Florida company to pay partial refunds

OLYMPIA – A company that offered to rescue desperate Washington homeowners from foreclosure – and then allegedly did little or nothing – has agreed to refund tens of thousands of dollars to an estimated 200 customers across the state.

Foreclosure Assistance Solutions, based in Clearwater, Fla., did not acknowledge any wrongdoing in the settlement filed Monday in Spokane County Superior Court. But the now-defunct company agreed to repay $78,125 to Washington customers, plus $20,000 to the state attorney general’s office.

“Today’s settlement puts some money back into the pockets of those who bought into the company’s false promise of hope,” said Attorney General Rob McKenna.

Homeowners facing foreclosure paid $1,200 to $1,500 each to the company, which allegedly mailed out letters and postcards that mimicked official government notices and instructed people to call. The partial refunds under the settlement are expected to total $300 to $500 each.

A Spokane attorney for Foreclosure Assistance Solutions, Kathryn McKinley, couldn’t be reached for comment Monday.

Archived copies of the company’s Internet page show pictures of beaming families and “thanks for saving our home” testimonials.

“Everyone needs help from time to time,” the Web page said. “… Any foreclosure situation can be successfully resolved with the right help. … We know 47 different ways to save a home from foreclosure. One of them is right for you!”

The company said it would negotiate with banks to help stave off the loss of the home.

“It is our greatest pleasure to help hard-working people like you,” the Web site said.

The company also guaranteed consumers that it would find a solution to stop foreclosure, said Assistant Attorney General Jack Zurlini in Spokane.

But the “solution,” he said, could include virtually impossible things, like paying off the entire mortgage immediately. By the state’s estimate, more than 70 percent of the Washingtonians who hired the company lost their homes.

And in many cases, Zurlini said, the company doesn’t seem to have even contacted the bank to try to work out a deal for the struggling homeowner. Nonetheless, the company’s contract included a clause that barred homeowners from trying to contact their own mortgage lender.

“It was used to mask their lack of doing any work,” Zurlini said. Many clients also said the company ignored their follow-up calls, he said.

Homeowners behind on their payments should immediately call their lender and try to work out a deal, Zurlini said.

“Anything FAS could have done for the people, the people could have done for themselves,” he said. “Pick up the phone and talk to the lender. You’ll find that the lenders don’t want to foreclose, either. They’d rather have someone in the house paying than sell the property at a loss, particularly in this market.”

For customers who paid the $1,200 to $1,500 with a credit card, the contract also barred them from trying to dispute the charge with their credit card company.

Only a few of the homeowners who hired the company were in Spokane and Wenatchee, Zurlini said. Most were in Western Washington.

Washington’s settlement comes on the heels of a similar move in Texas, where Attorney General Greg Abbott last year labeled the company a “scam” and had a court freeze its assets.

The company deposited more than $13 million in Bank of America accounts between 2005 and 2006, Texas investigators say, and most of that money came from homeowners facing foreclosure. Last month, the company agreed to refund $475,000 to hundreds of Texas homeowners. The company also agreed to pay a $100,000 fine and $175,000 in attorneys’ fees in the Texas case.

In Washington, the clauses against contacting a lender or disputing the credit card charge were illegal in this case, Zurlini alleges, because the company was violating the state’s Consumer Protection Act.

Worried about “foreclosure rescuers” who do nothing to help a homeowner, Washington’s Legislature this spring passed a law aimed at a different kind of offer. House Bill 2791, which takes effect in June, is aimed at scam artists who get a person to sign his or her home over to the company – typically saying they can rent it and eventually buy it back – and then simply have the person evicted.

The new law gives the homeowner five days to reconsider such a deal and forces the “rescuer” to prove that the homeowner can actually make the payments necessary to stay in the home. If the person still loses the home, at least 82 percent of the equity must go to that original homeowner.

“It makes this type of activity unprofitable for the scammer,” said Zurlini.