Attorney General Martha Coakley is suing several non-profit foreclosure prevention organizations, saying the groups solicited $350,000 in illegal advance fees from homeowners, violating a 2007 law intended to protect foreclosure victims.
“We allege these defendants targeted and took money from homeowners facing foreclosure, promising to help them stay in their homes, but instead used that money for personal expenses,” Coakley said in a statement.
The attorney general’s suit claims the defendants portrayed themselves as tax-exempt, non-profit organizations, but operated like for-profit businesses, requiring homeowners to deposit up to 25 percent of their gross monthly incomes in order to apply for federal and other mortgage relief programs. Between March 2010 and October 2012, the firms racked up more than $350,000 in deposits from homeowners, which the defendants spent on their own rent and mortgage payments, car insurance fees, car repairs and vehicle excise payments.
Suffolk Superior Court Judge Frances McIntyre granted a preliminary injunction last Thursday against the defendants, preventing them from soliciting or advertising for any foreclosure-related services or improperly charging advance fees.
The complaint names three organizations operated since 2009 by a ring of five defendants: the Alliance for Affordable Housing (AFAH), the Global Advocates Foundation Inc. and the Alliance for Hope Network, Inc. The first two operated in Everett, the third in Framingham. Individual defendants Obeilson Roosevelt Matos of Framingham; Gailon Arthur Joy of Boylston; Pricila Trancoso Silva of Revere; John Charles Schumacher of Lancaster; and Paula Carvalho of Framingham were also named in the suit. The complaint also alleges that the defendants, who are not attorneys or law firms, engaged in the unauthorized practice of law.
In 2007, Coakley’s office issued regulations that prohibit soliciting or accepting an advance fee in connection with foreclosure-related services, or advertising services without disclosing exactly what is offered to avoid foreclosure, among other unfair practices.
