New York Attorney General Andrew M. Cuomo is suing a pair of loan modification companies that he says ran nationwide foreclosure rescue scams.
The lawsuits were filed against National Modification Service ("National Modification") and its founder Joseph Romano, and Infinity Mitigation Corporation, Infinity Funding Group ("Infinity"), and their owner and principal Neil Singer.
According to Cuomo, the companies and their owners prey on homeowners facing foreclosure by claiming that they can save their homes, but often fail to provide the services promised.
"As New Yorkers and others across the country fight to stay afloat in these tough times, we continue to see dishonest companies preying on vulnerable homeowners," said Attorney General Cuomo. "These companies pretend to be reaching out a helping hand, but instead they push consumers further down into debt and, in some cases, into foreclosure."
Foreclosures have claimed the homes of thousands of New Yorkers. In January 2010 alone, there were 4,569 foreclosed properties in the state, and one in every 1,737 housing units had received notice of foreclosure. The AG's investigations have shown that thousands of New Yorkers and homeowners throughout the country have been affected by foreclosure rescue scams.
The lawsuits against National Modification and Infinity claim the companies charged homeowners up-front fees of several thousand dollars, a violation of New York law. In addition, the companies are accused of using misleading advertising and made false representations to customers, including unsubstantiated claims of over a 90 percent success rate and guarantees that they would be able to convert an adjustable-rate mortgage to a lower, fixed-rate mortgage.
The lawsuits also contend that the companies promised a 100% money-back guarantee but then failed to provide refunds to customers that they scammed, often even refusing to answer the customers' calls.
The lawsuits seek to shut down the companies and provide restitution and damages to customers and aim to prevent them from ever providing foreclosure rescue services. In addition, the lawsuit seeks penalties and costs from the companies and their principals. Collectively, they may be subject to penalties of $1 million and potentially much more.
Cuomo also announced settlement agreements with two companies, ABM Mitigation Corporation ("ABM"), a Ronkonkoma-based loan modification business, and Raymond, Louis & Fitch ("RLF"), a Florida-based loan modification company doing business in New York.
As part of the settlements, both companies will refund fees to all customers who have not obtained a loan modification. ABM will shut down their practices nationwide and RLF will stop doing business in New York State.
Both companies illegally charged customers thousands of dollars in up-front fees and failed to provide their customers with contracts as required by law. ABM, which is now prevented from obtaining any new clients, lured customers by misrepresenting their qualifications, falsely claiming that they were accredited, and falsely advertising a 100 percent success rate. RLF used fabricated testimonials, falsely represented that consumers had been selected for special government programs, and falsely claimed consumers' homes qualified for fabricated loan modification programs.
Under the law in New York, foreclosure rescue companies are required to provide clients with contracts, let financially vulnerable homeowners know that there are non-profit counselors that can help them for free, and refrain from charging up-front fees.
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.
While mortgage loan modifications have helped some homeowners, there are many for whom the whole process has been a nightmare .
