A New Jersey-based loan modification company has agreed to pay $10 million to settle charges that it defrauded homeowners who were behind on their mortgages. Two of the company's agents also agreed to pay damages, and will have their licenses revoked.

The payment by New Hope Property LLC stemmed from a lawsuit alleging that the company took money from struggling consumers and then failed to deliver on promises that it would help rescue their struggling mortgages. The company charged the money up front, which is illegal in New Jersey.

The company rebuffed consumers who sought refunds once they realized the company was not going to help them, and at one point tried to shut down its website, according to the suit. Additionally, the company allegedly gave consumers the false impression that it was associated with the Hope Now Alliance, the non-profit foreclosure prevention program set up by the government and certain lenders in 2007.

Under the settlement, two of New Hope's former agents agreed to pay damages and to have their mortgage solicitor's registrations revoked. Brian Mammoccio and Donna Fisher, both New Jersey residents, are on the hook for $1.2 million and $250,000, respectively. Fisher also agreed to have her lender's license revoked, and both are barred from ever again applying for any license from the Department of Banking.

The office of New Jersey Attorney General Paula Dow, which brought the suit, said in a statement that New Hope defrauded "thousands of victims nationwide." Dow framed the settlement as a warning shot aimed at other fraudulent loan modification companies.

"This is an important outcome, one that should send a clear message to anyone who may be tempted to seek profit in the financial misery of others during these tough times," Dow said. "This company, and these individuals, made money by selling false hope to trusting people during their darkest financial hour. It is appropriate that their professional licenses are revoked, and that they will never again be permitted to operate in our state."

The suit, filed in March 2009, charged New Hope with violations of the Consumer Fraud Act, state advertising regulations and the Debt Adjustment and Credit Counseling Act.

ConsumerAffairs.com has heard from scores of consumers who say they were defrauded by New Hope, several of whom lost their homes as a result. As James of New Castle, Delaware, wrote last June:

"We filed to do a loan modification to get out of a variable rate mortgage. They informed us not to make any payments and the mortgage company also said they would not accept any ... [A]fter calling for months and being told our file was under review by the mortgage company and new hope, all of a sudden I called for 2 weeks straight not getting any return calls and one day finding out they were a scam, by now our mortgage was very behind. and we are out our fee and possibly our home."

Earlier this month, ConsumerAffairs.com reported that many consumers with modified mortgage agreements are still struggling to make their payments. According to a government audit, the number of homeowners with new agreements who have again fallen behind now stands at 2,879, up from around 1,000 in January. All together, around seven million consumers are currently behind on their mortgages, according to government estimates.