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MORTGAGE SCAM: Thieves Prey on Iowans

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Warren County -- If it`s true that a man`s home is his castle, then Mike Murphy is dangerously close to losing his kingdom.  Murphy said, "I had to pay for my mother's funeral because she had no life insurance.  I had to take money out of my 401k for that, plus money out of my own pocket."

Four years ago, Murphy and his wife bought a home with a pond on a hill in Warren County.  Today, they are so far behind on their mortgage that the next step will be foreclosure.  He explained, "(We) can't buy food and can't pay our other bills when it all goes to a house payment."

Murphy thought he had a solution.  He saw a commercial for the Burke Law Center.  He called them, and according to his complaint with the State of Iowa, Burke promised to drop his mortgage payments down to $750 per month at 3% interest.  They told him not to make payments to his lender, Citi Mortgage, and not to have contact with Citi.  Thinking that Burke was helping him to avoid foreclosure, Murphy paid $2,066.66 up front but nothing happened.  “Burke changed their address on me once.  They moved from one place to another city,” said Murphy.  " I'd never been through this before, so I didn't know what I was up against, either."

Bill Brauch knows it all too well.  Brauch is the director of the Consumer Protection Division of the Iowa Attorney General’s Office.  He said that The Mortgage Rescue Scam, as it’s known nationwide, is one of the most heartbreaking pitfalls for people who are at threat of losing their homes."

That's why the Attorney General's office got the Iowa legislature to pass a law in 2008.  It is now illegal for a company to charge money up front for the promise that they will settle a mortgage dispute.  Brauch explained, "You cannot ask for any money or collect any money until you have completed all of the service.  (In other words), you’ve helped the person.”

Murphy filed a complaint with Brauch’s office.  A state investigator took the case.  A few weeks later, the AG’s Office received a letter from Burke’s attorney which stated, in part, “Burke Law Center decided to cease offering loan modification services anywhere in the U.S.  You can therefore be absolutely certain that there will be no further loan modification solicitations of Iowa residents by Burke Law Center.”  Murphy also received a refund check for $2,066.

Brauch said, "These companies want to try to fly under the radar, so to speak, and not be subject to an enforcement action, and so in some places they will pay money back.  That doesn't mean they're out of the woods.  Because what they're doing is illegal and we are going to pursue them, but our job one is get money back for people and then take it from there."

Iowans can receive free legal mortgage rescue assistance and loan modification services from the Iowa Mortgage Help Hotline.  Click here or call (877) 622-4866.