Carrie Bay | 12.12.08

Seven new lawsuits have been filed by the state attorney general of Illinois against mortgage "rescue" companies.

Attorney General Lisa Madigan said there is an alarming rise in scams that prey on vulnerable homeowners on the verge of foreclosure, and said homeowners should use caution when seeking help if they are at risk of losing their homes and to seek reputable and trusted sources for assistance.

The following defendants were named in the lawsuits:

- National Foreclosure Counseling Services, Jacksonville, Florida
- Foreclosure Solutions, Burlington, Wisconsin
- Homestead Protection Services, Maitland, Florida
- Home Foreclosure Solutions, Plainfield, Illinois
- Foreclosure Experts, Chicago, Illinois
- Mason Capital Group, Tarzana, California
- StopMyForeclosure.net, Rockford, Illinois

In each of the lawsuits, the Illinois Attorney General Madigan alleges that con artists targeted homeowners who have fallen behind on their mortgage payments and promised that for an upfront fee, the scammers could negotiate with the mortgage lenders to reduce the payments and save their homes. However, according to Madigan's complaints, these "consultants" collected the upfront fees and failed to negotiate or perform any services on behalf of the homeowners, leaving consumers still at risk of losing their home to foreclosure.

This tactic violates Illinois' Mortgage Rescue Fraud Act, the attorney general said, which prohibits mortgage rescue companies from requiring payment from consumers prior to completing all the terms of a rescue contract. The law also requires rescue businesses to fully disclose the exact terms and nature of the proposed rescue services and the homeowner's right to cancel the contract.

In each suit, the Attorney General is seeking a permanent injunction preventing the defendants from engaging in mortgage rescue. Madigan has also asked the courts to award restitution to consumers and to order each defendant to pay a civil penalty of $50,000, additional penalties of $50,000 for each act committed with intent to defraud, an additional $10,000 for each act committed against a senior citizen, and costs for investigation and prosecution of the cases.

With these seven new filings, Madigan has brought lawsuits against a total of 22 mortgage companies for rescue fraud schemes.