Newton Conover, behind on his bills after a series of illnesses, thought he found the help he desperately needed when Hope Now Modifications of Cherry Hill promised to secure lower mortgage payments.
Instead, Conover, 65, of Galloway, was among 514 customers in New Jersey and other states who fell victim to a company that preyed upon those looking to avoid foreclosure on their homes and who paid large fees for services never provided, state officials said.
On Wednesday, the New Jersey Attorney General's Office announced the company, which also uses the name Hope Now Financial Services Corp., must pay more than $5 million in a settlement of civil fraud charges.
The company and its owners, Salvatore A. Puglia Sr., 34, and Nicholas F. Puglia Jr., 33, also must pay an additional $51,000 to the state for legal fees and investigative charges. The Puglias and company officials could not be reached Wednesday. Their attorney did not return a call seeking comment.
The state had sued Hope Now last year on behalf of consumers who never received services or refunds and then fell further behind on mortgage payments, making the threat of foreclosure more likely, officials said.
"This is an important outcome, one that should send a message to anyone who might seek to exploit the financial desperation of others during these very difficult economic times," Attorney General Paula T. Dow said in a statement issued Wednesday.
"This company, and these individuals, callously peddled false hope to trusting people - people who needed real loan modification help," Dow said. "It is appropriate that they never again be allowed to sell loan modification or debt adjuster services in New Jersey."
The Attorney General's Office said Hope Now deceptively advertised its program and at times represented an affiliation with Hope Now Alliance, a legitimate nonprofit alliance of mortgage companies and counselors that was formed in October 2007 as part of a federal foreclosure-prevention initiative.
Conover, who drives a bus for disabled children, said he fell behind in mortgage payments about two years ago after he had been ill, needed surgery, and was out of work for a while. He also helps support a 32-year-old mentally impaired daughter who lives with him.
Conover's wife works part time, which helps cover other bills, but not enough to pay the $2,200 a month on the $283,000 mortgage they owe on their two-story Colonial, he said.
Conover's mortgage had been sold twice, eventually landing with a third bank, he said.
Conover called Hope Now, which promised to work with the bank to get his mortgage adjusted and payments lowered. He paid $1,800 up front.
"I have to tell you the Hope Now Modification people sounded more sincere than the [bank] people," said Conover. "They sounded so sincere that they should get an Oscar for their acting ability."
After several months, he realized he had been scammed.
"It just put me in such a state of shock, and I was heading for a nervous breakdown," said Conover, adding that although he's been served with foreclosure papers, the bank was trying to work out a deal to keep his family in the house. His wife, he said, is terrified.
"I tell her this house is not a national shrine. If we have to, we have two choices: We put it up for a short sale or we'll put the keys in the door, leave, and move to an apartment."