Bankrupt, facing a pile of medical bills from two surgeries andstruggling with an adjustable rate mortgage, Hazlehurst’s ShermaineJohnson is the prime target for a new series of possible loanmodification scams being prosecuted by several attorneys generalnationwide, and she was one phone call away from walking into thetrap herself.

Johnson was on the verge of writing a check to 21st CenturyLegal Services, a California-based loan modification company thatpromises homeowners a renegotiated, low-sum, fixed rate mortgagepayment for a $1,500 processing fee.

She said she almost agreed and sent off her money because thecompany representative contacted her on her cell phone, knew herand her husband’s name, Social Security numbers and mortgageaccount information. She believed the company had acquired theinformation from her lender.

“He had my account number, he told me everything – that’s why Ithought it was legit,” Johnson said. “I called my mortgagecompany… and let them know 21st Century had all my information,every bit of it. She said someone is leaking out the information. Iwas fixing to mess up.”

Johnson was saved from taking the bait in what authorities allover the country are calling a scam by Brookhaven notary publicMartha Arrington, who called in the middle of the night to raisethe red flag and cancel the loan modification. Arrington said shetoo was contacted by 21st Century and asked to assist Johnson withher paperwork, but she had already received the warning from theNational Notary Association.

Arrington said 21st Century instructed her not to leaveJohnson’s house without the $1,513.86 check and advised her notleave copies of the paperwork. She said notaries across the nationare being contacted to help in the alleged scam, but most easilyspot such fishy details – especially considering none of the loanmodification paperwork actually requires notarization.

“They’re telling you they are going to take this paperwork toanother lender to get you cheaper interest rates and lower monthlypayments, but because you’re paying this fee doesn’t guarantee youare going to get a loan modification,” Arrington said. “Peopledon’t see that.”

Scared, broke homeowners looking for help may not notice thefine print, but authorities do.

The list of top cops filing suit against 21st Century LegalServices is impressive, and includes the attorneys general fromIndiana and Ohio, with the Florida Attorney General investigatingthe company and the Wisconsin AG considering a suit. Similarly, theArkansas Securities Department has issued a cease and desist orderagainst the company.

Informal complaints about 21st Century Legal Services may befound pasted all over the Internet, including a listing atwww.ripoffreport.com.

Mike Bates, a mortgage specialist listed in 21st Century’spaperwork, said the company has changed ownership and would soon beknown as Fidelity National Legal Services. Several members of NNAposted on their group forum that the company often changesnames.

Company supervisor Garrett Reed did not immediately return aphone call seeking comment.

Specific action against the company has not been taken inMississippi, but it could be next in a line of similar loanmodification companies coming under fire from the MississippiDepartment of Banking and Consumer Finance.

Commissioner of Banking John Allison said his departmentconsiders 21st Century and other loan modification companies to bepseudo mortgage companies and under the scrutiny of the statemortgage law. If confronted, he said such companies usually claimexemption from the mortgage law and claim the company is actually alegal firm, but then the group would have to have a nexus topractice law in Mississippi.

“They try to get around it that way, but we distinctly feelthey’re not following the law,” Allison said. “We can get theattorney general involved or the Mississippi Bar Association.”

Allison said his department is gathering information on 21stCentury.

In the meantime, he said homeowners should stay away fromlending or loan modification plans involving up-front fees.

He said the only up-front fee allowed under the state’s lendinglaw would be for appraisals, title searches or other “nominal”fees. Anyone approached by a company with such a plan shouldrequest proof the company is authorized under the MississippiDepartment of Banking and Consumer Finance, he said.

“People asking for up-front fees is certainly a no-no,” Allisonsaid. “If someone is having trouble with a loan, they need to talkwith their bank, not go through a third party. These things are toogood to be true.”