1,000 homeowners duped in mortgage reduction scam headed by Washington man, feds say

A Washington call center manager falsely promised hundreds of homeowners he could reduce their mortgage debts if they paid him a fee of $3,000, officials said.

Josh Herrera, 34, pleaded guilty Tuesday to defrauding at least 1,000 homeowners who were facing foreclosures, U.S. Attorney Brian Moran of the Western District of Washington said in a news release.

Officials said Herrera and co-conspirators in California sent mailers to “distressed homeowners” across the country that promised that Herrera’s organization could lower monthly mortgage payments.

The operation sent about 4,000 mailers weekly, feds say, and urged the homeowners to call the Everett call center.

“The mailers stated that the homeowner had been ‘pre-approved’ for a new government program, under which Herrera’s organization could negotiate a mortgage modification,” the U.S. Attorney’s Office said in the news release. “For example, one mailer said that Herrera’s organization could reduce a borrower’s loan balance by over $140,000 and could reduce the interest rate to 2%.”

When homeowners connected with the call center, officials said, Herrera ordered operators to read a script that made it seem like “each caller’s mortgage was being reviewed.” The call center had no legal staff or an underwriting staff, and homeowners didn’t see a change in their mortgages, according to the U.S. Attorney’s office.

The operators would then put the caller on hold to make it seem like a review was happening. Then they would tell the homeowner they qualified for the program pending a $3,000 fee, according to the Attorney’s Office.

“Once the contracts were signed, the call center submitted the homeowner’s paperwork to a California-based loan processing group, which made some minimal efforts to restructure the debt,” the Attorney’s Office said. “While a limited number of customers obtained a lower monthly payment, the vast majority had no change or, in some cases, a higher monthly payment.”

At least 1,000 customers paid more than $2.5 million to the organizations Herrera ran between March 2016 and May 2018. Herrera personally kept about $360,000, officials said.

“Conspiracy to commit wire fraud is punishable by up to five years in prison,” the attorney’s office said. “The case is being investigated by the FBI.”

This story was originally published January 27, 2021 at 8:12 AM.