The Strike Force That Never Struck 

Despite pledging to crack down on foreclosure scam artists three years ago, Attorney General Kamala Harris has allowed an industry of fraud to flourish.

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One giant fraud spawns ten thousand smaller frauds — that was one of the major lessons of the foreclosure crisis. A relatively small number of mortgage lenders issued millions of toxic home loans in the 2000s, often misrepresenting the terms to borrowers or predatorily targeting low-income homeowners, Latinos, African Americans, immigrants, and the elderly with financial products that were practically designed to fail. Then when the crash came in 2008, thousands of smaller fraudsters crawled out from under their rocks to feed off the carnage caused by the collapse of the mortgage market.

Calling themselves "foreclosure consultants," this army of rip-off artists set up on the internet and plastered local newspapers, especially ethnic media, with advertisements, claiming that "we can stop your foreclosure." Radio ads broadcasted on English- and Spanish-language stations promised to "halt foreclosure." Scam artists pumped their messages through late-night TV: "Obtain a loan modification to stay in your house." Sometimes scammers posed as representatives of federal housing programs, emblazoning HUD and Treasury Department seals on their deceptive websites, mailers, and brochures. One company even used a robocall system programmed with President Obama's voice announcing a phony mortgage "rescue" plan.

Desperate homeowners sailed toward these siren songs. The typical victim handed over thousands of dollars for services that were never rendered or for services that could never stop a foreclosure. Fake and crooked lawyers filed faux lawsuits, claiming they could slow down foreclosure sales. Unlicensed brokers pretended to negotiate new loans, collecting big upfront fees, but then doing little or no work. Some scammers were small fries, taking advantage of just a few distressed borrowers. Bigger sharks defrauded dozens, even hundreds of borrowers out of millions of dollars. There were literally thousands of rip-off operations, so many that no one — not any state or federal agency or law enforcement authority — has tallied a sound estimate. And they're still a problem. They're still preying on distressed homeowners who were left high and dry by the federal economic bailout, which did little or nothing to alleviate the average American's debt woes.

The Lawyers Committee for Civil Rights Under Law is still receiving between five hundred and eight hundred complaints a month from homeowners throughout the nation about foreclosure rescue scams. The committee's representatives enter the complaints into a database that feeds into a larger federal consumer complaints repository. "California leads the way," said Michael Tanglis, an analyst with the committee. According to Tanglis, homeowners nationwide have made more than 13,000 complaints against scam operations based in California since 2010. "California also leads the way with 6,000 complaints reported by in-state homeowners," Tanglis added.

"It's been a massive problem, and I suspect it still is," said Maeve Elise Brown, executive director of Housing and Economic Rights Advocates, a nonprofit that gives free legal assistance to homeowners in distress. "Every other client we deal with has paid money to at least one scam."

"California, tragically, is the epicenter for the loan modification frauds," said Joseph Dunn, CEO of the California State Bar. The state bar found it necessary to carry out a sweeping disciplinary campaign against lawyers who loaned their names and credentials to foreclosure rescue scams. It's a record of discipline that gives a sense of how vast the mortgage consultant problem has been: From February 2009 to October 2013, the state bar received 13,200 complaints against attorneys regarding mortgage loan modifications. The Office of Chief Trial Counsel, the state bar's enforcement arm, has pursued disciplinary charges in 1,654 cases of loan modification fraud, involving 211 licensed California attorneys. As a result, the state bar has disbarred 57 attorneys. Cases against another 50 attorneys are pending before the State Bar Court, and another 86 attorneys are currently under investigation.

But the cases brought by the state bar represent just a fraction of California-based foreclosure rescue operations, many of which did not involve lawyers. "When there's money to be had, there's gonna be a constant flow of fraudsters," said Dunn.

The problem was so bad that, in 2011, when Kamala Harris took over the California Attorney General's Office, she announced the creation of a statewide task force to tackle mortgage fraud. A big focus of the task force was supposed to be going after rescue scam artists. At a May 23 press conference that year, Harris called mortgage fraud a "top priority" for her team.

