NEW YORK — New York Attorney General Andrew Cuomo said Tuesday that he has subpoenaed 14 loan modification companies and is preparing to sue a 15th company on Long Island as his office looks into tactics used by so-called home-foreclosure rescue experts.
On a call with reporters Tuesday, Cuomo said his office has issued a notice of intent to sue American Modification Agency Inc., a loan modification company in Uniondale, N.Y., and its President Salvatore Pane Jr.
"This economic climate has bred an environment in which scam artists and opportunists are able to prey on vulnerable consumers on the brink of losing their most valuable possession - their home," Cuomo said in a statement. "Companies that charge homeowners up front fees for loan modification services, put homeowners into contracts that don't disclose cancellation rights, or lure consumers with misleading claims violate not only our trust but the law."
Cuomo said a probe by his office found that American Modification Agency, or Amerimod, charged heavy upfront fees in advance of providing services in violation of New York law. Cuomo said the company also used misleading advertising, including "unsubstantiated claims" it has a 90% to 100% success rate.
The upfront fees were about 1% of the outstanding mortgage, so they could be $3,000, $4,000, $5,000 or $6,000, Cuomo said.
The attorney general said Amerimod, one of the largest loan modification companies in New York, also failed to provide contracts that include a required notice of right to cancel and failed to provide Spanish-speaking consumers with Spanish contracts in violation of New York law.
Cuomo said his office is looking into similar conduct at other loan modification providers and the probe is ongoing.
The subpoenas issued Tuesday include requests regarding the companies' marketing strategies, representations made about the services they provide and their success rates, their fee structures, whether contracts are provided in accordance with the law, and what services are actually performed, Cuomo said.