Mod Firms Bombarded With Lawsuits

In Florida, Attorney General Bill McCollum filed a lawsuit in the Fifteenth Judicial Circuit against FHA All Day.Com, its owner Jason Vitulano and three affiliated companies that allegedly charge up-front fees of as much as $5,000 for loan modification services, according to a copy of the complaint. The defendants earn around $1 million monthly from up-front modification fees through automated marketing phone calls that illegally used President Barack Obama’s voice.

Claims that the company has a staff of attorneys were disputed by McCollum, who noted that Vitulano and company didn’t perform promised services. More than 300 complaints were received about the company, and the attorney general hopes to collect civil penalties of $15,000 for each violation of the Foreclosure Fraud Prevention Act and obtain a permanent injunction barring up-front fees.

In the other Sunshine State, Arizona, Attorney General Terry Goddard recently touted several actions taken against modification firms. Among those actions was a lawsuit filed against Hope for Homeowners Now LLC, which allegedly solicited up-front fees of $3,195. Another complaint filed against Loan Modification of America LLC accused that firm of falsely claiming a 90 percent success rate and a 100 percent money-back guarantee.

Loan Modification Professional Services is accused by Arizona of collecting between $1,500 and $3,500 from eight customers who claim they never received the services they were promised. That lawsuit was filed in Maricopa County Superior Court.

Santoya Financial Company LLC is accused in a lawsuit by Goddard of falsely advertising that its services were endorsed by the U.S. Department of Housing and Urban Development. Santoya allegedly suggested fees were refundable if the modification was unsuccessful because of the endorsement.

Goddard was making the announcements in conjunction with Operation Loan Lies — an initiative undertaken by the Federal Trade Commission and several states that targeted 200 loan modifications firms. When the initiative was announced on July 15, the FTC indicated federal and state agencies took 189 actions.

Over in New Jersey, Stephen Pasch, attorney Ejike N. Uzor, New Day Financial Solutions and several related companies were sued in New Jersey Superior Court in Essex County by Attorney General Anne Milgram, who claims the defendants offered worthless guarantees, wrongly advised customers to stop making payments and collected up-front fees of as much as $4,200 while not helping delinquent borrowers.

A second lawsuit filed in Superior Court in Mercer County by Milgram accuses Best Interest Rate Mortgage Co. of violating the Consumer Fraud Act and the New Jersey Debt Adjustment and Credit Counseling Act. Best offered modification services without a state license to conduct debt adjustment activity, while misleading solicitations appear to have been from a government agency. Borrowers were charged “several thousand dollars” up front, though they were promised it would be returned if the modification didn’t go through, and were told to stop making payments.

“The defendants also are charged with misleading consumers through false advertising and deceptive solicitations, and engaging in debt adjustment activity without a license,” the New Jersey news release said of defendants in both cases. “As with the New Day complaint, the state’s lawsuit against Best Interest Rate Mortgage Co. asks the court to order a halt to the defendants’ unlawful business practices, seeks restitution for consumers and the imposition of maximum civil penalties.”

California-based U.S. Homeowners Assistance was sued in the Hamilton County Court of Common Pleas by Ohio Attorney General Richard Cordray over allegations it misled borrowers and failed to deliver on promises. It is charged with violations of the Ohio Consumer Sales Practices Act, Telephone Solicitation Sales Act, Debt Adjusters Act and the Telephone Consumer Protection Act.

Customers responding to automated phone calls were charged $1,800, though U.S. Homeowners “fails to deliver and fails to refund consumers’ money,” according to Ohio. The lawsuit followed a cease-and-desist order issued in May. The judge in the case has reportedly granted a temporary restraining order to prevent the company from continuing its actions while the case is being decided.

California’s Attorney General Edmund G. Brown Jr. announced five lawsuits filed against 21 individuals and 14 companies. Brown, who seeks full restitution from the defendants, claims the firms violated a range of California codes including the Business and Professions Code sections 2945.3, 17500 and 17200, Civil Code sections 2945 et seq., 2945.4 and 2945.45, and Penal Code section 487. Other codes allegedly violated included

One of the California lawsuits was against U.S. Homeowners Assistance and company executives Hakimullah “Sean” Sarpas and Zulmai Nazarzai for falsely claiming a 98 percent success rate and implying it was a government agency. None of its customers received loan modifications even though they paid up-front fees of as much as $3,500. The state seeks $7.5 million in civil penalties.

RMR Group Loss Mitigation Group and executives Michael Scott Armendariz , Ruben Curiel and Ricardo Haag are also accused of falsely claiming a 98 percent success rate and money-back guarantee — taking in fees of $1 million from 500 borrowers. Also named as defendants in the lawsuit — which seeks $7.5 million in civil penalties — are Living Water Lending Inc., attorney Arthur Steven Aldridge, the law firm of Shippey & Associates and its principal attorney Karla C. Shippey.

A lawsuit filed against US Foreclosure Relief Corp., executives George Escalante and Cesar Lopez, and legal affiliate Adrian Pomery claims the defendants charged up to $2,800 up front — earning $4.4 million in one nine-month period, California’s statement said.

Up the Pacific Coast in Seattle, Washington Attorney General Rob McKenna announced four lawsuits, including one filed against California-based Mason Capital Group over alleged violations of Washington’s Consumer Protection Act, Mortgage Broker Practices Act, Distressed Property Conveyance Act and Credit Services Organization Act. The company wasn’t authorized to do business in the state, collected up to $3,000 in up-front fees and didn’t do anything for its customers.

G Services Group, which does business as Guardian Services, faced similar allegations in a lawsuit filed by McKenna. The firm allegedly charged $1,500 in up-front fees.

Four Illinois lawsuits filed in Cook County Circuit Court by Attorney General Lisa Madigan alleged the defendants charged up-front modification fees but failed to perform any actual services. Violations of Illinois’ Mortgage Rescue Fraud Act are alleged. In addition to a permanent injunction barring the defendants from mortgage rescues, Madigan is asking for each defendant to pay a civil penalty of $50,000 and for additional penalties where the intent to defraud borrowers of impacted senior citizens.