You’ve seen the commercials and heard them on the radio: “don’t pay your debt, don’t go into bankruptcy, eliminate your debt!”
Eliminate your debt without bankruptcy? Really? What the hell am I advising my clients then?
So I did some poking around… which is big fancy lawyer talk for “legal research.” And I think I was able to put my finger on what some of these companies are actually selling.
This first appeared on May 27, 2008. Unfortunately even today, there are people looking to scam those who can least afford it. If you’re facing foreclosure or know someone who is, this is an important read.
As more and more people try anything to avoid losing their homes, more and more people are getting scammed.
Here are two links with important information for homeowners contemplating modifications:
This from The Christian Science Monitor:
TransUnion, a credit reporting company, released its own numbers on Tuesday. At the end of the fourth quarter last year, it said, 6.89 percent of all US mortgage payments were at least 60 days past due. That was an all-time high.
Enter unscrupulous loan-modification companies. They advertise on late night-television or radio shows and sound as if they are linked to the Obama program.
“Many of them have the word ‘hope’ in their phone number,” says Jonathan Mintz, commissioner of the Consumer Affairs Department in New York. “But it’s a false hope.”
And here’s a link mentioned in the same article that describes, among other things, 6 Facts You Should Know About Loan Modification Scams.
Follow us on Twitter and on Facebook for the latest news (the links are to the right).
One of the best things about summer is the local produce you’re likely to find not just in the supermarket, but on road side stands. While I admit I’m a bit biased, when I was a kid, there was no better place to get tomatoes and sweet corn than the small farms on Aquidneck Island. That’s probably going to tick-off the good folks in Little Compton, but hey, I know what I know. I am sure that I can find a place online that would ship them to me, but it’s not the same as pulling over to the side of the road, smelling the air, and reaching into your pocket for a few bills to get some good stuff. Law firms advertise online, as do credit counselors and so-called debt settlement and consolidation firms…and there are hundreds if not thousands of companies and firms offering assistance to people struggling with debt. Is it a good idea for Massachusetts consumers stay “local” when they are looking for resources to help them deal with their debt? This very question came up today when I was talking with a prospective client.
For a variety of reasons, the family is in a lot of debt and exploring options. There’s bankruptcy (and I can help them with that), and there’s credit counseling (which I can offer a recommendation). There’s also debt consolidation and debt settlement, but ironically, there do not seem to be too many local companies that offer such services. Perhaps it is because those services are usually little more than a scam. Perhaps it’ because it’s been tried
The clients were considering the “Consumer Law Group, PA” located in Florida. I like Florida – I have not been there in years – but it’s a pleasant place to be. And while I like oranges, I don’t feel the need to go to Florida to get them.
Fortunately, the client did some research on this outfit on their own. They learned that the “Consumer Law Group, PA” had only been around since November 2007. They found websites where people had some very unfavorable things to say. More than one person, actually. They also learned that in less than two years period, they earned an exceptionally low BBB rating. That was their wake up call. It dawned on them: “why are we not dealing with a local business who can help us?”
While this is arguably yet another reason to stay clear from any outfit claiming to offer debt consolidation or debt settlement services (which again, are a scam), I think it is also important to consider going with someone local. It doesn’t matter if it is an attorney, a credit counselor or a lender who may be trying to help you refinance…. why go with an out of state outfit state? After all, we are talking about your money, your life, your family and your future.
For those reasons, it’s important to get good help from someone who knows what they are doing. And frankly, if these issues are important enough for you and your family, then you should be able to look that professional square in the eye. That’s hard to do when they are a few states away.
In the past, I have written and warned readers here about it. It is simply not all it is cracked up to be. From CBS News/The Early Show:
[C]onsumer advocates warn that a majority of the companies can’t or won’t deliver on their promises to reduce your debt. The National Foundation for Credit Counseling recently explained that, “A settlement company may suggest that you stop paying your creditors and instead begin making deposits into a special third-party account. The settlement company will attempt to negotiate a settlement offer with your creditor once enough money relative to the debt is on deposit. This may take six months or more, although the exact length of time will vary with circumstances. During this time, the balance on your debt can continue to grow if interest and various penalty fees continue to be charged by your creditor. As a result, you may owe more than when you started and your credit may suffer.”
