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AG Horne Files Lawsuit Alleging Consumer Fraud Violations Against Loan Modification Company

PHOENIX (Monday, April 23, 2012) -- Attorney General Tom Horne today filed a lawsuit against Mortgage Relief Group, d.b.a. Mortgage Assistance Group, and its owner, Stan Allotey, alleging that the Defendants engaged in deceptive loan modification services. 

The lawsuit alleges that since at least February of 2008, the company deceived consumers into paying fees, ranging from $995 to $3,245, for loan modification services by misrepresenting their ability to help consumers obtain mortgage relief and save their homes, thereby violating the Arizona Consumer Fraud Act. 

The Defendants are also accused of using deceptive means to lure financially distressed homeowners into paying up-front fees with promises that the company would prevent foreclosure and save the consumers’ homes by negotiating modifications of mortgage loans. Also, the company allegedly continued to charge or collect up-front fees even after the enactment of the Arizona Foreclosure Consultant Regulation Law’s ban on charging or collecting such fees. 

Once homeowners paid the upfront fees, the Defendants allegedly often failed to perform their part of the contract, keep homeowners informed of the status of their application for a modification, refund fees, or otherwise do anything to earn their fee. 

“Predatory loan modification scams are an unfortunate part of the housing crisis,” Horne said. “Cases such as this show that every consumer needs to thoroughly research the companies with which they do business. And it is a reminder that nobody should ever agree to paying up-front fees for services of this kind.” 

The Complaint alleges that defendants violated the Arizona Consumer Fraud Act, the Arizona Telephone Solicitations Act, and the Arizona Foreclosure Consultant Regulation Law, and asks the Court to bar Defendants from conducting any further foreclosure consulting business, impose civil penalties against the Defendants of up to $10,000 for each violation, pay the State of Arizona its costs of investigation and prosecution, and provide refunds to consumers. 

The case is being handled by Assistant Attorney General Alyse Meislik in the Consumer Protection and Advocacy Division. 

The Attorney General recommends that homeowners who are in or facing foreclosure contact their lender or servicer or a government-approved housing counselor. The Arizona Foreclosure Help-Line, 1-877-448-1211, refers consumers to HUD-approved housing counseling agencies who provide loan modifications and other services at no cost. 

If you feel you have been a victim of consumer fraud, please contact the Arizona Attorney General’s Office of Consumer Information & Complaints Unit at (602) 542-5763 / (520) 628-6504 / (800) 352-8431.