The owner of New Day Financial Solutions Inc. agreed to pay New Jersey up to $805,000 to settle allegations that he defrauded homeowners trying to avoid foreclosures, said state Attorney General Paula T. Dow.
The state claimed New Day and other companies owned by Stephen Pasch of Somerset County broke New Jersey law by taking upfront fees from homeowners for mortgage modification help. Pasch also owns American Credit Repair and Settlement, NDROA Inc. and Paramount Debt Settlement USA. In a related case, attorney Ejike N. Uzor of Newark agreed to settle similar state claims for $25,000. Uzor's two companies, Uzor Financial Solutions and Ejike N. Uzor and Associates were also named in the state's 2009 lawsuit.
As part of the settlement, Pasch, Uzor and the companies admitted no wrongdoing or liability. The state had claimed the services homeowners paid for in advance either never were provided or made the situation worse. The state also claimed Pasch and Uzor allegedly used a supposed nonprofit called American Financial Advocacy Council to promote the companies.
"These companies exploited people who looked to them for hope and paid them for help. This type of activity is reprehensible anytime, but particularly during tough economic times," said Dow.
The settlements will be used to pay restitution to consumers who paid upfront fees -- one consumer paid $4,200 for New Day's services in 2008, but her lender told her in 2009 that no loan modification review could begin because needed documentation hadn't been provided. She didn't get a refund.
Both Pasch and Uzor shut down their loan modification businesses and have been banned in New Jersey from any work in loan modification, debt adjustment or credit repair. Pasch also agreed to a 10-year ban on a state banking license and Uzor agreed to refer any of his legal clients seeking such services to certified counseling agencies.
The Federal Reserve put together a list of five ways to avoid getting trapped in a foreclosure rescue scam.
Take the first steps to building your portfolio.View Course »