"The California Department of Justice received thousands of complaints last year alone — all related to foreclosure scams, mortgage fraud, and mortgage servicing scams," said Harris. "2.2 million Californians owe more than their home is worth. Their distress and vulnerability is a very rich opportunity for predators."

Harris described the Mortgage Fraud Strike Force as a crack division in the state DOJ, "designed to protect innocent homeowners and to bring to justice those who would defraud them.

"As California's real estate boom set a trend for the rest of the nation, so too will our policing of its dark side," Harris continued. Harris initially assigned 25 DOJ lawyers and investigators to the Mortgage Fraud Strike Force, which had had a clear mandate to aggressively stamp out foreclosure fraud, and an annual budget of $2.45 million in fiscal year 2011-12, and $2.63 million in 2012-13, according to public records.

And yet three years after the establishment of the Mortgage Fraud Strike Force, Harris' office has prosecuted only ten cases of foreclosure consultant fraud. Despite the fact that California was the hardest hit state by foreclosure rescue scams, and that it is the home base for more scam artists than any other state, Harris' strike force has prosecuted fewer foreclosure consultant fraud cases than attorneys general in numerous other states. Moreover, as Harris' office has failed to act, attorneys general in other states have turned their sights on California, targeting rip-off artists who are based here and have scammed homeowners elsewhere in the country.

Indeed, interviews and public records obtained from Harris' office reveal a portrait of a well-funded and robustly staffed strike force that appears to have never really struck a significant blow against the foreclosure rescue scam industry in California. Instead, the job of prosecuting foreclosure consultants in the state has fallen on attorneys general from other states, private attorneys (often working pro bono), and local county district attorneys in California who have fewer resources and staff to investigate and litigate.

At the same time, foreclosure consultants have largely ignored and brazenly violated laws put in place by former Attorney General Jerry Brown that were supposed to undermine the ability of foreclosure rescue scammers to operate. California, as a result, is not only the base of operation for countless fraudsters, but also a favorite hunting ground for those who continue to prey on desperate homeowners.


It's not hard to find a shady company that will offer to modify your mortgage for a hefty price, or provide some other foreclosure consulting service that is "guaranteed" to keep you in your house. Recently, I went to Los Angeles to try to help my fictitious elderly mother avoid foreclosure on the equally fictitious family home. I found an endless list of companies on the internet eager to "help." After a little research, and after emailing and chatting with them on the phone, it was clear that some are legitimate businesses and law firms that haven't broken any laws, even if the services they're offering are pretty much worthless.

But then there are companies like Direct Loan Counseling. I found Direct Loan Counseling after about ten minutes of searching the internet and clicking on ads thrown at me by Google's dangerously undiscriminating algorithms. I called Direct Loan Counseling's 877 number and spoke with someone who identified himself as Alan Rose. He claimed to be the supervisor of the company's HAMP program. HAMP, the Home Affordable Modification Program, is a government-sponsored loan modification program that most of the big banks participate in. HAMP provides borrowers with reductions in their principal and interest payments.

"It's a good thing it's with Bank of America," Rose assured me about my mother's defaulted mortgage loan, which I had explained to him was months in arrears. Bank of America, I told him, is the lender and servicer, and the bank's representatives weren't responding to my calls. I told Rose I was worried they'd foreclose. "We have a good relationship with them," he claimed about Bank of America.

Rose said that Direct Loan Counseling could quickly obtain a loan modification that would reduce the interest rate on my mother's mortgage to 2 to 3 percent a year, lowering the monthly bill by thousands of dollars. He was very reassuring: "We have attorneys and processors to take care of this. It only takes about two weeks from when we get the application back from you."

Rose encouraged me to fill out Direct Loan Counseling's fourteen-page "request for mortgage assistance form," which he promptly emailed to me. The document itself is filled with all sorts official-looking forms and scraps of information, including various disclosures regarding household income, liens, and legal judgments. The reassuring seal of the Treasury Department, the sponsor of the HAMP program, appeared on page seven, as did the telephone number for the HAMP "Homeowners Hotline."

