Attorney General Andrew M. Cuomo announced that his office is sending more than 180 cease-and-desist letters to mortgage rescue companies with customers in New York, warning them to immediately end all misleading and illegal conduct. The Attorney General’s ongoing investigation into the mortgage rescue industry revealed that many companies routinely collect illegal upfront fees from homeowners on the brink of foreclosure and then fail to help them lower their mortgage payments or save their home as promised. Thousands of New Yorkers have been affected by mortgage rescue scams.
“Today, we are putting mortgage rescue companies on notice—they must immediately cease any dishonest tactics used to prey on homeowners or they will face the consequences,” said Attorney General Cuomo. “The business model for many mortgage rescue companies is based on false promises, but the true cost of their deception is all too real. When faced with the threat of foreclosure, New Yorkers should remember the rights they have as homeowners and the protections that my office ensures.”
The Attorney General’s cease-and-desist letters--which are going to 182 companies—warn mortgage rescue companies to end any illegal, deceptive, and misleading practices, including:
►Charging up-front fees for consulting services;
►Failing to enter into written contracts with homeowners, in the language the homeowners use, that fully disclose the exact nature of, and fees for, the services to be provided;
►Failing to allow homeowners to cancel their contract, without any penalty, within five business days after signing and failing to provide homeowners with notice of this right in the contract;
►Using any deceptive and misleading advertising practices, including: false guarantees regarding success rates, false 100 percent money-back guarantees, and fabricated consumer testimonials;
►Using any advertisements designed to give consumers the false impression that a company is affiliated with the government or a government-sponsored program.
A copy of the Attorney General’s cease-and-desist letter can be found here.
The Web site, www.nyprotectyourhome.com, contains information about recognizing and avoiding mortgage rescue scams, important facts about the foreclosure process, and a list of reputable resources that can provide free mortgage rescue help to homeowners facing foreclosure. The foreclosure crisis has claimed the homes of thousands of New Yorkers across the state. As of May 2010, there are 64,778 foreclosed properties in New York, and one in every 1,982 housing units had received notice of foreclosure.
Cuomo is committed to aggressively enforcing the law against mortgage rescue companies that engage in illegal conduct and take advantage of homeowners facing possible foreclosure.
Some of the Attorney General’s actions in his ongoing investigation of the mortgage rescue industry include:
►In August 2009, Cuomo’s office filed a lawsuit against American Modification Agency Inc. (Amerimod), formerly one of the largest mortgage rescue companies in the country, and its owner and president Salvatore Pane Jr. The Attorney General’s investigation revealed that Amerimod routinely collected illegal upfront fees from homeowners on the brink of foreclosure and then failed to modify their home mortgage loans and lower their monthly mortgage payments. In April 2010, the New York Supreme Court issued a favorable decision in the case, holding Pane personally liable for engaging in fraudulent and illegal acts, continuing a freeze on Amerimod’s assets, and ordering further proceedings to determine the amount of consumer restitution, costs, and penalties. Pane is currently serving time in jail on an unrelated conviction.
►In March 2010, Cuomo sued Infinity Mitigation Services and its principals for illegally charging homeowners for loan modification services that were not performed. In June 2010, the Attorney General’s office obtained an order and default judgment from the New York Supreme Court shutting down the company, freezing their assets, and ordering them to pay a judgment in the amount of $8.8 million.
►In March 2010, Cuomo announced settlements shutting down two mortgage rescue companies: Ronkonkoma, N.Y.-based ABM Mitigation Corporation and Florida-based Raymond, Louis & Fitch (RLF). As part of the settlements, ABM agreed to shut down their practices nationwide and RLF agreed to stop doing business in New York State. The companies also agreed to refund fees to all customers who have not obtained a loan modification.
►In May 2010, Cuomo’s office entered into a settlement with Global Modifications Services Inc. and its principal. Under that settlement, the company and its principal agreed to pay restitution to homeowners who were charged illegal upfront fees.
For more information, visit www.nyprotectyourhome.com.