Foreclosure Advice Firm Targeted in Minn. Lawsuit

Minnesota's attorney general has filed suit to stop a mortgage foreclosure consulting company from making allegedly false representations to homeowners in the state.

"We do not tolerate mortgage foreclosure consultants taking advantage of struggling homeowners who are already between a rock and a hard place in the worsening mortgage meltdown," Attorney General Lori Swanson said in a statement.

Although the suit does not specifically target subprime lending, the foreclosure issues involved are relevant to the current mortgage banking crisis.

According to the state court suit, defendant Lewis Loss Mitigation Inc. does business as the Stop Foreclosure Center and Lewis & Associates Consulting, which offer foreclosure help through nationwide Web sites.

The sites say the companies can stop mortgage foreclosures and help people stay in their homes.

Lewis represents that it has experienced employees who can negotiate with mortgage lenders to prevent foreclosure, the complaint says.

The Alabama-based company collects an up-front fee of almost $600 from clients before offering any services, which is illegal under Minnesota laws on foreclosure consulting, according to the suit.

Lewis also falsely claims that it will refund all payments if the company cannot assist the homeowner, the complaint says.

The suit also alleges that Lewis provides misleading contracts to clients who sign up for its services.

The contracts do not tell consumers that they have the right under Minnesota law to cancel the agreement within three days, the complaint says.

Further, in violation of state law, the contracts allegedly do not disclose that it is illegal to collect advance fees for foreclosure advice services.

The lawsuit alleges Lewis' business practices violate Minnesota's foreclosure consulting and consumer-fraud laws.

The attorney general is seeking an order directing Lewis to stop engaging in the allegedly misleading and fraudulent practices in Minnesota.

She also seeks unspecified damages and penalties for the alleged statutory violations, as well as attorney fees and costs.

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