The Lawyers' Committee and counsel Davis Polk & Wardwell filed a lawsuit this week in New York Supreme Court in Nassau County on behalf of 18 homeowners claiming that a network of for-profit loan modification companies conducted a scam on them.
The lawsuit -- Masheyeva v. Law Offices of David M. Green -- alleges that vulnerable homeowners were defrauded out of tens of thousands of dollars by the defendants who promised to obtain modifications on their behalf but then failed to deliver results.
Defendants in the lawsuit consist of a network of loan modification companies, all of which are owned or affiliated with Green, as well as individual attorneys who allegedly worked with Green to execute his scheme.
According to the complaint, borrowers paid advance fees of up to $5,000 to the defendants who would work directly with the plaintiffs' lenders to renegotiate their loans and to secure lower monthly payments and rates. In some cases, the defendants' services were used to avoid impending foreclosure, the lawsuit said.
New York state law prohibits loan modification companies from charging borrowers any upfront fees.
Borrowers were lured to use the defendants' services by marketing slogans such as “Stop your foreclosure now!” and “Consultations are free and there is no obligation.”
The slogans also appeared on the American Home Crisis Center website.
Plaintiffs are seeking to recover monetary damages, including the upfront fees paid by the home owners.
An attorney for Green said his client looks forward to “vigorously representing himself in defending these actions.”
He added: “It would be inappropriate for us to comment on pending litigation.” The attorney asked to remain anonymous.
