DENVER – Colorado Attorney General John Suthers today announced three settlements as part of his office’s ongoing effort to crack down on deceptive mortgage advertising and bring foreclosure consultants into compliance with the law. Today’s announcement comes on the heels of a similar set of cases announced on November 18 of last year.
Foreclosure Protection Enforcement
The Attorney General has reached a settlement agreement with Castle Rock-based Hawk Financial Services and its sole proprietor, Basil J. Badwan, which marketed foreclosure consultant services to Colorado homeowners through print ads in the Yellow Pages.
The firm entered in to numerous contracts with Colorado consumers for “foreclosure rescue” services, including loan modifications. Thirty-one contracts reviewed by the Attorney General’s Office did not contain the mandatory language, disclosures, or cancellation notices required by law. HFS also collected full payment from the homeowners, ranging between $500 and $1,900, prior to performing any service, which is also prohibited by state statute.
The settlement agreement requires a restitution payment of $26,500 to compensate the thirty-one consumers who paid advance fees to Hawk Financial between Jan. 10, 2007, and July 21, 2008. The settlement also provides a $5,000 in Civil Penalties and $5,000 in costs and attorney fees.
Separately, Attorney General Suthers issued a Cease & Desist Notice to a foreclosure consultant and loan modification firm, Infinity Funding Group, located in Bohemia, New York. Infinity advertised foreclosure rescue services, including loan modification, and accepted an upfront payment of $3,500 from one distressed homeowner in Colorado. As part of the agreement, Infinity has agreed to refund the upfront fee it collected.
Colorado Executive Mortgage and owner/operator Nathan Soroka have agreed to an Assurance of Discontinuance that will eliminate the deceptive use of teaser rates in its advertisements. CME was accused of running advertisements in the Mortgage Marketplace section of the Denver Post and Rocky Mountain News featuring low, one-month teaser rates associated with option-ARM loans. The advertisements made it appear as if the low rate was fixed for a traditional five-year ARM. CME paid the Denver Newspaper Agency more than $128,000 to run these advertisements through most of 2007 and early 2008.
Like the settlements announced in November of last year, the assurance reached with Colorado Executive Mortgage prohibits the company from featuring low teaser rates in its advertisements or burying material information about these loans in agate footnotes. The assurance also requires CME to provide borrowers with a consumer handbook on adjustable rate mortgages.
These actions are part of Attorney General Suthers’ ongoing effort to help protect Colorado borrowers from deceptive lending practices and to shield borrowers facing foreclosure from fraudulent activity. The Colorado Foreclosure Protection Act was enacted in 2006 to curtail and prevent deceptive and unconscionable business practices of certain foreclosure consultants. To date, the Attorney General’s Office has reached Cease & Desist agreements prohibiting 17 companies from operating in Colorado until they follow the law.
For those who are having trouble making their mortgage payments or are currently in foreclosure, there are many low- and no-cost options available for getting help. Homeowners facing difficulties are encouraged to call Colorado’s Foreclosure Hotline at 1-877-601-HOPE (4673). Homeowners who contact the Foreclosure Hotline to receive assistance stand a much better chance of saving their home than those who go it alone.