June 30, 2010
New York Attorney General Andrew Cuomo is sending over 30 cease-and-desist letters to mortgage rescue companies warning them to end immediately all misleading and illegal conduct. A total of 213 companies have now been put on notice.
Cuomo says his investigation into the mortgage rescue industry, which is continuing, revealed many companies routinely collect illegal up-front fees from homeowners on the brink of foreclosure and then fail to help them lower their mortgage payments or save their home as promised.
Thousands of New Yorkers have been affected by mortgage rescue scams. After sending cease-and-desist letters to over 180 mortgage rescue companies last week, the Attorney General's office received consumer complaints and uncovered more evidence that indicated additional companies might be abusing New York homeowners.
Mortgage rescue companies target homeowners facing foreclosure by claiming to be able to modify home mortgage loans and lower monthly payments. Often, these companies engage in deceptive and illegal marketing practices to lure customers and then fall short on their promises. After using a mortgage rescue company, homeowners can find themselves in worsened financial circumstances and at greater risk of losing their homes.
"The letters that we are sending out to mortgage rescue companies across the United States intend to stop bad companies in their tracks," Cuomo said. "Many of these companies take money from homeowners who cannot afford to pay it and make a bad situation worse. We are telling these companies to immediately cease any wrongdoing and to make sure their business practices are all above board, or they are going to be held accountable by my office."
Cease and desist
The attorney general's cease-and-desist letters -- which are going to 31 additional companies -- warn mortgage rescue companies to end any illegal, deceptive, and misleading practices, including:
Charging up-front fees for consulting services;
Failing to enter into written contracts with homeowners, in the language the homeowners use, that fully disclose the exact nature of, and fees for, the services to be provided;
Failing to allow homeowners to cancel their contracts, without any penalty, within five business days after signing and failing to provide homeowners with notice of this right in the contracts;
Using any deceptive and misleading advertising practices, including: false guarantees regarding success rates, false 100 percent money-back guarantees, and fabricated consumer testimonials;
Using any advertisements designed to give consumers the false impression that a company is affiliated with the government or a government-sponsored program.
Cuomo says the foreclosure catastrophe has claimed the homes of thousands of New Yorkers across the state. As of May 2010, there are 64,778 foreclosed properties in New York; in May 2010 alone, one in every 1,982 housing units had received notice of foreclosure, according to the Attorney General's Office.