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New York Sues Foreclosure Rescue Companies

Attorney General targets 14 operations for failure to fulfill bargains

June 10, 2009

Cuomo's office has served a notice of intent to sue on American Modification Agency, Inc. and its owner and President Salvatore Pane, Jr., claiming the company targets homeowners facing foreclosure by claiming that it can save their homes, but often fails to provide the services promised. Cuomo says the company charges illegal up-front fees and engages in consumer fraud.

Amerimod is headquartered in Uniondale, NY and claims to operate in all 50 states, servicing thousands of consumers nationwide.

As part of his investigation into the so-called "foreclosure rescue" industry, Cuomo 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, Cuomo says these companies scour foreclosure notices and filings and prey on consumers desperate to save their homes from being foreclosed. They promise 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 investigation comes in response to complaints from homeowners 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 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."

Cuomo said the 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.

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