Feds Bust Mortgage Modification Scheme that Hit 500 Borrowers

Feds Bust Mortgage Modification Scheme that Hit 500 BorrowersFederal prosecutors in Manhattan announced the arrests of seven individuals on charges of defrauding 500 homeowners across the country out of at least $2.3 million as part of a scheme that promised mortgage modifications.
The individuals allegedly claimed their ‘business’ was affiliated with the federal government’s foreclosure-prevention campaign, Home Affordable Modification Program, or HAMP. In fact, they were not, authorities said.
The scheme’s operators also instructed victims to stop paying their mortgages immediately, transfer thousands of dollars in upfront frees to their company in exchange for false promises of a guaranteed mortgage modification, and cease all communication with their mortgage lenders.
Manhattan U.S. Attorney Preet Bharara said: “As alleged, these defendants told one lie after another, purporting to help struggling homeowners looking for an end to their financial troubles but instead defrauding them out of millions. This Office has zero tolerance for those who would target already distressed borrowers in hopes of turning a profit at their expense, and we will continue to work to hold these and like-minded defendants accountable.”
From about January 2009 to June 2011, the individuals defrauded homeowners who were close to losing their homes because they could not afford to pay their mortgages, Bharara said.
Through a company located in Long Island, New York, and its successor companies, the representatives “falsely promised to help financially struggling residential mortgage holders refinance their mortgages for lower interest rates and monthly payments,” Bharara said.
However, these companies delivered little or no service to their customers, “diverting most, if not all, of the customers’ payments to the Mortgage Modification Companies’ owners and employees rather than using those funds to assist customers in procuring mortgage modifications,” said a statement issued by Bharara’s office.
The mortgage modification companies charged customers thousands of dollars in up-front fees — in violation of New York State law — and made fraudulent claims about the companies’ services, including guarantees that they would either: secure a mortgage modification that would result in a significant reduction in the customer’s interest rate and/or monthly payments; or provide the customer’s money back.
A federal indictment unsealed Wednesday in Manhattan federal court charges Guy Samuel, the co-owner of a company that purported to provide mortgage modification services, and four former employees of the company, Anthony Blackwell, Angel Gonzalez, Jonathan Lyons, and Aren Goldfaden, for their alleged participation in the scheme.
Also unsealed Wednesday were the guilty pleas of Scott Schreiber and Darrell Keys in connection with their participation in the scheme.

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