Hundreds of distressed homeowners facing foreclosure in Hawaii were likely misled by a loan modification program operated by the Homeowner Legal Assistance Association, a Florida corporation, for approximately 17 months in 2009 and 2010, according to an investigation conducted by the Hawaii Department of Commerce and Consumer Affairs’ Office of Consumer Protection.
OCP believes more than 500 Hawaii homeowners may have claims against their New York-based attorneys and urges victims to file claims for reimbursement.
According to OCP, the victims were offered loan modification services through HLAA Inc. and New York attorneys David Galanter and Marc Zirogiannis. The alleged scheme operated nationally, but was widespread locally, and is believed to have taken in more than $1.5 million from Hawaii consumers.
“All of the money that was paid by Hawaii consumers was paid under retainer agreements with these New York attorneys for legal services, and yet it does not appear as though the lawyers provided any legal services. Neither of these out of state lawyers could legally provide the promised services here in Hawaii since both attorneys were not licensed to practice law in our state,” according to OCP Executive Director Bruce Kim. “The HLAA loan modification program was specifically structured to circumvent our laws, and hundreds of consumers were affected.”
OCP advises homeowners who are facing foreclosure that they may be targeted by a mortgage rescue scam. These mortgage rescue “professionals” frequently use half-truths and deceptive tactics to sell services that promise relief to homeowners in distress.
Homeowners looking for foreclosure prevention help, avoid any business that:
c Promises they can stop the foreclosure process, no matter a homeowner’s circumstances
c Instructs the homeowner not to contact his lender, lawyer or U.S. Department of Housing and Urban Development approved credit or housing counselor
c Collects a fee before providing any services
c Recommends the homeowner stop making mortgage payments
c Recommends that the homeowner make mortgage payments directly to it, rather than the homeowner’s lender
c Pressures the homeowner to sign papers he hasn’t had a chance to read thoroughly or that he don’t understand
c Recommends that the homeowner hire an out of state lawyer who isn’t licensed to practice law in Hawaii
Violations of Hawaii’s Mortgage Rescue Fraud Prevention Act and the laws prohibiting unfair and deceptive trade practices subject offending parties to fines ranging from $500 to $10,000 per violation per day.
A DCCA spokesman said Tuesday that there were likely victims on the Big Island, but so far his office had only confirmed cases on Kauai, Oahu and Maui.
Anyone who believes they may have been the victim of a mortgage rescue scam and have not filed a complaint with the state’s Office of Consumer Protection may contact the Consumer Resource Center at 587-4272 or visit cca.hawaii.gov/ocp for more information about filing a complaint.
HUD-approved housing counseling agencies in Hawaii can provide free advice on buying a home, renting, defaults, foreclosures and credit issues. Homeowners facing foreclosure can contact the Hawaii Foreclosure Information Center at 587-3222 or toll-free at 800-394-1902 to get free information on HUD-certified housing counselors. They may also visit its website at hfic.hawaii.gov. HFIC is operated by the DCCA as a free service to homeowners facing foreclosure.
The Office of Consumer Protection was represented in this case by staff attorneys Landon Murata and James Evers.