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Attorney General Lockyer Wins Court Order Freezing Assets of Firm That Unlawfully Exploits Homeowners in Foreclosure

Thursday, July 29, 2004
Contact: (415) 703-5837

(SANTA ANA) – Attorney General Bill Lockyer today announced his office has won a court order freezing the assets of Garden Grove-based Housing Assistance Services, Inc. (HAS) after filing a lawsuit alleging the firm has illegally and deceptively sold mortgage assistance services to homeowners in foreclosure.

"Con artists such as these defendants rank among the worst offenders of our consumer protection laws," said Lockyer. "They prey on highly vulnerable people, people who need to save every penny, and who can least afford to throw their money away on false promises. The court's order will protect victims by preserving money to pay the judgment we will win."

Lockyer filed the lawsuit Wednesday in Orange County Superior Court against HAS and its president, attorney Marc Sheckler. Superior Court Judge Mary F. Erickson on Wednesday issued a temporary restraining order freezing the assets of HAS and Sheckler. The order also requires the defendants to immediately comply with all laws the complaint alleges they have violated.

The defendants violated California laws governing the business practices of foreclosure consultants, the complaint alleges. In the process, the defendants also violated laws prohibiting unfair competition, and false or deceptive advertising, according to the complaint.

Lockyer's lawsuit seeks civil penalties of at least $2 million, full restitution for victims and an injunction that permanently bans HAS and Sheckler from operating in California as foreclosure consultants.

The complaint centers on the "Fresh Start Program," which HAS marketed via mail. In its advertising materials, HAS said it could help homeowners in foreclosure negotiate with mortgage lenders a loan modification or loan forbearance. Specifically, the HAS materials said if homeowners participated in Fresh Start, HAS could "stop your current foreclosure by rewriting your existing loan ..."

To participate in Fresh Start, consumers paid HAS an upfront, base fee of between $750 and $1,250. Additionally, consumers paid separate fees for "reinstatement processing," "docusave" services, "financial education materials," and credit reports.

The Attorney General's Office received complaints from consumers who said that, after they paid the upfront, base fee, HAS never provided them the promised foreclosure assistance services. Further, said the complainants, HAS refused to provide refunds when the firm failed to deliver on its promise.

In operating the Fresh Start Program, the complaint alleges, HAS and Sheckler violated several provisions of the law governing foreclosure consultants. The alleged violations include taking consumers' money before HAS provided the promised services; failing to include in contracts required disclosures of cancellation rights; and attempting to limit the defendants' liability in contracts.

Additionally, the complaint alleges the defendants' statements that the Fresh Start Program could save consumers' homes from foreclosure violated laws prohibiting false or deceptive advertising. Sheckler and HAS also violated those statutes in statements posted on Internet web sites, according to the complaint. In those statements, the complaint alleges, defendants misled consumers by representing they provided free services, and by boasting they had 25 years combined experience helping homeowners avoid foreclosure.

"Consumers facing foreclosure should be wary of companies that solicit them with offers to help them avoid the loss of their home," said Lockyer. "Foreclosure consultants often charge high fees, but take the money and run."

Consumers who believe they have been victimized by HAS, or a similar scam, can contact the Attorney General's Office at http://www.ag.ca.gov/consumers/mailform.htm or by writing to the Public Inquiry Unit of the Attorney General's Office at P.O. Box 944255, Sacramento, CA 94244-2550.

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04-079.pdf29.15 KB

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