SALEM, Ore. (Legal Newsline) - Oregon Attorney General John Kroger announced a lawsuit on Friday against a California-based loan modification company.
The lawsuit, filed September 29 in Clackamas County Circuit Court, alleges that NOD Consultants and principals Nicolas R. Godbout and Grant A. Gerhart collected approximately $90,000 in fees from 34 Oregon homeowners.
NOD Consultants allegedly collected fees for loan modifications from homeowners and refused to provide refunds after failing to obtain them.
"We're going to do everything we can to prevent distressed homeowners from being taken advantage of," said Keith Dubanevich, the chief of staff and special counsel to Kroger. "We would like to thank Rep. Dennis Richardson for his help in bringing this company to the attention of the Oregon Department of Justice."
Since November 1, 2009, at least 34 Oregonians have become clients of NOD Consultants after company officials allegedly convinced them that the company would successfully obtain loan modifications on their behalf. The company allegedly charged advance fees ranging from $725 to $2,950, in violation of Oregon law, which caps advance fees at $50.
According to the complaint, although most of the clients were current on their mortgage payments, the defendants allegedly encouraged them to skip at least one payment, claiming it would encourage their lender to renegotiate.
NOD Consultants allegedly failed to obtain a loan modification for 33 of its 34 Oregon clients. Despite this failure, it has generally refused to refund the fees paid by clients, Kroger says. The lawsuit seeks restitution and penalties.
When the federal government, non-profit organizations, mortgage lenders and private companies started offering loan modification services to financially distressed homeowners facing foreclosure, predatory mortgage relief companies charging excessive fees to perform services began to spring up, Kroger says.
The Oregon Legislature passed laws in 2008 and 2009 to protect homeowners from predatory mortgage relief companies and unfair loan modification practices, authorizing Kroger to enforce the new homeowner protection laws.