With home prices declining, do homebuyers cancel escrows more frequently?

  • Yes, transactions are more frequently canceled. (69%, 20 Votes)
  • No, transactions are not canceled more frequently. (31%, 9 Votes)

Total Voters: 29

$6 million fraud scheme

Federal and state regulators have just unraveled a multi-million dollar real estate scam based in Los Angeles targeting vulnerable homeowners during the pandemic.

In September 2022, the California Department of Financial Protection and Innovation (DPFI) and the Federal Trade Commission (FTC) issued a joint complaint against a massive mortgage assistance relief scam operation, according to a DFPI press release.

Roger Scott Dyer and Dominic Ahiga (a.k.a. Michael Dominic Grinnell) operated the scam as Chief Executive Officers, defrauding distressed homeowners nationwide out of a combined $6.3 million, according to the complaint filed with the U.S. District Court for the Central District of California.

Dyer and Ahiga conducted business through multiple trade names, including:

  • Green Equitable Solutions;
  • Academy Home Services;
  • South West Consulting Enterprises;
  • Home Matters USA;
  • Apex Consulting & Associates;
  • Golden Home Services America;
  • Infocom Entertainment LTD, Inc.;
  • Amstar Service Group;
  • Atlantic Pacific Service; and
  • Home Relief Service of America.

As of September 14, 2022, a federal court temporarily shut down the operation and froze Dyer and Ahiga’s assets. The court also appointed a receiver to assist with taking over the business and administering potential relief for victims.

The mortgage relief scam

From at least June 2018 through September 2022, Dyer and Ahiga targeted distressed homeowners through telemarketing calls, text messages and online advertisements. These featured deceptive claims guaranteeing substantially lower monthly mortgage payments in as little as three months. To reassure homeowners, they falsely claimed affiliation with government mortgage relief programs, including federal COVID-19 relief programs, according to the DFPI and FTC’s allegations.

Homeowners duped by the operation never received a modification. While the operation performed little to no actual services, its damage stretches on in the form of:

  • money losses in the thousands for some;
  • damaged credit; and
  • foreclosure sales.

Real estate scammers get creative in their attempts to disorient consumers. The complaint claims the scammers asked consumers to send signed cease and desist letters to their mortgage servicer, preventing them from receiving late payment notices. This lack of communication would lead to missed payments, default and foreclosure.

Dyer and Ahiga violated numerous laws and regulations by conducting their multi-state operation, including the FTC Act, the Mortgage Assistance Relief Services (MARS) Rule, the Telemarketing Sales Rule, the COVID-19 Consumer Protection Act and the California Consumer Financial Protection Law, according to the complaint’s allegations.

Related article:

DFPI Bulletin Digest: October 2022

The MARS rule

Mortgage loan originators are well-acquainted with Regulation O. This enacts the MARS rule, which is designed to protect consumers from deceptive practices in mortgage relief. Originally, the MARS rule and Regulation O went into effect in 2010 in response to widespread abuse of consumers in mortgage distress. While the FTC first had rulemaking authority over the MARS rule, that authority shifted to the Consumer Financial Protection Bureau (CFPB) in July 2011.

For clarity, a mortgage assistance relief service is any arrangement, offering or program provided to consumers claiming to aid them with mortgage-related issues. [12 Code of Federal Regulations §1015.2]

Also, any person or party who provides, extends an offer to provide or arranges for others to provide any mortgage assistance relief service qualifies as a mortgage assistance relief provider. [12 CFR §1015.2]

Related Video: Mortgage Concepts: What is the MARS Rule?

Click here for more information on the MARS rule.

Dyer and Ahiga face violation of the MARS rule against mortgage assistance relief providers requesting or receiving payment of any fee before the consumer has executed a written agreement between themselves and their mortgage holder. [12 CFR §1015.5(a)]

The MARS rule also prohibits mortgage assistance relief providers from representing to consumers that they cannot communicate with their mortgage holder, another violation held in the complaint. [12 CFR §1015.3(a)]

Dyer and Ahiga also stand accused of violating the MARS rule by misrepresenting to consumers material aspects of their mortgage assistance relief services. The rule covers claims concerning:

  • the likelihood of negotiating, obtaining or arranging any represented service or result;
  • the amount of time it will take the mortgage assistance relief service provider to accomplish any represented services or results;
  • affiliation or association with the U.S. government or any federal, state or local government agency; and
  • the consumer’s obligation to make scheduled periodic payments according to the consumer’s mortgage. [12 CFR §1015.3(b)]

In addition, Dyer and Ahiga apparently failed to make required disclosures clearly and prominently according to the MARS rule. [12 CFR §1015.4]

Related Video: Mortgage Concepts: Deceptive Practices Banned Under Regulation O

Click here for more information on forbidden deceptive practices.

Fraud follows closely on the heels of economic stress. Receive updates on this developing fraud case — and California’s real estate market at large — by subscribing to our weekly Quilix newsletter.