I decided to call the HAMP hotline and ask about Direct Loan Counseling. "I do not believe this firm is directly affiliated with the HAMP program," responded Josh Fuhrman, a senior vice president of the Homeownership Preservation Foundation, the nonprofit that operates the HAMP program hotline.

I also called Bank of America to check on Rose's claim about Direct Loan Counseling having a "good relationship" with the bank. "Bank of America does not have special relationships with any for-profit counseling companies," said Rick Simon, a spokesperson for Bank of America. "No one should believe that they need to pay for this type of assistance or that they will receive special treatment if they do so."

Direct Loan Counseling doesn't appear to be a legal corporation allowed to do business in California. I found no record of the company having registered with the California Secretary of State as required by law. Public records also indicate that Direct Loan Counseling isn't licensed to do business in the City of Los Angeles, despite the fact that it rents an office in Tower One of the Westwood Gateway building at 11111 Santa Monica Boulevard. In addition, no one has ever registered Direct Loan Counseling as a fictitious business name in Los Angeles County, according to the LA Registrar-Recorder/County Clerk's Office.

Direct Loan Counseling's website includes no identifying information, no office address, and no information about who its executives and board members might be. Alan Rose, if that's his real name, is not licensed by the California Bureau of Real Estate (BRE) to act as a real estate broker, a requirement for anyone advertising and assisting homeowners with loan modifications. And a search for Direct Loan Counseling in the BRE's company license database also turned up no results.

There are only a few clues about who is behind Direct Loan Counseling. An Irene Smith registered Direct Loan Counseling's website domain name in May 2013. In 2011, someone also named Irene Smith registered two fictitious business names with the County of Los Angeles — Direct Mortgage Counseling and Mortgage Counseling Center. The mail drop Irene Smith used for Direct Mortgage Counseling was a second-floor office above a Thai restaurant and a wig shop just a few blocks away from Direct Loan Counseling's current office on Santa Monica Boulevard.

Three recent consumer complaints against Direct Loan Counseling, filed with the Business Consumer Alliance, a nonprofit watchdog, identified a Charles Smith as the company's primary representative, along with Irene Smith, and several other employees. The complaints allege that the Smiths and Rose broke several state laws and stole thousands of dollars from homeowners in distress.

In February 2013, Irene and Charles Smith were busted by the California Department of Real Estate for operating their previous company, Direct Mortgage Counseling, in violation of state law. In a published Desist and Refrain Order, Bureau of Real Estate Commissioner Wayne Bell cited the Smiths for posing as real estate brokers (neither is licensed) and for collecting advanced fees in the performance of loan modification services, a direct violation of California's foreclosure consultant law, punishable by a fine of $10,000 and up to a year in jail.

But just like hundreds of other fly-by-night, unlicensed and unregistered foreclosure consultants identified by the Bureau of Real Estate, neither Irene nor Charles Smith appears to have ever been prosecuted by any California law enforcement agency for running Direct Mortgage Counseling. Shortly after the BRE issued its order to the Smiths, they closed down Direct Mortgage Counseling, and are now doing business as Direct Loan Counseling.

California law requires foreclosure consultants to register with the state Department of Justice, and to post a $100,000 bond as a precondition of doing business. The law was designed to drive most foreclosure consultants out of business, and to make it easier for authorities and consumers to spot frauds. But Direct Loan Counseling isn't registered with the DOJ, and has never posted a bond to act as a foreclosure consultant.

Neither have a half-dozen other foreclosure consultants I called up and received offers from during the past few weeks. Several of these companies and the people I spoke with were also previously cited by the California Bureau of Real Estate for breaking various state laws in pursuit of their fraudulent schemes.


During the depths of the foreclosure crisis, Ofra Pleban was the staff attorney of Central California Legal Services, a nonprofit legal aid group serving Fresno. "It's like a mushroom after the rain," she said of foreclosure rescue scam operations in the Central Valley. "You close one down, another opens, pops up."