Even worse, there have been many instances where none of this money ever makes it to creditors — the companies simply steal it, Gibbons points out. Plus, a growing number of credit card companies refuse to work with debt settlement groups. Of course, a group probably won’t tell you that until after you’ve paid them.
A few people have spoken to me about it. And I have had some time to reflect. My comments about David Coleman and his outfit, Mortgage finders of New England, were not kind. I believe I referred to him as “the lowest of the low.” In that article, I discussed what he did, and why the Bankruptcy Court fined him and issued an injunction against him. But courts issue fines every day and I don’t refer to the parties as the “lowest of the low.” So after some reflection, I thought it best to discuss why I stand by those statements.
Coleman – and others like him – scour public records to look for people in foreclosure. There is nothing wrong with that – provided you’re doing it for a good reason. There are some bankruptcy lawyers that do it, along with real estate brokers and others who offer their services to people who they think need it. But Coleman offers nothing.
Coleman leads his “clients” to believe that he is a lawyer and that he is capable of properly preparing a chapter 13 petition to stop a foreclosure. He then agrees to meet his “clients” at the courthouse – where the “clients” sign the petition and give him cash. Then, the petition is filed. The foreclosure is stopped….if only for the time being.
But Coleman does not counsel the “client.” He does not develop a strategy. He does not guide them through the rocky and ever changing legal terrain that is chapter 13. He does nothing more. The cases are dismissed, and the foreclosures in many cases, will likely occur. He has provided no benefit at all. He has done nothing other than take money and buy a small amount of time.
So why does this irk me?
Because people who are facing foreclosure need help. Because if their name is in the legal ad section of the newspaper and they have not already consulted with an attorney, or developed some sort of game plan, we can and should assume that either there is no game plan to put together, or maybe more likely the case, they are so scared and embarrassed at the very idea of losing their home, that it seems more appropriate to do nothing, since doing something is an acknowledgment that something is terribly, terribly wrong. In other words and perhaps more simply stated: they are vulnerable.
And Coleman takes advantage of it. He files the case. It gets docketd. It will get assigned to a judge and a trustee. Clerks will review it. Orders to Update will issue, directly the debtor to file other required documents. Those documents will likely never be filed. The case will be dismissed perhaps within a few days, or a few weeks or a few months. The foreclosure was stopped. It was stalled.
What also bothers me is that Coleman ignored court orders directing him to comply with those Bankruptcy Code provisions that require him, as a “petition preparer” to disclose his status (as well as for him to do other things that petition preparers are required to do). From all of this, I infer that Mr. Coleman and his outfit have no problem offering “help” to people, but ultimately providing none – and doing so only after taking their money. I also infer that Mr. Coleman doesn’t care what the law says or has any respect for our courts.
I am in the business of helping people. Debtor or creditor, that’s what I do. Bankruptcy law is tough enough on debtors. Being in deep in debt and feeling utterly powerless and alone is hard enough. But being preyed upon by someone who knows nothing, who offers nothing, and who takes everything is simply unconscionable. And it is for those reasons that I believe that my comments about David Coleman, Mortgage Finders of New England, and every other low-life who thinks they can get away with it, are entirely jusitified.
When people are in foreclosure, they can fall victim to a host of scammers and scams. Unfortunately, by the time many of these folks are scammed, they are worse-off than they were before they stumbled into foreclosure. So when I come across a scammer who preys on people who need real help, you’ll read about here. Here’s the story behind David Coleman and his bogus outfit: Mortgage Finders of New England.
