The U.S. Department of Housing and Urban Development (HUD) recently charged a California business for allegedly targeting Hispanic homeowners with illegal and discriminatory mortgage modification services. HUD said that The House Lawyer, based in Redwood City, California, collected fees from Hispanic borrowers for loan modification services prior to completing the services, a violation of California law, while “encouraging them to withhold their mortgage payments, and putting them at risk of foreclosure.” This constituted a violation of the Fair Housing Act, the agency said.
The case first came to HUD’s attention in 2012 when multiple Hispanic homeowners filed complaints with HUD alleging that they had been the victims of a loan modification scam, HUD said. The complaint alleges that the homeowners heard about the loan modification service through ads on a Spanish-language radio station, which claimed that The House Lawyer helped hundreds of people successfully modify their mortgages. Additional complaints were filed in July of 2013. The State Bar of California found that the practices violated California law by (1) collecting an advance fee for loan modification, and (2) taking a lien on real estate, personal property or other security to secure payment of this fee for mortgage loan modification work
When the homeowners contacted The House Lawyer, HUD claims its workers allegedly provided false statements about the “application requirements, procedures and standards for review for loan modification requests, and misrepresented that so long as the homeowners withheld their mortgage payments and remained in default, their banks would be compelled to modify their loan.”
The complaint alleges THL charged client fees of approximately $3,500, which were typically paid before they completed the work. In addition, they were charged a recurring monthly fee of $50, HUD said. When prospective clients did not qualify because they were current on their bills, HUD said THL advised them to stop paying their mortgage.
The agency also charged Barney Diamos, who allegedly was in charge of training and supervising staff, setting hours and rules for the company. He allegedly played a significant role in marketing THL’s services to the Hispanic community.
“For many families, homeownership represents the culmination of a dream, and the realization of that dream shouldn’t be put in jeopardy by unscrupulous actors and unlawful practices,” Jeanine Worden, HUD’s Acting Assistant Secretary for Fair Housing and Equal Opportunity, said in a statement on May 4, 2021. “Today’s action reaffirms HUD’s commitment to ensuring that no family is saddled with fraudulent mortgage products that threaten their ability to stay in their home because of their nationality.”