MFY Legal Services has filed a groundbreaking lawsuit on behalf of Elva Brardo, a 60-year-old Queens homeowner who is currently in foreclosure. The complaint alleges that two affiliated firms -- American Hope Group and the Donado law firm -- and seven of their employees cheated Brardo out of $11,885 and violated the law. It reportedly is the first case in New York City filed under the distressed-property consultant law created in 2008 and last amended in 2010.
The statute forbids firms from charging upfront fees for loan modification services. Brardo claims to have paid $2,850 to American Hope Group, even though the law stipulates that payment must be delayed until completion of the work and that contracts must include a notice of alternatives such as government-approved housing counselors.
Exemptions from the law include attorneys who provide foreclosure-prevention consulting as part of the normal course of business. Some loan-modification scam companies, however, bring in attorneys to try to skirt the law. Brardo purchased a home in 2009 and in 2012 sought help from American Hope, partly because employees there communicated with her in her native Spanish. Brardo claims the firm did not secure an affordable modification or provide her with legal representation.