In April 2008, a Virginia couple contacted Coleman’s firm about an upcoming foreclosure on investment property in Newbury, MA. Coleman told the couple he could help them by filing a bankruptcy petition on their behalf. He also told the couple that he was experienced in filing bankruptcy cases, although at no time did he mention that he wasn’t a lawyer and that by law, he could not give legal advice. Only after the case was filed did the couple learn for the first time that Coleman wasn’t a lawyer at all.
Coleman waited for the debtor (the wife only) in the lobby of the Tip O’Neill building where he collected a $1,000 cash “fee” and had her sign a skeletal bankruptcy petition he prepared. But he did not properly complete the portion of the petition acknowledging that he was a petition preparer. In fact, in an effort to presumably fly below the radar and to keep his scam going, he left it blank. The case was dismissed on May 5, 2008 because no other documents were filed.
On May 21, 2008, a New Bedford woman was contacted by Coleman after he obtained information about a looming foreclosure from a local paper. Coleman told the woman that he could stop the foreclosure and it would cost $1,000 cash to retain his services. The next day, he met the woman in the lobby of the Tip O’Neill building where he collected his $1,000 cash fee, filed a chapter 13 petition, but did nothing more. When the clerk asked Coleman if he was representing the woman, he said he was only assisting her. It was at that time that the woman learned that Coleman wasn’t a lawyer. The woman’s friend demanded that he return the money, but Coleman refused.
On May 6, 2008, a Roxbury man filed a chapter 13 case after being contacted by Coleman, who learned of a foreclosure in the local paper. Again, he met the man for the first time in the lobby of the Tip O’Neill building in Boston and collected the $1,000 case. Again, the filing was deficient. And in this case was dismissed because required documents were not filed. Again, the forms were not completed correctly. Again, the people were not properly advised.
There are many more cases. There are many more violations. There are many more victims.
Who is he?
David Coleman is a predator. He operated Mortgage Finders of New England at 70 Worcester Street in Methuen. He’s not a lawyer. He has no formal education. He has no training with regard to the bankruptcy process or how to properly and fully prepare bankruptcy documents. Yet despite this, he contacts distressed homeowners, convinces them that he can help them, takes their money (and I’m willing to bet, money they cannot afford to lose), files a bare bones petition and does nothing more. Since April 2008, when he started this operation, he has collected money and prepared bankruptcy documents for over thirty people.
He advertises in the Verizon Yellow Pages and by distributing cards and flyers. He makes calls to people, using “411″ to get a homeowner’s name after getting personal information from a foreclosure notice or other public record. He tells his victims to meet him in at the Bankruptcy Court in Worcester or Boston. He downloads forms on line, completes them in his own handwriting, and files them. He doesn’t tell his victims that he is not an attorney and that he may not give legal advice. He does not disclose to the court that he is a petition preparer. He does not even give copies of the documents he files to his victims. And then he does nothing more – ultimately letting their cases fail because other necessary documents are never filed.
He holds himself out as a bankruptcy expert. Folks, David Coleman is no expert.
And it gets worse.
In July 2008, US Bankruptcy Judge Hillman issued an injunction requiring that Coleman comply with the Code and properly disclose on cases that he is a petition preparer as defined by Section 110 and his fees. Even with this order, Coleman continued this unlawful and illegal scam. He continued to file documents without disclosing who he was and what he was doing. He continued to rip people off. He continued to hurt people.
In an order dated February 18, 2009, the US Bankruptcy Court issued an order finding that Coleman had violated Section 110(b)(1) of the Code. He was fined a total of $34,500 for violation of the code, and among other things was ordered to disgorge (return) the fees he unlawfully received.
It was also found that he was engaging in the illegal practice of law, and therefore, he has been barred as “(1) acting as a bankruptcy petitioner; (2) soliciting, assisting, advising, providing legal guidance, advice, assistant or consultation of any king to any person in connection with the filing or prosecution of any bankruptcy case or any document in any bankruptcy case, whether for a fee or for free” in Massachusetts. The order includes not only Coleman but also includes “any person or entity acting in concert with him.”