As if counseling homeowners on how to navigate the Kafkaesque banking negotiation system wasn't difficult enough, Pleban found herself forced to investigate and sue foreclosure consultant scammers who preyed on the Central Valley's working-class and heavily Latino communities. "We were involved in litigation with one of the most prolific loan modification schemers in Fresno County who defrauded hundreds of homeowners of thousands of dollars each, with promises to obtain for them a loan modification," she said.

"Unfortunately, despite the extensive evidence against this entity [Legal Foreclosure Services] and its operators, and the scope of their activities in Fresno and Merced counties, law enforcement, including the District Attorney's Office, the Attorney General's Office, and the US Attorney's Office, failed to prosecute."

So why did some local district attorneys in the Central Valley fail to prosecute some of the most egregious foreclosure rescue scammers?

"Locals, of course, claim limited resources and the need to allocate, or prioritize them," said William Krieg, a private attorney in Fresno.

Krieg is suing multiple foreclosure consultant companies and law offices for fraud, but few private attorneys are following his lead. "You might get an injunction and they close, but then there's no assets to collect," explained Pleban, referring to the problems of going after foreclosure rescue fraudsters. "It's not that easy for the private bar to prosecute these cases."

And what about Attorney General Harris' office? "Generally, I am not aware of California Attorney General efforts in the Central Valley, or elsewhere, to actively prosecute these scams," Krieg said. "More often this is left to local the district attorney, or to the California Bureau of Real Estate to seek real estate license revocations."

This patchwork system of prosecution has numerous drawbacks. "One problem for local district attorneys," explained Krieg, "is that scammers are often located out of state, or out of county, and the district attorney defers to the attorney general or must join with other district attorneys if the problem is extensive enough. "Our local DA has confirmed the very limited resources available for this."

Official budget records show that the Fresno County District Attorney's Office had only one attorney and one investigator in its Real Estate Fraud Unit during 2010 and 2011, probably the most active years for foreclosure consultant scams in an area that was hit especially hard by the foreclosure crisis. And like in other real estate fraud units in county district attorneys' offices, prosecuting foreclosure-related frauds was just one of the staffers' responsibilities in the Fresno County DA's office, meaning that only a fraction of their time was spent chasing foreclosure consultants.

Even the biggest counties in California appear to be struggling to muster the resources and staff necessary to investigate and prosecute even a fraction of the foreclosure consulting scams in their jurisdictions. "We have a couple [foreclosure consultant fraud] cases currently on our case load," said David Lim, deputy district attorney in the Alameda County DA's Office. "From January 2011 through the end of April 2014, we filed 28 cases against 44 defendants," said Lim. "Of those 44 defendants, 10 cases against 13 defendants were charged with actions related to mortgage fraud consulting." Lim said the real estate fraud unit was staffed with two attorneys and two investigators from 2009 to 2013, but in September 2013 the office added another prosecutor.

In Los Angeles, the state's largest county, and probably second only to Orange County in terms of the number of foreclosure consultant scammers operating there, the district attorney's real estate fraud unit has seven prosecutors and six investigators. "We're more than treading water, but, of course, we could always use more bodies, more investigators," said David R. Lopez, deputy district attorney in charge of LA's real estate fraud unit. "There's voluminous records, and it's always the case that you have to figure out what happened, who did it, and since these go hand-in-hand with identify theft, no one is who they say they are," Lopez said of foreclosure rescue scammers. "The suspects and companies are shells.

"Last fiscal year we prosecuted 103 cases involving over 250 defendants and a total aggregate loss of over $80 million," added Lopez, who clarified that about one-third of these cases involved loan modification scams perpetrated by foreclosure consultants. In other words, LA County took down approximately thirty foreclosure consultants last year alone.

Peter Pierce, senior deputy district attorney in charge of Orange County's major fraud unit, said his office has 116 cases pending. "I would estimate that about 30 to 35 percent would be considered foreclosure rescue scams," said Pierce. The Orange County DA has done all this with a staff of just three prosecutors and three investigators.

