Industry NewsMortgage

Loan mod ‘boiler room’ alleged

Lawsuit reveals details of California company's operations

A loan-modification company based in Southern California allegedly spent $70,000 a week on radio and television advertising for its sales force to generate 500 calls a day from desperate homeowners facing foreclosure around the country.Employees reportedly manned 44 office cubicles, working staggered shifts in "a well-appointed telephone boiler room" to generate about $6.2 million in revenue for Anaheim, Calif.-based H.E. Servicing Inc. and related businesses, but helping only about one in 10 of the nearly 3,000 borrowers who paid up-front fees of $1,000 or more.Those are among the preliminary findings in a report by a court-appointed receiver assigned to take over H.E. Servicing on July 9, after the company and dozens of others were shut down by state and federal officials this month.The U.S. Federal Trade Commission said its coordinated effort with 23 state attorneys general targeting mortgage-rescue scams resulted in lawsuits against 178 companies accused of deceptive mar...