When it comes to helping people keep their homes out of foreclosure, Coleman serves no legitimate purpose. He preys on people who are probably feeling as if they are at the lowest point in their lives. What people facing foreclosure need is sound counsel given by people who are trained in and who study the law and know what they are doing. That’s not Coleman, and it never was. He’s only taking money and selling false hope. He’s the lowest of the low.
If you’re facing foreclosure, talk to an attorney. Don’t be scammed by Coleman, or anyone else.
Read the Court decision here: US v. Coleman, 08-04132 (2/18/2009).
I came across an interesting story (and video) over at CNBC.com: Fraud at your Front Door which discusses foreclosure rescue scam artists who are knocking at the front door of homeowners facing foreclosure. I have met clients who have told me they have been approached by individuals how have been at their doors offering assistance. But there’s no rescue. They’s only a rip-off.
Not only do the homeowners lose money, they lose time to productively work with their lender. I heard a lender attorney recently say that homeowners have told them that “…we paid this person to help us.” But the person is not helping them, and as this CNBC story points out, in many cases, the “helper” doesn’t even contact the lender. In addition to losing valuable time and money, the homeowner may also lose credibility with the lender.
The story recommends that if your lender is unwilling to relax the payments to help you, seek a qualified real estate attorney or non-profit credit counselor. But there are also local mortgage counselors who will help you with a modification request (click here for ESAC located in Boston). And I also think you should not rule out speaking to a bankruptcy attorney so you can discuss your options. Or, I encourage you to contact us if your lender is unwilling to work with you.
I know that attorneys and other professionals may send written solicitations to homeowners who are facing the possibility of foreclosure. However, I have heard that there are unscrupulous individuals who may be posing as attorneys or are providing bankruptcy “assistance” when in fact, they are not qualified to do so.
If you are facing foreclosure and are contacted by ANYONE who claims to be an attorney, point your browser over the Board of Bar Overseers and look up that person up. There, you will find out whether they are licensed to practice law in Massachusetts, whether they are insured, and whether there is any history of discipline against them. If the person claims to be an attorney and they are not listed there, stay away from them.
These predators obtain a homeowner’s name and address by scouring the Land Court records and the auction notices in local papers. This information is available to anyone who goes to the court, or who perhaps subscribes to this information through a vendor (such as Banker & Tradesman). Through clients, I have learned that homeowners can be contacted by attorneys, real estate brokers and salespersons, mortgage brokers, as well as “investors” or others who may not have their best interests in mind.
Clients have been known to bring in bundles of mailings they have received. But the unscrupulous ones may not send out mailings. They may call, or show up at the door. They may claim that they go to same church, or once lived in the same neighborhood. They will appear to be friendly and helpful. They are anything but.
The bankruptcy cases that are getting filed are sloppily prepared. In many cases, those filings are without a credit counseling certificate, which means the case will end up being dismissed. In many cases, the scoundrel has taken the last chunk of money these folks have all under the guise of “helping them.”
If you’re facing foreclosure, or know someone that is, be smart and be safe. Deal only with a licensed professional.
To look up a real estate professional’s license, click here.
To look up a mortgage broker’s license, click here.
From FoxBusiness: a look at the legislation Congress is mulling over to give bankruptcy judges more authority to modify residential mortgages.
Have you ever heard those radio commercials touting “debt elimination?” It usually has an announcer proclaiming that “my plan does not reduce your debt, it eliminates it!” One commercial in particular on a local station also has a speaker who says “using this system, I will be able to pay my 30 year mortgage in just three years making only the money I am making now.” That sure does sound too good to be true. Well, it was a bad week for two scam artists from California who ran such an out. The Mercury News reports that on Tuesday they were sentenced to more than 25 years in prison for mail fraud.
Actually, this bit is yesterday’s news, but it’s worth mentioning: The New York Times reports that the mortgage crisis is not only affected lower and middle income borrowers. According to the report “affluent consumers with annual incomes of $100,000 or more … are increasingly being ensnared in the home mortgage crisis.”
And finally, here’s something we might want to think about this weekend: is the US Dollar on its last leg?
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