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Another foreclosure rescue firm hits the dust

The following article caught my eye in the Plain Dealer. It says Federal Trade Commission, Ohio attorney general sue foreclosure rescue firm Debt Advocacy Center.

Is it really news that another company has been indited for screwing people in foreclosure? Not really. This is happening everyday. However what I found unique is that I knew these people. They gave a seminar in a nice hotel for Realtor’s. They were endorsed by other companies that I knew and trusted. They were supposedly connected with a national law firm of good repute.

The seminar they gave was put on by a classy older fella who seemed to be the model of propriety. He gave us figures demonstrating about how successful his firm was at working with short sale clients and how they could use their proprietary connections with servicers to do short sales in 20 days to 45 days. He explained how his company used a forensic loan audit to use as leverage against lenders to make them work with debtors in a timely manner. He also said that in only a couple out of a thousand plus loans did not have serious errors.

Talking with some other seminar attendees we wondered how this law firm would both threaten a law suit with servicers on behalf of their clients for leverage yet cultivate special relationships they claimed to have both at the same time. It seemed a bit schizophrenic however we thought if they really do what they say it could really be worth it for our clients to have an attorney representing them with this expertise. And all of their services they would do for a low up front fee of $1000.00 and and additional $1999 when the short sale was completed. They claimed that a high percentage of the time they could get the bank to pay the $1999 dollars.

The seminar was mostly sales froth but I got one jewel from my 3 hour investment. The attorney giving the presentation mentioned that when when a debt is forgiven as part of a negotiated release of law suite (any body know if this is the proper legal term?) that it is not taxable. This could be used as another tool for folks who are worried about a large tax liability from forgiven debt. Currently most homeowner occupants selling their home will not have a problem with tax liability on forgiven debt.

I didn’t know it at the time, that this Smith, Groman & Davidson was basically just a renamed Credit Law Group which a client of mine had told me they had been scammed by not to long previous to this. Credit Law Group came highly recommended to my client, a real estate industry insider and ran away with the $1000 and not only did not get results but couldn’t even prove they had tried attempted to help him.

To be fair no jury to my knowledge has found the Credit Law Group or Smith, Groman & Davidson guilty of fraud. Also when prosecutors come in, with out having any conviction they can arrest you and force you to post bond, they can ruin your reputation ruining your ability to do further business and be able to afford expensive defense attorneys, and they can freeze your bank accounts. For an honest person who has been wrongly indited who has all his or her funds cut off and fighting against a government with seemingly endless resources and facing potential catastrophic consequences it would be common for all but the most bold to enter a guilty plea for leniency. To see this happen makes you question the American justice system. I will be writing more about real estate foreclosure fraud in future posts.

For a seller in a difficult situation it should be a large warning sign if rescue company or attorney looking to charge a large fee up front. Many states have all ready completely outlawed the practice of foreclosure rescue firms collecting up front fees for foreclosure prevention services. You are much better off looking for HUD counselors and other publicly supported non profits that can assist you in keeping your home.

If you are selling your home in most cases there should be no reason to charge a fee up front either, in most cases. When we sell homes on a short sale an important member of our team is the title attorney we work with. Our title attorney always reviews the short sale pay off letter to make sure your loan will actually be paid off. Our attorney is available if necessary for more premium foreclosure defense services and in general those services can be fully paid for with the sales proceeds.

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Andy Morris is an Ohio real estate broker with an expertise in selling homes on a short sale. If your Ohio home is heading towards foreclosure or you owe more than your property is worth, please call Andy at 888-4-STOP-IT to see if you qualify for a short sale with your lender.

2 comments to Another foreclosure rescue firm hits the dust

  • Carolyn

    Dear Andy,
    We used the Debt Advocacy Center for over a year to help us modify our mortgage and avoid foreclosure. We paid them $1,800 up front, and recently an additional $1,800, just before they were closed down by the Feds. We entered into the Making Homes Affordable program and are in the middle of the trial period. The Debt Advocacy Center asked us for the completion of their fee ($1,800) when it was confirmed that we were entering into the government program. HOWEVER, if they were closed down by the FTC how are they able to still draw money from out account? The last installment (I hope) was withdrawn today, from our bank account. Do you know how we can look into this further? Their telephone numbers are disconnected.
    Any advice would be appreciated.
    Thank you.

  • admin

    Go to the ftc http://www.ftc.gov/ftc/contact.shtm and contact them and see what you can do to get your $$$ back. They may have some oversight and have an ability to do that. Also call your states attorney general and see what ways they might be able to help you.

    I am getting tons of traffic on this article. Apparently everyone is freaking out and searching google and getting my page. I have several people a week call me thinking that I am Smith Grumman… Ha… I am hardly a fan right now. I client of mine is still working with them and it appears that the workers are all using their personal email and i assume personal phones now as the corporate infrastructure is basically shut down. I learned later after talking with this client that they actually used an out of country credit card processor with some shady methods of withdrawal to stop charge backs. He ended up getting charged an international transaction fee by his bank for doing the transaction.

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