American Neighborhood Housing Foundation (ANHF), Chesapeake, Virginia, a mortgage loan modification company, was sued on November 9, 2010, by the Viriginia Attorney General after it had allegedly charged illegal advance fees before performing “foreclosure rescue” services for its customers. ANHF also maintained an office in Richmond, Viriginia, from November 2007 through October 2010. A settlement has been reached between the parties.
The Complaint alleged that ANHF violated the Virginia Foreclosure Rescue law by charging up to $1,050 in advance fees from nearly 1,000 consumers nationwide in connection with services to 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.”
The Complaint also alleged that ANHF violated the Virginia Consumer Protection Act (VCPA) by guaranteeing in many instances that it could stop the scheduled foreclosures of consumers’ homes. The VCPA generally prohibits suppliers from engaging in deception, false statements, false promises, or misrepresentations in connection with consumer transactions. The attorney general alleged in his complaint that the guarantee made was deceptive because the “stoppage” often only amounted to a temporary delay of the foreclosure proceeding, and even a temporary stoppage was not a possible result in all cases.
The settlement includes the following key terms:
– a permanent injunction prohibiting ANHF from violating the VCPA and the Virginia Foreclosure Rescue law, by, among other things, collecting advance fees in connection with services to avoid or prevent foreclosure;
– a permanent injunction prohibiting ANHF from making representations to customers such as, “We will stop your foreclosure,” or “We can and will stop the scheduled foreclosure auction of your home,” when such a result is not always possible;
– ANHF agrees to make refunds totaling $94,388.73 to 273 consumers across the country for unearned advance fees collected. The refund amounts vary based on the amount of agreed-upon services not performed by ANHF for or on behalf of individual consumers;
– ANHF agrees to pay the commonwealth a $5,000 civil penalty and $10,000 for reimbursement of the commonwealth’s attorneys’ fees and costs.
Attorney General Ken Cuccinelli announced the settlement.
“I am pleased that we were able to reach a reasonable agreement with ANHF that potentially will provide refunds to 273 affected consumers,” Cuccinelli said. “I appreciate the company’s cooperation in working with us to resolve the claims raised in our recent lawsuit.”
“My office continues to work with the Virginia Office of Consumer Affairs and the Virginia Bureau of Financial Institutions to identify and investigate companies that potentially may be violating the advance fee prohibition on foreclosure rescue companies. People are very vulnerable in this economy and are desperately seeking help, so it is especially important that we make sure those in the mortgage industry are playing by the rules and not playing on people’s desperation,” said Cuccinelli.
Consumers who have questions about the settlement may contact ANHF toll-free at (877) 545-1812. This number may change in the near future, and consumers should consult with ANHF’s website, http://www.itsyourhomekeepit.org, before calling. The attorney general’s office also will issue a news release if and when any changes are made to the company’s toll-free number.
The settlement, which is in the form of a consent judgment, was filed with the Chesapeake Circuit Court on December 10 and approved by the Court on December 15, 2010.
Cuccinelli credited his staff for the quick work on this case: “I appreciate the hard work of Senior Assistant Attorney General Dave Irvin and Assistant Attorney General Mark Kubiak for helping get this settlement resolved quickly and fairly for ANHF’s customers.”