David Zak, attorney, Revere, Massachusetts, and his two businesses Zak Law Offices, P.C., and Loan Modification Group, Inc, have been ordered to pay more than $625,000 for targeting homeowners with deceptive advertisements and demanding thousands in illegal advance fees for mortgage modification and foreclosure relief services they failed to deliver.
“At a time when homeowners were struggling to afford their mortgages, this attorney abused his clients’ trust and deliberately exploited their financial circumstances by demanding exorbitant fees based on false promises, leaving these homeowners even more vulnerable,” Massachusetts Attorney General Maura Healey said. “This judgment puts an end to these deceptive and unfair practices and confirms that those who seek to capitalize on the foreclosure crisis will be held accountable.”
The final judgment , issued by Suffolk Superior Court Judge Paul Wilson finds defendants liable under the Massachusetts Consumer Protection Act. The court found that the defendants preyed upon at-risk homeowners throughout Massachusetts who were facing the imminent loss of their homes, took unlawful advance fees based on deceptive guarantees that mortgage loans could be modified to prevent foreclosures.
The judgment requires the defendants to pay more than $625,000, including $400,000 in civil penalties, more than $68,000 in attorney’s fees and costs, and $157,000 in consumer restitution for approximately 65 former clients who complained to the AG’s Office about the deceptive practices and unlawful advance fees.
As found by the Superior Court, the defendants targeted Spanish and Portuguese-speaking homeowners with misleading radio advertisements guaranteeing dramatic loan modifications and legal representation to avoid foreclosure. The defendants failed to disclose in the advertisements that there was no guarantee of success, when in fact they had failed to obtain the promised modifications for most of their clients.
On the basis of these false promises, and in violation of Massachusetts law, the defendants demanded non-refundable advance fees of $5,000 or more from distressed homeowners – when foreclosure relief services were available for free elsewhere – only to fail to deliver on their promises, leaving homeowners even more at risk of foreclosure.
Under the terms of the judgment, Zak and his companies are enjoined from engaging in deceptive advertising or soliciting, arranging or accepting advance fees for mortgage assistance or foreclosure-relief services.
In 2007, the Massachusetts Attorney General’s Office issued regulations that prohibit soliciting or accepting an advance fee in connection with foreclosure-related services – with certain limited exceptions for licensed attorneys preparing bankruptcy filings or court proceedings to avoid foreclosure – or advertising services without disclosing exactly what is offered to avoid foreclosure, among other unfair practices.
This case was handled by Assistant Attorney General Sara Cable of AG Healey’s Consumer Protection Division, with assistance from paralegal Virginia Aprahamian and Investigator David Bolcome.