Judgments secured by Mo. AG against two loan modification companies‏

Nick Rees Mar. 30, 2010, 2:22pm

JEFFERSON CITY, Mo. (Legal Newsline) - Missouri Attorney General Chris Koster won a judgment against two foreclosure rescue companies, he said Tuesday.

The firms allegedly took distraught homeowners' money but failed to provide promised services.

"This attorney general's office has instituted a zero tolerance policy for any mortgage modification firm that preys on and cheats desperate homeowners," Koster said. "Our office will use all its powers to investigate and prosecute businesses involved in these schemes to defraud Missouri consumers."

The judgments name Gateway Mortgage Modification, owned by Richard R. Reichert, Jr., and First Universal Lending LLC, based in Palm Beach Gardens, Fla.

Gateway was alleged by Koster to have charged up-front fees for foreclosure and mortgage modifications unlawfully and to have falsely promised consumers that attorneys would negotiate loan modifications on their homes.

The court's judgment orders Gateway and Reichert to pay $65,000 and permanently prohibits them from charging up-front fees for their services and from falsely representing to consumers that attorneys would negotiate modifications. The court also prohibited Gateway and Reichert permanently from violating the state's merchandising practices and foreclosure consultant laws and ordered them to pay attorney fees and costs. An additional $10,000 penalty will be imposed if the company fails to pay restitution as ordered.

First Universal Lending LLC was alleged to have marketed its services to homeowners facing difficulty paying their mortgages or facing foreclosure. First Universal allegedly promised these customers lower house payments or lower interest rates and advised some clients to stop making mortgage payments while the modification process proceeded.

The process caused the consumers more harm by injuring their credit rating and increasing the likelihood of foreclosure. The business also allegedly illegally required up-front fees from homeowners before services would be provided.

First Universal was ordered by the court to pay more than $51,000 in restitution and $23,000 in civil penalties. Additionally, the company is prohibited from charging up-front fees, advising homeowners to stop making mortgage payments, and from promising loan modifications that are not followed through upon.

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