AG wins orders against loan mod scams in Charlotte and Wilmington
Release date: 9/19/2013
Companies must follow law, repay consumers who complained
Raleigh: Two companies that charged homeowners illegal fees for help lowering mortgage payments and avoiding foreclosure are now barred from those practices and must pay refunds, Attorney General Roy Cooper said today.
“Schemes like these promise help but almost always fail to deliver,” Cooper said. “People pay steep upfront fees but usually get little or no meaningful help in saving their homes.”
Cooper filed suit in September 2012 against Community Mortgage Assistance Program of Charlotte and Tidewater Financial of Wilmington for charging consumers illegal advance fees for mortgage loan modification services and then failing to provide them with meaningful help. Under North Carolina law, it’s illegal to charge an upfront fee for foreclosure assistance or loan modification services.
Wake County Superior Court Judge Paul Gessner approved consent judgments against both companies last week.
Tidewater Financial and its owner, Elaine Madej, are barred from charging illegal advance fees and from any unfair or deceptive practices that violate North Carolina law and will pay $8,200 in refunds. Community Mortgage Assistance Program and its owner, Koy Lynn Chiu, are banned from providing any mortgage loan modification or foreclosure assistance services to North Carolina residents or from within North Carolina and will pay $4,000 in refunds. If either defendant violates the court orders, they will owe $30,000 or more in civil penalties.
Approximately 1,200 consumers have complained to the Attorney General’s Office about foreclosure assistance and loan modification schemes over the past five years. Cooper and his Consumer Protection team have taken 17 foreclosure scammers to court, winning judgments worth more than $1.6 million from foreclosure scammers including refunds for consumer victims of these schemes.
As alleged in the lawsuit filed last year, Community Mortgage Assistance Program charged consumers as much as $1,500 in advance and claimed to have a 98 percent success rate in saving people’s homes. But consumers who paid the fee get little or no real help working out a loan modification. Chiu falsely promoted the company as a “faith-based organization” on gospel radio and in written materials to target religious homeowners and make the company seem trustworthy.
Cooper’s complaint against Tidewater Financial alleged that it charged homeowners $700 to $1,000 in upfront fees and promised consumers a “legal review” of their loan documents to determine whether lenders had violated state or federal law. However, no one with the company had legal expertise on lending laws. According to one consumer who filed an affidavit in support of the lawsuit, Tidewater Financial claimed it was working out a loan modification even as the consumer’s home was sold at auction and his family was evicted by the Sheriff.
The Attorney General’s Consumer Protection Division received five complaints about Community Mortgage Assistance Program and seven complaints about Tidewater Financial. To file a consumer complaint, call 1-877-5-NO-SCAM toll-free within North Carolina or fill out a complaint form at www.ncdoj.gov.
“If you’re having trouble paying your mortgage, seek out free, qualified help instead of wasting your time and money on a scam,” Cooper said.
Consumers who are behind on their mortgage payments should contact their mortgage lender or servicer immediately. In North Carolina, free help dealing with foreclosure is available from the State Home Foreclosure Prevention Project by calling 1-888-623-8621. The State Home Foreclosure Prevention Project, which is administered by the North Carolina Housing Finance Agency, helps North Carolina homeowners who are facing foreclosure for any reason with free housing counseling, access to legal services for people with lower incomes, and help dealing with your mortgage servicer.
Media contact: Noelle Talley (919) 716-6413