EVERETT — Under a new government program, your mortgage rate could be slashed to as low as 2%.
If you’re one of the lucky few who qualify, you could even get your principal balance reduced by $140,000.
Sound too good to be true?
That’s because it was.
Yet an Everett call center manager used the false advertising in thousands upon thousands of mailers to scam $2.5 million out of roughly 1,000 homeowners, many of whom were already in financial trouble and facing foreclosure, according to charges filed in federal court.
Edwin Josue “Josh” Herrera Rosales, 34, who goes by Josh Herrera, pleaded guilty Tuesday to conspiracy to commit wire fraud in U.S. District Court in Seattle.
Plea paperwork notes Herrera had at least three co-conspirators who were already running “numerous call centers in Southern California” with an almost identical scam model when Herrera launched a call center of his own, employing five operators in Everett.
Herrera initially believed it would be a legitimate business, according to his plea.
“Beginning shortly after the Everett Call Center opened, however, Herrera came to understand that the business employed fraudulent and deceptive tactics,” court records show.
On the phone, Herrera’s employees used fake names. Herrera himself went by Mark Chambers or Gabriel Ortega, according to the charges. Sound Solutions Group, later renamed Community Assistance Center, listed an address in Salt Lake City, never revealing that the company used a service that would forward all of its mail from Utah, federal prosecutors alleged.
In reality, the company was based in Everett from early 2016 to early 2018. Herrera also managed Sienna Support Network, a second center in California, for about a year starting in March 2017.
Sound Solutions targeted residents at risk of losing their homes. Their advertised interest rates ranged from extremely unlikely to impossible, charges say.
One of the unnamed co-conspirators sent out 4,000 mailers per week containing “false and misleading statements suggesting homeowners had been ‘pre-approved’ for extremely favorable modifications to their mortgages,” according to the charges.
Herrera gave out scripts to the call center staff, telling them how to dupe people into believing underwriters and attorneys were reviewing their mortgages and the fine print. The script told the phone operator to say customers would only be accepted for a new rate if they were absolutely sure the rate could be obtained.
Callers were put on hold for a set amount of time, to pretend that “the underwriting department” was reviewing their file.
Operators would put the caller on hold for three to five minutes.
Then the employee would congratulate the caller on their brand new interest rate, somewhere between 2% and 4%. It was a made up range based on the scripts Herrera had given out.
Following the script, the operator would put the caller on hold again for eight to 10 minutes.
“Good news!” the script told workers to say, because the “legal department has decided to sign off on your case.”
But, oh, right, there was one last thing to take care of. To get the rate, homeowners needed to sign a contract and shell out $3,000 in fees, in three payments.
If the homeowner balked?
“Put the fear of God in them,” Herrera instructed the call-takers. The script told workers to use “hot buttons” to “persuade the homeowner to agree to pay the fee.”
Setting aside the fraud, it’s illegal to charge any up-front fee for mortgage modification services.
Once homeowners paid a first installment, their personal files were referred to a loan processing group in California. Rarely, if ever, were mortgage rates decreased as advertised, according to court records. Sometimes rates went down slightly. But in some cases, prosecutors wrote, the customer’s new rate was actually higher.
Herrera struck a deal with the other scammers to keep about 40% of the profits, according to the court records. He kept an estimated $360,000 for himself.
Investigators dug up records showing Herrera transferred thousands of dollars at a time from company accounts into his personal account at Bank of America.
Herrera’s hearing Tuesday was held via the video call service Zoom. U.S. District Court Judge Paula McCandlis allowed the defendant to remain out of custody while he awaits sentencing May 4.
Herrera faces up to five years in prison. The amount of restitution he must pay back will be determined by the court.
Caleb Hutton: 425-339-3454; email@example.com. Twitter: @snocaleb.