Voters who look to Bob Frey's online campaign bio will see that he described his business career in this way:
I launched my business in 1981, Frey Manufacturing, a leader in manufacturing transportation equipment, and electrical power designs for industrial, commercial, and international solar projects. Kristi’s family has owned property in Carver County since the 1950′s that is still in the family today. Kristi and I purchased a farm outside of Norwood Young America in 1991, and have enjoyed raising our five children in the County ever since.
Bluestem has discovered that Frey's campaign resume apparently omits a very short career in the residential loan and mortgage modification industry that appears to have occupied at least some of his attention in 2009 and 2010.
Our exclusive and original research has discovered that Frey appears to have worked as a loan and mortgage originator or modification consultant with at least three firms: defunct Michigan-based Save My Home USA Inc; Lewis Hunt Enterprises (D.B.A as Interactive Financial Corp); and the least documented of the three, the Mortgage Indepentent Loan Originator (MILO) Network.
According to addresses on the documents, Robert Frey operated his residential loan originator service out of an office at 624 - 13th St. E. Glencoe, although one additionally lists his Norwood address. This property is owned by Representative Glenn Gruenhagen, according to his Economic Interest Statement filing online at the Minnesota Campaign Finance and Public Disclosure Board.
Presumably, Frey rented Suite 102 from his friend Glenn Gruenhagen, whose own Gruenhagen Insurance and Financial Services firm is housed in Suite 101 of the commercial office space in downtown Glencoe. There is no evidence whatsoever that Gruenhagen himself was involved in the firm save as a landlord.
None of the companies appear to be in business in Minnesota at the present time, and http://freyshome.com is shuttered with an Under Construction notice on its home page. A domain name registration search indicates that freyshome.com was registered in 2006 to s that David Frey used to register David Frey of Crystal, Minnesota. A domain name for Frey Manufacturing traces back to the same email address that David Frey used for freyshome.com.
Nonetheless, Bluestem was able to locate two files on freyshome.com: a Save My Home USA application packet and a Uniform Residential Loan Application form [pdf] on which Frey indicates that applications were taken for Interactive Financial Corporation. A Linked In profile for Robert Frey lists his occupation as "Mortgage Broker" at MILO.
Perhaps the most interesting of these business connections is that with Save My Home USA, Inc, a Michigan-based firm which made the news in Minnesota. It's not a flattering story from the foreclosure crisis.
Minnesota Fines Save My Home USA
According to the March 2011 Minneapolis-St. Paul Business Journal article by staff writer Ed Stych, Firm accused of scamming MN homeowners in mortgage modification fraud, Save My Home USA bad behavior attracted the attention of the Minnesota Department of Commerce:
A Michigan company was accused Thursday of defrauding 118 Minnesota homeowners out of nearly $290,000 in what is being called a mortgage modification scam.
The Minnesota Department of Commerce accused Save My Home USA of Madison Heights, Mich., of taking money from the homeowners for mortgage modifications but never providing services.
The department ordered save My Home USA to stop doing business in Minnesota, and it set a hearing for May 5.
The agency said in a news release that the 118 homeowners paid $289,020 in fees, and most families lost $1,000 to $4,000 while falling farther behind in the mortgages.
The department said it contacted 23 of the 118 families and found only one who said it received services from Save My Home USA.
“This is a classic scam by opportunists preying on consumers who are in dire straits with their homes,” said Commerce Commissioner Mike Rothman. “The actions of this company appear to have put desperate homeowners in an even more precarious position than they were to begin with."
The Alexandria Echo Press reported in Commerce charges loan modification firm for scamming 118 homeowners:
According to the department, Save My Home USA contacted the residents and convinced them to pay advance fees for loan modification services. The 118 homeowners allegedly paid a collective $289,020 in fees. Of the 23 homeowners contacted by the department, only one claims to have received loan modification services. Instead, residents lost as much as $1,000 to $4,000 per family, and fell farther behind on mortgage payments, according to the commerce department.
On April 21, 2012, the Star Tribune's Kelly Smith reported in Whistleblower: Loan modification scams 'a growing problem':
. . .Current state law says financial consultants licensed as loan originators only have to abide by one state rule: Don't charge compensation until after completing what they tell a consumer they'll do. But even that [Ron Elwood, supervising attorney for Legal Services Advocacy Project] says, is loosely defined, giving them ways around it to charge upfront fees. Other provisions such as providing paperwork copies or allowing a homeowner to sue for damages are exempt for loan originators. . . .
"Nobody contemplated that loan modifiers ... would actually use the license as a shield to get away with it," Elwood said.
