Arizona Firms Selling Allegedly Bogus Loan Modification Services & "Loss Mitigation Consultant" Business Opportunities Faces Federal Civil Charges

The Federal Trade Commission recently announced:

• At the request of the Federal Trade Commission, a federal court has halted a bogus mortgage foreclosure prevention operation that misrepresented both the “loss mitigation” services it offered and the earnings potential of the business opportunity it sold. The FTC seeks to end this deceptive scheme and make the defendants give up their ill-gotten gains.

• According to the FTC’s complaint, the defendants(1) sold “loss mitigation” services to homeowners at risk of foreclosure, falsely claiming they could prevent foreclosure in 97 percent of cases and misrepresenting that they would make a full refund if they failed. Before performing any loss mitigation services, the defendants required homeowners to pay the equivalent of one month’s mortgage payment. Their contracts instructed homeowners not to contact lenders or their contract and its money-back guarantee would be voided. In some cases the defendants’ consultants told homeowners to stop making their mortgage payments while the defendants were working on their cases.

• The FTC alleged that, contrary to the defendants’ claims, they completed loan modification in only about 6 percent of cases and routinely failed to return consumers’ repeated telephone calls. In numerous instances, the defendants had not contacted the consumers’ lenders or had made only non-substantive contacts with them, resulting in late fees, penalties, and other costs for the homeowners. After failing to secure loan modifications, the defendants also failed to honor their refund policies.

• The FTC’s complaint also alleges that the defendants sold a “loss mitigation consultant” business opportunity for up to $1,500, falsely claiming that purchasers (“consultants”) could earn various amounts, including up to $6,000 per week, by referring homeowners to them and by recruiting new consultants. In fact, throughout the defendants’ entire operation, no consultant has earned that much money.

For the entire press release, see FTC Stops Foreclosure Prevention Marketers Who Misrepresented Their Services and Misled Business Opportunity Buyers.

For the relevant court documents in this case, see:

• Complaint for Injunctive and Other Equitable Relief,
• Stipulated Preliminary Injunction Order as to All Defendants,
• Ex Parte Temporary Restraining Order Against Defendants Freedom Foreclosure, Loss Mitigation Training Center, and Jeffrey Segal and Order for All Defendants to Show Cause Why a Preliminary Injunction Should not Issue.

(1) According to the civil lawsuit, the defendants are:

• Freedom Foreclosure Prevention Services, LLC, 1234 S. Power Road, Mesa, Arizona 85206. Freedom Foreclosure also used a maildrop located at 70 S. Val Vista Drive, Suite 3, #420, Gilbert, Arizona 85296,
• Loss Mitigation Training Center of America, LLC, - uses a maildrop located at 70 S. Val Vista Drive, Suite 3, #420, Gilbert, Arizona 85296 as its registered office address. In addition, it directs correspondence to the physical address of 1234 S. Power Road, Mesa, Arizona 85206. It also does business as Mastermind Consulting Group.
• Jeffrey C. Segal, and
• Michael R. Workman.