Federal and state officials are taking legal action against a growing list of loan modification companies — with New York subpoenaing 14 firms. Among violations frequently cited are charging illegal up-front fees and claiming falsely high modification success rates.
Bryan D’Antonio and three companies he controls — The Rodis Law Group Inc., America’s Law Group Inc. and The Financial Group Inc. which does business as Tax Relief ASAP — have been sued by the Federal Trade Commission in a civil contempt action, an FTC statement last week said. The defendants allegedly violated a 2001 court order prohibiting the misrepresentation of material facts about goods or services. D’Antonio pleaded guilty to mail fraud in the earlier case and served nearly three years in prison.
In the latest action, the defendants allegedly charged delinquent borrowers up to $5,500 in advance for modifications even though many of the loans were ultimately foreclosed and few modifications were executed. Borrowers were promised that the firm would negotiate to lower interest rates, payments and principal balances and were told that the company had never lost a customer’s home to foreclosure.
The FTC is asking the court to halt unlawful practices, freeze assets and seek compensation for victims.
On June 9, New York Attorney General Andrew M. Cuomo announced that a notice of intent to sue was served on American Modification Agency Inc. and owner Salvatore Pane Jr. The New York firm, which claims to serve thousands of consumers across the country, often fails to deliver on its promise to save homes from foreclosure — though it collected up-front fees in violation of New York law.
The state claims American Modification falsely advertises success rates of 90 to 100 percent, fails to provide contracts with required notices of right to cancel and fails to provide Spanish-speaking borrowers with Spanish language contracts.
The attorney general also said in the statement that he has served subpoenas on fourteen other loan modification companies as part of a broader investigation in response to growing consumer complaints. He wants to review marketing strategies, fee structures and representations made by the companies. He also want to review success rates and whether contracts are provided in accordance with the law. Those companies are:
|
“Companies that charge homeowners up front fees for loan modification services, put homeowners into contracts that don’t disclose cancellation rights or lure consumers with misleading claims violate not only our trust — but the law,” Cuomo stated.
In Arizona, Attorney General Terry Goddard announced this month that Bobby John Herrera was sentenced to five years in prison and ordered to pay $80,541 in restitution after pleading guilty in April to one count of fraudulent schemes and artifices. Herrera allegedly told prospective customers that he had connections who would enable him to negotiate better loan terms and avoid foreclosure. He charged borrowers $1,245 up front even though he failed to provide any loan modifications or prevent foreclosures.
As regulators set their sights on loan modification firms, Mortgage Fraud Examiners is warning that many of the players are migrating to its turf: the loan audit business. But the Ashburn, Va.-based company — which attempts to extract bigger modification concessions from lenders by exploiting compliance errors during the origination process — suggested servicers have nothing to fear from these new entrants who utilize the same software to audit the files as lenders did at origination.
Coeur d’Alene, Idaho-based Apply 2 Save Inc. filed for Chapter 7 Bankruptcy liquidation earlier this month, the Associated Press reported. The modification company claimed $5.2 million in assets and $7.8 million in mostly employee wage liabilities.
The launch of Convergys Loan Modification Solutions will help servicers quickly respond to heavy demand, Convergys Corp. announced on June 5. The offering includes contact center agent services and self-service automation.
Another service provider, Genpact, said earlier this month that it offers a suite of services that improve the efficiency and effectiveness of the loan modification process. Genpact said its approach helps financial institutions boost customer satisfaction levels by simplifying interaction.
“In addition to relieving pressure on lender resources and reducing costs by up to 40%, our approach to loan modifications cuts red tape for the consumer and provides a clear, easy to understand roadmap throughout the modification process,” Genpact executive Bob Pryor said in the statement.
Mortgage servicers face “aggressive tactics” and lawsuits by borrowers who engage the Law Offices of Consumer Protection Legal Services, a news release Friday said. The Southern California law firm claims that it utilizes strong negotiating tactics.
Despite a modification program that was held up by the Federal Deposit Insurance Corporation as a model for the entire industry to use, borrowers of failed IndyMac Bancorp Inc. are struggling to complete modifications, according to a story yesterday in the Chicago Tribune. The story cited multiple Chicago-area borrowers who said that after being trapped in a circuitous maze of paperwork and phone calls, their modification applications were denied.
Two individuals who claim to have successfully negotiated over 1000 loan modifications during their 25-year careers have teamed up to release The Insider’s Guide to Mortgage Loan Modification. Servicers will reportedly receive more complete information from borrowers who use the guide.
United Law Group touted a single modification it claims to have negotiated for a California borrower in a June 9 press release. The Irvine, Calif.-based firm said its attorneys are licensed in every state.