In recent years, he said his office have seen more mortgage fraud cases like Sistrunk's, and often "they can hide behind a good faith effort ... a lot of finger-pointing," he said.
Just last month, the state Department of Commerce issued a cease-and-desist order against a Michigan company, Save My Home USA, for defrauding 118 Minnesota homeowners, charging upfront fees totalling nearly $290,000 for loan modification services that only one person received.
For Sen. Benjamin Kruse, R-Brooklyn Park, author of the current bill, better consumer protections in state law could prevent some of these cases by requiring more of companies. "There's a lot of folks out there and they're burning people," said Kruse, whose district has had a rise in foreclosures.
The Minnesota Mortgage Association supported the law change; no one has testified against it, Elwood said. . . .
Taking individuals' money and hopes during the foreclosure crisis and not not refunding their money when you can't perform on your promises? Even the mortgage industry didn't smile on that practice.
According to Department of Commerce Director of Communications Anne O'Connor, "Individuals did not need to have a mortgage originator license prior to January 1, 2011. It appears from my search that Mr. Frey does not hold a license in MN."
Neither the company nor the individuals were licensed to do business in Minnesota, O'Connor said.
However, the Department of Commerce began investigating Save My Home before the charges were made in 2001; according page 4 of the Findings of Fact and Order embedded below, an administrative subpoena was sent to the last known address for Save My Home USA on August 25, 2010; the issue was not licensing but the illegal requests of an upfront fee for their services.
Bob Frey's Save My Home Now Packet
According to page information for http://freyshome.com/save_my_home_usa_packet.pdf, the page was last modifed on Monday, April 27, 2009 9:43:20 PM.
Bluestem Prairie has been unable to determine if Robert Frey ever actually took money from a client to modify an existing mortgage for Save My Home USA--or for any lending firm for any purpose. When we called to ask him about his career in loan modification, Frey told us he was busy and would call back another time.
Frey did not respond to a follow-up email about his business connections with Save My Home USA.
However, we do find that Frey's cover letter for the firm outlines a practice that consumer advocates warn worried homeowners to shy away from and for which Save My Home USA ran into trouble in Michigan, Maryland and later Minnesota. He writes:
No charge to pre-qualify. If pre-qualified there is a fixed fee of $2,995.00. Money back guarantee of reasonable help less $495.00 Audit Fee. 100% back if you change your mind within 72 hours of your payment Depending on circumstances, it takes 2 to 5 business days to pre-qualify after I receive your completed faxed packet. Call me when you have faxed your packet, if I can not answer please leave a message and I will return your call. Since this process is time sensitive, please be sure you can pay the fee if you are pre-qualified, contact me for some suggestions if necessary.
Save My Home USA will never ask you to do anything inappropriate such as telling you not to contact your lender or asking you to send your mortgage payments to us. Save My Home USA puts all collected funds into an escrow account at an FDIC-insured bank. No money will be deducted from the account unless and until Save My Home USA performs services for you.
When we called the cell phone number listed in the document embedded directly below, Bob Frey answered the phone. The Norwood address is also that for Bob Frey.
The names of the mortgage consultants who worked with the owners of the firms are not part of the public record, according to the DOC spokester O'Connor. Thus we cannot ascertain whether Frey himself was directly involved in anything that got the company kicked out of the state.
And as we noted, Frey did not respond to our inquiry about his connection with Save My Home USA. We are not sure from which state the license, noted on page 12 of the embedded document below, is from. According to the Minnesota Department of Commerce, it's not a Minnesota license.
Information on the Loan Modification Scam Prevention Network project of the Lawyers' Committee for Civil Rights Under Law notes that in Minnesota:
Minnesota Law Prohibits Advance Fees for Loan Modification Services (Minnesota Statute 325N.01-.09)
Enacted in 2004, Minnesota prohibits the upfront payment of fees by homeowners to anyone assisting with loan modifications. . . .
The Department of Commerce "Findings of Fact and Order" (page 5) embedded below notes this practice on the part of Save My Home USA.
Again, there's no evidence that Frey ever sent out one of these packets on behalf of Save My Home USA or took any money from a desperate homeowner.
The existence of the packet and the business connection does, however, make make Bluestem wonder about his definition of the theory of evolution as "fraud" when he appears to have at the very least entertained doing business with out-of-state interests who were indeed alleged to have engaged in fraud.
Michigan and Maryland Act Against Save My Home USA
While the state of Minnesota didn't act on issues with Save My Home USA until 2011, authorities in Michigan and Maryland scrutinized the company much sooner.
