Suthers sues loan modification company
DENVER (Legal Newsline) - Colorado Attorney General John Suthers announced on Thursday that his office has filed a lawsuit against a Castle Rock company that allegedly engaged in a multistate loan modification scam.
The suit names Loan Modification Systems, as well as the company's owners, Robert Auhll and Nanette Auhll, and the company's salesperson, Thomas Stefanszky.
According to the lawsuit, the defendants are suspected of defrauding customers in search of home loan modification and foreclosure relief in Colorado and other states.
The complaint, which was filed in Denver District Court, alleges that the company and its principles collected $2,995 in upfront fees from homeowners in exchange for loan modification services. Loan Modification Solutions is suspected of taking over $1 million since January 2009.
Under Colorado law, companies are not permitted to seek an upfront fee for foreclosure relief services or loan modification.
The company is also suspected of using deceptive advertisements to attract customers, including promises of a 100 percent money-back guarantee and 90 percent success rates. Other alleged false advertising claimed that "skilled" and "professional" negotiators would secure modifications when, in fact, the company allegedly only collected documents from homeowners and faxed them to lenders.
The defendants also allegedly largely ignored consumers' requests for refunds when they failed to secure modifications through Loan Modification Solutions.
"Loan-modification scams prey on distressed homeowners' desire to save their homes and to find any means to help fix their dire financial situations," Suthers said. "As is the case with most loan-modification operations, consumers who dealt with Loan Modification Solutions lost not only their upfront fee, but also crucial time they could have used to secure a modification through their lenders."
The defendants are believed to have started up a new business, Principal Financial Partners Inc., in September. That business allegedly solicited upfront fees of $3,495 from homeowners seeking to reduce their principal mortgage balance. These actions were in violation of Colorado's consumer protection laws.