According to a story published by the National Mortgage Professional Magazine, New York Attorney General Eric T. Schneiderman filed a lawsuit in New York County Supreme Court against four interrelated companies and their principals for operating a fraudulent loan modification scam.
The lawsuits were filed against Home Affordable Direct, Inc. (Farmingdale, NY), Home Affordable Solutions, Inc. (Farmingdale, NY), JR Holding Group Corp (Babylon, NY), Clear Solutions and Settlements, Inc. (Tampa, FL) and their principals, Javier Gutierrez and Shadi Soumekh.
The companies and their principals are alleged to prey upon financially vulnerable consumers by claiming they can provide substantial relief from unaffordable mortgage payments through loan modifications and other forms of foreclosure prevention.
The firms allegedly collect illegal advance fees and routinely fail to deliver on their promises. The lawsuit seeks to stop the illegal practices, provide restitution and damages to consumers, obtain disgorgement of profits, as well as penalties and costs.
“There has to be one set of rules for everyone, no matter how rich or powerful, and that is why our office has aggressively cracked down on those who prey upon vulnerable consumers at risk of losing their home,” said Attorney General Schneiderman.
The company’s scam operated by having salespersons falsely representing to homeowners that the company could cause their mortgage servicing company to reduce the principal mortgage balance to the current value of the home. Or, alternatively, the company claimed that they would obtain a specific dollar reduction in the homeowner’s monthly payment amount.
The scammers convinced homeowners to pay hefty upfront fees that ranged from $1,500 to over $11,000, which is a violation of law. Then, these companies usually refused to refund illegal advance fees once consumers realized they were victims of a scam.
The companies failed to provide required disclosures that would have alerted consumers to be wary of these misleading claims, particularly the disclosure that the consumer can stop doing business with the companies at any time and that they do not have to pay anything to the company if they reject the offer of mortgage assistance obtained from the consumer’s lender or servicer