SALEM, Ore. (Legal Newsline) - Oregon Attorney General John Kroger announced on Monday that he has filed a lawsuit against a loan modification company that allegedly violated the state's Unfair Trade Practices Act and Mortgage Rescue Fraud Protection Act.
The lawsuit alleges that, beginning in January 2009, American Team Mortgage Inc., charged 32 homeowners more than $80,000 in fees for mortgage loan modification services. Since many of these fees where charged in advance of actually providing any help, it allegedly violated state law.
Kroger alleges that the company obtained loan modifications for very few of its Oregon clients, with possibly only two receiving aid.
"Homeowners facing foreclosure need help, not false promises," Keith Dubanevich, chief of staff and special sounsel to Attorney General Kroger, said.
Despite not helping with many of its customers, the company allegedly only refunded money to two of those who signed up with them and paid in advance for its services.
The lawsuit further alleges that in June 2010, the company went out of business, leaving many of its customers without a loan modification or a refund. At least one client lost his home to foreclosure and others face foreclosure as a result.
The Oregon Legislature passed laws in both 2008 and 2009 regulating companies involved in foreclosure counseling and loan modification services to prohibit the charging of advance fees and to require loan modification and foreclosure counseling companies to register with the Department of Consumer and Business Services.
American Team Mortgage, the lawsuit alleges, failed to register with DCBS.
"Companies offering loan modifications must be registered, and they must meet Oregon's strict laws designed to protect consumers," David Tatman, the administrator of the DCBS Division of Finance and Corporate Securities, said. "For homeowners seeking help with loan modifications, check the company's credentials, ask a lot of questions, and consider calling a nonprofit HUD counselor for free assistance."
Kroger's suit also alleges that Steve Hufstedler, the company's owner and president, claimed in a video on American Team Mortgage's website that the company got "great results more than 95 percent of the time," which hasn't been proven to be true.
Kroger seeks to permanently ban American Team Mortgage and Hufstedler from performing loan modifications and foreclosure counseling in the state. He is also requesting full restitution for Oregon consumers who were taken in by the company.