Mortgage Modification Scam Nets $3 Million

By Mike Colpitts

Four men have been charged in a mortgage modification scam in which they guaranteed modifications to thousands of homeowners busted through the federal Home Affordable Modification Program (HAMP) and allegedly collected illegal fees up front, amounting to more than $3-million. The four promised homeowners they would be able to stay in their homes.

A 20-count indictment was filed in U.S. District Court in Boston, charging Christopher S. Godfrey, 42, of Delray Beach, Fla.; Dennis Fischer, 40, of Highland Beach, Fla.; Vernell Burris Jr., 51, of Boynton Beach, Fla.; and Brian M. Kelly, 34, of Boca Raton, Fla., with conspiracy, wire fraud, mail fraud and misuse of a government seal Tuesday. The four were charged in Boston and transported to Florida, where they will stand trial.

The indictment alleges that from early in 2009 through May 2011, the men instructed employees to make a series of misrepresentations inducing financially troubled homeowners desperately looking for a federally funded home loan modification to pay their company a $400-$900 up-front fee in exchange for receiving a home loan modification.

Federal investigators say misrepresentations included claims that homeowners were guaranteed assistance to obtain a loan modification under the Home Affordable Modification Program (HAMP), which is part of TARP, the Obama administration’s mortgage assistance program and that the men’s company was a non-profit organization developed to help homeowners at risk of losing their homes to foreclosure.

HOPE logo

Misrepresentations made to homeowners also included that the four men’s company, HOPE was affiliated with the homeowner’s mortgage lender, and that the applicants had been approved for a loan modification. Investigators say employees of the company instructed the homeowners to stop making mortgage payments while they waited for their loan modification, and that their fees would be refunded if the modification was not successful.

In exchange for the fees paid by the homeowners up front, company employees allegedly sent customers in the course of the mortgage modification scam, including homeowners in Massachusetts, a do-it-yourself application package that was nearly the same as the application the U.S. government provides on its website for HAMP free of charge. HOPE instructed customers to fill out the application and submit it to their mortgage lender.

Customers who used the forms provided by the company to apply for loan modifications had no advantage in the loan modification application process, and most of their applications were denied, according to federal investigators.

Godfrey and Fischer were charged with one count of conspiracy, nine counts of wire fraud, nine counts of mail fraud and one count of misuse of a government seal. Burris and Kelly were charged with one count of conspiracy, nine counts of wire fraud and nine counts of mail fraud. Each count of conspiracy and misuse of a government seal carries a maximum penalty of five years in prison and a $250,000 fine.