Court Rules That NY Foreclosure Rescue Firm Engaged in Fraud

New York Supreme Court Justice Emily Jane Goodman has ruled that Long Island-based American Modification Agency (AMA or Amerimod) engaged in fraudulent, deceptive and illegal business practices by promising to save clients’ homes in exchange for hefty upfront fees and then often doing little or nothing in return. The ruling stems from a suit filed last year by state Attorney General Andrew Cuomo in response to cases such as that of a Queens couple represented by South Brooklyn Legal Services, a program of Legal Services NYC. (Image courtesy www.loanscamalert.org)

From an April 13th Crain’s New York article :

The decision, which came down last week and was announced by Mr. Cuomo on Tuesday, found that Amerimod made numerous false claims in its advertisements, including misrepresenting the number of homes it had saved. The judge also ruled that Amerimod falsely claimed to have a 90% to 100% success rate, to be licensed by a government agency and to be affiliated with “legal experts.”

The company also violated state law by charging illegal upfront fees, failing to provide contracts in the language of its customers and neglecting to notify homeowners they could cancel their contracts within five business days, the judge ruled.

The court denied a request by Mr. Pane to lift a temporary restraining order obtained by Mr. Cuomo freezing various bank accounts and other assets associated with the company. Ms. Goodman ordered further proceedings to determine the amount of consumer restitution, costs and fees and civil penalties.

The case was referred to the Manhattan district attorney’s office for a criminal investigation.

An attorney for Mr. Pane did not immediately return a call seeking comment.

But other attorneys hailed the ruling. Aoah and Equintal Middleton of St. Albans, Queens paid AMA $1,990 in December 2007, but instead of getting a lower mortgage payment, they got a foreclosure notice. They are still awaiting a modification.

“Judge Goodman’s ruling and injunction will ensure that vulnerable homeowners will be protected from AMA’s fraudulent business practices,” said Ms. Middleton’s attorney, Cyrus Dugger, of South Brooklyn Legal Services. “In addition, it serves as a warning to the countless other New York ‘distressed property consultants’ who continue to target New York homeowners.”

A NY Newsday article last June also focused on South Brooklyn Legal Services clients who were victims of AMA:

“There’s no reason on earth that you would pay for a loan modification when there are free services,” said Meghan Faux, who heads foreclosure prevention at South Brooklyn Legal Services, which provides free legal assistance to individuals across the region.

After months of trying to get mortgage relief using American Modification Agency, Brooklyn resident Rolett Brown is now working with South Brooklyn Legal Services to try to get back the $5,600 she paid AMA, based in Hauppauge and founded by executive Salvatore Pane. He also owns Amerimod, a separate Uniondale company that’s Long Island‘s largest modification firm.

Brown, who needed help after the monthly payment for her adjustable rate mortgage rose to $3,700 last July, said she paid AMA last summer, using two credit cards and a loan from her retirement fund. Her loan modification application was denied – twice.

AMA wanted to try a third time. Brown said no. Then, she said, she connected with city officials and her bank’s representatives and was able to get the changes she needed on her own.

AMA hasn’t refunded her money, she said. “I feel betrayed,” Brown added.