Foreclosure-rescue scam artists are finding new ways to prey on distressed homeowners — but one Queens resident is fighting back.
Last week, MFY Legal Services filed a groundbreaking lawsuit on behalf of Queens homeowner Elva Brardo, 60.
The suit alleges that two affiliated companies, American Hope Group and the Donado law firm of Elmhurst, Queens, and seven of their employees swindled Brardo out of $11,885 while breaking the law and failing to save her home. She is now in foreclosure.
MFY says this is the first case in New York City filed under the new distressed-property consultant law — created in 2008 and amended in 2009 and 2010 — which forbids charging upfront fees like the $2,850 Brardo paid American Hope Group for loan-modification services.
Payment must be delayed until completion of the work, and contracts must include a notice mentioning alternatives like government-approved housing counselors.
The distressed-property consultant law exempts attorneys who provide foreclosure-prevention consulting as part of the normal course of business.
But a 2010 investigation by New York’s attorney general, cited in the complaint, showed that some loan-modification scam companies bring in attorneys apparently to try evading the law.
Brardo’s case follows the Oct. 23 unsealing of an indictment in Manhattan federal court by Preet Bharara, US Attorney for the Southern District of New York, against executives at a Long Island firm that also promised loan-modification services — but instead allegedly bilked 500 homeowners nationwide out of $2.3 million.
Brardo bought a home with her daughter and son-in-law in 2009. After falling on hard times in 2012, Brardo turned to American Hope, trusting the defendants partly because they communicated with her in Spanish, her native language.
But she claims they did not secure an affordable modification or provide her with legal representation.
“People are saying, ‘Oh, the [foreclosure] wave is slowing,’ but this is a new wave taking advantage of vulnerable homeowners,” said Nicole Arrindell of MFY Legal Services, which filed the complaint in Queens County Supreme Court. “They are telling vulnerable homeowners they are experts and can save the home, but are luring them into further debt.”
Valmiro Donado of the Donado law firm denies the allegations and said he will respond to the complaint.
Calls seeking comment from American Hope Group were not returned.