New York State Attorney General Andrew Cuomo has been in the middle of many controversial legal actions regarding Wall Street and the Real Estate industry. Since the recession began, Cuomo has successfully challenged virtually every aspect of the credit process, including real estate appraisals practices.
The son of the former Governor of the State and a probable favorite to gain the gubernatorial nod has taken aggressive action against 182 foreclosure assistance firms in the state. The Attorney General’s Office has sent cease and desist letters to all the firms suspected of charging clients retainer fees and then failing to provide services.
Cuomo has warned the foreclosure rescue companies that misleading and illegal conduct will be cause for imprisonment. “Today we are putting mortgage rescue companies on notice – they must immediately cease any dishonest tactics used to prey on homeowners or they will face the consequences. The business model for many mortgage rescue companies is based on false promises, but the true cost of the deception is all too real,” said Cuomo.
The Attorney General identified the following illegal practices:
1. Charging up-front fees for consulting services
2. Failing to enter into plain language written contracts with the homeowners
3. Failure to disclose exact services and all fees for those services
4. Failure to allow homeowners to cancel their contract without penalty within five days of signature
5. Failure to advise clients of this write of cancellation
6. Using deceptive and misleading advertising practices
7. Offering false 100 percent money-back guarantees
8. Using advertising representations that mortgage rescues companies were in some way connected to the government
The New York State Attorney General’s Office has already issued subpoenas to 20 mortgage loan modification companies. The AG has entered into settlement agreements with these companies and pursued enforcement actions against companies that failed to settle.
Throughout the recession, Cuomo has shown a willingness to protect the consumer. Distressed homeowners who do not want to lose their homes are very vulnerable to false promises and illegal actions taken by these mortgage rescue companies. In most cases, the homeowner is better served by approaching HUD or communicating directly with the lender.