Illinois sues mortgage ‘rescue’ firms

So-called mortgage rescue companies in Schaumburg, Lombard, Woodridge and Chicago were charged with using their attorneys to collect upfront fees and bilking distressed homeowners of nearly $375,000 altogether, Illinois Attorney General Lisa Madigan said Tuesday.

Madigan filed lawsuits in Cook County circuit court against the companies and their attorneys, charging they operate fraudulent mortgage rescue or loan modification schemes, taking upfront fees and not delivering the promised services.

“By now, we’ve all seen the ads from so-called ‘loan mod consultants’ or ‘mortgage rescuers,’ claiming they’ll save your house from foreclosure,” Madigan said during a news conference. “Please know these operations are run by con artists who have started to use attorneys as sham fronts. These operators are scamming families out of thousands of dollars and actually making foreclosure more likely.”

In addition to Madigan’s lawsuits, the Cook County state’s attorney’s office Tuesday filed suit in Cook County circuit court against Arlington Heights-based Legal Housing and Debt Advisor LLC, along with its owner Jason Tong.

The suits were part of a multiagency crackdown on Illinois attorneys and loan modification firms that exploited the 2006 Mortgage Rescue Fraud Act that allows lawyers to collect upfront fees from homeowners for mortgage rescue services in the course of legitimate legal work. While the businesses use attorneys as the face of their operations to charge upfront fees, in reality the attorneys performed no legal work on behalf of homeowners, said attorney general spokeswoman Robyn Ziegler.

Madigan said their failure to provide legal services left consumers at an even greater risk of losing their homes to foreclosure, Zeigler said.

Those charged include:

타Legal Modification Network LLC in Woodridge and the Law Offices of Matthew Wildermuth is accused of bilking at least 21 homeowners living in Will and Cook counties of more than $32,000 for loan modification services that never materialized.

타Loan Litigators International LLC, a now defunct company formerly based in Lombard, President Joseph Aldeguer, and the Law Offices of Michael E. Fleck of Villa Park, which advertised on radio that he would represent consumers and that the business could provide homeowners a modification in 45 to 60 days. One consumer paid nearly $1,500 for a loan modification and the promise to delay the foreclosure proceeding on his home. The consumer eventually lost his home, yet Loan Litigators International still kept the fees.

타Exelpol Management & Consulting Inc., a dissolved corporation in Schaumburg. The suit alleges one consumer was charged about $1,900 with the promise of obtaining a loan modification, but discovered later the modification was denied because the business failed to submit the right paperwork. The lawsuit also was filed against the company’s President Alicja Lapinski, employee Sam Lapinski, and Robert Phillip Ward and Anthony P. Montegna, attorneys working with Exelpol.

타ZeTrust Legal Services of Chicago and attorney Daniel Scott for marketing loan modification services to consumers in Chicago-area Polish communities. The suit charged ZeTrust with failing to assist consumers in obtaining modifications. Twenty-one homeowners reported losing more than $24,000 in the scheme.

The attorney general’s lawsuits asks the court to shut down the businesses and obtain restitution for at least 76 victims. The lawsuits also seeks to bar the defendants from providing mortgage rescue services in Illinois and to order each defendant to pay a civil penalty of $50,000 and additional penalties of $50,000 for each act committed with intent to defraud, the documents said.

The Cook County suit alleges Legal Housing and Debt Advisor LLC and Tong solicited struggling homeowners and offered to have an attorney negotiate with their lender to obtain a lower monthly payment. Tong is alleged to have collected upfront fees of $1,000 each from multiple victims without providing the promised legal services or reducing their mortgage payments.

Attempts to reach the companies were unsuccessful and messages left for the named attorneys were not immediately returned.