The two companies promised to modify 98 percent of mortgage foreclosures by working directly with banks. Authorities say the companies forced customers to pay 1 percent of the mortgage upfront, which is illegal.
"As New Yorkers and others across the country fight to stay afloat in these tough times, we continue to see dishonest companies preying on vulnerable homeowners," Cuomo said. "These companies pretend to be reaching out a helping hand, but instead they push consumers further down into debt and, in some cases, into foreclosure."
The lawsuits against National Modification and Infinity allege that the companies charged homeowners up-front fees of several thousand dollars, a violation of New York law. In addition, the companies used misleading advertising and made false representations to customers, including unsubstantiated claims of over a 90 percent success rate and guarantees that they would be able to convert an adjustable-rate mortgage to a lower, fixed-rate mortgage.
The lawsuits also allege that the companies promised a 100 percent money-back guarantee, but then failed to provide refunds to customers that they scammed, often even refusing to answer the customers' calls.
The Attorney General's lawsuits against National Modification and Infinity seek to shut down the companies and provide restitution and damages to customers. The lawsuits also aim to prevent both National Modification and Infinity and their owners from ever providing foreclosure rescue services.
In addition, the lawsuit seeks penalties and costs from the companies and their principals. Collectively, the companies may be subject to penalties of $1 million and potentially much more.
The foreclosure crisis has claimed the homes of thousands of New Yorkers across the state. In January 2010 alone, there were 4,569 foreclosed properties in New York, and 1 in every 1,737 housing units had received notice of foreclosure.
Under the law in New York, foreclosure rescue companies are required to provide clients with contracts, let financially vulnerable homeowners know that there are non-profit counselors that can help them for free, and refrain from charging up-front fees.
Consumers who are unable to make their mortgage payments should call their lender immediately to discuss the available alternatives to foreclosure. Many lenders offer foreclosure avoidance programs and have pledged publicly to assist distressed borrowers.
To find counselors approved by the U.S. Department of Housing and Urban Development in your local area, call 800-569-4287 or visit HUD.gov. To obtain foreclosure assistance or contact your mortgage lender, call the Federal Housing Administration at 800-CALL-FHA or visit FHA.gov.
Consumers who believe they are being targeted or defrauded by a foreclosure rescue company that may be engaging in unlawful conduct are urged to contact the Attorney General's Office at 800-771-7755 or visit the Attorney General's new Web site NYProtectYourHome.com.