Last Thursday, the Orange County DA brought charges against a foreclosure consultant ring accused of stealing $13.5 million from 3,500 victims. The Orange County DA's Office believes this to be the largest-ever prosecution of a loan modification scam in the nation. The Newport Beach Police Department, the Orange County DA, the US Secret Service, and the state Franchise Tax Board conducted the investigation with help from the State Bar of California, the FBI, Huntington Beach police, Irvine police, and the California Bureau of Real Estate. Notably absent from the investigation was the California Attorney General's Office.

The San Diego County District Attorney's Office, meanwhile, has a team of three attorneys, three investigators, two paralegals, and one secretary, said spokesperson Steve Walker. Between April 1, 2008 and April 30, 2014, the San Diego County District Attorney's Office filed criminal felony charges against 38 individual defendants, alleging violations of California's foreclosure consultant laws, Walker said. "We work very hard as an office to prevent and prosecute foreclosure fraud whenever we find it. However, like most district attorney offices, we are confronted with a substantial demand on our real estate resources, and we must prioritize matters."


In August 2009, then-Attorney General Jerry Brown issued a stern warning to the foreclosure consultant industry, publicly naming 386 companies and threatening them with prosecution unless they complied with the state's Mortgage Foreclosure Consultant Law. The law requires foreclosure consultants to register with the California Department of Justice and post a $100,000 bond. Brown also sent letters to 27 loan consultants, demanding that they substantiate advertising claims related to foreclosure rescue programs they were marketing via the internet and through direct mailings to Californians.

However, as of today, only fourteen foreclosure consultants have bothered to register and post a bond with the DOJ, according to records obtained from the Attorney General's Office. And while most of the 27 companies to which Brown sent letters quickly went out of business, several remain open, marketing their foreclosure consulting services in apparent violation of state law.

For example, AvoidingForeclosure.com is still up and running. It's a trade name used by a Massachusetts company that claims to have developed a computer program to assist homeowners with loan modifications. The program "came from a man who spent his undergraduate years working in artificial intelligence programming with a Nobel prize winner," the company boasts on its website. AvoidingForeclosure.com allows California residents to apply for loan modifications, even though the company never registered with the DOJ or posted a bond as required.

Brown's letter to Fair Lender Audits, a company operated by a Borzou Hamzavi in San Diego, asked it to provide evidence for various claims it had made, including the following quote investigators copied from its website: "Our attorneys will contact your lender quickly (usually within one day) to let them know we will be negotiating a loan modification on your behalf. This will usually put a halt to any collection calls you are currently receiving from your lender." After Brown sent his letter to Fair Lender Audits, it quickly shut down.

But when I typed the exact language from Fair Lender Audits' old website quoted above into a search engine, I was pointed to a different and new website (registered in February 2014) of a new company calling itself Loss Mitigation Servicing. This company's website includes, verbatim, all of the language on Hamzavi's Fair Lender Audits company website. It contains no identifying information about the company, but directs visitors to fill out an intake form for their loan modification. According to public records, Loss Mitigation Servicing isn't a registered corporation in California, and no such company is licensed by the Bureau of Real Estate, nor is registered or bonded with the DOJ to offer foreclosure consulting services.

Like mushrooms, they just keep popping up.

Since taking office in January 2011, Attorney General Kamala Harris has met repeatedly with homeowners facing foreclosure — and her office even features photos of these meetings on its website. But it's unclear what steps she has taken to follow through on the substantiation letters sent in 2009 by her predecessor. Representatives of Harris' office did not respond to multiple phone calls and emails requesting comment for this report.

