Friday, August 14, 2009

NY AG Sues Loan Modification Firm; Outfit Runs Illegal Upfront Fee Racket Engaging In Deceptive Practices That Fails To Deliver On Promises, Says Suit

From the Office of the New York Attorney General:
  • Attorney General Andrew M. Cuomo [Thursday] announced that his office has filed a lawsuit against New York-based American Modification Agency, Inc. (“Amerimod”), one of the largest foreclosure rescue companies in the country, and its owner Salvatore Pane, Jr. for engaging in a wide variety of deceptive business practices and false advertising to induce beleaguered homeowners on the brink of foreclosure to sign up for their services.(1) [Thursday's] lawsuit is part of Cuomo’s ongoing investigation into foreclosure rescue scams that target New York homeowners.

For the entire press release, see Cuomo Announces Lawsuit Against “Amerimod” Loan Modification Company To Protect Distressed Homeowners Facing Foreclosure (Long Island-Based Company Charged Illegal Up Front Fees and Failed To Obtain Promised Help for Homeowners; Suit Seeks Refunds for Thousands of Customers and Court Order Shutting Down Company).

(1) The lawsuit asserts that Amerimod:

  • Fails to obtain loan modifications for the vast majority of its customers, many of whom end up in foreclosure or negotiate loan modifications on their own;

  • Illegally charges thousands of dollars in up-front fees, and fails to refund these fees as promised when loan modifications are not obtained;

  • Engages in deceptive and misleading practices by grossly exaggerating its success rate, making false promises about its ability to save customers’ homes, underestimating the amount of time it takes to achieve a loan modification, and misrepresenting that the company is a law office and that lawyers will work on customers’ files;

  • Makes false guarantees of 100% customer service when, in fact, once Amerimod has collected its up-front fees, its representatives often fail to return calls of customers facing imminent foreclosure who are desperately seeking a status update on their files;

  • Makes false and misleading statements on its website, in newspaper advertisements, and in radio advertisements;

  • Fails to include legally required disclosures and notices in its customer contracts, including notice of a customer’s right to cancel a contract within five business days;

  • Provides detrimental advice to customers, such as recommending that they stop making monthly mortgage payments, ignore communications from their lenders and avoid consulting with non-profit housing counseling agencies;

  • Targets Spanish-speaking consumers who are signed up by Spanish-speaking representatives, and then fails to provide the consumers Spanish-language contracts as required by law.