Another Upfront Fee Foreclosure Rescue, Loan Modification Firm Under Fire From Feds

The Federal Trade Commission announced Wednesday:

• In a case that affects consumers throughout the nation, the Federal Trade Commission has charged a mortgage foreclosure “rescue” company with falsely claiming that it will stop foreclosure or fully refund consumers’ money.(1) A federal court ordered a halt to the alleged practices and froze the defendants’ assets pending trial. Many people who paid the company ultimately lost their homes to foreclosure, and others avoided foreclosure only through their own efforts. The FTC seeks to prohibit the deceptive claims and make the company pay consumer redress.

• According to the Commission, the company promotes its “Fresh Start Program” by mailing ads to consumers who are behind on their mortgage payments and facing foreclosure. [...] Consumers who call the company are told that negotiations with lenders will begin once consumers pay a fee ranging from $300 to more than $1,000, which typically is paid before the consumer receives a contract.

For the entire press release, see FTC Sues Mortgage Foreclosure “Rescue” Operation.

For the FTC legal documents filed in this case, see:

• Temporary Restraining Order With Asset Freeze, Appointment of Temporary Receiver and Other Equitable Relief, and Order to Show Cause,
• Complaint for Permanent Injunction and Other Equitable Relief

(1) The defendants are National Foreclosure Relief Inc., David Ealy, Chele Stone, also known as Chele Medina, and Hugo Tapia. The Commission vote to authorize staff to file the complaint was 4-0. The complaint was filed in the U.S. District Court for the Central District of California on February 2, 2009; the court entered a temporary restraining order and asset freeze later that day.