SAN ANTONIO, October 19, 2007 – The 408th District Court has issued a temporary injunction against a Florida-based “foreclosure rescue” scheme. Under the court order sought by Texas Attorney General Greg Abbott, Foreclosure Assistance Solutions, LLC of Florida, and its principal operators, Herb Zerden and Adolfo Quintero, as well as J.W.W. Services, Inc. of California and owner John Woodruff, are prohibited from targeting and deceiving Texans who fall behind on their mortgage payments.
Last September, the Attorney General obtained an emergency restraining order and froze assets belonging to Foreclosure Assistance Solutions and its various operators. The temporary injunction issued this week extends the initial order, securing approximately $750,000 in fees that the defendants charged more than 700 Texans who paid for its services. The monies will remain frozen pending further orders from the court.
“This court ruling prohibits these unscrupulous ‘services’ from unlawfully preying on struggling homeowners,” Attorney General Abbott said. “Texans who fall behind on their mortgage payments should be very wary of anyone promising to save their homes for a large fee. We will remain vigilant and will take aggressive enforcement action to protect Texas consumers.”
According to the Attorney General’s enforcement action, the defendants mailed cards and letters to homeowners who were facing foreclosure because of delinquent mortgage payments. The defendants’ promotional materials boasted established relationships with mortgage companies and banks nationwide. These purported relationships, Foreclosure Assistance Solutions claimed, would enable it to persuade lenders to refrain from foreclosing on its customers.
Homeowners who responded to Foreclosure Assistance Solutions were pressured to immediately sign a $1,200 contract. Once Foreclosure Assistance Solutions received its fee, company representatives rarely interacted with clients. When homeowners repeatedly called the company seeking information or action, they were ignored. Because the terms of the company’s customer contract strictly prohibited homeowners from directly contacting their mortgage companies, Foreclose Assistance Solutions’ inaction worsened the situation for many homeowners.
The temporary injunction prohibits the defendants from continuing to target and mislead troubled Texas homeowners.
The court’s order also requires that Foreclosure Assistance Solutions disclose important account information to its Texas customers. Specifically, the defendants must provide each of its customers with a written statement describing every contact the company’s representatives had with the customer’s mortgage company. The disclosure statement must include the specific dates of contact, the mortgage company representative with whom they spoke, and the results of the contact. If Foreclosure Assistance Solutions representatives learn they cannot prevent a home from going into foreclosure, the company is obligated to notify the home owner within 48 hours. Foreclosure Assistance Solutions must also provide refunds to any of its existing customers it is unable to help.
The Attorney General reminded the company’s customers that they should not wait for Foreclosure Assistance Solutions to contact them about the status of their mortgage. Homeowners need to call their lenders immediately and ask what preventative measures, if any, the defendants have taken on their behalf.
The pending legal action seeks court-ordered restitution for homeowners who were harmed by the defendant as well as civil penalties of up to $20,000 per violation of the Texas Deceptive Trade Practices Act. Additionally, the Attorney General has requested up to $5,000 per violation for failure to register as a business that conducts telephone solicitations.
The Office of the Attorney General is engaged in a variety of efforts to protect Texas homeowners. Last month, Attorney General Abbott launched the Texas Residential Mortgage Fraud Task Force, a partnership that involves key state regulatory agencies to take a proactive stance towards tracking and prosecuting mortgage fraud.
This month, Attorney General Abbott urged three of the largest mortgage lenders and servicing companies doing business in Texas to take steps to address the high rate of foreclosures in the state. In meetings with EMC Mortgage, Countrywide Mortgage and Litton Loan Servicing, he outlined five measures that the companies should implement to restore borrowers’ financial stability, including stepping-up efforts to convert adjustable rate mortgages to fixed-interest loans; subjecting more delinquent loans to mitigation first rather than immediately submitting them to an antagonistic collections process; improving communication and outreach with consumers; waiving penalties and fees while companies work with troubled homeowners; and promptly addressing complaints filed against them with the Office of the Attorney General.
Earlier this year, Attorney General Abbott secured $21 million in restitution for Texas homeowners who were harmed by lending giant Ameriquest Mortgage Co. That case resolved allegations that the company and its affiliates did not clearly disclose certain terms to homeowners, including unpredictable adjustable rates.
Homeowners who believe they have been harmed by this or similar fraudulent businesses may call the Office of the Attorney General’s toll-free complaint line at (800) 252-8011 or file a complaint online at www.oag.state.tx.us.