It's also unclear why Harris' Office has filed so few lawsuits against foreclosure consultants in recent years. Despite establishing the Mortgage Fraud Strike Force and setting a high-profile agenda to crack down on foreclosure consultant fraud, Harris has filed fewer lawsuits than the attorneys general of smaller states with fewer victims and far fewer operations based in their jurisdictions. Harris has also filed fewer lawsuits against foreclosure consultants than many county district attorneys offices, despite the fact that there have been many large, sophisticated scam operations whose fraudulent crimes have crossed jurisdictional boundaries — cases that were ripe for the state's top prosecutor.

The Mortgage Fraud Strike Force within the DOJ has managed to file only ten lawsuits against foreclosure consultant scams since it was established three years ago, despite its seeming wealth of resources compared to county district attorneys' offices. When Harris launched the Mortgage Fraud Strike Force, Michael Troncoso, a senior attorney in the DOJ, told the Bay Citizen news organization that it "will bring overwhelming focus and priority to [mortgage fraud] cases."

The DOJ's Mortgage Fraud Strike Force's employee roster, obtained via the California Public Records Act, currently lists 8 investigators and 18 attorneys among its total of 28 staff members. Attorneys on the DOJ's Mortgage Fraud Strike Force actually outnumber the combined attorneys in California's four largest district attorneys' offices who focus on real estate fraud: Los Angeles, San Diego, Orange, and Riverside counties.

The ten lawsuits filed against foreclosure consultants by Harris' strike force targeted foreclosure consultants operating in six counties. The largest amount of restitution a foreclosure consultant was ordered to pay was $475,000 by Joana Sosa, a Los Angeles grifter who extracted $950 up-front fees from numerous homeowners for whom she promised to obtain loan modifications. That was followed by Rudy Calderon, a Fresno area scam artist who defrauded multiple homeowners with a similar scam while even convincing a few to deed their property over to him. Calderon was ordered to pay $300,000 and was sentenced to four years and eight months in prison.

Some of the cases for which Harris's office has claimed credit, however, were actually spearheaded by other law enforcement agencies. For example, in response to a public records request, the AG's office listed defendant Alan David Tikal as being among the cases brought by the Mortgage Fraud Strike Force. Tikal, who called himself a "private, registered banker," ran a multi-state foreclosure rescue scam through an entity called the "Kicking Ass and Taking Names," KATN Trust, according to court documents. Tikal victimized more than 1,000 homeowners, mostly in California, stealing $3.1 million.

When Tikal was arrested in 2012, Harris said, "I am thankful for the fine work of the California Mortgage Fraud Strike Force and of our US Department of Justice colleagues in cracking this case." But Harris's office did not lead the investigation against Tikal and his associates; rather, the probe was led by the Special Inspector General for the federal government's Troubled Asset Relief Program and the US Attorney General, and they filed their case in federal court. The California DOJ's involvement was minimal.

Moreover, the biggest case of foreclosure rescue fraud investigated and prosecuted by the California Attorney General's office predates Harris' administration. Brown initiated an investigation of nine Los Angeles men who were running a loan modification scam out of "a Southern California boiler room, tricked out in high-roller style with a roulette wheel and other casino equipment," according to a press release from May 2010. Working through companies called Mason Capital Group, LLC and Gretchen Fox and Associates, the men stole approximately $2.3 million from hundreds of victims in a sophisticated telemarketing operation. The investigation, arrests, and lawsuit filed by the AG's office predated Harris' Mortgage Fraud Strike Force.

Yet despite the lack of prosecutions by Harris' team of eighteen lawyers and eight investigators, complaints against foreclosure consultants continue to pour into her office. The Attorney General's office received 85 complaints alleging foreclosure rescue scams in September 2013, 92 more complaints in October, and 58 in November, records show. In January, Californians reported another 67 complaints about foreclosure rescue scams to the Attorney General's Office.


In fact, the volume and complexity of California's foreclosure rescue scams have become an immense and persistent problem for other states as well. And attorneys general in those states have been far more aggressive in prosecuting foreclosure scammers than Harris and her strike force — including targeting fraudsters in her jurisdiction.

"Between 2010 and 2013, we have filed 172 foreclosure consultant cases in state or federal court," said Jaime Barb, a spokesperson for the Indiana Attorney General's Office. "The vast majority of foreclosure rescue scams are located outside of Indiana," added Barb. California is a "very common" base of operation, he said.

