A group of businesses that advertised themselves as non-profit foreclosure prevention organizations was sued for allegedly soliciting and spending more than $350,000 in illegal advance fees from distressed homeowners, Attorney General Martha Coakley announced today, Oct.15.
“We allege these defendants targeted and took money from homeowners facing foreclosure, promising to help them stay in their homes, but instead used that money for personal expenses,” Coakley said. “Through our HomeCorps program, our office has obtained direct relief and free services for homeowners, and we will continue our efforts to combat deceptive foreclosure rescue schemes that take advantage of struggling borrowers.”
Suffolk Superior Court Judge Frances McIntyre granted a preliminary injunction Thursday against the defendants, preventing them from soliciting or advertising for any foreclosure-related services or improperly charging advance fees.
The complaint, filed in Suffolk Superior Court, alleges that since 2009 a group of five individuals operated a series of organizations claiming to offer financial and legal services, including foreclosure-related services, to distressed homeowners in Massachusetts.
Those named in the lawsuit include the Alliance for Affordable Housing (AFAH) and the Global Advocates Foundation Inc., both located in Everett as well as the Alliance for Hope Network, Inc., in Framingham.
Individual defendants include Obeilson Roosevelt Matos of Framingham, Gailon Arthur Joy of Boylston, Pricila Trancoso Silva of Revere, John Charles Schumacher of Lancaster, and Paula Carvalho of Framingham.
The defendants allegedly portrayed themselves as tax-exempt, non-profit organizations, but operated like for-profit businesses, seeking financial gain for their officers and directors. The complaint also alleges that the defendants, who are not attorneys or law firms, engaged in the unauthorized practice of law.
According to the complaint, the defendants required homeowners to give deposits of up to 25 percent of their gross monthly incomes, claiming the deposits were necessary to be eligible for federal and other mortgage relief programs. The complaint alleges that between March 2010 and October 2012, the defendants collected and spent more than $350,000 in deposits that they received from homeowners and claimed would be placed in escrow for the homeowners to use to help mitigate their pending foreclosure. The complaint alleges, however, that the defendants never properly accounted for the use of the funds and allegedly used the funds for personal expenses including residential housing costs, car insurance fees, car repairs and vehicle excise payments.
In 2007, the AG’s Office issued regulations that prohibit soliciting or accepting an advance fee in connection with foreclosure-related services, or advertising services without disclosing exactly what is offered to avoid foreclosure, among other unfair practices.
If you are facing foreclosure, or the foreclosure has already occurred, the Attorney General’s HomeCorps may be able to help by offering access to a variety of foreclosure prevention or recovery services. Contact the HomeCorps Hotline at 617-573-5333.
This case is being handled by Assistant Attorneys General Mychii Snape, Colleen Nevin, and Gillian Feiner, and paralegal Krista Roche, of AG Coakley’s Consumer Protection Division, with assistance from Investigators William Mackay and Jody Quartarone of the Civil Investigations Division.