New York Attorney General Goes After Loan Modification and Foreclosure Rescue Companies for Screwing Consumers

Attorney General Andrew M. Cuomo announced his office is taking legal action against a leading New York foreclosure rescue company for charging illegal up-front fees and engaging in consumer fraud. The company targets homeowners facing foreclosure by claiming that it can save their homes, but often fails to provide the services promised. The Attorney General’s Office served a notice of intent to sue on American Modification Agency, Inc. (“Amerimod”) and its owner and President Salvatore Pane, Jr. Amerimod is headquartered in Uniondale, NY and claims to operate in all 50 states, servicing thousands of consumers nationwide.

Today’s notice is part of Cuomo’s investigation into the so-called “foreclosure rescue” industry. Cuomo’s Office also has also served subpoenas on fourteen other companies in New York and across the country that offer loan modification services. Capitalizing on the current economic downturn and housing crisis, these companies scour foreclosure notices and filings and prey on consumers desperate to save their homes from being foreclosed. The companies promise that they will negotiate with the consumers’ banks to lower mortgage interest rates, lock in fixed rates, get late fees and past due payments forgiven, and even reduce principal balances. The Attorney General’s investigation is in response to complaints from homeowners across New York that these companies fail to deliver as promised, charge illegal, up-front fees and use misleading advertising to lure consumers into services that oftentimes leave them further in debt, facing a worsened threat of foreclosure.

“This economic climate has bred an environment in which scam artists and opportunists are able to prey on vulnerable consumers on the brink of losing their most valuable possession – their home,” said Attorney General Cuomo. “Companies that charge homeowners up front fees for loan modification services, put homeowners into contracts that don’t disclose cancellation rights, or lure consumers with misleading claims violate not only our trust but the law. Today’s notice and the subpoenas issued nationwide are part of my Office’s multi-tiered effort to stamp out this kind of abuse and protect homeowners across the country.”

The Attorney General’s investigation into Amerimod found that the company charged homeowners heavy, up-front fees in advance of providing any services, a violation of New York law. In addition, the company uses misleading advertising full of unsubstantiated claims that it has success rates of 90 to 100 percent and that it is fully licensed. Amerimod also fails to provide contracts that include required notice of right to cancel, and fails to provide Spanish-speaking consumers with Spanish contracts, also in violation of New York law.

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As part of the investigation, Cuomo has issued subpoenas to fourteen other loan modification companies: American Home Recovery Corporation; CloseMore Financial Corporation; Elite Results Group, Inc.; FLM Law Center LLP, a/k/a Federal Loan Modification Law Center and Federal Loan Modification; Hometown U.S.A., Inc.; Global Modification Services, Inc. a.k.a Law Office of Brian Margolin, P.C.; Loan Modification Affiliate Exchange, Ltd, a/k/a LoanMAE; Nationwide Modification Agency, Inc.; NMA Legal Services, P.C.; Northeast Mortgage Services; People’s First Financial, Inc.; Raymond Lewis & Fitch, Inc.; Settled For Less, Inc.; and the Law Depot, Inc. a/k/a the Loss Mitigation Legal Network.

The subpoenas include requests designed to uncover, among other information, the companies’ marketing strategies, representations made to customers regarding the services the companies provide and their success rates, fee structures, whether contracts are provided in accordance with the law, and what, if any, services are actually performed.

Sara Ludwig, Co-Executive Director of Neighborhood Economic Development Advocacy Project (NEDAP), a non-profit research and advocacy organization promoting economic justice, said: “We commend Attorney General Andrew Cuomo for these investigations. Millions of New Yorkers have been affected by the housing crisis, and people in communities of color in particular have borne the brunt of abusive subprime lenders who have targeted their communities. These homeowners are now particularly vulnerable to the predatory practices of so-called foreclosure rescue companies that often prey on and take advantage of homeowners in distress and can cause people to lose their homes. The Attorney General’s investigation is an important step in fighting this scourge that is plaguing New Yorkers.”

Lionel Ouellette, Executive Director of CHANGER, a non-profit organization assisting homeowners in gaining economic rights, said: “We applaud Attorney General Andrew Cuomo for investigating these companies who are targeting hardworking families and costing them their homes. These companies charge significant and illegal up front fees for little or no assistance at all, or for concessions from the homeowner’s lender that the homeowner can usually get on his or her own. In some instances, foreclosure rescue scam artists defraud homeowners into forfeiting the equity they have worked so hard to obtain in their homes, or into relinquishing their homes altogether. We are very pleased that the Attorney General is working to address this wide-spread problem.”

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Consumers who are unable to make their mortgage payments should call their lender immediately to discuss the available alternatives to foreclosure. Many lenders offer foreclosure avoidance programs and have pledged publicly to assist distressed borrowers.


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5 thoughts on “New York Attorney General Goes After Loan Modification and Foreclosure Rescue Companies for Screwing Consumers”

  1. Can someone please tell me what is the law in NY against charging upfront fees. Does this apply to all businesses


  2. Thanks Steve for your feedback. I guess I feel frustrated being a part of an industry that is taking such a beating. Still, as you said, people can get “ripped off” by almost any industry. Hey, what about the banks that put people into these option ARMs?

    • Karen,

      Yes, the banks have a lot of blame in this but the reality is the they have loads of money and can control legislation and regulation. They can also outspend any consumer on legal action and even though it is a pity, for many people they can only get as much justice as they can afford. People in financial trouble can’t afford much justice.

      Keep visiting and commenting. Your point of view is always welcome.



  3. Not all loan modification companies are ripping people off. I work for a company in New Jersey. We don’t tell people to stop paying their mortgage, we don’t ask for all the money up front and we give people their money back if we can’t help them. We don’t accept clients who would not be able to pay their mortgage even if they were modified (such as those that are unemployed). All of these negative articles focusing on those companies that are taking advantage of people that are already in distressed financial situations, only tells one side of the story. Every day I get calls from people who had a temporary financial setback that caused them to fall behind on their mortgage; they call their bank and are told, “there is nothing we can do.” Sometimes they just provide such terrible customer service or make the homeowner jump through so many hoops, they just give up. These people are forced to hire an attorney to defend themselves against this institution that doesn’t care whether they lose their home or not. Why is it that people are told that the very institution that caused their problem is the very same institution that will fix it? Is there any reason to believe that the bank puts the interest of the homeowner ahead of its own, or is even willing to work with them to come to a resolution? My experience tells me otherwise. Maybe I’m lumping too many banks and mortgage servicers into the same pool, but it’s the same as saying that all loan modification companies are taking advantage of distressed homeowners. It’s an industry that arose from a need. If the banks were truly helping people, there really would be no need for our services.

    • There is no doubt that consumers can benefit from professional services and representation delivered by competent professionals. Unfortunately, unless the loan modification industry starts crying out desperately for aggressive legislation to eliminate bad actors out of business, everyone will get painted with a broad brush.

      As I learned a long time ago, consumers in financial turmoil are considered a disadvantaged class of people and companies that charge fees for services that do not result in the outcome desired will be perceived as taking advantage of the consumer and are easy targets for regulators and legislators. Yet someone can be in debt and pay a mechanic to repair their car and that’s not an issue. That is because at the end of the car repair process, the car is either repaired or not. You don’t pay if it is not.

      If loan modification companies agreed to charge no fee if the loan was not modified as needed, there would not be this hunt to put loan modification companies out of business by states.

      It does you no good to be the most fair and the best in an industry of less than stellar companies.I know that from experience and I learned all of these lessons the hard way. It’s not fair, it is what it is.



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