This is the fifth and final installment in an investigative series on the federal government's loan modification program.
On a cool evening in early November 2014, a Rolls Royce pulled up to Joseph Clarke’s modest home in Brooklyn, New York. Two men stepped out, approached the front door and bluntly announced they were the property’s new owners.
Clarke, 65, and his wife, Jacqueline Knights, 64, were stunned. Just hours earlier, Clarke had been at the offices of a local foreclosure “rescue” firm where a lawyer handed him papers to sign — documents Clarke, who had lost income due to an injury, said he believed would save his home of 15 years from being taken over by the bank.
Instead, the owners of the firm tricked him into authorizing a short sale of the property to a company they also ran, Clarke and Knights alleged in a lawsuit filed last year.
“I took what they said for granted,” Clarke said in an interview. He said he was told the lawyer was present to represent his interests, which he trusted.
“I assumed they knew what they were doing,” said Clarke, a retired driver for United Parcel Service.
Since the nation’s housing bubble burst nearly a decade ago, tens of thousands of distressed homeowners have alleged they were cheated by foreclosure-prevention and mortgage-reduction firms, in which attorneys often have played pivotal roles.
A Center for Public Integrity investigation links tens of millions of dollars in consumer losses to firms that participated in a government-backed mortgage-reduction program called loan modification. Over the years, many schemes have apparently targeted minorities, charging thousands of dollars for help in reducing their mortgage payments or for other services the firms never delivered.
The scams continue to this day.
In Brooklyn, alleged abuses of the federal loan-modification initiative have proven even more costly — in some cases taking peoples’ homes.
One group of foreclosure specialists in the New York area, where housing prices have soared, has been singled out for allegedly targeting minorities and immigrant homeowners with financial troubles and wresting away their property through short-sale scams or other fraudulent deed transfers.
“There’s kind of an insatiable thirst for property in New York City. It can’t be quenched,” said Jennifer Eisenberg, a staff attorney with South Brooklyn Legal Services, who represents Clarke and Knights in their court battle.
The couple is suing Homeowner Assistance Services of New York and related companies. Their case is one of more than a dozen civil suits filed by aggrieved homeowners since 2013 that allege wrongdoing by the foreclosure group or its associates.