Loan Mod Fraud

Owners and the managing attorney of a California-based law firm were arrested Thursday for loan modification fraud, California Attorney General Kamala D. Harris announced in a release. Flahive Law Corporation charged thousands of dollars in up-front modification fees for services that were never performed for homeowners, many of whom ended up losing their homes, the release stated.

Owners of the firm, and the firm’s managing attorney, took fees without performing modification services of up to $2,500 from homeowners in Placer, Sacramento, Butte, and Yuba counties. In California, it is illegal to collect money for foreclosure-related services before performing them. The firm advertised their services on flyers, radio and televised infomercials.

The defendants claimed that through a mortgage violation audit, they could find bank violations in loan documents and use that as leverage to get a loan modified. The investigation revealed that in some cases, the client’s lender had no record of contact with the law firm so basically they had performed no work on the file they had been paid 100% of the fee up front.



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