AG Coakley Targets Financial Companies for Predatory Loan Practices, Warns Homeowners About Foreclosure Relief Scams
AG’s Office Obtains $20,000 Settlement with iMod Corporation, Files Lawsuit Against Pinnacle Financial for Soliciting Massachusetts Consumers with Foreclosure Relief Scams
BOSTON – Following separate actions brought by her office this week against two financial companies and a law partnership, Attorney General Martha Coakley is warning consumers about potential scams that attempt to take advantage of struggling homeowners.
Both cases allege unfair and deceptive acts and practices in connection with foreclosure-related services, including improper charging of advance fees. Under Massachusetts law, consumers should not be charged advance fees for foreclosure-related services.
“We allege these defendants preyed on distressed homeowners, often requesting advanced payment in violation of the law,” AG Coakley said. “We continue to see many foreclosure and loan modification scams that prey upon borrowers who are desperately trying to save their homes. Homeowners should be aware of their rights and know that our office has resources available to help them.”
In the first action, a Brighton company and related law firm have agreed to pay a total of $20,000 in restitution to consumers and the Commonwealth for allegedly charging illegal advance fees for loan modifications. According to an assurance of discontinuance, filed on Wednesday in Suffolk Superior Court, iMod Corporation (iMod), and Lombardi and Stephenson, an affiliated law firm, charged Massachusetts residents advance fees for foreclosure-related services. In addition to restitution for consumers, the defendants have agreed to no longer charge consumers advance fees for foreclosure-related services, and will notify potential clients that free loan modification services are available.
In the second action, a Lawrence financial company and its owner have been sued for using the foreclosure crisis to prey upon homeowners and provide legal advice without a license. According to the lawsuit, filed in Suffolk Superior Court on Wednesday, Pinnacle Financial Consulting, LLC (Pinnacle), and its owner, Robert Burton (Burton), allegedly engaged in unfair or deceptive conduct while marketing, soliciting and providing loan modification, bankruptcy petition preparation and financial advising services. The allegations include misrepresenting to consumers the services they could provide, exaggerating the benefits of their services, charging unlawful advance fees, practicing law without a license, failing to take any action to provide the promised services after receiving payment, and refusing to provide refunds upon request. Defendants allegedly targeted minority and non-native English speakers desperate to save their homes from foreclosure. The AG’s Office has obtained a temporary restraining prohibiting the defendants from dissipating or concealing assets and destroying records.
In 2007, the AG’s Office issued regulations that prohibit soliciting or accepting an advance fee in connection with foreclosure-related services, or advertising services without disclosing exactly what is offered to avoid foreclosure, among other unfair practices.
Using the funds directed to Massachusetts from the $25 billion national settlement with the five major lenders over their servicing and foreclosure practices, the AG’s Office initiated the HomeCorps program, utilizing those resources to benefit affected borrowers with loan modification, borrower representation and borrower recovery services.
In light of these recent actions, the Attorney General’s Office offers the following advice for distressed homeowners:
- If you are going to pay someone to help represent you in attempting to avoid foreclosure, it is ILLEGAL for them to demand or accept a fee in advance (with the exception of certain fees for legal services which may be charged by a licensed attorney in the limited circumstances of preparing and filing a bankruptcy or court proceedings to avoid foreclosure).
- You should NEVER agree to any proposal where you are required to transfer title to your home to another party.
- Do not ignore notices from the lender. And do not follow the advice of anyone who says that you should stop making payments - you will only get further in arrears, closer to foreclosure, and damage your credit rating.
- Just because a party has information about your loan terms or your property does not mean that they are affiliated with your bank or a government program. That information can be obtained by various means, including through foreclosure filings. Be particularly careful not to share your personal information or credit information with someone whom you do not know.
- Under law, the lender must provide you with a default notice and a 150-day "right-to-cure" period before they can foreclose on your home. Use this period to attempt to negotiate a loan modification with the lender.
- If a foreclosure appears to be inevitable, speak with your lender about how much time you may have to find a new place to live, and consult with a social services agency in your community about assistance with the transition. Homeowners facing foreclosure should know that there are several organizations available to help.
- If you are facing foreclosure, or the foreclosure has already occurred, HomeCorps may be able to help by offering access to a variety of foreclosure prevention or recovery services. Contact the HomeCorps Hotline at 617-573-5333.
These matters were handled by Assistant Attorney General Tim Hoitink of AG Coakley’s Insurance and Financial Services Division and Assistant Attorney General Justin Lowe of AG Coakley’s Consumer Protection Division, with assistance from Investigators Monique Cascarano, Anthony Sibilia, Jody Quartarone, and William Mackay all of Attorney General Coakley’s Civil Investigations Division.