Hundreds of distressed homeowners facing foreclosure in Hawaii were likely misled by a loan modification program operated by the Homeowner Legal Assistance Association (HLAA), a Florida corporation, for approximately 17 months in 2009 and 2010, according to an investigation conducted by the Hawaii Department of Commerce and Consumer Affairs’ (DCCA) Office of Consumer Protection (OCP).
OCP thinks more than 500 Hawaii homeowners might have claims against their New York-based attorneys and urges victims to file claims for reimbursement.
According to OCP, the victims were offered loan modification services through HLAA Inc. and New York attorneys David Galanter and Marc Zirogiannis. The alleged scheme operated nationally, but was widespread locally, and is thought to have taken in more than $1.5 million from Hawaii consumers.
“All of the money that was paid by Hawaii consumers was paid under retainer agreements with these New York attorneys for legal services, and yet it does not appear as though the lawyers provided any legal services. Neither of these out of state lawyers could legally provide the promised services here in Hawaii since both attorneys were not licensed to practice law in our state,” according to OCP Executive Director Bruce Kim. “The HLAA loan modification program was specifically structured to circumvent our laws, and hundreds of consumers were affected.”
OCP advises homeowners facing foreclosure they might be targeted by a mortgage rescue scam. These mortgage rescue “professionals” frequently use half-truths and deceptive tactics to sell services that promise relief to homeowners in distress.
If you are looking for foreclosure prevention help, avoid any business that:
• Promises it can stop the foreclosure process, no matter your circumstances.
• Instructs you not to contact your lender, lawyer or U.S. Department of Housing and Urban Development (HUD) approved credit or housing counselor.
• Collects a fee before providing any services.
• Recommends you stop making your mortgage payments.
• Recommends you make your mortgage payments directly to it, rather than your lender.
• Pressures you to sign papers you haven’t had a chance to read thoroughly or you don’t understand.
• Recommends you hire an out-of-state lawyer who isn’t licensed to practice law in Hawaii.
Violations of Hawaii’s Mortgage Rescue Fraud Prevention Act and the laws prohibiting unfair and deceptive trade practices subject offending parties to fines ranging from $500 to $10,000 per violation per day.
A DCCA spokesman said Tuesday there were likely victims on the Big Island, but so far, his office only confirmed cases on Kauai, Oahu and Maui.
Anyone who thinks they might have been the victim of a mortgage rescue scam and has not filed a complaint with the state of Hawaii’s Office of Consumer Protection can contact the Consumer Resource Center at (808) 587-4272 or go online to the OCP website at http://cca.hawaii.gov/ocp/ for more information about filing a complaint.
HUD-approved housing counseling agencies in Hawaii can provide free advice about buying a home, renting, defaults, foreclosures and credit issues.
If you are facing foreclosure, you can contact the Hawaii Foreclosure Information Center (HFIC) at (808) 587-3222 or toll free at (800) 394-1902 to get free information on HUD-certified housing counselors. You also can visit HFIC’s website at HFIC.hawaii.gov.
HFIC is operated by the DCCA as a free service to homeowners facing foreclosure.
The Office of Consumer Protection was represented in this case by staff attorneys Landon Murata and James Evers.