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Action taken agains Loan Modification companies

July 01, 2010

Action taken agains Loan Modification companies

For Immediate Release: July 1, 2010.

Minnesota Department of Commerce takes action against unlicensed loan modification companies for deceptive business practices

(ST. PAUL, MN)  The Minnesota Department of Commerce has taken action against two out-of-state loan modification companies for operating in Minnesota without a license and allegedly engaging in deceptive practices.  "These two cases are just further examples of why we encourage all consumers to exercise caution when making decisions related to their financial situations," says Manny Munson-Regala, Deputy Commissioner of Market Assurance.  So far this year, the department has taken more than 50 enforcement actions against mortgage-related businesses, helping to ensure Minnesota consumers are protected from irresponsible and deceitful practices. 

Ronald Le Clair of Bank Modifications, Ernest J. Bartlett of
Ronald Le Clair of Bank Modifications (B.M.) and Ernest J. Bartlett of have been charged by the Department of Commerce with conducting unlicensed mortgage modifications.  B.M., owned and operated by Le Clair from November 2008 to March 2009, allegedly performed unlicensed activity on at least 50 client files, charging an estimated $125,000 in total.

According to the department's investigation, B.M. illegally charged an advance of $1,000 to $3,000 to modify loans and neglected to return money to unsatisfied residents demanding refunds.  Its contracts allegedly excluded required provisions, including the right to cancel.  The company failed to place funds into trust accounts, keep mandatory records or provide monthly statements, and deceptively advised a Minnesota citizen to stop making mortgage payments to gain leverage on getting her loan modified.  After March 2009, B.M. allegedly transferred mortgage modification files, at least 12 of which concerned Minnesotans, to Ernest J. Bartlett of, who performed similar unlicensed activities.

Steven Fattorusso of USA Loan Auditors
The department is alleging that USA Loan Auditors (ULA) owner Steven Fattorusso engaged in deceptive advertising and performed loan modifications despite the fact that neither he nor ULA were properly licensed.

A Minnesota resident allegedly received a letter/advertisement for loan modification services from ULA in April.  The advertisement claimed the resident's current loan company was under a "predatory lending investigation" and warned about possible lender misconduct.  It went on to offer ULA's services as a remedy, giving the impression that ULA was either part of or related to a government agency.  According to the department's investigation, ULA sent out similar advertisements in other states, changing the names of the lenders they claimed to be investigating.  ULA had already been the subject of a cease and desist order in Idaho for similar activities.

Consumers should be cautious and follow these tips when using loan modification companies:

  • Always check to see that the company is licensed in Minnesota.  Licenses can be verified online at or by calling the Department of Commerce at (651) 296-6319.

  • Never pay any amount of money up front for services.

  • Loan modification can be done free of charge altogether, either through an organization or by yourself.

  • Use caution when taking advice from a company.  Some may encourage you to engage in harmful practices, like stopping payments on a mortgage.

The Minnesota Department of Commerce licenses and regulates mortgage originators, brokers, servicers and multiple other individuals and companies in the real estate industry.  Consumers with complaints or questions may call the Minnesota Department of Commerce at (651) 296-2488 or toll free, 800-657-3602.