Attorney General targets foreclosure consultants

Attorney General Lori Swanson has sued six more out of state foreclosure consultants, for taking money from Minnesotans upfront in an alleged violation of state laws.

"We will not tolerate mortgage foreclosure consultants taking advantage of struggling homeowners," Swanson said in a statement released by her office Thursday, "People who are already between a rock and a hard place in the worsening mortgage meltdown."

The companies targeted offer homeowners help avoiding or escaping foreclosure, by negotiating new terms with lenders and other creditors. Swanson cited the consultants for taking money -- up to $2,300 -- from vulnerable families, and then failing to deliver the promised help.

According to the petitions, the law bars such consultants from charging a fee until after they've "fully performed each and every service" they've agreed to in the contract or promised to the customer.

Case in point

Chantae Grandsberry was among those who complained to the Attorney General's office about her family's experience with American Foreclosure Specialists, and agreed to share it with the news media.

In June of 2007 Grandsberry and her husband, Ricky, paid the Oklahoma company $1,300 upfront to help fend off foreclosure. This came after the monthly payment on their Adjustable Rate Mortgage, or ARM, shot from $1,200 to $2,700.

"We were constantly in touch with them via e-mails and phone calls," Grandsberry told KARE 11, "We were always assured they were negotiating with Wilshire, our mortgage lender."

Wilshire and her husband are both college educated, but she concedes they weren't experts on mortgages and foreclosures. When the couple bought Ricky's parent's home in Brooklyn Center in 2005, she explained, they didn't fully understand how the ARM would work.

While surfing the web for foreclosure help, they found the AFS website which prominently advises potential customers the company is owned and run by Christians.

"Both of my in-laws are pastors," Grandsberry explained, "So it was a big selling point for the entire point for entire family because we thought there's no way they're going to take advantage of us."

But three months later, in September, the Grandsberrys received notice that their lender was foreclosing on the loan. Even then, she says, AFS assured her not to worry.

"AFS said that wasn't true, that they had been in negotiations and that they would call and straighten everything out."

And yet, on Friday October 12th, Chantae Grandsberry learned her home was going to be auctioned off at a sheriff's sale the following Monday. AFS eventually refunded the family's $1300 fee, but it was too late by then to find other help.

"For us it wasn't so much the money, it was the time we wasted," she told KARE.

That sheriff's sale started the six-month clock to vacate the home, and just last week Chantae's family moved to a rental house in Brooklyn Park. Her husband had to leave his boyhood home.

"It was the waste of a year, and valuable time to save our house," remarked the mother of two, with one on the way.

"We could've been negotiating with our lenders ourselves. I found out later we could've been talking to them on our own behalf."

Company's response

The owner of American Foreclosure Specialists, Kristian Hendel, said Thursday that KARE 11's call was the first he'd heard of the Attorney General's lawsuit.

Hendel said he couldn't comment on the Grandsberry case until he had a chance to review the family's file, but he said he had no idea Minnesota law prohibited foreclosure consultants taking money upfront.

"Once we get a chance to study this issue I'm sure we will remedy the problem, whatever it may be," he said.

He said he was aware Colorado had such a law on the books, and once spent months helping a customer there but never earned a dime. Hendel said his website is filled with positive customer testimonials and examples of how they've worked out deals with lenders.

"But people have to understand these lenders do expect some kind of payment," Hendel explained, "Some kind of sign that these borrowers are seriously making an effort."

Warning to consumers

Swanson is urging Minnesotans to contact their lenders immediately as soon as they encounter trouble making house payments, to seek options to stay in the homes.

She also cites that the Minnesota Housing Finance Agency can direct consumers to reputable mortgage counselors. But, she cautioned homeowner not to pay advanced fees for services.

Companies named in Thursday's lawsuits

National Foreclosure Relief, a Nevada corporation with a California business address

Lewis Loss Mitigation of Alabama, which also does business as Stop Foreclosure Center.

D.R. Financial Services Corp. of California, which also D.R. Financial and Superior Home Loans

American Foreclosure Specialists, LLC, an Oklahoma limited liability company

Mortgage Default Assistant, LLC, a Florida limited liability company

Home Assure, LLC, a Florida limited liability company which, according to Swanson, claims to have offices in the Empire State Building in New York

Companies sued in December

Foreclosure Assistance Solutions, LLC American Housing Authority, Inc. American Housing Financial, Inc.

By John Croman, KARE 11 News

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