Attorney General Martha Coakley’s office has entered into a stipulated preliminary injunction with three defendants for their alleged inappropriate business practices in offering loan modification assistance.  

Under the terms of the order, signed yesterday by Judge Linda Giles in Suffolk Superior Court, Loan Modification Group Corp., Mitigation LLC, and the companies’ principal, Daniel H. Fox must place $50,000 into an escrow account to be used to satisfy any judgment that the Attorney General may receive against them.

Additionally, the defendants must cease collecting up-front fees and must contact all existing Massachusetts customers within 10 days to let them know about the court’s order, Coakley said in a statement.  

The attorney general’s office also obtained a preliminary injunction against a fourth defendant in the case, Chris Fuelling, who operated Web sites which marketed the defendants’ business. The preliminary injunction against Fuelling imposes similar restrictions on his future business activity in Massachusetts.

The complaint, filed in Suffolk Superior Court earlier this month, alleges that the defendants offered services purporting to assist homeowners as "loss mitigation specialists" who are able to negotiate loan modifications to avoid foreclosure for an advance fee. The complaint further alleges that the defendents sought to capitalize on the foreclosure crisis by preying upon Massachusetts residents facing the loss of their homes.

The complaint further alleges that the defendants’ business practices were unfair and deceptive, in violation of the Massachusetts Consumer Protection Act, because they solicited fees in advance of services, failed to disclose the precise details of the services offered and how they would assist homeowners in avoiding foreclosure, and guaranteed a loan modification that would improve the homeowner’s financial situation dramatically and save the home from foreclosure.