05/22/2012 01:59 pm ET

Deo Buddhu Accused Of Mortgage Scam Promising False Federal Aid

A bunch of homeowners in one state are facing foreclosure and they say it's the fault of one man.

At least six homeowners are accusing Deowraj "Deo" Buddhu of Weathersfield, Connecticut of running a mortgage scam that’s threatened them with foreclosure, NBC Connecticut reports. Buddhu allegedly promised access to special federal aid to help customers’ lower their mortgage debt, then proceeded to collect an upfront fee while telling the customers to stop making mortgage payments, according to lawyer Manny Suarez. Buddhu allegedly collects thousands of dollars in each case and is believed to have scammed 200 homeowners.

Despite the accusations, at least one of Buddhu's so-called customers believes he's being helped.

"I am 100 percent sure that what Mr. Deo is doing is completely under the law and honorable," Luis Gonzalez of East Windsor told NBC Connecticut. He and his wife are currently facing foreclosure.

Buddhu’s strategy of promising federal aid is a popular one among scammers, especially following the $25 billion national mortgage settlement earlier this year. Attorney General Eric Schneiderman warned in April that the settlement could lead to an increase in mortgage scams, while California officials are leading a campaign to raise awareness of potential schemers, ABC News reports.

The efforts appear to be falling short, though. Reports of mortgage scams have increased 60 percent, this year, the nonprofit Homeownership Preservation Foundation said in April.

Many of these scams have been known to use tactics similar to what the homeowners claim they faced with Buddhu. One Utah man allegedly charged about 200 homeowners up to $3,000 to modify their loans, then used the money to pay for plastic surgery for his wife.

Lawyers have been known to scam troubled homeowners too, often charging a fee to help modify mortgage loans then never following through. In some cases, lawyers led clients to believe they were involved in large mortgage settlements, and then the clients found themselves in foreclosure after being told to stop making payments during the so-called proceedings. But such attorney scams aren’t exactly new. The California State Bar alone has investigated 1,186 loan modication cases in the state since 2009, Daily News Los Angeles reports.



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