BBB Warns Homeowners: ‘Mass Joinder’ Lawsuit Mailings May Be Latest Advance Fee Mortgage Modification Scheme

BBB Warns Homeowners: ‘Mass Joinder’ Lawsuit Mailings May Be Latest Advance Fee Mortgage Modification Scheme

St. Louis, Mo., April 19, 2011 – The Better Business Bureau (BBB) warns homeowners to steer clear of mailings asking them to join national “mass joinder” lawsuits to force their mortgage companies to cut their loan payments.

Michelle Corey, BBB president and CEO, says the mailings are a new twist on schemes to obtain up-front payments of $5,000 or more from homeowners struggling to pay their mortgages. Some mailings are tied to businesses in St. Charles County.

“Complaints from homeowners who paid thousands of dollars for mortgage assistance are a familiar story at the BBB,” Corey said.  “Few, if any, of these people got help. Many ended up worse off than before the mortgage modification companies entered their lives.”

Several property owners in Boone County, Mo., recently got letters saying that their loans “may be eligible for national litigation aimed at fraudulent lender actions.”  The letters listed no company name or return address. A nearly identical notice sent to a homeowner in Long Beach, Calif., came from the Litigation Settlement Department at 3829 Veterans Memorial Parkway, St. Peters, Mo.

Missouri secretary of state records list the St. Peters address as home to Diversified Financial Protection Agency and Capital Debt Management. The records list John Jacob Ehlinger as president of Capital Debt Management. John J. Ehlinger is registered agent and the only incorporator of Diversified Financial Protection Agency. Capital Debt Management filed for incorporation in October 2009; Diversified Financial Protection Agency filed on Feb. 16, 2011.

The BBB has issued two warnings on Ehlinger and Capital Debt Management since last summer. The company has an “F” grade with the BBB, the lowest grade possible.

Consumers told the BBB they paid the company for mortgage help, but received little or nothing in return. Company officials have blamed problems on partners—first in St. Louis County and later in California—who did not complete mortgage modification work.

A BBB investigator visited the address on Veterans Memorial Parkway. He found that previous references to Capital Debt Management had been replaced with the Diversified Financial Protection Agency name on the front door and in the reception area. Ehlinger and other officials of the companies did not respond to a BBB request for information.

Officials of Diversified Financial Protection Agency, Capital Debt Management, or both firms, apparently are now partnering with Mass Litigation Alliance of Hawthorne, Calif. The same toll-free phone number is on the Boone County and California solicitations and is one of several listed on a website for Mass Litigation Alliance. Mass Litigation Alliance filed corporate papers with the California secretary of state on Feb. 14, listing Philip A. Kramer of Calabasas, Calif., as the company’s agent.

Mass Litigation Alliance’s website describes Kramer as senior partner of Kramer & Kaslow, a Calabasas law firm with an “F” grade from the Los Angeles BBB.  Consumers have filed more than 30 complaints about the firm. Most allege the firm didn’t fulfill contracts for loan modification or foreclosure related services, that the firm misrepresented its ability to provide service, or that the complainant was unable to obtain refunds of advance fees.

The company has disputed the allegations and said contracts are based on hourly rates or flat fees, not on performance.

The Federal Trade Commission issued rules that prohibit anyone except attorneys from collecting advance fees for mortgage modification, and then only under specific conditions.

The California Department of Real Estate warned last month that some businesses were trying to use the lawyer exemption to collect advance fees for mortgage assistance suits.

“Those who continue to prey on and victimize vulnerable homeowners have not given up,” the California agency said. “They just change their tactics and modify their sales pitches to keep taking advantage of those who are desperate to save their homes.”

The district attorney in Denver, Colo., last month denounced mass joinder solicitations received by consumers in that state.

The BBB found more than 50 website addresses linked to Mass Litigation Alliance. Each site is virtually identical to the others except for phone numbers. They have names such as thetruthaboutyourmortgage.com and paybackthebanks.com.

In video clips on the sites, Kramer says that mass joinder suits are different from mortgage modifications.  “A loan modification is going to your bank with your hat in your hand and asking them to do something for you,” Kramer said. “We go in with a club; we now make demands on the bank. It’s time for the banks to start answering our questions.”

The solicitation from St. Peters sent to the Long Beach, Calif., woman is marked “Personal and Confidential Legal Notice – Joinder Action Suit.” It includes the name of the bank that holds her mortgage, her loan amount and her address.

“Your loan may be eligible for a national litigation settlement aimed at fraudulent lender actions,” the notice says. “The goal is to make your illegal and fraudulent mortgage go away, seek monetary relief up to $75,000, stop foreclosures, and/or seek compensation for damages.” It urges her to call a toll-free number.

A Boone County homeowner said he was alarmed when he got a solicitation inviting him to join a lawsuit against the Columbia, Mo., area bank that held his mortgage.

“I’m in the title business and I knew immediately this was someone trying to take advantage of the current mortgage situation,” he said. He has no idea how the company got his name or address. He hadn’t sought help with his mortgage.

When he phoned the firm, a representative identified it as Mass Litigation Alliance of St. Louis, Mo. The representative asked the man several questions about his loan and told him that he was qualified to join the suit, but that he would first have to pay a $5,000 retainer.