One of the 34 lawsuits filed in 2010 by the Indiana Attorney General's Office against foreclosure consultants was aimed at a California scam operation called Hope4Homes. According to the lawsuit, Hope4Homes operated illegally in Indiana, reaching out to distressed homeowners via the internet. Mahan Abassi, a Beverly Hills lawyer who ran Hope4Homes, was found guilty of violating Indiana consumer protection laws that are very similar to those that are supposed to protect California homeowners from foreclosure rescue scams.

In Illinois, Attorney General Lisa Madigan had already filed fifty lawsuits against foreclosure consultants by December of 2011 — making her office perhaps the most aggressive of any of the fifty states' attorneys general. "In terms of states that have the most activity targeting Illinois homeowners, we have seen the bulk of complaints from California operations and then Florida," said Illinois AG spokesperson Natalie Bauer. Among the enforcement actions taken by Madigan's office were cases against California-based companies like People's First Financial of San Diego, which was accused of ripping off Illinois residents of thousands of dollars each. Yet People's First Financial still has a website (registered through a private domain registration company to shield the owner's identity), and the company still claims to be in business in San Diego.

"I think that [Kamala Harris] has totally failed the homeowners," said Carlos Marroquin, a housing rights activist in Los Angeles who lost his home to foreclosure several years ago. "Somebody changed the title to my house and defrauded me. I took my complaint to Brown and Harris, but they did nothing." Marroquin called Harris' Mortgage Fraud Strike Force a "public relations" effort.

Since losing his home, Marroquin has organized protests against what he believes is the widespread unwillingness of law enforcement officials to protect homeowners. "Harris needs to open her eyes. These scammers have popped up like popcorn. They're operating freely," he said. "Everybody I talk to, all the homeowners struggling to avoid foreclosure, they have been scammed by two or three people."

Ralph Kanz, an Oakland resident who was defrauded when a broker altered his loan documents, also thinks Harris has done a poor job cracking down on mortgage scams. But he said the problem goes much deeper, and that nearly every law enforcement office is failing the public. "With all these prosecutors, there's the PR part of what they do, and then there's the meat of what they actually do," Kanz said. "They were saying they were helping homeowners, but they were really focused on saving the banks."

Which brings us back to the giant fraud that spawned ten thousand smaller frauds. Grassroots activists like Kanz and Marroquin believe that it's ultimately the unwillingness of prosecutors to truly crack down on banks and the other powerful mortgage industry players that created the conditions for thousands of smaller scammers to operate in California. The proliferation of foreclosure rescue scams is a direct outcome of the fact that the banks were bailed out, and then never held accountable for their original crimes of predatory lending, nor for their ongoing violation of state and federal laws meant to protect borrowers. For example, by routinely violating laws that require banks to provide borrowers with a single point of contact when seeking a loan modification, a relatively small number of mortgage servicers like Bank of America and Ocwen are fomenting frustration and confusion among distressed homeowners. And when law enforcement officials fail to prosecute financial institutions for failing to comply with the law, desperate homeowners often have nowhere to go for help, and so become easy prey for foreclosure rip-off artists.

A recent California Senate Banking and Financial Institutions Committee meeting included testimony from experts who reiterated that the banks that signed the National Mortgage Settlement, along with most of the other mortgage loan servicers in California, continue to break laws that were implemented to protect homeowners seeking loan modifications. Just last week, as the Express reported on its website, the California Reinvestment Coalition released a report showing that the nation's largest banks and mortgage servicing companies continue to violate standards and laws mandated by the National Mortgage Settlement, the California Homeowner Bill of Rights, and new federal mortgage servicing rules.

"Part of the problem is that there's no enforcement of the homeowners bill of rights," said Marroquin. "When you allow the banks to continue to do what they want, people feel helpless, they look to other places for assistance, but then fall into these foreclosure rescue scams."

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