On July 15, 2009, the State of Michigan Attorney General's Office issues a press release, Cox Charges Five for Foreclosure Rescue Fraud, noting:
Attorney General Mike Cox today announced that his office has filed 18 charges against four companies and one individual for committing foreclosure rescue fraud. Cox also issued warnings to 17 companies regarding complaints from residents about their practices. Michigan law prohibits "foreclosure rescue" companies, which provide foreclosure advice, from making misleading or false statements, or charging service fees before any service is completed.
"Preying on residents in the process of losing their homes is not only shameful, it's illegal," said Cox. "Today we are sending a message that mortgage rescue fraud will not be tolerated."
The charges resulted from the Attorney General's office conducting undercover operations based on complaints from homeowners and include one count of unauthorized use of the Great Seal of the State of Michigan and 17 counts of violating Michigan's Credit Services Act (CSA). The CSA prohibits charging fees before completing services when seeking to negotiate a loan on behalf of a homeowner. The Credit Services Act carries a maximum penalty of 90 days in jail and/or $1,000 fine, and allows the Attorney General's office to seek restitution for affected consumers.
Misleading or false statements made by the companies included guarantees to prevent foreclosure and assertions consumers could avoid foreclosure regardless of their credit score, home appraisal, or debt to income ratio. Victims were charged between $595 and $3,000.
Save My Home USA of Madison Heights
o Four counts of violating the CSA (43rd District Court, Oakland
o Charged victims between $595 and $2,000 before completion of
services and advised consumers not to communicate with their
mortgage company. . . .
Later in 2009, Save My Home USA ran afoul of Maryland's laws. The Daily Record reported on November 24 in DLLR orders 5 firms to end loan modification schemes:
State officials have ordered five companies to shut down illegal home loan modification schemes that targeted Maryland residents facing foreclosure, the Department of Labor, Licensing and Regulation announced Tuesday afternoon.
Homeowners paid thousands of dollars in upfront fees to companies that promised to modify their loans in order to avoid foreclosure, according to DLLR. Not only did the companies fail to deliver, but they stopped returning phone calls, misrepresented the loan modification process and ignored requests for refunds, the department alleged.
"Today's actions are part of an ongoing effort to protect consumers from scams where desperate borrowers pay up-front fees to so-called consultants who promise assistance in getting a loan modification or otherwise avoiding foreclosure," DLLR Secretary Alexander M. Sanchez said in a written statement.
The Federal Trade Commission and U.S. Department of Justice announced 118 similar cease and desist orders delivered by 26 federal and state agencies on Tuesday as part of the ongoing "Operation Stolen Hope. "
Companies served notices in Maryland were:
Equity Recovery Services, Towson;
U.S. Equity Solutions, Owings Mills;
GIAN Inc., Laurel;
Save My Home USA Co. Inc., Michigan; [emphasis added]
Help Modify Now Inc., California.
None of the companies could be reached for comment Tuesday evening. At least one company Web site listed a phone number that was no longer accepting calls. . . .
The Minnesota Department of Commerce "Findings of Fact and Order" (page 5) embedded below notes the Michigan and Maryland actions.
Foreclosures in Carver County
Why should this missing page from Bob Frey's resume matter to Republican primary voters in Minnesota House District 47A?
Bluestem suspects that Carver County residents probably will want to know more about Frey's involvement with Save My Home USA than about peculiar notions about HIV or evolution. According to 2010 Foreclosures in Minnesota: A Report Based on County Sheriff’s Sale Data, a report issued by Housing Link for a coalition of pro-home ownership organizations, 416 foreclousres took place in Carver County in 2010; 363 foreclosures took place in 2009.
Bluestem suspects that homeowners and others who faced hard times during the country's economic downturn might want to get some answers from Frey before casting their ballots. While frey declined to allow Bluestem to ask our questions, perhaps he'll be more forecoming with an answer for those folks whom he wants to represent in the state legislature.
Republicans in the district must choose between Frey and Jim Nash, the conservative and reportedly rational mayor of Waconia in the August 12, 2014 primary. The winner will face DFler Matt Gieseke in November's general election.
The open seat is a consequence of Ernie Leidiger's retirement; Leidiger is perhaps best known nationally for inviting toxic metal preacher Bradlee Dean to serve as guest chaplain in the Minnesota House. Dean's prayer, which questioned President Obama's faith, was redacted from the record.
State of Minnesota Documents
The Minnesota Department of Commerce's Cease and Desist Order & Notice of Hearing:
The Minnesota Department of Commerce's Statement of Charges:
The Administrative Law Judge's Findings of Fact and Recommendations
Minnesota Department of Commerce Order
Screenshot: Bob Frey with his giant bone in 2004, as he was testifying to the Minnesota Senate Education Committee against teaching evolution.
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