3 arrested in alleged Southern California foreclosure scam

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The California attorney general’s office made another move in its crackdown on predatory lending and mortgage fraud schemes, saying it had arrested three people targeting Southern California homeowners facing foreclosure.

The group promised to renegotiate home loans but instead collected more than $700,000 in payments while the properties slipped into foreclosure, said Atty. Gen. Edmund G. Brown Jr.

The 39-count complaint includes charges of grand theft, money laundering and conspiracy charges.

Operating under the names First Gov and Foreclosure Prevention Services, the group mailed fliers to hundreds of homeowners offering to renegotiate mortgages, reduce monthly payments and transfer delinquent loan amounts to the renegotiated principle, according to the complaint dated Oct. 27.

They charged an up-front fee of $1,500 to $5,000 and told their victims to stop making mortgage payments and avoid communicating with lenders, according to Brown. Once victims started complaining that delinquency and foreclosure notices were still coming, First Gov would say that the loans had been renegotiated, according to the complaint. All that was required was a “good faith payment” to accounts with official-sounding names like “Reinstatement Department” or “Resolution Department.”

The companies could not immediately be reached for comment.

--Tiffany Hsu