The representative said the suit could reduce his loan principal up to 80 percent, cut the interest rate to 2 percent or get him  $75,000 in punitive damages. The representative told the man he would have to act immediately.  He turned down the offer.

The BBB offers the following tips for homeowners seeking mortgage assistance:

  • Call your bank or mortgage company before going to a third party.
  • Be wary of marketing companies, lawyers or other groups asking for fees to join a class action or “mass joinder” lawsuit against a mortgage holder. Consumer advocates say the chance of actually getting mortgage relief from such suits is slim.
  • Beware of any company that promises to help you modify your mortgage in return for an advance fee. As of Jan. 31, this business practice is illegal, except under certain circumstances.
  • Beware of any company asking you to pay for a forensic loan audit.  These audits may not help you reduce your loan rates or mortgage payments.
  • Before sending any money or signing a contract, check BBB Business Reviews atwww.bbb.org or by calling 314-645-3300.

Contacts: Michelle Corey, President & CEO, 314-645-3300, mcorey@stlouisbbb.org, or Bill Smith, Trade Practice Investigator, 314-645-3300, tpc1@stlouisbbb.org

Comments
10 Responses to “BBB Warns Homeowners: ‘Mass Joinder’ Lawsuit Mailings May Be Latest Advance Fee Mortgage Modification Scheme”
  1. Kevin says:

    The BBB is like the FDA or any other three letter organization these days. If you don’t pay them the huge amounts of greasy money to get an A rating, they spread the news to put fear into people. Can you say extortion? The bottom line is the banks are caught and they don’t like lawsuits like the mass joinder whereby the facts, the fraud and the lies are exposing their loan schemes. This war of propaganda is just beginning and its time for people to wake up and know the truth. If you do nothing about it, you will get exactly what they have planned for you!

  2. Nancy Coxall says:

    I pray the Mass. Joinder Lawsuits end up with satisfied results. I am one whoes last hope for justice will be achieved for the homeowners. If not, Our Country is in HUGE TROUBLE.. i DO NOT THINK THERE IS A PERSON IN America who is not watching these courts in Floriida…To see that Justice has been done for all of the homeowners.

    This shold not be difficult…There is eithner Fraud on everyone’s paperwork or there isn’t.. These courts sare making up new rules as they go along. The should be sent to prision along with The Banks.

    My foreclosure says Plaintiff….IndyMac Federal Bank, FSB There is no such bank.. My Mortgage was turned over to MERS at the closing of my loan. This whole entire legal sysem is no better that the banks who they are trying to protect!

  3. pamelag says:

    we need more witnesses in the courtrooms!many. remember most people are embarassed. you people here are the only ones that ‘get it’. God Bless America

  4. JIm Bethea says:

    Beware of the BBB…..they may be correct in this element but they are not on the consumers side…..The ratings & enrollments are down down and they need any exposure they can get.

  5. leapfrog says:

    I’ve gotten several of these “official notices” in my mailbox. They are a scam. What I wonder is why the AGs crack down so hard on these scammers (not really saying they shouldn’t) but they let the banksters off scott-free and willfully refuse to investigate the MASSIVE fraud that was perpetrated on homebuyers and investors.

    • l vent says:

      You are right leapfrog, but this morning the DOJ was on CNBC saying they are investigating thousands for mortgage fraud. That public admission should HALT Fraudclosures INDEFINITELY AND A FORECLOSURE MORATORIUM SHOULD GO INTO EFFECT IMMEDIATELY WHILE THE U.S. DEPARTMENT OF JUSTICE INVESTIGATES. Wouldn’t you think? How could they allow fraudclosures to continue when the U.S. GOVERNMENT IS ADMITTING ON A WORLD WIDE NEWS SHOW that the MORTGAGE FRAUD WAS INDEED, RAMPANT?

  6. housemanrob says:

    Is this a multiple choice question? Who do we trust here?

  7. l vent says:

    Not to worry, NO ONE here wants to re-establish a mortgage debt that never existed. Now We The DEFRAUDED HOMEOWNER ARE ON THE FLOAT. HOW DO THEY LIKE THAT? WHAT GOES AROUND, COMES AROUND. RESCIND OUR FAKE MORTGAGE CONTRACTS, OUR HOMES ARE PAID FOR FREE AND CLEAR. THAT WAS THE DEAL, THEY JUST NEVER TOLD US WE WERE ALL IN ON THEIR PONZI SCHEME HEIST.. FANNIE/FREDDIE AND WALL STREET — USED THE AMERICAN PEOPLE AS HUMAN CAPITAL, NOW A PAID FOR HO– USE IS BEING MORE THAN FAIR TO ALL OF US DEFRAUDED AND ROBBED HOMEOWNERS.

    • l vent says:

      FOR THE LOVE OF GOD, THEY EVEN STOLE THE EQUITY OUT OF OUR HOMES FOR THE LOVE OF GOD, THE U.S. GOVERNMENT MUST PUT A STOP TO THE FINANCIAL RAPE AND PILLAGE OF THE AMERICAN PEOPLE.STOP THE UNCONSTITUTIONAL ILLEGAL, FRAUDCLOSURES. RESCIND OUR FAKE LOAN CONTRACTS.THE AMERICAN PEOPLE HAVE HAD ENOUGH OF THE MULTINATIONAL FOREIGN FINANCIAL TERROR AND TYRANNY!!!! GOD BLESS AMERICA!!!!!!!

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