Attorney General John Kroger announced on Friday that a California company will repay $67,000 in fees it charged homeowners to obtain mortgage modifications that the company never delivered.

The company, American Team Mortgage, Inc., will repay more than $12,000 in fees it charged homeowners in Bend and Redmond, who believed the company would help them obtain better mortgages.

The agreement was good news for Redmond homeowner Jess Bulkley, 70, who paid the Mission Viejo, Calif., company $2,995 to obtain a mortgage modification in 2009. After Bulkley paid the fee, American Team Mortgage employees strung him along for more than a year with promises of help that never materialized.

“If I was able to get $2,995, I’d be thrilled because that was money I never thought I’d see again,” Bulkley said Friday.

The attorney general filed a lawsuit nearly a year ago against American Team Mortgage Inc., also doing business in Oregon as American Mortgage Relief, alleging the company charged Oregon homeowners more than $80,000 in fees for mortgage modifications, according to a court document. Most of those fees were charged before American Team Mortgage provided services, which violated state law, according to the document.

Under Oregon law, there is a $50 limit on the up-front fees that companies can charge for mortgage modifications, state Department of Justice spokesman Tony Green said. Companies can charge additional fees after they successfully obtain mortgage modifications, Green said.

“We’ve investigated several different companies for this type of conduct,” Green said.

In fact, the Department of Justice recently filed a lawsuit against another California company, NOD Consultants, LLC, for allegedly collecting $90,000 in fees and then failing to provide mortgage modifications, according to a press release issued Friday.

The American Team Mortgage lawsuit filed last year also named company President Steve Hufstedler, and Green said Friday that Hufstedler will pay a total of $132,000 in restitution and other payments to the state under the agreement announced Friday.

The agreement will provide $65,000 for state consumer protection efforts, and it bans Hufstedler and his companies from foreclosure counseling, credit and debt counseling, loan modification and mortgage origination in Oregon, according to a press release from the Department of Justice.

Green would not comment on whether Hufstedler continues to offer financial services in other states.

“All we’re concerned about is his doing business in Oregon,” Green said. “We got restitutions for our consumers, we got money for our consumer protection efforts and we got this company out of Oregon permanently.”

A spokesman at the California Department of Justice was unable to confirm or deny late Friday afternoon whether the department investigated similar concerns.

Company president is also a doctor

Hufstedler is a physician in California, where his medical license and the business registration for American Team Mortgage share the same Mission Viejo address, according to records from the Medical Board of California and the California Secretary of State. A phone call to a telephone number listed for Hufstedler in Mission Viejo was not returned on Friday afternoon.

Medical board records show that Hufstedler was cited and fined $900 in July 2010 for failing to report a misdemeanor conviction within 30 days. Hufstedler pleaded guilty to reckless driving in June 2010 and was sentenced to a three-month alcohol program and three years of probation, according to records of the Superior Court of Orange County in California.

Homeowner receives modification

Back in Redmond, Bulkley’s “option ARM” mortgage had started out at $196,000 in 2007, and it grew to roughly $216,000 by fall 2010. Payment-option adjustable-rate mortgages, popular during the height of the real estate boom, give homeowners a choice of monthly payments. They can make payments from one that covers interest and part of the principal, to a minimum payment that does not even cover all the interest.

After Bulkley realized American Team Mortgage was not going to get him a mortgage modification, he sought one instead through his loan servicer, American Home Mortgage Servicing, Inc. Bulkley received a modification, although in the end he still paid $700 for the modification. His monthly payments increased, from $975 to $1,117, but for the first time a portion of the payment went toward the principal.

“I would never do this again, trusting someone like that,” Bulkley said of American Team Mortgage. He did look at the company’s website, which touted its success at obtaining mortgage modifications for customers.

“They had a whole list of people who made up their company, it was really impressive,” Bulkley said. “So I thought, this is a reputable company.”

Who’s licensed?

To find out whether a company is licensed to provide mortgage modifications in Oregon, call the Oregon Department of Consumer and Business Services at 866-814-9710 or visit www.dfcs.oregon.gov and click on “License Holder Search.” Homeowners can also contact local foreclosure counselors at 800-SAFE-NET or 888-995-HOPE .