Star Tribune Exclusive: Fines for illegal mortgage modification schemes don’t always end real estate careers.
A defunct company called Modify My Loan US LLC has not paid a penny of the record $1 million fine the state assessed last year for “scamming” 200 Minnesotans trying to save their homes from foreclosure.
Yet two of the Eden Prairie company’s former owners remain in the real estate business. The Minnesota Department of Commerce allowed them to keep their state-issued licenses.
In announcing a crackdown two years ago on “deceptive and dishonest” loan modification schemes, the Commerce Department singled out Modify My Loan US. Commerce Commissioner Mike Rothman said at the time that “companies and individuals like these think they can line their pockets with hard-earned money from consumers struggling to stay afloat. Not on my watch. We’re going to put a stop to it.”
Since 2010, the department has taken enforcement action against 36 individuals for violating mortgage modification laws. Ten of them held some kind of license with the department that enabled them to engage in real estate activity. Five of them still have those licenses.
Rep. Karen Clark, DFL-Minneapolis, and chairwoman of the Housing Finance and Policy Committee, was dismayed when informed of the Star Tribune’s findings.
“They shouldn’t be in the housing business, period,” she said. “I’m very concerned.”
The Commerce Department regulates the real estate industry by requiring licenses for various activities. A mortgage originator license is required for those who make real estate loans. A real estate broker’s license is needed for those running their own brokerage company. Agents working for other brokers need a real estate salesperson’s license.
The department said data practice laws prohibit it from talking about individual cases. Spokeswoman Anne O’Conner said that when the department issued penalties for loan modification there was “insufficient information to consider action against other licenses.” The department also said “if new facts are reported, the department will take any and all appropriate action, including reopening cases, investigation or taking action against a license.”
Last year, the department’s actions against Modify My Loan US included $15,000 fines to co-owners Maria Domek, Philip Domek and Mark Abdel, which were paid. Philip Domek was banned from the business for five years. His wife, Maria Domek, kept her mortgage origination license and is working for a mortgage company.
Abdel still has a license to sell real estate.
In separate interviews, Maria Domek and Abdel each said they weren’t involved in the day-to-day operations of Modify My Loan US at the time it got into trouble with the state.
They also noted that the Commerce Department would have revoked their licenses if they had done anything seriously wrong.
“If all of this truly took place, don’t you think we would be in jail?” Domek said.
One license without the other
As more homeowners struggled to make mortgage payments in recent years, many fell victim to companies that promised to renegotiate their loans but failed to deliver.
One of those companies was Asset Redemption Services, run by Carlos Maciel Montes. In late 2009, Samuel Lopez Gonzalez needed to sell his south Minneapolis home to avoid foreclosure. He paid $1,500 to Maciel Montes, who told him the new homeowners would be moving in soon, Lopez said in an interview. It was winter, he remembered, and he was given three days’ notice to move his wife, son and newborn daughter into a small apartment in Richfield.
The bills kept coming, however. He realized that the house had never been sold, and that he still owed the bank $30,000.