|
TRENTON
– Attorney General Paula T. Dow announced
today that a New Jersey loan modification
company and its owners have agreed to a
judgment of $5,051,253 to settle civil charges
they defrauded homeowners who sought help
in avoiding mortgage foreclosure.
In addition to civil penalties of $5 million,
corporate defendants Hope Now Financial
Services Corp. and Hope Now Modifications
LLC, of Cherry Hill, along with individual
defendants Salvatore A. Puglia Sr. and Nicholas
F. Puglia Jr., principals in the business,
have agreed to pay the State $51,253 in
attorney fees and investigative costs.
The
$5-million-plus settlement resolves allegations
that the defendants charged up-front fees
totaling several thousand dollars for loan
modification services, then failed to take
any action on consumers’ behalf. The
defendants were also charged with misrepresenting
an affiliation with Hope Now Alliance, a
legitimate non-profit alliance of mortgage
companies, mortgage counselors, investors
and other mortgage market participants that
was formed in October 2007 as part of a
federal foreclosure prevention initiative.
Under the agreement, the defendants are
permanently barred from selling debt adjustment
or loan modification services in New Jersey.
“This
is an important outcome, one that should
send a message to anyone who might seek
to exploit the financial desperation of
others during these very difficult economic
times,” said Attorney General Dow.
“This company, and these individuals,
callously peddled false hope to trusting
people – people who needed real loan
modification help. It is appropriate that
they never again be allowed to sell loan
modification or debt adjuster services in
New Jersey.”
”These
defendants preyed upon extremely vulnerable
consumers -- people who were facing the
imminent foreclosure of their homes,”
said Deputy Attorney General Lorraine K.
Rak, Chief of the Division of Law’s
Consumer Fraud Prosecution Section. “This
settlement not only addresses the defendants'
deceptive practices, but also serves as
a reminder that consumers seeking loan modification
help should deal with licensed debt adjusters
or other persons authorized to provide such
services.”
“Today’s
announcement signifies New Jersey’s
continued attack on mortgage fraud,”
said Department of Banking and Insurance
Commissioner Tom Considine. “We will
not tolerate conduct of this type. Those
who exploit struggling homeowners’
hopes and fears will face the law’s
full measure.”
Filed in Superior Court in Camden County,
the State’s six-count complaint charged
Hope Now Financial and the other defendants
with violation of the Consumer Fraud Act,
violation of Advertising Regulations and
violation of the Debt Adjustment and Credit
Counseling Act for, among other things,
engaging in unlicensed debt adjustment activity,
and making misrepresentations and false
promises to consumers.
The
lawsuit accused Hope Now Financial and the
other defendants of charging already-distressed
consumers thousands of dollars in upfront
fees for loan modification services, but
failing to provide any such services.
Ultimately, the lawsuit charged, consumers
fell further behind on their mortgage payments,
making the threat of foreclosure more likely.
The lawsuit also alleged that Hope Now Financial
failed to provide refunds to consumers who
received none of the agreed-upon loan modification
services.
The
complaint also charged that Hope Now Financial
and the other defendants placed content
on a Web site designed to deceive consumers
into believing the company was affiliated
with the non-profit Hope Now Alliance, which
provides credit counseling and free foreclosure
prevention.
Among the defendants’ victims were
a husband and wife from Eagleswood Township,
Ocean County, who had more than $2,800 billed
to their credit card by the defendants,
received no loan modification services,
and ultimately confronted foreclosure after
they stopped paying their mortgage on the
advice of a company representative. Another
victim, who resides in Kennesaw, GA, paid
more than $3,500 to Hope Now Financial and
received no assistance. After receiving
a foreclosure letter, the victim renegotiated
his mortgage in direct contact with his
lender, but without defendants’ promised
assistance. In total, 514 consumers have
filed complaints against the defendants.
Under
terms of the settlement, $1 million of the
$5 million judgment against the defendants
is suspended for a five-year period and
will ultimately be vacated, assuming the
defendants comply with all restraints and
conditions contained in the Final Consent
Judgment.
The defendants have represented that Hope
Now Financial Services Corp. and Hope Now
Modifications are no longer operating, and
that the Hope Now Modifications Web site
is permanently disabled and inactive.
Under
the settlement, the names of consumers victimized
by the defendants will be sent to the Federal
Trade Commission (FTC) and the FTC will,
to the extent available, provide restitution.
The Hope Now Financial action was handled
on behalf of the State by Deputy Attorney
General Nicholas Kant of the Consumer Fraud
Prosecution Section and Deputy Attorney
General Gregory McHugh of the Banking, Insurance
and Insurance Fraud Section. Deputy Attorney
General Rak, Chief of the Consumer Fraud
Prosecution Section and Deputy Attorney
General Raymond Chance, Chief of the Banking,
Insurance and Insurance Fraud Section, also
provided assistance. The investigation was
conducted by Investigator Joseph Iasso of
the Division of Consumer Affairs, Office
of Consumer Protection.
### |
