Three North Carolina companies that claim to help people win lower mortgage payments and save their homes from foreclosures are instead ripping off homeowners and must be shut down, Attorney General Roy Cooper said Monday.
“These schemes promise to help save your home but instead drive you closer to foreclosure,” Cooper said. “Victims lose precious money that could pay their mortgage, and critical time that could be spent negotiating real loan modifications.”
In lawsuits filed Friday, Cooper alleges that the Community Mortgage Assistance Program and Lender Exchange, both of Charlotte, and Tidewater Financial, of Wilmington, are charging consumers illegal fees for mortgage loan modification services and then failing to provide them with meaningful help. He is asking the court to ban the companies and their principals from offering foreclosure, loan modification or debt relief services and order them to pay consumer refunds and civil penalties.
Under North Carolina law, it’s illegal to charge an upfront fee for foreclosure assistance or loan modification services. Including these three cases, Cooper and his Consumer Protection Division have taken 16 foreclosure and loan modification scams to court, winning money back in all 13 previous cases.
Cooper contends that Community Mortgage Assistance Program, Lender Exchange, and Tidewater Financial operate by promising struggling homeowners that they can negotiate a loan modification on their behalf and save their homes from foreclosure, for an upfront fee. Consumers are told to stop paying their mortgages and not communicate with their mortgage lenders or servicers—advice which makes foreclosure more likely, not less. The companies do little or nothing to help consumers save their homes.
As alleged in the complaints filed Friday:
Community Mortgage Assistance Program and its principal, Koy Chiu, charge consumers as much as $1,500 in advance and claim to have a 98 percent success rate in saving people’s homes. But consumers who pay the fee get little or no real help working out a loan modification. Chiu falsely promotes the company as a “faith-based organization” on gospel radio and in written materials to target religious homeowners and make the company seem trustworthy.
Lender Exchange and its principals, Kenneth McCurd and Tanya Wilson, charge consumers one month’s mortgage payment and falsely claim that they’d never had a homeowner lose their home to foreclosure. The company tells prospective customers it will provide a full refund if it isn’t able to obtain a loan modification, but homeowners who’ve paid Lender Exchange and not gotten any meaningful help have had a hard time getting their money back.
Tidewater Financial and its principal, Elaine Madej, charge homeowners $700 to $1,000 in upfront fees and promise consumers a “legal review” of their loan documents to determine whether lenders have violated state or federal law. However, Madej is not an attorney and the company has no legal expertise on lending laws–nor do its services actually help homeowners. According to one consumer who filed an affidavit in support of Cooper’s lawsuit, Madej kept claiming she was working out a loan modification even as his home was sold at auction and his family was evicted by the Sheriff.
The Attorney General’s Consumer Protection Division has received eight complaints about Lender Exchange, including some forwarded by the Better Business Bureau and Legal Aid of NC, and four complaints each about the Community Mortgage Assistance Program and Tidewater Financial.
More than 1,000 consumers have complained to Cooper’s office about various foreclosure assistance and loan modification scams over the past five years. To file a consumer complaint, call 1-877-5-NO-SCAM toll-free within North Carolina or fill out a complaint form at www.ncdoj.gov.
“Beware of anyone who offers to help you resolve a foreclosure for an upfront fee,” Cooper warned. “If you’re struggling to pay your mortgage, real help is available for free.”