Legal Industry News

October 7, 2010

Cal. Attorney General Files Charges Against Mortgage Firms and Attorneys for Fraudulent Mortgage Scheme

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California Attorney General (AG) Edmund G. Brown Jr. has filed a $60 million lawsuit against US Loan Auditors, My US Legal Services, and five individuals, including two attorneys, who operate a fraudulent mortgage audit scheme that preys on desperate homeowners anxious to save their homes.

The suit demands civil penalties, restitution for victims, and permanent injunctions to keep the companies and other defendants from fraudulently marketing forensic loan audits and legal services of little value.

The companies, based in Rancho Cordova, work together to market and sell “forensic loan audits” to homeowners, who pay thousands of dollars in up-front fees for a dubious computer-generated review of their mortgages, according to the AG Office.

The audits purport to show violations of law by lenders, which sales agents cite to convince homeowners they have a strong legal case. Sales agents use these findings to encourage homeowners to stop making their mortgage payments and instead pay additional fees to bring “predatory lending” lawsuits against their lenders, the AG Office added.

In addition to the companies, Brown sued the three owners: attorney and real estate broker James Sandison, Jeffrey Pulvino, and Shane Barker, as well as two California attorneys, Sharon L. Lapin and Jonathan G. Stein.

The State Bar filed disciplinary charges on October 6, 2010 against Sandison for alleged misappropriation of clients’ funds and aiding the unauthorized practice of law.

In this regard, the AG also announced that any person who has a complaint against Sandison, Lapin, Stein or any other lawyer involved in a loan modification or foreclosure relief service may contact the State Bar Complaint Hotline at 1-800-843-9053.

According to the AG office, My US Legal Services bilks clients for months, filing cookie-cutter complaints with little or no merit, billing unjustified monthly fees, and then dodging clients’ phone calls or stringing them along with false assurances that a settlement is in progress.

In February, the AG Offfice, along with the Bar and the Department of Real Estate, issued an alert warning consumers to be wary of forensic loan audits that require homeowners to pay up-front fees.

There is no evidence or statistical data to support claims that forensic loan audits of a lenders’ mortgage practices - even if performed by a licensed mortgage professional or a lawyer—help homeowners obtain loan modifications or any other foreclosure relief, the AG Office explained.