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TRENTON – Attorney
General Paula T. Dow announced today that
the owner of several New Jersey loan modification
companies has agreed to pay the state $805,000
and stay out of the foreclosure rescue business
to resolve allegations he defrauded struggling
homeowners who sought help in staving off
foreclosure.
Defendant Stephen Pasch
of Greenbrook Township, Somerset County,
agreed to a judgment of $805,000 -- $205,000
of it payable to the Division of Consumer
Affairs within 60 days – to settle
charges that his New Day Financial Solutions,
Inc. and other companies collected up-front
fees from homeowners in return for promised
mortgage modification help – a prohibited
practice in New Jersey. Pasch’s other
companies include American Credit Repair
and Settlement, NDROA Inc. and Paramount
Debt Settlement USA.
In addition to Pasch, another
defendant in the same lawsuit, licensed
attorney Ejike N. Uzor of Newark, has settled
claims against him for $25,000. Two Uzor
companies were also corporate defendants
in the state suit: Uzor Financial Solutions
and Ejike N. Uzor and Associates.
In most cases, the foreclosure
rescue services for which homeowners paid
Pasch and Uzor up front never materialized
or actually made their situations worse.
In addition, the state’s lawsuit charged
that a Pasch/Uzor “non-profit”
known as American Financial Advocacy Council
– through its Web site at www.lordsavemyhome.com
– fraudulently sought to instill consumer
confidence in the defendants’ profit-making
operations.
“This case is another
example of our commitment to fighting deceptive
practices in the mortgage business and related
industries, such as loan modification, and
to holding accountable those who mislead
vulnerable homeowners,” said Attorney
General Dow.
“Simply put, these companies exploited
people who looked to them for hope and paid
them for help. This type of activity is
reprehensible anytime, but particularly
during tough economic times,” said
Dow.
Said New Jersey Department
of Banking and Insurance (DOBI) Commissioner
Tom Considine: “Those who take advantage
of people at one of the worst times in their
lives, during financial distress, must make
full restitution. It is unconscionable to
promise services to families who are desperate
to save their homes and provide them nothing
but false hope. We will not accept such
treatment of New Jersey borrowers.”
The settlement announced
today resolves allegations that Pasch and
his companies misled consumers through false
advertising and deceptive solicitations
in violation of New Jersey’s Consumer
Fraud Act, and engaged in debt adjustment
activity without a license in violation
of the New Jersey Debt Adjustment and Credit
Counseling Act and the federal Credit Repair
Organizations Act.
The defendants’ settlement
payments will be used to provide restitution
of up-front fees paid by consumers. The
Division of Consumer Affairs has reached
out to homeowners who filed complaints about
Pasch and Uzor with information about the
restitution fund, and what they need to
do to collect their payments.
The defendants have ceased
operating their loan modification business.
Under the settlement, they have agreed to
a permanent ban on participating in, or
soliciting consumers for, any business related
to loan modification, debt adjustment or
credit repair.
Pasch has further agreed to a 10-year ban
on applying for any banking license from
DOBI. He is not to conduct any further business
using a call center unless and until he
registers with the Division on Consumer
Affairs. He must report to the Division
all of his employment and business activities,
and income, for a five-year period.
Uzor is prohibited from conducting any loan
modification activities, and is required
to refer any of his legal clients seeking
such services to certified, non-profit housing
counseling agencies.
Acting Division of Consumer Affairs Director
Thomas R. Calcagni said homeowners in mortgage
trouble need to know the warning signs of
a potential scam.
“Legitimate
assistance is available to help homeowners
avoid mortgage default and potential foreclosure,
Calcagni said. “But consumers should
beware, and report to the Division of Consumer
Affairs, anyone who charges an up-front
fee for mortgage modification assistance.”
Other
warning signs include being told not to
contact your lender directly and to deal
only through the supposed mortgage assistance
company.
Among
the defendants’ victims, a Sayreville
woman paid New Day $2,500 for loan modification
help and later learned her lender had no
record of any contact with New Day. The
woman, who had coincidentally received a
loan modification offer from her lender,
asked New Day for a refund after learning
the company had done nothing for her. She
never received the refund.
In
another case, a woman from Howell paid $4,200
for New Day’s services in September
2008. She was instructed to make her check
payable to Pasch’s company, NDROA.
In early 2009, the woman received a letter
from her mortgage company indicating that
no loan modification review could begin
because required documentation had not been
provided. Ultimately, the woman worked directly
with her lender to modify her loan, but
New Day never refunded her $4,200.
The
New Day Financial Solutions action was handled
by Deputy Attorney General James Michael
and Deputy Attorney General Janine Matton
of the Affirmative Litigation Section; Deputy
Attorney General Raymond Chance, Chief of
the Division of Law’s Banking and
Insurance Section; Deputy Attorney General
Gregory McHugh of the Banking and Insurance
Section. Deputy Attorney General Megan Lewis,
Chief of the Division of Law’s Affirmative
Litigation Section, and Samuel Cornish,
Acting, Section Chief, supervised the case.
Assistant Attorney General James J. Savage
of the Division of Law also provided assistance.
The investigation was handled by Supervising
Investigator Jennifer Micco, and Investigator
Jared O’Cone of the Division of Consumer
Affairs.
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