TRENTON, N.J. (AP) -- Attorney General Anne Milgram announced two new lawsuits Wednesday that charge 10 individual and corporate defendants with preying on struggling homeowners looking to modify the terms of their mortgages.
In many cases, the homeowners -- often in danger of foreclosure -- were left in worse financial shape than before they enlisted in the services. Milgram said 42 homeowners were affected.
"In both cases, the defendants took advantage of desperate people who looked to them for help,'' Milgram said. "They gained the trust of their victims through deceptive advertising and misleading sales pitches, then collected thousands of dollars in unlawful fees and provided nothing in return but empty promises and added financial misery.''
Named in the first case are attorney Ejike N. Uzor, who practices in Linden and Newark, and Stephen Pasch of Green Brook Township.
The complaint accuses Uzor and Pasch, along with seven corporations, of violating fraud, advertising, and federal debt counseling laws.
According to the lawsuit, from roughly September 2008 through March 2009, the Newark-based companies used Web-based advertising, radio ads and telephone calls to find homeowners in financial straits.
Milgram said the companies charged customers thousands of dollars to help them obtain a better home loan, offering a money-back guarantee if the company failed to get it.
Often, customers were urged to stop making mortgage payments while the company tried to secure a new loan on their behalf, putting homeowners in even worse financial standing.
Milgram said that when the companies failed to obtain a modified loan, they returned only part of the fees, and in many cases, nothing at all.
A message left at Uzor's law office was not immediately returned Wednesday. Pasch's phone was disconnected.
In the second case, the state accused mortgage lender BIRMCO, based in Haddon Township, of similar offenses dating back to November 2008.
Milgram said BIRMCO used direct mail solicitations, which included a homeowner's specific mortgage information, to urge distressed homeowners to call.
Customers were promised that BIRMCO would negotiate a lower interest rate and lower monthly payments. Like the other lawsuit claimed, consumers were charged an upfront fee of several thousand dollars and promised a refund if BIRMCO failed to obtain a modified loan agreement. Customers were again told to stop making mortgage payments and to avoid contacting their lenders -- purportedly to strengthen their position in seeking loan modification.
Customers typically learned through a call from their lenders that they were delinquent on their mortgages and that nothing had been done to modify their loans.
Ultimately, Milgram said customers ended up working directly with their lenders to get a better loan. Afterward, she said BIRMCO typically sent a letter to the consumer claiming credit for the better loan. Customers who sought a refund usually got nothing back.
Debbie Mangroo, of Belleville, paid BIRMCO, which stands for ``Best Interest Rate Mortgage Company,'' $2,900 to help her get a better loan. She said the company told her that she should stop paying her mortgage for three months because that was the only way she would qualify for a lower rate.
She didn't question that advice at the time.
"I figured that's how they do it,'' she said. "Now, because of BIRMCO, I'm behind on my mortgage.''
She said she was able to work directly with her lender to arrange a way to catch up on the missed payments. BIRMCO eventually refunded half of her money.
To date, the state has filed a 11 mortgage fraud lawsuits since June 2008 against 102 individual and corporate defendants. More than 950 people have been affected by the scams, according to prosecutors. The state has also obtained indictments or guilty pleas in seven criminal mortgage fraud cases involving loans worth nearly $11 million.
Milgram reminded homeowners facing foreclosure that free help may be available to them through the state's foreclosure mediation program.
On the Net:
www.NJForeclosureMediation.org
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