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Koster to tell Congress of huge increases in mortgage-rescue and debt settlement fraud

This article first appeared in the St. Louis Beacon, July 13, 2009 - Missouri Attorney General Chris Koster says he'll tell members of Congress Tuesday that his office is "seeing sharp increases in consumer complaints related to both mortgage-rescue and debt-settlement businesses."

The complaints against mortgage-rescue companies, his office says, are up more than 200 percent.

Koster is slated to be the sole state attorney general testifying Tuesday before the U.S. Senate Commerce Committee about mortgage-rescue and debt-settlement fraud committed while ;the public has sought help during tough economic times.

According his office:

In 2007 and 2008 combined, the Attorney General’s office received a total of 25 complaints about mortgage-rescue companies. In just the first half of the year in 2009, his office has already had 84 complaints. His office already has received 105 complaints against debt-settlement companies so far in 2009, compared to 78 complaints in all of 2007 and 109 in 2008.

Koster's aides say his testimony will explain that “foreclosure consultants and debt settlement firms claim to consumers they can cut principal in half, reduce monthly payments by hundreds of dollars, or eliminate debt altogether. The fact is that these companies are offering a service that the consumer could do for himself, or that non-profit credit counselors will perform for free or a modest fee.”

A key point: "Many of these companies require up-front fees from consumers, which is illegal in Missouri.  He will note that these fees can be hundreds or thousands of dollars, and can
leave consumers in substantially worse financial shape than before....

"He also will point out that these companies’ strategies typically rely on the consumer stopping all payments to and communications with creditors, which leads to long-term damage to the consumer’s credit rating and hundreds or even thousands of dollars in additional fees,'' Koster's staff says.

Since April 6, Koster says he has "filed lawsuits against seven companies offering mortgage refinancing, foreclosure relief or debt-settlement...with more than a dozen additional official investigations currently underway."

Koster said he plans to suggest to the senators that they "consider additional enforcement measures at the federal level to discourage businesses from attempting to use fraudulent tactics and advertising, and to give all states stronger powers in shutting down their scams."

Jo Mannies has been covering Missouri politics and government for almost four decades, much of that time as a reporter and columnist at the St. Louis Post-Dispatch. She was the first woman to cover St. Louis City Hall, was the newspaper’s second woman sportswriter in its history, and spent four years in the Post-Dispatch Washington Bureau. She joined the St. Louis Beacon in 2009. She has won several local, regional and national awards, and has covered every president since Jimmy Carter. She scared fellow first-graders in the late 1950s when she showed them how close Alaska was to Russia and met Richard M. Nixon when she was in high school. She graduated from Valparaiso University in northwest Indiana, and was the daughter of a high school basketball coach. She is married and has two grown children, both lawyers. She’s a history and movie buff, cultivates a massive flower garden, and bakes banana bread regularly for her colleagues.