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Attorney General's News Release

July 13, 2009

Attorney General Koster to testify before US Senate

--Attorney General to highlight foreclosure-rescue, debt-settlement scams in Missouri--

Jefferson City -- Attorney General Chris Koster will testify before the U.S. Senate Commerce Committee Tuesday, July 14, on the increase in mortgage-rescue and debt-settlement fraud Missouri is experiencing during the downward economic times.

Koster will tell committee members that his office is seeing sharp increases in consumer complaints related to both mortgage-rescue and debt-settlement businesses. In 2007 and 2008 combined, the Attorney General's office received a total of 25 complaints about mortgage-rescue companies. In just the first half of the year in 2009, his office has already had 84 complaints. His office already has received 105 complaints against debt-settlement companies so far in 2009, compared to 78 complaints in all of 2007 and 109 in 2008.

"Foreclosure Consultants and Debt Settlement Firms claim to consumers they can cut principal in half, reduce monthly payments by hundreds of dollars, or eliminate debt altogether," Koster will tell the committee. "The fact is that these companies are offering a service that the consumer could do for himself, or that non-profit credit counselors will perform for free or a modest fee."

Koster will highlight that many of these companies require up-front fees from consumers, which is illegal in Missouri. He will note that these fees can be hundreds or thousands of dollars, and can leave consumers in substantially worse financial shape than before. He also will point out that these companies' strategies typically rely on the consumer stopping all payments to and communications with creditors, which leads to long-term damage to the consumer's credit rating and hundreds or even thousands of dollars in additional fees.

Koster has made a "zero tolerance" commitment to fighting businesses that defraud consumers seeking help with foreclosures or debt. The Attorney General has filed lawsuits against seven companies offering mortgage refinancing, foreclosure relief or debt-settlement since April 6, with more than a dozen additional official investigations currently underway.

During the hearing, Koster will encourage committee members to consider additional enforcement measures at the federal level to discourage businesses from attempting to use fraudulent tactics and advertising, and to give all states stronger powers in shutting down their scams.

Koster is the only Attorney General testifying at the hearing.

 



 
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