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Idaho and Illinois Attorney Generals Plagued With Mortgage Complaints

Foreclosures continue to affect thousands of homeowners across the nation, and as a result, both the Attorney General in Idaho and Illinois said mortgage-related filings dominated their top-10 consumer complaints list for 2009.


Idaho foreclosures soared 89 percent from 2008 to 2009, and as a result, Idaho consumers filed 353 complaints related to mortgage modification businesses. ""Idaho Attorney General Lawrence Wasden"":http://www2.state.id.us/ag/ said this was the largest number of complaints filed in any category last year. In the past, ""loan modifications"" had never even been on that state's top-10 list, but the record number of filings in 2009 made this the No.1 complaint category.

""We received reports of outrageous fraud,"" Wasden said. ""Some of these operators took advantage of desperate homeowners by charging hundreds or even thousands of dollars in upfront fees, while taking no action to modify the mortgage.""

Wasden said his consumer protection division responded aggressively to these complaints. The division pursued several enforcement actions against deceptive loan modification companies, hired a part-time housing counselor, published two free consumer handbooks, and produced public service announcements to inform Idahoans of the free help that is available.

Additionally, Wasden's staff worked with loan servicers to facilitate loan modifications and helped to reverse, postpone, or cancel foreclosures. They investigated several hundred complaints against 10 mortgage modification and foreclosure rescue consultants, and they filed consumer protection lawsuits against two mortgage modification and foreclosure rescue consultants. The division also entered into settlement agreements with three mortgage modification and foreclosure rescue consultants, and they recovered $60,935 in restitution for consumers related to mortgage modification and foreclosure rescue and other housing complaints.

The hard work that Wasden and his staff put into resolving loan modification complaints helped make 2009 a record-setting year for the Attorney General's office in overall consumer protection efforts.


""Through our enforcement actions, the consumer staff recovered a record $7,431,388 in restitution for Idaho consumers last year,"" Wasden said. ""This equates to $12.14 recovered for each taxpayer dollar appropriated for consumer operations and extends to 19 years our record of recovering more money than we receive from the general fund.""

Idaho wasn't the only state to see an increase in mortgage-related complaints. ""Illinois Attorney General Lisa Madigan"":http://illinoisattorneygeneral.gov/ said the intensifying home foreclosure crisis also dominated her top-10 consumer complaints for 2009. The consumer debt category topped the complaints filed by Illinois consumer last year, including a 65 percent increase in residential mortgage-related complaints.

""These numbers demonstrate how this economic crisis is hitting home for tens of thousands of Illinois families,"" Madigan said. ""Hardworking people are struggling to make their mortgage payments on time. They're fighting to cope with mounting debts, and they're being targeted by con artists looking to make a quick buck.""

In addition to seeing an increase in mortgage-related complaints, Madigan noted that the types of complaints reported have transformed. In the first wave of foreclosures, a majority of complaints reported to the Attorney General's office came from homeowners who were placed in risky loans that they could never afford. Starting in 2008, though, Madigan said her office began receiving more calls from homeowners who had lost their jobs and could no longer make their mortgage payments.

The Attorney General's office also reported an increase in complaints against mortgage rescue companies that prey on homeowners desperate to save their homes. These so-called foreclosure ""rescue"" businesses charge homeowners a large up-front ""consulting"" fee to negotiate a loan modification with the lender, but after collecting the money, the companies do little or nothing to save the home.

With mortgage complaints on the rise, Madigan has made it a top priority to help homeowners stay in their homes. In 2008, she brokered a ground-breaking $8.7 billion settlement in her predatory lending lawsuit against Countrywide, and in 2009 she filed suit against Wells Fargo, alleging the lender engaged in consumer fraud and illegally discriminated against African American and Latino homeowners. In addition, she has filed 31 lawsuits targeting mortgage rescue scams.

In 2008, Madigan established the homeowner helpline to provide direct assistance for borrowers who risk losing their homes to foreclosure. Since its inception, the helpline has received more than 21,000 calls from at-risk homeowners. In addition, the Attorney General's office has helped secure more than $21 million in loan modification savings for borrowers who were at risk of losing their homes over the past year.

About Author: Brittany Dunn


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