New Jersey Loan Mod Company Agrees to Civil Judgment

A New Jersey loan modification company and its owners have agreed to a judgment of $5,051,253 to settle civil charges they defrauded homeowners who sought help in avoiding mortgage foreclosure.

In addition to civil penalties of $5 million, corporate defendants Hope Now Financial Services Corp. and Hope Now Modifications LLC of Cherry Hill, N.J., along with individual defendants Salvatore A. Puglia Sr. and Nicholas F. Puglia Jr., principals in the business, have agreed to pay the state $51,253 in attorney fees and investigative costs.

According to New Jersey attorney general Paula Dow, the settlement resolves allegations that the defendants charged upfront fees totaling several thousand dollars for loan modification services, then failed to take any action on behalf of consumers.

The defendants were also charged with allegedly misrepresenting an affiliation with the Hope Now alliance, a legitimate nonprofit alliance of mortgage companies, mortgage counselors, investors and other mortgage market participants that was formed in October 2007 as part of a federal foreclosure prevention initiative. Under the agreement, the defendants are permanently barred from selling debt adjustment or loan modification services in New Jersey. "This is an important outcome, one that should send a message to anyone who might seek to exploit the financial desperation of others during these very difficult economic times," said Dow.

"This company, and these individuals, callously peddled false hope to trusting people-people who needed real loan modification help. It is appropriate that they never again be allowed to sell loan modification or debt adjuster services in New Jersey."

The settlement serves as a reminder that consumers seeking loan modification help should deal with licensed debt adjusters or other persons authorized to provide such services, added deputy attorney general Lorraine Rak, and chief of the state's Division of Law's Consumer Fraud Prosecution Section.

Filed in Superior Court in Camden County, the state's six-count complaint charged Hope Now Financial and the other defendants with violation of the Consumer Fraud Act, violation of advertising regulations and violation of the Debt Adjustment and Credit Counseling Act for, among other things, engaging in unlicensed debt adjustment activity, and making misrepresentations and false promises to consumers.

The lawsuit accused Hope Now Financial and the other defendants of charging already-distressed consumers thousands of dollars in upfront fees for loan modification services, but failing to provide any such services.

Ultimately, the lawsuit charged, consumers fell further behind on their mortgage payments, making the threat of foreclosure more likely. The lawsuit also alleged that Hope Now Financial failed to provide refunds to consumers who received none of the agreed-upon loan modification services.

The complaint also charged that Hope Now Financial and the other defendants placed content on a website designed to deceive consumers into believing the company was affiliated with the Hope Now alliance, which provides credit counseling and free foreclosure prevention.

Among the defendants' victims were a husband and wife from Eagleswood Township in Ocean County, who had more than $2,800 allegedly billed to their credit card by the defendants, received no loan modification services, and ultimately confronted foreclosure after they stopped paying their mortgage on the advice of a company representative. Another victim, who resides in Kennesaw, Ga., allegedly paid more than $3,500 to Hope Now Financial and received no assistance. After receiving a foreclosure letter, the victim renegotiated his mortgage in direct contact with his lender, but without defendants' promised assistance.

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