Home / News / Government / Court Halts Bogus Loan Mod Operations
Print This Post Print This Post

Court Halts Bogus Loan Mod Operations

At the request of the ""Federal Trade Commission"":http://www.ftc.gov (FTC), a U.S. district court has ordered two South New Jersey-based companies to stop falsely advertising that they are part of the mortgage assistance network, ""HOPE NOW Alliance"":http://www.hopenow.com, and that they successfully modify mortgages for almost all of their clients or else give refunds.
The defendants - ""Hope Now Modifications"":http://www.hopenowmod.com and ""New Hope Modifications"":http://www.newhopemodifications.com - are not affiliated with the legitimate HOPE NOW Alliance network. And according to the FTC, they operate in a manner diametric to the service they advertise, often diverting a full month’s mortgage payment from distressed homeowners as a fee, failing to help them modify their mortgages, and then denying refunds.
FTC Chairman Jon Leibowitz said, ""With many consumers desperate for relief and afraid they might lose their homes in these difficult economic times, some unscrupulous individuals prey on these fears for their own financial gain. The New Hope and Hope Now scammers have given consumers false hope under the guise of the government-endorsed HOPE NOW Alliance. We won’t hesitate to take action against these types of con artists now and in the future.""
The complaints and temporary restraining orders announced on Tuesday were against: 1) ""Hope Now Modifications, LLC"":http://www.ftc.gov/os/caselist/0923079/090324hopenowcmpt.pdf, Hope Now Financial Services Corp., and their principals, Nick Puglia and Salvatore Puglia; and 2) ""New Hope Property LLC"":http://www.ftc.gov/os/caselist/0923068/090324newhopecmpt.pdf, also doing business as New Hope Modifications LLC, and its principals, Brian Mammoccio and Donna Fisher. The FTC said it will continue to push for a permanent halt to the defendants’ illegal conduct.
According to the commission, the defendants advertised, marketed, and sold mortgage loan modification services to consumers nationwide via their Web sites, making false claims of a HOPE NOW affiliation. The FTC, which works to prevent fraudulent, deceptive, and unfair business practices, has charged the defendants with violating federal law by misrepresenting that they could obtain mortgage loan modifications for consumers in all, or virtually all cases.
Both defendants’ Web sites now say they are ""temporarily under construction,"" but the FTC says they previously contained false statements designed to induce consumers to buy their services. For example, the commission said ""New Hope's site"":http://www.newhopemodifications.com represented that ""Loss Mitigation"" is ""The Fast and Easy Way to Save Your Home,"" and that, ""Our experience with the loss mitigation departments of major mortgage companies and servicers gives you the advantage needed to secure a plan you can live with."" FTC said that ""Hope Now's Web site"":http://www.hopenowmod.com claimed the organization could ""help you save your credit and your home, often within 60 to 90 days."" Other claims included, ""We STOP FORECLOSURE In Its Tracks!""
According to the FTC, when consumers call the New Hope or Hope Now toll-free numbers, the defendants’ telemarketers promise them that they can help modify their mortgage loans and prevent foreclosure. Consumers are then told that they first must pay an up-front fee, referred to as a ""mitigation escrow fee"" before the defendants begin working with them.
The complaints also allege the defendants tell consumers they can receive a full refund if they are not satisfied with the service. But the FTC says, in many cases, after consumers have paid the up-front fees, the defendants fail to return their phone calls to provide them with updates about the status of their communications with the consumers’ lenders or misrepresent that negotiations are proceeding smoothly. In most instances, the commission said, the defendants fail to obtain mortgage loan modifications, and consumers find out later from their lenders that they have not even been contacted by the defendants. And, the complaints state that consumers who complain about the lack of service often find they cannot get a refund for the substantial up-front fee they paid.
The FTC also charged the defendants with making false claims that they are affiliated with, or part of, the HOPE NOW Alliance, a non-profit organization that is a broad-based coalition of credit and homeownership counselors, lenders, investors, mortgage market participants, and trade associations. The HOPE NOW Alliance offers free assistance to homeowners who may not be able to pay their mortgages and need help working with their mortgage company or loan services. Seeking to capitalize on its name, the FTC said the defendants called their firms New Hope Modifications and Hope Now Modifications, and used telephone numbers that included ""HOPE,"" to mimic the real HOPE NOW Alliance hotline (888-995-HOPE).
The commission voted unanimously to approve and file each complaint with the U.S. District Court of New Jersey. The court has issued temporary restraining orders and related asset freezes against the two companies, until further legal proceedings. The FTC's charges were made with the assistance of the HOPE NOW Alliance and the Attorney General of New Jersey.

About Author: Carrie Bay

Carrie Bay is a freelance writer for DS News and its sister publication MReport. She served as online editor for DSNews.com from 2008 through 2011. Prior to joining DS News and the Five Star organization, she managed public relations, marketing, and media relations initiatives for several B2B companies in the financial services, technology, and telecommunications industries. She also wrote for retail and nonprofit organizations upon graduating from Texas A&M University with degrees in journalism and English.
x

Check Also

Homeowner Debt and HELOCS

Personal loan volume increased threefold between 2011 2018, but according to a new report, U.S. homeowners have significant opportunity to use HELOCs to replace higher cost sources of credit.

GET YOUR DAILY DOSE OF DS NEWS

Featuring daily updates on foreclosure, REO, and the secondary market, DS News has the timely and relevant content you need to stay at the top of your game. Get each day’s most important default servicing news and market information delivered directly to your inbox, complimentary, when you subscribe.