Attorney General Josh Shapiro Sues Five Companies, Two Individuals in Mortgage Modification Scam
Attorney General Seeks $280,000 in Restitution for 21 Pennsylvania homeowners and others who were scammed
HARRISBURG — Attorney General Josh Shapiro today announced a lawsuit against five Pennsylvania mortgage foreclosure companies and two company owners for deceiving consumers into signing contracts to have their mortgage loans modified – and never delivering the services paid for. In some cases, homeowners instructed by the scammers to not pay their mortgages ultimately lost their homes in sheriff’s sales.
The Office of Attorney General received 21 complaints from Pennsylvania consumers, and nearly 50 more from consumers across the country, who entered into mortgage modification contracts with companies owned by Mark Goldstein and Drew Alia, including GMK Solutions, the Foreclosure Law Center; Century Legal Group; Alia Law Group; and the Law Offices of Drew Alia. Pennsylvania homeowners and other consumers wound up agreeing to pay the defendants more than $280,000 through their scam conducted between 2008 and 2015.
Here’s how the scam worked:
The defendants signed contracts with homeowners, promising to do a home loan audit and a mortgage modification – with the goal of lowering the consumer’s monthly mortgage payments or interest rate, or saving their home from foreclosure.
The defendants took cash deposits — often thousands of dollars — and then failed to produce the audits or mortgage modifications. To hide their scam, they told homeowners not to contact their mortgage lenders or make any payments because they were “handling” negotiations on the homeowners’ behalf. When anxious consumers began to demand updates on the status of their loans, the defendants dodged their calls and offered no refunds.
“Defendants Mark Goldstein, Drew Alia and their companies preyed upon dozens of Pennsylvanians and other consumers who thought they were making a smart decision for their home and family,” Attorney General Shapiro said. “They wanted to lower their interest rates, modify their mortgages, and save their homes. Instead, all they received from these defendants were false promises and no services. Some even lost their homes. This misleading scam was outrageous and I’m suing to get restitution for every person and hold these companies accountable.”
During the scam, many homeowners received notices from their lenders stating that if they did not respond, their homes would be foreclosed upon or sold at sheriff’s sale. In one instance, a consumer paid $3,500 up front for mortgage foreclosure services, and after the defendants assured the homeowner they had stopped the Sheriff’s sale – the home was lost anyway.
Another consumer from Delaware County called the Foreclosure Law Center for a loan modification to keep her home out of foreclosure, and paid a $700 deposit. The night before a sheriff’s sale, the defendants contacted the consumer and told her to file for bankruptcy to delay the sale. The bankruptcy filing was dismissed by the court. Ultimately, the defendants never delivered services or helped her – and wouldn’t refund her deposit.
This consumer, Kathleen Zang, said: “The Foreclosure Law Center told me not to contact my mortgage company and they were handling everything on my behalf. I had to file for bankruptcy after I learned that communication was never made to keep my house — where my children and family lived. I was outraged after learning from my mortgage company that no one from the Foreclosure Law Center had been in touch with them. Other people lost their homes because of this company. I lost $700 — and I’m grateful to Attorney General Shapiro and his Bureau of Consumer Protection for stepping up for consumers like myself.”
In addition to claims filed under Pennsylvania’s Unfair Trade Practices and Consumer Protection Law, the Attorney General’s lawsuit bases other claims against the defendants under the Pennsylvania Mortgage Licensing Act.
“If you believe you were victimized by defendants Goldstein, Alia or any of their companies, or any other false mortgage modification deal, call my office today or email us at email@example.com,” Attorney General Josh Shapiro said. “I want to hear from you, and we’ll seek justice and restitution for you.”
The lawsuit in the Philadelphia County Common Pleas Court seeks injunctive relief and restitution in excess of $280,000 total for all consumers who are currently or have ever been in a transaction with any of these companies or their affiliates.
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