Illinois Attorney General sues for mortgage fraud

Illinois Attorney General Lisa Madigan recently filed lawuits against four Chicago companies, claiming they conducted fraudulent mortgage rescue or loan modification schemes that provided homeowners with little to no help to avoid foreclosure. Similarly, Cook County State's attorney Anita Alvarez also filed suit against a loan modification and debt settlement company for exploiting consumers.

The Chicago Sun Times reported that the lawsuits are in response to companies charging homeowners for services to help them avoid foreclosure, but then do not follow through on their promises. These companies use attorneys as a front to collect fees, but no legal services are actually done on behalf of the consumer, Madigan said.

According to the news source, the lawsuits could shut down the businesses, force them to pay restitution to 76 harmed consumers and bar the defendants from offering mortgage rescue services in Illinois. The suits also call for a civil penalty from each defendant of $50,000, and additional penalties of $50,000 for each fraudulent act committed.

ABC 7 News reported Madigan has offered struggling homeowners and consumers affected by the fraudulent practices a mortgage foreclosure helpline, which has received more than 4,000 calls, half of them concerning complaints of mortgage rescue fraud. Madigan said the companies are finding loopholes in a state law that enables them to collect upfront fees from consumers and then not provide adequate services. 

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