Virginia Attorney General Ken Cuccinelli has announced that he has reached a settlement with a Chesapeake, Va.-based mortgage loan modification company, American Neighborhood Housing Foundation (ANHF), after it had allegedly charged illegal advance fees before performing “foreclosure rescue” services for its customers. The attorney general previously filed suit against ANHF on Nov. 9, 2010. ANHF also maintained an office in Richmond, Va. from November 2007-October 2010.
In his complaint, the Cuccinelli alleged that ANHF violated the Virginia Foreclosure Rescue law by charging up to $1,050 in advance fees from nearly 1,000 consumers nationwide in connection with services to avoid or prevent foreclosure. Section 59.1-200.1 of the Foreclosure Rescue law prohibits a supplier of foreclosure avoidance or prevention services from “charging or receiving a fee prior to the full and complete performance of the services it has agreed to perform, if the transaction does not involve the sale or transfer of residential real property.”
In his complaint, Cuccinelli also alleged that ANHF violated the Virginia Consumer Protection Act (VCPA) by guaranteeing in many instances that it could stop the scheduled foreclosures of consumers’ homes. The VCPA generally prohibits suppliers from engaging in deception, false statements, false promises, or misrepresentations in connection with consumer transactions. The attorney general alleged in his complaint that the guarantee made was deceptive because the “stoppage” often only amounted to a temporary delay of the foreclosure proceeding, and even a temporary stoppage was not a possible result in all cases.
The settlement includes the following key terms:
►A permanent injunction prohibiting ANHF from violating the VCPA and the Virginia Foreclosure Rescue law, by, among other things, collecting advance fees in connection with services to avoid or prevent foreclosure;
►A permanent injunction prohibiting ANHF from making representations to customers such as, “We will stop your foreclosure,” or “We can and will stop the scheduled foreclosure auction of your home,” when such a result is not always possible;
►ANHF agrees to make refunds totaling $94,388.73 to 273 consumers across the country for unearned advance fees collected. The refund amounts vary based on the amount of agreed-upon services not performed by ANHF for or on behalf of individual consumers;
►ANHF agrees to pay the commonwealth a $5,000 civil penalty and $10,000 for reimbursement of the commonwealth’s attorneys’ fees and costs.
“I am pleased that we were able to reach a reasonable agreement with ANHF that potentially will provide refunds to 273 affected consumers,” Cuccinelli said. “I appreciate the company’s cooperation in working with us to resolve the claims raised in our recent lawsuit.”
“My office continues to work with the Virginia Office of Consumer Affairs and the Virginia Bureau of Financial Institutions to identify and investigate companies that potentially may be violating the advance fee prohibition on foreclosure rescue companies. People are very vulnerable in this economy and are desperately seeking help, so it is especially important that we make sure those in the mortgage industry are playing by the rules and not playing on people’s desperation."
For more information, visit www.vaag.com.