Attorney General Sues Unlicensed Foreclosure Rescue/Mortgage Modification Companies

AUGUSTA, ME – November 25, 2009 – (RealEstateRama) — Attorney General Janet Mills today joined the Federal Trade Commission, the U.S. Department of Justice and the attorneys general of twenty-six other states in a national crackdown against foreclosure rescue and mortgage modification operations. These companies prey on consumers who are desperate to save their homes from foreclosure.

The Maine Attorney General has filed three separate lawsuits in Kennebec County Superior Court against three out-of-state businesses and their principals. The defendants are: Elect Group, LLC, Anthony Ferlanti and Emmanuele Zuccarelli (Florida); Help Modify Now Debt Solutions, Inc., Help Modify Now, Inc. and Chas Bain (California and Nevada); and US Advocate Law Group, P.C. and Jeff Nemerofsky (California). These lawsuits allege that the defendants used deceptive and unfair practices in marketing so-called “debt settlement” services, in the form of foreclosure rescues and mortgage modifications, and that they failed to register as debt management services under Maine law. The suits seek the recovery of fees paid by Maine consumers to these defendants, as well as civil penalties and costs.

“A person’s home is not just their largest financial asset; it is the bedrock of their family, their anchor in the community, their children’s future and their legacy. These foreclosure rescue schemes take advantage of people threatened with foreclosure by demanding large upfront fees and doing little or nothing in return,” said Attorney General Mills.

“I am pleased to join a national effort to protect homeowners from unfair and deceptive practices. Maine homeowners need to know that there is legitimate help for those concerned about foreclosure. I encourage Maine consumers to talk to Maine registered non-profit counselors and to avoid paying fees to any entity without checking the state’s registry. Many times a homeowner can negotiate on their own without paying any fees to a debt management company. The money spent on these ‘debt solution’ services is better spent on paying down debt and negotiating with banks and other creditors,” Mills stated.

The three lawsuits follow investigations conducted by staff in the Attorney General’s Office and at the Bureau of Consumer Credit Protection within Maine’s Department of Professional and Financial Regulation, which licenses debt management service providers.

The defendants allegedly charged Maine consumers more for their debt settlement services than allowed for by Maine law. The State alleges that the defendants’ illegally high upfront charges ranged from $1,000.00 to $4,300.00. Maine law prohibits debt management service providers from charging more than a $75 set-up fee and for charging more than 15% of the amount by which the consumer’s debt is reduced as part of each settlement. The State also alleges that the defendants misrepresented the benefits of their programs to consumers and refused to provide refunds when consumers asked for them after the defendants failed to prevent foreclosure. As a result, many Maine consumers found themselves in more dire financial straits than they were before they engaged the defendants. .

Maine’s Debt Management Services Act requires that providers of debt management services register with the Superintendent of the Bureau of Consumer Credit Protection and obtain a $50,000 surety bond for the protection of consumers. The defendants named in the recent lawsuits have never registered nor have they procured the required surety bond.

Superintendent Will Lund of the Bureau of Consumer Credit Protection stated that his agency has filed Cease & Desist Orders against 19 separate unlicensed debt management providers in the past 6 months, and that his staff has recovered more than $25,000 in restitution for Maine consumers during that time.

Lund cautions consumers who are considering hiring a debt management provider to review the roster of registered companies found on the agency’s website, www.Credit.Maine.gov, or to contact the Bureau at 1-800-332-8529 (1-800-DEBT-LAW) to make sure that the provider is properly registered.

“We hear every week from consumers who have found unlicensed companies on the Internet and who have sent funds to those companies without receiving any benefit,” Superintendent Lund commented. “We will continue to work with the Attorney General and other partners to stop violations of laws and to protect the public,” he said.

AG Mills and Superintendent Lund advise homeowners facing foreclosure that they now have a right to mediate with their lenders during the court proceedings. Homeowners should not hesitate to ask for mediation; this is an informal opportunity to resolve a foreclosure problem under the guidance of a court-approved mediator

Contact:
Kate Simmons, Office of the Attorney General, (207) 626-8577 Doug Dunbar, Dept. of Financial and Professional Regulation, 207) 592-0843