trying to share the word not to get into such traps. I've further expressed my thoughts on my blog. If interested, check it out - http://cayess.blogspot.com/
From San Bernardino, CA, 09/30/2009
Andrea Ramirez, Ruby Encina, Mindy Holt, sales agents licensed under Andrea, Mindy, Chris George and Jerry George are all inter-twined. Follow the licenses, business addresses, the mortgage business Fidelity Financial and let's see how many people have horror stories.
From Corona, CA, 09/26/2009
Consumers, this is no time to be lazy or act out of desperation... do your homework... research any firm or business whether profit or none before trusting them to help you. No one will care as much about your home as you. Ask your friends, read as much as you can, and before you hire anyone... even an attorney (and you can imagine I am a fan of hiring attorneys) VISIT the office and MEET the ATTORNEY FACE 2 FACE... or at least make sure to research and talk on the phone if you are just too far away.
And now for the attorney advertisement plug... if you've been scammed, contact a local attorney to see if you can get your money back and save your home.
- Paul
09/25/2009
In the first place mortgage modification program itself is a scam. It is scam to steal tax payers money to bail out orginal scammers i.e speculators/irresponsible people who participated in the realestate bubble.
From chino, CA, 09/25/2009
21st Century Legal Services aka Fidelity National Legal Services aka East Coast Management owned by Andrea Rameriz, Chris George, Jerry George Rancho Cucamonga CA 91730
A unnamed investigator estimates that these people have scammed distressed homeowners nationwide out of over $60 million since August 2008. Banks used included Union Bank of California, PFF and US Bank.
They are also investigating Jerry George, who owns a ocean boat, in stashing money off shore.
From Beltsville, MD, 09/25/2009
I was contacted in late June by 21st Century Legal Services, and offered a loan "adjustment" to 3.5% for a 30 yr fixed loan. I made an appointment for a representative to come to our home, but the person never showed, and never called. The next day, I Googled the company and discovered all the complaints against them. I got on one of the fraud report sites and placed a detailed report, including the contact person's name and phone number. I hope it caused him a lot of problems!
From Oakland, NJ, 09/25/2009
I don't understand why the legal authorities insist on pursuing the mortgage scammers when they just change their names and continue operating. Why aren't they pursuing the individuals and putting them in jail? Aren't there laws against fraud that could result in jail time when violated?
From chino, CA, 09/24/2009
9/24/09 FBI raids Rancho Cucamonga business park offices of
21st Century aka Fidelity National Legal Services aka East Coast Management
http://www.dailybulletin.com/ci_13406364?source=rss_viewed
From Orange County, CA, 09/24/2009
This article also needs to state that homeowners don't face a better option going directly to the lenders... hour long waits on hold, and unfair settlements are the other side of doing a modification alone... modification company = scam... homeowners need to search, choose, and stick to an experienced and aggressive attorney...
From Atlanta, GA, 09/24/2009
I received a call from 21st Century on April 14, 2009. I requested more information via email, which arrived from a "caudley simon [six2@sbcglobal.net]" and included two attachments. I did not like the idea of not making the mortgage payment while they did whatever they said they were going to do... so that was the end of our interaction. I have the original email and attachments they sent, if you would like them.
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