Attorney General Announces Settlement of Fraud Case with Mortgage Rescue Firms

TRENTON – Attorney General Paula T. Dow announced today that the owner of several New Jersey loan modification companies has agreed to pay the state $805,000 and stay out of the foreclosure rescue business to resolve allegations he defrauded struggling homeowners who sought help in staving off foreclosure.

Defendant Stephen Pasch of Greenbrook Township, Somerset County, agreed to a judgment of $805,000 — $205,000 of it payable to the Division of Consumer Affairs within 60 days – to settle charges that his New Day Financial Solutions, Inc. and other companies collected up-front fees from homeowners in return for promised mortgage modification help – a prohibited practice in New Jersey. Pasch’s other companies include American Credit Repair and Settlement, NDROA Inc. and Paramount Debt Settlement USA.


In addition to Pasch, another defendant in the same lawsuit, licensed attorney Ejike N. Uzor of Newark, has settled claims against him for $25,000. Two Uzor companies were also corporate defendants in the state suit: Uzor Financial Solutions and Ejike N. Uzor and Associates.

In most cases, the foreclosure rescue services for which homeowners paid Pasch and Uzor up front never materialized or actually made their situations worse. In addition, the state’s lawsuit charged that a Pasch/Uzor “non-profit” known as American Financial Advocacy Council – through its Web site at – fraudulently sought to instill consumer confidence in the defendants’ profit-making operations.

“This case is another example of our commitment to fighting deceptive practices in the mortgage business and related industries, such as loan modification, and to holding accountable those who mislead vulnerable homeowners,” said Dow.

“Simply put, 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.

Said New Jersey Department of Banking and Insurance (DOBI) Commissioner Tom Considine: “Those who take advantage of people at one of the worst times in their lives, during financial distress, must make full restitution. It is unconscionable to promise services to families who are desperate to save their homes and provide them nothing but false hope. We will not accept such treatment of New Jersey borrowers.”

The settlement announced today resolves allegations that Pasch and his companies misled consumers through false advertising and deceptive solicitations in violation of New Jersey’s Consumer Fraud Act, and engaged in debt adjustment activity without a license in violation of the New Jersey Debt Adjustment and Credit Counseling Act and the federal Credit Repair Organizations Act.

The defendants’ settlement payments will be used to provide restitution of up-front fees paid by consumers. The Division of Consumer Affairs has reached out to homeowners who filed complaints about Pasch and Uzor with information about the restitution fund, and what they need to do to collect their payments.

The defendants have ceased operating their loan modification business. Under the settlement, they have agreed to a permanent ban on participating in, or soliciting consumers for, any business related to loan modification, debt adjustment or credit repair.

Pasch has further agreed to a 10-year ban on applying for any banking license from DOBI. He is not to conduct any further business using a call center unless and until he registers with the Division on Consumer Affairs. He must report to the Division all of his employment and business activities, and income, for a five-year period.

Uzor is prohibited from conducting any loan modification activities, and is required to refer any of his legal clients seeking such services to certified, non-profit housing counseling agencies.

Acting Division of Consumer Affairs Director Thomas R. Calcagni said homeowners in mortgage trouble need to know the warning signs of a potential scam.

“Legitimate assistance is available to help homeowners avoid mortgage default and potential foreclosure, Calgani said. “But consumers should beware, and report to the Division of Consumer Affairs, anyone who charges an up-front fee for mortgage modification assistance.”

Other warning signs include being told not to contact your lender directly and to deal only through the supposed mortgage assistance company.

Among the defendants’ victims, a Sayreville woman paid New Day $2,500 for loan modification help and later learned her lender had no record of any contact with New Day. The woman, who had coincidentally received a loan modification offer from her lender, asked New Day for a refund after learning the company had done nothing for her. She never received the refund.

In another case, a woman from Howell paid $4,200 for New Day’s services in September 2008. She was instructed to make her check payable to Pasch’s company, NDROA. In early 2009, the woman received a letter from her mortgage company indicating that no loan modification review could begin because required documentation had not been provided. Ultimately, the woman worked directly with her lender to modify her loan, but New Day never refunded her $4,200.

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