State sues four South Florida foreclosure rescue companies

Attorney general says operations broke the law by charging thousands in up front fees

By Diane C. Lade South Florida Sun Sentinel
6:19 PM EDT, July 21, 2009

State regulators filed a lawsuit in Palm Beach Circuit Court Tuesday against four South Florida mortgage loan modification companies they say were collecting a total of up to $1 million in monthly fees, as the Attorney General's Office cracks down on the foreclosure rescue industry.

Officials said the operations, which were related, illegally used President Barack Obama's voice in telemarketing calls and charged up to $5,000 up front to modify home loans, a violation of the 2008 Foreclosure Rescue Fraud Prevention Act. The state is seeking restitution for consumers, civil penalties and the companies' dissolution.

FHA All Day.Com, Inc., Safety Financial Services, Inc., Housing Assistance Law Center PA and Housing Assistance Now, Inc. were named in the suit, as well as Jason Vitulano, the owner of FHA All Day and Safety Financial. Attorney General spokeswoman Sandi Copes said the state has received a total of 300 complaints about the four businesses, which were based in Delray Beach, Boca Raton and Deerfield Beach.

One filing came from Kim Kyzar. She decided to try to lower the 8.1 percent interest rate on her Lake Worth house after receiving an FHA All Day marketing call featuring Obama talking about low-rate mortgages under the stimulus act.

She said she and her husband, who have an air conditioning business, paid FHA All Day $2,000 up front in March for a "forensic loan document review" plus another $500 for legal costs. But Kyzar became suspicious when the company stopped returning her phone calls in the middle of April. Going to the Boca Raton office, she found it empty.

"I have no idea if they are working on my case," said Kyzar, whose lender told her they never had been contacted by FHA All Day.Owner Vitulano said the attorney general had ordered him to close down the office, although he was worried it would generate more complaints when his customers could not find him. FHA All Day still is processing existing modifications, he said, although not taking new clients.

Vitulano said he only had rented space to Housing Assistance Law Center and denied any connection with Housing Assistance Now. He and the Attorney General's Office had discussed settling for $15,000 in investigative costs and $20,000 in restitution regarding FHA earlier this year but Vitulano said negotiations broke down when he refused to also permanently abandon the mortgage modification business.

But Copes said the attorney general decided to reinstate its investigation after receiving more complaints and learning more about the affiliated companies.