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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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.

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