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.”

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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.

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.”

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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.”

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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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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