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NY Attorney General Takes Action Against Fraudulent Mortgage Rescue Scheme

May 14, 2015

New York State Attorney General Eric T. Schneiderman has obtained a default judgment in New York County Supreme Court against two law firms and their lead attorney for participating in a fraudulent mortgage rescue scheme. The judgment ordered Litvin Law Firm; Litvin, Torrens & Associates PLLC; and the firms’ principal attorney Gennady Litvin to immediately halt their illegal business practices, including preying upon financially vulnerable consumers by claiming to provide a comprehensive legal services plan that would allow consumers to avoid foreclosure. Under today’s judgment, the court also ordered the Litvin Law Firm and Gennady Litvin–which have recently filed for bankruptcy–and Litvin, Torrens & Associates to provide a full accounting so that the Attorney General’s Office can determine an appropriate amount for restitution for their victims, who typically paid hundreds of dollars in monthly fees for services that were never provided.

“Today, these law firms can no longer prey upon vulnerable families desperate to stay in their homes, and my office can begin determining appropriate restitution for their victims,” said Attorney General Schneiderman. “My office has no tolerance for attorneys who abuse their position in order to defraud consumers, and we will continue to take aggressive action against such schemes. In the meantime, I urge all New Yorkers to use our AGScamHelp app to check out a company claiming to offer mortgage help and get connected to free, trusted assistance through one of our many HOPP partners statewide.”

Last year, the Attorney General’s Office filed a lawsuit against the firms and Gennady Litvin for engaging in fraudulent and illegal practices in offering legal services and other foreclosure assistance to consumers in New York and other states. Through repeated television and radio ads, the Litvin Law Firm induced consumers to call its offices by falsely implying that they had a connection to “State Attorneys Generals and the Federal Government” and that homeowners could have their mortgages satisfied in full, a most unlikely result.

Through the use of third-party marketers, many of which used the term “legal” in their names, the firms solicited homeowners nationwide, representing that the homeowners would have a “custom made attorney defense team” that provided “a level of service that usually is only enjoyed by large corporate clients.” The marketers also purported to provide homeowners with “forensic loan audits” that were “vitally important” to identify errors in their mortgage loan documents, defend against foreclosure, and win concessions from lenders. On its website, the Litvin Law Firm led consumers to believe that it was a law firm with a nationwide presence, located in 31 states, and that the firm had the ability to provide foreclosure defense nationwide.

Based on these representations, struggling homeowners paid the firm and its marketers a monthly fee, typically $595 or $750, to obtain legal services. However, many consumers did not receive the legal representation they were promised. The Litvin Law Firm and Litvin, Torrens & Associates, which had offices only in New York and Florida, could not provide nationwide foreclosure defense. Moreover, the forensic audits typically had very little value in saving consumers’ homes. In many cases, homeowners never spoke to an attorney in their state, never obtained a loan modification or other foreclosure relief, and wound up having to negotiate with lenders on their own.

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