Modification Litigation Explodes

In Pennsylvania, a lawsuit was filed on Nov. 23 against Foreclosure Awareness Inc. and owner Michael Squillace by state Attorney General Tom Corbett, according to an announcement. The company allegedly used deceptive and misleading advertisements and failed to provide promised services.

Similar charges were lodged by Corbett in a Nov. 23 lawsuit against Nationwide Foreclosure Prevention Center. Another lawsuit by Pennsylvania against Best Interest Rate Mortgage Co. alleges the use of direct-mail ads that appeared to be from a government agency and operation of the business without a license. A fourth firm sued by the state, U.S. Mortgage Mod, allegedly used misleading mailers, overstated its results and charged up-front fees without obtaining a required bond.

All four lawsuits were filed in Commonwealth Court, Harrisburg, Pa.

A lawsuit was filed in Cook County Circuit Court on Nov. 24 against Loan Mod One LLC by Illinois Attorney General Lisa Madigan, a news release indicated. The firm, which has an office in West Dundee, allegedly targeted at-risk borrowers for up-front fees on modification services that were never performed. Illinois claims Loan Mod One violated its Mortgage Rescue Fraud Act, which prohibits up-front fees before completing all the terms of a mortgage rescue contract.

Illinois seeks restitution, a civil penalty of $50,000, additional penalties and a permanent injunction barring the defendants from engaging in mortgage rescue operations.

In addition to Loan Mod One, Madigan filed lawsuits against Chicago-based Freedom Mortgage Team Inc. and Living Modifications Corp. in Schaumburg, Ill.

A criminal complaint was filed against Global Financial Consulting Services of Dearborn Heights, Mich., by Michigan Attorney General Mike Cox, a Nov. 24 news release said. The company allegedly charged up-front fees, didn’t deliver the services it promised and failed to provide requested refunds. The up-front charges are a violation of the Credit Services Protection Act.

Michigan also made similar allegations in separate criminal complaints filed against Advanced Mediation Services and James Klein, both of Midland.

A November announcement indicated that Connecticut Attorney General Richard Blumenthal was suing FHAAllDay.com Inc. for allegedly charging Connecticut borrowers between $2,500 and $4,500 then failing to deliver on promises to help them avoid foreclosure. Up-front fees have been illegal in Connecticut since Oct. 1.

Missouri Attorney General Chris Koster announced that a lawsuit is being filed against Palm Beach Gardens, Fla.-based First Universal Lending LLC. The company charges illegal up-front fees, advised some borrowers to stop making payments and “appears to do little or nothing for most of its customers,” the state said. Restitution, monetary penalties and permanent injunctions are sought.

A summary cease-and-desist was obtained by the Maryland Department of Labor, Licensing and Regulation’s Office of the Commissioner of Financial Regulation against The Shmuckler Group LLC, Nova Key LLC, Howard R. Shmuckler, Alon Fisch, and Ted Dubin, according to a news release. The defendants, operating from Northern Virginia, are accused of collecting more than $1.2 million in up-front fees on 372 loans in exchange for promised modification services and operating without a Maryland credit services business license. Although modifications were obtained in only one-quarter of the cases handled, no refunds were given.

The state claims the defendants violated of the Maryland Credit Services Businesses Act and the Protection of Homeowners in Foreclosure Act.

Kansas Attorney General Steve Six announced that two lawsuits were filed in Shawnee County District Court on Nov. 19 against modification firms alleging that they did nothing for the customers despite promises to the contrary. The firms are California-based Home Loan Modification Advisors and New York-based Infinity Funding Group,

Separate lawsuits were filed in Kennebec County Superior Court by Maine Attorney General Janet Mills on Nov. 24 against three separate firms. The unlicensed companies failed to register as debt management services as required under state law and obtain required bonds. Illegal fees charged up front were as high as $4,300, and the state limits debt-management service providers to a $75 setup fee and 15 percent of the amount of reduced debt.

The defendants in the first case are Elect Group LLC, Anthony Ferlanti and Emmanuele Zuccarelli. In the second case, Help Modify Now Debt Solutions Inc., Help Modify Now Inc. and Chas Bain are named as defendants, while the third case was filed against US Advocate Law Group P.C. and Jeff Nemerofsky. The state hopes to recover fees for impacted borrowers.

After being tipped off about an advertisement that appeared to be from the government, Idaho’s attorney general phoned the toll-free number and wound up talking to Best Interest Rate Mortgage Co. The state also found that the company was charging advance fees of between $1,000 and $1,800 — in violation of Idaho law — and that it was not licensed to offer modifications in the state.

Best Interest Rate, which didn’t admit to any wrongdoing, agreed to settle the charges with the state. As part of the agreement, 12 borrowers will receive $19,710 in refunds. The company also agreed to cease operating in Idaho or soliciting Idaho consumers.

Idaho said it previously sued another firm, APS Northwest Idaho LLC, over similar allegations.

Federal Trade Commission v. Kirkland Young, LLC, a limited liability company, David Botton, individually and as a manager of Kirkland Young, LLC.