Loan Modification Company Settles Civil Suit

Allison Tussey —  July 22, 2011 — Leave a comment

Nationwide Loan Modification Bureau, LLC (“Nationwide”), Virginia Beach, Virginia, a mortgage loan modification company, was sued for allegedly charging illegal advance fees before performing foreclosure rescue services for its customers.  Nationwide has since agreed to a settlement.

The suit against Nationwide was filed on July 20, 2010.  In the complaint, Nationwide allegedly violated the Virginia Foreclosure Rescue Law by charging consumers up to $1,200 in advance fees for services to help avoid or prevent foreclosure.  Section 59.1-200.1 of the Foreclosure Rescue Law prohibits a supplier of foreclosure avoidance or prevention services from “charging or receiving a fee prior to the full and complete performance of the services it has agreed to perform, if the transaction does not involve the sale or transfer of residential real property.” 

Nationwide allegedly also violated the Virginia Consumer Protection Act (“VCPA”) by failing to follow through on promises to assist consumers in obtaining modifications of their mortgage loans.   The VCPA generally prohibits suppliers from engaging in deception, false statements, false promises, or misrepresentations in connection with consumer transactions.  
The settlement includes the following key terms:

  • The Commonwealth is granted a permanent injunction prohibiting Nationwide from violating the VCPA and the Foreclosure Rescue Law by, among other things, collecting advance fees in connection with services to avoid or prevent foreclosure.
  • The Commonwealth is granted judgment against Nationwide in the amount of $21,700 for restitution.   If collected in full, it will provide reimbursement to all consumers that previously filed complaints with the Virginia Office of Consumer Affairs for unearned advance fees paid for foreclosure avoidance or prevention services on their primary residences. 
  • The Commonwealth is granted judgment against Nationwide in the amount of $25,000 in civil penalties for its violations of the Foreclosure Rescue Law and the VCPA.   
  • The Commonwealth is granted judgment against Nationwide in the amount of $7,500 for reimbursement of the Commonwealth’s attorneys’ fees and costs.

The Commonwealth also reached an agreement with Nationwide’s sole member and manager, Jason T. Gillentine, to resolve potential claims it had against him regarding his conduct through the company. Pursuant to this agreement, the Commonwealth recovered a total of $7,233.33, all of which will be used towards consumer restitution.  

Attorney General Ken Cuccinelli announced the settlement.

“This settlement results in judgments for the claims raised in our lawsuit against the company,” Cuccinelli said.  “I am pleased that we were able to address the wrongdoing in this manner, and that we have recovered some money that will be used to provide refunds to distressed homeowners that paid illegal advance fees.”

The Office of the Attorney General continues to work with the Virginia Office of Consumer Affairs and the Virginia Bureau of Financial Institutions to identify and investigate foreclosure rescue companies thought to be violating the advance fee prohibition.

The settlement with Nationwide, which is in the form of a consent judgment, was approved by a Virginia Beach Circuit Court judge on July 12, 2011.

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