A California man has pleaded guilty to wire fraud in connection with a foreclosure rescue scam that took at least $5 million from distressed homeowners.
Sergio Lorenzo Rodriguez admitted to one count of wire fraud, according to the Department of Justice. This offense carries a maximum sentence of 20 years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense.
Rodriguez and an unnamed person owned and/or managed a series of mortgage modification companies, through which they used deceptive marketing practices to defraud homeowners facing foreclosure. They executed this scheme between mid-2015 and August 2020.
Through tactics such as falsely claiming homeowners had been pre-approved by their lender for a modification and promises of no-risk money-back guarantees, the two collected thousands of dollars in prohibited advance fees from each victim.
“As he admitted today, for years, Sergio Lorenzo Rodriguez took advantage of desperate homeowners who were facing foreclosure and eviction to collect from them, in the aggregate, millions of dollars in advance fees based on promises that Rodriguez knew he could not, or would not, keep,” said U.S. Attorney Damian Williams.
“He exploited the financial vulnerability of his victims and is now being held accountable for his crime.”
Mortgage fraud risk has risen throughout the pandemic due to a large drop in loan volumes, combined with a subsequent decline in lower-risk refinances. CoreLogic reported a 37.2% year-over-year (YOY) increase in fraud risk at the end of the second quarter of 2021.
Homeowners susceptible to foreclosure-related fraud may increase as foreclosure rates tick back up to pre-pandemic levels. Overall foreclosure rates were up 11% month-over-month in February and 129% YOY.