More than 500 Hawaii homeowners who paid two New York attorneys for allegedly fraudulent foreclosure assistance may be able to recover some of the estimated $1.5 million they lost to the scheme.

The state Office of Consumer Protection announced a settlement Tuesday that includes restitution for Hawaii consumers who paid for foreclosure help offered through Florida-based Homeowner Legal Assistance Association, or HLAA Inc., in 2009 and 2010.

Bruce Kim, executive director of the Consumer Protection office, said HLAA promoted a loan modification program that had consumers retain two New York attorneys who couldn’t legally provide such services because they weren’t licensed in Hawaii.

"All of the money that was paid by Hawaii consumers was paid under retainer agreements with these New York attorneys for legal services, and yet it does not appear as though the lawyers provided any legal services," Kim said in a written statement.

The two New York attorneys are Marc Zirogiannis and David Galanter. Each homeowner paid the attorneys retainers of $2,750 and $2,950, respectively, Kim’s office said.

Local consumers who paid Galanter and suffered losses can submit recovery claims to the Lawyers’ Fund for Client Protection of the State of New York.

Anyone interested in filing a claim should contact Kim’s office for instructions.

Local consumers who retained Zirogiannis for foreclosure help may also be able to seek restitution by contacting Kim’s office, though recovery is more complicated because Zirogiannis was disbarred in New York and is in prison, a spokesman for Kim’s office said.

HLAA, which claimed to be a nonprofit network of attorneys, operated nationally but established a widespread presence in Hawaii through local agents who also settled claims with the Consumer Protection office.

Names of HLAA’s local agents weren’t disclosed under the settlement, though Kim’s office said the agents were affiliated with Family 1st Solutions Inc. and 1st Choice Family Solutions Inc. Other firms involved in the scheme were Justice Paper Processing Inc. and E3 Finance LLC in Florida, the office said.

Entities involved with HLAA have been prohibited from engaging in Hawaii’s home mortgage finance industry and paid the Consumer Protection office $87,000 in fines and penalties, the office said.

The Consumer Protection office announced the settlement on the same day a national report on foreclosure rescue fraud, titled "Foreclosure Rescue Inc.," was released.

The report by the Lawyers’ Committee for Civil Rights Under Law examines what it calls an epidemic, and references types of bogus rescue operations that include the model in which a nonprofit refers clients to lawyers who collect upfront fees. The 112-page report also delves into enforcement, recovery and prevention efforts.

The Lawyers’ Committee has compiled information on more than 40,000 complaints of loan modification scams with total reported homeowner losses of over $90 million.

"Homeowners facing difficult financial circumstances are desperate to find help to keep their homes and thus are vulnerable to the high-pressure sales pitches and false guarantees of success made by individuals and companies posing as loan modification specialists," said the report, which is available online at preventloanscams.org.

State officials advise homeowners who face foreclosure to contact credit and housing counselors certified by the U.S. Department of Housing and Urban Development.

A list of counselors and more information are available at hfic.hawaii.gov, the foreclosure information website under the state Department of Commerce and Consumer Affairs.

Anyone who believes they may have been the victim of a mortgage rescue scam and has not filed a complaint with the Consumer Protection office can call 587-4272 or visit cca.hawaii.gov/ocp for more information.