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NEWARK
-. The State Attorney General’s Office
and the Division of Consumer Affairs have
filed suit against a Gloucester County businessman
who allegedly collected tens of thousands
of dollars in surplus funds that homeowners
otherwise would have received for a small
fee after their homes were sold in foreclosure.
The
state’s two-count complaint against
Samuel E. Goodwin, III is the first action
filed under the state’s Consumer Fraud
Act to address deceptive practices in the
area of surplus funds recovery.
Goodwin
allegedly charged homeowners 15% to 65%
of the total surplus funds to which they
were legally entitled by misleading the
homeowners into believing that the process
to recover the funds was complicated and
could not be filed by the homeowners on
their own. Surplus funds are the monies
remaining after the foreclosure sale takes
place and mortgage, tax and other legal
obligations have been paid. Homeowners in
foreclosure can claim surplus funds by filing
a simple form available from the Superior
Court Trust Fund Unit and after paying nominal
fees totaling less than $100.
The
state alleges that in one instance, Goodwin
received approximately $79,000 in surplus
funds for making the application for release
of such funds.
“Because
of the ongoing subprime mortgage crisis,
an increasing number of homeowners are facing
foreclosure. These individuals can be a
ripe target for those who would exploit
their misfortune for profit,” Attorney
General Anne Milgram said. “Consumers
who have lost their homes in foreclosure
need and deserve all of the surplus funds
to which they are entitled.”
“We
continue to educate consumers about the
surplus funds process and to alert them
to deceptive practices,” said Acting
Consumer Affairs Director Stephen B. Nolan.
“The Division will vigorously pursue
those who would take advantage of vulnerable
consumers. Anyone going through the foreclosure
process is urged to get all the facts about
how the process works and to be suspicious
if anyone unexpectedly offers to help with
obtaining surplus funds.”
The
state’s complaint, filed in State
Superior Court in Gloucester County, alleges
that Goodwin, who maintains business addresses
in Gloucester City and Woodbury, violated
the state’s Consumer Fraud Act by
the following:
- Misleading
consumers into believing that he is a
practicing attorney;
-
Leading consumers to believe that the
surplus funds application is a complicated
process that requires his “expertise”
and assistance;
-
Leading consumers to believe that they
could not make a pro se application for
surplus funds;
-
Aggressively pursuing and pressuring consumers
into retaining his services and executing
documents;
-
Orally representing a surplus funds allocation
between himself and the consumer, and
then preparing written documentation that
increases his share of the surplus funds
recovery;
-
Charging consumers varying percentages
for the recovery of surplus funds when
the same application process applies to
all consumers;
-
Recovering amounts ranging from $8,900
to $79,000 as a result of making a surplus
funds application on behalf of consumers;
and
-
Failing to disclose to consumers the actual
charges incurred in connection with the
filing of a surplus funds application.
In
addition, the state seeks restitution for
affected consumers, maximum civil penalties,
reimbursement of its attorneys’ fees
and costs and compliance with the Consumer
Fraud Act.
The
Superior Court Trust Fund Unit has assisted
the Division with its investigation.
Any
consumer who believes that he or she may
be a victim of a surplus funds scam should
file a complaint with the Division of Consumer
Affairs. Complaints forms are available
online at www.NJConsumerAffairs.gov.
Complaints also may be filed by calling
800-242-5846 (within N.J.)
or 973-504-6200.
Deputy Attorney General Lorraine K. Rak,
Chief of the Consumer Fraud Prosecution
Section, is handling this matter for the
state.
Earlier
this year, the Division issued a Consumer
Brief concerning surplus funds which can
be found at www.NJConsumerAffairs.gov/brief/surplus.pdf
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