18 Say Mortgage Scam Targeted Blacks

     ATLANTA (CN) – A loan modification ring targeted black homeowners in a scam, 18 alleged victims claim in court.
     Lead plaintiff George Sampson sued All American Home Assistance Services, alleged ringleader Derek Harris and 11 other people employed by or associated with him, in Federal Court.
     Sampson claims that Harris, of Ellenwood, Ga., took advantage of the housing market crash in Georgia and ran a scam through (nonparty) National African American Relationships Institute (NAARI), targeting African-American homeowners who were having trouble keeping up with their mortgage payments.
     He claims that Harris and his affiliates charged homeowners thousands of dollars in fees, promising to help them modify their loans, reduce their monthly payments, balances and property taxes, and restore their credit.
     The defendants took the money, but failed to provide most of the promised services, according to the 207-page lawsuit.
     After NAARI filed for bankruptcy and was dissolved in 2012, Harris created All American Home Assistance Services, an Atlanta-based nonprofit which continued NAARI’s foreclosure rescue scam, according to the complaint.
     “In 2006, the housing bubble burst; residential real estate prices in the United States plummeted and foreclosures increased,” the complaint states. “By 2008, the United States entered what many consider to be the worst economic downturn since the Great Depression of the 1930s. This downturn, termed the ‘Great Recession,’ has resulted in millions of Americans experiencing unemployment or underemployment. The housing crisis continues to burden many individuals and families. The constant struggle to make their mortgage payments, together with the need for daily necessities, has taken a devastating financial and emotional toll on millions of homeowners.
     “The foreclosure epidemic has hit Georgia especially hard. Georgia ranked among the top five states in terms of the number of home foreclosures in 2011 and 2012. Home values in metropolitan Atlanta fell approximately 31 percent from their mid-2007 peak through mid-2012. By mid-2012, Atlanta home values had fallen farther from their January 2000 levels than had home values in any of the 20 U.S. cities tracked in the S&P/Case-Shiller index, other than Detroit, Michigan.
     “As the foreclosure rate escalated to historic levels, the individual defendants operated a loan modification scam, as described herein. The scam was initially operated through National African American Relationships Institute, Inc. (‘NAARI’) and NAARI Housing Counseling Agency, Inc. (‘NAARI Housing’) (hereinafter referred to collectively as the ‘NAARI Entities’). After the NAARI entities declared bankruptcy in 2012, the scam operation continued through a new corporation – defendant All American Home Assistance Services, Inc. – which was incorporated in 2012 by defendant Derek Harris.
     “The individual defendants, operating through the NAARI entities, have targeted their scam operation on African American homeowners who were susceptible to foreclosure due to unemployment, underemployment, or other circumstances. The lure of assistance to modify their home loans seemed for plaintiffs (and, upon information and belief, many other homeowners) to be the lifeline needed to stave off financial ruin. However, in exchange for sizable up-front fees, defendants provided dubious (if any) services and caused further damage to plaintiffs and many other homeowners.
     “Loan modification scammers like defendants have been very successful in preying upon vulnerable homeowners. From March 2010 through Jan. 15, 2013, homeowners across the United States have submitted over 29,000 complaints against alleged scammers to the Loan Modification Scam Prevention Network’s Database maintained by the Lawyers’ Committee for Civil Rights Under Law. The average reported loss by homeowners to alleged scammers is over $3,000, with total reported losses of over $70 million. In Georgia alone, over 1,100 complaints have been submitted to the National Database. The total reported losses from Georgia homeowners are over $1.6 million.”
     Harris and his co-defendants falsely claimed that their services were provided in connection with federal agencies and banks, and that they had a 90 to 99 percent success rate in getting loans modified, according to the complaint.
     “The individual defendants also instructed many plaintiffs, and, upon information and belief, many other homeowners, to stop making their mortgage payments and not to communicate directly with their lenders regarding the status of their loans,” the complaint states. “As a result, the individual defendants caused many homeowners, including certain plaintiffs, to fall behind on their mortgages, subjecting them to risks of foreclosure, late fees, and damage to their credit.”
     The plaintiffs seek an injunction and compensatory and punitive damages for violations of the Fair Housing Act and the Credit Repair Organizations Act, false advertising, deceptive practices, fraud, negligent misrepresentation, breach of fiduciary duty, and unjust enrichment.
     Defendants include Lawrence Spear of Lithonia, Timothy Spear of Decatur, Asim Spear of Lithonia, Lynette Townes of Mableton, Taylor Yvet Bailey of Douglasville, Rick Davidson and Karen Johnson residences unknown, Saleemah Cannon of Tucker, Shaunta Moore of Covington, Tenephius “Tony” Williams of Lithonia, and Derrick Millin of Tucker, all in Georgia.
     The plaintiffs are represented by John Chandler with King & Spalding.

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