Principal Reduction Scam Results in Conviction

Principal Reduction Scam Results in Conviction

On September 15, 2014 Alan David Tikal was convicted on 11 counts of mail fraud and one count of money laundering in a mortgage fraud scheme. Tikal’s business, names KATN, targeted homeowners that were having difficulty paying their mortgage. He promised a principal reduction of up to 75% of the mortgage by promising to buy the mortgage from the  lender and then forgive the balance. This scheme has been discussed plenty around the county with Arizona convicting a group doing essentially the same thing. If it sounds too good to be true, it probably is.

In this case, not one homeowner ever saw a reduction. The program that the fraudster was accused of exploiting was the TARP program (Troubled Asset Relief Program). These homeowners were talked into paying Tikal the mortgage payments instead of their lender and many of them lost their homes to foreclosure because of it.  Homeowners paid $5,800,000 in fees and monthly payments  with $2,500,000 going to Tikal. Many of these homeowners thought their loan would be modified. More information on the case can be found here.

Principal Reduction is rare. Any law firm or modification company that promises a result is probably lying. Loan Modifications are hard enough much less the idea of getting a principal reduction to boot. They are possible, but no law firm or company should promise one.

If you are facing a point where you can no longer afford your mortgage or it no longer makes sense to keep paying, you need answers to critical questions. California and Arizona have unique deficiency, foreclosure and tax laws that you need to understand before making a decision on your mortgage. Remember, staying in your home is a decision. Reach out to us and schedule a no cost consult today.

 

About Kevin Hardin

Kevin W. Hardin is a 22 year veteran of the Mortgage and Real Estate industries. He holds a Juris Doctor (JD) degree from Concord Law School and a CMB (Certified Mortgage Banker) from the Mortgage Bankers Association. He is a Senior Loan Officer at HomeStreet Bank. He works with Borrowers, Attorneys, Title Companies, Real Estate Agents and Mortgage Companies on mortgage law issues.

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